1 The applicants, George and Deanne Cotsonis, Jim Louzis, Helen Haley-Coulson and Paul Haley-Coulson, must pay the respondents, Michael Edward Pekin and Margaret Linda Pekin, their costs fixed at $6,880.00 within 30 days of the date of this order.

1 Application P2387/2004 was an application for an enforcement order made by George and Deanne Cotsonis and others which alleged that the subject land at 107 Keon Street, Thornbury owned by Michael and Linda Pekin was being used for more than one dwelling without a planning permit in contravention of the Darebin Planning Scheme. The applicants alleged that a freestanding, two storey studio in the backyard of the subject land was being used as a self contained residence. The Tribunal found that the studio was part of a single dwelling on the subject land. It did not constitute a second dwelling and hence did not require a planning permit.

2 By order dated 15 February 2005 the Tribunal rejected the application for enforcement order and reserved costs.

3 The respondents have made an application for costs against the applicants on the basis that it would be fair to make an order for full indemnity costs under section 109 of the Victorian Civil and Administrative Tribunal Act 1998 because the respondents have been unnecessarily disadvantaged; the conduct of the applicant in conducting the proceeding has been vexatious; there was no likelihood of success to the applicant; the applicant's case demonstrated no tenable argument on the law or on the facts; and the nature and complexity of the proceeding was exacerbated by the manner in which the applicant conducted its case. It was also submitted that an order can be supported by reference to section 150(4)(a) of the Planning and Environment Act 1987, which provides for an order to be made for compensation for time lost by the respondents, as well as full indemnity costs, on the basis that the proceedings were vexatious or frivolous.

4 The claim is resisted by the applicants on the basis that they had a reasonable concern about the use and development and it was entirely appropriate for them to seek a determination from the Tribunal. The Planning and Environment Act provides for individuals to take enforcement proceedings and in the normal course of events costs are not awarded. The Act does not provide for a higher bar to be cleared in resisting a costs application in the case of unsuccessful enforcement proceedings instigated by individuals. In the circumstances of the present case none of the exceptions outlined in section 109(3) of the Victorian Civil and Administrative Tribunal Act are applicable and therefore the normal rule set out in section 109(1) of the Victorian Civil and Administrative Tribunal Act should apply, namely that each party is to bear their own costs in the proceeding.

5 In the Tribunal's decision of 15 February 2005, the Tribunal, in giving its reasons, said:

[14] This is a case that has arisen out of a dispute between neighbours. However, it is not our role to delve into the origins of that dispute nor the rights or wrongs of it. This is an application for an enforcement order under the Planning and Environment Act 1987 and we must decide this application based on planning principles and the law.

6 The Tribunal's decision also outlined certain salient aspects of the conduct of the proceeding, in particular the failure by the applicants to comply with the Tribunal's order dated 1 December 2004 that:

[6] All witness statements of both professional and lay people must be exchanged in accordance with the Tribunal directions within 10 days of the hearing.

7 No witness statements were filed or served by the applicants yet at the commencement of the applicants' case, Mr Clem Newton-Brown who was acting on behalf of the applicants indicated his intention to call Mr George Cotsonis to give evidence. This was objected to by the respondents and the Tribunal ruled that in light of the explicit order by the Tribunal on 1 December 2004 regarding the exchange of all witness statements, Mr Cotsonis would not be permitted to give evidence. The Tribunal commented:

[13] ... Very clear directions were given by the Tribunal that the applicants have failed to comply with. It would be unfair to allow them to now call this evidence.

8 During the course of the hearing, Mr Clem Newton-Brown attempted to cross examine the respondent, Michael Edward Pekin, and his daughter Georgia Pekin, both of whom gave evidence, about a journal of observations made by Deanne Cotsonis regarding the alleged comings and goings of people to the studio on the subject land and the alleged use of the studio. This was not a document that was produced in evidence according to the Tribunal's order and the Tribunal ruled that it was not admissible.

9 Accompanying the applicants' written submission opposing an award of costs was a statutory declaration by George Cotsonis outlining his reasons for making an application for an enforcement order, his concerns about the studio and the breakdown in his relations with the respondents. Also included with the costs application is a very detailed chronology of events, copies of correspondence with the respondents and statutory declarations from the other applicants, including Deanne Cotsonis who attaches a "a journal of observations that I recorded in relation to the activities of my neighbours at 107 Keon Street, Thornbury." This journal runs to some 18 typewritten pages. It covers the period between 16 August 2004 and 16 January 2005 and includes entries for 106 days. The journal is extremely detailed in terms of the observations recorded and clearly indicates that the studio and its occupants have been under intensive and continuous scrutiny.

10 In his submission regarding costs Mr Clem Newton-Brown states that the material has been enclosed for the following reasons:

The Applicants in this enforcement application are George and Deanne Cotsonis, Him Louzis, Helen Halley-Coulson and Paul Coulson.

The Respondents had made it clear in material served that they considered the relationship they had with George Cotsonis to be relevant to the proceeding. At the commencement of the hearing an application was made for leave for George Cotsonis to withdraw from the proceeding, in an attempt to focus the issues on planning mattes only.

This application was refused, but the matter was nonetheless confined at the direction of the Tribunal to the planning issues at hand, rather than the neighbourly relations.

The issue of neighbourly relations are relevant however, to the costs issues in determining whether the actions of both the Applicants and the Respondents warrant costs being awarded.

Given the hearing of the matter did not cover neighbourly relations, statutory declarations are attached to support assertions of fact made in this costs submission.

11 The starting point in any consideration of an application for costs is section 109(1) of the Victorian Civil and Administrative Tribunal Act, which establishes the basic rule that each party is to bear their own costs in a proceeding before the Tribunal. But the Tribunal may make an order awarding costs if it is satisfied that it is fair to do so having regard to the range of matters set out in section 109(3) of the Act. Whilst it should not be assumed that costs will be awarded as a matter of course in all enforcement applications[1], the Tribunal has tended to regard enforcement order proceedings in a different light to applications for review about the merits of planning proposals for the reasons stated by Deputy President Macnamara in Haouli and Ors v Hobsons Bay CC [2001] VCAT 433:

[24] I should also say that the structure of Section 109 does, despite Mr Peake's submission to the contrary, create a presumption that costs lie where they fall. So far as I am aware this is the light in which Section 109(1) has been seen in this and all other Lists of the Tribunal. Nevertheless, Section 109(3)(d) provides in itself a justification for departing from the general rule. Ordinary permit review proceedings might be regarded as legitimate differences of opinion between parties as to the proper exercise of administrative discretion. No party contends for a particular view of fact or law to be found by the Tribunal. Therefore, despite the outcome, in most cases nobody can be said to be "right" or "wrong" in an ordinary permit review proceeding. An enforcement proceeding however, stands in a very different character. Here, just as in ordinary court proceedings, one party alleges and another party denies a particular state of fact or law. The Tribunal is called upon to make findings of fact and to apply the law to the facts which it finds, in the same way as a court does. Hence the circumstances surrounding the matter are required to be proven by proper evidence which is taken on oath, in contradistinction to the manner in which ordinary permit review applications are conducted with matters being simply asserted in the course of submission. See for instance Svanosio v Shire of Strathfieldsaye (1989) 2 AATR 26. Nevertheless as Mrs Komesaroff observed in Bayside City Council v T.A. Campbell (1999) 3 VPR 79, 82 at [17] "there is no general rule [that costs follow the event in enforcement orders] and each case must be judged on its merits".

12 This is a view that has been followed in many other Tribunal decisions. In Haouli's case Deputy President Macnamara found that the circumstances described in that case justified a departure from the general rule and awarded costs in favour of the successful respondents. He did so on the basis that the potential effects of the enforcement proceedings upon the respondents would have been "devastating". Resistance to the proceedings was a matter of commercial necessity and the respondents were "in many respects, in a similar situation to unwilling defendants in commercial litigation. That litigation was of some complexity and was therefore demanding to defend."[2]

13 Similar sentiments were expressed by Member Komesaroff in Baw Baw SC v Zorro Produce PL [2004] VCAT 2198. She stated:

[7] Council referred me to paragraphs 14 of my 30 July 2004 decision and seeks to use this admission by Mr Drendel, together with my analysis of the law on dominant/ancillary uses, to sustain its argument that it should not be liable for the successful respondents' costs, as the case was complex and capable of argument. That is not the point. The point is that:

i Enforcement applications are often an exception to the ordinary s.109 rule that parties bear their own costs;

ii the onus lay upon council to prove its case, and it should accept that responsibility with the forethought of the consequences that result from not doing so. Council could have called witnesses that would have been subject to testing by cross examination, but chose not to;

iii Respondents called upon to defend such enforcement applications should, if successful, not have to bear the costs burden, as they had no choice but to defend themselves.

14 We agree with Ms Davis' submission on behalf of the respondents that the comments of the Tribunal in Baw Baw SC v Zorro Produce PL are apposite in this case. Here, the onus lay on the applicants to prove their case. The consequences of not doing so were raised with the applicants on a number of occasions, as was the tenuous nature of their case. No witness statements were ever supplied and the only outline of argument circulated provided a flimsy argument which ultimately failed. The respondents had no choice but to defend the enforcement application and, being successful, should not have to bear the costs burden. In our view, the applicants' case failed to grasp the full implications of the legal requirements associated with an enforcement order application in terms of adducing proper evidence to prove the allegations they were making. They disregarded the orders of the Tribunal made on 1 December 2004 regarding exchange of witness statements prior to the hearing and the Tribunal's very explicit comments in that order: These orders were made as an outcome of an unsuccessful mediation and in making its orders the Tribunal said:

At mediation it was obvious that the issues could not be resolved. However, the parties agreed that information should be exchanged to the extent that both Applicant and Respondent are fully aware of what is to be argued at the subsequent hearing. There should be no surprises on the day.

15 In fact, the arguments put at the hearing on behalf of the applicants were more akin to arguments that might be raised in considering the merits of a permit application for the studio. They related to height, bulk, overlooking, overshadowing etc. Whilst these matters may well be of concern to the applicants, an enforcement order application must establish by proper evidence there has been a breach of the planning scheme or a planning permit. This the applicants failed to do. The respondents were not in a position to ignore the application for enforcement order because the orders sought were either for demolition or a modification to "the size, height, scale, fit out and amenity normally expected of an "outbuilding".

16 We find that this is a case where costs should be awarded to the respondents. They had no choice but to defend themselves in an unjustified application for an enforcement order that was poorly prosecuted and ultimately failed.

17 We also find that the proceedings have been conducted vexatiously by the applicants, George and Deanne Cotsonis. It is George and Deanne Cotsonis who have wished to focus on the issue of neighbourly relations throughout the proceeding and the material they have submitted with their costs submission leads us to the conclusion that they have unnecessarily disadvantaged the respondents by conducting the proceeding vexatiously.

18 It is clear that there was a falling out between the Pekins and the Cotsonis as a result of a failed contractual relationship between them. Mr Cotsonis is a builder. At the request of the Pekins he submitted a number of quotations to construct a studio for the Pekins according to various sets of plans. He put in a lot of work preparing these quotes without any compensation but was ultimately unsuccessful in securing the job to construct the studio. When construction commenced in May 2004 he began agitating the Council to do something. The Council's consistent response was that no planning permit was required. The chronology of events submitted by Mr Cotsonis indicates just how persistent he was in pursuing the issue with the Council and his neighbours. The application for enforcement order was made because the Council refused to take any action.

19 The journal of observations compiled by Deanne Cotsonis reveals an extraordinary preoccupation with the Pekins and activities on the subject land. In the context of this costs application it is difficult to see what purpose is served by submitting all this material, including the journal. It may be an attempt on the part of the applicants to justify their actions and imply that the Tribunal was wrong in its decision dated 15 February 2005 that the studio was not being used as a self contained residence. If that is so, the attempt has not succeeded. In the first place the Tribunal's decision is not open to review. In the second place the material does nothing to justify the applicants' actions in any way that is relevant to our consideration of this costs application except to establish that the applicants, especially George and Deanne Cotsonis, were most upset with the Pekins and with the construction of the studio, and that their institution and pursuit of the enforcement order proceeding was in the nature of a "pay back" or vendetta. In our view the material is evidence that the proceedings were vexatious.

20 In James W Sadler Pty Ltd v City of Keilor 6 AATR 2000 the Tribunal adopted the tests propounded by the Supreme Court of New South Wales in Attorney General v Wentworth[3] as to whether proceedings were vexatious:[4]

Proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought.

They are vexatious if they are brought for collateral purposes, and not for the purpose of having the Court, adjudicate on the issues to which they give rise.

They are also thought properly to be regarded as vexatious if, irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless.

21 We regard the behaviour of the applicants, George and Deanne Cotsonis, as falling within the first of these tests, namely they have instituted these proceedings with the intention of annoying or embarrassing the person against whom they are brought. We consider that the proceeding has been conducted vexatiously and that in doing so the applicants have unnecessarily disadvantaged the respondents. As we stated in our decision dated 15 February 2005, our role was not to delve into the origins of the dispute between the parties nor the rights or wrongs of it much and all as it appears that this is what the Cotsonis wished us to do. In choosing to make an application for an enforcement order the applicants were under an obligation to establish their allegations. This they failed to do. At all times they were made aware that the respondents would claim costs. They cannot therefore have been unaware of the consequences of their actions.

22 Our conclusion is therefore that the applicants should be ordered to pay the respondents' costs. In terms of quantum, the applicants have claimed an amount of $8,159.71. In addition to legal costs and disbursements for the preparation of shadow diagrams, items are claimed for the time spent by Mr and Mrs Pekin and various other disbursements they claim to have incurred such as 10% of the cost of a laser printer.

23 The claim for the time spent by the Pekins and their outgoings is a claim for loss or damage made pursuant to section 150(4) of the Planning and Environment Act, which states:

150. Tribunal orders in relation to proceedings

(4) If any proceedings are brought before the Tribunal under this Act and the Tribunal is satisfied that -

(a) the proceedings have been brought vexatiously or frivolously or primarily to secure or maintain a direct or indirect commercial advantage for the person who brought the proceedings; and

(b) any other person has suffered loss or damage as a result of the proceedings -

the Tribunal may order the person who brought the proceedings to pay to that other person an amount assessed by the Tribunal as compensation for the loss or damage and an amount for costs.

24 However, we do not consider that the claim for time spent by the respondents in dealing with this proceeding takes this case out of the normal realm of a claim for costs and into the more specialised realm of loss and damage covered by section 150(4). The reference to a claim under section 150(4) of the Planning and Environment Act was not further developed in Ms Davis' submission and we do not consider that this provision can be relied upon for the purpose of the claims made. The claim for the Pekins' time and outgoings is more properly dealt with under section 109 of the Victorian Civil and Administrative Tribunal Act 1998. However, we are not prepared to allow the disbursements claimed personally by the Pekins or for the time spent by them in relation to the proceeding for the following reasons.

25 In the case of Aussie Invest Corporation Pty Ltd v Hobsons Bay CC [2004] VCAT 2188, 18 VPR 171 the Tribunal considered what is meant by the word "costs" in section 109 of the Victorian Civil and Administrative Tribunal Act. In that case Justice Morris held that "costs" in section 109 extends to the costs of non-lawyers who are "professional advocates" under section 62 of the Victorian Civil and Administrative Tribunal Act and the disbursements incurred for the purposes of the proceeding. The Tribunal also has power to make an award of costs in favour of an unrepresented person to compensate the person for wages lost and travelling expenses incurred in attending a hearing of a proceeding. However, he held there is no power for the Tribunal to make an order as to costs in favour of a non-represented person based upon the time spent by that person in relation to the proceeding. On this point Justice Morris said:

[18] It remains true that an order as to costs is an order in the nature of an indemnity (or partial indemnity). Hence there is no power for the tribunal to make an award of costs in favour of an unrepresented person in relation to expenses which would have been incurred if the person engaged professional services, but were not in fact incurred. Further, there is no power for the tribunal to make an order as to costs in favour of an unrepresented person based upon the time spent by that person in relation to the proceeding. However where an unrepresented person loses wages or incurs travelling expenses in order to attend the hearing of the proceeding, this is an outgoing directly related to the proceeding which can be indemnified.

26 These remarks relate to an unrepresented person, however the Perkins have been legally represented from the outset of the proceeding. Just as the costs of an unrepresented person do not extend to time spent in relation to the proceeding, the same applies to a represented party. Many of the disbursements claimed appear to have been disbursements personally incurred by the respondents, not by their legal representatives. In our view, these are not disbursements that are appropriate to reimburse as "costs".

27 The total legal costs incurred by the respondents is $6,880.00. We consider this is a reasonable amount and note that we received no submissions regarding the quantum or method of calculation from the applicants. We will therefore fix the sum of costs to be paid by the applicants to the respondents in the sum of $6,880.00.

28 We note that in the applicants' costs application no submission is made that any distinction should be made between the applicants in respect to any order that may be made in respect of costs, notwithstanding that the primary protagonists have been George and Deanne Cotsonis. In making our order we have therefore made the order against all the applicants.

[1] See Casey City Council v Gerard [2004] VCAT 1838 at para 31

[2] [2001] VCAT 433 at para 26.

[3] [1988] 14 NSWLR 481

[4] 6 AATR 200 at 204