1. On 18 September 2025, in Craig v Banyule CC,[1] I dismissed an application that requested amendment of condition 1 of permit P967/2022 ('permit') issued under the Banyule Planning Scheme ('planning scheme'). The permit allowed variation of the covenant 939046 ('covenant') that burdened the subject land.
2. The effect of the requested amendment was to restore the 'one building' restriction (but not the 'roof materials' restriction) in the covenant.
3. I dismissed the application after considering and answering the following five agreed questions of law:

Question 1

Was the Responsible Authority required by s 52 of the Act to give notice of the application for the Permit?

Answer: No

Question 2

For the purposes of s 88 of the Act, does the Permit:

(a) relate to the construction of buildings, or the carrying out of other work or the development of land; or

(b) relate to the use of land?

Answer: The permit relates to the development of the land

Question 3

Does the Tribunal have power in this Proceeding pursuant to s 103(1AA) of the Transfer of Land Act 1958 (Vic) to direct the Registrar of Titles to amend the title of the Land to restore the Single Building Restriction to the Covenant?

Answer: No

Question 4

Is the Permit "spent" because plan of variation of restriction AW999658D, which deleted the Single Building Restriction, was registered on 30 June 2023?

Answer: Yes

Question 5

If yes, is the Tribunal precluded from cancelling the Permit?

Answer: Yes

1. The respondents have applied for an order that the applicants pay their costs.
2. The costs application is made under section 109 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('VCAT Act').
3. Under section 109, the 'general rule' in Tribunal proceedings is that each party is to bear its own costs. However, the Tribunal may order that a party pay all or a specified part of another party's costs in a proceeding. The Tribunal must be satisfied that it is fair to do so having regard to a non-exclusive range of matters in section 109.[2]
4. The purpose of a costs order is to enable justice to be done and to compensate a party that has incurred costs in circumstances in which it would be unfair to require them to be liable for its costs. The Tribunal has also often said that the function of a costs order is not to punish an unsuccessful party.
5. The respondents rely on a 20-page submission and a 7-page affidavit affirmed by Matthew Klages on 1 October 2025 which contains nearly 70 pages of exhibits. The applicants oppose costs, relying on a 7-page submission and a 4-page affidavit of Diane Kraal, and the 3-page affidavit of Charles Craig, both affirmed on 23 November 2025.[3]
6. I have decided to refuse the costs application. My reasons follow.

1. Homestead Park Association Inc ('Homestead') lodged the application on 1 April 2025 requesting amendment of the permit. Homestead said it lodged the application 'on behalf of Glenard Estate property owners who benefit by the Covenant'.[4] In its statement of grounds, Homestead stated that it represented 'neighbouring beneficiaries of the covenant affecting 25 Glenard Drive ...'.[5] It was signed by Diane Kraal.[6]
2. Following a practice day hearing on 16 May 2025, I found that Homestead was not a proper applicant and did not have standing to request that the permit be cancelled or amended.[7] I removed Homestead as a party.
3. At Homestead's request (to which the respondents did not oppose), I joined 'Richard Nash & Diane Kraal, Charles Craig & Karen Tyers-Craig, Francesca Calati & Enzo Calati' ('Charles Craig and others') as joint applicants. This took effect on 22 May 2025.[8]

1. The respondents submit that it would be fair to make an order for costs because:

(a) having regard to the relative strengths of the claims made by each of the parties, the applicants made a claim that had 'no tenable basis in fact or law';[9]

(b) the applicants were on notice that their application had no tenable basis in fact or law;[10]

(c) the application was an 'attack on the respondent's accrued property right and [the respondents] were justified in taking it seriously';[11]

(d) the application was brought in the Tribunal's original jurisdiction in which there is a practice that costs orders are more readily made;[12]

(e) the applicants did not get a better outcome than in the respondents' settlement offer dated 2 May 2025;[13] and

(f) the respondents have suffered quantifiable financial loss and damage.[14]

1. The respondents submit their total costs (counsel's fees and solicitors' costs) in the proceeding were $60,840 and they request the Tribunal make an order fixing costs in that amount. In effect, they seek an order awarding indemnity costs.
2. As a matter of completeness, the respondents do not claim that the applicants' request was 'brought primarily to secure or maintain a direct or indirect commercial advantage' for any one or more of the applicants.[15] The applicants submit the application was not brought for this purpose. The issue of commercial advantage therefore does not arise in this costs application.
3. In deciding whether I am satisfied that it would be fair to award costs, I will consider the merits of the respondents' grounds summarised as paragraphs (a) to (f), above.

1. The respondents succeeded in each of their 'claims' on each question of law. That led to my overall finding that the applicants did not have standing to request amendment of the permit and their application must be dismissed.
2. As I have already stated, success alone is insufficient as a factor weighing in support of an award of costs.

1. The answer to question 1 involved a finding about the interpretation or meaning of the covenant.
2. If the subject land had been used or developed for more than two years before 18 August 2022 in a manner that breached the covenant, no notice was required to be given of the respondents' permit application to vary the covenant, including notice to an owner or occupier of land benefited by the covenant.
3. In effect, the covenant restricted the existence of 'more than one building'.
4. Ultimately, the question was whether the building on the subject land should be characterised as 'one building'. I found that whether there was more than one 'dwelling' was irrelevant. Based on seven features of the building, I found the subject land contained two buildings throughout the relevant period.
5. One of those features was what I characterised as a 'glazed breezeway' or 'passage' that joined or connected the two 'wings' of the building and that this connection had no structural function for the two wings and was modest in scale, form and function.[16]
6. The applicants' claim that the existing building should be characterised as one building was arguable. I would not characterise it as having no tenable basis in law or fact.

1. Question 2 concerned the Tribunal's jurisdiction.
2. If the permit related to the 'use of land', as claimed by the applicants, the Tribunal had jurisdiction to cancel or amend the permit. If the permit related to the 'development of land', as claimed by the respondents, the Tribunal did not have jurisdiction.
3. The definitions of 'use' and 'development' in the PE Act do not expressly include removing or varying a restrictive covenant.
4. I supported the respondents' claim, having regard to the decision of the Supreme Court in Skabal Pty Ltd v Boroondara City Council[17] ('Skabal').
5. The applicants' claims that Skabal should be distinguished, that the reasoning was 'hesitant' and therefore not binding, or that it was wrongly decided were claims that I would characterise as weak. Although weak, the applicants' claims do not support an award of costs.

1. Question 3 involved considering the Tribunal's powers under section 103(1AA) of the Transfer of Land Act 1958 (Vic).
2. I decided that the Tribunal did not have the power to direct the registrar to amend the title to the subject land to restore the single building restriction in the covenant. Accordingly, even if I were minded on the merits to amend the permit, I did not have the power to direct the registrar to give effect to the amendment.
3. The only authority on the question that the parties brought to my attention was Ingram v McLennan and Associates Pty Ltd[18] ('Ingram'). Ingram was a decision of the Tribunal that held that section 103(1AA) does not confer a separate or general jurisdiction for the Tribunal and that the Tribunal only has jurisdiction in a proceeding if the Tribunal has the power to direct the Registrar. As a Tribunal decision, I am not bound by Ingram.
4. In deciding the Tribunal did not have the power to direct the Registrar, I agreed with the reasoning of the Deputy President in Ingram.
5. I will not set out here all the applicants' submissions, but it suffices to state that they included that section 87 of the PE Act should be interpreted broadly so that an order of the Tribunal to amend the register can be given effect.
6. I would characterise the applicants' submissions as weak. Although weak, the applicants' claims do not support an award of costs.

1. The answer to questions 4 and 5 involved whether the Tribunal could not amend the permit because it was 'spent'.
2. I was not persuaded by the applicants' claims that:

(a) the 'concept' of a spent permit is not one that the PE Act applies to covenants;

(b) the permit has 'ongoing effect as the source of authority for the [varied] covenant which continues to govern the use of the land'; and

(c) the permit is the 'root' of the 'ongoing and unresolved development application' for permission to construct two dwellings on the subject land.

1. The respondents relied on Skabal in which the Supreme Court ultimately found that a permit to vary the easement in the case could not be cancelled or amended because a plan of variation of the easement had been registered.
2. The applicants submitted that Skabal should be distinguished on its facts because it concerned an easement and not a covenant.
3. I ultimately found that a permit to vary an easement should not be distinguished from a permit to vary a covenant. I therefore found a new category of a 'spent' permit.
4. As the permit was 'spent', I could not cancel or amend the permit.
5. I would therefore not characterise the applicants' claims as not having any tenable basis in fact or law. The relative strengths of the applicants' claim do not warrant an award of costs.

1. The respondents submit that costs should be awarded because the applicants continued to pursue a claim after the respondents notified the applicants in the settlement offer dated 2 May 2025 and in practice day submissions dated 12 May 2025 that the application had no tenable basis in fact or law.
2. The respondents rely on C J Stanbrook Pty Ltd v East.[19] In that case, East had notified Stanbrook that a purported assignment of a debt under a building contract was 'ineffective' because East had not given her consent as required by the contract. The Tribunal found the application was 'unmeritorious' and that East's notice was a relevant matter under section 109(3)(e) of the VCAT Act. The Tribunal awarded costs to East from the date of notice.
3. As I have found that the relative strengths of the claims do not support an award of costs, there is little or no weight to the respondents' notice claims.

1. The respondents submit that the application 'was an attack on the respondents' accrued property right and they were justified in taking it seriously'.
2. A third-party request to cancel or amend a permit is a 'serious' matter, as I stated in the reasons.[20] However, just because the application could have affected an 'accrued property right' and could be characterised as a serious matter does not derogate from the need to determine whether it is fair to make an award of costs.
3. The respondents' property right claim does not support an award of costs.

1. The applicants' request was brought in the Tribunal's original jurisdiction in which there is a practice that costs orders are more readily ordered. This is a factor supporting an award of costs but does not affect the overriding need for the Tribunal to be satisfied that it is fair to make an award.
2. The respondents rely on Maddingley Brown Coal Pty Ltd v Moorabool SC[21] ('Maddingley'). That case also recognised the Tribunal's practice.[22] Maddingley does not support any general principle that costs should be awarded in favour of successful parties in original jurisdiction cases. I would be cautious about applying the Tribunal's decision to award costs in that case to this proceeding.
3. For example, the case concerned whether a party should be 'compensated' if successful in a summary dismissal application.[23] By way of another example, the Tribunal characterised the proceeding as being 'of a sophisticated commercial nature akin to that which would otherwise be heard in the Supreme Court'.[24] That characterisation does not apply in this proceeding.

1. The VCAT Act provides that unless the Tribunal 'orders otherwise', a party that makes a relevant settlement offer is 'entitled to an order that the party who did not accept the offer pay all costs incurred by the offering party after the offer was made'.[25] In other words, the 'entitlement' is subject to the Tribunal's discretion.
2. The respondents gave the applicant an offer of compromise dated 2 May 2025. The respondents offered to forego their costs in exchange for the applicant's withdrawal of its application, failing which costs on an indemnity basis would be sought. The applicant did not accept the offer within the 14-day period.
3. I accept that my final orders dated 18 September 2025 were not more favourable to the applicants than the offer.
4. The respondents now rely on the reasoning of the Supreme Court in Joshua John Martin & Anor v Anton Lindeman[26] ('Martin'). In Martin, the defendants opposed modification of a restrictive covenant, but the plaintiffs contended that the covenant did not benefit any land and the covenanted land was not subject to a building scheme. The Court found the plaintiffs had been put to unnecessary expense because the defendants pressed on after being told why their land did not benefit from the covenant. The Court ultimately decided to award indemnity costs from the offer date.
5. I would distinguish Martin. First, it was not a case involving the provisions of the Planning and Environment Act 1987 (Vic) and the VCAT Act. Second, one of the Court's reasons for an indemnity costs award was that 'the defendant's opposition to the plaintiff's application was without legal or factual merit'. I take the Court to have meant that the application was the same as having 'no tenable basis in fact or law', to use the language of the section 109 of VCAT Act. I have already found the application in this case could not be characterised in that way.
6. It is unnecessary to determine if the offer complied with the settlement offer provisions of the VCAT Act for a reason that I must strictly apply. The offer was given to Homestead on 2 May 2025 and was not accepted by Homestead within the 14-day period which expired on 16 May 2025.
7. On 22 May 2025, Homestead ceased to be the applicant. The offer was not given to Charles Craig and others after they became the new applicants on 22 May 2025. Simply put, Charles Craig and others did not fail to accept any settlement offer.
8. I agree, as a matter of policy, that it is desirable that parties are encouraged to settle proceedings and, consequently, it is undesirable that settlement offers be burdened with technicality.[27] The technicality in many of the cases concerns what the offer was. That type of technicality does not arise here. However, the facts that the current applicants did not fail to accept an offer is a fundamental matter rather than a technical one.

1. The respondents submit the applicants caused 'significant financial harm' to the respondents.
2. They rely on an affidavit affirmed by Matthew Klages who states the application (lodged in April 2025) caused a loss of ability to start construction in November 2025 and an overall six-month delay. Mr Klages quantifies the 'loss and damage' arising from additional 'interest, rent and holding costs' at 'approximately $80,000'. He also refers to his partner's (and co-respondent's) medical expenses caused by 'stress' from 'constant uncertainty and anxiety' but does not seek compensation for those expenses.[28]
3. The loss and damage claimed by the respondents are not costs that may be claimed under the VCAT Act. Interest, rent and holding costs are not costs of the proceeding.[29]
4. In any event, the impact of a 'six month' delay in 'starting' construction is mitigated by the fact that separate planning permission to construct two dwellings on the subject land was not issued until on or after 31 October 2025 and so there could be no 'start' until after the relevant issue date.

1. My order dated 18 September 2025 both answered agreed questions of law and considered the merits of the applicants' request to amend the permit.
2. As I found that the applicants did not have standing to lodge their application, it became unnecessary to determine the merits of the application.
3. In response to the parties' submissions on the merits and in response to the possibility that I might have incorrectly answered the questions of law, I made various observations about those submissions.[30] I would summarise those observations as indicating that on many of the relevant considerations, the applicants would face various difficulties.
4. I do not discern that the respondents' grounds in their application for costs include the relative strengths of the merits claims.
5. As I made no findings on the merits, it is unnecessary to consider relative strengths of the respondents' and applicants' merits claims in determining the costs application.

1. For the above reasons, I will refuse the respondents' application for an order that the applicants pay their costs.

[1] [2025] VCAT 829.

[2] Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 109.

[3] I have considered all this material but, in accordance with the practice of the Tribunal, not all of it will be cited or referred to in these reasons.

[5] Statement of grounds dated 31 March 2025 [1].

[6] The capacity in which Dr Kraal signed on behalf of Homestead was not specified in the application. Later, at the practice day hearing on 16 May 2025, it became apparent that Dr Kraal was a member of Homestead's controlling committee.

[7] Nash v Banyule CC [2025] VCAT 453 [18].

[16] Craig v Banyule CC [2025] VCAT 829 [56].

[17] [2020] VSC 532.

[18] [2014] VCAT 133 [28].

[19] (Costs Hearing) [2015] VCAT 417 [30], [32].

[20] Craig v Banyule CC [2025] VCAT 829 [104].

[21] (Costs) [2020] VCAT 908.

[24] (Costs) [2020] VCAT 908.

[26] Supreme Court of Victoria, Application S ECI 2023 05420, unreported 20 September 2024.

[27] BMD Major Projects Pty Ltd v Victorian Urban Development Authority [2007] VSC 441 [5].

[28] Costs such as those caused by 'stress' are not claimable: Juresko v Watts [2007] VCAT 2462 [13].

[29] See eg Ross v Mount Alexander SC [2011] VCAT 2108 [5].

[30] Craig v Banyule CC [2025] VCAT 829 [100]-[172].