1. On 23 August 2012, I made an order striking out the applicants' application to the Tribunal under section 75(1) of the Victorian Civil & Administrative Tribunal Act 1998 (VCAT Act).
2. The respondents have applied for compensation under section 75(2) of the VCAT Act.
3. At the compensation hearing on 5 December 2012, Mr Kenny appeared for the respondents and Mrs Raisa Gelman appeared for the applicants. Ms Janina Gelman was overseas at the time but had sent written submissions, to which her mother spoke. At the conclusion of the hearing, I made orders allowing the parties to make written submissions regarding the matters raised and in relation to whether a litigant in person may be awarded costs for their own time. Each party filed written submissions.

(1) At any time, the Tribunal may make an order summarily dismissing or striking out all, or any part, of a proceeding that, in its opinion -

(a) is frivolous, vexatious, misconceived or lacking in substance; or

(2) If the Tribunal makes an order under sub-section (1), it may order the applicant to pay any other party an amount to compensate that party for any costs, expenses, loss, inconvenience and embarrassment resulting from the proceeding.

1. Section 75(2) gives an unfettered and wide discretion as to whether an award of compensation ought to be made. There is no presumption that compensation in the form of costs follows the event and it is not to be assumed that each party is to bear their own costs. The particular circumstances of the case must be considered.[1]
2. Section 58 of the VCAT Act, referring to Part 4, says

(1) This Part sets out the general procedure of the Tribunal.

(2) Schedule 1 sets out variations from the general procedure for certain types of proceedings.

1. Clause 28GG of Schedule 1 to the VCAT Act[2] says:

(1) The Tribunal cannot order costs in a proceeding relating to a small claim, except in a review of a determination under section 120 in respect of such a proceeding.

1. A small claim under the VCAT Act has the same meaning as small claim in section 107A of the Fair Trading Act 1999. As a consequence, and relevantly here, a small claim for the purposes of clause 28GG includes a consumer and trader dispute in relation to a claim for performance of work of a value not exceeding $10 000 arising out of a contract for the provision of services.
2. It was clear that, as the dispute which was the subject of the proceedings concerned the performance of legal work and the amount claimed was $9,999, it was a small claim.
3. Section 109 of the VCAT Act, which deals with costs orders, says, relevantly:

(1) Subject to this Division, each party is to bear their own costs in the proceeding.

(2) At any time, the Tribunal may order that a party pay all or a specified part of the costs of another party in a proceeding.

(3) The Tribunal may make an order under subsection (2) only if satisfied that it is fair to do so, having regard to -

(a) whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding by conduct such as -

(i) failing to comply with an order or direction of the Tribunal without reasonable excuse;

(ii) failing to comply with this Act, the regulations, the rules or an enabling enactment;

(iii) asking for an adjournment as a result of (i) or (ii);

(v) attempting to deceive another party or the Tribunal;

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding;

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law;

(e) any other matter the Tribunal considers relevant.

1. It is accepted that clause 28GG means that the Tribunal may not make a costs order under section 109 in a small claim.
2. There is a conflict in the authorities as to whether the Tribunal may make an order for an applicant to pay a respondent's costs under section 75(2) or under section 109 where a proceeding has been summarily dismissed or struck out under section 75(1).

Generally speaking, it will probably make little difference whether the VCAT orders the applicant to pay the respondent's costs under s 75(2) or under s 109 where the proceeding is struck out or dismissed under s 75(1). That is because, when exercising the discretion under s 75(2), the VCAT will typically have regard to similar considerations to those set out in s 109(3).[3]

1. The usual position is that a litigant in person may not seek an order for costs to compensate for the expenditure of his or her own time.[4] There is a longstanding exception to that rule, to the effect that a lawyer admitted to practice in the jurisdiction is entitled to an award of costs where that solicitor has acted for himself or herself as a litigant and where he or she succeeds.[5] Although that exception has been the subject of criticism by the High Court of Australia[6] and it is no longer followed in Western Australia[7], it remains the law in Victoria.[8] Given the High Court's criticism of the exception, it is narrowly construed.[9]

1. An affidavit sworn by Mr Kenny and filed in support of the claim for compensation outlined the background to the strike out application. An exhibit to the affidavit was a letter to the applicants, which included a request that the applicants agree to have the proceeding dismissed or struck out without the need for the section 75 hearing. The letter went on to say:

If you fail to do so, then I intend to seek an order that you both pay compensation to my firm, being our costs on an indemnity basis at our normal charge out rates.

1. The affidavit said that, due to the complexity of the claim made by the applicants in the proceeding and the complexity of the matters raised, together with substantial correspondence between the respondents and the applicants, "the respondents have been put to substantial cost, trouble, expense, stress and allocation of resources to deal with the matter".
2. The affidavit then stated that the respondents sought an order that, by way of compensation, the applicants pay to the respondents the respondents' costs of and incidental to the proceeding, to be taxed on Magistrates' Court scale D in default of agreement.
3. At the hearing Mr Kenny handed up a document which set out the claim for $5,229 which comprised items categorised in accordance with Magistrates' Court scale D. Those items referred to submissions and preparation for the strike out application, the appearance costs for the strike out hearing for Mr Kenny and an instructing solicitor, preparation of affidavits in relation to the compensation claim and the appearance at the hearing of the compensation application.
4. Mr Kenny explained that the respondents are not claiming legal costs as provided for under section 75(2), rather they are seeking compensation for loss arising from the time and resources Mr Kenny and the firm had allocated to responding to the proceeding. Mr Kenny contended that the firm is in the business of selling its time and that, what it had lost, was time dealing with this matter. One way to measure that loss was to claim on the usually applicable charge out rates but instead the more conservative scale had been relied upon. Further, Mr Kenny said that the amount of time claimed is a conservative estimate of that which was in fact spent on the matter.
5. The respondent's written submissions say that the Tribunal may make an order under section 75(2) of the VCAT Act in a small claim despite clause 28GG of Schedule 1. The respondents say that, once an order is made under section 75(1), the power to make an order for compensation under section 75(2) arises. Section 109 of the VCAT Act applies to orders for costs in proceedings in the Tribunal generally. Section 75(2) is neither qualified nor restricted by section 109. Section 75(2), as a compensation provision rather than a costs provision, deals with loss and inconvenience and was said to have been enacted to protect respondents from unmeritorious proceedings.
6. The respondents contend that:

Public policy dictates that even in the small claims jurisdiction, respondents should be protected from unmeritorious claims being made against them. This is recognised by s. 75(1) and by the discretion vested in the Tribunal in s. 75(2) to make orders of the type provided in that section once the jurisdiction of the section is invoked.

1. As to the question of self represented litigants being awarded costs for their time, the respondents say that the cases mentioned are distinguishable because they all concerned claims for costs whereas here the claim is for compensation. The respondents say that the question raised by section 75(2) is whether a party suffered loss or inconvenience by reason of a proceeding that was struck out under section 75(1).
2. The respondents were unable to direct me to any previous decisions where an order had been made under section 75(2) in relation to a small claim.

1. Ms Janina Gelman, a lawyer, prepared submissions regarding the claim which were handed up at the hearing. Those submissions make reference to the fact that the Tribunal was established as a low cost jurisdiction. Referring to section 109 of the VCAT Act, it was noted that the usual rule is that each party ought to bear its own costs. Ms Gelman also referred to the prohibition on costs orders in small claims and submitted that costs cannot be awarded in this matter as a consequence.
2. The submissions also discussed aspects relating to the substantive issues in the proceeding and the conduct of the parties during the proceeding. It is not necessary to refer to those matters here.
3. The further written submissions filed after the hearing reiterated the above matters and emphasised the fact that the cases discussing whether solicitors are allowed costs where they have been self represented, all refer to costs rather than compensation.

1. It is plain from the words of section 75(2) that compensation may be ordered where a strike out order has been made. The section refers to categories of compensation being costs, expenses, loss, inconvenience and embarrassment.
2. The term "costs" is not defined in the VCAT Act. It is usually understood in the Tribunal to mean legal costs.[10] Legal dictionary definitions of costs refer to costs including fees, charges, disbursements, expenses, remuneration and reimbursement allowed to a litigant in respect of legal matters.[11]
3. In the cases dealing with a solicitor's entitlement to claim costs for appearing on his or her own behalf, it is apparent that what is being sought is reimbursement for the solicitor's professional time and skill and that reimbursement is sought by way of a costs order.[12]
4. I am satisfied, having regard to the way in which the application under section 75(2) has been made, that the respondents are in fact seeking an order for costs rather than compensation. No evidence has been produced showing that the respondents lost income as a result of Mr Kenny and his instructor dealing with this matter. No expenses have been claimed. No evidence has been produced to show that inconvenience, other than in respect of time, has been suffered. There is no evidence of embarrassment.
5. In the letter warning the applicants of the risks of not withdrawing their application, the respondents referred to seeking indemnity costs. In the application for an order under section 75(2), reference was made to compensation comprising the respondent's costs. While accepting that the Magistrates' Court scale was used as a convenient way to quantify the claim, the selection of items in that scale which best reflect the work done by Mr Kenny and his instructor, confirm that the claim is for legal costs.

Effect of clause 28GG - orders for costs & small claims

1. I accept the proposition that section 75(2) differs from section 109 in that the former is a compensation provision and the latter is a costs provision. As discussed above, it is apparent on the face of section 75(2) that compensation of various kinds may be ordered and one of the categories is costs.
2. I do not accept the respondents' proposition that, because section 75(1) applies to a small claim, section 75(2) must also apply, irrespective of clause 28GG. I cannot agree that the section ought to be read in isolation in this way as that would effectively import a further exception to the general rule. If it were intended that section 75(2) costs orders could be made for small claims, an exception of the kind already contained in clause 28GG in respect of section 120 review applications could have been included.
3. In the absence of an express exception in clause 28GG or in section 75(2) or words which indicate that clause 28GG only applies to orders for costs under section 109, I consider that the phrase "order for costs" ought to be read as referring to any such order made by the Tribunal in Fair Trading Act 1999 proceedings other than where the exception applies or where there is an express provision to the contrary. Applying clause 28GG to section 75(2) results in costs orders being prohibited where a small claim has been dismissed or struck out under section 75(2).
4. If I should be incorrect about that reading of clause 28GG and if the correct position is that a compensation order for costs may be made in a small claim under section 75(2), I would nevertheless decline to make such an order in this case. I agree that section 75 provides a protection for respondents in respect of unmeritorious proceedings. I am satisfied that the applicant's proceeding was unmeritorious as I found it was an abuse of process. That is why it was struck out without the need for a full hearing. Where costs do not follow the event, that factor, reflected in section 109(3)(c), does not provide a total answer.
5. Unlike section 109(3), section 75(2) does not set out a list of matters which the Tribunal is called upon to take into account when exercising its discretion. The Tribunal's discretion is broad.
6. If the respondent's reading was applied then, in any small claim, it would be open for the Tribunal to make a costs order where the respondent employs section 75 to have the proceeding dismissed or struck out but would be prohibited from making the same order for costs at the conclusion of the hearing where the reasons for dismissal or strike out are identical. That would be an inconsistent and potentially absurd outcome. If it is correct that there is some interchangeability between section 75(2) and 109, it would also be inconsistent to be able to allow an order for costs under section 75(2) but not under section 109 in a small claim. As a consequence of these matters, I will not exercise the discretion to make a compensation order for costs in this case.
7. For these reasons, no award of compensation will be made and the application for an award will be dismissed.

[1] See the discussion at paragraph [VCAT.75.450] and the cases referred to therein in J Pizer's Pizer's Annotated VCAT Act, 4th Edition

[2] At the hearing the parties made reference to clause 4I which was an earlier form of the current clause. The wording of the two clauses is the same.

[4] Guss v Veenhuizen (No 2) [1976] HCA 57; Cachia v Hanes [1994] HCA 14

[6] Cachia per Mason CJ, Brennan, Deane, Dawson and McHugh JJ at paragraphs [12]-[14]

[7] Dobree and Ors v Hoffman (1996) 18 WAR 36

[8] Brott v Almatrah [1998] 2 VR 83; Winn v Garland Hawthorn Brahe [2007] VSC 360

[10] See the detailed discussion from paragraph [VCAT.109.120] of Pizer

[11] Lexis Nexis Words and Phrases Legally Defined, Fourth Edition and Oxford University Press Oxford Australian Law Dictionary