1 In this matter the two respondents seek orders for costs against Ms Gonsalves. The background is as follows:

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On 4 July 2005 Ms Gonsalves made a complaint to the Equal Opportunity Commission of Victoria (EOCV) of sexual harassment and victimisation against her former employer (the first respondent) and against one of her employer's executives (the second respondent).

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On 30 August 2005 EOCV advised Ms Gonsalves that it declined to entertain her complaint of victimisation. On the same day it referred her complaint of sexual harassment for conciliation.

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On 10 November 2005 the complainant was advised by EOCV that attempts to conciliate her claim of sexual harassment had been unsuccessful.

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On 18 October 2005 EOCV received notices indicating the complainant wished to refer her complaints to the Tribunal for hearing. These complaints were received by the Tribunal on 30 January 2006.

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On 27 February 2006 the matter was listed for directions before Judge Davis who gave the requisite directions and listed the matter for mediation on 1 May 2006.

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Mediation was unsuccessful.

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The matter was heard over three days on 19, 20 and 21 July 2006 and on 16 August 2006 the decision dismissing the complaint was handed down and written reasons were given.

2 The submissions of the first and second respondents are essentially the same.

3 Mr Harris who appeared for the second respondent relied on section 109 of the Victorian Civil and Administrative Tribunal Act and in particular on s 109(3)(c) and 109(3)(vi). Relevantly the section provides -

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

(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 sub-section (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

(e)

any other matter the Tribunal considers relevant.

4 The second respondent seeks costs on an indemnity basis and submits that this is based on the absence of any legal or evidentiary basis for the complainant's case. He submits first that the sexual harassment claims brought by the complainant were without foundation being complaints about treatment of persons other than the complainant. Second he submitted that the proceedings against his client were intended purely to vex and humiliate him and, as a result, his client was put to a three day hearing and considerable expense. During the hearing, he submitted, matters which had no bearing on the case and which were designed simply to embarrass and humiliate his client were re-agitated when the only question was whether the second respondent knew about the complainant's role in the rather sorry affair.

5 Mr Millar who appeared for the first respondent adopted Mr Harris' submissions and added some of his own. It was his submission that it was not necessary to go beyond the opening words of ss.(3)(a) and that the major consideration for the Tribunal was what was "fair" in the circumstances. But, he submitted, if one were to go beyond the opening words, then in his opinion the claim was vexatious (ss.(3)(a)(vi)), the complainant prolonged the case unnecessarily (ss.(3)(b)) and her case had no tenable basis in fact or law (ss.(3)(c) .

6 He submitted generally that the complainant failed on all grounds; there there was, he said, no fine construction of the evidence to be made, the claims re sexual harassment were not hers to be made, the conduct was not of a sexual nature and there was no causal link between the detriment and the allegations. He summed the complainant's case up by saying "it was misconceived, bad in law and always destined to fail". Further he submitted that the true nature of the claim was really one of unfair dismissal. This was of course something she had pursued in another place but had discontinued the action.

7 Mr Harding who appeared for Ms Gonsalves reminded the Tribunal that when he opened the case at the hearing, he stressed that the main claim was one concerning victimisation and that was the way the case was run. He submitted that I ought to take that into account when considering the matter of costs. It is true he did open the case in that way, but I imagine that was of little solace to the second respondent. The complainant's particulars of complaint included a number of instances of alleged sexual harassment which had to be answered by him and it is possible (although I was not so informed) that had the harassment claims been withdrawn before hearing the second respondent might not have required separate representation.

8 Mr Harding referred me to the oft-quoted decision of Tanglemayer v FAI Workers Compensation (Vic) Pty Ltd (Anti Discrimination List No. M4 of 1998, decision dated 16.12.1998) as it appeared in a number of decisions by Senior Member Lyons of this Tribunal. In **Frobose v Victorian College for the Arts (**VCAT A196/1998) (a case in which the Tribunal declined to award costs) Senior Member Lyons set out the following passages from Tanglemayer expounding the following propositions which are still the cornerstone of consideration in this Tribunal -

It is inappropriate in relation to the jurisdiction conferred by the Equal Opportunity Act 1995 to observe an automatic rule that costs should follow the event. To do so might detract from the clear conciliation focus of the Act by encouraging parties to proceed to hearing in the hope of being indemnified for their costs, rather than resolving the matter by conciliation. It may also undermine the objective of the Act to provide redress for the victims of sexual harassment or discrimination, by deterring them from accessing the jurisdiction, for fear that, if they lost, costs might be awarded against them. This approach to costs is consistent with legislation under which the ADT was required to act fairly and according to the substantial merits of the case and was not bound by rules of evidence or court practice.(Equal Opportunity Act 1995 ss141 and 142; now see VCAT Act s98)

However, the Tribunal has a clear discretion as to the award of costs and, if the party seeking costs can point to circumstances (apart from the fact of having won) to justify the award, it may award them. Examples of situations where the Tribunal has awarded costs include where a party has instituted or pursued a claim in which he or she could not genuinely have believed or which on no reasonable belief could have had any prospect of success, or where a party has continued to maintain a claim which was clearly untenable. The Tribunal has also awarded costs in situations where a party's conduct in relation to proceedings has been unreasonable.

9 In George v Victoria Legal Aid [2000] VCAT 2014 Senior Member Lyons had this to say -

....section 109(1) states the normal rule of this jurisdiction, that each party is bear its own costs. And then section 109(3) sets out circumstances where the Tribunal may decide to depart from the normal rule. The policy underlying the normal rule is straightforward; an individual wishing to bring a complaint of discrimination, sexual harassment, and/or victimisation under the Equal Opportunity Act to the Tribunal for a hearing should not be deterred from doing so by the prospect of having to bear the other side's costs if the individual loses.

10 In Prolisko v Arthur Knight & Anor (VCAT A475/2004) a number of similar cases were put to me in support of the contention that the unsuccessful complainant in that case should not have to bear any burden of costs. In response I set out what I believe is still a correct proposition. At para 9 I stated -

What is clear [from the cases cited] is that at no stage in his reasons did Senior Member Lyons indicate that applicants should expect, as a matter of course, that they would never be at a risk for costs. Litigants should give consideration when embarking upon litigation that there may be situations where they may well be at risk for costs if they are unsuccessful in their claim. And the presence of section 109(3) in the legislation is a clear pointer to that responsibility. In like vein it is not contended that respondents will always have to bear the burden of their costs irrespective of whether they win or lose.

11 The clear conciliation focus of the legislation (referred to in Tanglemayer) is exemplified in the steps to be taken before any litigant comes to a full hearing at VCAT. First the matter is given full consideration at the Equal Opportunity Commission following the filing of a complaint and, where appropriate, conciliation occurs. Second, when conciliation has failed and the matter comes to this Tribunal, inevitably mediation is ordered and a further attempt is made to resolve the matter. Thus there is ample opportunity for the parties to assess the strengths or otherwise or their case and to achieve appropriate resolution.

12 Mr Harding submitted that, in my reasons for decision, the sexual harassment matters only occupied a few paragraphs and thus those matters occupied less of the Tribunal's time. That is of course correct but that does not mean that the respondents did not have to prepare their case and prepare their witnesses in response to the particular set out by the complainant. He submitted that there was no finding as a matter of law that the case was hopeless and he referred me to a decision of Deputy President Horsfall in Cooper v Boorondara CC [2001] VCAT 2429 in which he stated that the mere fact that a litigant has a weak case, does not mean it is untenable.(I did not find that case useful having regard to the practices of the planning jurisdiction in which that case was heard). He made submissions about whether, viewed prospectively, the complainant's case was untenable and referred me to correspondence received from the Equal Opportunity Commission. In relation to the victimisation case, the Commission rejected it due to a lack of substance, not because the claim was frivolous or vexatious. Mr Harding reminded me that throughout the case, he had emphasised that the victimisation case was one of inference. Generally he delivered an impassioned plea on behalf of his client and urged me not to award any costs against her.

13 He submitted that I should have no regard to the letter of offer received by the complainant stating that it was not in true "Calderbank" form and that, in any event, the complainant was entitled to rely at that point on her own version of events.

14 I am grateful for the authorities to which I was referred by all counsel but overall I am brought back to the opening words of section 109(3) - what is fair in the circumstances of this case? I am not persuaded for instance that the complainant unnecessarily prolonged her case and I am not persuaded her case was vexatious although there is certainly some merit to Mr Harris' suggestion that the re-agitation of the second respondent's personal tribulations was of no assistance to the Tribunal. It certainly would not have improved his reputation.

15 This case was hotly contested and vigorously fought; solicitors and specialist counsel were employed by all three protagonists. The respondents had to proof and call a number of witnesses to rebut the complainant's case against them. They were put to considerable expense and inconvenience and were subjected to rigorous and sometimes embarrassing cross-examination.. This is especially the case for the second respondent who had to answer the claims of sexual harassment, based on what can only be described as a flimsy premise but a premise with which the complainant nonetheless persisted.

16 The first respondent is not a large well-funded public corporation. It marketed and administered an apprenticeship support service funded by the Commonwealth government and as I recall the evidence of its chief executive, it has since lost that funding. The precise financial resources of the parties are not known to the Tribunal but in any event, they are not determinative.

17 It should be emphasised that the complainant failed in her case entirely. She sought damages for pain and suffering, medical expenses, loss of employment opportunities and loss of income. She achieved none of these. As a matter of fairness it is my view she should contribute to the costs incurred by the respondents. Similarly as a matter of fairness, I am not persuaded that I should accede to Mr Harris' request for indemnity costs. To do so would be punitive in the extreme and that is certainly not the aim of this Tribunal and not the focus of the legislation. What is sought is to achieve some balance between the competing merits of accessibility and fairness to all parties.

18 I was not addressed as to the merits of the competing County Court scales although both counsel sought costs under different scales. I am not persuaded that this case was such as to merit an award of costs pursuant to Scale D - there were no novel points of law and no difficult evidentiary problems. I consider the appropriate scale to be Scale C particularly having regard to the remedy sought.

19 I do not propose to take the offer made in May 2006 into account but I do propose that the award of costs should date from the time of the unsuccessful VCAT mediation - that is, from 2 May 2006.

• The complainant is ordered to pay 50 per centum of the costs and disbursements of each of the respondents calculated from 2 May 2006 to date on County Court Scale C to be taxed in default of agreement.

• Otherwise the complaint is dismissed.