Mr Terry Montebello of Maddock Lonie and Chisholm appeared for the applicant, Council.

Mr G. Peake, Counsel, instructed by Messrs Secombs, appeared for the respondents.

1. On 20 April 2000 following a hearing on 23 and 24 March of that year I published reasons for dismissing an enforcement order application made by the City of Hobsons Bay as Responsible Authority under the Hobosns Bay Planning Scheme for an order seeking to restrain Mr Haouli and Ms El-Hawli (a husband and wife) from operating a property at 45-47 Mason Street, Newport, as a petrol station. The circumstances surrounding the application and my reasons for dismissing it appear in the determination which I published on 20 April. It is unnecessary therefore, to repeat any of these matters.

2. As a consequence of their victory Mr Haouli and Ms El-Hawli have sought an order that the applicant, Responsible Authority, pay their costs of the proceeding.

Submissions on Behalf of Mr Haouli and Ms Halili

3. Through their Counsel, Mr G. Peake, Mr Haouli and Ms El-Hawli relied upon Section 109 of the Victorian Civil and Administrative Tribunal Act 1998 and Section 150(4) of the Planning and Environment Act 1987.

4. Mr Peake referred me to the chronology of events and a selection of relevant correspondence submitting that I should draw the following conclusions:

(a) The Council "was prompted to dispute the respondents' existing use rights by a complaint from an adjoining occupier that has some connection with the Council". [The "adjoining occupier" was a community organisation, Outlets Co-operative Limited which amongst other things operates a child care centre on premises adjoining the petrol station. It emerged in evidence that the Co-operative receives funding from the Council.]

(b) The Council pursued the matter "on the basis that it had no obligation to make reasonable enquiries so as to make an informed judgment about the existence or otherwise of the existing use rights".

(c) Council regarded it "as being solely the responsibility of the respondent to prove to the [Council's] satisfaction that the existing use of the land had continued".

(d) Council felt it was entitled to bring the enforcement proceedings "based on its view that the respondents had not satisfied it".

(e) Council had thereby adopted a flawed approach, not giving due weight to the valuable property right constituted by a permit which had been in force for almost 40 years cf Woollahra Municipal Council v Banool Developments Pty Ltd [1973] HCA 65; (1973) 129 CLR 138.

(f) Council placed the respondents "in the invidious position of having to defend that permit against the concerted efforts of the [Council] to challenge what is on the face of it a lawful use of land, permitted by a valid planning permit".

(g) Council should have conducted proper enquiries before commencing proceedings. Instead "it is apparent that, in this case, the [Council] had not undertaken prudent independent investigation and had simply relied upon a process of allegation, requiring proof of the negative by the property owner".

5. Mr Peake submitted that Council's contentions were utterly baseless and therefore vexatious or frivolous within the meaning of Section 150(4) of the Planning and Environment Act or else the proceedings were brought to achieve "a purpose unrelated to proper town planning issues, being to assist a person (Outlets Co-operatives) in its civil dispute with the respondent". Mr Peake referred to correspondence addressed to the Co-operative in which the respondents through their solicitors had sought to prevent persons associated with the child minding centre from parking cars on a right of way which formed part of the respondents' land. Council, in a letter over the signature of its Chief Executive Officer, Mr Ken McNamara [so far as I am aware not related to me] had intervened stating that Council was supportive of the Co-operative and urging the respondents to make proper arrangements to enable the right of way to be used as a "drop-off" area for the child minding centre.

6. So far as Section 109 of the Victorian Civil and Administrative Tribunal Act 1998 was concerned Mr Peake submitted it was wrong to regard sub-section (1) which states, inter alia "Each party is to bear their own costs in the proceedings" as establishing a presumption that costs lie where they fall. The sub-section is expressed to be subject to other provisions in the same Division and to view it in the absence of sub-sections (2) and (3) of Section 109 which do provide for the payment of costs when it is fair to do so, would be to take an unbalanced view of the section as a whole. Rather in Mr Peake's submission "sub-section (1) operates as the default position, unless the Tribunal exercises its discretion under sub-section (2)". He said that sub-section (3) sets out the circumstances in which the Tribunal may exercise a discretion to order costs subject to "the primary qualification ... that the Tribunal must be satisfied that it is fair to order a party to pay the costs of the other party. It then sets out the matters to which the Tribunal must have regard when deciding whether it was satisfied that it is fair to make such an order."

7. He submitted that when in accordance with Section 109(3)(c) one considers the relevant strength of the claims made by the parties, the Council's case was characterised by "an appalling lack of evidence on its part" except for "the evidence fully, fairly and frankly provided to it by the respondents". He said the definition of the alleged existing use did not require petrol sales to the public. The leading Victorian authority Harrington v Nunawading City Council [1985] VicRp 64; [1985] VR 641 "directly held that the mere keeping of premises in a suitable state to recommence operations, with an intention to recommence those operations, was sufficient to preserve existing use rights".

8. He said that the Council "had failed to carry out proper, prudent and responsible investigations to establish the strength of its assertion".

9. He said that Council had a duty to act fairly between all stakeholders and failed to do so, taking a partisan position "based on an unsubstantiated allegation from a party that has at least some relationship with the Council" [that is the Co-operative] by seeking orders that would have "a devastating effect on the owner of the land" and by requiring the owner to bear the burden of proof to justify its continued use, he said the actions of the Council were "high handed and irresponsible". This was not a case of a party developing or using land in flagrant violation of a planning scheme or without any permit at all.

10. As a result of all these things the respondents had to expend a very large amount of money and in Mr Peake's submission they should be restored to the situation which they would have been in had they not been so unreasonably traduced.

11. Mr Peake sought payment of $22,751.46 said to be the respondents' costs of the proceeding calculated as between solicitor and client upon County Court Scale "D" by a costs consultant together with a further some of $3,000 being the costs of the present application. Alternatively, the costs should be ordered on some appropriate scale.

12. Mr Peake relied upon Shire of Daylesford and Glenlyon v Watson (1994) 12 AATR 362 and Lowther Hall Anglican Grammar School v Moonee Valley City Council (1999) 1 VPR 140.

13. Mr Montebello on behalf of the Council submitted that Section 109(1) of the Victorian Civil and Administrative Tribunal Act 1998 did create a presumption that costs would lie where they fall.

14. Mr Montebello submitted that there had been no criticism of the manner in which Council had conducted the proceedings or procedural directions had been complied with. He noted that Mr Peake had made some comment upon Ms McKenny-Campbell (an officer of Outlets Co-operative) giving evidence without a statement of her evidence having been exchanged in advance as required by the directions made. He said that Council was unaware that Ms McKenny-Campbell would attend the hearing and the decision to call her as a witness was made at a late stage.

15. Mr Montebello conceded that there was a greater willingness on the part of the Tribunal and its predecessors to order the payment of costs in enforcement proceedings. He continued:

"However, the Responsible Authority submits that this tendency ought not to be accorded the status of a presumption, and that the matters set out in Section 109 still need to be established by the party seeking costs."

16. The mere fact that Council had been unsuccessful in its application could not without more, lead to a departure from the usual rule that the costs lie where they fall.

17. Mr Montebello submitted that the Council's case was tenable both in fact and law. Council had an obligation to administer and enforce its planing scheme pursuant to Section 14 of the Planning and Environment Act 1987 but sought alternative remedies before commencing the enforcement proceedings, inviting the present respondents to seek declaratory relief which they declined to do so. He noted that a costs order could be made under Section 109 only if the Tribunal were satisfied that it was fair to do so. He said that the circumstances surrounding the petrol station raised genuine and difficult issues of fact and law in the application of the Planning Scheme. It was reasonable and proper in his submission for the Council as Responsible Authority to seek a Tribunal determination. It would be wrong for the Tribunal by heavy handed costs orders in circumstances such as these to deter councils from taking this sort of responsible action.

18. He referred to and relied upon certain remarks of Mrs Bruce, Deputy President in Lord Haven Pty Ltd v City of Greater Dandenong (1998/35419 1998/68286 paragraph 58 to 64 and 68 to 74.

19. Since so much has been said about Section 109 of the Victorian Civil and Administrative Tribunal Act 1998 I set it out in full below:

(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 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 in fact or law;

(e) any other matter the Tribunal considers relevant.

(4) If the Tribunal considers that the representative of a party, rather than the party, is responsible for conduct described in sub-section (3)(a) or (b), the Tribunal may order that the representative in his or her own capacity compensate another party for any costs incurred unnecessarily.

(5) Before making an order under sub-section (4), the Tribunal must give the representative a reasonable opportunity to be heard.

(6) If the Tribunal makes an order for costs before the end of a proceeding, the Tribunal may require that the order be complied with before it continues with the proceeding."

20. At the outset I reject the submission variously put by Mr Peake that there is no basis in fact or law for the making of this enforcement application, that there was an appalling lack of evidence or that the application was frivolous or vexatious. My reasons extend over 23 pages and 51 paragraphs. The disposition of the matter was neither easy nor swift. Council relied upon a number of interstate authorities which in the end I concluded did not represent the law in Victoria; nevertheless the effect of Harrington's case to which Mr Peake made reference is not quite as clear and easy to discern as his submission would suggest.

21. Council was certainly set in motion as a result of the complaints made by the next door Co-operative. It is wrong to suggest however, as was implicit in some of Mr Peake's submissions that it had nothing to go on save for the allegations made by Ms McKenny-Campbell on behalf of the Co-operative. The primary facts were ultimately not in dispute between the parties. The material furnished by the respondents is no less proper evidence for Council to act upon by reason of its source. Given that the use of a piece of land is peculiarly, if not solely, within the knowledge of the current owner and his or her predecessors in title, it was reasonable for Council to call upon the respondents to furnish any material that they had available to them. It was in the interests of the respondents to gather material which supported their case. Given that the respondents at a fairly early stage had solicitors acting for them and that a meeting was held with those solicitors before the commencement of the enforcement proceedings, Council ought not to be criticised for failing to conduct an interview with one of the respondents.

22. What I have said already indicates that the application cannot be regarded as frivolous and vexatious and therefore there is no ground for relying upon Section 150(4) of the Planning and Environment Act 1987.

23. A lot of the cross-examination at the principal hearing and a number of Mr Peake's submissions were aimed at suggesting an unfair partiality between these respondents and the Co-operative. It is notorious that Council enforcement proceedings are almost invariably set in motion as a result of complaints from neighbours. There is nothing sinister in that. The propriety or otherwise of Council's Chief Executive's intervention in the right of way dispute is not for me to determine. The enforcement proceedings were launched only after Council had taken legal advice and as Mr Montebello informed me, had its files reviewed by its solicitors. Accordingly I also reject the suggestion that these proceedings were launched without proper preliminary investigation.

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".

25. Whilst I have rejected the various attacks upon the conduct of the Council, I am persuaded nevertheless that this is a proper case for a costs order to be made. The respondents were faced with the loss of a substantial investment which they had made:

26. If its use as a petrol station was prohibited, an alternative use was not obvious and the buildings and installations might have to be demolished. Mr Peake was correct in characterising the potential effects of the success of the enforcement proceedings upon the respondents as "devastating". In the event they had to defend the proceedings and call a substantial number of witnesses and do a substantial amount of work to establish with precision what the circumstances were over the years and precisely what had and had not been done on the site. Resistance to the proceedings was a matter of commercial necessity for the respondents. They were in my view, 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.

27. Even although Mr Montebello observed that Mr Peake placed no reliance on Section 109(3)(d) of the Victorian Civil and Administrative Tribunal Act the special approach taken to enforcement proceedings was implicit in the entire case made by Mr Peake and was conceded by Mr Montebello.

28. In my view, the circumstances described justify a departure from the general rule and an award of costs in favour of the successful respondents.

29. Nevertheless, I am unpersuaded that it would be proper to order costs on anything other than an ordinary party party basis. In Colgate Palmolive v Cussons Pty Ltd [1993] FCA 536; (1993) 118 ALR 248 Sheppard J. of the Federal Court of Australia considered this and cognate issues. He concluded that the ordinary basis upon which a Court orders costs is the so called party party basis and departure from that basis of fixing costs should only occur when there is some special or unusual feature in the case to justify the Court departing from the ordinary practice. For reasons already given I am unpersuaded that any of the matters urged by Mr Peake justifies a departure from the basis of fixing costs on a party party basis.

30. Particularly in planning proceedings there has been a tendency when costs have been awarded for the Members themselves to fix a sum certain in costs. In my view this approach has certain dangers and should be adopted only with some reluctance. It may be that there are some Members who do have expertise in the assessment of legal costs. Generally one would have thought that members of the Planning List do not have that expertise. Merely to order payment of the amount which a party's legal advisers are charging him, represents a payment of costs "on a full indemnity basis" a most unusual award as between parties to litigation and one which is made only in exceptional circumstances. See the judgment of Sheppard J. in the Colgate Palmolive case already referred to. Generally the safer course will be to refer the matters to taxation pursuant to Section 111 of the Victorian Civil and Administrative Tribunal Act 1998. The Principal Registrar or his delegate will act as taxing officer and may be expected to have the relevant expertise in the taxation of costs and will have placed before him or her a bill in proper taxable form.

31. For reasons which I gave in Maltall and Illiopolous v Bevendale (No. 2) (1998) VConvR 58-528 the scales to be applied in the Tribunal should generally be the County Court Scales.

32. Mr Montebello submitted that if a County Court Scale were adopted it should be Scale "B" for a small to medium dispute. Mr Peake however submitted that the proper way to apply the scales was to consider the value of what was in dispute between the parties. He submitted that County Court Scale "D" was the appropriate one because property to the value of at least $50,000 was in dispute. The subject matter of the dispute was a site purchased for $180,000. The circumstances which I have described as attending success in the enforcement order, suggest to me that there is at least $50,000 at stake for the respondents. In my view therefore, the costs should be ordered in accordance with County Court Scale "D".