Macedon Ranges Shire Council v Romsey Hotel Pty Ltd & Anor

Court of Appeal (Vic)|2008-04-16|Before: WARREN CJ, MAXWELL P and OSBORN AJA

PRACTICE AND PROCEDURE - Appeal - Costs - Application for indemnity costs against successful appellant - Appeal occasioned by appellant's conduct of review proceeding before VCAT - Whether award of indemnity costs in respect of costs of appeal and/or VCAT proceeding - Whether grant of indemnity certificate under Appeal Costs Act 1998 (Vic) - Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 109, 148(7).

**1 On 19 March 2008, the Court allowed the Shire's appeal and set aside the decision of the Tribunal granting approval for the use of the Hotel's premises for gaming. Having heard submissions from the parties on costs, we reserved our decision.

2 The Shire initially sought an order that its costs of the appeal be paid by the Hotel on an indemnity basis. Reliance was placed on a Calderbank letter sent to the solicitors for the Hotel in October 2007, before the appeal was heard. In that letter, the Shire offered to settle the appeal on the following basis:**

The appeal to be allowed by consent with our client's costs to date to be paid by your client. These costs are to be agreed or, in default of agreement, be taxed. The matter to be remitted to the Victorian Civil and Administrative Tribunal for rehearing at the earliest available date.
Our client will pay your client's costs of the three hearing days at first instance before VCAT, that is, the costs of the hearing itself (being the only costs that could be said to be thrown away) not the costs of preparing for the hearing. These costs to be agreed or, in default of agreement, be taxed by the Registrar of VCAT on the Supreme Court scale.

3 The offer was rejected by the Hotel's solicitors, who advised that the Hotel would settle the appeal on the basis that the Shire withdrew its appeal and abided by the determination of the Tribunal, with both parties bearing their own costs of the appeal to that point. In a subsequent letter, the solicitors for the Hotel repeated advice they had previously given, that if the appeal proceeded they were instructed to seek full indemnity costs for:

the hearing of the application for leave to appeal on 30 March 2007;
the hearing of the appeal; and
any rehearing of the matter by the Tribunal, including the professional costs of any expert witnesses required at such rehearing.

**4 The starting-point, as the Court indicated to counsel for the Shire in argument, is that the entire appeal was occasioned by the Shire's decision not to place any reliance before the Tribunal on the evidence of community opposition which it had presented to the Commission, and on which the Commission had so heavily relied. It is true that the consequences of that decision could still have been averted if the Commission had participated in the hearing, or if the Tribunal itself had recognised the relevance of the issue or, indeed, if the representatives of the Hotel had pointed out to the Tribunal that the Shire's non-reliance on the material did not determine the question of relevance for the Tribunal. None of those things happened. But the fact remains that, had the Shire done as it would have been expected to do - that is, advance before the Tribunal its evidence and submissions about community opposition - it is almost certain that the appeal ground which we have upheld would never have arisen. The decision not to press that issue has never been explained and we can discern no rational basis for it.

5 When these matters were pointed out to counsel for the Shire, he sought instructions and then withdrew his client's application for costs. Counsel for the Hotel then made application for orders of the kind foreshadowed in the solicitors' correspondence, namely, an order that the Shire pay the Hotel's costs of the appeal and of the first hearing in the Tribunal, on an indemnity or solicitor-client basis. It was submitted that the exceptional course of awarding costs on an indemnity basis was justified because of the 'special circumstance' that the appeal had been occasioned by the Shire's deliberate decision, apparently based on an assessment of its own forensic advantage, not to pursue the issue of community opposition in the Tribunal. Counsel also foreshadowed that his client would seek a certificate under the Appeal Costs Act 1998.

6 Reference should be made to what was said by Maxwell P at the conclusion of the hearing of the Shire's application for leave to appeal. The Court having granted leave, his Honour said:**

I want to record, however, the submission advanced on behalf of the respondent to the application about the injustice constituted by his client, the respondent, being exposed to the risk of the decision being set aside by reference to a matter which the applicant, now the appellant, chose not to agitate before the Tribunal. That is a matter which we think will require consideration on the appeal and submissions on the appeal will need to deal with that matter specifically. That is to say, whether there is, as Mr Dreyfus has submitted, an injustice resulting from the sequence of events which has occurred and if so, what power the Court may have, by way of an order of costs or otherwise, to rectify that injustice in whole or part.

7 Counsel for the Hotel relied on a concession subsequently made by senior counsel for the Shire, during the course of the hearing of the appeal, that the Shire would pay the Hotel's costs thrown away on an indemnity basis. When pressed, senior counsel for the Shire acknowledged that the concession related to the costs of the three days of hearing before the Tribunal, and to so much of the preparation for the hearing as would have to be repeated before the rehearing.

8 In our view, the Shire should pay the Hotel's costs of the appeal, but only on a party-party basis. Although the appeal resulted from a deliberate decision by the Shire as to the conduct of its case before the Tribunal, there is no suggestion of impropriety or 'high-handed' or unmeritorious behaviour such as would warrant the Court showing its disapproval by an order for indemnity costs.[1]

**9 The usual rule in the Tribunal is that each party bears its own costs.[2] The Tribunal may order a party to pay all or part of the costs of another party, but only 'if satisfied that it is fair to do so'.[3]

10 No order for costs was sought or made at the conclusion of the proceedings in the Tribunal. As noted earlier, the Hotel now seeks an order from this Court that the Shire pay the Hotel's costs of that hearing, on the basis that those costs have been thrown away by reason of the Tribunal's error and the consequent need for a full rehearing. Counsel relies on the powers of the Court under s 148(7) of the VCAT Act, to make:**

an order that the Tribunal could have made in the proceeding; and
any other order the Court thinks appropriate.

**11 The Court has remitted the review proceeding to the Tribunal 'to be heard and decided again', in accordance with s 148(7)(c) of the VCAT Act. There will need to be a fresh hearing, but it is the same proceeding. It follows that the Tribunal would have power to make an order for costs in the proceeding with respect to the days of hearing before Morris J.

12 On balance, however, and in view of the Shire's concession earlier referred to, we think that it is appropriate for this Court to deal with those costs. Otherwise more time will be spent and expense incurred in dealing with the costs issue, separately from the rehearing of the merits.

13 In our view, the Shire should pay the Hotel's costs of the hearing before Morris J on an indemnity basis. That will include the costs of the days of hearing, together with the costs of preparation thrown away. Those costs are to be taxed if not agreed.**

**14 As the respondent to a successful appeal, the Hotel is entitled under s 4(1) of the Appeal Costs Act 1998 to apply for an indemnity certificate 'in respect of costs'. In view of the costs orders we have decided to make, however, we do not propose to grant a certificate to the Hotel.

15 The question of the costs of the rehearing will be a matter for the Tribunal to deal with in the ordinary course.**

[1] See, for example, PRCZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24 [2], [5] and [35]-[36].

Civil and Administrative Tribunal Act 1998

At a glance

Court

Decision date

Before

Source

Judgment (25 paragraphs)

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Legislation Cited (4)