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[2008] VSCA 58
appellant. Appeal allowed; Tribunal's approval for gaming set aside; matter remitted to VCAT for rehearing under s 148(7)(c). Costs: Shire to pay Hotel's costs of the appeal on a party-party basis; Shire to...
The Court of Appeal allowed the Shire's appeal, set aside VCAT's approval for gaming at the Hotel and sent the matter back for a fresh hearing. On costs the Court held the Shire must pay the Hotel's costs of the appeal on a normal party-party basis because, although the appeal flowed from the Shire's tactical decision at the Tribunal, there was no impropriety warranting indemnity costs. However, the Court ordered the Shire to pay the Hotel's costs of the earlier VCAT hearing on an indemnity basis because those costs were effectively thrown away by the Tribunal's error and will need to be repeated; preparation costs thrown away were included. The Court declined to grant an indemnity certificate under the Appeal Costs Act despite the costs orders made.
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1,739 words · generated 28/07/2026
This is an appeal from a VCAT decision approving the use of the Romsey Hotel premises for gaming. The Macedon Ranges Shire Council (the Shire) obtained leave to appeal to the Court of Appeal and succeeded on the substantive ground: the Tribunal's decision was set aside and the matter remitted to VCAT for rehearing (paras 1, 11). The principal post-judgment dispute concerned costs.
4 cited instruments linked from this judgment.
Chronology and core facts relevant to costs:
Two distinct cost questions were considered and resolved differently.
Costs of the appeal (party-party, not indemnity)
Costs of the Tribunal hearing (indemnity)
Finally, although the Hotel had statutory entitlement to apply for an indemnity certificate under the Appeal Costs Act (s 4(1)), the Court exercised its discretion not to grant such a certificate because it had already made precise costs orders (para 14).
Before this judgment:
After this judgment:
These applications sit within existing statutory frameworks (VCAT Act s 109; s 148(7); Appeal Costs Act s 4(1)), and the Court explicitly relied on those provisions (paras 9-11, 14).
"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..." (para 4).
"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." (para 8).
"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." (para 13).
"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." (para 14).
This judgment will be especially relevant where:
The text of the judgment itself does not record subsequent treatment by later courts. This judgment, however, is explicit about the principles applied: (a) the cautious approach to granting indemnity costs on appeal for tactical omissions (para 8), and (b) the availability of indemnity costs for thrown-away tribunal hearing costs when remitting for rehearing under s 148(7) (paras 10-13). Any authoritative statement about later judicial treatment would require examination of subsequent decisions citing this case; that material is not present in the judgment itself.
Threshold for indemnity costs where tactical decisions cause appeals: The Court refused indemnity for the appeal because there was no impropriety, but the judgment does not exhaustively define what degree of tactical error or neglect would, by itself, be treated as 'high-handed' or otherwise merit indemnity. Practitioners will need to assess case-by-case whether the appellant's conduct crosses from mere poor tactic to culpable conduct justifying indemnity (para 8).
Interaction with Calderbank offers: The Court considered the Calderbank offer and the Hotel's rejection, but declined to make indemnity orders for the appeal. The precise weight to be accorded to pre-appeal settlement offers in borderline cases where conduct caused an appeal remains context-dependent (paras 2-3, 5).
Scope of 'preparation costs thrown away': The Court ordered indemnity for preparation costs to be repeated. How widely 'preparation costs' will be interpreted (e.g. expert fees, consultant reports, documentary discovery expenses) may require further clarification in subsequent taxation or appellate decisions (para 13).
Use of s 148(7) to determine costs vs. leaving to tribunal: The Court chose to decide the indemnity costs of the thrown-away hearing itself, partly to avoid further expense and delay (para 12). The circumstances in which an appellate court will do so rather than remit the costs issue to the tribunal are not fully articulated and may depend on practical considerations and concessions made.
Conclusion: This decision balances the ordinary reluctance to award indemnity costs on appeal against the equitable consequence of indemnifying costs that have been wasted by reason of an error requiring rehearing. Practitioners should note the distinction between costs of the appeal (where indemnity remains exceptional) and costs of a thrown-away tribunal hearing (where indemnity may be appropriate and the appellate court can make that order on remit).
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:**
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:
**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]
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:**
**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].
[3] Section 109(2), (3).
Macedon Ranges Shire Council
Romsey Hotel Pty Ltd & Anor
Appeal allowed; Tribunal's approval for gaming set aside; matter remitted to VCAT for rehearing under s 148(7)(c). Costs: Shire to pay Hotel's costs of the appeal on a party-party basis; Shire to pay Hotel's costs of the Tribunal hearing before Morris J on an indemnity basis (including preparation costs thrown away), to be taxed if not agreed; no indemnity certificate under the Appeal Costs Act granted (paras 1, 8, 11-14).