7 The section does not deal specifically with the issue of scales of costs at all. The Tribunal does not have its own scales of costs, as the courts do, and there is no provision in s 109 or elsewhere in the statute dealing specifically with or distinguishing between concepts such as party/party costs, solicitor/client costs, solicitor own/client costs or costs on a full indemnity basis. Most of those concepts are dealt with in the existing rules which apply in the Supreme and County Courts and all of them have been given some application in the legal system over the years. The issue of scales therefore is at large for the Tribunal to determine.
8 The next point to note is that the starting point in any analysis in the Tribunal is that costs lie where they fall. Hence, in considering authorities in court, which deal with uplifted scales of costs, such as solicitor/client costs or costs on a full indemnity basis, one must note a significantly different context in court from the ones which apply in the Tribunal. In court, the general rule is that costs follow the event. A party that discontinues a proceeding will, as a matter of course be required, unless that party has negotiated a release from the liability, pay the costs of the defendant in the discontinued proceeding. Here, no such rules apply. We start from the proposition that costs lie where they fall.
9 I should also note the existence of s 112 of the VCAT Act which deals with settlement offers. Its framework and effect is substantially similar to that of Order 26 of the Rules of the Supreme and County Courts dealing with offers of compromise. However, there are material differences. The most important difference is that this section and those that follow it do not apply to proceedings in the Tribunal's review jurisdiction. Proceedings under the Transport Accident Act 1986 are an exception to the rule. The section does not therefore apply in the present proceeding.
10 The second point to note is that in a Court of Appeal proceeding the section deals with offers of settlement. It is not necessary for the section to operate and lead a party making a settlement offer to become entitled to costs on a higher scale than would otherwise be payable to show that the offer of settlement is not of a compromise. It is sufficient if it is an offer to terminate the proceeding [TAC v Coyle (2001) 3VR 589]. With that general context, I now turn to the submissions made in support of the applicants' application.
11 Mr Rozen did not contend that there had been any conduct in the proceedings by the respondent that unnecessarily disadvantaged his clients; a matter which is a ground for the award of costs under s 109(3)(a) of the VCAT Act. Nor did he suggest in accordance with paragraph (b) of the section that the Authority had been responsible for prolonging unreasonably the time taken to conclude the proceeding. He did, however, place reliance upon a consideration of the relative strengths of the claims made by each of the parties. He said that the ground upon which both applicants succeeded had been fully articulated in an internal review application made by the applicants to the respondent authority.
12 Those arguments which had been fully and properly articulated in the internal review proceeding had been pressed a second time before the Tribunal and had been accepted. He submitted that these were strong and fair arguments and they were put consistently and those factors in accordance with s 109(3)(c) should provide an important ground for exercising the Tribunal's discretion to make the orders which he sought. He also relied upon sub-paragraph (e) which entitles the Tribunal to consider any other matters that it considers relevant. In that respect, he relied upon two things. The first of those matters related to the internal review procedure adopted by the authority. In my principal reasons, I explained in some detail, the framework of the Occupational Health and Safety Act 2004 and the jurisdiction which it bestows upon the Tribunal. In broad terms, the Tribunal's jurisdiction may be invoked to review a determination by an inspector to issue a notice only after an internal review procedure under s 128 of the Act has been undertaken by the authority. The Authority and its review officer in these matters adopted the approach that it was not obliged to carry out a full merits review. Rather, its obligation was to conduct what might be described as an appeal procedure in the strict sense. That is, to consider whether there was material before the two inspectors who issued the relevant Prohibition Notices which were justified. The inspectors in issuing the notices and in making the necessary findings of fact as basis for those notices. I concluded in my determination that the full merits review was required under s 128 and in a recently published decision in the matter of A B Oxford [Victorian Workcover Authority v A B Oxford Cold Storage Pty Ltd 1 September 2006] the Court of Appeal reached a similar conclusion. Hence, said Mr Rozen, the applicants came to this Tribunal not only as review applicants with strong cases which ultimately prevailed but as review applicants who had been deprived of an important right to administrative review bestowed upon them by the statute but not afforded to them by virtue of the approach taken by the authority and its review officer.
13 Secondly, Mr Rozen drew my attention to a number of items of correspondence which had passed between the parties. There were letters expressed to be "without prejudice except as to costs" on 5 July, 28 July and 31 July 2006, from solicitors acting for the applicants, effectively inviting the Authority to consent to the prohibition notices being set aside.
14 The hearing in the Tribunal commenced on 16 August and a further letter was sent to the same effect but, in this case, specifically stating that if the Authority consented to the notices being set aside each party would bear its own costs. None of those offers was accepted and the letter stated that if the proposals were not accepted, these items of correspondence would be relied upon in support of an application for an award of costs on a full indemnity basis and in the events that have occurred, this is precisely what is being done.
15 Mr Rozen said that these matters should be seen in the context of an independent statutory power vested in the Authority under what is I believe s 114 of the statute to cancel or vary prohibition notices on its own motion independently of any internal review procedure or any proceedings in the Tribunal. Hence as, said Mr Rozen, the Authority had ample statutory power to mould an arrangement which would have entailed acceptance of his clients' proposals and it would be wrong for effect not to be given to the letters expressed to be "without prejudice except as to costs" where the applicants had achieved the victory which these items of correspondence predicted that they would have.
16 Mr Rosen submitted that I should apply s 112 of the statute to some degree by analogy or as providing some form of guidance in approaching the Calderbank letter issue. Mr Rozen also submitted that it would be inappropriate to disallow any of the costs which were specifically the subject of a proposal for disallowance by Mr Pizer who appeared for the Authority. He said that with regard to the proposal that these matters not be heard together, the contentions put by the applicants even although they did not prevail were not unreasonable. Those contentions were, he said, that there were separate considerations relative to the prohibition notices addressed to the two applicants and that hearing the matters together would tend to blur the distinctions. Moreover, he said it was not customary for particular points which were not met with success to be singled out and removed from a costs order in favour of a successful litigant. There were exceptional cases he said that where such a thing might be done where an issue was discrete but the matters relied upon by the respondent, according to Mr Rozen, were not sufficiently distinct for it to be made the subject of a separate exclusion. It would, he said, be practically difficult for a taxing officer to disentangle the costs incurred with respect to one issue from those costs incurred with regard to the merits of the proceeding as a whole. He submitted that this was an important proceeding potentially and one which could be regarded as a test case and so it was reasonable for his clients to retain two counsel, one of whom was a senior counsel well known in the occupation of health and safety jurisdiction.
17 Mr Pizer's submission, on behalf of the Authority, commenced by an observation that generally the various matters referred to in s 109(3) as justifying the award of costs by the Tribunal did not apply to the present proceeding. He said that there was no conduct of the proceeding which unnecessarily disadvantaged another party (paragraph (a)) or an unreasonable prolongation of the proceeding (paragraph (b)). Mr Pizer's submissions, I think, accorded with the concessions made by Mr Rozen. He also said that there was no occasion for a consideration of the relative strengths of the claims made by each of the parties. It was not a matter of simply identifying that the contentions of one party had prevailed and those of the other party had been rejected for this occurs in every proceeding. What had to be shown was that there were contentions advanced which were clearly implausible or incredible and nothing of the sort had been shown here.
18 A consideration of the nature and complexity of the proceeding according to Mr Pizer indicated not that there should be an award of costs but rather reinforced the view that there should not be. He referred me to determinations of Judge Higgins and Mr Byard in the matters Mornington Peninsula Shire Council v Fox 24 October 2003 at para [16] and Greenwedge Protection Group Inc v Nillumbik SC [2005] VCAT 1116 at [30]. This latter decision was by Mr Byard Senior Member. In both those cases, the Tribunals as constituted said that the fact that matters were of novelty and potentially could be regarded as test cases could be judged as a ground for not making an award of costs because of the public importance of having these matters determined.
19 Mr Pizer said that the Occupational Health and Safety jurisdiction of the Tribunal was a new one and there was, I think, only one previous full scale determination of the Tribunal and there was a lack of authoritative guidance on a number of important matters including the issue which was argued before me as to what constituted an appropriate approach to the matter of internal review pursuant to s 128 of the Act.
20 Mr Pizer said that to employ the Calderbank [Calderbank v Calderbank [1976] Fam 93] doctrines in the context of the present proceedings would be to fly in the face of Parliament's clear intention where it excluded s 112 operation with regard to settlement offers from review proceedings such as this. To apply Calderbank here would, he submitted, be to make an "end run" around s 112 which he said manifested an intention to exclude these sorts of doctrines from the Tribunal's review jurisdiction. He said, in any event, the various Calderbank letters should be given very little weight, they amounted to no more than demands on the part of the applicants or the Authority to surrender. Moreover, care needed to be taken, he said, in simply adopting words and approaches he found in court to the Tribunal's situation. In court the rule is that costs follow the event, the discontinuing party pays the other party's costs. Neither of these propositions apply in the Tribunal and therefore much that is said in court on this subject is simply inapplicable.
21 He also referred me to a decision of Cavanough J in Thomopoulos v Faulks & Anor (No 2) [2006] VSC 286 where his Honour in determining what effect was to be given to a Calderbank style offer of settlement made shortly before a trial considered that the Trial Division was bound by an authoritivative determination of the Court of Appeal in Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) [2005] VSCA 298 which included a joint judgment of Warren CJ, Maxwell P and Harper AJA. In that judgment, the Court identified certain specific matters as being relative to the operation of Calderbank style letters; that is, letters of settlement expressed to be without prejudice except as to costs. This was not an exhaustive list but a highly relevant one, he submitted. The list was as follows :