1. Counsel for the Importer opposed any award of costs in favour of the Applicant on the basis that the Applicant had failed to accept a reasonable settlement offer prior to issuing the VCAT application. The Importer also opposed any order that the Importer pay the Supplier's costs on an indemnity basis on the ground that costs should only be awarded on that basis in exceptional circumstances.
2. Further, the Importer contended that the Tribunal did not have the power to make a costs order with respect to legal costs incurred prior to the initiation of the VCAT application. The Importer contended that the Tribunal's powers were limited to awarding costs "in the proceeding". That being so, it followed that the Tribunal could not award costs for expenses incurred before the proceeding was commenced.
3. The Importer did not seek a costs order in its favour.

1. The general position under the VCAT Act is that each party should bear their own costs.[1] Nevertheless, section 109(2) empowers the Tribunal to order a party to pay all, or a specified part, of the costs of another party in the proceeding. The Tribunal may only make such an order if it is fair to do so, having regard to the factors set out in s. 109(3) of the Act.
2. In Vero Insurance Ltd v Gombac Group Pty Ltd,[2] Gillard J set out the steps to be taken when considering an application for costs under section 109 of the VCAT Act. His Honour held that the Tribunal should approach the question on a step by step basis, as follows:-
   1. the prima facie rule is that each party should bear their own costs of the proceeding.
   2. the Tribunal may make an order awarding costs, being all or a specified part of costs, only if it is satisfied that it is fair to do so. That is a finding essential to making an order.
   3. in determining whether it is fair to do so, that is, to award costs, the Tribunal must have regard to the matters stated in s 109(3). The Tribunal must have regard to the specified matters in determining the question, and by reason of paragraph (e) the Tribunal may also take into account any other matter that it considers relevant to the question.
3. Pursuant to s. 111 of the VCAT Act, if the Tribunal makes a costs order, it may fix the amount itself or order that the costs be assessed, settled or taxed by the Costs Court. In the latter event, unless otherwise specified, the costs order will be assessed (taxed) on the standard basis, that is on a party/party basis pursuant to Rule 1.07 of the Victorian Civil and Administrative Tribunal Rules. This rule provides that the County Court Scale is to apply to the award of costs.
4. While costs are usually awarded on the standard (party/party) basis, costs on an indemnity basis can be ordered by the Tribunal as and when the justice of the case requires.[3]
5. Indemnity costs are all costs, including fees, charges, disbursements, expenses and remuneration, incurred by a party to the litigation in undertaking the proceedings, provided that they have not been unreasonably incurred or are not of an unreasonable amount.[4]

1. The Applicant contended that the following matters fell within the ambit of s. 109(3) of the VCAT Act and thereby warranted the making of a costs order:
   • delays caused by the conduct of the Respondents [s. 109(3)(b)]. There were two significant delays, firstly the Supplier brought an application in December 2017 challenging the Tribunal's jurisdiction to hear and determine the application. After directions were granted and the hearing delayed, the Supplier did not persist with this application. Correspondence was produced which indicated that the Supplier, had by this application, brought about a three month delay to the benefit of the Respondents. Secondly, the Importer applied to have the hearing date vacated so that it could arrange an expert to examine the motor car that was the subject of the proceeding. Having been granted this indulgence, and having thereby caused a significant delay, the Importer did not adduce any expert evidence at the final hearing.
   • failure to comply with directions [s. 109(3)(a)(i)]. The Importer failed to comply with orders and directions of the Tribunal in that it failed to serve and file Points of Defence to the Cross-Claim and to the Applicant's Amended Points of Claim. The Importer also failed, despite a direction, to file and serve an expert witness statement but did not inform the Applicant that it had decided not to lead this evidence until the hearing day. The basis of the Importer's defence to the Applicant's claim was not made known until the commencement of the hearing. The Importer's failure to comply with the Tribunal's directions was not explained.
   • the relative strengths of the claim and defence [s. 109(c)]. The application essentially turned on expert evidence which detailed the nature and magnitude of the contravention of the consumer guarantee under s. 54 of the ACL. The Importer had received advice from its own mechanics in November 2016 which indicated that the contravention might constitute a major failure.[5] This information was not disclosed to the Applicant. On having the motor car examined by an expert engineer, the Importer chose to lead no evidence about the "failures". The Importer made no admissions (save that it was an importer for the purposes of the ACL) and required the Applicant to be put to her proofs on all matters. In essence, the Importer did nothing to facilitate the efficient conduct of the proceeding, was delinquent and caused unnecessary expense and uncertainty by its failure to adhere to directions.
   • the nature and complexity of the application [s. 109(d)]. The quantum of the Applicant's claim was substantial. The application turned on expert evidence and points of law both of which demanded legal expertise. All parties considered it appropriate to engage lawyers.
   • the engagement of lawyers enabled the application and cross-claim to be determined very efficiently [s. 109(e)]. The applicant contended that this warranted the award of costs.
   • the parties conducted the action on the basis that costs would be recoverable [s. 109(e)]. This was stated in the pre-action correspondence and during the proceeding. The Importer acknowledged that it could not resist a costs order against it for costs thrown away by reason of the adjournment to have the motor car examined by an expert engineer.
2. The Applicant further contended that the delays caused by the Respondents, the relevant delinquency of the Importer in failing to comply with Tribunal directions and to make necessary admissions, and the Respondents' insistence that the Applicant be put to all her proofs whilst the they led no evidence, constituted a "luxury" for which the Respondents should be obliged to pay on an indemnity basis.[6]
3. In support of this contention, the Applicant put into evidence correspondence between the parties from 22 December 2016 to July 2017. This correspondence contained a series of settlement proposals and counter offers made by the Applicant and Importer.
4. By correspondence dated 28 June 2017, the Applicant proposed that her claim be settled on the following basis:
   • the Importer replace the defective car with a new 2017 Range Rover Autobiography, custom-built motor car, to be provided within four months;
   • the replacement motor car be covered by Range Rover's Corporate Servicing Program; and
   • a deed of settlement be executed by the parties.
5. The Applicant required the Importer to respond to this proposal within seven days. The solicitors for the Applicant went on to advise that,

"If the Offer is not accepted and VCAT makes orders more favourable than the terms of this offer, our client reserves its right to produce this letter in support of an application that your client pay our client's costs on an indemnity basis from the date of this offer in accordance with the principles in Calderbank v Calderbank [1975] 3 WLR 586 and Cutts v Head [1984] 1 Ch 219.

1. The Applicant sought to rely upon this Calderbank offer to recover costs from the Importer on an indemnity basis on the contention that this offer was "equivalent with the result ultimately achieved" by the Applicant.
2. Finally, in response to the assertion that the costs incurred prior to the issuing of the VCAT application were not recoverable because s. 109 of the VCAT Act only permitted the Tribunal to award costs "in the proceeding", the Applicant contended that:
   • the preposition "in" qualified the party in the proceeding rather than the costs of that party; and
   • if the legislature had intended the Tribunal to depart from the standard practice in civil litigation of allowing costs of and incidental to the proceeding, then that intention should have been expressly stated.

1. The Supplier contended that it was entitled to have its costs paid by the Importer on an indemnity basis on two grounds. Firstly, and primarily, pursuant to the statutory indemnity found in s. 274 of the Australian Consumer Law (Vic.) [ the ACL] and/or in the alternative, pursuant to s.109(2) & (3) of the VCAT Act on the basis that it was just to do so.
2. In relation to the alternative basis, the Supplier referred to the following matters relevant to the Tribunal's discretion under s. 109(2) of the VCAT Act.
   • the VCAT proceedings were only issued after a protracted period of dealings between the Applicant and the Importer. The Supplier was not involved in this process. Upon learning of the dispute, the Supplier was expressly directed by the Importer not to get involved because the Importer would deal with it.[7]
   • at no point in the litigation, did the Importer contest the Supplier's entitlement to be indemnified under s. 274 of the ACL. This indemnity extended to the Supplier's costs.
   • despite orders of the Tribunal, the Importer failed to:
     • - serve and file Points of Defence to the Applicant's Points of Claim
     • - serve and file Points of Defence to the Supplier's Points of Cross-Claim; and
     • - submit an expert witness report, despite having sought an adjournment of the hearing to enable it to do so.
   • the Importer failed to respond to costs saving measures proposed by the Supplier on several occasions.[8]
3. In essence, the Supplier contended that the nature of the proceedings was such that the Importer stood as the Supplier's indemnifier and that it was reasonable to expect that the Importer would act accordingly by taking up the carriage of the defence. If the Importer had so acted, then the Supplier would have incurred little, if any, legal costs. Instead, the Importer acted so delinquently that the Supplier did not even know if the Importer would appear at the final hearing.

1. The Importer contended that:
   • the general rule that each party should bear their own costs applied; and
   • the indemnity under s.274 of the ACL did not apply to legal costs incurred by the Supplier. The indemnity only applied to costs if the Supplier was ordered to pay the costs of the Applicant; and, if the Importer was, nevertheless, ordered to indemnify the Supplier's costs, then -
   • it should not be liable to indemnify any of the Supplier's costs incurred with respect to the Supplier's application challenging VCAT's jurisdiction to hear and determine the application given that the Supplier had discontinued this application. That is to say, these costs were incurred unnecessarily.

1. The Importer again contended that the general rule set out in s. 109(1) of the VCAT Act should apply. Further, the Importer contended that there were countervailing considerations that required the Tribunal to refrain from exercising its discretion to award costs on any basis to the Applicant.
2. In regard to this latter aspect, the Importer referred to the pre-litigation settlement negotiations to assert that the Applicant had acted unreasonably by commencing the VCAT proceedings. The Importer pointed to letters sent by the Applicant's lawyers to the Importer's lawyers dated 14 & 15 March 2017 wherein she offered to settle her claim for the following:

1. a replacement car built to the same specifications as the defective motor car; and 2. payment of $100,000 in compensation; and

1. payment of all legal costs incurred in the matter.
2. The Importer's lawyers refused the offer and asserted that the $100,000 sought by way of compensation was grossly excessive and unreasonable.[9]
3. The Importer then pointed to the settlement negotiations which took place between May and June 2017. During this time, the parties came close to resolving the claim on the basis that the Importer provide a replacement motor car built to exactly the same specifications as the defective motor car, together with additional benefits which included an ex gratia payment of $5,000. The sticking point was the Applicant's claim for payment of all her legal costs which at that stage stood at about $20,000. The Importer was only prepared to pay a small amount towards the Applicant's legal costs on the basis that, if the Applicant had accepted the replacement motor car when first offered in March 2017, then all subsequent legal costs could have been avoided.[10]
4. Subsequently, the Importer offered the same terms plus payment of $5,000 towards the Applicant's legal costs. This was rejected by the Applicant. However, in July 2017, the Applicant proposed a revised settlement, namely, that the Importer would replace the defective motor car with a 2017 model built to the same specifications, together with an extended warranty. This proposal was subject to the Applicant and the Importer entering into a deed of settlement which contained "acceptable" ancillary provisions. Unfortunately, the parties could not agree on these ancillary terms.
5. The Importer did not contend that any of its offers of settlement fell into the category of Calderbank offers. Rather, the Importer sought to demonstrate that it had acted reasonably and had made reasonable, commercially based offers of settlement. In turn, the Importer contended that, although the Applicant had agreed to accept a new replacement motor car, the Applicant had acted unreasonably by insisting on minor ancillary terms of settlement. Given those matters, the Importer contended that discretionary considerations did not warrant the displacement of the prima facie rule that each party should bear their own costs.

1. I consider that there is considerable force in the Applicant's contention that it would be fair to make a costs order in this instance. The application involved very significant claims and cross-claims. The quantum of these claims exceeded $280,000. The claims were in turn based on technical legal points involving statutory guarantees, a statutory indemnity, property rights over expensive goods and common law contract issues and required expert evidence.
2. I note that the monetary value and the complexity of a proceeding are both factors which, in themselves, have justified the Tribunal granting a costs order. [11] These considerations are underlined by the fact that all parties in this proceeding deemed it necessary to engage legal practitioners - a fact which has also warranted the awarding of costs.[12] In my view, the Applicant could not have run a proceeding of this complexity without the benefit of legal expertise.
3. I also accept that, because the parties were legally represented, "each of their arguments were efficiently and reasonably advanced" a matter which has also inclined the Tribunal to allow costs.[13]
4. That being said, the actions of the Respondents did, nevertheless, delay and unnecessarily add to the costs of the Applicant. The Supplier applied to challenge the Tribunal's jurisdiction to determine the Applicant's claim. This application was eventually discontinued without explanation. Similarly, the Importer delayed the ultimate hearing for the purpose of obtaining an expert report but did not adduce any such evidence at the hearing.
5. I consider that this conduct did unnecessarily disadvantage the Applicant through the delays and expenses, including the costs thrown away on the adjournments, and through the uncertainty occasioned by the Importer's failure to comply with directions. Such unnecessary disadvantage need not be malicious or for that matter "very serious" to warrant an award of costs.[14]
6. This leads on to the next element to be considered, the respective strengths of the competing claims. This statutory phrase includes claims made in support of the application and in support of its the defence.[15] On that point, I note that the Applicant relied upon expert evidence to establish that the contravention of s. 54 of the ACL amounted to a major failure and she was, therefore, entitled to a refund of the purchase price, together with compensation for consequential loss. The Respondents did not contradict that evidence. The Supplier had no expert evidence at all and, while the Importer had received a report from an independent expert, it did not adduce that report into evidence.
7. There remained another defence. The Supplier initially contended that it did not supply the subject motor car to the Applicant but to another dealer which in turn on-supplied the car to the Applicant. The Importer also sought to rely upon this defence but in doing so, failed to take any active steps to gather evidence through the interlocutory process. This defence was maintained by the Importer at the hearing and was not "bereft of merit".[16] However, I note that the strength of this defence was such that, prior to the hearing, the Supplier abandoned it and admitted that the supply contract had in fact been made between it and the Applicant. I also note that the supply contract expressly identified the Applicant as the purchaser of the motor car.
8. Having regard to these matters, I find that there was a substantial disparity between the strength of the Applicant's claim and the weakness of the Respondents' claims. Notably, the Applicant won entirely and the Respondents lost entirely. I consider that this disparity is sufficient to support a costs award in favour of the Applicant.
9. There remains one fundamental consideration with respect to the "fairness" principle imposed by s. 109(2) of the VCAT Act, and that is the fact that the failure to grant a costs order would substantially diminish the fruits of the Applicant's victory.[17] The Applicant's solicitor/client costs stand in the order of $138,000. The refund and compensation orders made in the applicant's favour total $283,191. Accordingly, if the applicant does not receive any additional allowance for legal costs, the value of her award will be substantially diminished. I consider that such an outcome would be unfair, particularly, as all parties to this proceeding deemed it appropriate, if not essential, to be legally represented.
10. There are also strong policy reasons to award costs in these circumstances, particularly as the Applicant rightly pointed out that s. 188 of the Australian Consumer Law and Fair Trading Act (2012) [the ACL&FTA], renders VCAT the proper jurisdiction for consumer and trader disputes. If costs are not awarded to successful applicants in these large and complex consumer/trader disputes (where legal assistance is vital), then consumers will be discouraged from asserting their rightful claims before the Tribunal while traders may acquire an underserved advantage in dealing with such claims. Access to justice in a practical sense is always a proper consideration for the Tribunal.[18]
11. Furthermore, I do not accept the Importer's contention that the history of the pre-litigation negotiations disclosed that the Applicant had acted unreasonably and was, therefore, disqualified from benefitting from a costs order.
12. I find that the arguments employed by the Importer cut both ways. In any event, the Applicant was under no obligation to settle her claim by accepting a new motor car of the same description as the defective car, with or without any ancillary benefits. Indeed the Applicant was under no obligation to enter into any arrangement that the Importer might deem commercially expedient or reasonable. This is particularly so in relation to a major failure under s. 54 of the ACL. In such circumstances, the election to return the defective goods and seek a full refund resides with the consumer. The Supplier or Importer cannot elect to refuse a full refund by repairing or replacing the defective goods.[19]
13. The pre-litigation history shows that the parties made considerable attempts to resolve this dispute. When settlement was not achieved, the Applicant commenced proceedings to assert her rights under the ACL. In doing so, she was wholly successful. I cannot accept that the successful assertion of one's legal entitlements could ever be regarded as unreasonable conduct.
14. For the reasons set out in paragraphs 34 to 46 (inclusive) above, I find that costs should be awarded to the Applicant in this instance and that it is fair to do so having regard to the relevant considerations under s. 109(3) of the VCAT Act.
15. I will now consider the extent of those costs.

1. I consider that there is substance in the Importer's contention that the Tribunal may only award costs "in the proceeding". The Importer contended that this meant that the Applicant could not recover any expenses incurred prior to the initiation of the proceeding.
2. The Applicant countered by making two submissions. Firstly, that if the legislature had intended the Tribunal to depart from the standard practice in civil litigation of allowing "costs of and incidental to the proceeding", then that intention should have been expressly stated. To that contention, I note that VCAT has no inherent jurisdiction or power to award costs.[20] Any such power must be found in the VCAT Act or in the relevant enabling enactment (in this case the ACL&FTA and the ACL).[21]
3. I note that the neither the VCAT Act nor the enabling Acts expressly grant the Tribunal the power to award costs of and incidental to the proceeding. This is in marked contrast to the other civil jurisdictions.[22] I find that I cannot imply the words "of and incidental" into s. 109(2) of the VCAT Act to bring that provision into line with other civil jurisdictions.
4. The Applicant further contended that the Tribunal's discretion to award costs was wide and was not limited to costs "in the proceeding" because, under sub-section 109(2) the preposition "in" referred back to the word "party" rather than to the word "proceeding". Accordingly, the Applicant contended that subsection 109(2) should be read as permitting the Tribunal to award all or a specified part of the costs (including pre-commencement costs) of a party in a proceeding.
5. I acknowledge that, read in isolation, there is some ambiguity in this phrase. However, the primary object of statutory construction is to construe a provision so that it is consistent with the language and purpose of all the provisions of the statute.[23] In that regard, I note that the surrounding provisions refer to costs "in the proceeding". This is expressly stated in subsection 109(1). In sub-section 109(3), I note that all the relevant matters for the exercise of the Tribunal's discretion to award costs are "case-connected", that is to say, with the exception of s. 109(3)(e), the relevant considerations are limited to the case as initiated and run in the Tribunal.
6. For these reasons, I find that the power of the Tribunal is limited by the words of s. 109 of the VCAT Act such that it may only order a party to pay all, or a specified part, of the costs of another party which have been incurred by that other party "in a proceeding".
7. This leaves open the question of whether pre-commencement costs may be considered costs in a proceeding.
8. The term "proceeding" is defined under s. 3 of the VCAT Act to mean a proceeding in the Tribunal, including various matters such as an inquiry conducted by the Tribunal, a compulsory conference under s. 83 and a mediation under s.88 of the VCAT Act.
9. The statutory definition was considered by the Victorian Court of Appeal in Lillas & Loel Lawyers Pty Ltd v Celona [24] where Priest JA said, "a proceeding is an action or matter or some vehicle by which the jurisdiction of [the Tribunal] is invoked, commenced by an application or other initiating process."
10. This definition implies that costs in a proceeding will be those expenses reasonably incurred from the initiation of the application to the conclusion of all hearings before the Tribunal. That has been the view taken in many Tribunal decisions.[25]
11. I accept that this view may well be correct as a general proposition. I note however, that the Supreme Court has not accepted this general rule as conclusive but has expressly left open the question as to whether the expression "in the proceeding" could extend to acts undertaken by the parties to the proceeding before the initiation of the application.[26]
12. Further, the construction of the term "costs in a proceeding", in the context of s.109, raises two additional considerations. Firstly, the definition of "proceeding" put forward in the _Celona c_ase[27] cannot be seen as exhaustive and, secondly, the word "in", when used as a preposition, can denote more than inclusion within temporal limits.
13. In relation to the first of these considerations, I note that the statutory context of s.109 of the VCAT Act makes it clear that a "proceeding" is more than a legal vehicle for the invocation of the Tribunal's jurisdiction. The statutory context discloses that a "proceeding" consists of "claims" of varying number and complexity. These claims may rest on a basis of "fact" and/or "law" and may range from being strong to being untenable. Implicitly, these claims go to the assertion or defence of legal rights or entitlements.
14. In relation to the second consideration, I note that the word "in" within its statutory context denotes inclusion within this abstract legal vehicle. As such, it denotes more than temporal inclusion, it denotes contextual inclusion as well. That being so, I do not consider that the words "costs in the proceeding" necessarily preclude all pre-commencement costs from an award of costs under s. 109(2) of the VCAT Act. The question is whether the pre-commencement costs fall within the contextual scope of the "proceeding".
15. The test to determine that issue is to ask whether the pre-commencement costs were necessary for the proper assertion or defence of the factual or legal claims that make up the subsequent proceeding. If so, they are costs in the proceeding.
16. This accords with reality. Legal costs are commonly and necessarily incurred prior to the actual date of the invocation of VCAT's jurisdiction. Basic searches such as business name and company searches must be undertaken prior to commencement. Very often experts will need to be engaged to advise on issues of liability and quantum before the proceeding can be formulated. This in turn requires legal expertise, for, amongst other considerations, the quantum of loss may turn on methods of rectification, mitigation and other legal factors, including whether compensation is to be determined pursuant to criteria under contract law or torts law. In any event, legal expertise is required not only in engaging the expert, but in briefing the expert, defining the scope of the expert's investigation and providing the expert with all the relevant (and admissible) material.
17. These pre-action investigations require legal skill and are necessary to the formulation and subsequent carriage of the proceeding. If the issues are complex counsel may be engaged to settle the letter of instruction, peruse the expert's report and advise on the prospects of the claim. Counsel may also be engaged to advise on the necessary evidence, the jurisdiction, the joinder of necessary parties and to draft Points of Claim. In the course of these pre-action investigations, lawyers may prepare witness affidavits for tendering in the subsequent proceeding.
18. In my view, it would be both unfair and illogical to exclude these items from an award of costs "in the proceeding" simply as a matter of timing. I, thus, conclude that the Applicant may recover costs for pre-action expenses that were necessarily incurred for the assertion of the Applicant's factual or legal claims in the proceeding.
19. Such costs would include those items with respect to the engagement of the expert mechanical engineer, perusal of his reports, arranging the inspections, advice on the relevant law and merits of the claim and formulation of the proceedings, the identification and collection of necessary evidence, such as the capture or downloading of the relevant website representations. These costs would also include disbursements such as company/business name searches and counsel's fees with respect to any of the above items. This list is indicative, it is not intended to be exhaustive. In my view, the recovery of any pre-commencement costs will depend upon the application of the test set out in paragraph 63 above.
20. I find that the items of expenditure in relation to the various offers and counter offers of settlement made prior to the commencement of the proceeding are not "costs in the proceeding". These negotiations sought a resolution of the claim on an alternative, commercial basis rather than through the "proceedings". The negotiations were not necessary for the assertion of any of the parties' rights or entitlements in the proceeding. They were made without admission. While parties should be encouraged to settle their disputes, there are already sufficient practical incentives for them to do so.

1. The Applicant contended that the Tribunal should exercise its discretion to award costs on an indemnity basis. The exercise of this discretion does not appear to be dictated by any fixed rationale, save that the exercise of the discretion requires a "sufficient or unusual feature"[28] of the proceeding or "some relevant delinquency" [29] by a party to the proceeding.
2. The Applicant submitted that the Tribunal should exercise this discretion on two bases. Firstly, because the Importer had rejected an offer of settlement expressed in a Calderbank letter and the ultimate result obtained on judgment was on par or less favourable for the Importer. Secondly, because both Respondents had:
   • demonstrated relevant delinquency in the conduct of the proceeding; and/or
   • accorded to themselves a luxury by insisting that the Applicant be put to all her proofs when they had no contradictory evidence.
3. As for the first limb of the Applicant's submission, I note that Calderbank offers may be effective in proceedings before the Tribunal.[30] There is an abundance of authority concerning these offers.
4. In MT Associates Pty Ltd v Aqua-Max Pty Ltd (No.3), [31] Gillard J adopted the following passage from the judgment of Rolfe J in Multicon Engineering Pty Ltd v Federal Airports Corporation:[32]

"...the evidence of a Calderbank letter, the rejection of the offer contained therein and the failure to obtain a result better than the offer, places the offeror in the position that a court should approach an application by that party for indemnity costs with a predisposition to holding that it is entitled to indemnity costs."

1. In Aljade and MKIC v OCBC,[33] the Supreme Court qualified this position by rejecting the notion of any predisposition to the award of indemnity costs. The Supreme Court held that, before a court can order costs on an indemnity basis, in consequence of the rejection of a Calderbank offer, the court must be satisfied that the rejection was unreasonable. The Court of Appeal in Hazeldene's Chicken Farm v The Victorian WorkCover Authority[34] approved that approach.
2. The onus of establishing that the rejection of the offer was unreasonable resides with the offeror.[35]
3. In this case, I am not persuaded that the ultimate judgment obtained by the Applicant was on par or worse than the Calderbank offer from the perspective of the offeree. The offer and the judgment were based on different premises. The judgment rested on the Applicant's lawful entitlement to obtain a full refund on the purchase price of goods in circumstances where the supply of the goods had contravened the statutory guarantee under s. 54 of the ACL by suffering a "major failure" and where the consumer had exercised her election to reject the goods.
4. The Calderbank offer was based, not on a refund or other form of monetary compensation, but upon the provision of a replacement motor car which was brand new but otherwise of the same type as the defective car. I have no evidence before me to determine the value of the offer in terms that are relatable to monetary compensation. Given these matters, I cannot be satisfied that the Calderbank offer constituted a better result than the judgment, from the offeree's perspective.
5. As a consequence of the matters set out in paragraphs 75 and 76 above, I am not persuaded that the Importer's failure to accept the Calderbank offer was imprudent or unreasonable.
6. The second limb of the Applicant's submission has more substance. The factors relied upon by the Applicant in support of this limb are set out in paragraphs 17 and 18 above. I will not repeat them here, save to note that there was a marked contrast between the activity level of the Importer prior to the commencement of the proceeding and after its joinder to the proceeding.
7. Prior to the VCAT application, the Importer took full carriage of the defence of the Applicant's claim, assuring the Supplier that it need do nothing as the Importer would deal with the claim. During this time, the Importer negotiated extensively with the Applicant. The Importer assumed this role because it was the indemnifier, that is, it accepted that any and all liability, including liability for costs ended with it.
8. Nevertheless, after being notified of the application, the Importer did little. It consented to its joinder, but took only few and somewhat belated steps in the proceeding. It made no offers (other than at the commencement of the hearing), ignored correspondence suggesting cost savings measures, belatedly sought to have the motor car examined by an independent engineer and failed to comply with Tribunal directions.
9. It may be contended that, save for compliance with the Tribunal's directions, the Importer was under no positive duty to do anything, after all the Applicant bore the onus of proving her claim. While that is so, the real issue is the reasonableness or otherwise of the Importer's conduct as it relates to the Tribunal's costs discretion in the circumstances of this proceeding. From that perspective, I note, firstly, that the Importer's prior conduct confirmed that it knew that any liability ultimately rested with it and secondly, that the Supplier expressly put the Importer on notice that, if the Applicant was successful, the Importer would bear all costs and, at the very least, some of those costs, namely, the Supplier's, would be assessed on an indemnity basis.[36]
10. The Importer also knew, from November 2016, that the alleged contravention of the consumer guarantee was such that the Range Rover motor car may require a new engine. Despite these matters, the Importer did nothing in the proceeding to minimise its potential costs liability.
11. I find that the Importer knew full well that any liability would ultimately be borne by it. Its failure to take basic measures to avoid unnecessary costs for itself and for the other parties must be viewed in this context. Coupled with this, the delays it caused in the proceeding and its failure to comply with Tribunal directions constitutes "relevant delinquency" sufficient to warrant a special costs order.[37]
12. Further, I find that the delays and expense caused by the Supplier in undertaking an application to challenge the Tribunal's jurisdiction by notice given in December 2017 [38], only to abandon the application, also warrants a special costs order.
13. Finally, I consider that the Respondents, in putting the Applicant to all her proofs when they had no substantial defence and did not lead any evidence, accorded to themselves a luxury for which they should pay.[39]
14. For the reasons set out above, I consider that there are "special circumstances in this case which raise it out of the ordinary" and warrant a special costs order.[40] In reaching this view, I accept the Importer's contention that such orders should be made sparingly and usually ought not be made. In this case, I find that there are sufficient, special features to warrant a departure from that rule.
15. I will order that, in addition to the expenses listed in paragraph 4 above, the Respondents pay the Applicant's costs, including necessary pre-commencement costs, on the standard basis up to 10 December 2017 and thereafter on an indemnity basis.

1. I accept the Supplier's contention that the indemnity set out in s. 274 of the ACL applies to cover both the Supplier's liability for the Applicant's costs and the Supplier's own costs. In my written reasons dated 2 October 2018, at paragraphs 132 and 133, I found as follows:

"132. I find that all requirements set out in s. 274 of the ACL have been made out by the Supplier. Further, I accept the evidence that the Supplier obtained no real net profit from the supply of the motor car to the Applicant.

"133. Given these findings, it is appropriate to make an order pursuant to section 274 of the ACL, to require the Importer to indemnify the Supplier to the full extent of the Supplier's liability to the Applicant. This includes any order that may be made as to costs."[41]

1. The Importer rightly pointed out that my finding, and the finding of Derrington J in Vautin's case, to which I referred, dealt expressly with the liability of the manufacturer/importer to indemnify the supplier with respect to the consumer's legal costs under the s.274 of the ACL. While that may be so, I note that the words of the section impose no such limitation.
2. The section requires the manufacturer (importer) to "indemnify" the supplier. This expression is well understood to mean "to hold harmless from loss" or "to make good a loss suffered by another".[42] The only limitation on this indemnity is that such loss must result from the supplier's liability for a failure to comply with a statutory guarantee under the ACL. Accordingly, given my findings set out in paragraph 132 of the Reasons dated 2 October 2018, I find that the Importer is required to indemnify the Supplier for its legal costs incurred in this proceeding.
3. Additionally, I consider that there is considerable merit in the Supplier's contention that the Supplier's costs were unnecessarily incurred by the Importer's failure to act as an indemnifier and that, as a consequence, the Importer should indemnify its costs as a matter of fairness under ss. 109(2) & (3) of the VCAT Act. I find that contention to be well founded. The Importer always had the power to limit the Supplier's costs. I find that it would be fair to make an order requiring the Importer to pay the Supplier's costs.
4. For the reasons set out in paragraphs 88 to 91 (inclusive) above, I find that the Importer must indemnify the Supplier in relation to the Applicant's costs and the Supplier's own costs. These costs are not open ended. The costs are limited by the indemnity basis of assessment, that is to say, they must not only be reasonable but also be reasonably incurred.
5. I note the objections of the Importer to paying the costs incurred by the Supplier in the Supplier's abandoned application to challenge the jurisdiction of the Tribunal. In reply it might be said that the incurring of these costs resulted from the failure of the Importer to act as the indemnifier and to take carriage of the defence itself. If it had so acted, the Supplier would have incurred very few costs.
6. This matter is complicated by the fact that the Importer was not, initially, a party to the application. Accordingly, I consider that, if the parties cannot agree on this question, then this issue should be left for determination by the Costs Court.

1. The orders set out above accord with findings contained within these written reasons.

[2] (2007) 26 VAR 354; [2007] VSC 117 at [20].

[3] See 24 Hour Fitness Pty Ltd v W&B Investment Group Pty Ltd [2015] VCAT 596 (Judge Jenkins) and the Court of Appeals decision in 24 Hour Fitness Pty Ltd v W&B Investment Group Pty Ltd [2015] VSCA 216.

[4] See Southgate v Vescovi [2014] VSC 176 at [41] (Macaulay J).

[5] See Written Reasons dated 2 October 2018, para. 37

[6] See Colgate Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225.

[7] See Further affidavit of Anthony Paul Ireland sworn 26 November 2018, paragraph 3

[8] See letter from Mills Oakley to Rennick & Gaynor and Thackeray Legal dated 12 June 2018 (exhibit API-12 to the affidavit of Anthony Paul Ireland sworn 22 November 2018 ).

[9] Letter from Chapman Thackeray Law to Rennick & Gaynor, Solicitors, dated 16 March 2017.

[10] See email from Daniel St George to Selina Clark dated 5 June 2017.

[11] See Dallimore v Cotham Road Pty Ltd [2014] VCAT 1136 at [15]; Sixty-Fifth Eternity Pty Ltd v Boroondara CC [2010] VCAT 310 at [18] and [132]; and Rosalion v Allianz Australia Insurance Ltd [2005] VCAT 541; and Whiteside v Taylor [2007] VCAT 658 at [51].

[12] See Styles v Murray Meats Pty Ltd [2005] VCAT 2142 at [17]; Whiteside v Taylor [2007] VCAT 658 at [51]; and Kafataris v Bookmakers' Clerks Registration Committee [2008] VCAT 577 at [26].

[13] See Buttigeig v Melton SC (No 4) (2006) 25 VAR; [2006] VCAT 1058 at [6].

[14] See Nakkasoglu v Bayside CC [2000] VCAT 682 at [43].

[15] Thirty Fourth Enterprise Pty Ltd v Leggets Tennis and Squash Centre Pty Ltd (No. 2) [2000] V ConvR 58-541; [1999] VCAT 27.

[16] See Australia's Country Homes Pty Ltd v Vasiliou [1999] VCAT 5 May, where the Tribunal found that it could have regard to the relative strengths of the parties claims under s. 109(3)(c) even if the losing party's case was not bereft of merit.

[17] See Cosgriff v Housing Guarantee Fund Ltd [2006] 463 at [20]; Beasley v Victoria [2006] VCAT 2044 at [48].

[18] See, for example, Clifford Hallam Healthcare Pty Ltd v Price [2010] VCAT 1117 at [36].

[20] Burns Philp & Co Ltd v Bhagat [1993] VicRp 13; [1993] 1 VR 203 at 210.

[21] Victoria v Bradto Pty Ltd [2006] VCAT 685.

1. [22] See the Magistrates Court Act 1989 s. 131 which relevantly provides that:-

(1) The costs of, and incidental to, all proceedings in the Court are in the discretion of the Court and the Court has full power to determine by whom, to whom and to what extent the costs are paid."

[23] See Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69]- [71].

[24] [2014] VSCA 19 at [32].

[25] See Murray v Bayside CC [1999] VCAT 1327 at [49]; Pure Capital Investments Pty Ltd v Fasham Johnson Pty Ltd [2002] VCAT 1761 at [14]; Greenhill Homes Pty Ltd v Allianz Australia Insurance Ltd [2006] VCAT 184 at [19]- [20]; and Structx Pty Ltd v O'Keefe [2009] VCAT 1442 at [12].

[26] See Schneider v Boroondara CC [2004] VCAT 642; (2004) 21 VAR 64 at [12].

[28] Colgate Palmolive Co v Cussens Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 233-234.

[29] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72.

[30] See Mildura Rural CC v Victorian WorkCover Authority [2006] VCAT 2366 at [34]; Elali v Mina [2005] VCAT 551 at [8].

[31] [2000] VSC 163.

[33] [2004] VSC 351 (Redlich J; 22 Sept 2004).

[34] [2005] VSCA 298.

[35] See Hazeldene's Chicken Farm Op.Cit. footnote [34] at [25].

[36] Letter from Mills Oakley, Lawyers to Thackeray Law 12 June 2018.

[37] See FAI General Insurance Co Ltd v Burns [1996] NSWSC 350; (1996) 9 ANZ Ins Cas 61-384; O'Keefe V Hayes Knight GTO Pty Ltd [2005] FCA 1559 at [35].

[38] Affidavit of Craig Mac Dougall sworn 30 November 2018, para. 8

[39] See Colgate Palmolive Company v Cussons Pty Ltd (1993) FCA 536; (1993) 46 FCR 225.

[40] Golem v Transport Accident Commission (No. 3) (2002) 19 VAR 279; [2002] VCAT 736 at [10].

[41] See Vautin v BY Winddown Inc. (No. 4) [2018] FCA 426 at [371].

[42] See Osbornes Concise Law Dictionary 12th edition Sweet and Maxwell (2013_); LexisNexis Concise Australian Legal Dictionary_ 5th edition (2015); see also Hunt & Baird Industries (WA) Pty Ltd v Cartwright Taylor Engineering (1984) 2 SR (WA) 198