Owners Corporation No 1 SP37133 v Jand Investments Pty Ltd & Ors (Owners Corporation) [2013] VCAT 22

(i) to the Applicant, to the First Respondent, and to the Second Respondent, their respective costs of the hearing on 17 May 2012; and

(ii) to the First Respondent, and to the Second Respondent, their costs of and incidental to their submissions as to the Charter of Human Rights.

1. In default of agreement, such costs are to be assessed by the Victorian Costs Court on a party and party basis, on County Court Scale.

1. The Third Respondent's application for reinstatement of the Applications in files OC1135/2012 and OC 1216/2012 is refused.

1. From 2011, when Jand Investments Pty Ltd (Binks Ford) commenced business at premises at 448 Geelong Road, Footscray West, the three Lot owners were in dispute about parking arrangements and the general use by them of the central area of common property. That area provides rear access to each of the 4 lots in the warehouse/retail complex that is shared by the owners (Amanatidis owns 2 lots).
2. Amanatidis complained to the Owners Corporation (the OC) about parking in the central area by Binks Ford. Binks Ford in turn complained that Amanatidis had marked parking bays for his own use and had requested Binks Ford not to use those spaces.
3. On 19 August 2011, the OC made an application to VCAT against Binks Ford for the enforcement of the model rules relating to parking. All Lot owners were joined to the proceeding and the claims of Amanatidis and Binks Ford were included in the proceeding.
4. There were several directions hearings and two compulsory conferences prior to the hearing before me on 17 May 2012. The hearing had been listed for one day but took two days, the second day being 6 June 2012.
5. At that hearing, Binks Ford and Ribeiro asked the Tribunal to determine parking areas and parking spaces and allocate them to lot owners. Amanatidis asked the Tribunal to declare that there be no parking in the central area. He also asked the Tribunal to determine that the central area had been obstructed by the other Lot Owners in breach of Rules 3.1(1) and 3.2.
6. Amanatidis had issued two further complaints (OC1135/2012 and, a duplicate, OC1216/2012) which he did not pursue at that time and which, by consent, were struck out with a right of reinstatement.
7. The OC manager attended the hearing but took very little part in the proceedings as the dispute was, effectively, between the lot owners. Each of the Lot owners was represented by counsel.
8. There were two separate issues for the Tribunal to determine. The first was what part of the central common area was properly used for parking and the second was whether there had been obstruction of the central common area by any of the Lot owners.
9. At the request of the Lot owners, the OC had obtained a report from a survey company, Miller Merrigan, who prepared a plan with options to use the common property that would allow all Lot owners parking and access for their particular needs.
10. Prior to the hearing there was a bona fide dispute between the owners as to the available parking in the central common property. Binks Ford and Ribeiro, prior to, and at the hearing, made it clear they were willing to settle the parking dispute based on the options presented by the Miller Merrigan plan. Their understanding was that Amanatidis was also willing to negotiate. Binks Ford made a proposal, by letter dated 18 April 2012, which was, effectively, accepted by Ribeiro on 27 April 2012. Amanatidis made a counter offer by letter dated 4 May 2012 from his Solicitors, to compromise the matter. In reply to that letter, Ribeiro requested further information. There was no evidence that Amanatidis replied to Ribeiro's request.
11. The offers and counter offers never reached agreement. However, Binks Ford and Ribeiro say they were taken by surprise at the hearing when Amanatidis refused settlement or further negotiation and instead argued that no parking at all should take place in the central common area. Amanatidis claimed 24 hour unrestricted access to the central common area for his and his tenants' delivery trucks.
12. Binks Ford and Ribeiro were further taken by surprise on the beginning of the second day of hearing when Amanatidis made a submission pursuant to the Charter of Human Rights and provided a copy of his Notice to the Attorney-General/Victorian Equal opportunity and Human Rights Commission.
13. I relied on historical planning evidence provided by Ribeiro to determine that the space available for parking in the central common area was more than had been previously thought to be available and was more than designated by the Miller Merrigan plan.
14. Having made that determination, I refused to allocate the parking spaces to particular lots as the available area for parking was increased.
15. The second part of the decision, that Binks Ford and Ribeiro had breached the OC rules with respect to obstruction, required an interpretation of the meaning of the relevant terms in the Owners Corporation Act 2006 and a determination of the facts. I found that there was no breach of the rules by Binks Ford or Ribeiro.
16. Binks Ford and Ribeiro now claim their costs and the costs of the OC be paid by Amanatidis who opposed that application and claimed his costs against them. At the hearing on 6 December 2012, the three Lot owners were represented by counsel and Binks Ford and Amanatidis made written submissions. Ribeiro endorsed Binks Ford submission and all parties made oral submissions in addition to the written material.
17. The further application by Amanatidis is to reinstate his other applications which were struck out with a right of reinstatement.

1. In considering any application for costs I must have regard to s 109 of the Victorian Civil and Administrative Tribunal Act 1998 which provides that each party must bear its own costs of a proceeding unless the Tribunal is persuaded it should exercise its discretion under s 109(2) having regard to the matters set out in s 109(3), and then, only if it is satisfied it is fair to do so.
2. Section 109 (3) provides:

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.

1. Thus, while the starting point at VCAT is that each party should bear its own costs of a proceeding, the Tribunal has a discretion to order that one party pay part or all of the costs of another party, only if satisfied that is fair to do so, having regard to the matters set out in s 109(3).

1. Binks Ford and Ribeiro claimed costs on the following grounds under s109:
   • Amanatidis conducted the whole proceedings, before and after the hearing in a manner that caused disadvantage to them.
   • that Amanatidis' case, and that of the OC that was made because of Amanatidis' claims, had no merit in fact or law
   • that Amanatidis prolonged the case both as a witness and by making an argument under the Charter of Human Rights that was misconceived
   • that Amanatidis unreasonably refused an open offer.

1. Amanatidis claimed that Jand and Ribeiro should pay his costs because:
   • they did not succeed in any claim they made and the costs of their application for the specific allocation of parking spaces should be borne by them;
   • the area determined as the area for parking did not accord with the position of any party and the costs should lie where they fall or, alternately, be borne by Ribeiro as the most significant loser.

1. I have determined that partial costs should be awarded against Amanatidis in terms of s 109 as follows :

1. Amanaditis' evidence took up the whole of the first day of the hearing and, as stated in my reasons, his answers to questions were lengthy, emotional, contradictory and obtuse. The decision to be made as to the available parking in the central common area was hindered by Amanaditis' refusal or inability to answer questions put to him by his and opposing counsel and ultimately his evidence was of no value. The case turned on the Tribunal's interpretation of the historical records of the subdivision provided by Ribeiro.
2. Amanaditis was warned several times, without effect, that his behaviour was hindering the hearing and although his behaviour was frustrating, I find it fell short of the extreme behaviour contemplated by s 109(a). However, it did prolong unreasonably the time taken to complete the hearing as contemplated in s 109(b).
3. The proceeding took two full days of hearing instead of the estimated one day. The extra time taken for the hearing was appreciably lengthened by the matters contemplated in s 109(3)(b) above and also s 109(3) (c) as follows:

1. Deputy President McKenzie said in Beasley v Department of Education and Training [2006] VCAT 2044, s 109(3) (c) 'means that a substantial disparity between the strength of one claim and the weakness of its competitor must exist before an order for costs will be fair having regard to this paragraph.'
2. The main claim by Amanatidis that only he should have use of the central common property to the exclusion of all others was completely misconceived. The Owners Corporation Act 2006 is clear: all lot owners have an equal right to use the common property. Simply, Amanatidis' claim had no tenable basis in law and was bound not to succeed.
3. At the beginning of the second day of hearing, Amanatidis, without warning to the other parties, made a submission with respect to the Charter of Human Rights and provided a copy of his Notice to the Attorney-General /Victorian Equal Opportunity and Human Rights Commission. Binks Ford and Ribeiro requested time after the hearing ended to reply to that submission in writing and that was allowed.
4. As stated in my reasons, this submission was also without foundation, and led the other respondents to incur costs which would otherwise have been unnecessary.
5. However, Amanatidis' claim with respect to obstruction was one that was properly brought as a dispute between the owners. It required an interpretation of the meanings in the Act and the Model Rules of the relevant sections and, in particular, the terms 'obstruction' and 'parking'. Although Amanatidis was unsuccessful in his claims as to obstruction there were real grounds on which to argue this part of his claim.
6. I find there was a great disparity in the terms of s 109 (3) (c) as to the strength of the parties' positions in regard to the matters of the right to use the common property and of the Charter, and there were obvious reasons at law for Amanatidis to form the view that these claims were untenable.

1. While some decisions of the Tribunal have indicated that it is likely a costs order will be made when a proceeding is complex, s 109(3) (d) has not been applied simply as meaning that a complex proceeding requires a costs order or that the matter must be complex before a costs order will be made. In Sweetvale Pty Ltd v Minister of Planning [2004] VCAT 2000, Justice Morris, then President of the Tribunal, (at paragraph 17) set out a number of relevant instances where the nature and complexity of a proceeding will make it fair to make an order for costs. These included - that the proceeding was in VCAT's original jurisdiction; that a large number of issues were involved, or a small number of complex issues; that the proceeding involved a large sum of money; that the proceeding succeeded and was a type which it was necessary to bring; that the proceeding failed and was a type where a party asserted a right it should have known to be tenuous; that a practice has developed that costs are routinely awarded in a particular type of proceeding, thus making an award of costs more predictable for the type of proceeding in question.
2. The present case is in the Tribunal's original jurisdiction. However, it involved only a small number of issues. The proceeding was not particularly complex and did not involve a large sum of money but involved a substantial effect on the way the business of each of the lot owners could be carried out. The claim was brought in a tribunal where - as Senior Member Vassie said in McCarthy v Dandenong Region Body Corporate Services (Aust) Pty Ltd t/as D R Strata Management [2009] VCAT 1898 (at para 67):

"It is important that would-be applicants in the jurisdiction are not deterred from airing genuine grievances, and making genuine claims, by the fear that VCAT will award costs against them if they lose."

"On the other hand, the right to air a grievance and make a claim needs to be exercised responsibly. It would be unfair to respondents for the Tribunal to permit applicants to think that they can, with impunity, make and pursue to the bitter end any claim that they have a mind to make, no matter how hopeless, manifestly weak, irrational or quixotic such a claim might be. I am not suggesting that any of those adjectives applies to Mr and Mrs McCarthy's claims in this case. I have said, however, that in my opinion their making and pursuit of a claim for damages of a magnitude of $103,000.00, on such a flimsy basis as became evident, was irresponsible."

1. Thus, parties should not unnecessarily be put in fear of having costs orders made against them. However, Amanatidis made a claim which, from the beginning of the hearing was evidently irresponsible; it was manifestly weak and irrational. He claimed exclusive possession of common property and claimed damage to his business and letting prospects of one of his lots if this was not granted. This was not a grievance which could succeed.

1. Binks Ford and Ribeiro made an offer of compromise based on the Miller Merrigan report. This offer did not comply with the terms of s 112 of the VCAT Act 1998. However, Amanatidis' rejection of the offer is still a relevant matter for the Tribunal to consider in deciding the issue of costs.
2. Amanatidis referred to Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 13 December 2005.

That case considered whether an unsuccessful party's rejection of a Calderbank offer should automatically lead to an order for indemnity costs. The Court held that costs should be awarded if the rejection was unreasonable and set out (at paragraph 25) the following factors relevant to assessing reasonableness:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree's prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.

Those principles are helpful in the present case in assessing the reasonableness of Amanatidis' rejection of the offer but it is a case where costs usually follow the event which must be distinguished from the s 109 position where the starting point is that parties are to pay their own costs.

1. The offer by Binks Ford and Ribeiro was made before the hearing date had been set, after the Miller Merrigan report had been produced and before production of the historical plans. The offer was continually referred to by Jand and Ribeiro during the proceedings as being open and, they were willing to consider further compulsory conference time which was refused by Amanatidis. The terms of the offer were clear and based on the independent report of Miller Merrigan whose solution reflected the unit entitlement of each Lot and provided space or parking while allowing room for deliveries and tradesmen. Amanatidis' prospects of success with respect to his position that the other parties have no parking rights on the central common property and that he have unlimited, unrestricted access was bound to fail. The refusal to accept the offer did not, in my view, take account of that. Accordingly, Amanatidis' apparent failure to reply to Ribeiro's letter requesting further information and failure to accept the offer was unreasonable.

1. In all these circumstances, I consider this was a proceeding in which it is fair that an order for costs should be made, being the hearing costs of Jand and Ribeiro of the claim by Amanatidis as to the designation of car parking and his submission with respect to the Charter. As stated, these claims by Amanatidis were without foundation and, further, he refused a reasonable offer of settlement. Although Amanatidis was unsuccessful in his claims as to obstruction there were real grounds on which to argue his case and costs relating to that issue should be borne individually by the parties.
2. Whilst the Tribunal did not accept the submissions made by any party, Jand and Ribeiro were better off after my decision than they would have been if the offer had been accepted as the amount of space available for parking is now increased. Any agreement made pursuant to the offer would have had the effect of changing the designated area of car parking which the owners corporation, of course, has the power to do.
3. I consider it is fair that Amanatidis pay the hearing costs of the other parties with respect to the matter of the car parking which I consider to be one day's hearing, 17 May 2012. I have not allowed costs incidential to that part of the claim as, up to the date of the hearing, the parties' costs were largely incurred in settlement talks. I also allow the costs of Binks Ford and Ribeiro with respect to their submissions as to the Charter.
4. The costs submission by Binks Ford contended that costs be on a party/party basis and on an indemnity basis from the date of the Binks Ford offer. Amanatidis made no submissions on this point. However, indemnity costs are only awarded in an unusual case and I do not find this is such a case. I consider the County Court Scale is the appropriate scale and I will order accordingly.

1. Amanatidis sought reinstatement of proceedings in his other applications (one being a duplicate of the other) against Binks Ford. That application is that Binks Ford remove landscaping on the south west corner of the common property and also remove a sign, unless permits are obtained for that sign from the relevant authorities. Amanatidis' request for reinstatement contained no submissions to support the request.
2. Binks Ford objected to the reinstatement of the proceedings on the basis that dispute resolution procedure set out in s 153 of the Owners Corporation Act 2006 has not been undertaken.
3. Binks Ford and Ribeiro also objected to reinstatement on the grounds of the potential cost to the parties, including the costs of the Owners Corporation.

1. Deputy President Steele in Fatouros v Jackson Development Group Pty Ltd (2007) VCAT 2461 set out the criteria for reinstatement as follows:

"The Applicant contended that in deciding whether to exercise its discretion to reinstate the application, the Tribunal should consider the merits of the case (Kostokanellis v Allen [1974] VicRp 71; [1974] VR 596) including what the Applicant said was the Respondent's concession that the Applicant has an arguable case, evidenced by a previous offer to the Applicant in respect of the claim and by the Respondent's apparent consent given at the compulsory conference that there be a hearing as to damages only. The Applicant said I should also consider the circumstances in which the strike-out application was made, its submission that whilst there was delay in bringing the reinstatement application the Respondent had alleged no prejudice and the fact that the Applicant had paid the costs ordered at the time the application was struck out. For the Respondent it was submitted that if the Tribunal had power to reinstate, the principles governing the Tribunal's discretion were the length of any delay in making the application, the reasons given for the delay, whether the proposed application has any real chance of success and the possible prejudice to the Respondent. .. I agree these are relevant principles... the Tribunal is required to weigh on the one hand the seriousness of denying the Applicant an opportunity to have his claim heard on its merits and on the other fairness to the Respondent who may have acted during the period of delay on the expectation that the strike-out order would stand and who may have lost the ability to adequately defend the matter."

1. Amanatidis' claim was struck out at the hearing in May 2012 and there was no application for reinstatement until the time of the costs application. While there was no explanation by Amanatidis for this delay of 5 months, I do not consider it is a delay that would cause prejudice to Binks Ford. The matters are simple and ongoing and no prejudice arises from the delay.

1. The merits of the case are also a relevant consideration although the parties made no submission on that matter.
2. I cannot at present form any view that Amanatidis' case is without merit.

1. While Amanatidis has no obligation to undergo the dispute resolution process with respect to a claim against another lot owner, I accept that the dispute resolution process should be followed before any application is made to VCAT with respect to these matters. Of further relevance is that Binks Ford stated at the hearing that it had agreed to remedy the situation of the landscaping and was only waiting to hear from Amanatidis what he wanted done and where a relevant pathway was placed before carrying out the works. In addition, Binks Ford said it had planning and building permits with respect to the sign and was willing to enter discussions generally as contemplated by the Owners Corporation Act 2006 with respect to both issues.

1. If the matter is resolved, this will lead to the application being again struck out or dismissed with an unnecessary incursion of costs.

1. The principles set out in Faturous have been met, but this must be weighed against the offer by Binks Ford to remedy the landscaping, regularise the position as regards the sign and, if necessary, undertake dispute resolution. Together with concerns as to costs, I consider it would not be fair to the other parties to reinstate the matter and I refuse to do so.