1. Further, the applicants submit that it is in the interests of all parties that proceedings be withdrawn at an early stage, if they are not to proceed, and in support of that submission, they refer to the comments of Member Sharkie in Wang v Nguyen[7] that_:_

depending on the circumstances, the Tribunal should not discourage an applicant from withdrawing an application at the earliest opportunity whenever that is appropriate.

In summary, I conclude that something exceptional would be required before there could be a costs order made...."

1. In response to the second respondent's submissions, the applicant submits that:

(a) it was appropriate for it to commence the proceeding, and it withdrew the application before any significant procedural steps had been required of the parties;

(b) the second respondent had maintained, in correspondence sent in July 2024, that the waterproofing requiring rectification was not within her lot, but was common property;

(c) on receiving the alternative quotation from the respondents, the applicant arranged for its consultant to meet with the respondent's consultant and informed the Tribunal that it sought to withdraw the proceeding so that it could 'meet further regarding [the alternative quotation] and to allow the parties to seek a resolution (without incurring the costs of running a VCAT case)';

(d) the applicant was self-represented at the time it commenced the proceeding, and some latitude should be afforded to it in considering the manner in which the proceeding was conducted;[8]

(e) the proceeding was withdrawn at an early stage, prior to the filing of Points of Claim.

1. I note that, in its application for leave to withdraw, the applicant stated that, after commencement of the proceeding, the respondents had:

(a) provided key documents to the applicant including an alternative quotation for rectification works;

(b) provided new information supplied by a plumbing expert; and

(c) provided access to their properties to allow water testing to be carried out.

1. The applicant submits, as a further ground against the award of costs in favour of the second respondent, correspondence between the solicitor for the respondents and the solicitor for the applicant, in which the respondents had invited the owners corporation to withdraw the proceeding, saying to the applicant:

The withdrawal of the proceeding ought not prejudice the OC or the parties, obviously, these matters need to be resolved.[9]

1. Finally, the applicant notes that, although at all times in the proceeding the solicitor now representing the second respondent in her application for costs was acting for both respondents, the first respondent has made no application for costs.
2. The second respondent did not file submissions in response to the applicant's written submissions.

1. The second respondent has sought orders reinstating the proceeding for the purpose of making the costs order it seeks. I do not consider that reinstatement is required. Section 74(2)(b) confers power on the Tribunal to make an order as to costs 'if an applicant withdraws an application or referral'. That is, the Tribunal's power to make an order as to costs in relation to withdrawal of an application is enlivened by the proceeding having been withdrawn.[10]
2. The applicant has criticised the second respondent's application for costs on the grounds that the second respondent has not disclosed the quantum of the costs she seeks. In circumstances where the second respondent is not seeking that costs be fixed, and the costs application is for costs on the County Court scale, presumably to be assessed by the Costs Court, the absence of particulars of the costs incurred is not a ground to dismiss the costs application.
3. Should an order for costs be made? In the courts, where costs usually follow the event, it is well established that the absence of a trial on the merits dictates, as a starting point, that each party bears its own costs.[11] The comments of Mc Hugh J in Re Minister for Immigration and Ethnic Affairs (Cth); Ex Parte Lai Qin,[12] although made in the context of an administrative review proceeding, are also applicable more generally:

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.

1. It is equally well established that, in a case which terminates before there has been a hearing, a Court, and therefore, this Tribunal, should not resolve the issue of costs by engaging in something in the nature of a hypothetical trial.[13]
2. There was no hearing and determination of the substantive dispute in this proceeding. To the extent that the second respondent's claim for costs rests on assertions as to the relative merits of the parties' cases, that would require me to make an assessment of the parties' submissions, not their evidence.
3. There were few procedural steps taken in the proceeding before the applicant sought leave to withdraw. My examination of the Tribunal's file shows that the only documents filed in the proceeding prior to its withdrawal were the notification that the first and second respondents had obtained legal representation, the proposed orders filed by the applicant and the first respondent seeking an adjournment, the second respondent's objection to the proposed adjournment, and the applicant's response to the administrative mention, seeking leave to withdraw the proceeding. All other documents relate to the second respondent's costs application.
4. There was only one directions hearing, at which directions orders were made for the filing of pleadings, and listing the proceeding for a compulsory conference. Those orders are the usual orders made by the Tribunal to progress a claim. The applicant and the first respondent reached agreement on consent orders that the compulsory conference be vacated and the proceeding adjourned to an administrative mention, with the applicant required to confirm the status of the dispute at the date of the administrative mention. The applicant responded punctually to the administrative mention, seeking leave to withdraw the proceeding.
5. I accept that the applicant did not file Points of Claim because it was attempting to negotiate resolution of the dispute without the need for further steps in the proceeding.
6. I accept that the complexity of the proceeding warranted the engagement of legal representation by the second respondent. However, I consider it relevant to the second respondent's application for costs that the second respondent has acknowledged that repairs are required. In my view that indicates that it is not in dispute that the waterproofing required repair. It is appropriate, in that circumstance, that the parties should attempt to resolve the issues promptly, without prolonging the time taken to repair by continuing proceedings in the Tribunal.
7. I am satisfied that there was no conduct of the applicant that caused disadvantage to the second respondent of the kind contemplated by s 109(3)(a) of the VCAT Act. I am also satisfied that the applicant's conduct did not prolong unreasonably the time taken to complete the proceeding, and there is no basis under s 109(3)(b) of the VCAT Act for making a costs order.
8. In relation to the question of the relative strengths of the claims made by the parties, there has been no determination of the applicant's claim by the Tribunal, and the parties' evidence was not tested in a hearing. As a consequence, there has been no determination about the Notice to Repair. It is not appropriate for me to hypothesise on the relative strengths of the parties' positions based on the submissions made in this costs application.
9. However, I consider it relevant that the respondents provided key documents, including information they had received from a plumbing expert, an alternative quotation for rectification works and provided access to their properties to allow water testing to be carried out. It is apparent that all of those steps could have been taken by the respondents prior to the commencement of the proceeding. I accept the applicant's submission that the provision of that information by the respondents was a material factor in the applicant concluding that there was scope to negotiate a solution, and that the proceeding might be withdrawn. That submission is borne out by the contemporaneous comments included in the applicant's application for leave to withdraw. In my view, commencement of the proceeding appears to have had a productive outcome.
10. I am satisfied that there are no grounds of the kind contemplated by s 109(3)(c) of the VCAT Act that would justify the making of a costs order.
11. Finally, I endorse the comments made by Feutrill J in Brownlie v Commonwealth:

...it would be antithetical to the object of the civil practice and procedure provisions to discourage parties from taking voluntary steps to relieve the Court of the necessity of determining the merits of an application by awarding costs against that party when no admission or concession has been made about the merits.[14]

1. In circumstances where there were few procedural steps taken in the proceeding, where the commencement of the proceeding prompted the respondents to provide their plumbing expert report and alternative quotations, there has been no admission or concession made about the merits of the claim, and the applicant sought to discontinue the proceeding early to enable it to attempt to reach a negotiated settlement, it is not appropriate to award costs against the applicant. The second respondent's application for costs is dismissed.

[1] Email dated 14 November 2024 from the solicitor for the applicant to VCAT, copied to all other parties.

[2] Body Corporate Strata Plan No 405967 No 1 v Brady Constructions Pty Ltd [2008] VCAT 2305 at [83].

[3] Transport Accident Commission v Coyle [2001] VSCA 236; [2001] 3 VR 589.

[4] See Wharington v Vero Insurance No 3 [2006] VCAT 639 per Senior Member Lothian; Juresko v Watts & Ors [2007] VCAT 2462 per Deputy President Steele (as she then was); Decleah Investments Pty Ltd v Cardinia Shire Council [2011] VCAT 1292 per Deputy President Mc Namara (as his honour then was); La Rocca v Daniele [2017] VCAT 117 per Deputy President Lulham; Fletcher v Owners Corporation PS640914E 1 (Owners Corporations) [2019] VCAT 2017.

[5] Colac-Otway SC v Tenth Cemalux Pty Ltd [2003] VCAT 280 at [54]; Johnstone v Mansfield SC [2009] VCAT 287 [13].

[6] Martin v Fasham Johnson Pty Ltd [2007] VSC 54 [30].

[7] (Residential Tenancies) [2025] VCAT 342.

[8] The applicant refers here to George v Owners Corporation No PS629591R (Costs) (Owners Corporations) [2020] VCAT 871 at [53].

[9] Letter dated 11 November 2024 from the respondents' solicitors to the applicant's solicitors; Applicant's Index of Documents, Document 5.

[10] See also Pizer's Annotated VCAT Act 7th edition paragraph 74.120.

[11] Australian Securities Commission v Berona Investments Pty Ltd (1995) 18 ACSR 772 at 777.

[12] [1997] HCA 6; (1997) 186 CLR 622. The authorities cited by McHugh J here included: Australian Securities Commission [1993] FCA 585; Australian Securities Commission v Berona Investments Pty Ltd (1995) 18 ACSR 772.

[13] ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270 per Burchett J, referring to Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCR 194 at 201_; Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin_ [1997] HCA 6; (1997) 186 CLR 622 at 624.

[14] [2023] FCA 435 [17].