Plaintiff v First Defendant

1 On 18 October 2022, via email, I delivered reasons for judgment in this judicial review application in favour of the plaintiff.[1] In short, I held that a building order for minor works (the BOMW) issued by the first defendant, and the variance of that order by the second defendant, were not issued in accordance with the requirements of s 113 of the Building Act 1993 (Building Act) and thus were void and of no legal effect.

2 The parties have not been able to reach agreement as to final orders to be made in this proceeding, in particular in respect of costs. Accordingly, I ordered the parties to submit proposed orders and submissions in support thereof.

3 The plaintiff seeks its costs of the proceedings on an indemnity basis.

4 The first defendant submits that there is no basis for an award of indemnity costs. It submits that costs should be awarded to the plaintiff on a standard basis, and should exclude the costs of two days on which the matter was not able to proceed. Further, the first defendant seeks an indemnity certificate in respect of its payment of the plaintiff's costs, as well as an indemnity certificate in respect of its own costs.

5 The second defendant adopted a Hardiman[2] position in the proceedings and did not make submissions in respect of costs, however made submissions addressing its position as to the appropriate orders to give effect to the judgment.

6 For the reasons that follow, I will make the following orders:

(i) The substantive appeal determination of the second defendant, the Building Appeals Board, dated 25 November 2019 (in case number 450250) is quashed.

(ii) The Building Order for Minor Works, as varied by the second defendant on 25 November 2019, is quashed.

(iii) The first costs order of the second defendant dated 9 November 2020 is quashed.[3]

(iv) The second costs order of the second defendant dated 19 May 2021 is quashed.[4]

(v) The decision of the first defendant to issue the Building Order for Minor Works in respect of the property located at 3/59-61 Ormond Esplanade, Elwood, Victoria on 29 August 2017 is quashed.

(vi) The first defendant pay the plaintiff's costs of the proceeding, excluding the costs of and associated with the 31 March 2022 and 5 April 2022 hearing dates, to be assessed on a standard basis in default of agreement.

(vii) The first defendant be granted an indemnity certificate in respect of its payment of the plaintiff's costs.

(viii) The first defendant be granted an indemnity certificate in respect of its own costs.

7 The background to the proceedings, including the conduct of the respective parties, is detailed in my substantive judgment and need not be repeated here.

8 The matter first came before me on 31 March 2022. At hearing, an adjournment was sought by the plaintiff to further amend its amended originating motion in order to better particularise its grounds of review. I granted this adjournment and reserved costs.

9 The hearing was listed to resume on 5 April 2022, however, as the plaintiff's counsel was unwell on that day and unable to appear, I granted a further adjournment and ordered that the costs of that adjournment also be reserved.

11 The plaintiff submitted that all orders and determinations made by the second defendant in respect of its appeal (being case number 450250) should be quashed and set aside. The second defendant submitted that this would affect all orders and determinations made by it, including the preliminary questions determination and bias determination, in respect of which I made no finding. In my reasons for judgment, I expressly declined to consider the plaintiff's grounds for judicial review in respect of the preliminary questions determination[5] and bias determination,[6] as neither was relevant to the substantive application for judicial review concerning s 113 of the Building Act. In the circumstances, I accept that those determinations need not be the subject of these final orders.

12 I note that whilst the second defendant did not accept that the substantive appeal determination was 'entirely anterior' to its first and second costs orders, it stated that, in the interests of bringing finality to the proceedings (given its lengthy procedural history), it consented to the plaintiff's proposal that those costs orders be set aside.

13 Section 24 of the Supreme Court Act 1986 and Part 4.5 of the Civil Procedure Act 2010 (Vic) confer a broad discretion on the court to award costs. This discretion must be exercised in accordance with Order 63 of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules).[7]

14 Rule 63.28 provides for taxation of costs on the following bases:

Subject to this Part, costs in a proceeding which are to be taxed shall be taxed on -

(a) the standard basis;

(b) the indemnity basis; or

(c) such other basis as the Court may direct.

15 'Standard basis' and 'indemnity basis' are described under r 63.30 and r 63.30.1 as follows:

63.30 Standard basis

On a taxation on the standard basis, all costs reasonably incurred and of reasonable amount shall be allowed.

63.30.1 Indemnity basis

(1) Subject to paragraph (2), on a taxation on the indemnity basis all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred.

(2) Any doubt which the Costs Court may have as to whether the costs were unreasonably incurred or were unreasonable in amount shall be resolved in favour of the party to whom the costs are payable.

16 As to the usual basis of taxation of costs in a proceeding, r 63.31 states:

Except as provided by these Rules or any order of the Court, including the Costs Court, costs shall be taxed on the standard basis.

17 It therefore follows that unless provided for by the Rules or an order of this Court, costs are to be taxed on a standard basis.[8]

18 It is well established that for a court to depart from the usual order and award costs on an indemnity basis, special circumstances must be demonstrated.[9]

19 In Banksia Securities Ltd v Insurance House Pty Ltd (Costs),[10] John Dixon J restated the principles applicable to an award of indemnity costs as follows:[11]

(a) Costs are to be assessed on a standard basis unless the circumstances of the case justify a departure from the usual course.

(b) The making of an indemnity costs order is in the unlimited discretion of the court, with such discretion to be exercised judicially and not unreasonably.

(c) The court may order indemnity costs where the circumstances warrant departing from the usual rule that costs be payable on a standard basis, including conduct that bears a 'sufficient or unusual feature' or some 'relevant delinquency'.

20 In Love v Kempton & Anor,[12] the Court's discretion was explained by J Forrest J (as he was then) in the following way:

Before making such an order, the Court needs to be satisfied that the conduct of the party warrants the ordering of costs on an indemnity basis. Special circumstances must be demonstrated "which lift the case out of the ordinary". Such conduct includes the commencement or continuation of proceedings in wilful disregard of known facts or clearly established law, as well as the commencement or continuation of such proceedings for an ulterior motive.[13]

21 In considering whether special circumstances exist, the conduct of a litigant giving rise to or inviting the litigation may be relevant.[14]

22 The plaintiff contended that the first defendant maintained the BOMW and the current proceeding in 'wilful disregard of known facts or clearly established law, for an ulterior motive, in circumstances where the defence had no prospects of success.' It stated that the first defendant's prior conduct, which including the appeal to the second defendant and the criminal prosecution, was relevant to the Court's assessment of its conduct as a litigant.[15] The plaintiff emphasised that the balcony, the subject of the BOMW, had been 'subjected to erroneous actions of the first defendant ... since 2007', and that this could be characterised as '"high handed" and contrary to achieving the purposes of the [Building] Act.' Further, the plaintiff contended that as it had been required to defend two actions brought by the first defendant, which it said were both subject to jurisdictional error, justice required indemnity costs to be awarded.

23 The plaintiff also submitted that the public interest would be best served by an award of indemnity costs to 'restore confidence in the administration of justice and collaterally to send a message to public authorities entrusted with the administration of justice that a subject should not be exposed to legal costs in defending against maladministration, recklessness, or for a reason other than for the purposes of an Act.'

24 The first defendant refuted the assertions made by the plaintiff in respect of its conduct. It submitted that, in issuing the BOMW, it sought to utilise powers which it understood, on reasonable grounds, were available to it under the Building Act. The first defendant submitted that its position in this Court was of a statutory primary decision-maker whose decision had been upheld by an independent statutory board undertaking de novo review. As the second defendant adopted a Hardiman position, the first defendant submitted that its engagement in the proceeding offered the Court the benefit of a contradictor. The first defendant stated that it did not unreasonably prolong the proceeding nor did it make meritless arguments, whereas the first defendant emphasised that it was the plaintiff who had unreasonably failed to prosecute its appeal in a timely manner. The first defendant submitted that for these reasons there was no basis on which to order of indemnity costs and that any costs order should be awarded on the standard basis.

25 I am not persuaded that there are special circumstances in this case to justify a departure from the usual order as to costs. That is, that 'costs follow the event' and the successful party is entitled to an award of standard costs in its favour. There is no direct evidence before me that the first defendant had an ulterior motive in respect of its conduct prior to and during the proceedings. The plaintiff's written submissions in support of its application for indemnity costs are, in the main, an attempt to revisit the merits of its primary application as well as to re-agitate much of the history between the parties. Notwithstanding my finding that the first defendant did not comply with the requirements of s 113 of the Building Act, I am not prepared to infer that the first defendant instituted or maintained the proceeding for an ulterior purpose, or in circumstances where it was patently unreasonable to do so. Nor am I prepared to infer that the first defendant acted either before or during the proceedings in a reckless manner or in wilful disregard of known facts or clearly established law. As such, I am not persuaded that special circumstances exist to justify the making of an indemnity costs order in its favour.

26 Further, in exercising my discretion as to the appropriate order for costs in this case, I am not minded to take into account a finding by another judicial officer in a different proceeding. Notwithstanding that the Magistrates' Court matter[16] related to the balcony (the subject of the BOMW), the Magistrate's ruling was not made in respect of the first defendant's powers under s 113 of the Building Act. Therefore, I consider it irrelevant to the exercise of my discretion in respect of the basis on which to award costs in the proceeding before me.

27 The first defendant submitted that it should not be ordered to pay the plaintiff's costs of the hearing listed for 31 March 2021 as the hearing was adjourned due to the plaintiff not being 'properly prepared,' and seeking time to plead new and different grounds of review.

28 In respect of the hearing on 5 April 2022, the first defendant submitted that while it was unfortunate that the plaintiff's counsel was unwell, it was in a position to proceed on that day. It submitted that it should not be required to pay the plaintiff's costs of that day given it was not the first defendant's fault that the matter could not proceed. Further, in acknowledging counsel's illness was not the fault of the plaintiff, the second defendant did not seek payment of its costs for the day. The first defendant therefore proposed that the appropriate award of costs should exclude the hearing on 5 April 2022.

29 The plaintiff made no submissions in respect of the costs of 31 March 2022. In respect of the costs of 5 April 2022, the plaintiff stated that as the adjournment on that day was beyond its control, its costs for that day should be paid by the first defendant.

30 The reason for the adjournment on 31 March 2022 was that the plaintiff's written submissions did not reflect what it had pleaded in its amended originating motion. It sought time to make further amendments. The adjournment was opposed as the first defendant was ready to proceed on that day. In the absence of any reasonable explanation as to why the plaintiff was not ready to proceed on the day of hearing, I surmise it was due to inadequate preparation. In those circumstances, the plaintiff should not recover any costs of this wasted day.

31 Whilst the illness of counsel on 5 April 2022 was unfortunate, if the matter had proceeded on the initial scheduled date for hearing the costs of this day would not have been incurred. In such circumstances, I consider it appropriate that the costs of 5 April 2022 should also be excluded from the award of costs.

Indemnity certificates under the Appeals Costs Act

32 The first defendant sought the grant of indemnity certificates under the Appeals Costs Act 1998 (Appeals Cost Act) in respect of an order that it pay the plaintiff's costs, as well as for its own costs of the proceeding.

33 This application was not opposed by the plaintiff.

34 The relevant provisions under Part 2 of the Appeals Costs Act are ss 3-5.

35 Section 3 includes the following relevant definitions:

appeal includes an appeal by way of re-hearing, an application for a new trial and any proceeding in the nature of an appeal, but does not include a case stated.

costs ...includes the costs of an application for an indemnity certificate in respect of the appeal or case stated but does not include costs incurred in a court of first instance except where otherwise expressly provided;

court includes any tribunal or other body -

(a) from whose decision there is an appeal to a superior court on a question of law; or

(b) which may state a case for the opinion or determination of a superior court on a question of law or reserve any question of law in the form of a special case for the opinion of a superior court;

indemnity certificate means an indemnity certificate granted under Part 2, 3 or 4.

36 Relevant to this application, s 4(1)(a) provides that if an appeal against a decision of a court in a civil proceeding succeeds in the Trial Division of the Supreme Court the respondent to the appeal may apply to the Court for, and the Court may grant, an indemnity certificate in respect of costs.

37 Section 5(1) provides that if an indemnity certificate is granted to a respondent, it may be in in respect of payment of the successful party's costs, as well as its own.[17]

38 The plaintiff's application was for judicial review pursuant to Order 56 of the Rules. It is accepted that such proceedings are in the nature of an appeal for the purpose of s 3 of the Appeals Costs Act.[18] Further, the second defendant has been held to be a court for the purpose of the same section.[19] The proceedings were necessitated by the second defendant's error. In such circumstances I am satisfied that indemnity certificates, in the form sought, should be granted.

[1] [2022] VSC 615 (reasons for judgment).

[2] R v The Australian Broadcasting Tribunal; ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13, 35.

[3] Defined in the reasons for judgment (n 1), [6].

[5] As defined at reasons for judgment (n 1), [2].

[8] Amaca Pty Ltd v CSR Ltd (Costs Ruling) [2018] VSC 67, [19].

[9] See, for example, Ugly Tribe Co Pty Ltd v Sikola & Ors [2001] VSC 189, [7].

[10] Banksia Securities Ltd v Insurance House Pty Ltd (Costs) [2020] VSC 234.

[12] [2010] VSC 254.

[14] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 89 [44].

[15] Citing NMFM Property Pty Ltd v Citibank Ltd [No 2] [2001] FCA 480, 92 [56], 94-5 [63].

[16] Magistrates' Court of Victoria case no C12871915.

[17] Appeals Costs Act 1998 (Vic), s 5(1)(a)(i), s 5(1)(b)(i).

[18] See, for example, Dawson & Ors v Bethonga Wholesale Foods Pty Ltd & Anor [2009] VSC 172; Radman v Open Plan [2020] VSC 318.

[19] See, for example, Zaitsev v Building Appeals Board & Anor (Costs) [2019] VSC 455.