Renex Op Co Pty Ltd v Environment Protection Authority (Costs) [2020] VCAT 938

1. In proceeding P470/2020, Renex Op Co Pty Ltd pay:

(a) the costs of Enviropacific Services Ltd of and incidental to the proceeding on a standard basis, to be taxed on the County Court Scale in default of agreement; and

(b) the costs of the Environment Protection Authority in the sum of $4,743.75.

1. In proceeding P762/2020, each party is to bear their own costs.

1. Renex Op Co Pty Ltd (Renex) issued two proceedings in the Tribunal. The first proceeding P470/2020, was an application for review brought pursuant to s 33B of the Environment Protection Act 1970 (Vic) (EP Act). Renex sought to review the decision of the EPA to amend Licence No. 186685 held by Enviropacific Services Ltd (Enviropacific).
2. In response to Renex's s 33B application Enviropacific, supported by the Environment Protection Authority (EPA), brought an application pursuant to s 75 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act) to strike out or dismiss the s 33B proceeding. The basis of that application being that the s 33B proceeding was misconceived as there is an absence of third-party review rights attached to decisions made under s 20(4) of the EP Act.
3. The second Renex proceeding, P762/2020, sought declarations on the interpretation of the Enviropacific Licence. The declarations sought interpretation as to the wastes permitted and in relation to conditions in the Licence which were said to be inconsistent with any previously issued works approval or otherwise required a works approval. The declarations were sought pursuant to s 36D of the EP Act. The question of standing to bring an application for declaration was also in issue.
4. By its decision dated 17 July 2020[1] the Tribunal determined that Renex had standing to bring an application for declaration pursuant to s 36D. However, the Tribunal was not prepared to make declarations in the terms sought by Renex. Further, in respect of s 33B application for review, having determined the decision to amend the Licence was properly made under s 20A(4), the Tribunal determined that Renex did not have standing to bring the application for review under s 33B. As the application brought pursuant to s 33B was consequently misconceived, the Tribunal dismissed application P470/2020 pursuant to s 75(1) of the VCAT Act.
5. Enviropacific made an application for costs pursuant to ss 75(2) and 109 of the VCAT Act and sought costs on the Supreme Court scale.
6. The EPA made an application for costs only of the s 33B proceeding which was dismissed by the Tribunal. The application was made pursuant to s 75(2) but limited to part of its costs of the s 33B proceeding.
7. Renex opposes any award of costs.

(2) If the Tribunal makes an order under subsection (1), it may order the applicant to pay any other party an amount to compensate that party for any costs, expenses, loss, inconvenience and embarrassment resulting from the proceeding.

(1) Subject to this Division, each party is to bear their own costs in the proceeding.

(2) At any time, the Tribunal may order that a party pay all or a specified part of the costs of another party in a proceeding.

(3) The Tribunal may make an order under subsection (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.

Principles which apply to an award of costs under the VCAT Act

1. The parties were in general agreement as to the principles which apply to the award of costs but differed on their application and emphasis.
2. Enviropacific set out the following principles:[2]

1. In an application under s 109 the starting point is always a presumption against costs. Each case must be considered on its own merits having regard to the presumption, and the exceptions to the presumption. 2. In contrast to s 109, s 75(2) gives an unfettered and wide discretion as to whether an award of compensation ought to be made and there is no presumption for or against making an order for compensation under s 75(2) including (but not limited to) compensation for legal costs. It is not to be assumed to each party bears its own costs.[3]

1. Costs are more commonly awarded in declaration proceedings, having regard to settled practice as the nature of such proceeding as being more akin to proceedings in a court.

1. Costs are also more commonly awarded where a proceeding is summarily dismissed as misconceived and/or for want of jurisdiction.
2. The EPA agreed there was no justification to assume that the starting point was each party bear their own costs when applying s 75(2).
3. Renex submitted that the principles as set out by Enviropacific required supplementation by the following pertinent additional principles:[4]

1. Whilst it is agreed s 75(2) does not operate from a starting presumption that each party ordinary bear its own costs, it does not follow that there is a presumption that costs should automatically follow the event. 2. The discretion under s 75(2) must be exercised having regard to the particular circumstances.

1. In particular, where the Tribunal has exercised the power to strike out a misconceived application, this is considered a matter less likely to lead to an award of costs than where the Tribunal has struck out a claim that was clearly frivolous or vexatious.

1. Further, the purpose of any award of costs under s 75(2) is to fairly compensate the successful party, rather than to penalise an unsuccessful party. 2. Whilst there is a public interest in discouraging misconceived claims and costs awards assist to achieve this, this should be reserved for where a claim is clearly and patently hopeless as it was in the case which was cited by Enviropacific in support of this principle,[5] rather than in circumstances such as this matter where a complex legal framework necessitated argument and in circumstances where the related s 36D application was effectively granted and in fact assisted the Tribunal to decide the s 33B jurisdiction.

1. Renex set out what it submitted were relevant principles to be considered in exercising discretion to award costs under s 109 of the VCAT Act:[6]
   1. An award of costs under s 109 does not follow merely because one party has won and the other party has lost. Such an approach would be to make an award of costs the rule rather than in the exception.[7] Section 109(1) indicates the Tribunal generally regards the award of costs to be the exception and not the rule.
   2. While s 109(3)(c) references the complexity of the case as a potential reason to consider an award of costs, complexity is often a reason not to award costs.[8] Complexity 'cuts both ways' in relation to costs. The novelty or public interest in issues ventilated by a complex case may militate against an award of costs, despite the fact the complexity requires the hearing before a presidential member, conducted by senior counsel and in a court like manner.
2. Additionally, Renex submitted that evidence of settlement discussions can also be relevant in an application for costs.[9]
3. Enviropacific's submissions on the question of the exercise of discretion to award costs were based on the principles set out in Vero Insurance Ltd v Gombac Group Pty Ltd[10] and Martin v Fasham Johnson Pty Ltd.[11]
4. The general rule is each party bears their own costs. However, the Tribunal may award costs if it considers it 'fair to do so' having regard to the factors set out in s 109(3).Whether it is fair to do so must be considered on case by case basis having regard to the factors which are individually relevant.[12]
5. Enviropacific submitted that Renex was at pains to emphasise in the hearing its principal case comprised the s 33B proceeding and the "little brother" declaration proceeding was brought subsequently and only as an add-on or rear guard action.
6. Once the challenge was mounted to Renex's s 33B proceeding based on questioning Renex's standing, a new proceeding was issued in effect seeking by declaration the same outcome as Renex sought by bringing the s 33B proceeding.
7. Enviropacific argued that the fact that an application is misconceived for want of jurisdiction is a factor supporting award of costs as well as having regard to paragraphs (c) and (d) of s 109(3). These factors would also be relevant to the exercise of discretion under s 75(2).
8. Whilst Renex has characterised the declaration proceeding as being of assistance to the Tribunal's ultimate decision in respect of standing, the Tribunal was not prepared to make the declarations in the form sought by Renex. The Tribunal did make declarations but they were more in the nature of preliminary legal questions so that the substantive proceeding, being the s 33B application for review, could be determined.[13]
9. Enviropacific argued that it was fair that it be compensated for its costs of defending a proceeding which was not contemplated by the legislation. This was not a case where the application for review failed owing to some unexpected or overlooked factor, rather this application for review was not valid on its face. The case put by Renex required an elaborate creative and improbable course of argument put against clear previous Tribunal authority as to what does or does not require a works approval under the EP Act.[14]
10. Enviropacific also submitted that the complexity of the proceedings required legal skill and commensurate levels of legal expense for it and this is also a factor supportive of an order for costs.[15] The dispute had a clear commercial nature to it, Renex being a commercial competitor and expressly relying upon its own commercial interests in seeking to establish both standing and its grounds of review.
11. Whilst there is no bar to an economic competitor bringing an application for review pursuant to the EP Act, it was clear from submissions made, and by reference to the earlier proceeding before the Tribunal which resulted in the a works approval and planning permit for the (now) Enviropacific premises,[16] that Enviropacific and Renex are economic competitors. This allegation was made numerous times by Enviropacific in its submissions to the Tribunal[17] and was not refuted by Renex. Whilst the Tribunal was unconcerned in determining standing whether Renex was a commercial competitor,[18] such status may be relevant to determining the question of costs.
12. In respect of the costs of the s 36D proceeding Enviropacific argued:
    1. costs are more readily awarded in the Tribunal's original jurisdiction.[19] This would include declaration applications having regard to the nature of such proceedings being more akin to proceedings in a court; and
    2. an order for costs in such a proceeding is consistent with the practice and within reasonable expectations of parties who choose to bring such a proceeding.[20]
13. Both Enviropacific and the EPA argued that notwithstanding the Tribunal found it appropriate to make an authoritative declaration on the matter, it was not necessary for Renex to bring its proceeding to achieve the outcome which resulted. The outcome is for all intents and purposes the status quo as both Enviropacific and the EPA contended it ought to be.

1. Enviropacific argued that s 75(2) differs from s 109 in the following important respects:[21]

1. It is confined to cases in which a proceeding is struck out or summarily dismissed pursuant to s 75(1). 2. It is not just a costs provision but a compensation provision allowing for compensation of various kinds to be awarded including but not limited to payment of legal costs.

1. Section 75(2) operates independently of s 109 and there was no presumption for or against making an order for compensation under s 75(2).

1. The scope of s 75(2) is broader than s 109 in order to discourage unmeritorious claims.[22]
2. Based on the reasons already stated, Enviropacific argued that an order for costs ought to be made against Renex. In particular, it relied on the commercial nature of the proceedings.
3. Further, Enviropacific argued that there is a strong public interest argument in ensuring illegitimate invocation of the Tribunal's processes should not be rewarded.
4. The EPA sought its costs only of the 33B proceeding and only for reimbursement of (part of) its out of pocket costs.
5. The EPA argued that it devoted a significant time to these misconceived proceedings and due to the issue of commercial in confidence the task was a time-consuming and complex one.
6. Furthermore, the EPA submitted that in considering the costs application VCAT should have regard to the fact the proceeding was brought primarily to secure or maintain a commercial advantage, Renex being a commercial competitor of Enviropacific.[23]
7. Renex submitted that:

1. This was a matter where the complexity of the argument, legislative framework and the role of third party rights militates against an award of costs. 2. There is a public interest in ensuring third parties are not incorrectly excluded from involvement in scrutinising the EPA approval process.

1. There is a distinction between a proceeding which is struck out on the basis it was frivolous or vexatious and its dismissal on the basis that it was misconceived because a party did not have standing. Costs are more readily awarded in the first instance.[24]

(d) The mere fact that Renex is an economic competitor, in the absence of evidence of economic and disadvantage ought not to be taken into account by the Tribunal in considering costs.

1. The EPA submitted that at any time Renex could have approached the EPA and sought to clarify the issues without the need for these proceedings. The EPA alleges that there is no record of any such approach being made.
2. Renex, in its Reply, attached correspondence dated 16 March 2020 which raised concerns that the Licence had been amended to include new categories of liquid and solid prescribed industrial wastes beyond that was contemplated in the Works Approval 10101 and beyond which the facility was designed, namely contaminated soils category A, B and C.[25]
3. Renex, having referred to this previous correspondence noted that even if the EPA, as the issuing authority, considered the licence be interpreted to mean one thing it did not stop the licensee considering that it meant another and acting accordingly. Therefore, even if the EPA had responded in writing to clarify its meaning of the amended licence this would not have provided sufficient comfort to Renex when it had legal advice that the meaning of the amended licence was unclear and ambiguous. The only course it could take was to review or seek a declaration from the Tribunal to authoritatively determine the point.
4. This appears to suggest that whatever representations made by the EPA or Enviropacific, Renex was intent on definitively seeking a declaration or legal determination on the point. Whilst this might have been dressed as a public interest motivation, there were also private economic benefits to Renex to take this course.
5. Renex also suggested that there were discussions between the legal representatives of Enviropacific and this suggests that Renex was willing to consider a consensual alternative to running the proceeding. It is apparent that no settlement could be reached.
6. In my view, whilst it clearly was open to Renex to pursue its declaration proceeding before the Tribunal it did so in the knowledge that both the EPA and Enviropacific accepted that the Licence related to the permission for contaminated soils and not other solid or liquid prescribed industrial wastes. This position was clearly put in the submissions and through the evidence of Ms Amy Wells.[26]
7. Renex noted that Enviropacific sought to minimise the outcome of the declaration proceeding by stating that the Tribunal's authoritative declaration on the matter was unnecessary. The outcome which resulted was the status quo as both Enviropacific and the EPA contended it ought to be.
8. Renex submitted that it was of no relevance that the declarations were made in a different form to those sought by Renex given the declaration achieved the same effect as one of the declarations sought by Renex (which was to clarify the amended licence was confined to contaminated soils).
9. Further, in choosing to exercise the discretion for the reasons stated at paragraphs [27], [41] and [70] of the Tribunal's Reasons, Renex submitted that the Tribunal acknowledged that the s 36D proceeding was relevant to the determination of the s 33B proceeding. In this regard Renex submitted that the circumstances are distinguishable from Sweetvale, as in the latter case both the declaration and the merits appeal had failed. In the current matter, the Tribunal's exercised its discretion to grant a declaration to clarify the issues in dispute. If the matter had been utterly hopeless or 'the issue in dispute was black-and-white' the discretion to issue a declaration would not have been necessary.

Costs of the s 33B proceeding - s 75(2) of the VCAT Act

1. Enviropacific and the EPA seek costs pursuant to s 75(2). Enviropacific alternatively seeks its costs pursuant to s 109. I will deal first with the question of costs as it applies to the s 33B proceeding.
2. As the Tribunal made an order dismissing the Renex proceeding in P470/2020 pursuant to s 75(1), the Tribunal's discretion to award costs in the s 33B proceeding arises pursuant to s 75(2). Whilst other divisions of the Tribunal have considered the question of any costs by way of compensation pursuant to s 75(2) with s 109 in mind, the two provisions are separate and distinct.
3. Costs in respect of the s 36D declaration proceeding fall to be determined in accordance with the provisions of s 109 alone, as s 75(1) was exercised only in respect of the s 33B proceeding.
4. Taking into account the costs submissions made by the parties,[27] I am persuaded in the circumstances that Enviropacific and the EPA ought to receive some compensation by way of costs. The Tribunal has placed determining weight on the following matters.
5. The s 33B proceeding was dismissed as misconceived with Renex failing to establish that it had standing to bring the proceeding. The issue of standing was raised at an early time, and as noted in the Tribunal's Reasons 'a rear guard' action and attempted to achieve in some part what Renex sought to achieve by challenging the licence amendment.
6. As noted in the Tribunal's Reasons in the substantive proceeding, the preliminary question of whether the EPA's decision on the amendment to the licence was made pursuant to s 20A(4) or otherwise was a question which needed to be determined preliminary to the finding that Renex had no standing to bring the s 33B review. Whilst this may be characterised as demonstrating the inevitable interconnection between the two proceedings, the Tribunal is satisfied that it is open to it to deal with them separately in the question of costs.
7. I accept that the relative complexity of the proceeding arising from the s 33B proceeding was one which compelled legal skill[28] such that the application was argued and explored comprehensively by experienced senior counsel. With that assistance, the Tribunal was satisfied that an order to dismiss the proceeding pursuant to s 75(1) was warranted. There being no standing for the applicant to bring the application for review compelled that course.
8. I do not give any weight to the submission regarding negotiations which took place between the parties. As noted above at [39], Renex was aware of the position expressed by the EPA and Enviropacific and pressed on.
9. I agree that there is a public interest in discouraging misconceived claims and the costs award system seeks to assist to achieve this. Whilst this factor would be accorded more weight where a matter brought was hopeless and clearly brought for ulterior purpose such that it was clearly frivolous or vexatious, the power to award compensation by way of costs also applies to matters which the Tribunal determines are misconceived. The Tribunal might be slower to award compensation by way of costs where the matter is brought motivated by being in the public interest and/or where there is a very serious question in issue, but there is no presumption either way as to costs when s 75(2) is at play.
10. Whilst there is no bar to a commercial or economic competitor bringing an proceeding pursuant to s 33B of the EP Act, it is clear that one of the consequences of a review being instituted pursuant to s 33B is that any amended licence is inoperable until the determination of that review. This operates no matter whether the review is meritorious or otherwise. Whilst this is a function of the legislation, it is also from Renex's point of view inadvertently or theoretically an economic benefit to it as it is equally a potential economic disbenefit to Enviropacific. Whilst there was no evidence of actual economic loss demonstrated by Enviropacific, the point was made on several occasions at the hearing and in written submissions of this consequence to Enviropacific. This was a point also noted by the EPA.
11. I agree with Renex that the purpose of any award of costs under s 75(2) is to fairly compensate the successful party rather than to penalise an unsuccessful party.
12. I am of the view that it is appropriate in the circumstances of these proceedings that an order be made that Renex pay some costs by way of compensation pursuant to s 75(2) in respect of the s 33B proceeding.
13. Whilst it is not strictly necessary to consider the exercise of the Tribunal's discretion to award costs pursuant to s 109 given the findings in respect of s 75(2), it would also be consistent with the exercise of discretion under s 109 that there is a finding that the presumption that each party bear their own costs ought to be modified pursuant to the factors set out in s 109(3). In particular, ss 109(3)(c), (d) and (e) support the exercise of discretion to award costs in respect of the s 33B application. I have considered the other factors but they are not relevant either way to the exercise of discretion to award costs here. In any event, the exercise of discretion is most appropriately exercised in respect of the s 33B dismissal pursuant to s 75(2).

Costs of the declaration under s 36D EP Act - s 109 of the VCAT Act

1. Section 109 is the relevant provision governing the award of costs in application P762/2020. In this, the starting point is the presumption each party bear its own costs, unless the Tribunal considered it is fair to do otherwise, taking into account the provisions of s 109 (3).
2. Having considered the submissions made by the parties, I have determined that this proceeding does not warrant an award of costs.
3. Whist there was an overlap to some extent in the interpretation of the legislation, and the issues raised in the declaration proceeding in part may well have been decided without the declaration formally being made, this proceeding was and is a separate proceeding.
4. Ultimately, the Tribunal made a declaration of its own volition and in different terms to that sought by any of the Renex declarations.
5. Both Renex and Enviropacific operate sophisticated and important recycling facilities. The EPA, as the relevant authority, was a respondent in any event. It was important that a definitive statement of the position be enunciated in order to facilitate an end to the litigation between the parties.
6. All parties have benefitted from the declaration by having a definitive statement on the interpretation of the licence and by putting an end to the litigation before the Tribunal in this regard.
7. Consequently, I am not persuaded that the presumption that each party bear their own costs should not apply and no order for costs in application P762/2020 will be made.

1. Where an award of costs is made it is usually made on the County Court scale unless otherwise ordered.[29]
2. Enviropacific argued that in the circumstances of this proceeding, an award of costs on the Supreme Court scale appropriate for similar reasons to those set out in the Tribunal's ruling in Sweetvale.[30]
3. Renex did not make any submission in respect of quantum. Rather, Renex relied upon its primary submission that the applications for costs by the EPA and Enviropacific should be declined in all the circumstances.
4. I am not persuaded that in the circumstances here that an award of costs be made on the Supreme Court Scale. Costs in the ordinary course at the Tribunal are awarded on the County Court scale. I am not persuaded that this matter is of such character to award costs other than on the usual County Court Scale. The circumstances here, as identified by Renex, are not on all fours with Sweetvale and in any event, the quantum of costs is also a matter for the discretion of the Tribunal. Whilst the matter was of complexity and properly required experienced counsel, the circumstances do not warrant a quantum of costs on the Supreme Court scale.
5. The Tribunal has exercised its discretion pursuant to s 75(2) to award compensation by way of some costs. I do not consider that the reference to 'compensation' by way of costs necessarily equates to a direction that the Tribunal ought to award a higher scale of costs than it would in the usual circumstances nor that it restricts the exercise of discretion as to the quantum of that compensation by way of costs to a measure more commensurate with indemnity costs.
6. The EPA sought only a portion of its costs and only in respect of proceeding P470/2020. The Tribunal will order that Renex pay the EPA's costs in the amount of $4743.75. This is a fair award of costs in the circumstances.

1. The Tribunal has determined that it is fair and appropriate in the circumstances that there be an award of costs in favour of Enviropacific and the EPA against Renex in proceeding P470/2020. The award will be made pursuant to s 75(2) of the VCAT Act.
2. The Tribunal orders that pursuant to s 75(2) of the VCAT Act, Renex pay Enviropacific's costs of the s 33B proceeding on the County Court scale to be taxed in default of agreement.
3. The Tribunal further orders that pursuant to s 75(2) of the VCAT Act, Renex pay the costs sought by the EPA in the sum of $4,743.75.
4. In respect of proceeding P762/2020, there be no order in respect of costs.

[1] Renex Op Co Pty Ltd v Environment Protection Authority [2020] VCAT 782 ('Renex').

[2] Enviropacific Services Ltd, 'Respondent's Submissions - Costs' filed in P470/2020, P762/2020, 31 July 2020, [1.4].

[3] Gelman v Kenny [2013] VCAT 117, [5]; Ingram v Mc Lennan & Associates Pty Ltd [2014] VCAT 412, [4].

[4] Renex Op Co Pty Ltd, 'Applicant's Submissions in Reply - Costs Applications' filed in P470/2020, P762/2020, 14 August 2020, [3.1]-[3.5].

[5] Fletcher v The Salvation Army Australia [2006] VCAT 740, [12].

[6] Renex Op Co Pty Ltd, 'Applicant's Submissions in Reply - Costs Applications' (n 4) [5.1]-[5.2].

[7] Mildura CC v Victorian WorkCover Authority [2006] VCAT 740, [14].

[8] See Buttigieg v Melton SC (No 4) [2006] VCAT 1058.

[9] Presumably pursuant to s 109(3)(e) of the VCAT Act.

[10] [2007] VSC 117.

[11] [2007] VSC 54. See also Emrys Nekvapil, Pizer's Annotated VCAT Act (Thomson Reuters, 6th ed, 2017) 585-586.

[12] Martin v Fasham Johnson [2007] VSC 54, [28].

[14] Hi Quality Quarry Products Pty Ltd v EPA [2016] VCAT 1445 [64], [68]. See application of principles applied by the Tribunal in its determination of this application: Renex (n 1) [81]-[84], [88], [91]-[92].

[15] Sweetvale Pty Ltd v Minister for Planning [2004] VCAT 2000, [14]-[16] ('Sweetvale').

[16] Innova Soil Technology v Hobsons Bay CC [2013] VCAT 658.

[17] Environment Protection Authority, 'Environment Protection Authority Submissions - Submissions regarding costs' filed in P470/2020, P762/2020, 27 July 2020, [12]-[14].

[19] Macmillan v Port Philip [2005] VCAT 1946, [11]; Ackerman v Mornington Peninsula SC [2011] VCAT 164, [40].

[20] Sweetvale (n 15) [19]-[20]; Buttigieg v Melton SC (No 4) [2006] VCAT 1058, [8].

[21] Enviropacific Services Ltd, 'Respondent's Submissions - Costs' (n 2) [3.1].

[22] Naylor v Oakley Thompson & Co Pty Ltd [2008] VCAT 2074, [29].

[23] Victorian Civil and Administrative Tribunal Act 1998 (Vic) sch 1 cl 63.

[24] Ingram v McLean & Associates Pty Ltd [2014] VCAT 412.

[25] Renex Op Co Pty Ltd, 'Applicant's Submissions in Reply - Costs Applications' (n 4) [18], Attachment 1 - Email & Letter to EPA 16 March 2020.

[26] Amy Wells, 'Affidavit of Amy Wells', filed in P470/2020, affirmed 22 May 2020.

[27] Enviropacific sought leave to file further submissions. However, before any leave was determined further submissions dated 25 August 2020 were filed which sought to respond to certain matters referred to in Renex's Reply. In the absence of leave, the Tribunal has not considered the 25 August 2020 submissions.

[29] Victorian Civil and Administrative Tribunal Rules 2018 (Vic) r 1.07.