Schutz DSL (Australia) Pty Ltd v Victoria Workcover Authority (Occupational and Business Regulation) [2011] VCAT 2401

There are no orders for costs as between the applicant and the joined party.

1. On 8 November 2010 the tribunal received an application for review of an Internal Review Unit ('IRU') decision made pursuant to Regulation 236 of the Dangerous Goods (Transport by Road or Rail) Regulations 2008. The applicant ('Schutz') is a person whose interests are affected by a decision of WorkSafe Victoria to approve a package design type under Regulation 56. The approval was issued to VIP Steel Packaging Pty Ltd on 22 October 2009. In its application to the IRU the applicant stated in relation to its eligibility:

...Schutz products are used by VIP in VIP's manufacture of cross-bottled IBC's and Schutz' reputation may therefore be affected by any failure of, or problem associated with, VIP's remanufactured products.

1. On 2 December 2010 the tribunal received a letter from VIP's lawyers applying for VIP to be joined as a party to the application for review pursuant to section 60 of the Victorian Civil and Administrative Tribunal Act 1998 ('the VCAT Act'). On 6 December 2010 orders were made joining VIP as a party. Orders were also made referring the application to a compulsory conference on 27 January 2011.
2. On 6 October the applicant's lawyers wrote to the tribunal advising the applicant was seeking leave to withdraw its application under s74 of the VCAT Act. On 7 October the lawyers for VIP wrote to the tribunal advising their client was seeking an order for costs pursuant to s74(2)(b) of the VCAT Act.
3. Section 74(2)(b) provides:

If an applicant withdraws an application or referral-

(b) the Tribunal may make an order that the applicant pay all, or any part of, the costs of the other parties in the proceeding.

1. On 10 October I made orders in Chambers granting the applicant leave under section 74 to withdraw its application and made further orders for the determination of the joint parties application for costs on the papers unless the parties request it be listed for hearing. A timetable was set for the filing of written submissions.
2. Both VIP and Schutz have filed submissions. VIP's submissions are supported by an affidavit of Christopher Edmund Duvall Williams, solicitor, sworn 2 November. Schutz' objection to any order for costs being made is supported by an affidavit by Amy Joan Trumble, solicitor sworn 16 November. Neither party have requested the costs application be listed for hearing.
3. No application for costs has been received from WorkSafe.

1. The power to make an order for costs under s74(2)(b) is discretionary. There can be no presumption that an order for costs will be made when leave is granted to an applicant to withdraw an application. Although I accept s74(2)(b) is a separate and distinct power, I accept the submissions on behalf of VIP that in considering whether to exercise its discretion under s74(2)(b) the tribunal should have regard to the matters set out in s109(3) of the VCAT Act:

(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. Similarly, I am of the view, that it is appropriate that in considering the matters set out in s109(3) the tribunal should also have regard to the provisions of s109(1) and (2).
2. Under s109(1) each party pays their own costs of a proceeding unless the tribunal exercises its discretion under s109(2) to make an order for costs if it is satisfied it is fair to do so having regard to the matters set out in s109(3).

Application by VIP to be joined as a party to the proceeding pursuant to s60 of the VCAT Act. Minutes of Consent Orders signed on behalf of the parties for VIP to be joined, and a compulsory conference scheduled including No orders as to costs.

Orders joining VIP as a party, and ordering a compulsory conference on 27 January and No orders as to costs.

Compulsory conference - representatives and legal representative for all parties attended. At conclusion when resolution not achieved orders made for a directions hearing on 3 March with liberty to apply by consent for the compulsory conference to be reconvened and Costs reserved.

Minutes of Consent Orders signed on behalf of all parties filed by WorkSafe adjourning the directions hearing listed for 3 March with no orders as to costs because the Federal Court mediation which had been listed for 25 February had been adjourned.

Orders adjourning directions hearing to 2 May and No orders as to costs.

Minutes of Consent Orders signed on behalf of all parties seeking to adjourn the directions hearing to 16 May 2011 filed by WorkSafe under cover of an email advising:

The parties are still negotiating and request an adjournment of the Directions Hearing for a further two weeks in order to continue negotiations.

Orders adjourning directions hearing listed for 2 May to 23 May being the first available date after 16 May.

Minutes of Consent Orders signed on behalf of the parties filed by Schutz' solicitors seeking an adjournment of the directions hearing to a date not before 1 August 2011.

Orders adjourning directions hearing listed for 23 May to 1 August and No orders as to costs

Email from WorkSafe advising it consented to a request by the applicant for a 4 week adjournment of the directions hearing listed for 1 August in order to assess its position in light of ongoing developments in the Federal Court proceeding. Due to the late application for an adjournment, the directions hearing proceeded as schedule on 1 August.

All parties attended the directions hearing (VIP's solicitor appeared by telephone). Consent orders adjourning the directions hearing to 29 August including no orders as to costs were handed up. Instead of a futher adjournment the tribunal listed a further compulsory conference on 20 September.

Minutes of Consent Orders signed by representatives for all parties were filed by email by WorkSafe seeking to adjourn the compulsory conference to 17 October, the earlier date being inconvenient for WorkSafe, and no orders as to costs.

Orders adjourning the compulsory conference to 17 October. No orders as to costs were made.

1. VIP seeks an order that its legal costs be fixed at an amount of $42,000 which it says equated to 60% of its actual costs incurred in this proceeding - $69,952.14.
2. In its submissions, VIP notes there are related and continuing legal proceedings in the Federal Court of Australia.
3. I will consider each of the matters set out in s109(3) relied on by VIP in the order in which submissions are made on behalf of VIP. However, before doing so, I note that the tribunal's powers to make any orders for costs relate to a party's conduct of a proceeding in the tribunal. Factors such as the time taken by Schutz to commence WorkSafe's internal review process and steps taken, or orders made in the 'related' Federal Court proceeding are not a relevant consideration. I am only concerned with Schutz' conduct of this proceeding.
4. Further, although Schutz sought and was granted leave to withdraw its application for review under s74 of the VCAT Act, there is no evidence before me as to any agreement which may have been reached between it and WorkSafe, and/or VIP giving rise to its application for leave to withdraw. It is not unusual for an applicant to seek leave to withdraw after entering into Terms of Settlement with a respondent including a condition that the applicant will withdraw its application.

(b) Prolonging unreasonably the time taken to complete the proceeding: s109(3)(b)

1. It is submitted on behalf of VIP that Schutz has engaged in extraordinary delay in this proceeding, noting that it has taken little if any substantive steps.
2. This submission must be considered in the context of the chronology set out above. The application for review was lodged on 8 November 2010. A resolution was not achieved at a compulsory conference held on 27 January 2011 when orders were made referring the matter to a directions hearing. A number of directions hearings have been adjourned by consent of all parties. In each instance, the Minute of Consent Orders included an order that there by No orders as to costs. At a directions hearing on 1 August, the tribunal ordered that there be a further compulsory conference. No issue was raised by VIP at that directions hearing about delay, or Schutz' failure to take any substantive steps in this proceeding.
3. In this regard, I note that no orders have been sought by the parties or made by the tribunal on its own initiative for the filing of material.

Conducting a proceeding in a way that unnecessarily disadvantaged another party: s109(3)(a)

1. It is submitted on behalf of VIP that the effect of the pendency of the proceedings has been to create uncertainty over the status of the Approval. I reject this. Section 50 of the VCAT Act is quite clear and relevantly provides:
   • (1) Subject to sub-section (2), the commencement of a proceeding for review of a decision does not affect the operation of the decision or prevent the taking of action to implement the decision.
   • (2) Sub-section (1) does not apply-

(a) if the enabling enactment provides otherwise; or

(b) if the tribunal makes an order under sub-section (3) [staying the operation of the decision]

1. There is no evidence before me to support VIP's assertion that Schutz sought and obtained access to WorkSafe's confidential communications with VIP, where it had sought and been denied discovery of such documents in the Federal Court proceedings. Even if I accept this assertion, there is no evidence before me as to when Schutz obtained these documents. For instance, did they obtain them as part of the internal review process, or after this proceeding was commenced? There have been no orders made for an interlocutory timetable in this proceeding.

1. I accept that in exercising its discretion the tribunal may make an order for costs where it is satisfied that a party's claim is weak, even if not utterly hopeless.[1] Any delay by Schutz in seeking an internal review of the approval is irrelevant in considering whether the tribunal should exercise its discretion under s74(2). I note time was extended by the Internal Review Officer. The application for review to this tribunal was made within the requisite 28 day period.
2. It is inappropriate to take into account any position adopted by a party at the compulsory conference. Not only were the discussions at the compulsory conference conducted on a confidential and without prejudice basis, it is not unusual for a party/ies to take a commercial approach in any form of Alternate Dispute Resolution when attempting to reach a resolution. Schutz has not formally abandoned any of the eight grounds for review, nor sought to amend the grounds for its application for review to this tribunal.
3. Steps taken in the Federal Court proceedings and orders made by the Court are, in my view, irrelevant in considering this application for costs.
4. In the absence of a determination of the application for review, or a hearing and determination of an application under s75 of the VCAT Act for summary dismissal of the application, it would be inappropriate to make any finding as to the merits or strength of Schutz' application.
5. Not only was VIP joined to this proceeding on its own application, it could have brought an application under s75 of the VCAT Act at any time and has not done so.

The nature and complexity of the proceeding; and any other relevant matter: s109(3)(d) and (e)

1. It is submitted on behalf of VIP that this proceeding forms a part of a complex dispute between the parties which also involves the Federal Court proceedings. Further, that the Federal Court proceedings involve multiple claims and cross-claims. The suggestion that this proceeding is commercial in nature and therefore:
   1. ... distinct from the majority of claims made in the Tribunal by individuals against administrative bodies (e.g. freedom of information)...

1. Those circumstances demonstrates this case is far from the usual kind of case in which the Tribunal might order that costs lie where they fall; rather, the proceedings were commenced by Schutz as part of a multifaceted commercial and strategic dispute between the parties.

is to misunderstand the nature and extent of the jurisdiction exercised by the tribunal in its civil jurisdiction where there can be no presumption that costs will follow the event.

1. Even if I accept that this proceeding is part of a wider commercial dispute between the parties, it does not follow that an order for costs would be appropriate. As Judge Bowman said when considering an application for costs in a domestic building dispute in Sabroni Pty Ltd v Catalano [2005] VCAT 374 at [5]:

Despite the observations of Member Young in Australia's Country Homes Pty Ltd v Vasiliou (delivered 5 May 1999), I am not of the view that there is anything peculiar to cases in the Domestic Building List that in some way gives a successful party an entitlement to a reasonable expectation that a costs award will be made in its favour. There is nothing in the wording of s.109 of the Victorian Civil and Administrative Tribunal Act 1998 that warrants such almost automatic expectation. In this regard I prefer the approach adopted by Deputy President Macnamara in Pure Capital Investments Pty Ltd v Fasham Johnson Pty Ltd (delivered 31 October 2002). Deputy President Macnamara concluded that there is nothing in the nature of a proceeding in the Domestic Building List that would justify departure from the presumption contained in s.109 and the exceptions thereto, and I am of the same opinion. Each case, whether it be in the Domestic Building List or elsewhere, must be viewed on its merits...

1. It is clear from the submissions filed on behalf of Schutz and VIP that the parties are involved in a bitter, complex commercial dispute in the Federal Court. However, in considering VIP's application for costs I can only be concerned with the parties' conduct of this proceeding. Accordingly, I have not had regard to the four judgments of the Federal Court in Schutz DSL (Australia) Pty Ltd v VIP Plastic Packaging Pty Ltd (No's 5, 8, 10, and 11) annexed to Mr William's affidavit.
2. Having considered the submissions made on behalf of both of the parties, I am not persuaded it is appropriate to exercise the tribunal's discretion and order Schutz to pay VIP's costs. In addition to the matters set out in s109(3) of the VCAT Act, I note that VIP was joined as a party on its own application, and that on each occasion (other than the adjournment of the compulsory conference listed for 20 September 2011) it consented to the adjournment of the next directions hearing and to an order that there be No orders as to costs,
3. VIP's application for costs will be dismissed, and there will be an order that there be No order as to costs as between the applicant and the joined party.

[1] Kelk v City of Brunswick (1992) 8 AATR 236 as cited in Lord Haven v Greater Dandenong [2000] VCAT 1873 at [60]