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

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.

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);

(iv) causing an adjournment;

(v) attempting to deceive another party or the Tribunal;

(vi) vexatiously conducting the proceeding;

(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;

(d) the nature and complexity of the proceeding;

(e) any other matter the Tribunal considers relevant.

(4) If the Tribunal considers that the representative of a party, rather than the party, is responsible for conduct described in subsection (3)(a) or (b), the Tribunal may order that the representative in his or her own capacity compensate another party for any costs incurred unnecessarily.

(5) Before making an order under subsection (4), the Tribunal must give the representative a reasonable opportunity to be heard.

(6) If the Tribunal makes an order for costs before the end of a proceeding, the Tribunal may require that the order be complied with before it continues with the proceeding.

(7) A power of the Tribunal under this section is exercisable by any member.

Section 109(3)(c) - relative strengths of the claims made by each party

1. In respect to their reliance on s 109(3)(c), the respondents submitted:
   1. the claims made by the applicant were relatively weak and were not supported by the correct interpretation of the Agreement and the relevant facts;
   2. the Tribunal refused to uphold any of the grounds and arguments raised by the applicant;
   3. the applicant had the benefit of being represented by very experienced and specialist legal counsel and the Tribunal ought to assume that it was properly advised of the strength of its case and the possible consequences if unsuccessful in the proceeding.
2. In response to the respondents' reliance on s 109(3)(c), the applicant submitted:
   1. the relative strengths of the claims made by each party are to be assessed prospectively and not done in hindsight through the lens of 'you lost therefore your case was weak';
   2. being unsuccessful in the application is not sufficient in and of itself to warrant an order for costs;
   3. on no view can it be said that the applicant's case had no tenable basis in fact or law;
   4. while accepting that s 109(3)(c) is not limited to untenable claims of fact or law, the merits of the applicant's case do not otherwise warrant an order for costs against it;
   5. it is significant that the applicant sought to reach a resolution with the respondents directly before commencing the proceeding;
   6. when direct resolution with the respondents failed, the applicant sought the assistance of Council, who urged the applicant either to resolve the matter with the respondents or apply for an enforcement order;
   7. clarity was required by the applicant as to the respondents' obligations under the Agreement so that it might make informed decision regarding the steps required to be taken to develop the Alfred Place Land;
   8. the case was ultimately one that turned on finely balanced issued subject to reasonable alternative interpretations of the Agreement;
   9. the manner in which Council ran its case supported its submission that the issued were finely balanced.

Section 109(3)(d) - nature and complexity of the proceeding

1. In respect to their reliance on s 109(3)(d), the respondents submitted:
   1. the invocation of the Tribunal's original jurisdiction weighs in favour of an order for costs;
   2. the application was heard over three days, required the preparation of expert evidence and the calling of expert and lay witnesses;
   3. the application had a 'court like' character;
   4. the application involved many months of responses to correspondence from the applicant and ongoing legal advice from senior counsel;
   5. given the potential significant consequences to the respondents, they had no choice but to defend the application; and
   6. the nature and complexity weigh in favour of an order for costs.
2. In response to the respondents' reliance on s 109(3)(d), the applicant submitted:
   1. the fact that the application was one for an enforcement order and declaration in the original jurisdiction does not of itself warrant an order for costs;
   2. the proceeding was not in the nature of a County Court or Supreme Court proceeding which may otherwise render it appropriate to award costs;
   3. the interlocutory steps to the hearing were relatively straightforward;
   4. the respondents' claim, based on many months of response to correspondence from the applicant, is not particularised so as to demonstrate support for an order for costs.
   5. contact with the respondents was in in the nature of correspondence typical of Tribunal proceedings and not in the nature of more significant interlocutory case management steps experienced in the County Court and the Supreme Court;
   6. there was limited debate on factual matters;
   7. the scope of the expert evidence was also limited and largely intended to assist the Tribunal in interpreting terms of art used in the Agreement;
   8. the applicant was efficient in advancing its case;
   9. the respondents ignored that the interpretation of the Agreement involved broader questions of public interest; and
   10. the proceeding has provided greater clarity in respect of how the operative clauses of the Agreement are to be interpreted and how the respondents are required to perform their obligations in respect of fire risk.

Section 109(3)(e) - any other relevant matters

1. The respondents submitted that the following are other matters that support an award of costs against the applicant:
   1. the proceeding was commercial in nature and brought to advance the private development interests of the applicant;
   2. the respondents did not cause the application to be brought as the Tribunal found that they had not breached the Agreement;
   3. the application was serious and, if it had been successful, would have had significant financial implications for the respondents; and
   4. the respondents incurred substantial costs and time to defend the application and it is unfair in the circumstances for the respondents to bear the costs of defending the proceeding.
2. The applicant submitted the fact that the application involved serious matters of consequence to the respondents should be balanced against the similarly serious consequences for the applicant and the development of the Alfred Place Land had it not commenced the proceeding given the Council declined to intervene.
3. The applicant also submitted that the respondents incurred substantial costs and time to defend the application is not determinative and does not in all the circumstances warrant an award of costs against the applicant.

1. The starting position on costs under s 109(1) of the VCAT Act is that each party bears their own costs.
2. The power to award costs under s 109(2) of the VCAT Act -
   1. is discretionary;
   2. should only be made where the Tribunal is satisfied that it is fair to do so.
3. In considering whether it is fair to make an order for costs under s 109(2), the Tribunal must have regard to the matters set out in s 109(3) of the VCAT Act.
4. While the respondents rely on s 109(3)(c), (d) and (e) of the VCAT Act in support of their application for costs, the Tribunal must have regard to all of the matters listed in s 109(3) when considering whether it is fair to make an order for costs under s 109(2) of the VCAT Act.
5. In addition to hearing the enforcement application, I also primarily case managed this proceeding since March 2023.
6. For the purposes of considering the matters set out in s 109(3)(a) and (b) respectively, I am satisfied from my own knowledge of the management of this proceeding and from a review of the interlocutory orders made by the Tribunal that the applicant:

has not conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding; and

has not been responsible for prolonging unreasonably the time taken to complete the proceeding.

1. I will now turn to the specific matters relied on by the respondents to support their application for costs.

Section 109(3)(c) - relative strengths of the claims made by each party

1. For the reasons that follow, I am not satisfied that it is fair to award costs against the applicant having regard to the relative strengths of the claims made by each party.
2. I accept that it is not necessary for a party's claim to have no tenable basis in fact or law in order for the matter in s 109(3)(c) to be relevant. Neither the application for costs nor the respondents' submission make claim that the application that commenced this proceeding had no tenable basis either in fact or law.
3. The detailed nature of both the oral and written submissions of the three parties before the Tribunal regarding the interpretation of the Agreement and the application of the Agreement to the facts before the Tribunal attests to foundation of the applicant's claims in both fact and law. The application was not one that could be characterised as having no tenable basis in fact or law.
4. As to the whether the relative strengths of the claims made by each party should otherwise warrant an award of costs against the applicant, the following relevant matters weigh against such an order:
   • the terms of the Agreement were not clear, precise or eloquent and were reasonably open to opposing interpretations particularly in circumstances when the terms of the Agreement were sought to be applied some 36 years after its execution by persons that were not originally signatories to the Agreement;
   • the nature of the competing interpretations is evident in the focus of both the written and oral submissions of the parties on the interpretation of the terms of the Agreement rather than on matters of disagreement arising from the relevant facts;
   • while the 2024 Order dismissed the application, not all of the respondents' submissions as to the interpretation of the Agreement were accepted by the Tribunal, such as the oral submissions of the respondents regarding the purpose of the Agreement;
   • both the applicant and the respondents saw fit to call and rely on expert witness evidence at the hearing which demonstrates an acceptance by both parties as to the relative strength of each other's position;

while it is the case that the applicant commenced this proceeding by making application for an enforcement order against the respondents, it should not be overlooked that Council was a party to this proceeding and in many respects advanced arguments as to the interpretation of clauses 4 and 5 of the Agreement that were similar, if not the same, to those of the applicant. In this regard, I particularly note that Council's position was that the Stage 3 Building Permit enlivened the respondents' obligation under clause 5, but that the consequences of that was a matter for resolution between the applicant and respondents; and

the 2024 Order has provided both the applicant and the respondents with clarity as to the interpretation and application of the Agreement that benefits both parties in their future dealings with each other and in respect to the future development of their respective properties.

Section 109(3)(d) - nature and complexity of the proceeding

1. For the reasons that follow, I am not satisfied that it is fair to award costs against the applicant after consideration of the nature and complexity of the proceeding.
2. I do not accept that simply because the proceeding invoked the Tribunal's original jurisdiction, that this 'weighs in favour of an order for costs'.
3. I also do not accept that the observation by the Tribunal in Sweetvale Pty Ltd v Minister for Planning [2004] VCAT 2000 that it would be more likely to make an order for costs if 'the proceeding was brought in the tribunal's original jurisdiction, not its review jurisdiction'[1] is anything more than an observation about the likelihood of costs orders being made in the original jurisdiction versus the review jurisdiction. As an observation of likelihood, it cannot have any weight at all in the consideration of matters under s 109(3)(d) of the VCAT Act by another division of the Tribunal when considering an application for costs.
4. I do not consider that the nature and complexity of the proceeding commenced by the application for an enforcement order warrants an order for costs. In essence, the proceeding was one that centred around the interpretation of a s 173 Agreement and application of that interpretation to the facts before the Tribunal.
5. It is true that the practice of the Tribunal in the Planning and Environment Division requires (to facilitate the just and expeditious disposition of a matter) pre-filed written submissions, the provision of a Tribunal Book (in this case by the applicant) and where necessary, practice day hearings, but none of these practices or requirements can reasonably be considered to be complex.

I accept that application had serious consequences for both the respondents and the applicant. I accept that the respondents have incurred substantial costs and time in responding to the application. However, this is not a proper reason of itself to depart from the general rule that each party bears its own costs.

It is the case that expert witness evidence was called and relied upon by both parties, however this alone does not make this proceeding complex.

Section 109(3)(e) - any other relevant matters

1. I am not satisfied that there are any other relevant matters that would warrant an award of costs against the applicant.
2. I do not accept the respondents' submission that the application was concerned with the private commercial interests of the applicant as a fair characterisation of the application. I accept that the interpretation of the Agreement affects future development opportunities of the applicant's land and to that extent affects the applicant's private commercial interests. The same observation can be made of the impact of the Agreement on the future development opportunities on the 120 Collins Street Land. However, the fact that the interpretation of the Agreement affects the commercial interests of the applicant is not a sufficient reason of itself to depart from the general rule regarding costs.

1. Having regard to the matters set out under s 109(3) of the VCAT Act, I am not satisfied that an order for costs should be made against the applicant. The respondents' application for costs is refused.