1. In State of Victoria v Bradto Pty Ltd[13] Judge Bowman held that a proceeding is conducted in a vexatious matter "if it is conducted in a way productive of serious and unjustified trouble or harassment, or if there is conduct which is seriously and unfairly burdensome, prejudicial or damaging".[14] The Court of Appeal in 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd[15] agreed that his Honour's description "encapsulates the circumstances in which conduct may be classified as vexatious".[16]
2. The relevant test was also carefully considered by Vice President Judge Jenkins, in 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd,[17] who concluded:

[77] By reason of the factual circumstances described above and the findings made following the damages hearing, I am satisfied that the Applicant:

(a) commenced an action for damages, following the finding that the Respondent was in breach of the lease, in circumstances where the Applicant, properly advised, should have known it had no chance of success;

(b) persisted in what should, on proper consideration, be seen to have been a hopeless case;

(c) engaged in conduct which caused a loss of time to the Tribunal and the Respondent;

(d) commenced a proceeding in wilful disregard of known facts or clearly established law; and

(e) made allegations as to losses which it claimed to have incurred, which ought never to have been made.

[78] In consequence, I am satisfied that the Applicant has conducted the proceeding in a vexatious way that has unnecessarily disadvantaged the Respondent. Accordingly, I am satisfied that the Respondent is entitled to an award of costs subsequent to the liability hearing, to the extent that such costs relate to the preparation for and hearing of the application for damages (emphasis added).

1. In 24 Hour Fitness, an unsuccessful application for leave to appeal against the decision of Judge Jenkins, the Court of Appeal referred to these paragraphs with evident approval.
2. I therefore consider that when deciding whether a proceeding is conducted in a way productive of serious and unjustified trouble or harassment, or whether there is conduct which is seriously and unfairly burdensome, prejudicial or damaging, so as to constitute the vexatious conduct of a proceeding, a relevant consideration is where the proceeding is maintained in circumstances that it is obviously untenable or manifestly groundless as to be utterly hopeless or, in the words of the Court of Appeal, "bound to fail".

1. It is clear from order 1 of the 2020 orders that I found, for the reasons I gave, there was no arguable case for the respondent's proposition that the parties held their respective shares in [the land] on any basis other than beneficially as tenants in common in equal undivided shares. I found that any contention by way of defence and/or by subsequent written submission of the respondent that the parties held otherwise, was bound to fail. To the extent that the respondent relied on that defence, it was struck out by order 1.
2. It is also clear from the 2024 orders, for the reasons I gave, that the defence of the respondent to the effect that the remaining net proceeds of sale of the land should not be disbursed to the parties until after:

(a) the lodging of accounts for the business entity PR Berlyn and DH Senior ABN 26 573 484 046 for the years ending 30 June 2020 and 30 June 2021; and

(b) any subsequent assessments by the Australian Taxation Office of any joint liabilities of the parties arising from their joint ownership of the land, and after any other joint liabilities have been identified

was frivolous, vexatious, misconceived and lacking in substance within the meaning of s75 of the VCAT Act.

(a) from the date of his defence dated 7 September 2018 (and his amended defence dated 18 December 2018) denying the proposition that since 2007 the land had been co-owned by the parties as tenants in common in equal undivided shares; and

(b) from the date of his subsequent contentions by way of defence that there should be no distribution of the net proceeds of sale until the completion of the winding up of the previous business affairs of the parties

the respondent persisted in what should, on proper consideration, be seen to have been a hopeless case for submitting to the Tribunal that it should, in the exercise of its discretion under s228 of the PL Act, not make the orders long sought by the applicant.

1. The applicant also relies upon findings against the respondent in the 2024 orders of his having conducted the proceeding in a way that unnecessarily disadvantaged the applicant by vexatiously conducting the proceeding within the meaning of s 78 of the VCAT Act.
   1. In Victoria v Bradto Pty Ltd ("Bradto"),[18] Judge Bowman VP (as he then was) observed at [67] that "a proceeding is conducted in a vexatious manner if it is conducted in a way productive of serious and unjustified trouble or harassment, or if there is conduct which is seriously and unfairly burdensome, prejudicial or damaging".
   2. I find that the respondent has filed multiple prolix submissions, often unrelated to the issues in dispute, and in parts insulting to the applicant and to his advisors. In some cases, the respondent has expressed himself in terms demeaning of the Tribunal.
   3. The respondent also sought orders by his affidavit sworn 24 June 2022 that senior practitioners of Heinz Law be joined to the proceeding on the grounds of alleged unconscionable conduct, that the applicant's legal advisors be joined to the proceeding on the basis of unethically being involved in a conspiracy to pervert the course of justice and disadvantage the respondent. The respondent also sought an order that the applicant be required to attend the Tribunal for examination concerning his position given, the respondent alleged, the inconsistent positions adopted by the applicant's respective legal advisors in relation to the issues in dispute. I dismissed the applications by my orders dated 17 August 2022 for lack of any evidential basis.
   4. The breadth of the respondent's wide-ranging and often irrelevant submissions has doubtless added to the cost of the proceeding to the applicant. I find that this conduct, and bringing of the joinder applications has unnecessarily disadvantaged the applicant.
   5. I consider that a reasonable litigant in the position of the respondent, properly advised, would not have chosen the course in the litigation that he did, and would not have resisted the applicant's request for a sale of the [land] and subsequent division of the net proceeds of sale. Rather, the respondent has endeavoured to prevent the due disbursement of the proceeds from the sale of the [land] as a means by which the due winding up of the parties' previous business affairs might be achieved.
   6. How the parties' previous business affairs are wound up, in the context of what is described by the applicant as a toxic relationship, remains something entirely in the hands of the parties.
2. I further find that the positions taken by the respondent by way of defence to the applicant's claim was conduct that unnecessarily disadvantaged the applicant by increasing the costs of what should have been an unexceptional application for sale and division of the proceeds of sale, in particular:

(a) whilst professing superior business and legal acumen (notwithstanding his lack of legal qualifications), the respondent's written submissions, such as his nine written submissions relied on by the respondent for the purpose of the 2020 orders, were verbose, repetitive and unclear. The applicant is informed by his lawyers that the confusing submissions complicated the work required of his own lawyers and increased his legal costs;

(b) the respondent failed or refused to sign the transfer of land to enable efficient settlement of the sale of the land to proceed, requiring the execution of the transfer and other relevant documents by the principal registrar of the Tribunal, upon receipt of affidavits Mr Dunne of Heinz Law, the firm charged by the Tribunal with responsibility for effecting the sale of the land;

(c) although the applicant understands the respondent to be an Australian citizen normally resident in Australia, the respondent refused to sign a Foreign Resident Capital Gains Tax Withholding Certificate[19] with the consequence that the purchaser of the land was required to withhold 12.5% of the purchase price at settlement. At the date of swearing his fifth affidavit, the Australian Taxation Office had not refunded or otherwise credited the applicant with his share of the amount withheld, and he then reasonably anticipated that further legal and accounting costs would be incurred in relation to the issue;

(d) the applicant sought to involve Heinz Law and Mr Start as neutral third party professionals (see the respondent's solicitors letter to the applicant's solicitors dated 20 December 2018, at page 9 of the exhibit to the fifth affidavit), with which appointments the applicant agreed. The applicant contends that the respondent subsequently fell into dispute both with Heinz Law and Mr Start as a result of which, he opines, higher professional charges were likely to have been imposed on the parties by both.

1. Perhaps most egregiously, by application dated 24 June 2022 (which I dismissed summarily on 17 August 2022), the respondent sought various orders, including

(i) the joinder of the applicant's solicitor and the applicant's counsel; and

(ii) two named employees of Heinz Law

as four individual parties to the proceeding, on the ground that each pair conspired with the other pair, such that all of them "inappropriately and unethically involved themselves in a conspiracy to pervert the course of justice and disadvantage the respondent".

(iii) an order that the applicant be deposed by the Tribunal for the purpose of clarifying his instructions to his solicitor on the one hand and his counsel on the other who, he alleged, had "agitated this matter inconsistently with each other."

1. In addition, I find that the respondent has engaged in what the applicant describes as strategic "feints", by way of commencing a course of action in the litigation, and not following through, for example, his appeal of the 2020 orders to the Supreme Court only to abandon his appeal in June 2024, and his application for a rehearing of the hearing on 4 September 2024, only to abandon the application by consent orders dated 15 October 2024.

Section 109(3)(b)- whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding

1. As is clear from the above summary of events, I find for the respondent was responsible for prolonging unreasonably the time taken to complete the proceeding.

Section 109(3)(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

1. It follows from the above that the applicant's case was strong relative to the respondent's. It also follows that the respondent made a claim in respect of the retention of the net proceeds of sale that had no tenable basis in fact or law.

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

1. I find that by the nature of his submissions, and the multiplicity of his applications, the respondent was responsible for creating a complex proceeding.
2. It warrants mention that, during the period that this matter was reserved for a costs decision, the respondent made two further misconceived applications, and I was required to make orders as follows:
   1. The respondent's application dated 19 February 2025 to obtain compliance by the parties with orders 4 and 5 of the orders of the Tribunal dated 20 October 2020, which orders and reasons were subsequently the subject of a notice of appeal filed 18 November 2020 in the Supreme Court of Victoria, which appeal was dismissed on 28 June 2024, is dismissed.
   2. The respondent's application dated 26 March 2025 seeking an order that the respondent answer interrogatories related to alleged real property transactions occurring between 19 July 2003 and 2019 (when the property the subject of this proceeding was sold by the parties), the answers to which appear from paragraph 2(b) of the application to be considered by the respondent as relevant to whether the applicant has conducted the proceeding in a way that unnecessarily disadvantaged the respondent, is dismissed.
3. It is regrettable that the respondent continued to insist that this proceeding should have been the vehicle by which the financial aspects of his former business relationship with the applicant should be regularised.
4. I have concluded that having regard to the above matters, it is fair that there should be a costs order against the respondent under s109(2) of the VCAT Act.

Whether there should be a special costs order

1. Section 112 of the Act allows a party to make a written offer to settle a proceeding, provided it complies with ss113 and 114 of the Act. The consequences of an offeree not accepting a complying offer are also set out in s112(2) of the Act.[20] These costs provisions do not, however, constitute a code.[21] It follows that a party to a proceeding may make another type of offer to settle the proceeding, that does not meet the description of an offer in sections 113 and 114 of the Act.[22] An unreasonable rejection by an offeree of what is known as a Calderbank offer may be considered as a relevant matter within the meaning of s109(3)(e) of the Act, when deciding whether it is fair to order costs in a proceeding.
2. A Calderbank offer is where the offeror states in the offer that, although it is made "without prejudice", the offeror reserved its right to produce it to the Tribunal on the question of costs.
3. The applicant attests by his fifth affidavit that at all times before and after the proceeding was commenced he proposed that, by agreement, the land should be sold, and the net proceeds divided equally between the parties.
4. I find this assertion to be supported by the applicant's solicitors' letter to the respondent dated 22 December 2017, expressed as a Calderbank offer, sent before the proceeding was commenced, and making an offer open for a period of 14 days from the date of the letter, was to that effect. It foreshadowed litigation, in the absence of such an agreed sale. It also foreshadowed an application for indemnity costs if orders made in the contemplated proceeding were not more favourable to the respondent than the offer.
5. The applicant deposes that the respondent responded by ten letters to the applicant's solicitors, none of which unequivocally accepted or rejected the December offer.
6. The applicant's solicitors' emailed a further letter dated 8 February 2018 to the respondent, sent before the proceeding was commenced, seeking a "yes" or "no" to the proposition made in December 2017 that the land be sold and the net proceeds divided. The offer in the letter was open for a period of 14 days from the date of the letter.
7. By the applicant's solicitors' further letter to the respondent dated 19 September 2018, following the respondent serving his defence on 7 September 2028, the respondent was informed that he had no substantive defence to the applicant's proposition that the land was co-owned beneficially by the parties, and urged the respondent to obtain independent professional legal assistance. The letter informed the respondent that the applicant would "at the appropriate time seek orders that [the respondent] pay [the applicant's] legal costs of [the proceeding] on an indemnity basis".
8. For his part, the respondent's solicitors emailed a letter to the applicant's solicitors dated 20 December 2018, expressed as a Calderbank offer, proposing to pay the applicant $320,000 "for [the applicant's] interest in the Joint Venture (ABN 26 573 484 046)", the proposed terms of which included a transfer of the land to the respondent. That offer was conditional upon the applicant agreeing to wind up the alleged "Joint Venture entity", and the amount of $320,000 proposed to be paid to the applicant being first used to meet any shortfall in the Joint Venture entity. No reliance is placed on this letter by the respondent's costs submissions. In fairness, I find that this was not a genuine attempt to resolve the substantive claim of the applicant in the proceeding, which was an application by a co-owner for the sale of land. The offer attempted to engineer a more comprehensive and complex outcome, with reference to a range of commercial considerations high in the mind of the respondent, than what was sought by the applicant. It is therefore impossible to determine whether what has resulted, by my final orders, is a more favourable outcome than if the applicant had accepted the offer.
9. By email dated 4 March 2020 (by which date sale of the land had occurred), marked "without prejudice save as to costs" the applicant's solicitors offered "terms of final settlement of the VCAT proceeding" including, among other proposed terms, $385,000 being paid to the applicant from the net proceeds of sale, with the balance of the net proceeds of sale being paid to the respondent.[23] By the offer, the applicant proposed to bear his own costs. At that date, the I find that the applicant was still offering to receive about half of the ten contemplated net proceeds of sale, but without recompense for any of his costs incurred to that date.
10. By email dated 12 March 2020, prior to a then scheduled directions hearing on 18 March 2020, the applicant offered an interim arrangement whereby $250,000 be paid to each party from the net proceeds of sale, with the balance to remain in an interest bearing trust account pending further order of the Tribunal or agreement of the parties. The applicant informed the respondent that the email would be produced in support of an application for indemnity costs. The offer was expressed to be open until midday on 16 March 2020. The respondent did not accept the offer. In the event, the then anticipated directions hearing was not held until 15 May 2020, and orders were then made for submissions on the question whether an interim disbursement should be made to the parties. Between 9 June 2020 and 11 October 2020, the respondent filed multiple submissions contesting the proposition that there should be an interim disbursement to the parties from the net proceeds of sale. The applicant's previous offer of $250,000 being paid to each party, was the very arrangement that was subsequently ordered by the 2020 orders.
11. An imprudent refusal of an offer of compromise is a matter to which a Court may have regard when considering whether to order indemnity costs.[24] The critical question is whether the rejection of an offer was unreasonable in the circumstances.[25] In Hazeldene's case_,_ Warren CJ, Maxwell P and Harper AJA discussed the circumstances that might lead a court to determine whether the rejection of an offer was unreasonable:

[25] The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. At the same time, a Court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard to at least the following matters:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree's prospects of success, assessed at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.[26]

1. In my view, and having regard to these matters, it was unreasonable for the respondent not to have accepted the applicant's offers dated 22 December 2017, 8 February 2018 and 4 March 2020.
2. I also find that it was also unreasonable for the respondent not to have accepted the applicant's offer dated 12 March 2020 in relation to proposed interim orders for part distribution of the net proceeds of sale.
3. An award of costs on an indemnity basis is usually made only in exceptional circumstances.
4. I find that the respondent's not accepting these offers, and the circumstances faced by the applicant in consequence of the conduct of the respondent throughout the course of the proceeding are plainly exceptional, entitling the applicant to be paid his costs of the proceeding on an indemnity basis.

1. In Ugly Tribe Pty Ltd v Sikola[27] Harper J also identified the following circumstances as warranting a special costs order, noting that the categories of circumstances are not closed:

(a) the making of an allegation, known to be false, that the opposite party is guilty of fraud;

(b) the making of an irrelevant allegation of fraud;

(c) conduct which causes loss of time to the court and to other parties;

(d) the commencement or continuation of proceedings for an ulterior motive;

(e) conduct which amounts to a contempt of court;

(f) the commencement or continuation of proceedings in wilful disregard of known facts or clearly established law; and

(g) the failure after the commencement of a trial, and without explanation, to discover documents, the timely discovery of which would have considerably shortened , and very possibly avoided, the trial.

1. I find that the conduct of the respondent in this proceeding has caused loss of time to the Tribunal, and to the applicant.
2. I also find that the maintaining of the defence by the respondent was for the ulterior motive of attempting to force the applicant to put an end to the parties' business relationship on the respondent's terms, and to call on the assistance of the Tribunal to supervise the process.
3. I find that the maintaining of the defence by the respondent, when it became clear from the Start report that there were no joint liabilities of the parties arising from their holding of the land, that Mr Start was able to identify, was also in disregard of the known facts.
4. I also find that having regard to the Ugly Tribe considerations, the applicant is entitled to be paid his costs of the proceeding on an indemnity basis.
5. In reviewing the manner in which the respondent has conducted the proceeding, overtly being for the improper or collateral purpose of seeking an outcome that put an end to the parties' business relationship on the respondent's terms, in making my final orders as to costs I regard as irrelevant the submission to the effect that the recently disclosed mental condition of the respondent should be regarded as a reason why a costs orders should not be made against the respondent, or should at least be ameliorated.
6. The submission on behalf of the applicant that, prior to the making of final orders, there should be an accounting of the reporting entity by which the parties formerly conducted their business is refused.

1. I have made a final order that the applicant and the respondent are jointly entitled as previous tenants in common in equal undivided shares in the land to the balance of the net proceeds (including interest) from the sale of the land remaining in the Supreme Court of Victoria's Funds in Court.
2. The question arises whether I should also order that the applicant be now entitled to access the share of the remaining net proceeds of sale that will otherwise be paid to the respondent.
3. In such cases, the Tribunal must do what, in its discretion, it considers just and fair in the circumstances. Section 228 of the PL Act provides:
   1. What can VCAT order?

(1) In any proceeding under this Division, VCAT may make any order it thinks fit to ensure that a just and fair sale or division of land or goods occurs.

(a) the sale of the land or goods and the division of the proceeds of sale among the co-owners; or

(b) the physical division of the land or goods among the co-owners; or

(c) that a combination of the matters specified in paragraphs (a) and (b) occurs.

1. Section 232 of the PL Act also confers a broad discretion on the Tribunal in such matters. It provides:
   1. Other matters in VCAT orders

In any proceeding under this Division, VCAT may order -

(h) that the sale and division of the proceeds of sale or the physical division of the land or goods is subject to any terms and conditions which VCAT considers necessary or desirable in any particular case.

1. I consider that ss228 and 232 of the PL Act provide a basis for making an order whereby the net proceeds of sale of jointly owned otherwise payable to one of the co-owners (in this case, the respondent) should, because it is considered just and fair, be paid to the other co-owner (in this case, the applicant) in part satisfaction of the latter's success in a proceeding that once commenced, should not have become so drawn out at the instance of the other co-owner.
2. I also accept the submissions made on behalf of the applicant that having regard to:

(a) the applicant having been successful in the proceeding;

(b) the applicant having been held out of some of the fruits of the proceeding since settlement of the sale of the land in May 2020;

(c) the applicant being still denied at least $57,000 of the gross proceeds of sale of the land otherwise payable to him but which, instead, has been remitted to the Australian Taxation Office by reason of the respondent's conduct as described above;

(d) the respondent being already in unexplained default of the costs order made in his Supreme Court appeal, now abandoned;

it is just and fair, and necessary or desirable, that the respondent's share of the remaining proceeds of sale be paid to the applicant in part satisfaction of the costs order that I have made against the respondent.

1. I make the attached orders. I make no order in favour of the applicant for "future costs" as sought.

[1] The applicant also seeks $20,000 for future costs "to the conclusion of the VCAT proceeding".

[2] Senior v Berlyn (No 2) (Building and Property) [2024] VCAT 124.

[3] The respondent filed by email a First Submission dated 10 June 2020 and attachments, a Second Submission dated 26 June 2020 and attachments, a Third Submission dated 30 June 2020 and attachments, a Fourth Submission dated 1 July 2020 and attachments, a Fifth Submission dated 2 July 2020 and attachments, a Sixth Submission dated 15 July 2020 and attachments, a Seventh Submission dated 15 July 2020 and attachments, an Eighth Submission dated 16 July 2020, a Ninth Submission dated 23 July 2020, and a Tenth Submission dated 11 October 2020 (partly responding to the applicant's submission dated 12 June 2020).

[4] The applicant had previously abandoned his allegation that the applicant may have received a greater benefit from holding the land than the respondent, and that an order for an accounting should be made.

[5] The power of the Tribunal to appoint an expert is provided in Schedule 3 clause 7 of Schedule 3 to the VCAT Act.

[6] See order 3 of my subsequent orders dated 17 August 2022.

[7] I also then summarily dismissed the respondent's application to join the respondent's counsel and his instructor as cross-respondents to the proceeding on the ground that they were conspiring with the stakeholder to pervert the course of justice against the respondent's interests.

[8] Mornington Peninsula SC v Fox [2003] VCAT 1524.

[9] S & R Property Developments Pty Ltd v Moonee Valley CC [2001] VCAT 541 at [36].

[10] Filippou Management Pty Ltd v MREEF Project Company No 11 Pty Ltd [2010] VCAT 1261 at [20].

[11] [1988] NSWCA 8; (1988) 14 NSWLR 481 at 491.

[13] [2006] VCAT 1813.

[15] [2015] VSCA 216.

[17] See 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd (Costs) (Building and Property) [2015] VCAT 596.

[18] State of Victoria v Bradto Pty Ltd (Palace Entertainment Complex) and Tymbook Pty Ltd (Palais Theatre)(Retail Tenancies Costs Ruling) [2006] VCAT 1813.

[19] See paragraph 8 of the Reasons accompanying the 2020 orders.

[21] See Alali v Mina [2005] VCAT 55 at [8].

[22] See Velardo v Andonov [2010] VSCA 38 at [39].

[23] It will be recalled that the land was sold in March 2020 for $912,000 plus $91,200 GST

[24] See Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) [2005] VSCA 298 at [17]- [20] and cases referred to therein.

[27] [2001] VSC 189 at [7], approved by the Court of Appeal in 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd [2015] VSCA 216.