1. The Tribunal has no power to order costs in favour of or against a non-party (answering a subpoena).

2. Liberty to apply.

Mr Nugent and Mr Hopper of counsel, instructed by Mitrakas Savas & Co., Lawyers & Consultants.

Mr J.P. Moore of counsel, instructed by Minter Ellison.

1 During the conduct of the principal application of State of Victoria v Bradto Pty Ltd and Tymbook Pty Ltd, which matter consumed an extraordinary amount of time, a subsidiary argument was heard concerning two summonses issued by Bradto Pty Ltd ("Bradto"). The summonses were directed to and served upon Ms Rebecca Doherty, an officer of the City of Port Phillip ("Doherty") and upon the City of Port Phillip ("COPP").

2 On 28th November 2005, argument was heard concerning the setting aside of the summonses. Both Doherty and COPP had obtained legal representation for the purposes of arguing that the summonses should be set aside. Mr J P Moore of counsel appeared for them. He attended on several occasions, awaiting the opportunity to argue in favour of the setting aside. The argument on behalf of Bradto was advanced by Mr Hopper and Mr Nugent of counsel. Bradto opposed the setting aside of the summonses. Doherty and COPP were successful in their application.

3 Mr Moore then sought his client's costs. I raised some doubts as to the power of this Tribunal, operating as it does pursuant to the provisions of the Victorian Civil and Administrative Tribunal Act 1998 ("the Act"), to order costs in favour of persons not joined to the proceeding. As it was thought desirable to push ahead with the hearing of the principal application, both Mr Moore and Messrs Hopper and Nugent were afforded the opportunity of providing written submissions in relation to this issue. Accordingly, very helpful written submissions have been filed and served.

4 The submissions of Mr Moore on behalf of these persons could be summarised as follows. Basic fairness requires that a non-party, who has neither instigated litigation nor engaged in conduct which has provoked another to litigate, should not be out of pocket - see the remarks of Heerey J in Australian Competition and Consumer Commission v Boral Limited [1999] FCA 663. Bradto, in its submissions, basically concedes this principle of fairness, but argues that the Tribunal does not have the power to make such an order. The absence of such a power would enable the Tribunal's processes to be used oppressively against third parties. The Tribunal should resist the proposition that it has no such power.

5 In at least two decisions of this Tribunal, costs have been ordered in favour of a person summonsed by a party to appear and/or produce documents. Those decisions are Bufalo Corporation Pty Ltd v Bulla Road Pty Ltd (delivered 26th May 2000) and Cabouret v Reward Insurance Pty Ltd and Mathews [2002] VCAT 1493. The correctness of this has been doubted in two other decisions, namely Rewal v IBM Australia Limited [2003] VCAT 1340 and Pong Property Development Pty Ltd v Paradise Constructors Pty Ltd (delivered 30th November 2005). Interrupting this summary of the submissions, I might say that in each of those matters I was the judge presiding. Continuing, whilst in Pong Property, grave misgivings were expressed as to whether the Act permitted a costs order to be made in favour of a person summonsed to appear before the Tribunal, in Rewal the possibility was left open. In neither case was it stated that the decisions in Bufalo and Cabouret were wrong.

6 In fact, the decisions in Bufalo and Cabouret should be followed. This is so for the following four reasons:-

(i) Whilst the Tribunal is not bound by its own decisions, it is desirable for it to decide matters consistently.

(ii) Where there is uncertainty, it is preferable for the Tribunal to act consistently with the basic principles of fairness than to accept a situation where its own procedures may be oppressive to non-parties.

(iii) In Pong Property, the decision of the Court of Appeal in Victoria Legal Aid v The County Court of Victoria and Anor [2004] VSCA 113 was not brought to the Tribunal's attention. That decision strongly supports the conclusion reached in Bufalo and Cabouret. It was there determined that a statutory provision relating to costs of a "party" extended to participants in the proceedings, such as a person attending court in compliance with a subpoena. Despite the wording of s.59 of the Act, the purpose of which is to determine who may adduce evidence, join argument and appeal, the decision of the Court of Appeal in Victoria Legal Aid should be applied to the present situation.

(iv) Even if s.109(2) of the Act does not apply, jurisdiction to make the order sought can be found pursuant to ss.80, 98 and 104(4) of the Act.

7 If the Tribunal does have jurisdiction to make such an order, it should be made for the following reasons:-

(i) Such an order would be consistent with the basic principles of fairness.

(ii) The Tribunal had already ruled that the documents the subject of the subpoenas were irrelevant.

(iii) Doherty and COPP had put Bradto on notice that, because of previous rulings of the Tribunal in the principal matter, an application would be made to set aside the summonses and costs would be sought. Despite this, Bradto pressed on with its subpoenas.

8 The suggestion by Bradto that an order for costs should not be made because Doherty and COPP are no strangers to the litigation has no merit.

9 Accordingly, Bradto should pay the costs of Doherty and COPP on a solicitor and own client basis.

10 The submissions of Mr Hopper and Mr Nugent on behalf of Bradto could be summarised as follows. The documents the subject of the subpoena are relevant and there is no ruling to the contrary. Whilst the decision in ACCC v Boral refers to the principle of basic fairness and this approach was adopted in Bufalo and Cabouret, the Tribunal does not have power to make an order that a party pay the legal costs of a third party. Section 109 of the Act restricts the power to award costs to the payment of costs of a party by another party or by the legal representative of a party. There is no provision for the payment of costs to a non-party.

11 Doherty and COPP do not fall within the definition of "a party" as contained in s.59 of the Act. Neither do they fall within the definition of "Parties to a proceeding" as defined in s.89 of the Retail Leases Act 1999. Section 92 of that Act governs costs of proceedings brought before the Tribunal, and its operation is confined to parties to a proceeding.

12 Section 104 of the Act gives the Tribunal the power to award fees and allowances to a person who answers a summons. This power is clearly distinct from that to award costs pursuant to s.109. To find that s.80 of the Act gives to the Tribunal power to award costs to a non-party is inconsistent with the operation of ss.104 and 109. In addition, Doherty and COPP are not strangers to the litigation.

13 The decision in Victoria Legal Aid does not assist Doherty and COPP. If there is a lacuna in the Tribunal's powers, which is denied, that is a matter for parliament. In relation to s.98 of the Act, the Tribunal does not have the power to adopt practices and procedures that are inconsistent with the Act or another empowering statute.

14 At the outset let me say that the merits of this matter, both in relation to the principles to be applied and in relation to the facts of the particular case, are entirely with Doherty and COPP. I accept the submissions of Mr Moore in this regard. In my opinion, it is highly desirable that this Tribunal should have the power to order costs in favour of someone who has unnecessarily incurred such costs in addition to wrongfully suffering the inconvenience and expense associated with the answering of a subpoena. In the present case, Doherty and COPP were successful in having the subpoenas set aside, and had accurately forecast this outcome to Bradto. Legal representation was engaged. Costs were incurred. Inconvenience was doubtless caused. I agree that basic principles of fairness strongly support the proposition that a non-party in such a position should recover its costs, and I also agree with the proposition that such costs should be on a solicitor and own client basis. As a matter of fairness, I see no reason why a person who has been so subpoenaed should be out of pocket.

15 However, the basic question is whether or not the Tribunal is empowered to make an order of this kind. Despite my attention having been drawn to the decision of the Court of Appeal in Victoria Legal Aid, the grave misgivings which I expressed in Pong Properties have not disappeared.

16 The decisions in Bufalo and Cabouret, made by Deputy President Cremean as he then was and Deputy President Aird respectively, are sensible, practical decisions affording basic fairness in situations which merited it. It is with very considerable reluctance, and whilst bearing in mind the desirability of consistency and the principles of comity between co-ordinate divisions of a jurisdiction, that I decide that I cannot follow those decisions.

17 The decision in Cabouret follows that in Bufalo, and indeed an extract from the decision in Bufalo is quoted. That extract, which appears to be a key passage, is as follows:-

"A non-party, by definition, however, is not a party. Yet there is a clear practice or procedure in the courts to the effect that a non-party should get its costs on discovery. Underlying that practice or procedure is a basic issue of fairness - someone, not a party to a proceeding, or gaining anything out of it being drawn into it. The Tribunal, of course, is not bound by any of the practices or procedures applicable to courts of record; s.98(1)(b). But it is able to adopt any of those practices or procedures. I am satisfied that the practice or procedure I have referred to is one which the Tribunal should adopt as a matter of basic fairness."

18 As practical and fair as this proposition is, it seems to me that it contains one inescapable flaw. The power to order costs is not a matter of practice or procedure. It is a matter of jurisdiction or substantive law. Whilst this seems to me to be a well-established, almost trite, proposition, in the context of tribunals it was specifically stated to be the case by Powell JA in Walton v McBride (1995) 36 NSW LR 440. Powell JA described the question of a Tribunal's power to make orders as to costs as "... being one relating to a substantive order rather than a mere question of procedure ...". In summary, such power is not a practice or procedure which can be adopted pursuant to s.98(1) of the Act.

19 The power to order costs is a question of jurisdiction. In the absence of an express statutory power to order costs, a court has no such power. A detailed history of the development of the law in this regard can be found in the judgment of Brooking J in Burns Philp & Co Ltd v Bhagat [1993] VicRp 13; [1993] 1 VR 203.

20 Statutory provisions may give to a court a broad discretion in relation to costs. An example of this is s.24(1) of the Supreme Court Act 1986 which reads:-

"Unless otherwise expressly provided by this or any other Act or by the Rules, costs of and incidental to all matters in the Court, including the administration of estates, and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid."

21 The breadth of the discretion conferred by this section, and when combined with the provision of Order 63 of the Supreme Court (General Civil Procedure) Rules 1996, has been sufficient to permit the Court to order costs against a non-party. Furthermore, "party" is defined in s.3 of the Supreme Court Act 1986 as a term which:-

"... includes every person served with notice or attending any proceeding, whether named on the record or not".

22 Thus, the word "party", as used in Order 63, would clearly be of sufficient breadth to include persons in the position in which Doherty and COPP find themselves in the present case. It would then be a matter as to whether the Court's discretion should be exercised in favour of them. However, the important point to be remembered is that the discretion has its origin in a statutory provision.

23 Similarly, the power of a Tribunal to award costs depends on statute, and there is no common law jurisdiction in a Tribunal to order costs - see Walton v McBride. In relation to the last mentioned proposition, it is to be recalled that, in any event, this Tribunal is a creature of statute. Its powers and jurisdiction are to be found in the Act and in enabling enactments. It cannot, for example, confer upon itself some manner of equitable jurisdiction. Accordingly, and whilst some assistance in relation to interpretation may be found in Victoria Legal Aid, to which I shall return, the essential starting point is to be found in the provisions of the Act. The power of the Tribunal to order costs is to be found in s.109. Whilst the discretion contained in s.109 is quite broad, it is not of the breadth to be found in s.24(1) of the Supreme Court Act.

24 Pursuant to s.109(2) of the Act, "... the Tribunal may order that a party pay all or a specified part of the costs of another party in a proceeding." The word "party" is used throughout s.109, and the only exception specified where costs can be ordered against someone other than a party is to be found in s.109(4), which gives the Tribunal power to make a costs order against the representative of a party. Even that provision does not go so far as to authorise the making of a costs order against the representative of a party in favour of a non-party, and indeed s.109(4) takes one back to sub-section (3) and thence to sub-section (2). Thus, the power to order costs is specifically confined to the ordering of costs against one "party", and in favour of another "party" in a "proceeding".

25 The next provision to be considered is s.59 of the Act. In it, the parties to a proceeding are identified and defined. That provision reads:-

(a) in a proceeding in the Tribunal's original jurisdiction -

(i) the person who applies to the Tribunal, or who requests or requires a matter to be referred to the Tribunal; and

(ii) in the case of an inquiry by the Tribunal, the person who is the subject of the inquiry; and

(iii) any person joined as a party to the proceeding by the Tribunal; and

(iv) any other person specified by or under this Act or the enabling enactment as a party ...".

26 It can immediately be seen that this provision is considerably narrower than the definition of "party" contained in s.3 of the Supreme Court Act. It is also considerably narrower than the definition of "party" contained in s.3 of the County Court Act 1958, which is in similar, although not identical, terms to the definition contained in the Supreme Court Act. In short, for the purposes of the present case, the parties within the meaning of s.59 are the State of Victoria, Bradto Pty Ltd and Tymbook Pty Ltd. The definition contained in s.59 does not extend to other persons. The definition of "parties to a proceeding" contained in s.89 of the Retail Leases Act 1993 could be viewed as being even more narrow, although its effect in the present case does not seem to me to differ from that of s.59 of the Act. In both instances, neither Doherty nor COPP have been joined as parties by reason of receipt of the subpoenas or for any other reason. Had application been made pursuant to s.60 of the Act that they be joined, the situation may well have been different.

27 In any event, it was determined by Byrne J in Pyramid Building Society (in liq.) & Ors v Farrow Finance Corporation (in liq.) & Ors; ex parte Farrow, Clarke and Lawson [1995] VicRp 30; 1995 1 VR 464 that a person attending a proceeding in response to a subpoena, at least for the purposes of Order 42.08(1), is not a party within the meaning of the statutory definition. If such a person is not a party for the purposes of the broader statutory definition contained in the Supreme Court Act, a fortiori such a person would not be a party for the purposes of s.59 of the Act.

28 That persons such as Doherty and COPP are not parties finds further support from the decision of Brereton J in the Supreme Court of New South Wales, Equity Division, in Application of Struthers, Liquidator of P.A.C.I. Pty Limited (delivered 27 September 2005 and revised 17 November 2005). As was stated in paragraphs 35 and following of that judgment:-

"The joinder of a person as a party in legal proceedings is not something which happens by accident. In order to be a party, one must either be named in the originating process, or joined pursuant to an order of the Court at some later stage. It is not something which lends itself to happening other than by a formal step.

A witness who is served with a subpoena to give evidence in proceedings is not regarded as a party to those proceedings ....

And if such a witness appears by counsel and applies to set aside a subpoena, the witness even then does not thereby become a party."

In summary, Doherty and COPP are not parties to the proceeding within the meaning of the Act. If such persons are not parties, it is difficult to see how an order pursuant to s.109 of the Act can be made for or against them.

29 Just as I am not persuaded by the argument that the practices and procedures of the Courts can be adopted pursuant to s.98 so as to enable the Tribunal to make the type of order sought, similarly I am not persuaded by any argument based upon s.80 of the Act. The power to "do whatever is necessary for the expeditious or fair hearing and determination of a proceeding" does not, in my opinion, permit the Tribunal to exercise a power or assume a jurisdiction which it otherwise does not have. In Bufalo, Deputy President Cremean raised the possibility, in passing, that s.80 might authorise a party to pay the costs of a non-party. I am afraid I cannot agree.

30 In Rewal, it was submitted to me that a matter such as this was "a proceeding within a proceeding" and therefore, effectively, the non-party was essentially a party to the "proceeding". I was referred to the decision of the Federal Court of Australia in Commonwealth of Australia v Construction Forestry Mining and the Energy Union [2003] FCAFC 115. Whilst that argument has not been raised in the present case, I have again considered that decision, and remain of the opinion that it does not assist. Apart from the fact that it was a case conducted in a totally different statutory context, the Commonwealth of Australia had actually become a party to the appeal which was being heard.

31 There are two further matters to be considered. The first of these is the effect of the decision of the Court of Appeal in Victoria Legal Aid, which decision, as Mr Moore correctly surmises, was not brought to my attention in Pong Properties. However, on reviewing that decision, it does not seem to me that it would have caused me to alter the observations which I made in Pong Properties. It would not have alleviated the misgivings which I then expressed.

32 The leading judgment in Victoria Legal Aid is that of Chernov J.A. An examination of his detailed judgment reveals the following significant observations which distinguish that case from the present situation. Firstly, the appeal concerned an order that a legal practitioner (Victoria Legal Aid) pay the costs of a non-party. Whilst it was s.25 of the Crimes (Criminal Trials) Act 1999 that was under consideration, this section essentially reproduced Rule 63.23 of the Supreme Court (General Civil Procedure) Rules 1996, and it was that to which His Honour turned. That Rule is headed "Costs liability of lawyer [Supreme Court only]". Rule 63.23 (1)(c) provides that "... the Court may make an order that ... the solicitor pay all or any of the costs payable by any party other than the client". In this regard Chernov J.A. observed the following at paragraph 20:-

"... it seems to me that the underlying purpose of the Rule makes it likely that "party" has a wider meaning than contended for by the appellant. The Rule essentially reflects the superior court's supervision over practitioners so that it is likely that the Rule was intended to affect the Court's power, in appropriate circumstances, to order a practitioner to pay the costs incurred by a non-party in relation to a proceeding due to the practitioner's wrongful act. There is no apparent policy or other reason to suppose that Rule 63.23 was intended to empower the Court to order a defaulting practitioner to pay costs of a named litigant but not those of a non-litigant, notwithstanding that each has incurred costs in relation to the proceeding due to the practitioner's misconduct or default."

This consideration of the superior court's supervisory role does not apply in the present case.

33 Secondly, His Honour determined that the word "party" for the purposes of Rule 63.23(1)(c) bore the same meaning as that defined in s.3(1) of the Supreme Court Act. Therefore, a person served with a subpoena fell within that definition. It is to be recalled that the definition includes the words "every person served with notice thereof or attending any proceeding, whether named on the record or not". As stated, such words are not contained in s.59 of the Act.

34 Thirdly, His Honour considered that the observations of Byrne J in Pyramid Building Society were "plainly right". In his opinion, the decision of Byrne J turned on the interrelation between the definition of "party" in the Supreme Court Act and Rule 42.08(1), a situation differing from that facing His Honour in relation to Rule 63.23. It may well be that the type of situation envisaged in Rule 42.08(1) is closer to the present situation than that envisaged in Rule 63.23. Whichever way one looks at it, the decision in Victoria Legal Aid does not assist Doherty and COPP. If the approach adopted by Byrne J in Pyramid Building Society is employed, Doherty and COPP are not parties and would not even be parties pursuant to the provisions of the Supreme Court Act and Rules. If the approach adopted by Chernov J.A. in Victoria Legal Aid is employed, they may arguably be parties in a Supreme Court action, but only because they fall within the definition contained in the Supreme Court Act, which definition is not applicable in the present case. Therefore, again, they would not be parties within the meaning of s.59 or s.109.

35 In summary, the statutory context in which costs were ordered in Victoria Legal Aid is significantly different from that in the present case. That difference is of such magnitude that the decision is of no assistance to Doherty and COPP, and, if anything, underlines the difficulties confronting them in attempting to obtain a costs order pursuant to the Act.

36 The final matter to be considered is whether an amount in respect of legal costs could be ordered pursuant to s.104(4) of the Act. It is a proposition concerning which I expressed some doubt in Rewal v IBM Australia Ltd [2003] VCAT 1340.

37 Some might consider that there is support for the proposition in Pyramid Building Society. In that case, Byrne J determined that legal expenses incurred by a non-party witness for the purpose of complying with a subpoena to give evidence could be the subject of an order pursuant to Rule 42.08. At first blush this may seem to lend support to the argument that legal costs can be ordered pursuant to s.104(4). However it is to be borne in mind that Rule 42.08 reads as follows:-

"Where a person named not being a party reasonably incurs in complying with a subpoena expense or loss substantially exceeding the amount of any conduct money given, the Court may order that the party who filed the subpoena pay to that person an amount in respect of that expense or loss."

38 That is to be contrasted with the wording of s.104(4) of the Act, which reads as follows:-

"A person who attends in answer to a summons is entitled to be paid the prescribed fees and allowances or, if no fees and allowances are prescribed, the fees and allowances (if any) determined by the Tribunal."

No fees and allowances have been prescribed. They are those determined by the Tribunal.

39 Significant differences in the wording of the two provisions are immediately discernable. There is a marked distinction between the concept of "expense or loss substantially exceeding the amount of any conduct money" and "fees and allowances". Indeed, in Pyramid Building Society, Byrne J observed that the inclusion in Rule 42.08 of the word "loss" suggested that it had a wider compass than conduct money as defined. Furthermore, he contrasted the wording of Rule 42.08 with that of Rule 42.08.1, which deals with the "fees and expenses" payable to a person not a party who attends before the court, and gives evidence, or has been subpoenaed but not called as a witness. In other words, Rule 42.08.1 deals with witnesses' fees and expenses, as indicated by the heading of the Rule.

40 He also contrasted the wording of both those Rules with the definition of "conduct money" in Rule 42.01. According to that definition, conduct money is:-

"... a sum of money or its equivalent sufficient to meet the reasonable expenses of a person named of complying with a subpoena in relation to the day on which he is required by the subpoena to attend."

Byrne J went on to observe that the reasonable expenses there referred to "... clearly include expenses such as travelling costs, sustenance and, where appropriate, accommodation".

41 Thus, pursuant to the Rules of the Supreme Court, there would seem to be three levels of possible payment. Each has different terminology and each would seem to cover different situations. There are the "reasonable expenses" which constitute conduct money and without the receipt or tender of which a person is excused from complying with a subpoena - see Rule 42.05. There are the "fees and expenses" payable to a person (not a party) who attends before the Court as a witness - see Rule 42.08.1. This would seem to cover the additional expenses that may be incurred by a witness as a result of attendance before the Court - see, for example, the decision of McDonald J in Sheraton v Albeth Pty Ltd (in liq.) (delivered 9 September 1993). Then, in addition to witnesses' fees and expenses, there is the "expense or loss" reasonably incurred by a non-party in complying with a subpoena where that expense or loss substantially exceeds the amount of any conduct money given - see Rule 42.08. It was pursuant to this last-mentioned and most sweeping provision that Byrne J, in Pyramid Building Society, ordered the payment of legal costs.

42 Of course, the wording contained in s.104(4) of the Act is "fees and allowances". To my mind, this falls a long way short of "expense or loss substantially exceeding the amount of any conduct money given". Therefore it also falls a long way short of empowering the Tribunal to order the payment of legal costs in the manner in which Byrne J determined he was so empowered in Pyramid Building Society.

43 It is worth noting that the type of orders made by this Tribunal pursuant to s.104(4) in the past dealt with such "fees and allowances" as the cost of attending court, loss of private business time, and car parking - see Re Darmos and Yarra CC [2003] VCAT 1462 and Re Roberts and Monash CC [2002] VCAT 129. To my mind, it is expenditure of that type which is countenanced by s.104(4). Legal costs do not fall within it.

44 Thus, regrettably, in my opinion the Tribunal has no power to make an order either in favour of or against a non-party in relation to legal costs. This is a highly unsatisfactory state of affairs. As discussed by Byrne J in Pyramid Building Society, there will be situations where it is proper for the interests of a non-party to be protected by legal representation. In those circumstances, and if the situation warrants it, the principle of basic fairness would seem to me to require that the cost of that representation be met. It is also desirable that, in such a situation, the Tribunal and the parties receive the full co-operation of, and assistance from, a non-party, something which might not always occur if it is known that legal costs so incurred cannot be recovered. It seems to me highly desirable that s.104(4) be amended and brought in line with the approach contained in Rule 42.08.

45 As previously mentioned, the situation may have been different had Doherty and COPP applied, upon receipt of the subpoenas and prior to the costs in relation to the hearing of this application being incurred, and such application was successful. I am far from saying that such application would have been successful, but, as I have previously observed in other matters, the discretion contained in s.60 of the Act is a broad one. In any event, no such application was made in the present case. Nor was any application made that Doherty and COPP intervene pursuant to s.73(3) of the Act - see the decision of Senior Member Walker in Kyrou v Contractors Bonding Limited (delivered 27 March 2006). I might add that I am in no way suggesting that any such applications now be made "after the event". I would take very considerable persuasion that, for the purposes of recovering costs, a non-party should be joined as a party after the costs have been incurred and after submissions concerning those costs have been completed, or that such non-party should now intervene.

46 I leave to one side the question of whether any fees and allowances are payable pursuant to s.104(4) as I have not been asked to determine this. However, and, as stated, with considerable reluctance, I determine that the Tribunal has no statutory warrant to order the payment of legal costs either in favour of or against a non-party and is not empowered so to do.