1 This matter is the determination of an application for costs made by the respondent, Greater Geelong City Council (`Council') against the applicant Mr J C Sutton following the determination of the Tribunal refusing the applicant's referral of an objection under Section 22 Valuation of Land Act (`VL Act') of the Council's valuation of the subject land at 106 Orton Street Ocean Grove as at 1 January 2002 and affirming the valuations by the rating authority of the subject at that date.

2 Following the decision, the respondent's solicitors applied for an order for costs and that matter was listed for hearing.

3 The hearing of the costs application occupied two hours. Submissions were made by Mr Connor of Counsel for the respondent/applicant for costs and by Mr Carew on behalf of the applicant. No evidence was given. Written submissions were made by Mr Connor and Mr Carew.

4 At the conclusion of the hearing I indicated that I would grant the application for costs and make the order set out above and gave brief oral reasons for the decision. These reasons are intended to reflect and amplify those oral reasons.

5 Mr Connor submitted that the orders for costs sought are appropriate for two primary reasons:

a. The respondent is a party in whose favour the proceedings have been determined for the purposes of Section 25(2) of the VL Act; and

b. The outcome of the proceeding is less favourable to the applicant than that contained in an offer communicated by letter dated 18 June 2004 and marked `without prejudice save as to costs'.

6 It was common ground that the general provisions as to the Tribunal's power to award costs contained in Section 109 Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act) do not apply to proceedings under the VL Act by virtue of Clause 99, Schedule 1, VCAT Act, and that Section 25(2) VL Act applies. That sub-section reads as follows:

`(2) The Tribunal may in its discretion award the costs of any proceedings under this Division -

(a) To the party in whose favour the proceedings are determined; or

(b) If a matter was referred to the Tribunal under this Division, but was not proceeded with by the objector, to the rating authority.'

7 It is established that Section 25(2) gives the Tribunal a discretion to award the costs in such proceedings to the party in whose favour the proceedings are determined. See the following cases:

* HSBC Asset Management Pty Ltd v Whitehorse City Council [2004] 15 VPR 258 at [1];

* Delacom Pty Ltd v Greater Geelong City Council [2003] VCAT 259 at [23];

* Esso Exploration and production Australia Inc v President Councillors and Ratepayers of the Shire of Morwell [1986] VicRp 29; [1986] VR 289 at pp 300-301.

8 It is not disputed that the proceedings have been determined in favour of the respondent, that the applicant and respondent sought different levels of valuations and that the Tribunal's order of 10 August 2004 affirmed the respondent's valuations. I agree with Mr Connor's submission that the respondent was successful and was the party in whose favour the proceedings have been determined for the purposes of Section 25(2) VL Act, and that accordingly the Tribunal has discretion to award costs to the respondent.

9 I set out the following table illustrating the relevant valuations contended and determined.

10 In determining the exercise of the costs discretion in this matter I agree with Mr Connor that the statement of the Tribunal in Minister for Environment and Conservation v Kupfer 16 VPR 67 at [10] applies, as follows:

`If an authority offers an amount and the claimant recovers no more than that amount, generally speaking the authority should not be out of pocket for defending, and successfully defending its offer.'

11 It is not contested that the respondent made an offer by letter dated 18 June 2004 offering a compromise on CIV of $1,100,000.00 ($50,000 less than the figure affirmed by the Tribunal) on the basis that each party shall bear their own costs. This offer was not accepted.

12 It is noted that whilst Section 109 VCAT Act does not apply, the provisions of Section 112 VCAT Act remain applicable, creating a presumption of an order for costs against a party if a settlement offer is rejected by that party. The applicant disputed that the offer fell within Section 112 and I make no determination as to whether or not it did. However Section 112 is relevant in that it supports a consideration of the offer and its non acceptance as a matter relevant to the exercise of the Tribunal's discretion.

13 In this case I consider that the failure of the applicant to accept the offer creates a ground in favour of exercising the Tribunal's discretion to make an order for costs against the applicant.

14 The applicant's principal argument why an order for costs should not be made against it is that it argued the respondent had failed to comply with Section 21(2) VL Act. This provision requires that the rating authority must refer an objection to the valuer for that authority, who must provide a reasonable opportunity for the objector to discuss the matter with him or her. The applicant argued that the respondent did not provide this opportunity to the applicant to discuss the objection before it disallowed the objection. In its determination and reasons of 10 August 2004 the Tribunal considered that matter and said:

45. Section 21(2) Valuation of Land Act 1960 provides that the rating authority must refer an objection to the valuer for that authority, who must provide a reasonable opportunity for the objector to discuss the matter with him or her.

46. Mr Carew submitted that no attempt was made by the valuer to comply with this obligation. This omission was drawn to the attention of the Council by letter dated 17 January 2002 with no response. The Tribunal at the directions hearing ordered that discussions take place and they did, but only after the making of the referral of the objection to the Tribunal.

47. We take Mr Carew's submissions as a complaint about the process. He considered that the outcome could have been quite different had the discussions taken place at an early stage.

However he made no submission to us that the failure to comply with this provision in any way invalidated council's valuations.

`The council is in the business of making valuations for the purposes of rate assessments. The council has in its possession all of the relevant information by way of sales records etc the objector does not have that information. The legislation accordingly provides the obligation on the council to provide the objector with sufficient information to make a value judgement as to whether he had been fairly rated.

Section 21 of the Valuation of Land Act 1960 must cause an objection to be considered and determined in accordance with the section, which provides that the rating authority must refer an objection to a valuer who must provide a reasonable opportunity for the objector to discuss the matter before the objection is determined. The valuer did not comply with that requirement and regrettably in his case this is not the first occasion when that has occurred.

This places the objector in a quandary. Does he abandon his objection because of the failure of the council to follow due process, or does he appeal? The problem for the objector is that if he wishes to proceed there is no option other than to appeal. A successful appeal is likely to involve the objector in obtaining valuation advice and calling expert evidence at the appeal, knowing that even if he is successful the expense incurred will not necessarily be recoverable.

Mr Sutton was denied the opportunity to participate in the decision to disallow his objection. He was not provided with information on which the valuation was based, so as to make an informed assessment prior to considering an appeal.

16 I do not accept Mr Carew's argument that the failure of the respondent to comply with this obligation is a sufficient ground not to make an order for costs against the applicant as the unsuccessful party for a number of reasons:

* The obligation under Section 21(2) is not an obligation to provide information but merely to provide a reasonable opportunity for discussion.

* At no time did the applicant engage a qualified valuer to negotiate with the Council or give evidence to the Tribunal. It is my view that such a course of action would have substantially assisted discussions and negotiations.

* After the referral of the objection to the Tribunal, at the directions hearing on 7 July 2003, the Tribunal made orders for the parties to meet to discuss the valuation and that discussion took place.

17 Further the Tribunal referred the matter to a Compulsory Conference which was conducted on 9 September 2003 presided over by a Valuer Member of the Tribunal. Pursuant to the initial orders of the Tribunal the parties exchanged lists of comparable sales relied on, although at the hearing the respondent's valuer did indicate an additional sales that he would rely on.

18 Taking these matters into account, I find that the applicant had ample opportunity early in the proceedings and well before the hearing to have discussions with the Council and to seek further information, and these opportunities negate nay weight to be given in this costs application to the respondent's failure to comply with Section 21(2) VL Act.

19 I do accept Mr Carew's submissions that there was some confusion surrounding the values given to the nearby properties and that the Point Lonsdale properties only came into play at a later date. However had the applicant had expert valuation assistance, the valuer engaged would no doubt have pointed out the obvious consideration that sea views are an extremely important factor in determining the value of coastal properties.