Victorian Civil and Administrative Tribunal|2004-02-04|Before: Mr P

Toonalook Straights Pty Ltd Ruling re Costs [2004] VCAT 127 (4 February 2004)

VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL ACT 1998 - s.109 - s.112 - costs generally - exercise of discretion

1. The cross claim of the Respondent is dismissed in accordance with Order 1 of 2 April 2003.

2. Order 2 of 2 April 2003 remains without alteration.

3. Respondent is to pay Applicants' disbursements for the two items referred to in paragraphs 39 and 40 of this decision.

4. Respondent is to pay Joined Party's costs incurred up to and on 1 November 2002.

5. Applicants and Respondent jointly are to pay Joined Party's costs incurred after 1 November 2002 and are so to do on a 50%/50% basis.

1. On 2 April 2003 I delivered a lengthy judgment in relation to the merits of this matter. The word "merits" is perhaps poorly chosen, as I expressed the opinion in that judgment that I was inclined to the view that this was a totally unmeritorious piece of litigation. I also expressed the view that, with the application of some common sense and good will, the matter could and should have been resolved without the necessity for such lengthy and costly litigation. Both during the conduct of the matter and in that judgment I raised the issue of s.109 of the Victorian Civil and Administrative Tribunal Act 1998 and the question of costs. However, the question of costs has now returned for determination.

2. The matter has also returned so that final orders can be made. One aspect of this was necessary and inevitable bearing in mind the orders of 2 April 2003. It is to be remembered that the first order then made dismissed the cross claim of the respondent, subject to further possible argument and evidence concerning the accuracy of calculations. No further evidence or calculations was adduced by the respondent. Therefore the cross claim of the respondent stands dismissed. The other, and unexpected, development in relation to the orders made borders on farce. Insofar as it is farcical, it fits well into this particular piece of litigation.

3. This particular development is as follows. Despite the breadth of the relief originally sought by the applicants, whom I will describe collectively as "Toonalook", ultimately, and by the end of the hearing, the only relief effectively sought by it was an order that the respondent -"Jeuken-Sims" - and joined party - "Dunkley" - obtain the necessary consent in relation to the assignation of the sub-lease. As stated in the judgment, this seemed to me to be very much a subsidiary issue, but I expressed the opinion that, technically, Toonalook was correct and was entitled to a declaration accordingly. I shall subsequently return to the issue of the reduction in the heads of relief sought.

4. After a considerable delay in the conduct of the case, the evidence and submissions concluded on 18 September 2002. As stated, the judgment was delivered and orders made on 2 April 2003. It appears that, on 25 September 2002, the East Gippsland Shire Council in fact gave the necessary consent. Certainly its common seal was affixed to the document of consent on that date. The Manager, Land Victoria - Gippsland Region, as delegate for the Minister for Natural Resources and Environment, signed a consent on 1 October 2002. The occurrence of these events did not come to light until discovered by the solicitors for Dunkley in late August 2003.

5. In other words, almost immediately subsequent to the conclusion of the hearing and prior to judgment, the very relief - indeed, the only relief - sought by Toonalook had in fact been obtained. Neither Toonalook nor Jeuken-Sims informed the Tribunal. Nor was Dunkley informed. Time passed. The judgment was delivered. Orders were made. Still there was no notification to myself or to Dunkley that the relief sought by Toonalook had long since been obtained. A directions hearing was organised in order to deal with outstanding issues. It was adjourned. Ultimately it came on before me on 13 August 2003. All parties were represented. It was adjourned again to 29 August 2003, and ultimately to 2 September 2003. Still there was no notification to the Tribunal or to Dunkley that the consent had been obtained many months before, and that the order made on 2 April 2003 was unnecessary and pointless.

6. Almost on the very eve of the hearing on 2 September last, the solicitors for Dunkley discovered the truth of the situation concerning the consent to the assignment of the sub-lease. Ms Lyle, on behalf of Dunkley, raised the matter at the outset on 2 September. Her instructors had forwarded relevant documents which arrived at this Tribunal on 1 September. Mr Best on behalf of Toonalook and Mr Berman on behalf of Jeuken-Sims attempted to explain what had occurred. It is inconceivable that those instructing them were not aware of this development. Indeed, there was no attempt to assert on behalf of Toonalook's solicitors that they were not aware. Rather, the explanation was based more on a misunderstanding. In turn, Mr Berman referred to an illness with which his instructor had unfortunately been afflicted.

7. However, the fact of the matter, based upon instructions to counsel, would appear to be that Jeuken-Sims, who had vigorously denied that she would give the appropriate consent, in fact did so. Precisely when she did this is not clear, but it could not have been any later than virtually straight after the conclusion of the hearing. The appropriate documentation or notification issued to Toonalook. No one told either myself or Dunkley. I should add that the issue was of more than academic interest to Dunkley. The declaration sought by Toonalook in relation to the obtaining of consent also embraced her.

8. I appreciate that misunderstandings do occur. Also an unfortunate illness can dislocate a practice. However, the firms of solicitors involved are both substantial in size and in terms of experience. I do not accept that there is any valid explanation for allowing this ridiculous course of events to occur. There then arises the question as to what, if anything, should or need be done in relation to Order No. 2 made by me on 2 April last. Various suggestions have been made by the parties. Upon consideration, I am of the view that nothing need be done. The form of my order was that "the First Applicant is entitled to a declaration that Respondent and Joined Party obtain the necessary consent referred to in the judgment". There is no clerical error, accidental slip or omission, material miscalculation or defect of form so as to attract the operation of s.199 of the Act. Section 120 is equally irrelevant. The order sets out with accuracy what was intended. The situation is simply that, by the time that it was made and came into effect, it served no useful purpose.

9. I shall return to a consideration of this unnecessary order in the discussion concerning costs. I can see no reason for interfering with it even if the Act permitted this.

10. I turn now to my ruling on costs. In essence, Toonalook seeks costs from Jeuken-Sims and Dunkley. Jeuken-Sims submits that each party should bear its own costs. Dunkley basically seeks costs from Jeuken-Sims, but has also suggested an apportionment of her costs between Jeuken-Sims and Toonalook, with Jeuken-Sims bearing the lion's share of such costs. The issue is further complicated by the existence of various written offers of settlement made during the conduct of the hearing.

11. When considering the issue of costs, some details of the history of this litigation need to be recalled. It had its origins in the Magistrates' Court at Bairnsdale where Jeuken-Sims and her husband were suing Toonalook, Mr and Mrs Franz and Robyn Dunkley. It was alleged that Toonalook was in arrears in relation to payment of rent, owed interest on rent, interest in relation to the payment for insurance and had failed to keep the clock at the subject restaurant in proper working order. Mr and Mrs Franz were essentially sued as guarantors and indemnifiers of Toonalook. Dunkley was sued pursuant to the provisions of the transfer of the sub-lease. I accept that it was Toonalook that caused the action to be transferred to this Tribunal. The original points of claim filed and served on behalf of Toonalook alleged failure to provide a disclosure statement, money paid under a mistake of law, indemnity in relation to amounts paid by way of withholding tax, reimbursement for various repairs, the installation of an operational clock, a declaration that it be included on the insurance policy, and a declaration that Jeuken-Sims obtain necessary approval of the transfer of the sub-lease. By the end of the litigation, only this last item of relief was sought and, as stated, obtained independently in any event.

12. The litigation commenced its tortuous journey towards a hearing. Jeuken-Sims joined Dunkley as a party. The East Gippsland Shire Council came and went. Directions hearings were held. Lists of documents were filed. Jeuken-Sims filed and served a cross claim seeking, against Toonalook and Dunkley, rent, interest, an order for possession as against Toonalook and an order compelling Toonalook and Dunkley to maintain the property. Amended points of claim were filed on behalf of Toonalook. These sought compensation in relation to quite detailed repair works, consent to the transfer, and relief in relation to the insurance policy. In paragraphs 13 to 16, relief was also sought against Dunkley, namely the obtaining of necessary consent or approval and damages. Whilst there is no argument but that it was Jeuken-Sims who sought to add Dunkley as a joined party, and an order to this effect was made on 22 January 2002, it is also clear that Toonalook then also sought relief from Dunkley. Given the wording of s.60 of the Act and the nature of this Tribunal, there is nothing irregular in that. Ultimately, and not long before the commencement of the hearing, Toonalook then sought to withdraw any claim in relation to defective premises and insurance cover.

13. Much of this is set out in paragraphs 7-17 of the original judgment. I only repeat part of it so as to emphasise where this litigation commenced, and how far it moved after it was transferred to this Tribunal.

14. Against the above general background, the provisions of the Act and the relevant decisions need to be recalled. The starting point in such disputes is always s.109 of the Victorian Civil and Administrative Tribunal Act 1998 and the point of commencement is that the normal expectation, subject to exceptions, is that each party bear its own costs. Matters such as this in the Retail Tenancies List have received particular attention. The decision of Deputy President Macnamara in Maltall v Bevendale Pty Ltd (1999) VConvR 58-528 is often produced in support of the proposition that matters in this particular List are complex and litigated as if they were commercial causes. Normally, it is said, a successful party could expect to receive a costs order in its favour. It is claimed that some indirect support for this proposition could be found in the decision of the Court of Appeal in Antonino Giuseppina, Ensabella & Sons Pty Ltd v Players on Downunder Pty Ltd (1999) 15 VAR 313. There have also been further decisions of this Tribunal to similar effect.

15. However, Deputy President Macnamara made one thing quite clear in Maltall. His general approach that, in the Retail Tenancies List, costs should follow the event was "...subject always to the overall and very flexible discretion which attends all costs orders".

16. It seems to me that what Deputy President Macnamara was doing in Maltall and related cases was making a broad statement that cases in the Retail Tenancies List will frequently fall within one of the exceptions listed in s.109(3). The Tribunal may make an order that a party pay costs if it is satisfied that it is fair to do so having regard to, amongst other things, the nature and complexity of the proceeding (see s.109(3)(d)). Hence, the Tribunal may exercise its discretion in favour of ordering costs if it considers it fair so to do, and one of the factors to which it will have regard in so considering is the nature and complexity of the proceeding. There is certainly no hard and fast rule that, because a matter is in the Retail Tenancies List, a successful party will recover its costs.

17. Because of the written offers made during the conduct of these proceedings, section 112 of the Act will also require some consideration. Clearly this section also gives to the Tribunal a discretion - see s.112(2). That discretion has been described by Senior Member Walker as "unfettered" - see Re Leggo and Transport Accident Commission (2 June 2000). In this regard the wording of s.112 does not seem to me to be as broad as that of s.109, but the existence of a discretion, which must of course be exercised judicially, is clearly contemplated.

D. TOONALOOK'S COSTS - THE SECTION 112 OFFERS

18. Toonalook made two offers of settlement, one being dated 21 June 2002 and the other 11 July 2002. I am not persuaded to make an order that "all costs" be paid on the basis of either of them. I have arrived at that conclusion for a number of reasons.

19. Firstly, I am not satisfied that my discretion should be so exercised. I am persuaded by Jeuken-Sims and Dunkley, and by the history of this particular piece of litigation, that it should not. I have commented previously on the lack of merit of this proceeding. That comment is applicable to Toonalook's case in addition to that on behalf of Jeuken-Sims. I need not repeat the history of the proceeding. In my earlier judgment, I made several comments about the attitude adopted by Toonalook and the lack of cooperation exhibited on its behalf. Further, the only order ultimately made in its favour was one that need not have been made and related to a head of relief that was not pursued with any great vigour - see paragraph 40 of the principal judgment. These observations in relation to the general exercise of my discretion pursuant to s.112 are equally, if not more, appropriate in relation to the pursuit of costs by Toonalook from Dunkley.

20. Further, the settlement offers seem to me to have some elements of confusion about them. Each contains a number of terms which do not appear to be severable. I shall deal with each of them in turn.

21. In each offer there is a term requiring the respondent, Jeuken-Sims, to re-install clock faces and workings in a certain manner, and to provide operating instructions and a service manual. Any claim by Toonalook upon Jeuken-Sims in relation to the clock had long since disappeared from the proceedings.

22. Another example of the potential for confusion is that the second offer has as one of its terms that Jeuken-Sims desist with her objection to Toonalook installing flagpoles. Whilst many items of dispute have appeared and disappeared during the course of this litigation, I have no recollection of, and can find no trace of, any argument concerning flagpoles. Hence, the written offer of settlement is requiring, as one of its terms, agreement in relation to something that is not and never has been part of this proceeding.

23. Similarly, the term that Toonalook will supply and install low voltage external floodlights to each clock face as part of the works to be undertaken by Jeuken-Sims - a term contained in the second offer - relates back to the abandoned requirement that Jeuken-Sims perform some works in relation to the clock. Further, all that Jeuken-Sims ever required of Toonalook in relation to the clock was, in essence, a declaration that Toonalook keep the clock in working order. Nowhere in the voluminous documents relating to the matter can I find any discussion concerning low voltage external floodlights. If I have overlooked any such reference, and that is quite possible, such an issue must have disappeared from the proceedings at some stage. Certainly I have no recollection or note concerning evidence relating to it.

24. The third term of the second offer refers to some repainting to be done by Toonalook, but a pre-condition for this seems to be "...completion or in conjunction with the necessary works to be undertaken by the Respondent to the inside of the premises". However, any claim by Toonalook in relation to works to be undertaken by Jeuken-Sims was withdrawn prior to the commencement of the hearing, and accordingly long before the making of the second offer. The first offer also contains a reference to refurbishing and repainting "...following completion of the necessary works...". Again, these terms can be construed as imposing upon Jeuken-Sims requirements beyond the scope of the proceeding in its ultimate form.

25. The first offer makes no reference to the rental issue. In the second offer, Toonalook agrees to abide by any determination of the Australian Taxation Office ("the ATO") in relation to Jeuken-Sims' application for a determination dated 11 June 2002, and makes no claim in respect of the interest penalty imposed on it. While this may seem comparatively clear and not as susceptible to creating some confusion, even that term is not without its potential complexities. What would be the situation if the ATO failed or refused to make a determination? That is far from being a purely academic question. It is almost precisely what happened. As set out in sub-paragraph (xxiii) of paragraph 21 in the principal judgment, the ATO, in response to the letter of 11 June 2002, in essence stated that it was not able to comment and that it would be a breach of the secrecy provisions if it did so. Indeed, the decision of the ATO as contained in its letter of 11 September 2002 reads "...the ATO is unable to answer the question you asked...". Even leaving to one side the other terms which do not appear to be severable, if the matter had settled where would this have left the parties? Perhaps that is more a question of whether the orders made are more favourable than the offer, but it does seem to me that the term itself had the capacity to create confusion and become meaningless. What eventuated demonstrates this very point. A similar result might have ensued if, for example, a determination was given by the ATO based upon a false or erroneous premise. The term contains no "fall back" provision, and is riddled with potential uncertainties.

26. Both the first and second offers contain a term that "...both the Respondent and Joined Party will not impede or object to the process of obtaining approval from the Head Lessor for the original assignment of Lease to the Joined Party and the Transfer of Sub Lease to the Applicants". This is also an unusual term. The whole thrust of Toonalook's case in pursuing the one remaining head of relief was that it was a requirement of the head lease, the sub lease, and the contract of sale of the business that consent was to be obtained. Whilst Jeuken-Sims was originally obstinate and outspoken in her refusal to obtain such consent, I can recall no suggestion that she was impeding the obtaining of the necessary approval. Certainly there was no suggestion that Dunkley was doing this. The whole tenor of this term seems to be:-

"despite the fact that the only relief which we now seek is an order that you obtain the necessary approval, which we cannot get without you, nevertheless we are going to get it without you so don't get in our way".

It might be said that this makes such a term all the easier to comply with, but I still find it, at least potentially, somewhat confusing. Viewed in the context of the case and the other terms contained in the settlement offers, it seems to me to be akin to saying:-

"The only relief which we seek from you in these proceedings is that you build a fence. However, we are prepared to settle with you on the basis that you don't get in the road when we build the fence, and that you agree to dig a drain and connect the water supply even though these requirements are not part of this or any other proceeding."

27. I am not saying that such a term is not capable of understanding or compliance. I simply find it somewhat perplexing. It could be seen as underlining the misgivings which are expressed in paragraphs 29 and 40 of the principal judgment as to how genuinely concerned Toonalook was concerning the whole question of the consent. Of course, I was unaware of the settlement offers at the time of delivering that judgment.

28. Only the last mentioned of the above terms relates to the joined party, Dunkley. There is a further term that she, along with Jeuken-Sims, bear her own costs. During the costs argument, Ms Lyle, on behalf of Dunkley, argued that the offer insofar as it involved Dunkley was clearly not acceptable because of this costs requirement. Toonalook's offer was, in essence, "don't impede or obstruct the approval process and you can bear your own costs".

29. Whether or not this was an offer acceptable to Dunkley - and clearly it was not accepted - it is able to be understood and, even if a little perplexing, is possibly capable of acceptance. However, it is confusing.

30. In summary, the offers insofar as they concern Jeuken-Sims seem to me to be productive of confusion. All of this constitutes a second, if lengthy, reason why I am not prepared to make an offer pursuant to s.112 that Jeuken-Sims pay all Toonalook's costs. The terms involving Dunkley are far more confined, but are also confusing.

31. Thirdly, I am not minded to make an order pursuant to s.112 because I am far from convinced that the requirements of s.112(1)(d) have been satisfied. It was asserted that clearly the orders made by the Tribunal in the proceeding are not more favourable to the other party than the offer. I cannot agree. The situation in that regard seems to me to be far from clear.

32. Firstly, dealing with the situation vis-a-vis Jeuken-Sims, I find it extremely difficult, if not impossible, to arrive at the conclusion that the orders made are not more favourable to Jeuken-Sims than the offer made by Toonalook. Each offer contains terms that are somewhat vague, and terms which relate to matters that are either no longer, or never were, the subject of the proceeding. Who is to say that, for example, an order that a cross claim seeking rental be dismissed on the basis that there was an entitlement to withhold portions of that rental (portions which are not lost) is more or less favourable than an offer containing a term that the offeree reinstall clock faces and clock workings? How can one determine that an offeror is entitled to a declaration that the offeree obtain a consent is more or less favourable than an offer containing a term based upon a presumption that the offeree will carry out unspecified "necessary works"? How does one measure either order against an offer containing a term that the offeree desist with objections to flagpoles concerning which there is absolutely no evidence? For all I know, the construction of flagpoles may have some drastic cosmetic or environmental implications.

33. Even a direct comparison between, for example, the order made in relation to consent, unnecessary as it was, and the term contained in the offers relating to it is difficult. It is even more difficult when, if the Tribunal had been informed of developments as it should have been, the order might never have been made or might have been made in a significantly different form. The difficulties concerning the offer in relation to rental, withholding and the ATO have already been discussed. In summary, the third reason why I am not prepared to make an order pursuant to s.112 against Jeuken-Sims and in favour of Toonalook is that the comparison required by s.112(1)(d) cannot be made satisfactorily or at all.

34. In my opinion, the same can be said of the offer insofar is it involves Dunkley. Leaving to one side costs, it solely concerns the issue of consent. The same difficulties face Toonalook in relation to the offer to Dunkley as applied to the offer to Jeuken-Sims. Further, the offer to Dunkley is firstly combined with the offer to Jeuken-Sims, and secondly is part of a series of terms which do not concern Dunkley. This seems to me to create the potential for additional problems.

35. In summary, I am not prepared to make an order pursuant to s.112 in favour of Toonalook against either Jeuken-Sims or Dunkley. I am not so minded because:-

(a) I am not prepared to exercise my discretion in favour of Toonalook, for the many reasons set out in this ruling and the judgment of 2 April 2003.

(b) The terms of the offers could be described as vague and unsatisfactory for the reasons set out above.

(c) As a result, the necessary comparison required by s.112(1)(d) is virtually impossible to make, or can be made with very little confidence.

36. I might say that my finding as set out above is equally applicable whether reliance be placed upon s.112 or upon the principles contained in Calderbank v Calderbank (1975) 3 All ER 333. Whether there is scope for reliance upon a Calderbank offer pursuant to the provisions of the VCAT Act is a moot point. No argument was advanced in relation to this in the present case. Given the nature of the jurisdiction and the specific provisions of the sections relating to costs, it might be argued that s.112 represents a self-contained code in relation to settlement offers, and is a code which embraces the principles of Calderbank offers. In any event, for the reasons set out above in relation to s.112, I make no order in favour of Toonalook on the basis of the principles set out in Calderbank.

37. I turn now to the general question of costs. In this regard, I have expressed some of my concerns in the earlier judgment, and have again set out above some history of the sequence of events and my views generally concerning the exercise of my discretion. Whether or not that discretion, which again must be exercised judicially, is more limited in ambit when exercised pursuant to s.112, there is, as has been stated, a very flexible discretion in relation to s.109.

38. In relation to Toonalook's application for costs as against Jeuken-Sims and Dunkley, it is probably evident that, as a broad proposition, I am not prepared to exercise my discretion in favour of Toonalook against either of them. I so find for the reasons set out above. The only exception is that in my opinion the expenses incurred by Toonalook in relation to two disbursement items should be borne by Jeuken-Sims.

39. Those items are, firstly, the expenses associated with the obtaining of the affidavit of 30 May 2002 sworn by Mr Henry Ekselman. This related to matters to do with the clock faces. At that point in time, Toonalook had withdrawn any claim it had in relation to the clock faces, but Jeuken-Sims had not. She subsequently abandoned any such claim. Thus, it seems to me that for the purposes of s.109(3)(b), Jeuken-Sims had unnecessarily prolonged the claim insofar as it related to the clock, and caused Toonalook to incur an unnecessary expense.

40. Secondly, Jeuken-Sims is also responsible for any disbursements associated with the obtaining by Toonalook of material relating to the calculation of rental so as to establish whether there were, or were not, any arrears owing. As earlier stated, the question of the accuracy of calculations had been left open, this being a question raised by Jeuken-Sims in addition to the issue of whether Toonalook was entitled to withhold some of the rental. In this regard, I am specifically referring to work done in relation to material obtained on the issue of rent calculations after my judgment of 2 April 2003, and particularly paragraphs 23-28 of that judgment and the order subsequently made. As I understand the situation, it was only after Toonalook obtained additional material and potential evidence that Jeuken-Sims opted not to pursue any alleged short fall based upon the figures of her witness, Rowe. Accordingly, it seems to me reasonable that the disbursements incurred by Toonalook in obtaining additional expert opinion should be paid by Jeuken-Sims.

41. I should make it clear that my refusal to otherwise order costs in favour of Toonalook embraces its defence of Jeuken-Sims' cross claim. I will not set out again my observations concerning the highly unsatisfactory nature of this piece of litigation, the manner in which it waxed and waned and took on different complexions, the technical approach adopted to the problem, and the lack of cooperation or goodwill between the parties. This was nowhere more apparent than in relation to the dispute concerning rental arising from the cross claim. These matters received considerable attention in the principal judgment, and I refer back to paragraphs 20-22 of it. As I previously stated, I am not minded to exercise my discretion in favour of Toonalook on the question of costs, save for the two items of disbursements referred to above.

42. On behalf of Jeuken-Sims, Mr Berman's basic argument was that each party should bear its own costs. Accordingly, he did not present any forceful argument that Jeuken-Sims should have her costs paid either by Toonalook or by Dunkley. I agree with this approach entirely. I see absolutely no reason why Jeuken-Sims should receive costs. There were various steps which she could have taken but did not in relation to resolving the rental issue, an issue in relation to which she was not successful in any event. I have already commented upon the somewhat farcical developments in relation to the question of consent. In summary, I can fully understand why no costs were sought by Jeuken-Sims.

43. In the principal judgment at paragraph 43, I stated my impression that Dunkley could be described as the unfortunate meat in a particularly nasty sandwich. That remains my view. If anything, that view is reinforced by the developments referred to above in relation to the obtaining of consent.

44. I am of the view that Dunkley is entitled to costs. I am of the view that, pursuant to s.109 of the Act, a costs order should be made in her favour. She has been dragged into complex litigation which was, to use the wording of s.109(3)(b), unreasonably prolonged. Further, pursuant to s.109(3)(d) and (e) she was forced into litigation that was complex and which, to a very considerable extent, involved argument which did not concern her. However, Toonalook persisted against her with a request for the relevant consent, and Jeuken-Sims persisted with a demand for rental, or an indemnity in relation to same.

45. As has been said, demands in relation to arrears of rental failed. In addition, the demand for the necessary consent seems to me to have been contingent upon Jeuken-Sims giving that consent, which she ultimately did without reference to Dunkley. It is also apparent that Toonalook was in any event pushing ahead for the necessary consent and virtually treating it as having been obtained, as set out in paragraph 31 of the principal judgment. The interests of Dunkley seem to have been ignored in that regard.

46. In summary, I am conscious of the fact that it was Jeuken-Sims who sought that Dunkley be a joined party. I am also conscious of the fact that Toonalook sought relief against Dunkley, relief which it was also seeking against Jeuken-Sims and which it was seeking independently of Jeuken-Sims' claim against Dunkley. Dunkley was in a position where she could not satisfy Toonalook's claim without the co-operation of Jeuken-Sims. Furthermore, Toonalook and Jeuken-Sims compromised the claim for the relief claimed by Toonalook without consultation with Dunkley.

47. Ms Lyle, on behalf of Dunkley, has submitted that Dunkley should be entitled to her costs, and that those costs should be spread between Toonalook and Jeuken-Sims, with Jeuken-Sims bearing the lion's share of such costs. Upon consideration, I am of the view that the provisions of s.109 are sufficiently broad to encompass an apportionment of costs. The discretion is a wide one. I am also of the view that Jeuken-Sims should bear the lion's share of such costs. It was she who effectively joined Dunkley to the action and her proceeding against Dunkley has been a failure.

48. However, Toonalook also persisted in a claim against Dunkley. Whilst Toonalook was successful in obtaining a declaration in relation to consent against Dunkley, I had expressed the view in the judgment of 2 April 2003 that Toonalook had exhibited no great concern in relation to this issue, and had in fact treated the necessary consent as having been already obtained - see paragraphs 31 and 40.

49. In exercising my discretion, I find it difficult to exclude from consideration that Toonalook and Jeuken-Sims in fact arrived at an agreement between the conclusion of evidence and the giving of judgment, and did not notify Dunkley concerning this. I am certainly not saying that such a consideration has any direct bearing on the question of costs incurred before the conclusion of evidence, but, as previously stated, it does underline the precarious position in which Dunkley found herself in this litigation. It is also to be borne in mind that it was this failure to notify Dunkley of what had occurred that potentially played a major role in keeping Dunkley in the litigation.

50. In summary, I am of the view that both parties are responsible for Dunkley's costs. However, I agree with Ms Lyle that there should be some apportionment. In my view, the overwhelming proportion of such costs should be borne by Jeuken-Sims. She joined Dunkley to the proceedings, and persisted against her, even if the evidence of Dunkley and her husband favoured Jeuken-Smith. Her claim against Dunkley failed. I should add at this point that both Dunkley and her husband were most impressive witnesses whose evidence I had no hesitation in accepting.

51. Toonalook also persisted in its claim against Dunkley in relation to the consent. It opted to maintain its action against Dunkley, even whilst pursuing its negotiations in relation to the consent, and obtaining same without involving, or even contacting, Dunkley.

52. A breadth of discretion is often regarded as making decisions on costs an easier task. Sometimes, in a complex matter, the task is made more difficult by the very existence of that discretion. Whilst it would have been perhaps simpler to determine the apportionment of costs on a percentage basis, that does not seem to me to be appropriate. I have arrived at the following conclusion.

53. Jeuken-Sims should pay Dunkley's costs up to and including 1 November 2002. A month then surely represents a reasonable time for the notification of Dunkley as to what had occurred, notification of the Tribunal to similar effect, and the obtaining of any appropriate orders. Neither party notified either Dunkley or the Tribunal.

54. It may be said that the relief sought in relation to the consent was relief sought solely by Toonalook. However, given the manner in which the litigation proceeded, in my opinion Jeuken-Sims also had some obligation to inform both Dunkley and the Tribunal that she had changed her mind and given the consent which was so much in dispute. Further, Jeuken-Sims was claiming rental from Dunkley, and, albeit on a very limited basis, that issue, on which Jeuken-Sims failed, also remained alive. In the circumstances, it seems to me fair that Dunkley's costs after 1 November 2002 should be borne jointly by Toonalook and Jeuken-Sims, each paying 50% of same. I might add that even without the rental issue, that seems to me to be a fair outcome.

55. I then turn to whether such costs should be paid pursuant to s.112 or s.109. I mention this because a settlement offer pursuant to s.112 was made by Dunkley on 15 August 2002. Such offer was addressed both to Toonalook and to Jeuken-Sims. A term of each offer was that the relevant party should discontinue its proceedings against Dunkley and pay its costs. In my opinion, "all costs" should not be awarded pursuant to s.112. Because of the peculiar circumstances prevailing, in exercising my discretion I am not convinced that the orders made were not more favourable to the other parties than the offer. Rightly or wrongly, the orders made included an order against Dunkley. Any settlement offers did not countenance such an order. As has been stated, at the time that the order was made, there was no knowledge of any correspondence that had occurred or might occur in relation to the obtaining of consent. In any event, the orders made and which, as stated, should stand, do not result in satisfaction of the requirements of s.112(1)(d).

56. I am also mindful of submissions made by Mr Best to the effect that Dunkley "lined up with" Jeuken-Sims and that her counsel attacked Toonalook's witnesses in circumstances which revealed some preference for the case advanced by Jeuken-Sims. Mr Best's submissions were, in essence, that Jeuken-Sims and Dunkley were running a joint attack against his client, even though it was Jeuken-Sims that had joined Dunkley to the proceedings. Without ruling on the accuracy of his submissions, there certainly seems to me to be sufficient substance in them to represent an additional factor against the proposition that costs should be awarded pursuant to s.112, although the failure to otherwise satisfy its requirements remains the principal reason for this finding.

57. However, as stated, I am of the view that Dunkley should receive her costs pursuant to s.109 and on the basis described above. The only remaining question relates to the scale of such costs. In advancing his client's case, Mr Best submitted that costs should be on Scale "D" of the County Court Scale. He related this to the value of the land in question. Apart from that consideration, and given the nature of this dispute and the manner in which it was contested, I am inclined to think that Scale "D" is the correct Scale. However, I am prepared to entertain further arguments in relation to this should there be no agreement.

(a) Toonalook should not receive any costs, save for those items of disbursement referred to in paragraphs 39 and 40 above.

(c) Dunkley should receive her costs, such costs to be paid by Jeuken-Sims up and until 2 April 2003 and thereafter by Toonalook.

(d) The scale of such costs is reserved pending further argument.

1. The cross claim of the Respondent is dismissed in accordance with Order 1 of 2 April 2003.

2. Order 2 of 2 April 2003 remains without alteration.

3. Respondent is to pay Applicants' disbursements for the two items referred to in paragraphs 39 and 40 of this decision.

4. Respondent is to pay Joined Party's costs incurred up to and on 1 November 2002.

5. Applicants and Respondent jointly are to pay Joined Party's costs incurred after 1 November 2002 and are so to do on a 50%/50% basis.

Toonalook Straights Pty Ltd Ruling re Costs [2004] VCAT 127 (4 February 2004)

At a glance

Court

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Before

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Judgment (80 paragraphs)

Toonalook Straights Pty Ltd Ruling re Costs [2004] VCAT 127 (4 February 2004)