1. Subject to paragraph 2, pursuant to s 109 of the Victorian Civil and Administrative Tribunal Act 1998 the respondent must pay the applicant's costs of and incidental to the proceeding (including reserved costs), and including costs of and incidental to the applicant's costs application. Those costs are on a party/party basis on Scale C of the County Court Scale. In default of agreement, they must be paid by a date fixed by the Tribunal or the Costs Court. In default of agreement, they must be assessed, settled, taxed or reviewed by the Costs Court.

1. In respect of the period from 17 June 2009 to 2 December 2009 (both inclusive), there is no order as to costs. Accordingly, under s 109(1) of the Victorian Civil and Administrative Tribunal Act 1998, each party bears their own costs.

1. I handed down my decision in this matter in May 2011. The applicant ("Ms Walker") now seeks costs. The respondent ("V1") opposes the application. I have extensive affidavit material and oral submissions from the parties.
2. I first say something about the law. I then briefly summarise the history and outcome of the substantive proceeding. Finally, I consider the parties' submissions and state my conclusions.

1. The effect of s 109(1) - (3) of the Victorian Civil and Administrative Tribunal Act 1998 ("the VCAT Act") is relevantly this. Each party bears their own costs unless, having regard to a number of factors listed in s 109(3), the Tribunal considers it fair to order otherwise. The Tribunal may award all or a specified part of costs.
2. The factors in s 109(3) on which the applicant relies are -
   • that V1 conducted this proceeding in a way that unnecessarily disadvantaged Ms Walker by failing to comply with VCAT's orders and directions without reasonable excuse, or by causing an adjournment;
   • V1 was responsible for unreasonably prolonging the time taken to complete the proceeding;
   • the relevant strengths of the claims made by each of the parties;
   • the nature and complexity of the proceeding; and
   • certain other factors (which I mention in detail when I consider the parties' submissions).
3. Counsel for Ms Walker briefly mentioned in submissions the factor in s 109(3)(a)(vi). This concerns the vexatious conduct of a proceeding by a party. However, there was no development of this submission. I treat it as not being relied on.
4. What many decisions tell us about s 109 is this. There is no automatic rule that costs follow the event. Unless the Tribunal considers it fair to order otherwise, costs will lie where they fall. Whether the Tribunal considers it fair to order otherwise depends on the circumstances of the particular case.

1. Ms Walker commenced this proceeding on 16 June 2009. On 10 July 2009, the Tribunal made directions by consent of the parties, setting a timetable for various procedural steps, including the filing and exchange of lists of documents by 11 September 2009.
2. V1 filed its particulars of defence on time. Its solicitor wrote to Ms Walker's solicitor requesting an extension of time in which to file and exchange its list of documents to 16 September 2009. Ms Walker's solicitor did not reply to that request. On 23 September 2009, V1 filed and served its affidavit of documents. On 24 September 2009, V1 sent to Ms Walker's solicitor copies of the documents in that list.
3. By letter dated 24 September 2009 but sent to V1 on 5 October 2009, Ms Walker's solicitor disputed that full discovery had been made. The dispute resulted in the Tribunal making further consent directions on 8 October 2009. The parties were directed to complete discovery by 14 October 2009.
4. On 10 November 2009, Ms Walker's solicitor applied for orders for further discovery by V1. At the same time it sought V1's consent to the orders applied for. It also sought leave to amend its particulars of claim. V1 opposed the application. A directions hearing was held on 26 November 2009, and I made a ruling and directions on 27 November 2009. I noted that the broader amendment to the particulars of claim sought by Ms Walker was sought very late - after particulars of defence and substantial discovery, and shortly before the hearing which was listed to commence on 30 November 2009.
5. I refused to amend the particulars of claim in a way which I considered would expand and effectively make a new and different case. I gave leave to amend the particulars of claim to further particularise certain existing matters. I directed V1 to make further discovery of certain categories of documents . I refused to direct it to discover other categories of documents which, in my view, related to the amendments to the particulars of claim that I had also refused. I indicated that, if requested, I would make certain much narrower orders for V1 to discover certain categories of documents.
6. I directed that the further discovery was to occur by 9.30am on 30 November 2009, and I also directed that the 30 November hearing would commence an hour later than scheduled. On 27 November 2009, Ms Walker's solicitor emailed VCAT (but did not send a copy of its email to V1) requesting the additional limited discovery that I had foreshadowed in my directions and ruling. Those directions were made in chambers. V1's solicitor complained to VCAT and Ms Walker's solicitor about not being notified of that request, and also indicated that compliance with the request would take time. It indicated its intention to seek a stay of the directions, but in fact did not do so.
7. On 30 November 2009, the date fixed for the substantive hearing to commence, V1's solicitor received from Ms Walker's solicitor copies of correspondence concerning a debt owed to Centrelink by Ms Walker, and a further proposed amendment to the already amended particulars of claim. The documents concerning the Centrelink debt had not previously been discovered. On the same date, parties exchanged further documents by way of discovery. Those documents included an expert report obtained by the applicant from an automotive expert, Mr Cuthbert. On the same day, Ms Walker's solicitor withdrew a previous objection to V1 inspecting Ms Walker's medical file.
8. The substantive hearing of the matter did not proceed on 30 November. Instead, on 2 December 2009, a directions hearing occurred and further directions were made. They included directions that the parties complete discovery by 25 January 2010. The further amendment to the amended particulars of claim was permitted, and directions were made for the filing and service of further amended particulars of claim. Directions were also made for witness statements, and the setting down of the matter for a compulsory conference.
9. I am satisfied that the following conduct of both parties caused the vacation of the substantive hearing. There was inadequate discovery by both, the late withdrawal of an objection to V1's inspection of Ms Walker's medical file, the late provision of an expert report on behalf of Ms Walker, and the need to permit V1 to inspect Ms Walker's medical file. In all these circumstances, it would have been unfair to both parties if the hearing had continued. It was also necessary to permit V1 to plead to the amendments to the particulars of claim made at that time. Both parties were equally responsible for the vacation of the originally listed substantive hearing.
10. Ms Walker completed discovery within the time directed. V1 did not. It provided lists of documents to Ms Walker's solicitor on 2 February, and copies of documents mentioned in the list on 22 February 2010.
11. A dispute arose between the parties about what V1's solicitor said was Ms Walker's failure to provide to it a substantial number of documents in her list of documents, and what Ms Walker's solicitor said was an inadvertent error to claim privilege in respect of the documents not provided. The parties continued to accuse each other of deficient discovery. This dispute led to a directions hearing on 12 March 2010, after which I made a ruling and further directions dated 22 March 2010. I ordered V1 to make further discovery and set a new timetable for steps in the proceeding. In the ruling, I said that V1's discovery had been inadequate and piecemeal, tended to be more responsive to Ms Walker's solicitor's requests than in accordance with the broad terms of VCAT's directions, and had caused delay. I upheld all but one of Ms Walker's claims of privilege.
12. V1 discovered more documents on 7 April 2010, one day after the date required by the direction. Those documents included documents about the leasing process which were highly relevant to the issues in the case.
13. Ms Walker's solicitor continued to claim that discovery was deficient.
14. Ms Walker's witness statements were served within time, except for those of her medical experts. V1 served its own witness statements late. It raised with Ms Walker's solicitor issues concerning the provision of a report by Mr Cuthbert. It is unnecessary for me to deal with this issue in detail, because I take the view that no disadvantage that might bear on costs was caused by this issue. Two medical reports on behalf of Ms Walker were filed late. Dr Agrawal's report was filed on 14 May 2010 (approximately 18 days late) and Dr Williams' report was filed and served on 31 May 2010 (although the fax containing it was dated 14 May 2010). This was more than a month after the required date which had been 27 April 2010.
15. V1's witness statements were due on 18 May 2010. It wrote to Ms Walker's solicitor raising the delay in the provision of the applicant's witness statements and explaining that it would be unable to prepare its own by the due date. On 17 June 2010, V1 emailed the Tribunal asking that the hearing date (fixed at the compulsory conference held on 9 June 2010) be postponed by one day because of the unavailability of the respondent's counsel. It appears that it also could not file witness statements because of counsel unavailability.
16. In fact, V1's witness statements were provided to Ms Walker's solicitor on 16 July 2010, and after Ms Walker's solicitor had applied for a directions hearing in relation to the matter. This made the respondent's witness statements some two months late.
17. In correspondence, Ms Walker's solicitor continued to say, and V1 continued to deny, that V1's discovery continued to be inadequate.
18. By 16 July 2010, the parties had reached certain agreements about what documents ought to be discovered. Consent directions were made on this matter, but further correspondence between the parties in August and September 2010 related to the matter of what was said to be deficient discovery by V1. There was also a dispute between the parties about who should bear the costs of Ms Walker's expert witnesses, if they attended for cross-examination.
19. Each party accuses the other of conduct of the proceeding which caused disadvantage, delay and the prolongation of the time taken to complete the proceeding. In fact, the hearing commenced one day later than the date originally scheduled at the compulsory conference. It appears that this late commencement was not opposed by Ms Walker. The parties agreed that Ms Walker's expert witnesses did not have to attend to be cross-examined.
20. I make reference to the following further matters which occurred during the 9-day hearing of evidence in this matter, which commenced on 21 September 2010. On days 2, 3 and 4 of the hearing, Ms Walker's counsel called on V1 to produce the original files for Ms Walker and for two of her witnesses - Ms Powell and Mr Wilmott. Those files were produced on day 4. The original file for Ms Walker contained a small but highly relevant handwritten entry which had not been photocopied and included in the copy file discovered to Ms Walker by V1. While I accept that this error may have been inadvertent, it was a serious matter.
21. On day 5, Ms Walker's counsel advised that, at the end of day 4, he had been handed by V1's counsel a supplementary statement for its witness Mr Phelan. This was the first time that a copy of such a statement had been shown to counsel for Ms Walker.
22. At the beginning of day 6, Ms Walker's counsel advised the Tribunal that he had been handed by V1's solicitor approximately 200 pages of further discovered documents. It was clear from what was said by V1's counsel at hearing that V1 was still looking for further documents. This further discovery caused the adjournment of the proceeding until the afternoon.
23. On day 7, V1 discovered further documents. V1 also sought unsuccessfully to amend its particulars of defence. I rejected the application to amend, primarily because it was made so late.
24. On day 8, V1's counsel told the Tribunal that further documents were being searched for.
25. My decision and orders in the substantive proceeding were handed down on 12 May 2011. Among other things, V1 was ordered to pay $1300 to Ms Walker by 26 May 2011. On 7 June 2011, Ms Walker's solicitor wrote to V1's solicitor pointing out that the amount had not been paid. The amount was paid on 8 June 2011.

1. In my orders in May 2011, I set aside the contract between the parties under ss 70 and 71 of the Consumer Credit (Victoria) Code ("the Code"). I found that the contract was unjust for a number of reasons, including the lack of explanation of it given to Ms Walker, and the lack of opportunity for her to read it and understand it or to obtain independent legal or other advice about it. I have mentioned the amount which I ordered V1 to pay to Ms Walker. I also required it to ensure that records concerning her credit file were corrected in a specified way. I declared that certain conduct of V1 constituted unconscionable, misleading or deceptive conduct in breach of ss 8 and 9 of the Fair Trading Act 1999 ("FTA"). I dismissed Ms Walker's claims that the contract was a credit contract within the meaning of the Code and that V1 was liable to certain civil penalties. I also dismissed her claims under the Motor Car Traders Act 1986. I found that a finalisation amount "under the contract between the parties was a penalty". I considered it unnecessary to award damages or compensation in relation to these matters, given that the contract had been set aside. I found that the adoption by V1 of consumer leasing was not intended to avoid the Code.
2. I criticised what I considered were flawed processes by V1 in connection with the Walker lease. I found that those processes needed urgent change. I directed that a copy of my orders and reasons for decision be sent to the Director of Consumer Affairs and ASIC.

Is this a small claim in respect of which VCAT cannot award costs?

1. V1 submits that clause 28GG of Schedule 1 of the VCAT Act applies to this proceeding. Clause 28GG is a provision in Part 7AA of that Schedule and is headed "Fair Trading Act 1999". Clause 28GG(1) relevantly provides that "the Tribunal cannot order costs in a proceeding relating to a small claim". Clause 28AA provides that "small claim" in that part of the schedule has the same meaning as it has in Part 9 of the Fair Trading Act.
2. Section 107AA of the Fair Trading Act defines "small claim" for the purposes of Part 9 of that Act. Broadly, it means a consumer and trader dispute in relation to a claim for payment of an amount not exceeding $10,000 or a claim for the performance of work of a value not exceeding $10,000, either of which arise out of a contract for the supply of goods or the performance of services.
3. V1 submits that clause 28GG prevents VCAT from awarding any costs in this proceeding. A contrary submission is made for Ms Walker.
4. In my view, clause 28GG does not apply to this proceeding. This is not a small claim. "Small claim" is defined as a category of consumer and trader dispute. That term is defined in s 107 of the Fair Trading Act, also for the purposes of Part 9 of that Act. To the extent that Ms Walker claims relief under the Fair Trading Act, she claims it under ss 158 and 159. Those sections are included in Part 11 (which relates to enforcement and legal proceedings), not in Part 9. Her claim is not based on a consumer and trader dispute but on compensation and other orders under Part 11 of the Fair Trading Act in respect of breach of that Act. This is why her claim is not a small claim.
5. I would add that I doubt whether this proceeding "relates" to a small claim. Properly characterised, it is, in my view, a proceeding under the Code rather than a proceeding under the Fair Trading Act. I would also add that I have characterised the amount in dispute to include an amount referable to relief from liability under the relevant contract. The amount, as I have characterised it, exceeds $10,000.

1. It was submitted for Ms Walker that costs of the entire proceeding should be awarded against V1 for these reasons. The reasons are based on the paragraphs of s 109(3) of the VCAT Act, and it is submitted for Ms Walker that it is fair to award costs on that basis.
2. The submissions are these. Ms Walker's claim was substantially successful. The findings involve serious criticism of V1's practice. V1's delays in discovery necessitated several directions hearings (which would otherwise have been unnecessary), and the vacation of the initial substantive hearing scheduled for November and December 2009. Those delays prolonged the time taken to complete the proceeding. There were also delays which could have been avoided during the substantive hearing in September 2010, delays which if they had not occurred would have meant that this hearing would have been shorter. V1 showed scant respect for VCAT's orders and directions in relation to discovery.
3. The proceeding is of a consumer protection nature, and was both legally and factually complex. Impecunious applicants like Ms Walker should not be deterred from accessing the protections which the Code affords by fear of having to pay the costs if they won.
4. The proceeding was vigorously contested. In some aspects it was a test case. The relevant capacity of the parties to pay costs should also be considered. What V1 has effectively done is to bring about a situation in which all the risk (of cost) is borne by Ms Walker.
5. V1 opposes the application and says that costs should lie where they fall. This would be the effect of s 109(1), if the Tribunal did not order costs. It says that there are no exceptional circumstances and no exceptional complexity about the case which would make it fair to award costs. Both parties did not conduct the proceeding in a timely way. Both were responsible for the vacation of the first hearing. To the extent that there were delays in discovery and production of witness statements by V1, these did not prolong unreasonably the time taken to complete the proceeding. The hearing of evidence was completed in the allotted nine days.
6. Any moral turpitude of V1 is irrelevant. The comparative ability of the parties to afford costs is also irrelevant. Costs are not punitive but compensatory. Even if Ms Walker was partially successful at hearing, costs do not automatically follow the event. The matters in which she did not succeed were the more complex matters. The Tribunal did not find that V1's claims were untenable. Any failure by V1 to comply with the Tribunal's directions did not cause unnecessary disadvantage to Ms Walker.
7. I am satisfied that, with the exception of one period, it is fair to order costs of this proceeding in favour of Ms Walker. The exception is costs in respect of the period from 17 June 2009 to 2 December 2009 (both inclusive). I briefly explain my decision, by reference to the factors in s 109(3).
8. In my view this proceeding was, legally and factually, moderately complex. I do not agree with V1 that this applied only to some but not all of the issues in dispute. Although not wholly successful in her claims, Ms Walker was substantially successful. She obtained what she sought - relief from liability under the contract and recompense for what she had paid and what she had sold to V1. This is not a simple commercial context. It is a consumer protection proceeding under a provision of the Code which protects consumers against unjust contracts with lenders. While I did not find that the claims of V1 had no tenable basis, and although success or failure of some of the original claims was only clear when findings were made, Ms Walker's claim to have the transaction reopened and the contract set aside was very strong. My findings concerning the extent to which the process was not explained to her, and the extent to which she had no opportunity to read or understand the lease itself, indicate how serious the flaws in the process were.
9. In my view, from 3 December 2009 on, V1's conduct unreasonably prolonged the time taken to complete the proceeding. Its delayed and inadequate discovery, even extending to the substantive hearing, made that hearing longer than it ought to have been, irrespective of the number of days originally scheduled. It wasted time and resulted in unfairness, because documents were not produced until the last minute, and so the opportunity of Ms Walker's legal representatives to examine them was lessened. This would not have occurred if discovery had not been delayed. Delays in discovery resulted in a number of otherwise unnecessary directions hearings. Had V1 treated its discovery obligations more broadly, and not merely been responsive to requests for discovery from the applicant's representatives, as it should have done, there would have been far fewer procedural steps, less correspondence, and a speedier hearing. I am not satisfied that the explanations proffered by V1 for its conduct are reasonable. Taken together, the delays and potential unfairness constitutes, in my view, unnecessary disadvantage to Ms Walker.
10. What I have said does not apply to the period from and including 17 June to 2 December 2009. That period dates from immediately after the filing of the application until and including the directions hearing on 2 December 2009. I am satisfied that both parties were equally responsible for delays during that period, and that both were equally responsible for the vacation of the original substantive hearing. I have explained the reasons which, in my view, led to the vacation of the first substantive hearing. In respect of this period, each party must bear its own costs.
11. There are a number of factors put forward by the parties which I have not taken into account because I do not consider them relevant to the question of whether costs should be awarded. These include the differing financial circumstances of the parties, the stress of the hearing on Ms Walker, whether costs were in fact incurred by Ms Walker, and Ms Walker's alleged failure to produce any costs agreement. Some of these factors may be relevant at the time of the assessment of costs.

1. It was submitted for Ms Walker that I should award solicitor/own client costs, or alternatively party/party costs on Scale C or D of the County Court Scale. It was submitted for V1 that costs should be on Magistrates' Court Scale B.
2. Ms Walker relied on the same facts to support a solicitor/own client award as were relied on to support an award of costs. I do not consider that it would be fair in the circumstances to award solicitor/own client costs. I consider that party/party costs are appropriate.
3. In my view the appropriate scale is Scale C of the County Court Scale. The County Court Scale is used often by VCAT in costs awards. In the particular circumstances of this case, I consider it appropriate. I do not agree with V1's submission that relief was confined to $1,300. I have explained why its amount was far greater. I consider that the approximate value of the relief sought is $25,000 or more. This makes the appropriate scale Scale C.
4. I do not accept V1's submission that the contract was rescinded by Ms Walker. The evidence is that Ms Walker had always sought to have the contract set aside. This is in fact what was ordered.
5. I am aware that, from 1 September 2011, a new scale of County Court costs has been introduced. I consider that Scale C of the County Court Scale (as it formerly was) is still the correct scale. This case, from its commencement to the handing down of the substantive decision, took place at a time when the former County Court scales were in force. They should apply to the determination of costs.