VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
civil DIVISION
CIVIL CLAIMS LIST		VCAT REFERENCE NO C7349/2021
CATCHWORDS	
Application by the respondents, who succeeded in the proceeding, for costs – Victorian Civil and Administrative Tribunal Act 1998, sub sections 109(3).	

FIRST APPLICANT	Seng Hwa Soh	
SECOND APPLICANT	Zong Beauty Concepts Pty Ltd (ACN 625 506 818)	
RESPONDENT	Mingqin Xiang	
WHERE HELD	Melbourne	
BEFORE	Member R Daly	
HEARING TYPE	Respondent’s application for costs	
DATE OF HEARING	11 April 2023	
DATE OF ORDER	8 August 2023	
CITATION	Soh v Zong Beauty Concepts Pty Ltd (Civil Claims) (Costs) [2023] VCAT 915	

Order
1.	The applicants shall pay the respondents’ actual costs of and incidental to this proceeding totalling $16,666.95.
2.	As a separate matter to the above award of costs, pursuant to section 115B of the Victorian Civil and Administrative Tribunal Act 1998, the applicants shall reimburse to the respondent the filing fees of $220.90 (application fee dated 20 August 2021 to restrain applicants’ legal practitioner from acting) and $378.80 (application fee for application for costs order).

R Daly 
Member			

APPEARANCES:		
For First Applicant:	No appearance	
For Second Applicant:	No appearance	
For Respondent:	Mr Jianwen Hu, Legal Practitioner	

Reasons
1	The respondent seeks an order that the applicants jointly and severally pay their actual legal costs incurred of and incidental to this proceeding, totalling $16,666.95 or an amount as taxed. The respondent’s legal representative, Mr Hu filed and served an application for costs supported by written submissions titled “points of claim” dated 2 June 2022 and “supplementary points of claim” dated 2 November 2022. Mr Hu also made oral submissions in support of the application for costs at the hearing on 11 April 2022 and further written submissions and invoices on 28 April 2023. 
2	The hearing of the application for costs was originally scheduled for hearing on 19 September 2022 and was adjourned by the Tribunal on that date with directions against both applicants to send detailed submissions in response to the respondent’s submissions by 19 October 2022.
3	Neither of the applicants filed and served any written submissions in response to the respondent’s submissions for costs nor did either of the applicants’ attend the hearing on 11 April 2022. The Tribunal unsuccessfully attempted to contact the applicants by telephone but proceeded to hear the application on the basis that the applicants had been given notice of the hearing by the Tribunal but failed to attend the hearing.
4	The Tribunal reserved its decision, and the following is a summary of the reasons for decision.
5	On 4 November 2020, the respondent entered into a contract of sale for the purchase of a massage business situated at Blackburn from the applicants, then paid the full purchase price of $35,000.00 to the applicants and took possession of the business on 5 November 2020. 
6	On 22 June 2021, the applicants applied for an injunction and directions in VCAT’s building and property list (VCAT reference number BP1152/2021) seeking orders against the respondent to (a) return the keys to the business and (b) not to access the business whilst retaining the purchase price paid to the respondent.
7	On 29 June 2021, VCAT ordered that (a) the applicants’ application for an injunction is dismissed, (b) the application was listed for mediation on 13 August 2021, and (c) if the proceeding does not resolve at mediation, the proceeding must be transferred to the civil list of VCAT because the dispute is not a retail tenancy dispute but is a consumer and trader dispute under the Australian Consumer and Fair Trading Act 2012 (Vic) and (d) costs were reserved.
8	On 20 July 2021, the respondent applied to VCAT for an injunction seeking orders against the applicants barring their legal representatives Legalment from acting for the applicants in the proceeding on the basis of a conflict of interest because Legalment had acted for both the applicant vendor and the respondent purchaser in relation to the purchase of the business.
9	On 23 July 2021, VCAT ordered that in relation the respondent’s application for an injunction, (a) the applicants to terminate the retainer of Legalment in the proceeding and (b) costs of and incidental to the application were reserved. The Tribunal noted that the applicants’ consented to the application.
10	On 13 August 2021, the parties failed to settle the matter at mediation.
11	On 17 December 2021, the applicants’ application was listed for hearing on 2 May 2022 and the Tribunal ordered (in chambers) (a) the first applicant was given leave to withdraw the application and the application was withdrawn, (b) the proceeding was struck out as against the second applicant for failing to appear or be represented at the hearing, and (c) an application for costs by the respondent must be lodged by 2 June 2022.
12	On 19 September 2022, the hearing of the respondents application for costs was adjourned for hearing on 11 April 2023 and the Tribunal relevantly ordered (a) by 19 October 2022 the applicants’ must send their response to the respondent’s submission for costs, (b) by 2 November 2022 each party must send a copy of all document on which they intend to rely at the costs hearing including written submissions, (c) if a party does not comply with these directions, orders may be made against the party. The order went on to say “Such orders may include…excluding documents not sent to VCAT or the other parties; or adjourning the matter and requiring the defaulting party to pay filing fees and costs”, and (d) any costs for today’s hearing are reserved.  At that hearing the second applicant failed to attend the hearing.
13	On 8 May 2023, the Tribunal made orders (in chambers) giving the respondent until 22 May 2023 to make further submissions regarding the costs of and incidental to the application for costs and the applicants were given until 7 June 2023 to provide submissions in response. The respondent provided submissions including invoices in support of the claim and the applicants provided written submissions in response on 5 June 2023.
14	The applicant’ submissions dated 5 June 2023 stated that they did not bring the lawsuit and we do not intend to pay any fees.
15	Mr Hu’s application for orders for payment of the respondent’s actual costs incurred of and incidental to this proceeding totalling $11,559.26 are itemised as follows:
(i)	$1,095.70 re proceedings threatened by the applicants prior to making the application to VCAT on the basis that the respondent had threatened to take possession of the business premises and unlawfully broke into the premises on two occasions and then threatened to issue proceedings in VCAT based on unfounded allegations that the respondent was engaging in unlawful activities at the business premises. The respondent had to respond to the threats in order to protect her rights to retain possession of the business having paid the full purchase price.
(ii)	$3,784.90 re the initial application by the applicants dated 22 June 2021 and the first hearing on 29 June 2021
(iii)	$2765.46 re the respondent’s application dated 20 July 2021 and the second hearing on 23 July 2021
(iv)	$2651.40 re the mediation on 13 August 2021
(v)	$1261.80 re the third hearing on 2 May 2021
(vi)	$ 5,107.69 re the application for costs, the adjourned hearing on 19 September 2022 and the fourth hearing 11 April 2022
16	In general terms, the respondents’ application for costs was that the Tribunal should be satisfied that it is fair to order the applicants to pay the respondents’ costs having regard to the criteria set out in subsections 109(3)(a)(i),(iii) and (vi), (c), (d) and (e) of the Victorian Civil and Administrative Tribunal Act 1998 (‘the VCAT Act’). In summary, the respondent submitted that:
a.	Subsection 109(3)(a)(i): the applicants had failed to comply with an order or direction of the Tribunal made on 19 September 2022 without reasonable excuse, notably failing to send detailed submissions in response to the respondent’s submissions for costs by 19 October 2022.
b.	Subsection 109(3)(a)(iv): the first applicant causing an adjournment on 19 September 2022 because he had not read or understood the respondent’s submissions.
c. 	Subsection 109(3)(a)(vi): vexatiously conducting the proceeding: The Tribunal’s dismissal of the application for an injunction at the first hearing on 29 June 2021 is conclusive evidence that in VCAT’s opinion the proceeding was vexatious.
d. 	Subsection 109(3)(c): the relative strengths of the parties’ respective positions strongly favoured the applicants, as evidenced by the outcome of the case, notably the orders made on 29 June 2021, 23 July 2021 and 2 May 2021 and the first applicant’s application to withdraw the application and second applicant’s failure to appear at multiple hearings.
e.	Subsection 109(3)(d): the case was sufficiently complex to warrant the respondent engaging a legal practitioner given the difficult issues of fact and law which arose, including a contractual commercial dispute, questions regarding a conflict of interest caused by the applicants’ legal representative, and an application for injunctive relief to allow possession of the business in circumstances where the respondent had paid the full purchase price of the business. Further, the respondent does not read or speak English and relies on an interpreter and therefore the case could not have been properly articulated by a self-represented litigant; and the amount in dispute was substantial for ordinary Australians.
f. 	Subsection 109(3)(e): any other matter the Tribunal considers relevant. The respondent submitted that section 78 of the VCAT Act empowers VCAT to strike out a proceeding and order costs if a party is conducting the proceeding in a way that unnecessarily disadvantages another party, such as failing to attend the hearing which was the ultimate outcome of the case with respect to the second applicant.  Further, section 74 of the VCAT Act empowers VCAT to order costs against a party for withdrawing an application which was the ultimate outcome of the case with respect to the first applicant.
g. 	The respondent submits that offers were made to the applicants to settle the case at each stage of proceedings on the basis that the applicants agree to pay the respondent’s legal costs at a significantly discounted rate but the applicants failed to respond to any of the offers.  The respondent provided copies of letters containing offers of settlement that were sent to the applicants during each relevant stage of the proceeding. 
h. 	The respondent submits that the applicants were forewarned of her intention to apply for an injunction restraining their legal representatives from continuing to act but they failed to respond yet consented to the application and orders at the hearing.
i. 	The respondent submits that the applicants ought to have known that their claims for possession in the initial application were tenuous. This is because a clause in the contract prohibited them from making the initial application for an injunction for breach of the contract until a notice of default seeking termination of the contract has been given to the respondent and not complied with. The respondent submits that the applicants failed to issue a notice of default and claim termination of the contract and instead tried to unlawfully take possession.  A copy of the relevant contract clause was provided to the Tribunal.
17	The respondent submits that no deduction should be made to the respondent’s claim for costs because the hourly rates applicable, i.e. $180.00 is significantly lower than the County Court costs scale for attendance (e.g. $340.00 in 2021) and discounts totalling more than $2,890.00 have been applied to the Respondent’s costs and research time was not billed.
18	The respondent seeks an order pursuant to section 115B of the VCAT Act for reimbursement of the fees paid for each of the respondents applications in the sum of $599.70 calculated as follows: $220.90 injunction filing fee and $$378.80 costs application fee.
Is it fair to order the applicants’ to pay the respondent’s costs of and incidental to the proceeding generally? Yes  
19	I am satisfied that it is fair to order the applicants to pay the respondent’s costs of and incidental to the proceeding generally having regard to the criteria in subsections 109(3)(a), (c), (d) and (e).
20	Subsection 109(3)(d) mostly concerns the question of whether in a particular case a party is justified in retaining legal practitioners, to the extent of them being able to seek costs from their opponent. Each case is different, and the Tribunal’s jurisdiction in civil claims is very broad. A case that only concerned a narrow issue, of whether a small consumer good such as an appliance or a small service such as the performance of dry-cleaning, in which the quality or defect of the good or service basically speaks for itself may not justify a party engaging a legal practitioner. However, this case certainly warrants the retainer of legal practitioners. The applicants initially engaged legal practitioners and made an application for injunctive relief involving complex issues regarding a commercial contractual dispute in circumstances where the respondent does not read or speak English. I have no doubt that the criteria in subsection 109(3)(d) is met.
21	Whilst the criteria in subsection 109(3)(c) is not the same as the concept of costs following the event, particularly in view of the plain words of subsection 109(1), in this proceeding the relative strengths of the parties’ respective positions plainly lay with the respondent, Ms Xiang. Ms Xiang had to quickly respond to the application for injunctive relief and to protect her interests in the business and to subsequently issue her own application seeking injunctive relief due to the clear conflict of interest regarding the applicant’s legal practitioners and to take each proceeding to a hearing and mediation. The applicants’ initial application for injunctive relief failed, the respondent’s application for injunctive relief succeeded and the final outcome resulted in the first applicant withdrawing the application and the second applicant’s application was struck out for failure to appear at the hearing. Further, this litigation occurred in circumstances where the respondent made offers of settlement prior to each scheduled hearing date.  I am satisfied that this criterion operates to make it fair that costs be awarded to the respondent.
The assessment of costs
22	The respondent sought an order that their actual costs be paid rather than on a standard basis under the County Court scale.
23	Rule 1.07 of the Victorian Civil and Administrative Tribunal Rules 2018 provides that:
Unless the Tribunal otherwise orders, if the Tribunal makes an order as to costs, the applicable scale of costs is the County Court costs scale as defined in Rule 1.13 of the Rules of the County Court.
24	The respondent submits that their actual costs would be significantly less than the County Court scale of costs for the reasons set out in paragraph 16 above. Mr Hu provided a detailed summary in paragraphs 17 to 23 of the points of claim dated 2 June 2022 of the legal costs and disbursements incurred by the respondent which were billed on the agreed hourly rate of $180.00 excl GST before discounts. Mr Hu provided subsequent submissions regarding the costs of and incidental to the application for costs including three separate invoices regarding the legal costs and disbursements incurred by the respondent. I do not accept the applications’ claims that we did not bring the lawsuit or that the claims for costs were struck out by the Tribunal. Whilst the respondent applied for injunctive relief this application was made in response to the applicant’s original application. At no time has the Tribunal struck out the respondent’s claims for costs, rather such applications have been reserved.
25	Based on my own experience as a former legal practitioner and long standing VCAT Member and based on the respondent’s submissions I am satisfied that the respondent’s claim for their actual costs totalling $16,666.95 is an appropriate assessment of costs. This is because I am satisfied that the costs would be significantly higher if assessed on the basis of the County Court scale because of Mr Hu’s lower hourly rate claimed and because the actual hours claimed in the points of claim for the services provided are reasonable. In other words, I am not awarding the costs to the respondent on an indemnity basis. I am awarding them on a standard basis, but am reducing the amount awarded because the respondent’s legal practitioners have charged the respondent less than the amount they could have charged under the County Court Scale. Whilst that undoubtedly benefited the respondent, in the unusual circumstances of this case it also had the effect of benefiting the applicants.
26	As a separate matter to the above award of costs, section 115B of the VCAT Act empowers the Tribunal to order a party to reimburse to the other party the filing fees which they incurred. The criteria to be considered are set out in sub-section 115B(3)(a) and (c) are very similar to those in sub-sections 109(3)(d) and (c) respectively, which I have discussed above. Applying the relevant criteria, I am satisfied that the respondent is entitled to an order for reimbursement. The fees to be reimbursed are $220.90 for the application for an injunction dated 20 July 2021 and $378.80 for the application for costs.

R Daly 
Member