VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
administrative DIVISION
REVIEW AND REGULATION LIST	
vcat reference Nos. Z54/2022, Z391/2022 & Z481/2022	
CATCHWORDS	
Review and Regulation List – Victorian Civil and Administrative Tribunal Act 1998 (Vic), section 79 – Whether Tribunal has discretion to order security for costs in review jurisdiction – Considerations in making an order for security for costs – Whether discretion should be exercised – Application for security for costs dismissed.	

FIRST APPLICANT	Sydenham Grace Pty Ltd	
SECOND APPLICANT	NewDimension Australia Pty Ltd	
RESPONDENT	Department of Families, Fairness and Housing	
WHERE HELD	Melbourne	
BEFORE	R Tang AM, Senior Member	
HEARING TYPE	Videoconference Hearing	
DATE OF HEARING	16 November 2023	
DATE OF ORDER and reasons	29 November 2023	
CITATION	Sydenham Grace Pty Ltd v Department of Families, Fairness and Housing (Review and Regulation) [2023] VCAT 1311	

Orders

1	For the reasons given, the respondent’s application for security for costs is dismissed.
2	If either applicant seeks costs under Division 8 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), then they must by no later than 4:00pm on 12 January 2024 send the Tribunal and the respondent their outline of submissions.
3	If an application for costs is made, the respondent must, by no later 4:00pm on 23 February 2024, send the Tribunal and each applicant an outline of the respondent’s submissions in reply.
4	Unless a party informs the Tribunal by no later than 4:00pm on 1 March 2024 that they seek to be heard on the question of costs, any application for costs will be determined by the Tribunal on the papers.
5	Failing any application for costs in accordance with Order 2, these orders are to be taken to have the effect that there is no order as to costs in respect of the application for security for costs.

R Tang, AM
Senior Member			

APPEARANCES:		
For First Applicant	Mr G Rebetzke of Counsel	
For Second Applicant	Mr R Knowles KC and Ms C Middleton of Counsel	
For Respondent	Mr J Pizer SC and Mr A Willoughby of Counsel	

Reasons
1	Prior to 2022, the applicants in this proceeding, Sydenham Grace Pty Ltd (‘SGPL’) and NewDimension Australia Pty Ltd (‘NDA’), were each the registered proprietors of a supported residential service (‘SRS’) known as Sydenham Grace in Sydenham and Gracemanor in Melton (respectively).  Registration of SRS proprietors is regulated under the Supported Residential Services (Private Proprietors) Act 2010 (Vic) (‘SRS Act’).
2	Mr Pradeep Divarkar has been the sole director of both applicants at all relevant times (except for a short period between March and August 2021) and owns all of the shares in NDA and 51% of the shares in SGPL.  Ms Parvinder Kaur owns the remaining shares in SGPL and has led the finance team of both SRSs.  (It appears from their financial reports that both entities act as trustees of trusts.)
3	Between early 2018 and late 2021, the Department of Families, Fairness and Housing (‘Department’) investigated issues concerning the applicants’ compliance with the SRS Act, particularly as to the standard of services provided by the applicants to residents.
4	As a result of those concerns, under section 170 of the SRS Act, the Director of the Human Services Regulator (‘Director’) – in his capacity as a delegate of the Minister for Disability, Ageing and Caring – made decisions on 12 January 2022 to appoint Ernst & Young as an administrator (‘Administrator’) to operate the two SRSs (‘Administration Decisions’).  An affidavit dated 20 October 2023 has been prepared by Mr Adam Nikitins (‘Nikitins Affidavit’), the partner of Ernst & Young responsible for the administrations, as to their financial position at the time.
5	Subsequently, on 27 May 2022 and 21 June 2022, the Director (again as the Minister’s delegate) revoked the registration of the SRSs operated by NDA and SGPL (respectively) under section 168 of the SRS Act (‘Revocation Decisions’).  In making the latter decisions, the Director relied upon both: 
(a)	The concerns as to applicants’ compliance with relevant SRS standards, leading to the conclusion that each applicant had ‘failed to carry on the supported residential service in accordance with [the SRS Act and regulations]’; and 
(b)	the view he had formed that each applicant did not have the ‘financial capacity to operate a supported residential service’ and, as such, ‘no longer [met] the registration criteria’.    The latter view was informed by financial viability assessments conducted by Mr Nitikins, who concluded that each SRS was ‘not viable’.
6	Under sections 206(2)(c) and (d) of the SRS Act, ‘a person whose interests are affected’ by a decision to revoke the registration of an SRS or to appoint an administrator to an SRS is entitled to apply to VCAT for review of the decision. 
7	By application dated 25 January 2022, both applicants sought review of the Administration Decisions (proceeding Z54/2022).  Further, by applications made on 7 June 2022 (proceeding Z391/2022) and 6 July 2022 (proceeding Z481/2022), NDA and SGPL sought review of the Revocation Decisions (respectively).
8	It is common ground that the review proceedings are still at a relatively preliminary stage.  It is relevant to note that there was an attempt at private mediation on 19 January 2023, which did not resolve the disputes between the parties, although it did result in attempts to narrow the issues in dispute.   In this regard, the Department agreed to produce a table of its findings, together with references to the evidence it relied upon (‘Table of Findings’) and the applicants agreed to annotate that table with their responses (and supporting evidence).  Further, a compulsory conference – conducted by a member of the Tribunal – was held on 12 September 2023.  While that has not resulted in the proceedings being resolved, an additional day has been earmarked for resumption of the compulsory conference (although the date for that has yet to be fixed).
9	By application dated 18 May 2023, the Department made an application for directions hearing or orders, seeking an order for security for costs under section 79 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (‘VCAT Act’).  Ms Kylie Walsh (solicitor for the Department) has sworn an affidavit in support of the application dated 20 October 2023 (‘Walsh Affidavit’).  In the affidavit, Ms Walsh states that the Department’s costs to date total approximately $150,000 and, based on her assessment of the likely preparation and hearing time for each matter, estimates the Department will incur further costs totalling around $1.8 million if the proceedings continue to a contested hearing.  Those costs are further broken down as to approximately $1.2 million in respect of NDA and approximately $600,000 in respect of SGPL.  
10	Despite the estimated cost, Mr Pizer (senior counsel for the Department) indicated that the orders sought by the Department are: 
That, by 4:00pm on 16 February 2024, the applicants lodge with the principal registrar security for costs in the sum of $900,000.
11	These reasons concern the Department’s application for security for costs.
12	It appears that there is no precedent for the Tribunal making an order for security for costs in proceedings in its review jurisdiction and, indeed, the parties have been unable to identify any precedent for such an order being made in review proceedings by any equivalent Australian tribunal at federal, state or territory level.
13	The issues which fall to be determined are:
•	whether the discretion to make an order for security for costs applies in VCAT’s review jurisdiction; and
•	if so, whether: 
-	the relevant considerations are the same or different to those that apply in relation to the making of such orders in VCAT’s original jurisdiction; and
-	the discretion should be exercised having regard to the (limited) material before the Tribunal.
14	For the reasons that follow, I consider that:
•	the discretion to make an order for security for costs does apply in VCAT’s review jurisdiction;
•	the considerations that apply in relation to the making of such orders are the same as those that apply in VCAT’s original jurisdiction, save that the right of a party affected by an administrative decision to seek review on the merits is a significant matter when assessing the public interest; and
•	having regard to the material before the Tribunal, and all the circumstances, the discretion should not be exercised, at least at this time.     
15	The decision not to order security for costs is qualified, as there is nothing that prevents a further application by the Department if and when circumstances change.  For instance, if the further day of compulsory conference does not lead to settlement of the proceedings and the applicants do not then cooperate with any case management directions the Tribunal makes to manage the proceedings and limit the costs for all parties, the balance of considerations might shift.
Does section 79 of the VCAT Act apply in VCAT’s review jurisdiction?
16	On its face, the discretionary power to make an order for costs under section 79 is enlivened by an ‘application of a party to a proceeding’.  Identifying whether that power extends to proceedings in the Tribunal’s review jurisdiction, i.e. involving review of a decision made by a decision-maker, is an exercise in statutory construction.  As with all such exercises, it is necessary to have regard to the text, context and purpose of the legislation in construing it.
17	As the Department submits, proceeding is defined in section 3 of the VCAT Act to mean any proceeding in the Tribunal, without seeking to distinguish between the Tribunal’s original or review jurisdictions.  Accordingly, I consider that the text of the VCAT Act prima facie supports the application of section 79 in proceedings in the Tribunal’s review jurisdiction.
18	In terms of context, section 79 sits within Part 4 of the VCAT Act dealing with matters of ‘general procedure’ and within Division 4 which concerns ‘preliminary procedure’.
19	Relevantly, section 80 of the VCAT Act – which gives the Tribunal a broad power to ‘give directions’ – appears in the same Division and Part and, like section 79, applies to ‘a proceeding’.  In section 80(3), a distinction is drawn about the making of directions for production of documents in ‘a proceeding for review of a decision’.  Thus, the immediate context makes it clear that: 
•	the general power to give directions in a proceeding (i.e. under section 80(1)) applies to proceedings in both the Tribunal’s original and review jurisdictions; and
•	the legislature is alive to the difference in the nature of those jurisdictions and makes specific rules to address the differences where considered appropriate.     
20	As the Department submits, that context is also supported by the distinctions drawn between proceedings in each jurisdiction in other provisions, such as: 
•	section 77 (which also appears in Division 4 of Part 4), allowing a proceeding, ‘other than a proceeding for review of a decision’, to be struck out and transferred to a ‘more appropriate forum’; and 
•	section 59 (which appears in Division 2 of the same Part), separately identifying the parties to proceedings in the Tribunal’s original jurisdiction (dealt with in section 59(1)) and proceedings in the Tribunal’s review jurisdiction (dealt with in section 59(2)). 
21	As will be seen, in terms of the relevant considerations for the making of an order for security for costs, both the applicants and respondent make submissions regarding the power of the Tribunal to make an order for costs under section 109 of the VCAT Act in respect of review proceedings.  Relevantly, section 109 also appears in Part 4 (albeit in Division 8) and applies to costs ‘in the proceeding’.
22	As the Department submits, the power to make an order for costs ‘unquestionably applies to proceedings involving the exercise of the Tribunal’s review jurisdiction’.  For a recent example, see McQuestin v Victorian Electoral Commission.  Indeed, that there is a (discretionary) power to award costs in the specific context of review of a decision under the SRS Act was impliedly recognised in Dependable Care Pty Ltd v Department of Families, Fairness and Housing, although it does not appear that the Department pursued its application for costs subsequent to the decision.
23	Returning to section 79 itself, in Hapisun Pty Ltd v Rikys & Moylan Pty Ltd  (‘Hapisun’), Daly AsJ observed that the policy behind provisions granting a court (or tribunal) the discretion to make an order for security for costs: 
is the recognition of the need to protect involuntary participants to litigation from the adverse financial consequences of defending claims against impecunious plaintiffs, particularly those who operate behind the shield of limited liability.
24	Save to recognise that the conferral of a right for a party affected by a governmental decision to seek its review means that the respondent government agency is not an ‘involuntary participant’ in the same way as a respondent to a commercial claim, I accept the Department’s submission that this general purpose ‘is advanced in all proceedings in the Tribunal, irrespective of whether that proceeding involves the exercise of the Tribunal’s original or review jurisdiction’.
25	In my view, the text, context and purpose of section 79 all support the discretionary power applying to proceedings in the Tribunal’s review jurisdiction.
26	I do not accept SGPL’s submissions that, because: 
•	the right of review conferred by section 206 of the SRS Act is ‘not qualified by an unstated requirement that the right is only to be extended to persons affected by a decision who are not impecunious corporate personalities’; 
•	the SRS Act does not give the Department any power to award costs; and
•	the Tribunal stands in the shoes of the Department under section 51 of the VCAT Act,  
there is an ‘inconsistency’ between the Tribunal’s general power to make an order for security for costs and its specific powers on review, such that the latter should prevail.  (Similarly, I reject the submission of NDA supporting that position.)
27	In this regard, as Mr Pizer observed in his oral submissions, under section 51(1)(c) of the VCAT Act, when conducting a review, the Tribunal has any function – in turn, defined to include any power – conferred under the VCAT Act, which is additional to the functions (and powers) under an enabling enactment. 
28	Further, the principle of statutory construction relied upon by SGPL – namely that the specific overrides the general (or, in Latin, generalia specialibus non derogant) – only operates as an ‘aid to construction’ and ‘must be applied subject to the particular text, context and purpose of the statute being construed’.
29	As those considerations are overwhelmingly supportive of section 79 applying in all VCAT proceedings, including in its review jurisdiction, they displace any operation of that principle of statutory construction.
What considerations apply to the exercise of the discretionary power in section 79 in the context of review proceedings?
30	Section 79 does not set out any specific test(s) for the exercise of the power to make an order for security for costs.
31	In Hapisun, Daly AsJ held that the Tribunal may have ‘regard to the principles developed in the general jurisprudence [concerning security for costs] when exercising its discretion under s 79’, but should not go so far as to set down any ‘threshold precondition to the exercise of the otherwise unfettered discretion’.  
32	In its submissions, the Department identifies the following factors from the general jurisprudence that it submits should guide the Tribunal’s exercise of the discretionary power in this proceding:
•	the applicant’s ability to meet an adverse costs order;
•	the prospects of success of the applicant’s claim;
•	whether making an order would lead to stultification of the proceedings;
•	whether there are persons ‘standing behind the applicant’;
•	any delay on the part of the party seeking the order; and
•	the cause of the applicant’s impecuniosity. 
33	In developing the Department’s position in oral submissions, Mr Pizer added ‘the likelihood of a costs order’ as a separate or further consideration, and also addressed a further factor raised by the applicants, namely ‘whether the proceedings are defensive in nature’. 
34	The factors identified by the Department appear to be a subset of those established by the general jurisprudence as set out in Pizer’s Annotated VCAT Act.  In response to a question from me, Mr Pizer accepted that a further consideration drawn from that commentary, which has relevance to the present case, is ‘whether there are aspects of the public interest which militate against the making of an order for security’.
35	Of course, as those factors are established by decisions of the courts (largely in the context of commercial civil disputes), and courts do not (or at least do not routinely) engage in merits review of governmental decisions, there is a question as to whether additional or varied considerations apply in the latter context.  However, as there is no precedent for an order of security for costs being made by a tribunal in proceedings involving review of an administrative decision (see [12]), it is necessary to look further afield to resolve this question. 
36	In this regard, the discretion to make an order for security for costs has been considered by the Federal Court of Australia in the context of a taxpayer’s appeal (by way of judicial review) of a decision of the Administrative Appeals Tribunal (by way of merits review) in a Federal taxation context.  Relevantly, this has parallels with VCAT’s jurisdiction to review state taxation decisions (and section 148 of the VCAT Act which allows a party to seek leave to appeal a decision of the Tribunal to the Supreme Court of Victoria on a question of law).
37	In Fletcher and Others v Federal Commissioner of Taxation (‘Fletcher’), Hill J had occasion to consider what he described as an ‘unprecedented’ application by the respondent Commissioner for security for costs in that situation.  After identifying the general rule in Cowell v Taylor that ‘poverty is no bar to a litigant’, Hill J observed that: 
[m]anifest injustice could well be done and would certainly be seen to be done if despite conferral of a right to appeal to this Court on a question of law that right could, in the absence of special circumstances, be frustrated by the Commissioner requiring security to be given by an impecunious litigant.
38	His Honour concluded: 
it would be a rare case where security for costs would be awarded at the instance of the Commissioner of Taxation against a natural person seeking to appeal from a decision of the Administrative Appeals Tribunal reviewing an objection decision, where it was conceded that there was a real issue to be decided between the parties.  Certainly more than impecuniosity would be required before the court’s discretion would be exercised in a way which could bring about the inability of a taxpayer to challenge in a court a question of law affecting his liability to income tax. 
39	Although Hill J’s observations were made in the context of a Federal Court rule that required ‘special circumstances’ for the making of an order for security for costs, and an appeal by an individual rather than a company, in my view, his observations have more general relevance to cases where an application is made for an order for security for costs in relation to a proceeding involving a statutory right to seek review of (or appeal) a decision of a government agency.  
40	That said, I consider that this consideration comfortably sits within the existing consideration as to the ‘public interest’.  
41	And, of course, it cannot be determinative or otherwise fetter the Tribunal’s broad discretion under section 79.  Indeed, despite the strong comments made by Hill J, the Federal Court can – and has – made orders for security for costs in relation to taxation appeals, where appropriate: see, for example, Oswal v Commissioner of Taxation (No2).  In that case, Nicholas J accepted there is a ‘strong predilection against awarding security for costs against a natural person at least in proceedings at first instance that involve a bona fide claim’.  However, he accepted that the fact that the applicants were ordinarily resident outside Australia and had no valuable assets in Australia, and were suing for the benefit of another party (in terms of having assigned any amounts recovered to a litigation funder), were factors that tipped the balance in favour of the exercise of the discretion to make an order for security for costs.
Taking account of the relevant considerations, should the discretion to make an order for security for costs be exercised?
Applicants’ ability to meet an adverse costs order
42	The Department submits that its costs of the proceeding are ‘likely to be enormous’ (see [9]) and that, if the Tribunal ‘were to order the applicants to pay those costs (or even a fraction of them) [i.e. under section 109 of the VCAT Act], it is very likely that the [a]pplicants would not be able to comply’, being a consideration weighing in favour of the making of an order for security.  In his oral submissions, Mr Pizer referred to Daly AsJ’s description of this factor as ‘an important, if not critical discretionary factor’ and her comment that ‘it is difficult to contemplate a scenario where the financial position of a plaintiff was not a paramount consideration’.
43	In relation to the ability of the applicants to meet any costs order, the Department relies on the opinion of Mr Nikitins to the effect that: 
•	both companies had substantial deficiencies in their net tangible assets at 30 June 2021; and 
•	there is no basis to think their financial position has improved (given they have not been operating any SRS since the administration came to an end).
44	In oral submissions, Mr Pizer described this as ‘unchallenged evidence’, noting that the applicants did not require Mr Nikitins to attend for cross-examination or put on any financial evidence of their own.  He added that, although the Department bears the onus of satisfying the Tribunal that it should exercise the discretion under section 79, once the applicants were ‘put on notice’ of the issue as to their ability to meet the costs order, it became ‘incumbent on them to bring evidence before the Tribunal to show what their financial position is’.  Further, he submitted the Tribunal could ‘comfortably draw an inference that there is no evidence’ of that nature given that the applicants have not produced it and did not provide any financial evidence in response to the respondent’s Table of Findings (identifying applicants’ financial capacity as an issue). 
45	Further, the Department observes that ‘neither Mr Divarkar nor Ms Kaur has offered a meaningful undertaking to be liable for any of the [r]espondent’s costs of the proceeding’.
46	The applicants’ written submissions did not expressly address their ability to meet an adverse costs order.  However, in oral submissions, Mr Rebetzke (counsel for SGPL) observed that:
•	the financial capacity of the applicants was not a basis for the Administration Decisions and, while relied upon in relation to the Revocation Decisions, there is a legal issue about when the applicants’ financial capacity is to be assessed (ie. at the time of the original decisions or at time of the hearing of the review); 
•	there are ‘limitations’ as to Mr Nikitins’ evidence.  For instance, he bases his opinion on SGPL’s balance sheet at the beginning and end of the administration, but admits he has not reviewed any of the applicants’ financial information since the administration ended and assumes various facts (e.g. whether particular loans are or are not recoverable); and
•	SGPL has ‘apparently’ been in a position to fund its own costs in the order of $200,000.  (Although, in response to a question from me, Mr Rebetzke conceded that there is no evidence as to the source of funds for payment of those fees.)
47	Ultimately, while Mr Rebetzke acknowledged that this was the Department’s strongest point in favour of an order for security for costs, he suggested there was a need for ‘some caution’ in accepting Mr Nikitins’ views. 
48	Mr Knowles (senior counsel for NDA) agreed with Mr Rebetzke’s submission that there is a ‘legal issue’ as to the time at which financial viability is to be assessed.  He submitted that Mr Nikitins’ evidence is about NDA’s financial position in 2021/2022 – ‘amid a pandemic and viewed through the administration’ – and, as such, is ‘not probative evidence of financial viability’.  In this regard, he observed that the Department had not identified any concerns as to NDA’s financial viability prior to the Revocation Decisions.  Mr Knowles also denied that the onus of demonstrating financial viability has shifted to NDA as a result of Mr Nikitins’ evidence.
49	In reply, Mr Pizer contended that the submissions of both SGPL and NDA should be rejected.  In doing so, he: 
•	referenced the decision of SC Derrington J in McMahon Services Australia Pty Ltd v Pinkeba Quarrying & Recycling Pty Ltd in relation to the shifting of the ‘evidentiary burden’ to an applicant where the respondent puts on ‘credible evidence establish[ing] that there is reason to believe there is a real chance … the [applicant] corporation will be unable to pay the costs of the [respondent]’; and
•	suggested that the criticisms of Mr Nikitins’ evidence amounts to ‘evidence from the bar table’.
50	The evidence given by Mr Nikitins as to the applicants’ ability to meet any order for security for costs is effectively expert evidence.  I accept that, based on the material in his affidavit, he has substantial experience in dealing with companies experiencing financial difficulty, including SRS proprietors (not limited to the applicants).  I also accept that he would have developed a reasonable appreciation as to the applicants’ financial position over the court of his administration.  
51	However, none of that means that Mr Nikitins’ opinion can or should be accepted uncritically.  His affidavit is replete with assumptions.  Beyond the matters raised by the applicants, the net asset deficiencies at the heart of his assessment of each applicant’s viability are based on the exclusion of a significant asset recorded in their financial statements, namely amounts relating to goodwill.  While he is correct to observe that ‘goodwill is an intangible asset that could not be readily monetised in the ordinary course of business to repay a debt’, if the businesses still have goodwill (despite the Revocation Decisions), there might be opportunities to sell all or part of the business to meet any award of costs.  Of course, as Mr Nikitins did not attend the hearing, I have not had an opportunity to explore whether he had considered such matters and the impact (if any) it may have had on his views.
52	Nevertheless, despite the foregoing concerns, I accept that if the Department’s costs are anywhere near the amount estimated by Ms Walsh, and assuming that the Tribunal would make an order as to costs in the Department’s favour in the event the applicants were unsuccessful (discussed further below), the applicants are highly unlikely to be able to meet any such order.  In this regard, it is of course relevant to note that each applicant would also have to fund its own legal costs, which can be assumed to be of a similar order of magnitude (either individually or collectively). 
53	I consider that this is a strong factor in support of an order for security for costs.
The applicants’ prospects of success
54	The Department submits that the applicants have ‘very poor prospects of success in the Proceedings’ suggesting that, in responding to the Table of Findings, neither applicant has ‘demonstrated that they have a persuasive response to the vast majority of allegations made against them’.  In particular, the Department points to the failure of the applicants to ‘adduce any evidence or to provide any explanation of why it had the financial capacity to operate its SRS’, contending that the Tribunal ought infer the failure is because they did not have that financial capacity (which is fatal to the review).  Mr Pizer added that a lot of the applicants’ responses to other matters amounted to ‘bare denials’, although he conceded that the ‘merits cannot be satisfactorily determined now’.
55	SGPL submits that the Tribunal is ‘not assisted by what is said to be a failure on [its part] to provide evidence or explanations … sufficient to persuade [the Department] to change its own decision’.  This is particularly so given the absence of ‘pleadings’ in these proceedings (unlike commercial cases where security for cost orders are normally considered).
56	Further, SGPL contends that it is ‘premature for the Tribunal to make any inference about the likely outcome of a merits review of the decisions’ in circumstances where ‘[n]o affidavit material has been filed’ (in the substantive proceeding) and the Department intends to call more than 20 witnesses.  In this regard, SGPL refers to Kirby J’s observation in Merribee Pastoral Industries Pty Ltd v ANZ Banking Group about the need for care in considering such matters, ‘given that the real merits of the case might not emerge until the final hearing’.
57	SGPLs submits that there is ‘a genuine contest between the parties’ and, ‘it cannot be concluded at this preliminary stage that the applicant’s case is one which lacks reasonable prospects of success’.  
58	Moreover, in oral submissions, Mr Rebetzke referred to the course taken by the Department to deal with its concerns (i.e. appointing the Administrator, and then revoking the registration of the SRSs) as the ‘nuclear option’ and suggested that other courses may have been open to the Department, such as to censure SGPL or suspend the entry of new residents at the SRS.
59	Similarly, NDA contends that it has ‘made and prosecuted its applications for review with bona fides’, noting its response to the Department’s Table of Findings.  Further, given the Department ‘relies on disputed matters to be determined in the final hearings of the substantive review applications’, it submits that, at this stage, ‘it cannot be said that the review applications have no reasonable prospects of success’.  It adds that the Department’s view as to the persuasiveness of the material put forward by it ‘should be given little, if any weight’, given it is the Department that made the decisions under review.  
60	In oral submissions, Mr Knowles added that all matters, including the financial issues, were ‘hotly contested’.  For example, a lot of the ‘allegations’ raised by the Department were based on information provided by a former employee who appears to have been ‘disgruntled’ and whose evidence would be subject to close cross-examination.
61	I regard the applicants’ prospects of success to be a neutral factor in the evaluation having regard to the following maters:
•	the relatively early stage of the proceedings, including the fact that the parties have not been ordered to exchange or file the evidence on which they seek to rely or their written submissions;
•	while the applicants have not responded to the financial viability assessments undertaken by Mr Nikitins to date, they may yet put on expert evidence which establishes sufficient doubt as to the opinion formed by Mr Nikitins.  Alternatively, they may satisfy the Tribunal that the assessment of financial viability is to occur at the time of hearing and that the position of the applicants has improved in the meanwhile (e.g. by injection of new capital into the trusts);
•	based on the applicants’ responses to the Table of Findings, the Department has apparently conceded a small number of the concerns raised and there remains a prospect that the Tribunal, after hearing all the evidence, may find that other concerns are not substantiated to the applicable standard; and
•	even if the majority of the concerns raised by the Department are substantiated, it does not follow that the Tribunal will necessarily determine that the appointment of the Administrator or the revocation of the applicants’ registrations is the ‘correct or preferable’ decision.  In this regard, Mr Willoughby (junior counsel for the Department) took me through the relevant provisions of the SRS Act, indicating that the Minister (or delegate):
-	‘may’ appoint an administrator where the Minister believes on reasonable grounds that it ‘is necessary to protect the interests of the residents of the supported residential service’.  Of course, the use of ‘may’ connotes a discretion and there may have been other courses of action open to the Minister to address any concerns (and which the Tribunal may now take, stepping into the Minister’s shoes);
-	‘may’, if satisfied of the maters discussed at [5] (i.e. a failure of a registered proprietor to comply with the SRS Act or regulations or that the proprietor no longer meets the registration criteria, including because of a lack of financial viability), suspend future admissions to the SRS or revoke the registration of the SRS (or, of course, do neither).  
62	While I accept Mr Willoughby’s submission that the censure option is not open, and there may be some doubt as to whether the suspension of admissions is an appropriate course now – given there are no longer residents at either property (i.e. since the revocation of the applicants’ registration) – the existence of a discretion means that there can be no certainty that the Tribunal will determine the action taken at the time of the decisions remains the ‘preferable’ decision at the time of hearing.  
Likelihood of a costs order 
63	Mr Pizer noted that there is a ‘conceptual difference’ between the strength of an applicant’s case and the likelihood of a costs order being made, referencing Daly AsJ’s observation in Hapisun, that:
the fact that VCAT is, by the presumption imposed by s 109 of the VCAT Act, a “no-costs” jurisdiction, means that part of any analysis of the question of whether security for costs ought to be ordered needs to include some assessment of the likelihood of whether, even if a defendant was successful in defending a claim, that an order for costs would be made in its favour. 
64	However, Mr Pizer suggested it was wrong for SGPL to suggest that it was necessary for there to be ‘certainty’ as to the awarding of costs.  Rather, the question is ‘how likely’ is an order of costs.  Otherwise, he suggested, the power under section 79 could never be exercised.  Mr Pizer contended that, in the present case, there was a ‘more than reasonable likelihood of a costs order’ in the event the applicants were unsuccessful given:
•	the nature and complexity of the proceedings, referencing Ms Walsh’s assessment that the hearing would last many weeks and involve around 40 witnesses,  making it ‘particularly unusual or rare’;
•	the relative strength of the Department’s claim, which ‘favours’ an award of costs; and
•	the applicants’ conduct of the proceedings, including the abandonment of applications (e.g. in relation to the stay of the Administration Decisions), changing barristers and failing to comply with timelines that had been agreed or set by the Tribunal.
65	SGPL submits that an order, ‘other than each party bearing their own costs under s 109 of the VCAT Act is exceptional’, in the sense that the Tribunal can only make an order for costs if it is fair to do so, having regard to specified considerations.  It contends that the Department has: 
fail[ed] to identify any basis, other than what is submitted to be poor prospects of success, upon which [it] could be said … that costs would follow the event if the orders ultimately made … were to affirm the decisions under review.
66	SGPL further contends that, in circumstances where it ‘has an unqualified right to apply for a review of the decision’, it cannot be said that its application for review has ‘no tenable basis in fact or law’ and, even if its prospects are poor, ‘that does not translate into any likelihood that costs would follow the event at the end of the day’.  
67	Finally, SGPL submits that the nature of the proceedings, being ‘ones in which costs are either unavailable, or only available exceptionally, militates against the making of an order for security for costs’.
68	In its submissions, NDA adds that the general position under section 109 (i.e. that, each party bears its own costs) is ‘designed to promote access to justice’, is ‘particularly relevant in proceedings commenced in the Tribunal’s review jurisdiction’ (and, more so in cases involving ‘review of regulatory decisions’) and, in those circumstances, costs should not be awarded ‘unless a party’s behaviour has been significantly poor, fraudulent or perverse’.
69	In reply, Mr Pizer noted that no authority was cited by NDA in support of its submissions, although it appears to have been drawn from an unreported decision of Megay SM in Woodford v Medical Practitioners Board of Victoria in a freedom of information context.  While he conceded that ‘costs are unusual in review proceedings’, he suggested that it is ‘not right to link costs to behaviour’, which is an ‘unwarranted and unjustified gloss’ on the discretion in section 109 (and the comments in Woodford are confined to freedom of information cases).
70	Like the assessment of an applicant’s prospects of success, it is difficult to make a proper assessment of the likelihood of an award of costs at an early stage of proceedings.  That said, as Daly AsJ observed in Hapisun, ‘different considerations will apply in different lists’.  Just as she acknowledged there would be ‘a far greater willingness’ for the Tribunal to order costs in relation to a commercial building dispute than a guardianship matter, it can readily be observed that it is unusual and relatively rare for costs to be awarded against an unsuccessful applicant in review proceedings.
71	I accept that these proceedings are complex and, if they run for the full extent of the period estimated by Ms Walsh, this would be a factor pointing towards an award of costs.  On the other hand, I also accept Mr Knowles’ reference to these proceedings being ‘existential’ for the applicants and noting their unrestricted right to bring the proceedings.
72	While there have been some delays on the part of the applicants, I doubt they are of such a nature to sway any determination as to whether it is fair to make an award of costs.   
73	Ultimately, at present, I consider the likelihood of an award of costs to be low.  While this may change as the proceedings develop, I consider this is a factor that points against the exercise of the discretion to order security for costs.
Will the making of an order for security for costs stultify the proceedings?
74	The Department contends that it is for the applicants to satisfy the Tribunal that an order for security for costs would stultify the proceedings but, in any event, this should not outweigh the preceding factors.
75	While Mr Rebetzke accepted that SGPL had not put on evidence in this regard, he suggested it was ‘obvious as a matter of practicality’ that, given the substantial security sought, SGPL would be left in a position of having to determine whether to ‘put up security’ or ‘abandon the proceeding’ (noting its costs to date are in the order of $200,000 (see [46])).  As such, he contended that any order for security ‘would tend to stultify the proceedings’.
76	Similarly, Mr Knowles contended that the stultifying effect of any order for security was evident as it could be ‘readily inferred that any money provided to the Tribunal [as security] cannot be spent on representation’ for NDA.
77	In reply, Mr Pizer criticised the submissions for each applicant as amounting to evidence ‘from the bar table’ and pointed to Livingspring Pty Ltd v Kliger Partners in support of the Department’s position that it is for an applicant to put on evidence related to this issue.  Further, he contended that the real question is not the ability of the applicants to fund any security, but rather those ‘standing behind’ the applicants (i.e. Mr Divarkar and Ms Kaur), observing that they had ‘chosen’ not to give evidence.
78	In its written submissions, the Department suggests that, given his position as director and shareholder of both applicants, ‘[i]t would appear that Mr Divakar is the person standing behind [them]’.  The Department observes that he has been permanently banned from providing services under the National Disability Insurance Scheme (‘NDIS’).  While it accepts that it does not have information relating to his current financial position, it suggests the NDIS ban ‘could only have worsened [his] financial position’ (and, similarly for Ms Kaur, who is subject to a similar ban). 
79	I accept that an order for security of costs in the order of $900,000 would ‘tend’ to place any applicant which is:
•	not, of itself of substantial means; and
•	unable to call on others to support it, 
in an invidious position.  However, in the absence of evidence as to the current financial position of the applicants, Mr Divarkar and Ms Kaur (and any other unitholders in the trusts operated by SGPL and NDA), I am unable to infer that the order would in fact stultify the current proceedings.
80	Accordingly, this is a neutral factor in the assessment.
Has there been unreasonable delay by the Department in making its application?
81	The Department contends there has ‘not been any undue delay’ given the proceedings have not been set down for hearing and ‘are still at a very early stage’.  Relying on Ms Walsh’s affidavit, which sets out detail of the procedural history of the applications, the Department attributes the delay in progress of the proceedings to the applicants’ failure to comply in a timely manner with agreed timetables and VCAT’s procedural orders.
82	SGPL observes that the ‘main rationale’ for this consideration is that ‘delay has the potential to prejudice an applicant who incurs costs pursuing a matter before being met with an application for security’ and is ‘often decisive’.
83	SGPL submits that, in these proceedings, where ‘no application for security was made promptly’, it was ‘entitled to proceed with the litigation and order its affairs on the assumption that security would not be sought’.  It contends that ‘both the delay and the prejudice are substantial’, noting that the application relating to the Administration Decision was filed in January 2022, while the application for security for costs was not filed until May 2023, and in the meantime, SGPL has incurred costs in excess of $200,000 (see [46]).
84	Likewise, NDA submits it has ‘incurred substantial costs to date and would be prejudiced by the orders sought’.  In this regard, its costs are in excess of $100,000.  While it acknowledges there has been some delay on its part in complying with the Tribunal’s orders, it submits that was not done ‘for an improper purpose’ and ‘does not justify the belated making of the security for costs application’.
85	While I accept that there has been some delay in the Department bringing its application for security for costs, I do not accept that the delay can be viewed as ‘unreasonable’ given the attempts which have been made to resolve the matter or narrow the issues in dispute (by way of private mediation and the compulsory conference).  It seems to me to be entirely appropriate for the Department to have waited until those matters had run their course before making its application.  (Indeed, as I indicated to Mr Pizer, there may be an argument that the application is premature, given there may still be a further day of compulsory conference.)
86	I accept, of course, that the applicants have themselves incurred considerable cost in prosecuting their applications for review ‘in good faith’ (as Mr Knowles submitted) and that there would be ‘prejudice’ to them if they had to abandon their applications by reason of any security being ordered.  However, again, that is a matter on which there is insufficient evidence.
87	Accordingly, this remains a neutral factor.
Have the Department’s actions caused or contributed to the applicants’ impecuniosity? 
88	The Department contends there is ‘no basis’ to suggest that it caused the applicants’ impecuniosity.  Based on Mr Nikitins’ affidavit, it contends that both NDA and SGPL had ‘substantial net tangible asset deficienc[ies] at the date of appointment of [the Administrator] and so ‘were already impecunious before any of the decisions under review were made’.
89	Neither of the applicants addressed this consideration in their written submissions, or in any detail in their oral submissions.  
90	While it may be suspected that the Department’s actions have contributed to the extent of the applicants’ impecuniosity (particularly given the proprietor of a SRS is liable for the cost of any administration), there is also a reasonable (albeit still untested) basis to form the view that the applicants were impecunious prior to those decisions, such that it cannot be concluded that the Department’s actions have had any real impact. 
91	Accordingly, this is again a neutral factor.
Are the proceedings defensive in nature?
92	SGPL observes that:
the extraordinary executive power reposed in the executive to appoint an administrator to the applicant’s business is a power conferred by Parliament subject to the safeguard that a person whose interests are affected by its exercise may seek a merits review of its exercise in the Tribunal.
93	In oral submissions, Mr Rebetzke added that the right to seek merits review is an important safeguard against an ‘overzealous regulator’, with which the Tribunal should be ‘very reluctant to interfere’.
94	Accordingly, SGPL submits that its applications for review should be ‘viewed as defensive of its legitimate interests, which is a factor which weighs against the exercise of discretion to order security for costs’.  In that regard, Mr Rebetzke observed that the Table of Findings lists ‘30 separate allegations of misconduct or not meeting the criteria [in the SRS Act] which it wishes to defend’.
95	Similarly, NDA contends that its applications for review were ‘made in good faith pursuant to the unqualified statutory right [under section 206 of the SRS Act]’ and ‘are defensive in nature’, such that it would be ‘contrary to the purposes of section 206’ (and the VCAT Act) ‘to interfere with its right to seek merits review by ordering security for costs’. 
96	In his oral submissions, Mr Pizer contended that the applicants’ reliance on this factor is ‘misplaced’ because the Department ‘did not bring a claim against the applicants’, but rather exercised their statutory powers, such that the applications for review are ‘not properly characterised as defensive’.  Further, he suggested that relying on the nature of the proceedings as a factor going against an order for security for costs on this basis, in addition to taking that into account when assessing the likelihood of a costs order, involves ‘double dipping’ and is ‘legally wrong’.
97	While I accept the ‘defensive nature’ of proceedings has been considered to be a factor pointing away from the making of an order for security for costs, it is ‘merely a factor to take into account’.  Further, to my mind, it is more relevant to consider the nature of the proceedings as part of the wider considerations as to the public interest.
98	Accordingly, I consider this factor to either be neutral in the assessment or subsumed into the public interest factor.  
Does the public interest militate against the making of an order for security?
99	In oral submissions, Mr Pizer accepted that Hill J’s decision in Fletcher supports the existence of a public interest in terms of permitting people affected by government decisions to obtain merits review.  However, he contended that ‘what stands this matter apart is that the case is likely to take 6 weeks [of hearing time] and 40 witnesses and cost the Department in excess of $1.8 million’.  Having regard to the doubts already noted regarding the merits of the case, he submitted that any public interest in allowing review of government decisions is outweighed by ‘the public interest in public money not being wasted when there is no reasonable prospect of recovery’.
100	While not expressly put in terms of public interest, SGPL submitted that:
[t]he nature and purpose of the rights of review, exercised by [it], as a bulwark or safeguard provided by the legislature against unmeritorious use of executive power should also be taken into account as weighing against the making of orders that have the potential to interfere with the exercise of those rights of review.
101	In oral submissions, Mr Rebetzke added that the ‘nature and purpose’ of the provisions providing for merits review of decisions under the SRS Act represent ‘an important discretionary factor going to the public interest’.
102	Mr Knowles made reference, in his closing submissions, to the decision of (then) Deputy President Macnamara in Sarandis (Vic) Pty Ltd v Mulberry’s Australia Pty Ltd (‘Sarandis’) for the proposition that, if the Tribunal was uncertain or perplexed as to whether or not to make an order for security, ‘any doubt should be resolved against making an order’ as a matter of public interest and because of the ‘tendency’ of such orders to stifle proceedings.  Relevantly, Macnamara DP formed this view despite the applicant’s claim being ‘open to doubt’ and the existence of credible testimony that the corporate applicant would be unable to pay costs if the respondent was successful.  
103	In reply, Mr Pizer submitted that while the applicants may have a right to seek merits review, this ‘does not translate to a right to a determination by the Tribunal’, noting that various provisions (e.g. sections 75, 77 and 78 of the VCAT Act) might bring proceedings to an end without a determination on the merits.  He maintained that there is a public interest in ‘public money being spent responsibly’.
104	While I accept there is a public interest in public money being spent responsibly, in circumstances where the legislature has sought fit to provide a party affected by a decision under an enactment with an unrestricted right of review, any costs incurred by government in seeking to uphold the decision is clearly legitimate expenditure directed to a public good in maintaining public confidence in government decision-making.  
105	On the flip side, that public good is likely to be diminished if accountability in government decision-making can be avoided by the simple expedient of an agency seeking an order for security for costs, otherwise than in the clearest of cases.
106	It is relevant to observe that, in order to prosecute their cases, each applicant has engaged external solicitors and counsel.  Relevantly, this is a right provided under the VCAT Act, and is either necessary or warranted given the complexity of the proceedings and Department’s exercise of its own right to representation.  As previously discussed, the applicants’ individual (or at least collective) costs will likely be equal to (if not greater than) those of the Department if the matter proceeds to a fully contested hearing.  Accordingly, any ‘wastage’ of costs applies equally to the parties on either side of the proceedings.
107	In these proceedings, there are genuine issues to be decided, both as to the factual underpinnings for the Administration and Revocation Decisions and the preferable outcome.  These will necessarily be impacted by the evidence that the applicants are able to marshal having regard to their presumably finite resources (even with the support of Mr Divarkar and/or Ms Kaur).
108	In those circumstances, I consider that ‘manifest injustice could well be done’ or ‘be seen to be done’ if an order for security for costs is made in this proceeding.  
109	Further, noting the absence of any prior case where an order for security of costs has been made in review proceedings, doing so in this proceeding may have a ‘chilling effect’ on parties legitimately seeking to exercise their rights of review in the event other government agencies follow the Department’s lead.
110	In all the circumstances, I consider that the public interest weighs strongly against the making of an order for security for costs.  Again, I emphasise this decision is made based on the circumstances at this time, and the position may change as the matter progresses (see [15]).
Conclusion
111	In my view, the strong public interest factor pointing against the making of an order for security for costs outweighs the concerns as to the applicants’ ability to meet an adverse costs order should they be unsuccessful in the proceedings, particularly in circumstances where I have formed the view that the likelihood of an award of costs is low (and all other factors are neutral).
112	This is also consistent with the approach adopted by Macnamara DP in Sarandis of dismissing an application for security of costs where the Tribunal is left ‘perplexed’ as to the appropriate course after assessing all of the considerations.
113	Nevertheless, it should be evident to both parties that proceeding to a fully contested hearing on all issues is a ‘lose-lose’ situation for all.  Indeed, even if the applicants were to fully succeed, it may not be viable for them to re-establish their operations (assuming they need to bear their own costs).  
114	Accordingly, I strongly encourage the parties to embrace the opportunity being offered by the Tribunal to engage in a further day of a member led compulsory conference with a view to: 
•	resolving the dispute;
•	substantially narrowing the issues in dispute, to focus on those that are likely to have a material bearing on the outcome; or
•	otherwise determining how to progress the proceedings in a more streamlined and cost-effective manner (e.g. there may be opportunities to agree on some base facts and/or address some legal issues by way of preliminary hearing).
Costs
115	At the end of this hearing, Mr Knowles indicated that NDA ‘may seek costs depending on the outcome’ and requested that this matter be reserved.
116	As indicated in the hearing, I see this request as somewhat ironic after the applicants’ arguments about the likelihood of an award of costs, which obviously remains constant irrespective of who seeks those costs.  
117	Nevertheless, I have provided orders setting out a process if the applicants do seek to pursue costs in respect of this application, with a view to that issue being determined on the papers in the absence of any objections to that course.

R Tang, AM
Senior Member