VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
civil DIVISION
OWNERS CORPORATIONS LIST	VCAT REFERENCE NO. OC1681/2022
CATCHWORDS	
Application for costs, Victorian Civil and Administrative Tribunal Act 1998 (Vic) section 109.	

APPLICANT	Tesmar Holdings Pty Ltd (ACN: 141 021 749)	
FIRST RESPONDENT:	Owners Corporation No. 1 PS602127U	
SECOND RESPONDENT:	Owners Corporation No 3 PS602127U	
WHERE HELD	Melbourne	
BEFORE	Senior Member C Price	
HEARING TYPE	Application for costs determined on the papers	
Date of respondent’s submissions for costs	
24 May 2024	
Date of applicant’s submissions in reply	
7 June 2024	
DATE OF ORDER	29 July 2024	
CITATION	Tesmar Holdings Pty Ltd v Owners Corporation No. 1 PS602127U (Owners Corporations) [2024] VCAT 722	

Order
1	The application for costs is dismissed.

C Price
Senior Member			

Reasons
Background
1	This is an application by the respondents, Owners Corporation No 1 PS602127U (‘OC1’) and Owners Corporation No 3 PS602127U (‘OC3’) (collectively ‘the OCs’), for the applicant, Tesmar Holdings Pty Ltd (‘Tesmar’), to pay their costs of the directions hearing conducted on 10 May 2024.
2	The directions hearing was listed by the Tribunal in response to an application filed by Tesmar on 2 May 2024. Tesmar’s application sought judgement in default or if denied, an urgent interlocutory order.
3	The application filed by Tesmar alleged the OCs had failed to:
(a)	provide discovery of documents requested on 8 March 2024 and 9 April 2024;
(b)	file and serve points of defence to the amended points of claim;
(c)	allow complete inspection of OC1 records, and any inspection of OC3 records.
4	I conducted the directions hearing on 10 May 2024 and advised Tesmar’s representative that the Tribunal lacked jurisdiction to enter a default judgement, but that if Tesmar wished to pursue an application for summary dismissal or strike out it could do so upon application and accompanied by supporting material.
5	Tesmar elected not to proceed with such an application, and I was not satisfied that it was necessary to make orders in respect of further discovery, instead making orders for the filing of submissions in respect of the OCs’ application for costs.
6	All parties have filed submissions in accordance with my orders. 
7	The orders provide that any such application for costs will be determined by the Tribunal on the papers.
8	No objection has been made by either party to the application being determined on the papers.
The OCs claim for costs
9	The OCs seek the following order:
(a)	That the Tribunal exercises its power pursuant to section 111 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (‘the VCAT Act’) to fix the amount of costs to be paid by Tesmar to the OCs in the amount of $2,644.72.
10	The amount claimed is calculated by the OCs as follows:
(a)	Item 8: Perusal of VCAT Application and attached memorandum (3 folios x $71.90) = $215.70;
(b)	Item 1(a)(iii): 2 hours of preparation (2 x $680) + 1.5 hour appearance (1.5 x $680) = $2,380;
(c)	Item 2: Drafting cost submissions (10 folios x $71.20) = $710.20
(d)	Totals: $3,305.90 x 80% for the County Court scale = $2,644.72.
Legislation
Section 109 of the VCAT Act
11	Section 109 of the VCAT Act provides that each party is to bear its own costs in a proceeding, however the Tribunal may, if it is satisfied that it is fair to do so, order that a party pay all or a specified part of the costs of another party. 
12	For convenience, I set out the text of section 109 below: 
109 	Power to award costs
(1)	Subject to this Division, each party is to bear their own costs in the proceeding. 
(2)	At any time, the Tribunal may order that a party pay all or a specified part of the costs of another party in a proceeding. 
(3)	The Tribunal may make an order under subsection (2) only if satisfied that it is fair to do so, having regard to— 
(a)	whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding by conduct such as— 
(i)	failing to comply with an order or direction of the Tribunal without reasonable excuse; 
(ii)	failing to comply with this Act, the regulations, the rules or an enabling enactment; 
(iii)	asking for an adjournment as a result of (i) or (ii); 
(iv)	causing an adjournment; 
(v)	attempting to deceive another party or the Tribunal; 
(vi)	vexatiously conducting the proceeding; 
(b)	whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding; 
(c)	the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law; 
(d)	the nature and complexity of the proceeding; 
(e)	any other matter the Tribunal considers relevant.
(4)		If the Tribunal considers that the representative of a party, rather than the party, is responsible for conduct prescribed in subsection (3)(a) or (b), the Tribunal may order that the representative in his or her own capacity compensate another party for any costs incurred unnecessarily. 
(5)	Before making an order under subsection (4), the Tribunal must give the representative reasonable opportunity to be heard. 
(6)	If the Tribunal makes an order for costs before the end of the proceeding, the Tribunal may require that order be complied with before it continues with the proceeding. 
(7)	A power of the Tribunal under this section is exercised by any member.
13	In Vero Insurance Ltd v The Gombac Group Pty Ltd, Gillard J set out the “step by step” approach to be taken by this Tribunal when considering an application for costs pursuant to section 109 of the VCAT Act: 
(i)	The prima facie rule is that each party should bear their own costs of the proceeding; 
(ii)	The Tribunal should make an order awarding costs, being all or a specified part of costs, only if it is satisfied that it is fair to do so. That is a finding essential to making an order; 
(iii)	In determining whether it is fair to do so, that is, to award costs, the Tribunal must have regard to the matters stated in s 109(3).
Application under section 109 of the VCAT Act
14	Firstly, I turn to the OCs’ application for costs pursuant to section 109 of the VCAT Act. The OCs rely in particular on paragraphs 109(3)(e) of the VCAT Act. I must give consideration to each of the paragraphs of section 109, including those not raised by the OCs.
Section 109(3)(e) – any other matter the Tribunal considers relevant
15	In relation to section 109(3)(e), the OCs submit that there are relevant matters that the Tribunal should consider in deciding whether to award costs.
16	These are described by the OCs as follows:
(a)	That all documents ordered by Member Rowland on 8 April 2024 to be produced to Tesmar from the OCs were provided on 15 April 2024 (to the extent the OCs had those documents);
(b)	Tesmar requested further documents on 9 April 2024 that did not on their face appear relevant to the dispute;
(c)	On 7 May 2024, the OCs legal representative emailed the representative of Tesmar, stating that other than the storage license deeds and signage licences (which were provided with that email) none of the additional documents sought appeared relevant to the dispute and asked for an explanation as to their relevance, to which no response was received;
(d)	Tesmar’s representative was unable to explain the relevance of the documents sought at the hearing on 10 May 2024;
(e)	The OCs Points of Defence were filed 3 weeks late on 7 May 2024. The delay caused no prejudice to Tesmar, and Tesmar has had 5 opportunities to put its Points of Claim;
(f)	OC1 arranged for Tesmar to inspect its records pursuant to the orders of Member Rowland made 8 April 2024. Inspections took place on 15 and 29 April 2024. A link to all of OC3 records was sent to Tesmar on 15 April 2024, in compliance with Member Rowland’s order of 8 April 2024; and
(g)	I dismissed the application on 10 May 2024, meaning the application failed, and it was evident during the hearing that discovery of documents was sought that were not relevant to the facts in dispute. In addition, Tesmar’s representative conceded towards the end of the hearing that she had adequate documentation and was not going to proceed with a summary judgement application.
17	Tesmar submitted in response that the application lodged on 2 May 2024 was in response to the OCs’ failure to comply with the orders of 8 April 2024, in that the OCs failed to:
(a)	provide discovery of documents requested on 8 March 2024 and 9 April 2024;
(b)	file and serve its points of defence due 26 March 2024;
(c)	allow complete inspection of OC1 records on 15 April 2024 as required by the orders;
(d)	allow any inspection of OC3 records on 22 April 2024 as required by the orders; and
(e)	respond to the email request made by Tesmar on 30 April 2024.
18	Tesmar further submits that it elected not to pursue a summary judgement application in circumstances where it did not wish to delay the final hearing scheduled for 15 July 2024, and that the orders made on 10 May 2024 did not dismiss Tesmar’s application.
19	Tesmar says that the OCs have still failed to provide numerous documents to Tesmar, and that the request for further documents on 9 April 2024 was for documents relevant to the dispute. The OCs failed to comply with the request, only responding to Tesmar’s request on 7 May 2024, well after Tesmar’s application to the Tribunal on 2 May 2024, and then only providing a portion of the documents.
20	That the Points of Defence were lodged well after Tesmar’s application was made on 2 May 2024, and OC3 has not complied with the orders of 8 April 2024 because they did not allow Tesmar to inspect the records on 22 April 2024, but provided only limited documents in a format which cannot be accessed.
21	The OCs are not entitled to a costs order and have failed to show that Tesmar has caused them any disadvantage, or acted vexatiously, or misleadingly or has delayed the proceedings under section 109(3) of the VCAT Act.
Findings & Decision
22	I can only depart from the presumption that each party bears its own costs if it is fair to do so when taking the considerations in section 109(3) into account.
Matters that are relevant under section 109(3)(e) in deciding whether to award costs.
23	It is relevant to my determination that the OCs failed to comply with the orders of 5 February 2024 which required them to file a defence by 26 March 2024. There was a significant delay in compliance with this order, with the OCs filing their defence on 7 May 2024. In addition, the orders of Member Rowland made on 8 April 2024 required OC3 to permit Tesmar to inspect the records of the OC3 under section 146 of the Owners Corporations Act 2006 (Vic), on Monday 22 April 2024 between 2:00pm and 5:00pm.
24	The submissions of the OCs in respect to these orders are firstly that the delay in the filing of the Points of Defence did not prejudice Tesmar and have to be seen in the context of Tesmar being given multiple opportunities to file its Points of Claim. Secondly, in respect of the inspection of OC3’s records, the OCs submit that, by providing a link to  Tesmar on 15 April 2024 to all of OC3’s records, this amounted to compliance with Member Rowland’s order of 8 April 2024.
25	Notwithstanding the submission of the OCs, I am satisfied that neither order was complied with; the filing of Points of Defence was significantly delayed, and sending a link to the records of OC3 on 15 April 2024 was not in compliance with the orders of Member Rowland, which required the OCs to permit an inspection by Tesmar of the records on 22 April 2024 between 2:00 and 5:00pm.
26	The OCs non-compliance with these orders needs to be considered in the context of Tesmar’s application for orders filed on 2 May 2024. At the time Tesmar filed its application, the OCs had not filed Points of Defence, and indeed were over a month delayed in complying with the Tribunal order. Further, Tesmar states in its application that the reason for applying included Points of Defence not being filed by the OCs, and there had been non-compliance with the orders of Member Rowland with respect to inspection of records.
27	While Tesmar also gave other reasons for making the application, I am satisfied on the basis of those two issues alone that the OCs had failed to comply with Tribunal orders, and the application by Tesmar was not without merit, and there was a reasonable basis to bring such an application.
28	I accept that the OCs filed their Points of Defence 3 days prior to the directions hearing on 10 May 2024, but the issue of compliance with discovery orders was still a live one.
29	While I did not dismiss Tesmar’s application, I did not make any further orders for discovery, as Tesmar’s representative during the course of the hearing indicated that she had all of the documents that she required. Given that I did not need to make a formal decision about further discovery, as it was clear from Tesmar’s representative that she was no longer pursuing it.
30	In respect of Tesmar’s application for summary judgement, Tesmar’s representative elected not to pursue this part of the application as it would mean listing the matter for a hearing in respect of that application, which was likely to result in the vacation of the final hearing, and she did not wish it to be delayed.
31	I was not able to be satisfied by Tesmar’s representative during the directions hearing that the additional documentation she sought was relevant to the facts in dispute in the proceeding, and in this respect much of the application was unable to be substantiated. However, in assessing costs, I take into account that Tesmar is not legally represented, and it would not be fair in all of the circumstances to make a costs order in favour of the OCs in circumstances where the OCs had failed to comply with Tribunal orders, and that there was a clearly justifiable basis for Tesmar issuing its application.
32	The OCs’ application for costs is therefore dismissed.

C Price
Senior Member