VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
planning and environment LIST	vcat reference No. P1092/2022
	
CATCHWORDS	
Enforcement order allowed by consent – costs claim – request to amend endorsed plans under permit – costs on an indemnity basis rejected – partial costs to be reimbursed.	

Applicant / Responsible Authority	Stonnington City Council	
Respondent	Paul Salter & Helen Salter	
SUBJECT LAND	13 Glenbrook Avenue
MALVERN EAST  VIC  3145	
HEARING TYPE	Costs Hearing on the papers	

DATE OF HEARING	2 October 2024	
DATE OF ORDER	21 October 2024	
CITATION	Stonnington CC v Salter (Costs) [2024] VCAT 991	
Order
Costs
1	Pursuant to section 109(2) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), the respondents must pay the costs of Stonnington City Council fixed in the sum of $11,880 by 16 December 2024 or such later date as may be agreed between the parties. 
2	Pursuant to section 115C of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), the respondents must reimburse the application fee of $1,284.44 to Stonnington City Council by 16 December 2024.

Dalia Cook
Member	

Reasons for costs 
Introduction
1	Stonnington City Council (Council) applied for an enforcement order against Paul and Helen Salter (the respondents) in respect of non-compliance with endorsed plans allowing alterations and additions to a dwelling on land within a Neighbourhood Character Overlay. 
2	The relevant permit issued on 7 August 2017 at the direction of the Tribunal. 
3	Council documented an extensive history of seeking compliance with the permit.
4	After the application for enforcement order was lodged, the respondents applied to amend the planning permit to ‘regularise’ the non-compliances.
5	When the matter came before me at a practice day hearing, there did not appear to be any dispute about non-compliance with the endorsed plans as alleged by Council.  
6	I encouraged the parties to consider requesting an enforcement order by consent, to enable the amendment application to be finalised and for the respondents to be required to comply with plans endorsed at the relevant time.
7	This would avoid further expense associated with a contested hearing, and would be likely to achieve a comparable outcome.
8	I reserved costs as requested by Council.  
9	Council later made an application for costs and fee reimbursement in the proceeding pursuant to sections 109 and 115C of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act).
The claim for costs and fees 
Council’s costs claim
10	Council sought repayment of its legal costs to the sum of $21,780 and reimbursement of the application fee of $1,284.44.  
11	Council referred to section 14 of the Planning and Environment Act 1987 (Vic) (PE Act) which imposes a statutory duty on it to administer and enforce the planning scheme (and permits issued under it).
12	It explained it had provided multiple opportunities to the respondents to bring the land into compliance with the planning permit but that these were not taken up.  It therefore claimed to have choice but to lodge an application for enforcement order.
13	It referred to the case of Sweetvale Pty Ltd v Minister for Planning as authority for the proposition that the Tribunal is more likely to depart from the ordinary rule (that each party bear its own costs) where the proceeding is in the Tribunal’s original jurisdiction, the proceeding is brought pursuant to a statutory obligation and where a practice has evolved which creates an expectation for an award of costs.
14	As to the matters in section 109(3) of the VCAT Act, Council submitted, in summary:
•	the merits of its case were strong, and confirmed by the respondents’ consent to an enforcement order and lack of contest to the alleged contraventions and evidence brought by Council in support;
•	the application was brought in the Tribunal’s original (rather than review) jurisdiction; and
•	the respondents ignored requests to bring the land into compliance to avoid the need for the enforcement proceeding. 
15	As to the amount claimed, in the first instance, Council was seeking full reimbursement of its legal fees in the proceeding.  That is, it sought costs on an indemnity basis, claiming that the fact the respondents consented to an enforcement order in advance of the hearing constituted ‘exceptional circumstances’.  
16	Alternatively, Council sought reimbursement of part of its costs on the County Court scale on a solicitor-client basis, now referred to as standard costs.
17	It also pointed out that the overall amount of costs would have been reduced substantially if the respondents had consented to the enforcement order shortly after the application was lodged.  
18	As to reimbursement of fees, Council relied on section 115C of the PE Act.  This creates a statutory presumption in favour of a reimbursement of fees where the party has ‘substantially succeeded’ in the proceeding.  It claimed that the issuing of an enforcement order in final form, by consent or otherwise, achieved this. 
Respondent’s submissions
19	The respondents agreed that the issuing of the enforcement order by VCAT constituted its acceptance that Council’s application was reasonable and appropriate. 
20	They consented to an order for costs being made, but opposed the amount sought. 
21	However, they contested the claim for costs on an indemnity basis, explaining that:
“Exceptionable circumstances” for indemnity costs, as opposed to standard costs, require there to be circumstances where the unsuccessful party has engaged in unmeritorious or deliberate or high-handed or other improper conduct, such as to warrant the Tribunal showing its disapproval and at the same time preventing the successful party being left out of pocket. 
22	The respondents denied that any such circumstances existed in the current proceeding.
23	They also advised that they had taken steps to remedy the non-compliant works by seeking an amendment to the planning permit, with a claimed substantial overlap with the subject matter of the contraventions.  
24	The respondents emphasised that the purpose of making an enforcement order is to achieve rectification, rather than to impose punishment, and considered that the process put in place by the orders would allow this to be achieved.  
25	Overall, the respondents agreed to reimbursing 50% of Council’s legal fees, explaining that this would be fair and just. However, they did not provide an explanation for how this percentage was arrived at.
Tribunal consideration
Costs
26	Costs in the Tribunal are discretionary.  The ‘ordinary rule’ in section 109(1) of the VCAT Act is that each party should bear their own costs in the proceeding.  However, the Tribunal may order otherwise if it considers fair to do so in the circumstances of the particular case.
27	Relevant matters are listed in section 109(3) of the VCAT Act.
28	In this case, there has been no notable behaviour by the respondents that has caused unnecessary disadvantage.
29	However, I accept that the Council’s case was clear and compelling as supported by the evidence filed (albeit untested).
30	The nature of the proceeding was an enforcement application, which is brought in the Tribunal’s original jurisdiction and for which Council holds a statutory duty. 
31	In all the circumstances, I accept that it was reasonable for Council to make the application to secure compliance with the permit.
32	No reasonable defence was offered.
33	Also, the respondents did not take action to resolve the proceeding until the hearing was imminent, although it was readily open to them to consent to a self-executing order of the nature ultimately consented to. 
34	Cumulatively, these factors justify an award of costs in the current proceeding.
35	I consider this is an appropriate case for me to fix the amount of costs pursuant to section 111 of the VCAT Act, rather than to order taxation in default of agreement.  
36	The issues (and costs) are relatively confined and the respondent has already agreed to reimbursing a proportion of Council’s costs.
37	The respondents submitted they should not be required to reimburse the GST amount on the costs paid by Council, on the basis of the Supreme Court’s decision in Merringtons Pty Limited v Luxottica Retail Australia Pty Ltd & Anor.  They considered the overall costs claim should be limited to $19,800 accordingly.  
38	On the facts of that case, the Court did not vary its orders in respect of GST because costs were taxed on scale.  However, in respect of non-eligible disbursements, the Court accepted that there may be a proportionate reduction if  component if the party originally liable for the payment was entitled to claim an input tax credit – to order otherwise would constitute ‘double dipping’ to an extent.  
39	The VCAT application fee (disbursement) is not subject to GST.  
40	In respect of costs, Council subsequently advised that it had obtained advice from its finance department and confirmed:
 
From Council perspective we have already claimed the GST portion as a credit from the ATO, this should not be passed on in the reimbursement amount.
Based on this advice, the Council no longer seeks as part of its cost’s application the GST component of Mr Kane’s professional legal fees in this proceeding.
41	Regulation 1.07 of the Victorian Civil and Administrative Tribunal Rules 2018 (Vic) provides that unless the Tribunal orders otherwise, the applicable scale of costs is the County Court costs scale.
42	As to the amount of costs, I reject the notion that this is a case where indemnity costs are justified.
43	Without seeking to limit the circumstances where indemnity costs may be warranted, there was no inappropriate behaviour by the respondents in the proceeding.
44	While they could have consented to an enforcement order in the terms agreed to earlier, this affects the overall amount of costs expended and therefore claimable, but does not of itself indicate that indemnity costs are warranted.
45	On the contrary, the fact the respondents agreed to an enforcement order and avoided the need for a hearing is a further factor in support of costs on a standard basis, rather than indemnity basis.  
46	Absent any other countervailing consideration, in my view, it would not be appropriate to order costs on an indemnity basis because a party consented to an order being made before a hearing.  There are public policy reasons to encourage parties to reach agreement in undisputed matters in order to avoid a hearing without punitive cost consequences.  
47	Ordinarily, as a ‘rule of thumb’, ‘necessary and reasonable costs’ in a proceeding such as this may represent 60-75% of the overall costs claimed.
48	It is clear to me that a proportion of costs incurred by Council in this proceeding are beyond what is conventionally regarded as ‘reasonably necessary’ in the proceeding when costs for a party are taxed.  
49	While I do not dispute these attendances occurred, or that they were legitimate expenses for Council, I do not consider that they are in the nature of ‘necessary’ costs for the respondents to reimburse in the current proceeding.
50	For example, site inspections by Council’s barrister in advance of a substantive hearing, conferences with Council officers, general reading, research (for a case of this type) and various other attendances fall within this category.
51	In addition, I consider that there should be some minor ‘allowance’ made for the fact that the respondents appropriately lodged an amendment application to the planning permit with Council in response to the enforcement order application.
52	If approved, this would regularise a number of the non-compliances or would provide a basis for remedial work.
53	Balancing all these matters, I consider that an award of 60% of the costs incurred by Council is reasonable in this case. 
Fees
54	I agree with Council that there is a statutory presumption in favour of an order reimbursing its application fee.
55	The respondents accepted that such an order is appropriate.
56	Nevertheless, I address relevant factors under the legislation for completeness.
57	Council has been substantially successful in the proceeding, to the extent an enforcement order was issued generally in the terms sought.
58	The fact the enforcement order was issued by consent is a relevant consideration but in my view, is not sufficient to displace the presumption under section 115C(3), having regard to party conduct.
Conclusion
59	For the reasons above, I have ordered Council’s fee payment to be reimbursed by the respondents, together with a portion of its legal costs in the proceeding.

Dalia Cook
Member