VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
planning and environment LIST	vcat reference No. P1308/2019
Permit Application no. PLN18/073	
   CATCHWORDS	
Application for costs under sections 109(3) of the Victorian Civil and Administrative Tribunal Act 1998 and for the reimbursement of fees under section 115B of the Victorian Civil and Administrative Tribunal Act 1998. 	

Applicant	Wang Republic Pty Ltd	

Responsible Authority	Greater Dandenong City Council	
SuBJECT LAND	101 Lightwood Road                            NOBLE PARK  VIC  3174	
Hearing type 	Costs - On the Papers 	
DATE OF ORDER	20 April 2022 	
citation 	Wang Republic Pty Ltd v Greater Dandenong CC [2022] VCAT 426	

Order
1	The applications by Wang Republic Pty Ltd for costs pursuant to section 109(3) of the Victorian Civil and Administrative Tribunal Act 1998 and for a reimbursement of fees pursuant to 115B of the Victorian Civil and Administrative Tribunal Act 1998 are refused.

Cindy Wilson
Member			

Reasons
Introduction 
1	Greater Dandenong City Council (Council) refused an application to use premises at 101 Lightwood Road, Noble Park (review site) for a shisha lounge. Wang Republic Pty Ltd (Applicant) sought a review of that decision. 
2	By order dated 12 October 2021, the Tribunal set aside the Council’s decision and granted a permit, subject to conditions. 
3	In response to the Applicant’s confirmation at the hearing that it would be seeking costs against Council, the order also detailed a process to be followed in making any such application and required a supporting submission to explain:
The basis upon which costs are sought.
The amount and details of the costs claimed, including any itemised bills with invoices where relevant.
The basis on which the costs are calculated (for example, whether on a standard or indemnity basis, and whether on the County Court or Supreme Court scale. Note that under Rule 1.07 of the Victorian Civil and Administrative Tribunal Rules 2018, the default scale of costs is now on a standard basis on the County Court Scale.)
The reasons why costs should be awarded having regard to the provisions of the Victorian Civil and Administrative Tribunal Act 1998, in particular section 109.
A copy of any document relied upon in the costs application or supporting submissions. 
4	On 28 October 2021 the Applicant made an application for costs and an application for reimbursement of fees.
5	By order dated 2 December 2021 the Tribunal required the Applicant to provide further and better particulars which clarified the basis for the applications. That order set out the process for the applications to be heard and determined “on the papers”, that is, entirely on the basis of documents without the appearance of the parties or their representatives.
6	On 17 December 2021 the Applicant provided an additional submission that sought an order against Council for
•	Costs of $627,542 under section 109(3) of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act); and
•	Reimbursement of $2,525 under section 115B of the VCAT Act for the hearing and application fees.
Background
7	The Applicant advised that use of the premises for a shisha lounge commenced operation on the understanding that no planning permit was required. Following advice from Council that a permit was required for the use, an application was made to Council on 12 December 2018. An updated application was made on 25 February 2019 that included a car parking demand assessment. The application was advertised, and two objections were received. On 30 April 2019 the application was refused. The Applicant applied for a review of that decision on 1 July 2019.
8	A preliminary hearing was held 22 January 2020 to determine the appropriate characterisation for the land use. The decision of the Tribunal is that the use of the land is appropriately characterised as a “Place of assembly (shisha lounge)” and a planning permit is required for use of the review site pursuant to clause 32.04-2 of the Mixed Use Zone.
9	Following a number of adjournments, practice day hearings and final clarification that correct notice of the application had been given, the application was heard on 14 April 2021. 
Legislative Framework
10	Section 109 of the VCAT Act provides the legislative basis for an award of costs. Section 109 states:
(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.
11	Section 115B of the VCAT Act addresses the reimbursement or payment of fees and provides: 
(1)	At any time, the Tribunal may make any of the following orders—
(a)	an order that a party to a proceeding reimburse another party the whole or any part of any fee paid by that other party in the proceeding, within a specified time;
(b)	an order as to which party must pay the whole or any part of a fee in future in the proceeding;
(c)	an order that a party to a proceeding pay, on behalf of another party, the whole or any part of any fee that may be required to be paid in the future by that other party in the proceeding;
(d)	an order that a party to a proceeding reimburse another party the whole or any part of any fee that may be paid in the future by that other party in the proceeding, within a specified time after the fee is paid.
(2)	Subsection (1)(b) does not apply if this Act, the rules, the regulations or an enabling enactment requires the fee to be paid by a particular party.
(3)	In making an order under this section, other than in a proceeding to which section 115C or 115CA applies, the Tribunal must have regard to—
(a)	the nature of, and issues involved in, the proceeding; and
(b)	the conduct of the parties (whether occurring before or during the proceeding), including whether a party has caused unreasonable delay in the proceeding or has failed to comply with an order or direction of the Tribunal without reasonable excuse; and
(c)	the result of the proceeding, if it has been reached.
Submission of parties, in summary
Applicant 
12	The Applicant seeks costs and damages from Council on an indemnity cost basis, according to the County Court scale. The Applicant submits there is justification for departing from the general rule of each party bearing their own costs in the circumstances of this matter. 
13	The claim is for damages, costs and consequential losses against the Council totalling $630,067. This amount is made up VCAT fees of $2,525, legal costs of $35,373, application fees to Council of $3,472, costs associated with the pergola construction and removal of $57,200, ongoing expenses of $75,497 and consequential loss of income of $456,000.  
14	I do not repeat the detailed submission made by the Applicant but have considered it carefully. I summarise key points as follows. 
15	The Applicant says Council’s case has no tenable basis in fact or law. Rather, it says the refusal was based on a strong stand against shisha which is an irrelevant and improper consideration in a planning permit application. The Applicant says this is demonstrated having regard to the following: 
•	Council has publicly adopted a position of not supporting shisha.
•	Council has no intention of approving any new planning permit application for shisha lounges. This is supported by reference to the minutes of two Council meeting that include reports on permit applications for shisha lounges which include the following:
…While it is acknowledged that shisha is a lawful activity, supporting the use of a shisha lounge would not ensure that Council protects the health and wellbeing of the residents of Greater Dandenong as stipulated above, and therefore it would not result in a net community benefit for present or future generations. …
•	The key reason Council refused the application relates to shisha use and this demonstrates an irrelevant and improper consideration of the permit application. Reference is made to the decision in Haouli & Ors v Hobsons Bay CC where costs were awarded to the successful party. The Applicant says the findings in that case about the proper exercise of administrative discretion are relevant to this proceeding. The Applicant says Council, in refusing the application on the basis of its use as a shisha lounge, was failing to execute the proper exercise of administrative discretion. 
•	Shisha is a lawful and legitimate activity and Council does not have the authority to ban shisha or reject planning permit applications for shisha lounges. This is supported by the Tribunal decision in Bahrami v Greater Dandenong CC where it was stated:
11.	At the time of this decision, the smoking of shisha is a legal and legitimate activity, and I am not aware of any attempts by any regulators to restrict its use in the manner that is proposed on the review site. Essentially what the Council is asking the Tribunal to do, is to find that the health impacts of smoking shisha is so significant, that I should usurp the law making role and authority of both Federal and State Government, and effectively outlaw in the Greater Dandenong municipality, a legal and legitimate activity. That is not the role of the Tribunal, or the planning system as a whole, for the reasons set out in the Hunt Club decision.
12.	For these reasons I find that the health and wellbeing impacts of smoking shisha are not relevant to my consideration of the dispute that is before me.
•	Council deliberately exceeded their authority in refusing the planning permit application as they were aware shisha use falls under the State and Federal jurisdiction. Council refusal of other applications for shisha lounges where there was no internal or external objectors demonstrates the conscious decision to exceed their authority and illegitimately refused the applications. Although these applications were not pursued to VCAT, where applications to review a refusal to grant a permit for a shisha have been lodged these have been successful.  
•	Council used unsubstantiated and baseless claims to justify their illegitimate refusal of the application apparent from the following: 
o	Reference to significant amenity impacts to nearby land from noise, litter and anti-social behaviour without providing legitimate evidence.
o	There was no objective evidence of noise disturbances with reliance placed on the respondents’ diaries who may be biased or misinformed. There were no other complaints about noise, the police found the noise acceptable and no noise infringements were issued.
o	The only other objector who raised noise concerns lived around the corner and had no way of knowing if the noise was made by the shisha lounge patrons.
o	The Applicant was not responsible for litter which mainly consisted of items not sold at the shisha lounge. Although Council acknowledged this, it nevertheless used the issue to justify refusal of the permit application.
o	The Applicant was not responsible for anti-social behaviour. Rather actions were taken to discourage such behaviour by reporting suspicious behaviour and providing CCTV footage to assist police in solving local crime. The municipality has ongoing issues with gangs and youth crime but still used the unsubstantiated claim to justify refusal. 
•	Council’s negligence and misconduct caused the Applicant to incur substantial costs and losses due to the following:
o	The initial Council advice that no planning permit was required to operate a shisha lounge but only a Café Class 3 Registration was required. As a result the Applicant made a financial investment of $350,000 including leasing the premises and setting up the shisha lounge.
o	Subsequent inspection of the premises by Council and processing of the Café Class 3 Registration did not result in correction of the error. Instead, officers negligently advised to commence trading under the wrong registrations. This resulted in unnecessary fees of $3,472.
o	Council fraudulently requested the Applicant to submit the planning permit application despite being aware there was a policy of refusing permit for shisha cafes. This involved several thousand dollars for application fees, parking assessments and plans.
o	Council deliberately exceeded their authority and illegitimately refused the planning permit even though they did not have the jurisdiction to ban shisha. 
o	Council left the Applicant only one option of recourse – an application for review to VCAT which resulted in legal costs, unnecessarily delayed resolution and increased costs and damages. 
o	Council vexatiously initiated proceedings in the Magistrate’s Court against the Applicant and others, including the landlord incorrectly stating they were unaware the shisha café was operating, that there has been incorrect processing of the initial application, that authorisation for trading had been given or that the matter was at VCAT. They attempted to intimidate the Applicant into giving up the VCAT case and business and caused enormous stress well as greater costs.
o	Council refused to allow the Applicant to continue trading during the proceedings resulting in substantial expenses and loss of income. Any lockdowns associated with the Covid-19 pandemic are irrelevant since he would have been unable to trade. 
o	Council refused to negotiate with the Applicant despite knowing they did not have a legitimate claim and losing successive VCAT cases against other shisha lounge applicants. Moreover, Council have further delayed the resolution of the matter and significantly increased the Applicant’s losses, damages and stress.
o	Council requested the removal of the pergola which was unwarranted and unjustified since it was built by a registered builder according to the code. It did not require a planning permit due to its size. As a result of their actions the outdoor furniture was damaged by rain, the permit no longer includes the outdoor area and there were damages of $57,200. 
o	The Applicant complied with the permit conditions imposed by VCAT removing the sign and submitting the required plans and Patron Management Plan on 22 November 2021. Council delayed approving these documents until February 2022 resulting in greater losses and stress. 
o	The legal costs of $37,898 include legal representation and VCAT application and hearing fees ($2,525).
Council
16	Council submits there is a presumption that the starting point in any matter before the Tribunal is that each party is to bear their own costs in a proceeding. This is especially so in a merits review proceeding where Council says the general principles and practices can be summarised as follows:
•	Generally, each party bears their own costs in applications for reviews;
•	It is ‘very rare’ and in fact ‘exceptional’ for costs to be awarded in applications for review in the Planning and Environment List and the power to award costs is ‘used sparingly’; and 
•	an order for costs is an ‘unusual event’ that, in broad terms, calls for there to have been ‘quite unreasonable conduct that has occasioned someone to incur costs that should have never been necessary’.
17	It is Council’s submission that there are no grounds for departing from the usual rule in review proceedings that each party bears its own costs. In support of that submission, Council says:
•	Its case was not untenable or weak. This is supported by:
o	the Tribunal sharing concerns about amenity and imposing conditions to address those concerns; 
o	the concerns about health and wellbeing impacts of smoking shisha are valid and legitimate concerns warranting consideration even though the Tribunal did not find them a basis for rejecting the application; 
o	the Tribunal agreeing with Council that the sign on the western wall of 102 Lightwood Road should be removed since it appears to be on adjoining land and there is no evidence that the owner of that land has been notified of the permit application; and
o	the Applicant’s ‘success’ is not determinative as to whether costs should be awarded in its favour. 
•	How the Council processed the permit application is irrelevant to the proceedings, noting that Council properly processed and considered the permit application.
•	In the course of the proceeding, Council acted reasonably and co-operatively and did not unnecessarily disadvantage the Applicant in any way. 
•	The Applicant commenced the shisha lounge use unlawfully as it did not have the relevant planning permission. The Applicant’s claim for financial loss as a result of being unable to operate an illegal use flies in the face of the planning system. It is noted that the Covid-19 restrictions applied in Victoria prevented business operation for some of the period in question.
•	The claim in relation to the pergola and outdoor furniture is of no relevance. No planning permit was obtained for the pergola and claim for costs of construction and removal of an illegal structure again flies in the face of the planning system.
•	The reimbursement of application and hearing fees is unjust and unfair given no evidence has been provided to suggest Council acted unreasonably or caused delays before or during the proceeding. 
•	If costs are to be awarded, they should be at a fixed amount and considerably less than the amount sought.
Tribunal findings
18	I am not satisfied that the matters relied upon by the Applicant justify an award of costs or a reimbursement of fees. I reach this view based on my findings about key matters raised by the Applicant assessed against the relevant legislation. 
No tenable basis for the Council decision 
19	Section 109(3)(d) of the VCAT Act requires consideration of:
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;
20	I do not agree with the Applicant that the Council’s case was without merit or that it had no tenable basis in fact or law. 
21	The assessment of the permit application in the delegate report, the grounds of refusal and the case put to the Tribunal on behalf of Council referred to a number of concerns. These included adverse amenity impacts, inappropriate signage and failure to achieve consistency with policy provisions that relate to health. 
22	Although my decision was to set aside the decision of Council and direct that a permit be granted, I agreed with some of the concerns raised by Council. For example:
•	I found potential adverse amenity impacts arising from noise associated with the use was relevant, especially given the proximity of the review site to dwellings. Although I did not refuse the application for this reason, I imposed permit conditions that limited hours of operation and prevented patron use of the outdoor area to address my concerns.  
•	I agreed with Council that the sign on the western wall of 102 Lightwood Road appeared to be on adjoining land rather than the review site. In the absence of the application for permit including the signature of the owner of the land or a declaration that the owner had been notified of the application, I declined to approve the sign. I directed inclusion of a permit condition requiring the sign to be deleted from the plans. 
23	I consider that my findings on these matters establish that the Council’s case was not untenable or even weak. Rather it included concerns that are legitimate and appropriate matters that should be considered as part of an assessment of the acceptability of the shisha lounge use. 
24	In my decision, I did not agree with Council’s submission that potential health impacts of smoking shisha was a relevant consideration. I adopted the findings of the Tribunal in Bahrami v Greater Dandenong CC that smoking shisha is a legal and legitimate activity and it is not the role of the Tribunal to outlaw its use. I do not agree with the Applicant that this finding makes the Council’s case untenable.
25	The Applicant refers to other decisions of Council in support of their view that the opposition to shisha is the basis for refusal. Those matters are not before me. I do note the Tribunal decision in Bahrami v Greater Dandenong CC refers to, and analyses, issues raised by Council beyond the health and well-being impacts.  
26	Reference was made by the Applicant to the findings of the Tribunal in Haouli & Ors v Hobsons Bay CC. That case concerns an application for costs associated with an application for an enforcement order. This creates different circumstance compared to a merits review. As found in Pyrenees SC v Green (Costs), it is 
… generally accepted that an order for costs may be more readily be made in the context of an application for an enforcement order. 
Council conduct prior to the commencement of the proceedings
27	The Applicant raises multiple concerns about the initial advice provided by Council on whether a planning permit was required for the use, how the Council dealt with the permit application and other actions of Council. However, the conduct of parties before the commencement of a proceeding is not a relevant consideration to a costs application under section 109 of the VCAT Act. 
28	Various parts of section 109 of the VCAT Act refer to the costs associated with a proceeding. Section 109(3)(a) requires regard to 
… whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding by conduct such as…
29	I agree with Council’s submission that these words direct the Tribunal to assess the conduct of a party in a proceeding rather than conduct that occurred before a proceeding has commenced. The findings in Seers v Macedon Ranges SC support this view. In the consideration of that costs application, the Tribunal stated: 
The Seers fundamentally feel ‘hard done by’ on the part of the council in terms of the council’s failure to disclose the existence of the permit at a much earlier stage in their dealings with the council following their purchase of the land in 2009. They feel that they should not have been led down the path of applying for a separate permit for a place of assembly in 2012. Generally they feel they have been deceived.
However, all these matters arose prior to this proceeding being commenced. There has been nothing in the council’s conduct of this particular proceeding that has unnecessarily disadvantaged the Seers. The council has not been responsible for prolonging unreasonably the time taken to complete the proceeding. …
30	In this matter, the Applicant similarly feels ‘hard done by’ by alleged Council advice and actions at the time of initial enquiries, during the processing of the planning permit application and prior to the decision of the Tribunal to grant a permit.
31	In the course of the proceeding, I am satisfied that Council’s conduct did not disadvantage the Applicant. Considering the Council conduct in terms of the provisions of section 109(a), I find that it:
•	complied with orders and directions of the Tribunal;
•	complied with the VCAT Act and other relevant legislation;
•	did not seek or cause an adjournment; 
•	did not attempt to deceive another party or the Tribunal;
•	did not vexatiously conduct the proceedings; and 
•	was not responsible for prolonging unreasonably the time taken to complete the proceeding.
32	In making these findings, I record that there were delays after the lodging of the application for review. These arose due to the Applicant:
•	making successful applications to have the hearing adjourned; and
•	failing to comply with the giving of notice in accordance with a Tribunal order.
33	The Applicant criticises the Council’s refusal to negotiate or review its decision on the permit application as unreasonable. I do not agree. Council made its decision on the permit application. Section 77 of the Planning and Environment Act 1987 provides for an applicant for permit to apply to VCAT for review of a decision by a responsible authority to refuse to grant the permit. This is the avenue provided under legislation for review of a decision and, indeed, is the avenue adopted by the Applicant.
34	The Applicant criticises the enforcement proceedings initiated by Council. Those matters are not before me.
Loss of trade and expenses  
35	The loss of trade and the expenses referred to by the Applicant are not related to the proceeding itself, nor do they arise from the Council’s conduct in the proceeding. These matters do not fall within the considerations specified in section 109 of the VCAT Act and relate to alleged actions/advice before the commencement of the proceeding. 
36	Notwithstanding the allegations of the Applicant about incorrect advice, delays in processing the permit application and commencement of enforcement proceedings, the fact remains that a planning permit is required for the proposal. This is confirmed in the decision of the Tribunal in Wang Republic Pty Ltd v Greater Dandenong CC.
37	Until the permit was granted and relevant permit conditions complied with, operation of the shisha lounge would have been in breach of the Greater Dandenong Planning Scheme.  
38	Awarding costs associated with loss of trade, rent and other expenses associated with the premises during the time there was no planning permit for the use is unjustified.
Costs associated with the pergola  
39	The Applicant refers to the costs of removing a pergola constructed on the review site as a result of a Council request, and the resulting damage to outdoor furniture. 
40	The permit application and application for review made no reference to the construction of a pergola on the review site. Thus the assessment of the permit application by Council and the consideration of the application for review by the Tribunal did not consider construction of a pergola. At the hearing, the Applicant advised an open area at the rear of the site which had been used for outdoor seating was no longer part of the application.  
41	In the Mixed Use Zone that applies to the review site, a planning permit is required to construct buildings or works for a use that is subject to a permit.
42	In these circumstances, any enforcement action by Council to require removal of a pergola from the review site and costs associated with its construction and removal is not relevant to this proceeding. 
Reimbursement of application and hearing fees
43	The Applicants seeks reimbursement of application and hearing fees pursuant to section 115B of the VCAT Act. 
44	This section of the VCAT Act allows consideration of the conduct of the parties before as well as during the proceeding. Having regard to the matters I am required to consider, I find it would not be fair or reasonable to order Council to reimburse the Applicant’s application or hearing fees. I reach this view based on the following matters:
•	Notwithstanding any earlier advice to the contrary alleged by the Applicant, I consider Council acted correctly in advising that a planning permit is required for the use of the land as a shisha lounge. This is confirmed by the findings of the Tribunal in the preliminary hearing. 
•	There is nothing in the material provided to the Tribunal that suggests the Council unreasonably delayed processing of the permit application.
•	The further information sought by Council ahead of a decision on the permit application related to relevant matters to be considered, including car parking.
•	Council has complied with orders and directions of the Tribunal.
•	Council did not contribute to delays in the hearing of the case once the application for review was lodged with the Tribunal. There were a number of adjournments of the hearing but these were at the Applicant’s request.
•	Although the outcome of the application for review has been to grant a permit, there were concerns raised by Council that the Tribunal agreed with and addressed via permit conditions.  
Conclusion
45	The general rule is, subject to the provisions of the VCAT Act, that parties bear their own costs. I am not satisfied that it would be fair to award costs or direct reimbursement of fees against Council in the circumstances of this case and having regard to the provisions of sections 109 and 115B of the VCAT Act. The applications are refused.

Cindy Wilson
Member