VCAT Costs Orders in Victoria: Can VCAT Award Costs Against You?

The Default Rule: Each Side Pays Their Own

Under section 109(1) of the Victorian Civil and Administrative Tribunal Act 1998, the starting position is that each party bears their own costs in VCAT proceedings. Unlike the Magistrates' Court or higher courts where "costs follow the event" (the loser typically pays the winner's legal costs), VCAT operates on a no-costs principle by default.

This means that even if you win your case completely, the other party does not automatically have to reimburse your expenses. And if you lose, you will not normally be ordered to pay the applicant's costs either. The rationale is that VCAT was established as a low-cost, accessible tribunal where the risk of a costs order should not discourage people from bringing or defending legitimate claims.

When VCAT Can Award Costs

The default rule has exceptions. Under section 109(3) of the VCAT Act, the Tribunal may order one party to pay the other's costs if it is satisfied that it is fair to do so in the circumstances. It can consider matters such as unreasonable conduct, frivolous or vexatious claims or defences, unnecessary delay, and costs unnecessarily incurred.

Unreasonable conduct in the proceedings. If a party has conducted their case in a way that wasted time or caused unnecessary expense — filing frivolous applications, failing to comply with directions, or pursuing arguments with no factual basis — the Member may order them to pay costs if the Tribunal considers an order fair in the circumstances.

Causing unnecessary adjournments. If the hearing was adjourned because you failed to serve your evidence on time, did not attend a scheduled mediation, or requested a last-minute postponement without good reason, the Tribunal may order you to pay the costs thrown away by the other party for that wasted hearing day.

Frivolous or vexatious claims. If the Tribunal concludes that a claim or defence was brought without any reasonable basis — purely to harass the other party or delay an inevitable outcome — costs may be awarded.

Failing to attend the hearing. If you do not attend and the Tribunal proceeds in your absence, a costs order against you is more likely, particularly if the applicant had to prepare for and attend a hearing that could have been resolved earlier.

What Costs Can Be Awarded?

VCAT costs orders typically cover reasonable out-of-pocket expenses rather than full legal fees. This includes:

• Filing fees paid for the application or counterclaim
• Travel expenses to attend the hearing
• Expert report costs (mechanic's assessment, building inspection)
• Copying and postage costs for document exchange
• Lost wages for attending the hearing, in some circumstances

If a party had legal representation under the applicable rules or with any required leave, the Tribunal can order a contribution to legal fees, but it exercises this power sparingly and the amount awarded rarely covers the full bill.

How to Avoid a Costs Order

The practical takeaway is straightforward: engage with the process reasonably. File your documents on time. Attend your hearing. Respond to settlement offers even if you reject them. Comply with the Tribunal's directions.

If you genuinely cannot meet a deadline, apply for an adjournment properly — with the consent form, supporting documentation, and adequate notice. A respondent who communicates difficulties early and follows the proper process is far less likely to face a costs order than one who simply ignores deadlines and hopes for the best.

For the full procedure of responding to a VCAT claim in Victoria, see our step-by-step guide.

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