| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : BUILDERS' REGISTRATION ACT 1939 (WA) CITATION : AMPEZZO PTY LTD and FRANKEN [2009] WASAT 109 (S) MEMBER : MR C RAYMOND (SENIOR MEMBER) HEARD : DETERMINED ON THE DOCUMENTS DELIVERED : 2 JUNE 2009 SUPPLEMENTARY
DECISION : 30 SEPTEMBER 2009 FILE NO/S : CC 1929 of 2007 BETWEEN : AMPEZZO PTY LTD Applicant
AND
BRADLEY STEPHEN FRANKEN
ELAINE FRANKEN
Respondents
Catchwords: Builders' Registration Act 1939 (WA) - Review of decision of Building Disputes Tribunal dismissed - Application for costs by respondent - State Administrative Tribunal Act 2004 (WA) - Effect of written without prejudice offers to settle - Referral to offer made in mediation - Principles to be applied
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Legislation: Builders' Registration Act 1939 (WA), s 38(4)
State Administrative Tribunal Act 2004 (WA), s 53(b)(i), s 55, s 87, s 89
State Administrative Tribunal Rules 2004 (WA), r 40, r 41, r 42, r 43 Result: Application for costs granted Category: B
Representation: Counsel:
Applicant : Mr S Walker
Respondents : Mr W Vogt
Solicitors:
Applicant : Western Legal
Respondents : Vogt Graham Lawyers
Case(s) referred to in decision(s):
Ampezzo Pty Ltd and Franken [2009] WASAT 109
Clifford and Shire of Busselton [2007] WASAT 89(S)
Gill and Wildnight Pty Ltd [2008] WASAT 135
J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282(S)
Lai and Costa [2006] WASAT 117
Pearce and Germain [2007] WASAT 291(S)
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REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision 1 The respondent to proceedings for the review of a decision of the Building Disputes Tribunal applied for costs following the publication of the Tribunal's decision dismissing the application for review. 2 On an application of the principles set out in Lai and Costa [2006] WASAT 117, the Tribunal determined that it was an appropriate matter in which to order costs. Having regard to the circumstances of the proceeding, the Tribunal concluded that the respondent should be awarded its costs reasonably incurred in respect of the application for leave but that no costs should be awarded in respect of the review. 3 In arriving at this conclusion, the Tribunal held that it was not obliged under the State Administrative Tribunal Rules 2004 (WA) to take into account two written offers of settlement made by the respondent to the applicant, which were more favourable than the Tribunal's order, because the offers did not comply with the Tribunal Rules. Although not obliged to do so, the Tribunal indicated it was in the public interest that noncomplying offers of settlement be given careful consideration by the parties and the Tribunal in exercising a discretion on costs. The Tribunal stated that it was appropriate to determine whether it was reasonable for an offeree to reject an offer, and that, in doing so, regard should ordinarily be had to, at least, the following: a) the stage of the proceeding at which the offer was received; b) the time allowed for the offeree to consider the offer; c) the extent of the compromise offered; d) the offeree's prospects of success, assessed at the date of the offer; e) the clarity with which the terms of the offer was expressed; and f) whether the offer foreshadowed an application for costs in the event that it was rejected. 4 Further, the Tribunal observed that a discretion was retained even when an offer did comply with the Tribunal Rules and that the above (Page 4)
criteria may be relevant, together with the nature of the jurisdiction being exercised and the cost rules normally applied to the particular type of case. 5 The Tribunal concluded that the applicant had not acted unreasonably by not accepting the offers of settlement. 6 The Tribunal declined to take into account an offer of settlement which was made by the applicant during the course of a mediation conducted in accordance with the Tribunal's directions. The Tribunal held that evidence of the offer was not permitted by virtue of s 55 of the State Administrative Tribunal Act 2004 (WA). 7 The Tribunal assessed that the amount of costs to be paid by the applicant to the respondent should be reduced from the amount of $16,845 claimed to an amount of $7,258.
The application for costs and opposing submissions 8 The applicant in the proceeding is referred to as the builder and the respondents are referred to as the owners, unless the context requires otherwise. 9 The owners have applied for costs following the issue of an order by the Tribunal on 2 June 2009 dismissing the builder's application to review a decision of the Building Disputes Tribunal (BDT). The Tribunal then also ordered that the parties have leave to make any application for costs by filing with the Tribunal and serving on the other party a written application for costs providing sufficient details of the services provided and the rates charged for such services to enable the other party to review and make submissions thereon, and the State Administrative Tribunal to assess such costs, together with submissions in writing supporting the application for costs. 10 The owners duly filed their application for costs which incorporated a bill of costs for assessment purporting to have been drawn on the Magistrates Court of Western Australia (Civil Jurisdiction) scale of costs. The builder has filed submissions in opposition to the costs application. 11 The owners' submissions are extensive. They refer to the Tribunal's power to award costs pursuant to s 87 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) and to the relevant principles set out in cases such as Gill and Wildnight Pty Ltd [2008] WASAT 135, Pearce and Germain [2007] WASAT 291(S), J & P Metals Pty Ltd and Shire (Page 5)
of Dardanup [2006] WASAT 282(S) (J & P Metals) and Lai and Costa [2006] WASAT 117 (Lai). After summarising that part of the history of the proceedings considered relevant, the owners submit that it was reasonable to instruct legal representatives, in the original BDT hearing based on complexity and, in the proceeding before this Tribunal, because the builder instructed legal representatives to present its case. 12 The owners expressly rely upon two written settlement offers, copies of which were attached to the submissions. The offers were made without prejudice save as to costs. The owners also referred to and disclosed the terms of a without prejudice offer to settle made by the owners in the course of a mediation, which had been conducted pursuant to the directions of the Tribunal. 13 It is also submitted that the builder's case was obviously unmeritorious and that is a ground for awarding costs. 14 The application for review related to an order made by the BDT requiring the builder to pay to the owners $6,209.50, as the cost to remedy faulty or unsatisfactory workmanship, expert witness costs of $9,496 and legal costs of $16,104 that is a total sum of $31,809.50. The owners submitted that the Magistrates Court scale of costs would be an appropriate guide to the Tribunal. The bill of costs prepared by the owners and forming part of the costs application is attached at the end of these reasons for decision, marked 'Annexure A'. 15 The builder's opposing submissions deal in some detail with various offers to settle made, as I understand the submissions, during the mediation conference, to submit that the particular offer relied on by the owners in mediation was not a genuine offer. The builder rejects that its grounds for review were unmeritorious on the basis that the Tribunal granted leave, which reflects that the application was of sufficient merit to meet the requirements for leave to be granted. It is submitted for the builder that, pursuant to s 87(1) of the SAT Act, each party should bear their own costs. The submissions conclude to state that in the event that the Tribunal considers it appropriate that the respondent's costs are to be awarded, the builder requests that the costs be taxed, if not agreed.
The merits of the cost application 16 The history of the proceedings and the basis upon which they were finally determined is fully set out in Ampezzo Pty Ltd and Franken [2009] WASAT 109 (principal decision) to which I refer and which should be read as if incorporated in these written reasons. (Page 6)
17 Subject to the qualifications later expressed, I accept that this is a matter in which, having regard to the principles set out in Lai, costs should be awarded. The hearing before the BDT occupied four days, which is an unusual length of time in that jurisdiction, and both parties had legal representation. The BDT held that, although the complaint was not legally complex, the number of complaint items and the breakdown of relations between the parties created a factually complex and difficult hearing. For that and other reasons, the BDT concluded that it was fair to award costs for legal representation pursuant to s 38(4) of the Builders' Registration Act 1939 (WA) (BR Act). The proposed grounds for review as set out in the application to this Tribunal raised issues of fact and law and in particular, ground 2, which alleged that complaint items had been determined based on speculation, hearsay, unqualified opinion, and not on evidence produced at the hearing, foreshadowed that a detailed examination of the transcript would be required. The conduct of an application for leave to review and a review following a hearing of this length is not a matter easily undertaken, and where the applicant for review chooses to be legally represented, it would have appeared particularly daunting for the owners to contemplate conducting the case without legal representation. 18 The owners submit that costs should be awarded in the amount of $16,845.35. Ordinarily, if costs of that proportion are reasonably incurred, relative to the amount in dispute, it can be seen that the inability to recover costs might result in an injustice. Although the costs claimed have been substantially disallowed, the amount of costs awarded is still such that I consider that an injustice would be done if the owners had to bear their own costs. 19 In the circumstances, it is not necessary to address in any detail the submission that the review was unmeritorious. It suffices to say that the submission is not accepted because, as the builder submits, leave would not have been granted if that was the case. 20 However, having regard to the history of the proceedings, and in particular, the manner in which the review was conducted, for the reasons which follow, I consider that the costs awarded to the owners should be restricted to those associated with the application for leave to have the BDT decision reviewed and to the costs application. 21 Although the builder was granted leave to review the decision of the BDT limited to two particular grounds, the owners were successful in their submissions in relation to the other three grounds raised (Page 7)
by the application. In relation to the grounds for which leave was granted, one ground raised a jurisdictional issue which neither party had identified. It was identified by the Tribunal and resulted in the application being amended to include that ground. The second ground for review related to costs, but was limited to a consideration of the extent to which the costs order might be affected if the jurisdictional point was upheld. In these circumstances, and because the application for review ultimately failed, the owners should be entitled to costs in respect of the leave application assessed in accordance with the principles established in J & P Metals. 22 The owners did not fare as well in the review proceedings, although, ultimately, the application for review was dismissed. None of the arguments presented on behalf of the owners were accepted. In fact, the review could not be concluded at the final hearing, because the owners' counsel had not addressed issues which were clearly identified by the Tribunal in the course of giving reasons for the decision granting leave: see [14] to [16] of the principal decision. As there set out, the parties were afforded an opportunity to file further submissions addressing the matters raised by the Tribunal. The further submissions filed on behalf of the owners were not accepted. 23 As it turned out, shortly after the last date for the filing of those further submissions, the Tribunal handed down a decision in an unrelated matter which provided the basis on which the review was ultimately determined. The owners' contribution to that outcome was contained in a single paragraph of a letter dated 10 March 2009 filed with the Tribunal in which, after the Tribunal had directed the parties' attention to the decision concerned, the owners' counsel submitted that there was no basis not to follow the decision. The builder made no submission on the point. 24 In these circumstances, I consider that there is an insufficient basis to move away from the starting position in the Tribunal that, pursuant to s 87(1) of the SAT Act, each party should bear their own costs, at least in respect of the review application. In reaching this conclusion, I have had regard to and taken into account the additional considerations which follow. 25 Having decided that the owners are entitled to costs in respect of the leave application, they should also be allowed costs in respect of the application for costs and preparing the draft bill. 26 Section 87(4) of the SAT Act requires the Tribunal, in making a costs order in review proceedings, to have regard to: (Page 8)
… (a) whether the party (in bringing or conducting the proceeding before the decisionmaker in which the decision under review is made) genuinely attempted to enable and assist the decisionmaker to make a declaration on its merits; and (b) whether the party (being the decisionmaker) genuinely attempted to make a decision on its merits. 27 The party referred to, in context, is the party against whom the order is contemplated. Although the BDT found that the builder had prolonged the hearing, there is no basis on which to find that the builder did not genuinely attempt to enable and assist the BDT to make a decision on its merits, nor is there any suggestion that the BDT did not genuinely attempt to determine the matter. 28 Section 87(5) of the SAT Act provides that the rules may deal with the effect of an offer to settle which complies with r 40 and r 41 of the SAT Rules, and the responses, if any, to the offer, on the making of an order for the payment by a party of the costs of another party. Rule 42 of the State Administrative Tribunal Rules 2004 (WA) (SAT Rules) obliges the Tribunal, in determining costs that may be awarded, to take into account that the party did not accept an offer more favourable than the Tribunal's order. 29 Rule 40 of the SAT Rules prescribes the manner in which settlement offers may be made either with prejudice or without prejudice. If made without prejudice, the Tribunal is not able to be told of the making of the offer until after it has made its decision in respect to the matters in dispute (other than in relation to the making of orders in respect of costs). That rule must be understood against the express provisions of s 55 of the SAT Act to the effect that evidence of anything said or done in the course of a compulsory conference or mediation is not admissible at any later stage of the proceeding unless: (Page 9)
(i) a proceeding for an offence in relation to the giving of false or misleading information; (ii) a proceeding under section 100 [of the SAT Act (for contempt)]; or (iii) a proceeding in relation to an order made under s 53(b)(i) [of the SAT Act (which refers to an order made determining a matter adversely to a person who fails to attend a compulsory conference)]. 30 The SAT Rules should not be taken into account for the purposes of interpretation of the SAT Act, and s 55 thereof in particular: see the discussion in C Pearce, Statutory Interpretation in Australia, (6th ed, 2006) at [3.41]. The provisions of s 55 of the SAT Act unambiguously exclude evidence of anything said or done in a mediation, unless one of the exceptions apply. The only exception which might be said to apply is that the parties have agreed to the admission of the evidence, because both parties referred to the offer made in mediation relied on by the owners. There is, however, no evidence of any agreement to the owners referring to the offer. Reference was made to the offer in the owners' submission and the builder replied to that, and referred to other offers apparently made in mediation. 31 In my view, both parties breached s 55 of the SAT Act by making reference to an offer made during the mediation. If a party wishes to obtain protection against costs from an offer made during mediation, unless both parties clearly agree to the making of the offer later being disclosed, the offer should be repeated after the mediation on one or other of the bases referred to in r 40 of the SAT Rules and in compliance with r 41 of the Rules. 32 I accordingly have had no regard to the offer made by the owners during the mediation. 33 It is, however, necessary to have regard to the two written offers of settlement which are annexed to the owners' costs application. 34 The first offer was made on 7 December 2007, and proposed that the proceeding be dismissed and there be no order for costs. As appears from the owners' bill of costs, only an amount of $25 is claimed by the owners in respect of costs incurred prior to the making of the offer. 35 The second offer was made on 20 June 2008 and was to the same effect as the earlier offer. As will appear from the assessment below, (Page 10)
the total costs which the Tribunal will order to be paid prior to that period amounts to $475. 36 In both instances therefore, the offer to settle on the basis that the proceedings be dismissed and that each party bear their own costs was more favourable to the builder than the orders which the Tribunal proposes to make. The first offer was expressed to be open for acceptance until 14 December 2008, a period of seven days, and the second offer until 25 June 2008, a period of five days. Rule 41 of the SAT Rules specifies that unless an offer is expressed to be open for acceptance until the commencement of the hearing, it must be open until the expiry of a specified period after the offer is made, which must be not less than 14 days. Neither is therefore a compliant offer and under r 42(1) of the SAT Rules, the rule only applies to an offer which complies with r 40 and r 41 of the Rules. Consequently, r 42 of the SAT Rules does not require the offers to be taken into account. 37 It is nevertheless in the public interest that offers of settlement that do not comply with the SAT Rules should be given careful consideration, so that settlement of disputes is encouraged. It is on that basis, notwithstanding the existence of specific rules prescribing the making of offers of compromise, that the Supreme Court of Western Australia has had regard to noncomplying offers of settlement expressed in Calderbank form, in exercising its discretion on costs. 38 In Seaman P, Civil Procedure Western Australia, LexisNexis, Butterworth, 1990 at [24A.O.5A], there is a discussion of the principles to be applied in considering whether costs should be awarded where a Calderbank offer has been made. The discussion reflects that it is relevant to determine whether it was reasonable for the offeree to reject an offer in determining whether costs should be awarded. It is there stated that: In deciding whether the rejection of a Calderbank offer was unreasonable, regard should ordinarily be had to, at least the following: (a) the stage of the proceeding at which the offer was received; (b) the time allowed for the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, accessed at the date of the offer; (e) the clarity with which the terms of the offer was expressed; and (Page 11)
(f) whether the offer foreshadowed an application for (indemnity) costs in the event of the offerees rejecting it. ((the Supreme Court of Western Australia Order 24A r 10(4) originally provided where a plaintiff made an offer, which was rejected and not bettered at trial, that costs be awarded on an indemnity basis it now refers to costs on a party and party basis). (Parenthesis added.) 39 In my view, the principles referred to above are relevant to the Tribunal's taking into account of an offer of settlement which does not comply with the relevant SAT Rules. Even in the case of a complying offer, the Tribunal retains a discretion under r 42: see Clifford and Shire of Busselton [2007] WASAT 89(S) and the above criteria may be relevant, together with the nature of the particular jurisdiction being exercised and the cost rules normally applied by the tribunal to the particular type of case. 40 In this case, the extent of the compromise offered, relating as it did only to the form of the costs order, was limited, difficult to assess, because the starting point is that costs are not awarded by the Tribunal so that each party must bear its own costs, and the builder's prospects of success, assessed at the date of either offer, appeared good on the jurisdictional point, at least. Having regard to those circumstances, I do not consider that it was unreasonable for the builder not to have accepted the offers made. On that basis, I do not consider that, after taking into account the circumstances in which the offers were made, that they call for any different order being made in respect of costs to that which I have indicated above. In addition, I consider that it would be unjust to expect the builder to pay the owners' costs in respect of the review, when all of the submissions made on behalf of the owners were rejected, issues identified by the Tribunal which needed to be addressed were not, and the application for review was refused only as a result of issues raised by the Tribunal. 41 Finally, the builder submitted that if costs were to be awarded, the owners' costs should be taxed, if not agreed (and they obviously have not been agreed). Neither the SAT Act nor the SAT Rules provide for taxation. Section 89 of the SAT Act provides that if the Tribunal makes an order for the payment of costs and does not fix the amount of costs, that amount is to be assessed or settled in accordance with the rules. Rule 43 of the SAT Rules provides that if the Tribunal does not fix the amount of costs, that amount is to be assessed or settled by the Executive Officer or a member of the Tribunal nominated by the President. The costs were not fixed and the order made on 2 June 2009 gave leave for the parties to apply for costs and directed that sufficient (Page 12)
details of the services provided and rates charged be provided to enable the other party to the review to make submissions thereon and the Tribunal to assess the costs. 42 I have been nominated by the President to constitute the Tribunal for the determination of this matter and the costs must therefore be assessed pursuant to r 43 of the SAT Rules. In carrying out that assessment, consistent with the principles set out in J & P Metals, any scale of costs which might be appropriate is to be used only as a guide. The Tribunal will take into account complexity, importance, possible urgency, the amount of time and effort required to properly prepare and present the case, and will strive to maintain proportionality between the subject matter of the proceedings and the associated costs. In assessing whether costs have been reasonably incurred, the Tribunal will expect that the representatives of the parties to approach the proceedings in a way that minimises costs to their clients.
The assessment of costs 43 The owners' application for costs provides no details whatsoever of the rates charged by their legal representative or of the time taken to provide the various services described in the bill of costs. The scale of costs provided by the Legal Practitioners (Magistrates Court) (Civil Jurisdiction) Determination 2008 (scale) varied the maximum charges set out in the scale with effect from 1 July 2008. There is nothing to indicate whether this has been taken into account in the bill of costs. 44 I accept that having regard to the quantum of the order of the BDT giving rise to the review, that the scale is capable of being used as a guide to the assessment of the costs. But, because of the above deficiencies, I shall have to do the best that I can on the information which is available to carry out the assessment. 45 I have reviewed all the documentation relevant to the various attendances described in the bill of costs in order to form some view of the reasonable time which should be allowed for provision of the relevant services. In doing so, I do not consider that the complexity of the matter, or any of the other criteria referred to above, is such as to warrant charges at the maximum of the scale. Under the scale, the maximum rate which can be charged by a practitioner admitted for five years or more, inclusive of GST, is $330 per hour. I am aware that the legal practitioner having the conduct of this matter has been admitted for in excess of that period. I have applied a rate of $300 per hour inclusive of GST. (Page 13)
46 By reference to the bill of costs, I consider that the costs claimed in respect of the following item numbers should be allowed in full, namely, item nos 1, 2(d), 3(a), 3(b), 4(a), 4(c), 4(g) and 4(h). All other items have either been disallowed or allowed in part only. I shall set out the approach which I have taken in respect of those other items. 47 In relation to the attendance at directions hearings, items 2(a), 2(b) and 2(c), I have allowed $150, or half an hour, in respect of each directions hearing. 48 In relation to item 4(b), I have considered that a reasonable time for preparation of the submissions, bearing in mind the time allowed for perusing and considering the transcript under item 4(c), is slightly in excess of 3 hours. I have allowed an amount of $1,000. 49 In relation to item 4(d), I have not allowed any amount, as I have regarded this attendance as being included in the time allowed for preparing the submissions on the leave application claimed under item 4(b). 50 In relation to item 4(f), I have allowed $500. 51 Items 4(i), 4(j) and 5(c) have been disallowed in their entirety on the basis of my above decision that the owners should not be entitled to the costs of the review. 52 In relation to appearance at the leave hearing as claimed under items 5(a) and 5(b), I have allowed a total sum of $1,800. 53 In relation to the costs application, I have allowed the owners, in respect of item 6(a), the sum of $900, and in respect of item 6(b), the sum of $300. 54 In relation to item 7, copying, I have allowed an amount of $300. It is probable that something in the order of 400 pages has been copied and the rate, under the scale, both before and after 1 July 2008, is $1 per page. Most of the copying would have occurred prior to the leave hearing. As I have disallowed costs in respect of the review hearing, I have had to apportion this claim on an arbitrary basis. 55 The claim for provision of legal advice under item 8(a) is disallowed. I consider that this is a solicitor and client attendance. Item 26 of the scale refers to 'other work', but it is a party and party scale. (Page 14)
56 Item 9 is disallowed as the transcript referred to cannot be related to any particular hearing and it cannot therefore be determined that the cost was reasonably incurred. 57 The result of the above is that the total amount allowed to the owners by way of recoverable party and party legal costs is the sum of $7,258.
Orders 58 For the above reasons, the order will issue that: (Page 15)
Annexure A (Page 16)
(Page 17)
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