BAILEY and WRENN
[2018] WASAT 109
•22 OCTOBER 2018
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION) ACT 2011 (WA)
CITATION: BAILEY and WRENN [2018] WASAT 109
MEMBER: MS H LESLIE (MEMBER)
HEARD: 15 JUNE 2018
DELIVERED : 22 OCTOBER 2018
FILE NO/S: CC 688 of 2017
BETWEEN: CRAIG BAILEY
Applicant
AND
JOHN GRAHAM WRENN
First Respondent
SONYA JACKIE WRENN
Second Respondent
Catchwords:
Building dispute - Costs application by unsuccessful party - Costs principles - Legitimate dispute - Expert difference of opinion - Onus and burden of proof - No unreasonable behaviour by parties - Costs neutral jurisdiction
Legislation:
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 49, s 57(1)(c)
State Administrative Tribunal Act 2004 (WA), s 87
Result:
Applications dismissed
Category: B
Representation:
Counsel:
| Applicant | : | Mr S Boni |
| First Respondent | : | Mr P Brunner |
| Second Respondent | : | Mr P Brunner |
Solicitors:
| Applicant | : | Western Legal |
| First Respondent | : | Bailiwick Legal |
| Second Respondent | : | Bailiwick Legal |
Case(s) referred to in decision(s):
Sanders and Gemmill Homes Pty Ltd [2017] WASAT 41 (S)
REASONS FOR DECISION OF THE TRIBUNAL:
Background and the application for costs
The substantive application before the Tribunal was an application under s 57(1)(c) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act). It was an application by the applicant (the builder) for review of a building remedy order made by the Building Commission on 16 February 2017 in respect of certain building services provided by the builder to the respondents (the owners).
The building remedy order contained a number of items.
Between the making of the building remedy order and the hearing, a number of aspects of the dispute were the subject of discussion between the parties. By the time of the hearing, there remained only two components of the building remedy order about which the parties sought the determination of the Tribunal, namely Items 11 and 34.
The order sought by the builder was that the building remedy order be varied to delete those items; in other words to reflect the fact that the builder was not required to engage in any remedial work regarding those two items. The owner opposed any variation being made to the building remedy order and sought to have the builder complete the remedial work referred to in the two items of the building remedy order. There was no issue as to remedial costs by a third party. The sole question was whether or not the builder should be required to complete the work designated in the two items of the building remedy order.
At the time of the hearing, other issues continue to exist between the parties that were not for determination by the Tribunal apparently contractual and also workmanship matters. The sole issue for determination by the Tribunal was a workmanship issue, being essentially the adequacy of the fixing systems used by the builder on the front and rear verandahs of the owners' home in, firstly, connecting the rafters to the relevant beams and wall plates and, secondly, in connecting the roofing battens to the relevant rafters on the front verandah.
On 15 June 2018, the Tribunal delivered its decision in relation to the matter referred to it. In summary, the builder was successful. The Tribunal found that the owners had simply not met the onus of proof which fell on them, and had failed to establish that the work done by the builder fell short of the workmanship standard required. Their claim for defective workmanship therefore failed. The Tribunal ordered that the building remedy order be varied to delete Items 11 and 34 to reflect that the builder was not required to engage in any remedial work regarding those two items.
Immediately upon the delivery of the decision, the builder sought costs. Submissions on the topic were filed and exchanged by both sides. The owners' submission also contains an application for costs.
The principles to be applied
Section 49(1) of the BSCRA Act provides that:
Subject to this section, the … [SAT] may make such orders for costs as [it] think[s] fit in relation to proceedings arising from a building service complaint or a HBWC complaint.
Section 49(2) of the BSCRA Act provides that costs should not be awarded unless:
… it is fair to do so, having regard to
(a)whether a party has acted in relation to a complaint in a way that unnecessarily disadvantaged another party; or
(b)whether a party has been responsible for prolonging unreasonably the time taken to deal with the complaint; or
(c)the relative strengths of the claims made by each of the parties; or
(d)any other [relevant] matter[.]
Section 49(3) of the BSCRA Act provides that:
If the Building Commissioner or the State Administrative Tribunal is of the opinion that the costs and expenses were unnecessarily incurred due to the conduct of a party, the Building Commissioner or Tribunal may make an order requiring the party to pay all or any specified part of the costs and expenses incurred under this Act in investigating the complaint.
Section 49(7) of the BSCRA Act provides that:
This section does not limit the powers of the State Administrative Tribunal under the State Administrative Tribunal Act 2004 Part 4 Division 5.
The latter reference is in particular to s 87 of the State Administrative Tribunal Act 2004 (WA) which provides that:
(1)Unless otherwise specified in this Act, the enabling Act, or an order of the Tribunal under this section, parties bear their own costs in a proceeding of the Tribunal.
(2)Unless otherwise specified in the enabling Act, the Tribunal may make an order for the payment by a party of all or any of the costs of another party or of a person required to produce a document or other material on the application of the party under section 35.
(3)The power of the Tribunal to make an order for the payment by a party of the costs of another party includes the power to make an order for the payment of an amount to compensate the other party for any expenses, loss, inconvenience, or embarrassment resulting from the proceeding or the matter because of which the proceeding was brought.
(4)Without limiting anything else that may be considered in making an order for the payment by a party of the costs of another party where the matter that is the subject of the proceeding comes within the Tribunal's review jurisdiction, the Tribunal is to have regard to
(a)whether the party (in bringing or conducting the proceeding before the decisionmaker in which the decision under review was made) genuinely attempted to enable and assist the decisionmaker to make a decision on its merits;
(b)whether the party (being the decisionmaker) genuinely attempted to make a decision on its merits.
(5)The rules may deal with the effect of certain offers to settle, and responses, if any, to the offer, on the making of an order for the payment by a party of the costs of another party.
(6)The Tribunal may order that the representative of a party, rather than the party, in the representative's own capacity compensate that or any other party for costs incurred because the representative acted in, or delayed, the proceeding in a way that resulted in unnecessary costs.
The relevant principles are conveniently set out by Senior Sessional Member Raymond in Sanders and Gemmill Homes Pty Ltd [2017] WASAT 41 (S) at [8][9]:
There are a range of factors that might contribute to the Tribunal making a costs order, including the following nonexhaustive list:
a)where a party conducts itself unreasonably, particularly where the conduct leads to unnecessary costs to the other party;
b)where a party has conducted itself inappropriately, particularly where the conduct leads to unnecessary costs to the other party;
c)where credibility of evidence is at the heart of a matter;
d)where the application undermines the integrity of proceedings under the relevant Act;
e)where the case is weak, being incredible or implausible or obviously unmeritorious;
f)where a party has to embark in proceedings to vindicate its clear contractual entitlement;
g)the circumstances of the case having regard to the above, or other factors, are such that the justice of the case supports moving away from the initial position that each party should bear their own costs; and
h)in the case of proceedings conducted under the BSCRA Act, although s 39 thereof broadens the Tribunal's discretion in relation to costs, the provision should not be understood as providing that costs will generally follow the result, it is neutral in effect, and should be applied in a manner which is consistent with and reinforces the objectives and procedures of the Tribunal. Further, any factors will be relevant which point to the justice of the case requiring an award of costs; as discussed in Pearce & Anor and Germain [2007] WASAT 291 (S) at [22][24]; Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S); Hoskins and Daniel Vinci t/as D'Vinci Contracting [2011] WASAT 188 and McLerie and Koleszko [2014] WASAT 160 (S) (McLerie).
In the case of an offer of settlement, whether or not the offer complies with r 40 and r 41 of the SAT Rules the Tribunal, in determining the costs that may be awarded, is required by r 42 thereof to take into account that a party did not accept an offer more favourable than the Tribunal's order. In deciding whether the rejection of an offer was unreasonable, regard should ordinarily be had to, at least the following:
a)the stage of the proceedings 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 of the offeree rejecting it;
as discussed in Ampezzo Pty Ltd and Franken [2009] WASAT 109 (S) and McLerie.
The 'settlement offers'
The builder in seeking costs essentially relies on an offer made by him in the proceedings. In a letter dated 12 July 2017 making reference to the substance of his expert's report and the onus upon the owners, the builder invited the owners to withdraw their opposition to the orders sought by the builder, including those in relation to Items 11 and 34 of the building remedy order thus bringing the matter to an end. The builder, in that letter, alerted the owners to the fact that, if he was successful at final hearing based on his reliance on his expert's report, an application for both legal fees and expert's costs would be made.
The builder refers to a letter dated 13 July 2017 from the then selfrepresented owners by which they maintained reliance upon their expert's reports, claiming that these establish that the report of the builder's expert was 'in the main, incorrect'. The owners' letter essentially invited the builder to withdraw his complaint to the Tribunal and alerted the builder to the fact that, if the owners were successful, on the strength of the reports upon which they relied, they would seek a costs order to recover their legal fees and all expert witness fees.
The matter was not resolved by the parties and the parties elected to pursue the matter through to a full days hearing relying on their respective expert reports.
The application for costs
The builder claims that he has incurred expenses engaging an engineer to investigate the complaint, prepare reports, attend site meetings and attend at the final hearing. He specifies those costs including legal fees subsequent to the date of the above-mentioned letter of 12 July 2017.
The builder's plea is that the Tribunal found in his favour 'substantially on the strength and merit of the evidence contained in [his expert's] report', and that had the respondent acted reasonably in accepting the findings in that report, the builder would not have been put to the costs claimed.
The owners oppose the builder's claim for costs and, in addition, seek an order that the builder pay for the costs of their expert's reports. They do not claim legal fees.
The owners claim that the dispute that originally was referred to the Tribunal on review was broader than the issues which ultimately required the determination of the Tribunal. The owner additionally claims that, as a result of the engaging of independent expert evidence by both sides and after mediation, and the conferring of the experts, certain works were agreed to be undertaken by the builder and, to that extent, the respondents were partially successful 'on the review', albeit not on the two items ultimately requiring determination by the Tribunal in the hearing. The respondent claims that as a consequence of the engagement of the experts, that the builder agreed to undertake certain works the subject of the review. On the basis of that 'partial success', the owners seek their expert costs.
The owners claim there is nothing untoward about the progression of the review and that they did not conduct themselves in such a manner as to require the builder to incur unnecessary costs and expenses. They submit that following the letter of 12 July 2017, they provided to the respondents, as requested, expert evidence countering the views expressed by the builder's expert.
The owners claim that both parties acted in furtherance of and consistently with their own experts' opinions, and, implicitly, that to do so was reasonable.
Consideration
Ultimately, the Tribunal is not persuaded that the justice of the case warrants the making of any costs order.
The Tribunal accepts that both sides acted reasonably on the advice of their respective experts, both legal and engineering.
There was dispute between the two legal representatives as to where the onus of proof lay in the circumstances.
There was a dispute between the two engineering experts a professional disagreement as to the question of workmanship. Neither expert view was rejected by the Tribunal. The owners simply failed, given the existence of a credible alternative engineering opinion, to satisfy the Tribunal to the requisite standard that the work the subject of the dispute in the hearing was defective.
To the extent that the builder makes the point that the difference in the expert views and the potential onus and burden of proof hurdles were or should have been identified by the owner in the lead up to the hearing, the Tribunal agrees, however, in all the circumstances, the Tribunal is not satisfied that that alone is a sufficient reason for an order for costs to be made against the owners.
As to the owners' claim for costs, the Tribunal is not prepared to go behind the basis upon which matters that were in issue at the beginning of the proceedings ceased to be in issue, and in particular, not in relation to the question of costs, both expert and legal, concerning those components of the dispute. If particular aspects of the dispute were settled then, in the absence of there being some overt reservation of costs in any settlement agreement, the Tribunal is not prepared to have regard to the circumstances of that settlement. To that extent, the Tribunal is not persuaded by the argument from the owners that they were 'partially successful' on review and are therefore entitled to some of their expert costs.
In the view of the Tribunal, neither party has behaved unreasonably or inappropriately. Each side had a legitimate argument based on expert advice, and potentially with some merit. It is reasonable to assume that the lawyers for the owners hoped to be able to persuade the Tribunal to prefer the evidence of the owners' expert over the builder's expert. That was certainly the approach adopted in the hearing. Such a course, although ultimately unsuccessful, is not so unreasonable as to warrant a costs order when unsuccessful, in all the circumstances.
In any event, in the view of the Tribunal, this is not a case the complexity of which required that it be prepared and presented in any more structured way than most of the building disputes coming before the Tribunal. It is noted that for a considerable part of the proceedings, the owners represented themselves. The parties of course have the right to legal representation but they do not have the automatic right to a costs order to meet expert fees and/or the cost of that representation even if 100% successful. To the contrary, the starting position in the Tribunal is that it is a costs neutral jurisdiction.
Upon a consideration of the factors required to be taken into account, there is nothing about this case that supports the Tribunal moving away from the general position adopted in the Tribunal's proceedings that each party should bear their own costs.
The just outcome is that each party bear their own costs in respect of these proceedings.
Orders
For the above reasons, the Tribunal will issue an order as follows:
1.The builder's application for expert costs and legal fees is dismissed.
2.The owners' application for expert costs is dismissed.
3.Each party shall bear their own costs of the proceedings.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS H LESLIE, MEMBER
22 OCTOBER 2018
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