CIUCU and VESPECU - [2016] WASAT 98

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

ACT: BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA)

CITATION: CIUCU and VESPECU [2016] WASAT 98

MEMBER: MR C RAYMOND (SENIOR SESSIONAL MEMBER)

HEARD: DETERMINED ON THE DOCUMENTS

DELIVERED : 12 AUGUST 2016

FILE NO/S: CC 1438 of 2015

BETWEEN: VALERIA CIUCU
First Applicant
LUCIAN CIUCU
Second Applicant
AND
EMIL VESPECU
Respondent

Catchwords:

Building Services (Complaint Resolution and Administration) Act 2011 (WA) - Matter settled in mediation - Attempt to relitigate by unrepresented applicants - Settlement performed - Application by respondent for indemnity costs alternatively costs on party and party basis

Legislation:

Building Services (Complaints Resolution and Administration) Act 2011 (WA), s 11(1)(d)

Result:

Application for costs dismissed

Summary of Tribunal's decision:

After dismissal of the proceedings as being without substance on the basis that a settlement agreement had been performed, the respondent applied for costs on an indemnity basis alternatively as between party and party in the sum of $6,424.
The Tribunal found that circumstances existed which opened the discretion to award costs but that as it was the conduct of the respondent which lead directly to the applicants seeking to re-open the case and the manner in which the respondent had responded to an application from parties having an obviously limited understanding by adding to its complexity instead of simplifying the matter the justice of the case did not call for an award of an award of costs on an indemnity basis, or any other basis.

Category: B

Representation:

Counsel:

First Applicant               :     In Person
Second Applicant          :     In Person
Respondent:     Mr T Preece

Solicitors:

First Applicant               :     N/A
Second Applicant          :     N/A
Respondent:     Hale Legal

Case(s) referred to in decision(s):

J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S)
Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S)

REASONS FOR DECISION OF THE TRIBUNAL:

The application for costs

Following entry into a settlement agreement at mediation and the performance of the agreement the Tribunal rejected the applicants' submission that the proceedings be re-opened and issued an order dismissing the proceedings.
The respondent has applied for costs to be awarded on an indemnity basis in the sum of $6,424 alternatively as between party and party.

Background

On or about 9 September 2012, the parties entered into a written building contract in the Housing Industry Association Limited HBCA Lump Sum form for a contract price of $150,000 in respect of the construction of a dwelling upon Lot 2 on Strata Plan 42006, known as 2/67 Odin Road, Innaloo.
The applicants are an elderly couple, who during the course of several directions hearings before the Tribunal demonstrated that they have some difficulty communicating in the English language and that they also have a very limited understanding of building construction, legal procedures and concepts.
The construction of the works did not proceed well with the parties making various allegations against the other. The respondent asserts that he terminated the contract.
The applicants lodged a complaint with the Building Commissioner apparently accepting that the contract had been terminated (although that acceptance is not free from doubt) and making numerous claims for work allegedly not performed by the respondent. The complaint was referred by the Building Commissioner to the Tribunal for determination pursuant to s 11(1)(d) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act).
At the first directions hearing before the Tribunal the matter was adjourned to enable the applicants to obtain legal representation because of the obvious difficulty they had articulating the basis of their claim. When the applicants obtained legal representation the matter was referred to a mediation hearing on 29 January 2016. The parties signed a confidential settlement agreement and the mediation was adjourned to 1 April 2016. It can be inferred the intent was to allow performance of the settlement agreement whereafter the proceedings would be withdrawn. That inference is borne out by the terms of the settlement agreement which both parties have consented to the Tribunal having regard to in order to resolve a dispute as to whether the applicants could re-open the litigation. The settlement agreement provided that the respondent wold pay the applicants the sum of $31,600 in settlement of all claims 'regarding the home building contract' within 28 days. Although the settlement agreement was not dated it was signed on 29 January 2016. On 6 March 2016, the applicants wrote to the Tribunal advising relevantly:
As the 28 days have past [sic], Mr Vespescu has made no payment of $31600 and we don't know why. He has sent me emails asking me how much to pay, but he already knows the amount as he was present on the 29^th January when the court made the final decision.
We would like to re-open the case, we are asking that he provide us with all the invoices he paid for the house, plus the original amount of $72000 is to be paid now.
…
On 1 April 2016 an order was made terminating the mediation and referring the matter to a directions hearing.
At the mediation on 1 April 2016, the only orders made were that the mediation was terminated and that the matter be listed for a directions hearing on 12 April 2016. At the directions hearing, a subsequent directions hearing on 19 April 2016 and the special appointment to determine whether the proceedings could and should be re-opened, the applicants had some difficulty even with the assistance of a sworn interpreter, from English into Romanian and vice versa, in explaining the basis upon which they contended that course should be followed.
The respondent filed two sets of submissions, firstly opposing the application to re-open the proceedings and also supporting his application for costs as stated above. Attached to the submissions were various documents on which the respondent relied including a bill of costs.
The respondent states in his submission that the settlement sum was paid, albeit late, on or about 5 March 2016, but says that was due to 'discussions' between the parties 'regarding an offset of monies owed by the Applicants to the Respondent' and that the applicants' legal representative issued a letter extending the time for payment to 9 March 2016. Attached to the submission, and marked 'B', is a chain of email communications said to be 'a copy of that correspondence'. Further reference will be made to them in the Tribunal's considerations below. The letter granting the alleged extension of time to pay is attached to the submission, and marked 'C'.
While careful consideration has been given to all the respondent's written and oral submissions, it suffices simply to observe that the thrust of them is that the applicants have persisted, notwithstanding opportunities given to them to obtain legal advice, in attempting to reopen the litigation after they had received payment of the settlement sum, when properly advised they would have known there was no prospect of succeeding with the application to re-open, that this is a breach of the settlement agreement and is vexatious, frivolous and an abuse of process. Further, that indemnity costs should be awarded because the applicants wilfully disregarded that they had settled the matter, had received and made no attempt to return the settlement sum. Reference is made to various authorities in support of the contentions. Emphasis is placed upon the applicants having been legally represented at the mediation when the settlement agreement was signed. (The legal representative had later ceased to act).

Considerations

The authorities referred to by the respondent are accepted as establishing that a discretion to award costs, including indemnity costs, might be exercised appropriately in the circumstances outlined.
However, I do not consider that the circumstances relied upon by the respondent fairly reflect what occurred between the parties.
The email communications between the parties commenced with a series of emails on 23 February 2016 commencing at 5.09 am from the respondent stating:
Hi, do you want me to pay the balance from what you owe?
Please send me your account details, Regards Emil
The applicants replied at 7.49 am by simply providing their account details.
The respondent emailed back at 8.53 am:
Hi do you want me to pay the balance?
The applicants replied at 9.16 am:
Yes please. Thanks
There then followed further communications on 25 February 2016 in which the respondent asked how much was the balance as he wanted to pay that day, to which the applicants replied in terms repeating their agreement:
Hi, Please do. Thank you Valerica & Lucian.
The respondent replied again asking:
How much is left from what you owed to me?
There was no response to the last email. On 29 February 2016, the respondent's legal representative emailed the applicants' then legal representative, advising that the parties had discussed setting off the settlement sum against the Magistrates' Court judgment, expressing the view that it would be prudent for that to occur and asking that the representative liaise with his clients and confirm that was acceptable.
By letter of 4 March 2016 (attachment marked 'C' to the respondent's submission), the applicants' legal representative replied advising that his clients denied agreeing to a set off, asserting the respondent was in default, and that if payment of $31,600 was not made within five days he had instructions to commence enforcement proceedings.
The reference to discussions between the parties and the terms of the email from the respondent's legal representative of 29 February 2016 reflect that there was no final agreement for any set off to occur.
Further, as is evident from the letter of 4 March 2016 (attachment marked 'C'), no extension of time was granted for payment to be made. The letter clearly asserts the respondent is in default of the settlement agreement and threatens enforcement proceedings.
The assertion that payment of the settlement sum was paid 'on or about' 5 March 2016 does not establish that the applicants were aware of that payment when they wrote to the Tribunal on 6 March 2016 asking that the proceedings be re-opened because payment of the settlement sum had not been made. There is no evidence of any specific advice to the applicants that payment had been made. As the applicants had provided their account details to the respondent it appears likely payment was made by electronic transfer directly into their account.
The applicants, who wrote directly themselves to the Tribunal, appear to have considered that they were entitled to ask the Tribunal to reopen the matter as at 6 March 2016. Having observed the applicants in directions hearings and during the special appointment hearing, I do not consider that they had any appreciation of the legal niceties of making time of the essence and giving notice of termination of the settlement agreement. Nor do I consider that they had any appreciation of the effect of retaining the payment once they became aware of it.
It would have been manifestly obvious to the respondent's legal representative, having been exposed to the applicants during the hearings before the Tribunal and in the mediation, that whether by reason of their age, language difficulties or lack of sophistication, they have no understanding of the legal process and that there was no prospect of them being able to succeed with the application to re-open the proceedings. If ever there was a case for a minimalist approach to a matter, this is the case. Instead, the worst of motives have been attributed to the applicants that they have acted vexatiously, and the proceedings have been made more complex by applying for indemnity costs. The Tribunal has an expectation that litigation before it will be conducted in a manner which minimises the costs for the parties: J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S).
The respondent must also be fully aware of the applicants' lack of understanding of the building process, as evident from the claims made, notwithstanding termination of the contract, that the respondent completes various items of alleged incomplete work and their general lack of commercial appreciation. It was within the power of the respondent to comply with the settlement agreement and pay before due date. It was his failure to do so which resulted in the applicants' complaint to the Tribunal and their attempt to re-open the proceedings.
There can be no doubt that, properly advised, the applicants should not have pursued the application to re-open the proceedings once they were aware that payment had been made by the respondent. If they were not aware of that by the time of the directions hearings on 12 and 19 April 2016, or by any earlier time, they must be taken to have been aware by the time the respondent's submission was filed and served on 11 May 2016, but they persisted with the application to the last. This resulted in the entire proceedings being dismissed when the applicants would not consent to withdraw the proceedings because the settlement agreement had been performed.
Ultimately, when circumstances exist as here when the discretion to award costs is open, the Tribunal must nevertheless be persuaded that the justice of the case is such as to justify the award: Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S).
Given the circumstance that it was the conduct of the respondent which lead directly to the applicants seeking to re-open the case and the manner in which the respondent has responded to an application from parties having an obviously limited understanding by adding to its complexity instead of simplifying the matter, I am not persuaded that the case calls for an award of an award of costs on an indemnity basis, or any other basis.

Order

For the above reasons, the Tribunal will issue an order as follows:
1.The respondent's application for costs to be awarded on an indemnity basis, alternatively, as between party and party, is dismissed.

I certify that this and the preceding [32] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR SESSIONAL MEMBER