| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : BUILDERS' REGISTRATION ACT 1939 (WA) CITATION : HARVEY and NELSON [2011] WASAT 185 MEMBER : MR T CAREY (MEMBER) HEARD : DETERMINED ON THE DOCUMENTS DELIVERED : 18 NOVEMBER 2011 FILE NO/S : CC 148 of 2011 BETWEEN : ERIC AND SHELLEY HARVEY Applicants
AND
ANDREW AND MARIA NELSON
Respondents
Catchwords: Building disputes Costs Application for costs upon dismissal of application consequential upon refusal of extension of time Nature of extension of time and stay applications considered Decision based on matter not raised by parties Legislation: State Administrative Tribunal Act 2004 (WA), s 87(1), s 87(2) Result: Application for costs dismissed
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Category: B
Representation: Counsel:
Applicants : Mr G MacLaren
Respondents : Mr W Vogt
Solicitors:
Applicants : Doyles Contruction Lawyers
Respondents : Vogt Graham Lawyers
Case(s) referred to in decision(s):
J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S)
Lai & Anor and Costa [2006] WASAT 117
Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125
Olympic Holdings Pty Ltd and Begley [2009] WASAT 30
Pearce & Anor and Germain [2007] WASAT 291 (S)
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REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision 1 The respondents successfully opposed the applicants' application for an extension of time allowing them to bring an application for review of a decision of the Building Disputes Tribunal. The principal application was therefore dismissed. The second respondent sought her costs of the proceeding in a particular amount. 2 The Tribunal considered the principles applying to when costs orders might be appropriate. It determined against the making of any costs orders in the second respondent's favour, having regard to the preliminary nature of the extension of time application (and also a stay application, determined earlier) and the fact that the basis of the decision to refuse an extension of time had not been agitated by the parties themselves.
Background 3 The applicants sought, by their principal application, leave to review a decision of the Building Disputes Tribunal (BDT) reflected in order to pay No 51/2010-11 in the sum of $35,212 (order to pay). The order to pay represented the conversion of a number of items allowed in an earlier order to remedy, comprising items of building work found not to have been carried out in a proper and workmanlike manner in connection with the construction by the applicants of a residence for the respondents. 4 On 25 August 2011, the State Administrative Tribunal (Tribunal) refused the applicants' application for an extension of time, and dismissed the application. 5 The second respondent seeks an order for her costs of the proceeding of $16,004. In accordance with the Tribunal's order on 25 August 2011, the costs application fell to be determined on the basis of documents filed by the parties. 6 The second respondent filed submissions in support of the costs application, and a bill of costs based upon the Magistrates Court scale of costs in support of the amount claimed. The applicants filed written submissions in response, which disputed the grounds advanced by the second respondent and sought dismissal of the costs application. (Page 4)
Nature of applications to the Tribunal 7 In my oral reasons for the decision to refuse the extension of time application, I described the grounds for the application for review in the following terms: … The case which the applicants seek to raise against the BDT's decision reflected in the order to pay is that the applicants were not permitted to press a claim that they were thwarted by the requirements of the Shire in their attempts to comply with the orders to remedy, which requirements were unreasonable, and that the orders to remedy should therefore not be converted at all. This, it is said, constituted breaches of the BDT's obligations to act according to equity, good conscience and the substantial merits of the case, section 36 of the BR Act and to afford every party before it a reasonable opportunity to present its case section 37 of the BR Act. … 8 I will not go into any detail into the reasons for the Tribunal's rejection of the extension of time application. They are to be found in a transcript of the oral reasons for decision in relation to the matter delivered on 25 August 2011. Each of the relevant factors going to such an application, being the length of delay, reasons for the delay, arguable case and prejudice to the respondents, was dealt with. In doing so, the Tribunal found that the applicants had not established that an arguable case existed, and that the remaining issues were 'either borderline or tending also against the application'. 9 Significantly for the costs question, the Tribunal determined the issue of arguable case against the applicants on the basis that the BDT had prescribed particular requirements in order for the applicants to pursue their claim that the order to remedy should not be converted to an order to pay, and those requirements were not followed. 10 In addition to the unsuccessful extension of time application, on 13 April 2011 the applicants' application for a stay of the order to pay was also dismissed. This application was determined by reference to the rejection of the applicants' submission that there was a demonstrated danger of inability to recover the amount of the order to pay once it had been paid over.
Costs in the Tribunal – principles 11 Section 87(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) creates the presumption that costs will not generally be awarded in matters determined by the Tribunal. There is, however, a (Page 5)
broad discretion under s 87(2) of the SAT Act to award costs in appropriate cases. 12 In Pearce & Anor and Germain [2007] WASAT 291 (S) (Pearce), constituted by the then Deputy President, now President, of the Tribunal, observations to the following effect were made: • Where a genuine dispute exists and the respective rights are unclear and parties seek a determination, the starting point is that each party should expect to pay their own costs. • In some circumstances, decisions to award costs might be warranted in order to promote certainty and responsibility in parties in their contractual relations. • It is not appropriate to delineate the particular circumstances in which the discretion to award costs would be exercised favourably. • The Tribunal may make a costs order where some of the following factors are found to exist: - a party has conducted itself unreasonably or inappropriately, particularly where this has led to unnecessary costs; - where credibility of evidence is at the heart of a matter; - where the application undermines the integrity of proceedings under the enabling Act; - where a case is incredible, implausible or 'obviously unmeritorious'; - where it was necessary for the successful party to commence proceedings to vindicate clear entitlements. 13 In Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (Marvelle), the Tribunal, including the President, had cause to comment on aspects of what his Honour, Chaney J, said in Pearce. Those comments included: (Page 6)
• Although decisions to award costs might serve to promote certainty and responsibility in parties to their contractual responsibilities, this did not necessarily mean that costs will follow the event. • Although each party should expect to pay their own costs where a genuine dispute exists, that does not exclude the possibility of an award of costs. • Where a party has conducted itself unreasonably or inappropriately, the expectation that each party will pay their own costs need not arise. • Each matter will be determined on its particular circumstances. 14 I also note that there is a line of decisions in the Tribunal which apply, in the building context, the factor referred to in Pearce concerning the capacity of awards of costs to promote certainty and responsibility in parties' dealings with each other. The second respondent has relied in particular on two such cases, Olympic Holdings Pty Ltd and Begley [2009] WASAT 30 (Olympic) and Lai & Anor and Costa [2006] WASAT 117 (Lai).
Consideration 15 There are two aspects of the background circumstances which, to my mind, have a major bearing on this application. The first relates to the nature of the unsuccessful applications. 16 The application for extension of time was, in a sense, preparatory to the 'main game', if there were to be one, of review of the relevant BDT decision. The actual outcome had the effect that the significant cost which would have inevitably flowed from any review was avoided. By their very nature, such applications act as a filter, ensuring that only deserving matters remain for substantive argument. As such, the application itself performed largely the function that was advanced before me as one of the principal rationales for awarding costs. 17 The application for a stay of the order to pay was concerned with the limited question of the operation of the BDT's decision pending the result of the principal application, and was dealt with expeditiously in this case at little additional expense over and above what would otherwise have been incurred. (Page 7)
18 The second aspect which looms large in determining this application is that the applicants, who were unrepresented before the BDT, considered at all times that their failure to comply with the order to remedy, which resulted in the order to pay being made, was attributable to a cause not of their making the alleged unreasonable conduct of the Shire. This is a thread running through all proceedings concerning the building works performed by the applicants for the respondents. 19 When the reasons for rejection of the extension of time application are considered, it is true, as pointed out by the second respondent, both that the applicants failed to establish any of the four grounds relevant to their application, and that, having not been satisfied that an arguable case was made out, the application was doomed to fail. This is not the same thing, however, as saying that the merits of the applicants' case were completely absent. 20 With the benefit of the Tribunal's reasons for deciding against the applicants' extension of time application, it can be seen that the parties' conduct of the proceedings was on the false premise that the arguable case issue was to be determined by reference to the validity, or lack thereof, of the arguments of the applicants against the Shire. Had that been the legitimate issue for determination, in order to justify an award of costs in the Tribunal, the second respondent would have needed to demonstrate that none of the applicants' complaints had any reasonable prospect of success. This was by no means a foregone conclusion, because matters of judgment concerning the quality of particular requirements of the Shire would have been involved. 21 The actual basis of the Tribunal's decision was more clearcut. It was that the BDT, in determining its own processes, had required that if the applicants wished to rely, at the hearing, upon the complaints against the Shire, they were to take certain steps, and no such steps were taken. In arguing, as she does, that the applicants were seeking to bring an obviously unmeritorious case, the second respondent is confronted with the immediate obstacle that she did not herself refer to, much less rely upon, such a basis. 22 Without attributing blame, I do not regard either party as either wholly responsible, nor free of blame, for failing to appreciate the significance of what had occurred prior to the BDT hearing. What it does do, however, is to undermine the second respondent's claims that the extension of time application was wholly unmeritorious, that to allow it might undermine the integrity of the BDT proceedings, or that the (Page 8)
applicants conducted the matter unreasonably or inappropriately in bringing the applications that they did. It does so because the second respondent accepted the applicants' chosen ground of battle, thereby ensuring, to continue the analogy, that the parties were engaged in a phoney war, to the parties' mutual cost. The fairest outcome, in my view, is for each party to bear its own costs associated with that engagement. 23 The second respondent's written submission in support of costs states: The second respondent was taken by surprise when the first named applicant relied on what occurred at the 21 April 2010 directions hearing in support of the application. The second respondent is not required to anticipate what grounds the applicants will rely on in support of their application and deal with those grounds before they are raised. 24 The reference in the submission to the first named applicant's reliance on what occurred at the directions hearing is to Mr Harvey's reference, at the hearing on 9 August 2011, through his counsel, to a tape recording of the directions hearing. Although this was the first mention of any such evidence, that is not surprising, given that the possible significance of the directions hearing was referred to, for the first time, by the Tribunal that day. The tape recording is, of course, merely evidence of the fact of what was said at the directions hearing, which, despite its ultimately critical importance, both parties had failed to mention. 25 There is one other matter raised by the second respondent deserving of a response. The second respondent relied upon the fact that the original BDT decision was for $31,692 in respect of the complaint items. Relying upon Lai at [18], a costs order was said to be warranted because, but for a costs order, the costs which the second respondent would be forced to pay would render her original complaint to the BDT 'almost nugatory'. Although unstated, this raises the spectre that the amount of the costs claimed, on the Magistrates Court scale, of almost exactly $16,000, is somewhat lower that the actual costs liability of the second respondent to her lawyers. I will return to this shortly. 26 It is notable that the passage from Lai upon which the second respondent relies is dealing with reviews, that is the substantive review, of BDT decisions. Further, the passage also makes specific reference to the frequency of costs being incurred in building disputes 'in engaging engineering or building consultants'. The order to pay in this case included an allowance of $3,520 for expert fees. (Page 9)
27 The costs being sought here are purely of a legal nature. I note that legal costs were the subject of the passage in Lai at [19]. In any event, and whichever paragraph in Lai is sought to be relied upon, the factors to which I have already referred are, in my opinion, sufficient to dispose of the application for costs against the second respondent. 28 I also bring to the parties' attention the caution concerning the need for restraint in rendering legal services in matters before the Tribunal expressed in J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S) at [38]. Such restraint appears particularly appropriate in relation to applications of the nature with which the current matter is concerned: The procedures of the Tribunal are designed to achieve the objectives prescribed by s 9 of the SAT Act. The Tribunal strives to ensure that its procedures are proportionate to the nature of the matters in issue. On occasions, matters before the Tribunal are difficult and complex, sometimes involving lengthy hearings. This is not such a matter. In the unusual event that an order for costs is made by the Tribunal, the Tribunal's obligation to minimise the costs to parties will be reflected in the costs assessed by the Tribunal as recoverable. That approach reflects an expectation that representatives of parties before the Tribunal will approach a proceedings in a way that minimises costs to their clients. If clients choose to approach proceedings before the Tribunal in a way which substantially increases costs for them, it will be a rare case where that increase in costs will be recoverable through a favourable costs order.
Orders 29 The Tribunal shall issue the following order: 1. The second respondent's application for costs is dismissed. |