MURPHY and RDC CONSTRUCTIONS PTY LTD
[2018] WASAT 131
•4 DECEMBER 2018
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION) ACT 2011 (WA)
CITATION: MURPHY and RDC CONSTRUCTIONS PTY LTD [2018] WASAT 131
MEMBER: MS H LESLIE (MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 4 DECEMBER 2018
FILE NO/S: CC 623 of 2017
BETWEEN: HELEN MURPHY
Applicant
AND
RDC CONSTRUCTIONS PTY LTD
Respondent
Catchwords:
Costs in building disputes - Application for legal costs and expert fees - Application principles - Consideration of offer of settlement - Competing expert evidence - Withdrawn matters - Behaviour of the parties
Legislation:
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 49
State Administrative Tribunal Act 2004 (WA), s 9, s 87, s 87(2), s 87(5)
State Administrative Tribunal Rules 2004 (WA), r 40, r 41, r 42
Result:
Application for costs refused
Category: B
Representation:
Counsel:
| Applicant | : | In Person |
| Respondent | : | Mr A Del Carlo |
Solicitors:
| Applicant | : | N/A |
| Respondent | : | Vogt Graham Lawyers |
Case(s) referred to in decision(s):
Sanders and Gemmill Homes Pty Ltd [2017] WASAT 41 (S)
WA Country Builders Pty Ltd and Hathersage Nominees Pty Ltd [2016] WASAT 70
Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32
REASONS FOR DECISION OF THE TRIBUNAL:
Background and the application for costs
The substantive application before the Tribunal was an application under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (the BSCRA Act). They were claims by the applicant (the owner) being workmanship claims, contractual claims and claims for damages for loss of rental in respect of each of the threeunit properties owned by her.
The respondent is the building company (the builder) which was contracted by the owner to provide building services.
The owner sought a sum totalling in the order of $400,000 from the builder. The builder opposed the orders sought in damages and in the contractual claim and sought a reasonable opportunity to remediate the relatively small number of items he says require attention.
The matter was listed over eight days. The owner represented herself. The builder was represented by counsel. At the conclusion of the hearing, the substantive decision was reserved.
On 29 August 2018, immediately prior to the elevation to the Magistracy of Member David MacLean, the Tribunal delivered its decision in relation to the matter.
The Tribunal made orders that the builder remedy a small number of defective items requiring attention in each of the three units and ordered that the builder pay compensation for lost rental in an amount totalling $22,785.
Thereafter, a costs application was made by the builder. Orders were made that submissions be filed and exchanged by both sides and that the costs issue then be determined 'on the documents'.
The Tribunal (in the circumstances differently constituted) has considered those submissions. In all the circumstances, the Tribunal is of the view that no order for costs should be made. The following constitutes the reasons for that decision.
The legal framework
Section 49(1) of the BSCRA Act provides that:
Subject to this section, … the State Administrative Tribunal 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:
[I]t 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, 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) (the SAT Act) 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 Clive 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.
In WA Country Builders Pty Ltd and Hathersage Nominees Pty Ltd [2016] WASAT 70 (Hathersage), the Tribunal set out the relevant principles which apply in relation to the claims for costs, bearing in mind the decision of the Court of Appeal of the Supreme Court of Western Australia in Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32
Relevantly, to summarise:
(a)There is no presumption that a successful party is entitled to costs.
(b)The onus is on the party seeking an order in its favour to establish that a favourable order should be made.
(c)The nature of the dispute is a relevant consideration in any application for costs.
(d)Every party to proceedings before the Tribunal is taken to be cognisant of the objectives of the Tribunal as expressly provided for in s 9 of the SAT Act.
(e)It will be relevant to the Tribunal to consider whether and to what extent the party who bears the onus on costs can establish that the other party's conduct in connection with the proceedings has impaired the attainment of the Tribunal's statutory objectives to have the proceedings determined fairly and in accordance with the substantial merits of the matter with as little formality and technicality as possible and in a way which minimises the costs to the parties.
(f)The mere fact that a party fails on some contentions advanced does not of itself signify that that party has acted inconsistently with the objectives in s 9 of the SAT Act.
(g)Unmeritorious claims or claims made or pursued involving misconduct or which are vexatious or grossly exaggerated or presented in a way that is unduly burdensome may justify an exercise of the discretion conferred by s 87(2) of the SAT Act.
(h)The weight to be given to the mandatory consideration of a complaint offer is a matter for the Tribunal in each individual case.
(i)Even in a jurisdiction where the general rule is that costs follow the event, it does not follow that the grant of leave to withdraw attracts an order that the withdrawing party pays the costs of the other party. The withdrawing party does not carry any onus to establish that it ought not pay the other party's costs.
Settlement offers
Section 87(5) of the SAT Act provides that the rules of the Tribunal may deal with the effect of an offer to settle which complies with r 40 and r 41 of the State Administrative Tribunal Rules 2004 (WA) (SAT Rules) and the responses to any such offer. Rule 42 of the 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 ultimate Tribunal order.
The hearing
The hearing took place over eight days, having been initially listed for only three days. The first day (30 August 2018) was adjourned after only an hour at the request of the owner in order that she have an opportunity to rearrange the presentation of her case in a manner better suited to the books of documents as prepared by the Tribunal. The following two days (31 August and 1 September 2018) were largely taken up with the expert evidence of the owner's expert Mr Angelo Vella and the builder's expert Mr Rick Martelli who were the first witnesses and gave evidence concurrently. The matter was then adjourned part heard and relisted for a further three days on 79 February 2018. The experts gave evidence for a further half day on 7 February 2018; thereafter, the owner gave her evidenceinchief for approximately two hours and was thereafter crossexamined from mid-afternoon on 7 February until midmorning on 9 February 2018. Thereafter two witnesses gave relatively brief evidence on behalf of the owner. After lunch on Friday, 9 February 2018, the builder's case commenced. Late on the afternoon of 9 February 2018, the hearing was again adjourned part heard. It continued for a further two days on 12 and 13 April 2018 for the completion of the evidence of eight witnesses for the builder, and was ultimately adjourned for the filing of written closing submissions by both parties with the decision thereafter reserved.
The application for costs
The builder claims that he has incurred legal expenses together with expenses in engaging a building expert to investigate the complaint, prepare reports, attend site and attend at the final hearing. He specifies those costs at $70,688.50 inclusive of dispersed expert fees of $12,212.50.
The builder's plea in substance is that the Tribunal found substantially in his favour in not accepting the majority of the owner's claim, and that had the owner acted reasonably and accepted the offer made in the proceedings, or alternatively, had she conducted herself differently in the running of her case, the builder would have been put to considerably less cost. He seeks to highlight a number of aspects of the owner's conduct which, he submits, when seen together, justify a conclusion that she has behaved in a way that warrants a cost order being made against her.
The owner opposes the builder's claim for costs. She claims in substance that there was nothing untoward about the progression of the case and that she did not conduct herself in such a manner as to require the builder to incur unnecessary costs and expenses. She submits that, having not had a reasonable opportunity to mediate the matter and, having expert advice and quotations upon which she relied, it was reasonable for her to go to hearing.
Consideration
Ultimately, the Tribunal is not persuaded that the justice of the case warrants the making of any costs order.
Albeit that the final order was for considerably less than she was seeking, and was, in relation to remedy matters, a works order rather than a payment order, the owner was at least in part successful in her claim.
The parties were not able to agree to attend mediation. The tenor of the correspondence between the parties was in the view of the Tribunal at times unhelpful and not conciliatory on both sides. It is not possible in the circumstances for the Tribunal to determine if fault lies at the feet of one or other party for non-occurrence of a mediation in this matter. It is true that no mediation was ordered by the Tribunal in the lead up to the hearing. The impression of the Tribunal is that there was reluctance on both sides to make concessions.
In the view of the Tribunal, the manner in which both sides conducted their cases in the hearing contributed to the excessive length of the hearing. In relation to the adjournment on the first day, the Tribunal accepts that the work done by the owner in reorganising the presentation of her case to reference the hearing books as prepared by the Tribunal, in all likelihood did shorten the length of the hearing and was therefore helpful to the Tribunal.
The Tribunal notes the findings of the original Tribunal regarding the owner's credit and her apparent misconceptions of some aspects of her case and the lack of balance in her approach to some matters. It may be that in relation to some aspects of her claim, she was misguided but the Tribunal is not satisfied that she acted maliciously or other than in a bona fide manner.
Allowance needs to be made for the fact that the owner was acting in person. She is not a trained lawyer nor is she a building expert. It is not uncommon that matters take longer in the hands of 'in person' litigants. Regard needs to be had to the fact that the processes of the Tribunal are designed to encourage members of the public to endeavour to resolve their disputes in person.
As is set out above, the mere fact that a party does not succeed on some contentions advanced does not of itself signify that that party has acted inconsistently with the objectives of the SAT Act.
Unmeritorious claims or claims made or pursued involving misconduct or which are vexatious or grossly exaggerated or presented in a way that is unduly burdensome are what is required to justify an exercise of the discretion conferred by s 87(2) of the SAT Act. Merely to have failed in one's case, even if on the basis that one's evidence was not accepted, is insufficient to justify a costs order being made. Notwithstanding the various matters pointed to by the builder's submission, the Tribunal is not satisfied that the owner behaved vexatiously or that she grossly exaggerated her claim or presented her case in a way that was unduly burdensome to the builder. Although misguided in some respects, the Tribunal accepts that the owner had a genuine, if erroneous in some respects, belief in the merits of all aspects of her claim.
The making of and refusal of an offer of settlement is a factor for the Tribunal to consider when exercising its discretion. But it is a factor only. The starting position remains that the Tribunal is generally a costs neutral forum. The making of offers of settlement does not change that. The costs applicant must persuade the Tribunal that there is a reason, over and above the fact of the offer, to depart from that general 'costs neutral' approach. Having expert advice and quotations supporting her case, the Tribunal is of the view that it cannot be said that it was unreasonable of the owner to refuse an offer made by the builder totalling less than one fifth of the value of her claim.
As pointed out in the relevant principle in Hathersage above, the fact that the owner withdrew a number of points of her claim is not a reason for costs to be awarded against her.
The Tribunal does not accept that the owner's case was so weak or so incredible or implausible or so obviously unmeritorious as to warrant a cost order being made against her. In the view of the Tribunal, neither party has behaved unreasonably or inappropriately in going to hearing. Each side had a legitimate argument based on expert advice, and potentially with some merit. It is reasonable to assume that the owner hoped to be able to persuade the Tribunal to prefer the evidence of her expert over the builder's expert. She clearly had obtained independent quotations in support of the quantum of her claim and was entitled to endeavour to persuade the Tribunal to accept that evidence rather than the builder's evidence. That was certainly the approach she 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 the owner represented herself. 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.
The builder sought to present an argument that it had always been prepared to remedy and make good. The owner's position was that she had tried without success to get the builder to do what was required. The Tribunal takes the view that, in a climate of dispute, there was intransigence on both sides and that it is not possible to place the blame squarely on the shoulders of the owner for the fact that the issues could not be resolved prior to hearing. The Tribunal does not accept the position that appears to be being put by the builder that the works order ultimately made encompassed remediation that it had at all times been genuinely and unconditionally ready, willing and able to perform.
The Tribunal is not satisfied that the owner acted unreasonably in conducting proceedings or that she conducted them in an unreasonable way.
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, in the view of the Tribunal, 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.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
4 DECEMBER 2018
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