OWNERS OF STRATA PLAN NO 54817 and ICON GROUP MANAGEMENT PTY LTD

[2012] WASAT 187

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

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

CITATION:   OWNERS OF STRATA PLAN NO 54817 and ICON GROUP MANAGEMENT PTY LTD [2012] WASAT 187

MEMBER:   MR C MARSH (SESSIONAL MEMBER)

MS K LANG (SESSIONAL MEMBER)

HEARD:   DETERMINED ON THE DOCUMENTS

DELIVERED          :   5 SEPTEMBER 2012

FILE NO/S:   CC 1151 of 2011

CC 1152 of 2011

BETWEEN:   OWNERS OF STRATA PLAN NO 54817

First Applicant

RON ARNDT
Second Applicant

AND

ICON GROUP MANAGEMENT PTY LTD
Respondent

Catchwords:

Building Services (Complaint Resolution and Administration) Act 2011 (WA) ­ Costs

Legislation:

Builders' Registration Act 1939 (WA), s 12(A)
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 49
Home Building Contracts Act 1991 (WA)
State Administrative Tribunal Act 2004 (WA), s 9, s 87

Result:

Respondent's application for costs unsuccessful

Category:    B

Representation:

Counsel:

First Applicant             :     Mr L Bilick (Acting as Agent)

Second Applicant         :     Mr L Bilick (Acting as Agent)

Respondent:     Mr D Cooper

Solicitors:

First Applicant             :     Council of Owners

Second Applicant         :     Council of Owners

Respondent:     Cooper Legal

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

Hoskins and Daniel Vinci T/as D'Vinci Contracting [2011] WASAT 188

Lai & Anor and Costa [2006] WASAT 117 (S)

Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S)

Pearce & Anor and Germain [2007] WASAT 291 (S)

REASONS FOR DECISION OF THE TRIBUNAL: 

Summary of Tribunal's decision

1. The applicant owners' complaint in relation to building work was originally made to the Building Disputes Tribunal and then referred to the State Administrative Tribunal under the Building Services (Complaint Resolution and Administration) Act 2011 (WA). The respondent builder was substantially successful at the hearing and was granted leave to apply for costs.

2. The Tribunal considered the written submissions and determined the costs application on the documents.  The builder was justified in engaging a legal practitioner, as the claim was substantial.  The builder made a Calderbank offer to the owners, but received no response.  The owners failed in 98% of their claim at the hearing, and were awarded less than the amount offered by the builder.

3. However, there was no evidence of unreasonable conduct by the owners and they did not unnecessarily delay the proceedings.  The owners' case was not obviously unmeritorious and the application did not undermine the integrity of the Tribunal proceedings.

4. Having taken all these factors into account, and having regard to the legislation and relevant case law, the Tribunal did not exercise its discretion to award costs. The unrepresented owners relied on an expert report that supported their claim and it is therefore not the case that there was a total lack of evidence. The Tribunal found the expert's opinion was not persuasive, but this was not sufficient to justify a costs order.

The proceedings and application for costs

1. In April 2011, the applicants (owners) lodged complaints with the Building Disputes Tribunal claiming faulty or unsatisfactory workmanship under s 12(A) of the now repealed Builders Registration Act 1939 (WA).

2. The complaints were referred to this Tribunal and consolidated pursuant to the provisions of the Building Services (Complaint Resolution and Administration Act 2011 (WA) (BS(CRA) Act).

3. The Tribunal heard the complaints on 9, 10 and 16 May 2012.  The owners sought a building remedy order that the respondent (builder) pay them $207,439.  The Tribunal ordered the builder to pay the owners $4,326 and granted liberty to the builder to apply for costs.  The parties agreed that the Tribunal would determine the application on the documents.

4. The builder filed submissions in support of the application on 7 June 2012.  After obtaining an extension of time to seek legal advice, the owners filed submissions in response on 7 and 13 July 2012.

5. The builder submits that the owners' claim was mostly without supportive evidence, and was prosecuted in the face of contrary evidence from the expert assisting the Tribunal and the owners' own expert.  The owners' claim failed to the extent of 98%, and they did not accept an offer from the builder prior to the hearing, which was greater than the amount awarded by the Tribunal.  The owners led expert evidence that was unreasonable and inappropriate.  The builder's legal costs amount to $47,298 with disbursements of $3,011.25.

6. The owners rejected the builder's submissions and opposed the application.

The applicable principles for the award of costs

1. The starting point when dealing with a costs application is that each party bears its own costs of a proceeding before the Tribunal.

2. Section 87 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) provides:

   (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. This provision must be read with the enabling legislation. Section 49 of the BS(CRA) Act provides as follows:

   (1)Subject to this section, the Building Commissioner or the State Administrative Tribunal may make such orders for costs as they think fit in relation to proceedings arising from a building service complaint or a HBWC complaint.

   (2)The Building Commissioner must not award costs to a party for the services of a representative of that party unless, in the opinion of the Building Commissioner, 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 matter the Building Commissioner considers relevant.

   …

4. There is a range of factors that the Tribunal may take into account in deciding whether or not to exercise its discretion to make a costs order, including the non­exhaustive list from Pearce & Anor and Germain [2007] WASAT 291 (S) (Pearce) at [22] ­ [24]:

   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; and

   f)where a party has to embark in proceedings to vindicate its clear contractual entitlement.

   Lai & Anor and Costa [2006] WASAT 117 (S) held that the costs of conducting the case might be allowed when the costs were such that an injustice would result by not allowing costs.

5. The Tribunal is required, by s 9 of the SAT Act, to act speedily and with as little formality and technicality as is practicable, and to minimise the cost to the parties. Those objectives would not be fostered by an approach that costs should follow the result as a general rule: Hoskins and Daniel Vinci T/as D'Vinci Contracting [2011] WASAT 188 at [17].

6. As stated in Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S) at [36], ' it will be a rare case … which will justify an award of costs, having regard to the above factors'.

Consideration of the costs claim

1. The Tribunal has had regard to the principles identified above in consideration of this application for costs.

2. The owners did not have legal representation but were competently represented at the hearing by Mr Bilick on behalf of the Council of Owners.  The Tribunal does not find that the claim was obviously unmeritorious, despite ultimately ruling very substantially in favour of the builder.  The owners produced a building expert's report in support of the claim and called the expert to testify at the hearing.  There was not a complete absence of evidence for the owners.

3. The Tribunal did not give any weight to the owners' expert evidence, but finds no fault on the part of the owners in this respect.

4. It is relevant to take into account that the owners failed to respond to the builder's reasonable and well­reasoned offer of settlement. However, the owners did not unduly delay the proceedings or act in a way that unnecessarily disadvantaged the builder. None of the subsections of s 49 of the BS(CRA) Act or the Pearce factors listed above are applicable to this case.

5. On balance, the Tribunal is not satisfied that there is sufficient justification to depart from the principle that the parties bear their own costs in this jurisdiction.

Conclusion

1. For the above reasons the Tribunal does not see fit to make an order for costs.

Order

1. The Tribunal will accordingly cause an order to issue as follows:

   1.The application for costs is dismissed.

I certify that this and the preceding [23] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MS K LANG, SESSIONAL MEMBER