PETSOS and JUDD - [2025] WASAT 26 (S)

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION) ACT 2011 (WA)
CITATION:   PETSOS and JUDD [2025] WASAT 26 (S)
MEMBER:   MR M BENTER, MEMBER
MR R WOODFORDE, SESSIONAL MEMBER

HEARD:   DETERMINED ON THE DOCUMENTS
DELIVERED          :   4 JULY 2025
FILE NO/S:   CC 1345 of 2021
BETWEEN:   KATHERINE PETSOS
First Applicant
PAUL PETSOS
Second Applicant
AND
HAROLD JUDD
Respondent

FILE NO/S: CC 14 of 2023
BETWEEN: HAROLD JUDD
Applicant
AND
KATHERINE PETSOS
First Respondent
PAUL PETSOS
Second Respondent

FILE NO/S: CC 15 of 2023
BETWEEN: KATHERINE PETSOS
First Applicant
PAUL PETSOS
Second Applicant
AND
HAROLD JUDD
Respondent

FILE NO/S: CC 372 of 2023
BETWEEN: KATHERINE PETSOS
First Applicant
PAUL PETSOS
Second Applicant
AND
HAROLD JUDD
Respondent

Catchwords:

Building dispute - Costs - Conduct of parties - Settlement offer - Turns on its own facts

Legislation:

Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 39, s 49(1)
Legal Profession (State Administrative Tribunal) Determination 2024 (WA)
State Administrative Tribunal Act 2004 (WA), s 9(b), s 60(2), s 87(1), s 87(2), s 87(5)
State Administrative Tribunal Rules 2004 (WA), r 40, r 41, r 42

Result:

Application for costs by applicants in CC 1345 of 2021, CC 15 of 2023 and CC 372 of 2023 and respondents in CC 14 of 2023 allowed in part

Category: B

Representation:

CC 1345 of 2021

Counsel:

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

Solicitors:

First Applicant	:	Vogt Legal
Second Applicant	:	Vogt Legal
Respondent	:	GV Lawyers

CC 14 of 2023

Counsel:

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

Solicitors:

Applicant	:	GV Lawyers
First Respondent	:	Vogt Legal
Second Respondent	:	Vogt Legal

CC 15 of 2023

Counsel:

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

Solicitors:

First Applicant	:	Vogt Legal
Second Applicant	:	Vogt Legal
Respondent	:	GV Lawyers

CC 372 of 2023

Counsel:

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

Solicitors:

First Applicant	:	Vogt Legal
Second Applicant	:	Vogt Legal
Respondent	:	GV Lawyers

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

Cairnes and Ventura Home Group Pty Ltd [2024] WASAT 111 (S)
Calderbank v Calderbank (1975) 3 All ER 333
Deshmukh and Distinctive Building Services Pty Ltd [2024] WASAT 62
Giabeni Pty Limited and the Owners of 30 Coode Street Mount Lawley Strata Plan 11321 [2024] WASAT 105 (S)
Gileno and Riviera Homes (WA) Pty Ltd [2018] WASAT 48 (S)
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2] [2005] VSCA 298
Hippydayze Pty Ltd and Mener Group Pty Ltd [2019] WASAT 92 (S)
McLerie and Koleszko [2014] WASAT 160 (S)
Petsos and Judd [2025] WASAT 26
Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32

REASONS FOR DECISION OF THE TRIBUNAL:

Background

On 20 March 2025, the Tribunal published its decision in Petsos and Judd [2025] WASAT 26 (the substantive decision) which concerned four separate but related proceedings, referred to collectively throughout these reasons as 'the related proceedings', between the same parties, namely:
(a)Mrs Katherine Petsos and Mr Paul Petsos, the owners of a property in Marangaroo, Western Australia; and
(b)Mr Harold Wayne Judd, the builder contracted by Mr and Mrs Petsos to renovate an existing house at their Marangaroo property.
As with the substantive decision, in these reasons Mr and Mrs Petsos, being the applicants in three of the four related proceedings, are referred to either by their surnames or as 'the home owners', while Mr Judd, being the applicant in one of the related proceedings, is referred to either by his surname or as 'the builder'.
The nature of each of the related proceedings is detailed in the substantive decision, however for context in these reasons, the related proceedings entailed, in summary, as follows:
(a)the first of the proceedings, CC 1345 of 2021, concerned a number of HBWC complaints by the home owners in relation to the builder's administration of the Building Contract (as defined in the substantive decision) and the circumstances in which the builder ceased to perform the Works (as defined in the substantive decision) and purported to terminate the Building Contract;
(b)the second proceeding, CC 14 of 2023, comprised a HBWC complaint by the builder in relation to the alleged repudiation of the Building Contract by the home owners;
(c)the third proceeding, CC 15 of 2023, being a HBWC complaint by the home owners in relation to the alleged repudiation of the Building Contract by the builder, the claimed loss of a government building grant and issues as to the builder's treatment of provisional sums under the Building Contract; and
(d)the fourth proceeding, CC 372 of 2023, being a complaint by the home owners, comprising 53 numbered complaint items of which all or most, for the reasons set out in the substantive decision, are properly understood to comprise building service complaints about specified parts of the Works being missing, incomplete or otherwise defective.
For the reasons set out in the substantive decision, the home owners were successful in part, with the orders of the Tribunal providing that:
(a)in respect of the proceedings in CC 1345 of 2021 and CC 15 of 2023, the builder must pay compensation to the home owners in the total amount of $58,378.81;
(b)the proceedings in CC 14 of 2023 be dismissed;
(c)in respect of the proceedings in CC 372 of 2023, the Tribunal declined to make any building remedy order; and
(d)each of the related proceedings was otherwise dismissed.
Arising from the substantive decision, the home owners indicated their intention to apply for a costs order, while the builder sought the opportunity to consider his position as to whether to apply for any costs. At a directions hearing on 2 April 2025, the Tribunal made orders:
(a)providing for the lodgement of any submissions by the parties to either seek or oppose costs orders; and
(b)that, unless otherwise ordered by the Tribunal, any application or applications for costs shall be determined on the papers pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA) (the SAT Act).
Pursuant to the Tribunal's orders, the home owners lodged costs submissions dated 16 April 2025 (the home owners' costs submissions) which seek an order that the builder pay their costs and disbursements in the total sum of $64,627.40. The submissions claim these costs in respect of three of the four related proceedings. Specifically, the costs are not claimed in respect of CC 372 of 2023, in which the Tribunal in the substantive decision declined to make any building remedy order, and the home owners' costs submissions were not lodged in that matter.
On 30 April 2025, the builder lodged his costs submissions (the builder's costs submissions), in which he seeks that the Tribunal make an order that there be no order as to costs, in three of the four related proceedings. The proceeding not referred to in the builder's costs submissions is CC 14 of 2023, being the only one of the related proceedings in which the builder was the applicant and which was dismissed in the substantive decision. The builder's costs submissions have not been lodged in CC 14 of 2023.
While the parties have each lodged their respective costs submissions in a different combination of some but not all of the related proceedings, the net effect of the submissions is that:
(a)the only party seeking any costs to be ordered to be paid to them are the home owners; and
(b)the builder seeks no costs be paid to him and otherwise submits that, contrary to the home owners' position, no costs should be awarded to them and each party should bear their own costs.

The home owners' costs application

By way of their submissions, the home owners seek an order from the Tribunal requiring the builder to pay to them a total sum of $64,627.40, comprising legal fees in the amount of $42,383.30 and the following disbursements:
(a)experts' fees of $16,772.85;
(b)the costs of obtaining Transcript of the final hearing on 23, 24 and 25 October 2024 in the amount of $5,113.25; and
(c)the complaint lodgement fees, totalling $358.00, in respect of the original complaints to the Building Commissioner that were ultimately referred to the Tribunal as proceedings CC 1345 of 2021 and CC 372 of 2023.
The primary basis of the home owners' costs application is that, on 25 June 2024, the home owners made an offer of settlement (25 June Offer), a copy of which is attached to the home owners' costs submissions.
By way of the 25 June Offer, the home owners offered to settle the related proceedings on the basis that the builder pay to them the sum of $50,000 in full satisfaction of the home owners' claims in the related proceedings.
As set out above, the net effect of the substantive decision was that the builder was ordered by the Tribunal to pay the total sum of $58,378.81 to the home owners.
The home owners thus seek their costs on the basis that they ultimately achieved a more favourable outcome in the substantive decision than the 25 June Offer.
The further basis upon which the home owners rely in their application for costs is, in effect, that the conduct of the builder in respect of the related proceedings was unreasonable to such an extent that the Tribunal ought to depart from the usual position that the parties bear their own costs.

The builder's position as to costs

In the builder's costs submissions, he contends that:
(a)in Tribunal proceedings, including those under the BSCRA Act, the starting position is that each party ought to bear their own costs;
(b)the home owners' conduct of the related proceedings significantly and unnecessarily delayed and increased the complexity and expenses of the proceedings; and
(c)while the home owners were successful in achieving an award for damages, the builder was successful in reducing the total amount claimed by the home owners by 59.7%.
The builder's position is then set out as follows in the last paragraph of his costs submissions:
The Respondent respectfully submits that this is a matter where the Tribunal should declare that both parties have been successful, the Applicants with a modest award and the Respondent by reducing the award for damages resulting in each party paying their own legal costs.
The Tribunal notes that it is difficult to reconcile the submission that both parties have been successful with the earlier statement in the builder's costs submissions that '[t]he Applicants were entirely successful'.[1]
[1] Builder's costs submissions at paragraph 18.
The builder's costs submissions otherwise do not address in any way the 25 June Offer that was so squarely relied upon in the earlier filed home owners' costs submissions.

Applicable principles in respect of costs

The SAT Act provides that the general starting position in Tribunal proceedings is that each party bears their own costs[2], but that the Tribunal has discretion to make an order for the payment of costs where it considers appropriate.[3]
[2] SAT Act, s 87(1).
[3] SAT Act, s 87(2).
The builder's costs submissions seek to address the engagement between the relevant provisions of the SAT Act and s 49(1) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act), which states:
(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.
This engagement between the relevant provisions in relation to the costs of building disputes, and the principles applicable to determining costs, have been considered previously by the Tribunal[4] and were well summarised by Senior Member Aitken of the Tribunal in Deshmukh and Distinctive Building Services Pty Ltd [2024] WASAT 62 (Deshmukh) as follows:
[4] See in particular Hippydayze Pty Ltd and Mener Group Pty Ltd [2019] WASAT 92 (S) (Hippydayze (S)) at [4] to [12] and Gileno and Riviera Homes (WA) Pty Ltd [2018] WASAT 48 (S) (Gileno).
39… Thus, in considering a claim for costs made pursuant to s 49(1) of the BSCRA Act, the Tribunal is not required to start from the position that each party is to bear its own costs. However, as is well understood, costs do not 'follow the event' in Tribunal proceedings and the broad discretion conferred on the Tribunal is to be properly exercised by taking into account relevant considerations.
40In Hippydayze (S) at [11] the Tribunal referred to the guidance given to the Tribunal in relation to the exercise of its discretion to award costs by the Court of Appeal in Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32 (Questdale) in which the following principles were found to apply:
(1)The discretionary power is to be exercised judicially; that is not arbitrarily, capriciously, or so as to frustrate the legislative intent;
(2)The power to award costs is to be exercised if it is fair and reasonable in all the circumstances of the case to do so;
(3)The onus is on the party seeking an order in its favour to establish that a favourable order ought to be made;
(4)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. It is therefore necessary for the applicant to establish that the respondent's conduct has impaired the attainment of the Tribunal's objectives to have the proceedings determined fairly and in accordance with the substantial merits, with as little formality and technicality as possible and in a way which minimises the costs to the parties; and
(5)The mere fact that a party ultimately fails on a contention advanced during the course of the hearing does not, in itself, signify that the party has acted inconsistently with the objectives set out in s 9 of the SAT Act.
41In Hippydayze (S) at [12] the Tribunal noted that if it exercises its discretion to award costs, it is to approach the task of fixing costs in a broad and relatively robust fashion, referring to the decisions of the Tribunal in Perth Central Holdings Pty Ltd and Doric Constructions Pty Ltd [2008] WASAT 302 at [67] and Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S) at [49]. However, although fixing costs involves a relatively broad-brush approach, the Tribunal must nevertheless be satisfied that the costs claimed are reasonable and not excessive in nature.
42I agree with the view of the Tribunal expressed in both Gileno and Hippydayze (S) that in considering a claim for costs made pursuant to s 49(1) of the BSCRA Act, the Tribunal is not required to start from the position that each party is to bear its own costs, although that does not mean that costs 'follow the event.
43The broad discretion conferred on the Tribunal under s 49(1) of the BSCRA Act is to be properly exercised by taking into account relevant considerations. The power to award costs is to be exercised if it is fair and reasonable in all the circumstances of the case to do so and the onus is on the party seeking an order for costs in its favour to establish that a favourable order ought to be made.
Adopting the principles above in respect of the related proceedings, being building dispute proceedings pursuant to the BSCRA Act, the Tribunal is not required to start from the position that each party is to bear its own costs and is to exercise its discretion as to costs taking into account all relevant considerations.
As noted above, the home owners' costs application is founded upon both the 25 June Offer and the builder's conduct in the proceedings.
In relation to the impact of a settlement offer on the costs of a proceeding in the Tribunal, s 87(5) of the SAT Act states:
(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.
The State Administrative Tribunal Rules 2004 (WA) (SAT Rules) in turn set out the process by which a party in Tribunal proceedings may make a settlement offer to another party and, where such an offer has been made, r 42 provides as follows:
42.Order for costs if settlement offer is rejected
(1)This rule applies if —
(a)a party to a proceeding (other than a proceeding in the Tribunal's review jurisdiction) gives another party to the proceeding an offer in writing to settle the proceeding; and
(b)the other party does not accept the offer within the time the offer is open; and
(c)the offer complies with rules 40 and 41; and
(d)in the opinion of the Tribunal, the orders made by the Tribunal in the proceeding are not more favourable to the other party than the offer.
(2)If this rule applies, the Tribunal is to, in determining the costs that may be awarded, take into account that the party did not accept an offer more favourable than the Tribunal's order.
(3)In determining whether its orders are or are not more favourable to a party than an offer, the Tribunal —
(a)must take into account any costs it would have ordered on the date the offer was made; and
(b)must disregard any costs it ordered in respect of any period after the date the offer was received.
The reasoning behind the SAT Rules in respect of settlement offers, and the manner in which they are applied, was addressed by the Tribunal in Giabeni Pty Limited and the Owners of 30 Coode Street Mount Lawley Strata Plan 11321 [2024] WASAT 105 (S) at [25] to [27] as follows:
25The SAT Rules encourage parties to settle their differences without the need for a final hearing before the Tribunal. The is reflected in Clifford and Shire of Busselton [2007] WASAT 89 (S) at [48] (Clifford) as follows:
48The SAT Act, therefore, through s 87(5) and the rules referred to, reveals parliamentary support for the idea that, where possible, parties to proceedings should endeavour to consider settlement. This intent is evident elsewhere in the SAT Act. For example, s 9(b) makes it one of the main objectives of the Tribunal to act as speedily and with as little formality and technicality as is practicable, and minimise the cost to parties. Section 52 encourages the use of compulsory conference as an alternative to a final adversarial hearing. Section 54 encourages mediation as an alternative to a final adversarial hearing. Importantly, s 56 expressly deals with settlement and enables the Tribunal to make an order giving effect to a written settlement of the parties. In this statutory context then, the rules providing for the making and acceptance of the settlement offers and for the making of an order for costs in the event that a settlement offer is rejected, or at least settling out factors to be considered in relation to an application for an order for costs in some circumstances, are important.
26However, there is no particular format that an offer to settle must be put. This is reflected in Gill & Ors and Wildnight Pty Ltd [2008] WASAT 135 where the Tribunal noted at [40]:
40There is no format in the SAT Act with which the settlement offer must comply. There is also no need for the settlement offer to refer to the SAT Rules. The offer must, however, be drafted in a way that, if accepted, an agreement comes into being. It must therefore be specific enough to settle issues in dispute if it is accepted.
27In its original jurisdiction, which is the case here, the Tribunal is required to take into account if a party did not accept an offer of settlement made in compliance with r 40 and r 41 of the SAT Rules which is more favourable than the Tribunal's orders: s 87(5) of the SAT Act. However, it does not follow that a costs order will be made. This is because the SAT Rules do not provide that a party who makes an offer more favourable to a party than the result achieved in the Tribunal, is by reason of that, entitled to an order for costs. Rather, as stated by Martin CJ in Questdale at [10], r 42 of the SAT Rules merely provides, perhaps superfluously, that the Tribunal must take such matters into account. This is the same as stated by the Tribunal in the earlier decision of Clifford at [49] to [50].

In considering whether a party's refusal to accept an offer made in accordance with the Calderbank principles[5] is unreasonable, the Victorian Court of Appeal in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2] [2005] VSCA 298 (Hazeldene's Chicken Farm) stated at [25] that regard should ordinarily be had to at least the following matters:
…
(a)the stage of the proceeding at which the offer was received;
(b)the time allowed to the offeree to consider the offer;
(c)the extent of the compromise offered;
(d)the offeree's prospects of success, assessed as at the date of the offer;
(e)the clarity with which the terms of the offer were expressed;
(f)whether the offer foreshadowed an application for an indemnity costs in the event of the offeree's rejecting it.
[5] Calderbank v Calderbank (1975) 3 All ER 333.
An offer made in accordance with the SAT Rules may or may not, depending upon the circumstances, also constitute an offer made in accordance with the Calderbank principles. However, whether a settlement offer is made pursuant to the SAT Rules, the Calderbank principles or both, the Tribunal has regularly referred to the factors outlined in Hazeldene's Chicken Farm as being matters relevant to the Tribunal's consideration of an application for costs based upon a settlement offer that was not accepted.[6]
[6] See for example Cairnes and Ventura Home Group Pty Ltd [2024] WASAT 111 (S) at [15] and McLerie and Koleszko [2014] WASAT 160 (S) at [4].
In relation to the otherwise broad discretion in respect of costs, the Tribunal in McLerie and Koleszko [2014] WASAT 160 (S) stated at [3]:
3There 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 Building Services (Complaint Resolution and Administration) Act 2011 (WA) (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 the manner which is consistent with and reinforces the objectives and procedures of the Tribunal and 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) and Hoskins and Daniel Vinci t/as D'Vinci Contracting [2011] WASAT 188.

Impact of the 25 June Offer

The 25 June Offer was set out in the letter from the home owners' legal representatives to the builder's legal representatives dated 25 June 2024.

The Tribunal notes that the vast bulk of the 25 June 2024 letter is directed at responding to a previous settlement offer that the builder had made to the home owners. However, in so responding, the letter sets out significant detail as to why, in effect, the home owners considered the builder's position in the related proceedings to be relatively weak while viewing their own prospects in the related proceedings as relatively strong.
The terms of the 25 June Offer are then set out at paragraphs 35 to 37 of the letter, with the key aspects being stated, in effect, as follows:
(a)the related proceedings would be settled by way of a payment by the builder to the home owners in the sum of $50,000 in full satisfaction of the home owners' claims in the related proceedings, payable within 21 days of acceptance of the offer;[7]
(b)the offer would remain open for acceptance for 14 days following the date of the offer;
(c)the offer was made in accordance with s 87 of the SAT Act and rules 40, 41 and 42 of the SAT Rules;
(d)the offer will be produced to the Tribunal in support of an application for costs by the home owners in the event that the builder fails to achieve an outcome which is the same or better than the terms of the offer;
(e)if accepted, the offer will be immediately enforceable and binding on the parties, with the terms of the offer to be re-stated in a formal deed of settlement, making provision for confidentiality, non‑disparagement and releases in respect of all claims the subject of the related proceedings; and
(f)within seven days of execution of the deed, the parties will execute a memorandum of consent orders for the related proceedings to be dismissed with no order as to costs.
[7] Noting that the heading of the letter includes the proceeding numbers for all four of the related proceedings.
The Tribunal is satisfied and finds that the 25 June Offer complies with rules 40 and 41 of the SAT Rules, noting in particular that:
(a)it was set out in a letter stated to be without prejudice save as to costs;[8]
(b)it specifies an amount of money to be paid, together with when and how the money was required to be paid in the event the offer was accepted;[9] and
(c)it was open for acceptance for the minimum required period of 14 days.[10]
[8] Rule 40(1)(b).
[9] Paragraph 35(b) of the 25 June Offer and r 40(4).
[10] Paragraph 37(a) of the 25 June Offer and r 41(2).
The Tribunal is also satisfied and finds that the orders made by the Tribunal in the substantive decision were not more favourable to the builder than the 25 June Offer. This is clearly the case in circumstances where the 25 June Offer was for payment of a sum of $50,000, with no other amount payable including in respect of costs, whereas compensation in the amount of $58,378.81 was awarded to the home owners in the substantive decision.
Consequently, by reason of r 42 of the SAT Rules, the Tribunal is obligated to, in determining the costs that may be awarded, take into account that the builder did not accept the 25 June Offer.
With regard to the factors outlined in Hazeldene's Chicken Farm, the Tribunal is satisfied and finds that the refusal by the builder to accept the 25 June Offer was unreasonable in all the circumstances and for the reasons that follow.
The 25 June Offer, while made at a relatively late stage of the proceedings, given the first of the related proceedings commenced in the Tribunal on 23 August 2021, was nonetheless made:
(a)within a week of the orders made by the Tribunal on 20 June 2024, by which the related proceedings were listed for a final hearing commencing on 23 October 2024;

(b)almost four months before the first day of the final hearing; and
(c)well after the parties had lodged their respective Statements of Issues, Facts and Contentions and bundles of documents in the proceedings.

Had the 25 June Offer been accepted, all parties would have saved most or all of the significant costs associated with the work required to be done after that time to prepare for and attend the final hearing, including preparing the combined hearing book, witness statements and any Statement of Agreed Facts and Agreed Chronology pursuant to the orders made on 20 June 2024.
Further, by the time the 25 June Offer was made, the parties were all well informed as to the other's position and well placed to consider their prospects in the proceedings.
The Tribunal also finds that the period of time that the 25 June Offer was open for acceptance was reasonable, particularly as both parties had, by the time of the offer, been legally represented for a significant period of time and the builder was well placed to obtain any legal advice in respect of the offer during the period it remained open.
Noting the extensive consideration of the parties' respective positions set out in the letter of 25 June 2024, particularly in responding to a prior offer that had been made by the builder, the Tribunal finds that the 25 June Offer was clear in its terms and provided sufficient detail as to the parties' respective positions.
The Tribunal also finds that the 25 June Offer, in the sum of $50,000, represented a significant compromise from the full amount of the home owners' claim which, by at least the time of the filing of the home owners' Statement of Issues, Facts and Contentions on 1 December 2023, had been quantified as $90,681.78, plus expert costs and other minor disbursements. Further, as noted above, the amount of the 25 June Offer is $8,378.81 lower that the compensation ultimately awarded by the Tribunal in the substantive decision.
The Tribunal also finds that the terms of the offer were clearly expressed and provided that the offer would be produced to the Tribunal in support of an application for costs in the event it was rejected and the builder failed to achieve an outcome which is the same or better than the terms offered.
On the basis of the matters set out above, the Tribunal finds that the home owners should be awarded costs, on the basis calculated below, by reason of the builder's unreasonable refusal to accept the 25 June Offer.

Conduct of the parties

In their respective submissions on costs:
(a)The home owners rely upon the conduct of the builder to support their application for costs; and
(b)The builder relies upon the conduct of the home owners to support his position that there ought to be no order as to costs.
Starting with the conduct of the builder, the claim in his costs submissions at paragraph 28 that '[t]he conduct by the [builder] has been exemplary' is rejected by the Tribunal. The matters set out in support of this contention are not, in the view of the Tribunal, consistent in any way with the findings set out in the substantive decision.
In his costs submissions, the builder also states at paragraph 29:
The Applicants sought an award from the Tribunal in the sum of $144,765.00 and were awarded $58,378.81, representing 40.30% of their claim. Whilst this can be seen as a "win" for the Applicants, it should also be considered against the reality that the Applicants have taken five (5) years to prosecute the claim with the expense of solicitors. Therefore, the award in this light can hardly be considered a "win" and is hard to justify. The reality is that the Respondent has been successful in reducing the claim by 59.70%.
Save for the amount of compensation ordered in the substantive decision, the figures in this submission are otherwise plainly incorrect. The amount of $144,765.00 represented the total cost, arising from the evidence of the expert witnesses called by the home owners, for the Works to be completed. However, the home owners accepted at all times that, from this amount, it was necessary to deduct the balance that otherwise remained to be paid under the Building Contract, such that the home owners were recovering only the additional costs that would now be incurred to complete the Works. As set out above, the home owners' Statement of Issues, Facts and Contentions filed on 1 December 2023 quantified their claim as $90,681.78, plus expert costs and other minor disbursements. While evidence was given by the home owners at the final hearing of some additional amounts claimed, the total quantum claimed was nothing like the amount referred to in the builder's costs submissions. Likewise, the amount of compensation ordered in favour of the home owners in the substantive decision, while being less than the full amount claimed by them, represented a significantly higher percentage recovery than that suggested in the builder's costs submissions. The builder's costs submissions in this regard can be given no credence.
While the home owners were not awarded all amounts claimed by them, the outcome of the substantive decision was a significant win for the home owners. Whereas it was a loss for the builder in terms of liability and a significant loss in terms of quantum.
Contrary to the submissions of the builder, the Tribunal finds that his conduct and approach to the proceedings resulted in the home owners being put to proof at the final hearing in respect of all significant issues. The builder throughout the proceedings, including the final hearing, adamantly maintained his ultimately unsuccessful position that the home owners had repudiated the contract and, as a consequence, were in the builder's submission not entitled to any compensation. He failed to lodge any independent expert evidence in respect of the alleged defects with the building works or the costs to complete the works, such that the home owners were required to produce expert reports and call each of the experts as witnesses at the final hearing, with all of the associated costs.
The findings by the Tribunal in the substantive decision, as summarised in the home owners' costs submissions at paragraph 14, entailed significant adverse findings in respect of the builder's conduct in purporting to terminate the building contract. However, this required significant work to be undertaken on the part of the home owners in pursuing their claims and, in light of the complexity of the issues involved, unsurprisingly caused them to incur significant legal costs and expert fees.
As to the conduct of the home owners in respect of the proceedings, the builder's costs submissions primarily rely upon various events, referred to at paragraph 26 of the submissions, which the builder contends significantly and unnecessarily increased the complexity and expense of the proceedings. However, the events referred to in this part of the builder's costs submissions are in the period from about June 2022 to December 2023.
It is apparent from the Tribunal's records of the related proceedings that they were not, on the face of it, conducted by the parties throughout in a manner consistent with the objective of the Tribunal set out in s 9(b) 'to act as speedily and with as little formality and technicality as is practicable, and minimise the costs to parties'. However, in circumstances where the home owners seek only their legal costs from the date of the 25 June Offer, the Tribunal considers it unnecessary to further consider the history of the proceedings prior to that date.
While the Tribunal is satisfied that the home owners ought to recover their costs, as quantified below, as a consequence of the builder's unreasonable refusal to accept the 25 June Offer, it also considers that the builder's conduct of the proceedings further supports the award of costs to the home owners.

Quantum of costs to be awarded

The home owners seek a total sum of $64,627.40, comprising:
(a)legal fees in the amount of $42,383.30;
(b)experts fees of $16,772.85;
(c)the costs of obtaining Transcript of the final hearing on 23, 24 and 25 October 2024 in the amount of $5,113.25; and
(d)the complaint lodgement fees, totalling $358.00, in respect of the original complaints to the Building Commissioner that were ultimately referred to the Tribunal as proceedings CC 1345 of 2021 and CC 372 of 2023.
At paragraph 53 of the home owners' costs submissions, it is stated that, 'in this case, it is fair and reasonable in all the circumstances for the Tribunal to order that Mr Judd pay Mr and Mrs Petsos' costs and disbursements of these proceedings from 10 July 2024'.
However, it is ultimately made clear in paragraphs 54 to 56, and the supporting expert witness invoices attached to the home owners' costs submissions, that:
(a)in respect of legal fees, the claimed costs include only legal fees from 10 July 2024; and

(b)in respect of expert fees, this includes the costs of the experts undertaking necessary inspections and preparing their reports, which took place prior to the 25 June Offer, and attending to give evidence at the final hearing in October 2024.

Starting with disbursements, the Tribunal considers that it was appropriate and necessary for the home owners to obtain expert evidence in the manner in which they did, and the Tribunal was assisted at the final hearing by the evidence given by the experts. The Tribunal considers that the home owners are entitled to recover from the builder a significant proportion of their expert fees.
However, the Tribunal notes that the expert fees include work associated with the proceedings in CC 372 of 2023, in respect of which the Tribunal declined to make any building remedy order for the reasons set out in the substantive decision. This included that, rather than being defects, most or all of the complaint items were work that was incomplete and the cost to complete those items was part of the claim for the costs of completing the Works. The Tribunal considers that this should be taken into account in assessing a global reduction to the total costs claimed.
In order to be satisfied that the expert witness costs are not excessive in nature, the Tribunal considers, in taking an appropriately broadbrush approach, that the claimed expert fees should be reduced by $2,000, such that the expert witness fees ordered to be paid by the builder are fixed in the sum of $14,772.85.
Given the complexity of the proceedings, the length of the final hearing and the need to assess the conflicting evidence of the home owners and the builder on multiple critical issues, it was reasonable for the home owners to obtain a copy of the transcript of the final hearing and the Tribunal considers that the that home owners are entitled to recover from the builder the transcript costs in the total sum of $5,113.25.
The Tribunal does not consider that the fees for lodging two of the original complaints with the Building Commissioner are properly recoverable.
As to the legal fees in the sum of $42,383.30, the home owners' costs submissions include a schedule of costs, setting out the primary tasks undertaken by the home owners' legal representatives after 10 July 2024 and the amount claimed in respect of each task, calculated at hourly rates that are no higher than those set out in the Legal Profession (State Administrative Tribunal) Determination 2024 (WA).
Consistent with the cases cited above, the fixing of costs by the Tribunal involves a relatively broadbrush approach, but nevertheless requires the Tribunal to be satisfied that the costs claimed are reasonable and not excessive in nature.
In reviewing the home owners' schedule of legal costs claimed, the Tribunal considers it appropriate to reduce the legal fees to take account of:
(a)fees being claimed for the attendance of a senior practitioner for the entirety of the final hearing, in addition to counsel but in circumstances where the lawyer appearing as counsel is a principal of the firm representing the home owners;
(b)fees being claimed in respect of two separate senior legal practitioners undertaking work on what appear to be the same tasks and with a risk of inefficiency or overlap, namely preparation for final hearing, preparing the witness statements of each of the home owners and perusing the transcript and preparing written closing submissions;
(c)fees being claimed for a senior practitioner for 3.4 hours to settle/collate the hearing book for the final hearing, in circumstances where much or all of that work could, on the face of it, be undertaken by a clerk or paralegal; and
(d)the likelihood that at least some portion of the work undertaken was associated with the proceedings in CC372 of 2023, in which the Tribunal declined to make any building remedy order.

In order to be satisfied that the legal fees are not excessive in nature, the Tribunal considers, in taking an appropriately broadbrush approach, that the claimed legal fees should be reduced by $5,000, such that the legal fees ordered to be paid by the builder are fixed in the sum of $37,383.30. While cognisant that this, together with the disbursements to be allowed, represents a significant sum as against the compensation awarded in the substantive decision, the Tribunal considers this appropriate in light of the complexity of the proceedings, the fact that no legal fees are claimed by the home owners for the period prior to the 25 June Offer and the other matters set out above.
For the above reasons, the total amount to be paid by the builder to the home owners in respect of the related proceedings is $57,269.40, comprising:
(a)$37,383.30 in legal fees;
(b)$14,772.85 in expert fees; and
(c)$5,113.25 for the costs of obtaining transcript of the final hearing on 23, 24 and 25 October 2024;
By reason of the matters set out above, the Tribunal makes the following orders:

Orders

The Tribunal notes that the following proceedings (the related proceedings) were heard together:
(a)CC 1345 of 2021;
(b)CC 14 of 2023;
(c)CC 15 of 2023; and
(d)CC 372 of 2023.

The Tribunal orders:

1.Pursuant to s 49(1) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) and s 87(2) of the State Administrative Tribunal Act 2004 (WA), the respondent in CC 1345 of 2021 is to pay to the applicants in CC 1345 of 2021 the total sum of $57,269.40 in respect of their costs of the related proceedings, including expert witness expenses, by no later than 4 August 2025.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MR M Benter, MEMBER
4 JULY 2025

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Citations

PETSOS and JUDD [2025] WASAT 26 (S)

Cases Citing This Decision

0

Cases Cited

14

Statutory Material Cited

4

PETSOS and JUDD [2025] WASAT 26

DESHMUKH and DISTINCTIVE BUILDING SERVICES PTY LTD [2024] WASAT 62

HIPPYDAYZE PTY LTD and MENER GROUP PTY LTD [2019] WASAT 92