WA COUNTRY BUILDERS PTY LTD and HATHERSAGE NOMINEES PTY LTD

[2017] WASAT 97

WA COUNTRY BUILDERS PTY LTD and HATHERSAGE NOMINEES PTY LTD [2017] WASAT 97

Jurisdiction:	STATE ADMINISTRATIVE TRIBUNAL	Citation No:	[2017] WASAT 97
Act:	BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA)
Case No:	CC:535/2016	Heard:	DETERMINED ON THE DOCUMENTS
Coram:	MS N OWEN-CONWAY (MEMBER)	Delivered:	6/07/17
No of pages:	20	Judgment Part:	1 of 1
Result:	Order granted in part
Category:	B
PDF Version

Parties:	WA COUNTRY BUILDERS PTY LTD HATHERSAGE NOMINEES PTY LTD
Catchwords:	Costs Indemnity costs calculation Principles to be applied Turns on own facts
Legislation:	Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 5(2), s 41, s 43, s 49, s 49(1) Home Building Contracts Act 1991 (WA), s 17 Legal Profession (Magistrates Court) (Civil) Determination 2016 (WA) Legal Profession (State Administrative Tribunal) Determination 2016 (WA) State Administrative Tribunal Act 2004 (WA), s 9, s 87 State Administrative Tribunal Rules 2004 (WA), r 40, r 42
Case References:	Barnett and Barrier Reef Pools (WA) Pty Ltd [2016] WASAT 50 Calderbank v Calderbank [1975] 3 All ER 333 Chew and Director General of the Department of Education and Training [2006] WASAT 248 Hoskins and Daniel Vinci T/As D'Vinci Contracting [2011] WASAT 188 Leichhardt Municipal Council v Green [2004] NSWCA 341 Pearce & Anor and Germain [2007] WASAT 291 (S) WA Country Builders Pty Ltd and Hathersage Nominees Pty Ltd [2016] WASAT 70 Western Australia Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32
Orders	1. Upon the applicant's application for costs of the proceeding pursuant to s 49 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 shall pay the applicant the sum of $8,189.56 within 21 days of the date of this order.,2. Save as is otherwise provided for in order 1 above, each party shall bear their own costs of the proceeding.
Summary	The Tribunal declined to make an order for the unsuccessful respondent to pay the applicant's costs on an indemnity basis. The Tribunal found that the unsuccessful respondent in allowing a reasonable and genuine 'without prejudice save as to costs' offer lapse in the circumstances was not reasonable in light of that offer being more favourable to the respondent than the order made by the Tribunal. The conduct of the respondent in causing additional directions hearings to take place was a factor that impaired the Tribunal's objectives contained in s 9 of the State Administrative Tribunal Act 2004 (WA). The combination of the conduct in allowing the genuine, reasonable and favourable offer to the respondent to lapse, the failure to challenge the applicant's case on the expert evidence at the final hearing, when the respondent had indicted it did genuinely challenge that evidence, the history of the disputes between the parties and the respondent's knowledge that some disbursements would inevitably be incurred by the applicant persuaded the Tribunal that an order should be made in favour of the applicant for certain legal costs and disbursements incurred by way of expert report and attendance fees and photocopying charges incurred in complying with a Tribunal order.

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA) CITATION : WA COUNTRY BUILDERS PTY LTD and HATHERSAGE NOMINEES PTY LTD [2017] WASAT 97 MEMBER : MS N OWEN-CONWAY (MEMBER) HEARD : DETERMINED ON THE DOCUMENTS DELIVERED : 6 JULY 2017 FILE NO/S : CC 535 of 2016 BETWEEN : WA COUNTRY BUILDERS PTY LTD

Applicant

AND

HATHERSAGE NOMINEES PTY LTD
Respondent

Catchwords:

Costs - Indemnity costs calculation - Principles to be applied - Turns on own facts

Legislation:

Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 5(2), s 41, s 43, s 49, s 49(1)

Home Building Contracts Act 1991 (WA), s 17
Legal Profession (Magistrates Court) (Civil) Determination 2016 (WA)
Legal Profession (State Administrative Tribunal) Determination 2016 (WA)
State Administrative Tribunal Act 2004 (WA), s 9, s 87
State Administrative Tribunal Rules 2004 (WA), r 40, r 42

Result:

Order granted in part

Summary of Tribunal's decision:

The Tribunal declined to make an order for the unsuccessful respondent to pay the applicant's costs on an indemnity basis. The Tribunal found that the unsuccessful respondent in allowing a reasonable and genuine 'without prejudice save as to costs' offer lapse in the circumstances was not reasonable in light of that offer being more favourable to the respondent than the order made by the Tribunal. The conduct of the respondent in causing additional directions hearings to take place was a factor that impaired the Tribunal's objectives contained in s 9 of the State Administrative Tribunal Act2004 (WA). The combination of the conduct in allowing the genuine, reasonable and favourable offer to the respondent to lapse, the failure to challenge the applicant's case on the expert evidence at the final hearing, when the respondent had indicted it did genuinely challenge that evidence, the history of the disputes between the parties and the respondent's knowledge that some disbursements would inevitably be incurred by the applicant persuaded the Tribunal that an order should be made in favour of the applicant for certain legal costs and disbursements incurred by way of expert report and attendance fees and photocopying charges incurred in complying with a Tribunal order.

Category: B

Representation:

Counsel:

Applicant : N/A
Respondent : N/A

Solicitors:

Applicant : N/A
Respondent : N/A

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

Barnett and Barrier Reef Pools (WA) Pty Ltd [2016] WASAT 50
Calderbank v Calderbank [1975] 3 All ER 333
Chew and Director General of the Department of Education and Training [2006] WASAT 248
Hoskins and Daniel Vinci T/As D'Vinci Contracting [2011] WASAT 188
Leichhardt Municipal Council v Green [2004] NSWCA 341
Pearce & Anor and Germain [2007] WASAT 291 (S)
WA Country Builders Pty Ltd and Hathersage Nominees Pty Ltd [2016] WASAT 70
Western Australia Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32

REASONS FOR DECISION OF THE TRIBUNAL:

Application

1 On 5 April 2016, WA Country Builders Pty Ltd (WACB) lodged an application against Hathersage Nominees Pty Ltd (Hathersage) with the Building Commissioner of Western Australia (Commissioner). WACB sought a home building work contract remedy order pursuant to s 41 and s 43 of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act) that Hathersage pay WACB the sum of $69,071 together with interest for loss and damage arising from an alleged breach of contract. WACB alleged that Hathersage had breached an obligation not to deliberately interfere with WACB's performance of that contract and/or that Hathersage had repudiated that contract. WACB alleged it had lawfully terminated that contract and claimed loss and damage arising from Hathersage's alleged breach of that contract. WACB's application is one that may be made pursuant to s 5(2) of the BSCRA Act, being one that concerns a matter referred to in the Home Building Contracts Act 1991 (WA) ( HBC Act). Section 17 of the HBC Act grants an owner or builder a statutory right to make a complaint to the Commissioner pursuant to s 5(2) of the BSCRA Act where it is alleged the other breached a home building work contract between them. The breache alleged cannot be the subject of what is defined as a 'building remedy order' by the BSCRA Act.

Background facts

2 By way of background, it should be noted that Hathersage is the proprietor of Lot 3, 247 Scarborough Road, Wilyabrup (property). The property comprises a large agricultural lot and a relatively small part of the property was intended by Hathersage to accommodate a residential dwelling. WACB is, and was at all material times, a building company. On 29 March 2012, WACB entered into a lump sum building contract with Hathersage to construct a residential dwelling on part of the property. Pursuant to that contract, WACB was obliged to build a residential dwelling on part of the property on certain terms and conditions comprised in a written contract (dwelling). The contract price is specified in the standard form written terms of the contract (schedule) referred to at Exhibit 1 at pages 22 to 25 of the Hearing Book as $373,493 inclusive of GST. That sum is within the limit applicable to what is defined as a home building work contract in theHBC Act.

3 There have been the following proceedings before the Tribunal between the parties in relation to the contract and the construction of the dwelling:

1) Hathersage and WACB - CC 1047 of 2013;

2) Hathersage and WACB - CC 90 of 2014;

3) Hathersage and WACB - CC 92 of 2014;

4) Hathersage and WACB - CC 1097 of 2014

(collectively referred to as the Hathersage proceedings against WACB)

5) WACB and Hathersage ­ CC 969 of 2014;

6) WACB and Hathersage ­ CC 1672 of 2015.

4 CC 969 of 2014 (number 5 above) was heard at the same time as the Hathersage proceedings against WACB (numbers 1-4 above) and concerned WACB's claim that the dwelling had been constructed to the stage of practical completion in March 2014 as that phase is defined by the contract. That claim was the subject of an application to the Commissioner and was referred by the Commissioner to the Tribunal. WACB alleged that the final instalment of the contract price was due to be paid because the construction of the dwelling had reached the stage of practical completion, so defined. WACB alleged that that the sum invoiced by way of a final instalment of the contract price in May 2014, was unpaid and the date for due payment had passed. Hathersage disputed that construction of the dwelling had reached the stage of practical completion as defined by the contract and therefore no monies were due, owing or payable thereunder, notwithstanding WACB's demand for payment of that final instalment. In essence, Hathersage asserted that the time had not arrived under the contract for WACB to demand the final instalment of the contract price. The final consent order made in CC 969 of 2014 was a dismissal of WACB's claim for payment of the final instalment of the contract price due under the contract as claimed.

5 The Hathersage proceedings against WACB concerned various claims that construction of the dwelling was not proper and proficient, was faulty and unsatisfactory and in some instances, not in compliance with the terms of the contract as identified in the contract drawings and specifications. In the course of resolving the Hathersage proceedings against WACB, the parties agreed on 31 March 2015 that additional work was required under the contract, remedial work was required to be undertaken to the dwelling and monies were to be paid by WACB to Hathersage for late completion of the construction of the dwelling under the contract. The parties also executed a variation to the contract (variation) (Exhibit 1 page 126). In addition to the execution of the variation, consent orders were made in the Hathersage proceedings against WACB and CC 969 of 2014 on 31 March 2015 to reflect all of the above agreed terms and that the parties agreed that the construction of the dwelling had not achieved the stage of practical completion and that the final instalment of the contract price was not due to be demanded.

6 The variation dealt with what amounted to practical completion and at what stage of construction of the dwelling, payment of the final instalment of the contract price would be due. To that extent, the parties had agreed to resolve the dispute comprised in CC 969 of 2014. In essence, the parties agreed that WACB's assertion that the construction of the dwelling had achieved practical completion and the claim for the final instalment of the contract price made in CC 969 of 2014 was premature.

7 CC 1672 of 2015 (number 6 above) concerned a subsequent claim by WACB that the dwelling had been constructed to the stage of practical completion as defined by the contract (as varied by the variation). That claim was the subject of an application to the Commissioner and was referred by the Commissioner to the Tribunal. WACB alleged that the final instalment of the contract price was due to be paid because the construction of the dwelling had reached the stage of practical completion, so defined. WACB alleged that the sum invoiced by way of a final instalment of the contract price was unpaid and the date for due payment had passed. Hathersage disputed that construction of the dwelling had reached the stage of practical completion as defined by the contract as varied and therefore no monies were due, owing or payable thereunder, notwithstanding WACB's demand for payment of that final instalment of the contract price. In essence, Hathersage asserted that the time had not arrived under the contract for WACB to demand the final instalment of the contract price. WACB sought to withdraw its application in CC 1672 of 2015 against Hathersage prior to the listed final hearing date and an order granting WACB leave to withdraw CC 1672 of 215 was made on 22 February 2015. Hathersage subsequently applied for its costs of CC 1672 of 2015 but that application was refused by the Tribunal (WACountry Builders Pty Ltd and Hathersage Nominees Pty Ltd [2016] WASAT 70 (WA Country Builders Pty Ltd)).

This proceeding

8 WACB's claim against Hathersage in this proceeding is for loss and damage arising from Hathersage's breach of contract in preventing WACB from undertaking the final construction work so that the construction of the dwelling achieved the stage of practical completion and which conducted constituted repudiatory conduct, entitling WACB to lawfully terminate the contract. It was always clear from WACB's claim before the Commissioner and how it couched the claim before the Tribunal, that the loss and damage was to be calculated by reference to the balance of the contract price (after allowances were made for payments made by Hathersage and additional sums owed by Hathersage and to WACB and WACB to Hathersage) less the cost of completing the construction of the dwelling as required by the terms of the contract. The fact that WACB's claim for compensation for loss and damage for breach of contract was calculated by reference to the amount outstanding under the contract, does not mean, in the Tribunal's view, that it is the same claim that was dismissed by consent in CC 969 of 2014 or that was withdrawn in CC 1672 of 2015 referred to above.

9 The background to this proceeding is relevant to this costs application because Hathersage contended in this proceeding that this proceeding was an abuse of process because WACB sought to re-litigate the matters that had been disposed of by a final consent order in CC 969 of 2014 and an order granting WACB leave to withdraw its claim in CC 1672 of 2015. That allegation was a primary defence to WACB's claim in this proceeding. The background to this proceeding also demonstrates that the parties have been involved in litigation arising from the construction of the dwelling and performance of the contract and the achievement of the practical completion stage of construction since 2013 and serves to summarise the fact that there were hotly contested genuine issues concerning the quality of the construction and performance of the contract and the consequential entitlements of each party against the other. The parties were again engaged in a hotly contested and genuine dispute about their rights and obligations under the contract.

The hearing and the orders made on the substantive claim

10 The final hearing in this proceeding took place on 18, 19 and 20 October 2016. On 20 October 2016, the Tribunal made the following order on the substantive claim by WACB:

1. Pursuant to s 41(2)(d)(i) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) the respondent shall pay to the applicant the sum of $70,717.00 within 14 days of the date of this order being compensation for loss and damage caused by the respondent's substantial breach of the contract between the parties dated 29 March 2012 and alternatively arising from the respondent's repudiatory conduct, accepted by the applicant on 3 March 2016 and which contract was terminated on that date by the letter for the substantial breach and repudiatory conduct.

11 The Tribunal concluded that this proceeding was not an abuse of process and it was not an attempt to re-litigate a matter that was the subject of a final order made in CC 969 of 2014 or CC 1672 of 2015. As stated, this matter did not require a determination of whether the construction of the dwelling had achieved practical completion. In fact, until a very late point in the hearing the parties had agreed that the construction of the dwelling had not reached the stage of construction of practical completion as provided for in the contract as varied.

12 The Tribunal concluded that Hathersage did breach the contract in that Mr Gould, a director of Hathersage, denied WACB representatives access to the site where the dwelling was being constructed on part of the property, who attended on 17 February 2016 and 2 March 2016 to assess the quantity of additional building materials required to complete the construction of the dwelling to practical completion. The Tribunal concluded that Hathersage and in particular, Mr Gould, were aware or should have been aware that representatives of WACB intended to attend the site for the task referred to above because of correspondence sent to Hathersage by WACB.

13 In making the final orders, the Tribunal calculated the loss and damage for breach of contract by reference to the final instalment due under the contract, the additional amounts due by Hathersage to WACB and by WACB to Hathersage, pursuant to various earlier orders and as a result of other variations to the contract and deducted therefrom the sum of $1,790 which, on the evidence of WACB's expert, was the cost of bringing the construction of the dwelling to practical completion in accordance with the contract as varied. No expert evidence of the cost of the incomplete work was advanced by Hathersage at the final hearing, although Hathersage had filed expert reports in the course of the proceeding indicating that it did intend to challenge the value of the construction work required to bring the construction of the dwelling to practical completion. Such cost would be a credit against the calculation of what WACB would be entitled to expect if the contract had been performed and not breached by Hathersage.

Submissions on costs and quantum of costs

14 WACB seeks an order that Hathersage now pay WACB's costs of the proceeding:

a) on an indemnity basis; or

b) alternatively, on a lesser basis to be quantified by the Tribunal.

15 The indemnity costs claim is quantified by WACB at $68,550.87 and is based on the accounts rendered by WACB's solicitors to WACB. The alternative costs claimed are calculated by reference to the Legal Profession (State Administrative Tribunal) Determination 2016 (WA) and the Legal Profession (Magistrates Court) (Civil) Determination 2016 (WA) (the Determinations). The total legal costs based upon the Determinations is a sum of $35,541 plus disbursements of $7,873.33 comprising an expert builder's report and attendance costs, amounting to $4,496.80 and the cost of providing six copies of the Hearing Book (Exhibit 1), as ordered by the Tribunal on 10 May 2016, amounting to$3,376.53. The Tribunal has had regard to the invoices attached to WACB's submissions filed 4 November 2016 (pages 36-40) and paragraph 66 of the same and notes that the table of disbursements claimed on page 20 of the submissions contains errors and the amounts for items 1 and 2 should be reversed. There is no obvious correlation between the invoices rendered for the photocopying and this proceeding. There are three invoices and the only one that has been referred to by WACB's solicitor in an invoice to WACB, is that dated 27 September 2016 at page 38 of the submissions. The other invoices dated 31 August 2016 and 5 September 2016 respectively, are not referred to in WACB's solicitor's account to WACB as a disbursement. If the two earlier photocopying invoices relate to this proceeding, the Tribunal would expect to observe that such costs are invoiced to WACB. Those costs have not been so invoiced. The Tribunal cannot find on the evidence that the whole of the photocopying costs before the Tribunal was attributable to this proceeding. It finds instead that the sum of $2,077.05 plus GST, totalling $2,284.76 is attributable to this proceeding and because of the date of that invoice and the proximity of that date with the filing date of the two volumes of the Hearing Book, the Tribunal infers that cost is the cost of WACB complying with the Tribunal's orders for the filing of six copies of the Hearing Book.

16 WACB's costs as identified concern preparing the complaint, attending at directions hearings, preparing statements of issues, facts and contentions and bundles of documents, attendance at mediation, preparing witness statements, preparing briefs to experts, preparation of hearing books, preparation of written submissions getting up for the final hearing and attending the final hearing. The respondent asserts that the matter is of sufficient complexity to justify WACB engaging a solicitor (paragraph 56 to 60 applicant's submissions).

17 WACB asserts that it made an offer to settle and compromise this dispute, the subject of this proceeding, by letter dated 21 March 2016 expressed to be 'without prejudice save as to costs'. WACB offered to resolve the dispute by agreeing to accept the sum of $60,000 including GST in order to resolve the matter, rather than $69,017 as demanded. This is less than the amount found to be payable as damages and constituted a discount of $9,017 of the amount sought earlier on in the dispute. At that stage, WACB's application to the Commissioner had not been lodged and the offer was made in relation to WACB's notice of intention to make an application and letter before action dated 16 and 3 March 2016. The applicant relies upon r 42 of the State Administrative Tribunal Rules 2004 (WA) (SAT Rules) and the principles of Calderbank v Calderbank [1975] 3 All ER 333 (Calderbank) in relying on the offer. WACB asserts, in summary, that the offer was reasonable; it had been made early; and was open for acceptance by Hathersage for 21 days. WACB asserts that Hathersage did not respond to the 'without prejudice' offer and that that conduct, along with other conduct, was unreasonable. WACB asserts that Hathersage's conduct in this proceeding was unreasonable in the following respects:

a) The Tribunal did not accept the evidence of Mr Gould and found him to not be a reliable witness of the events surrounding the attempt by WACB to attend to site on 17 February and 2 March 2016.

b) The Tribunal rejected the defences of abuse of process, res judicata and issue estoppel.

c) Hathersage was unreasonable in not allowing WACB's expert to assess the relevant property to undertake anexpert report necessitating an additional directions hearing and orders made on 1 July 2016.

d) Hathersage delayed in filing its witness statements resulting in WACB incurring further costs in obtaining an order from the Tribunal requiring Hathersage to file its statements on 6 September 2016.

e) Hathersage filed its expert evidence in response to WACB's claim but did not rely on those reports at the hearing, resulting in WACB incurring costs inconsidering the report, engaging an expert to respond to the report and copying those reports as part of the Hearing Book.

f) Hathersage asserted that the construction of the dwelling had achieved practical completion and that WACB had no right to attend the property notwithstanding earlier statements and assertions to the contrary.

18 WACB asserts that the above illustrates the fact that Hathersage's response and defence to WACB's claim was not a strong claim and was unreasonable and interfered with the discharge of the Tribunal's obligations to determine the matter on the merits as speedily as possible.

19 Hathersage's submissions assert that the mere fact that Hathersage failed in its defence and adverse findings were made against the principal witness, Mr Gould, does not of itself lead to an inevitable adverse costs order. Hathersage asserts that Mr Gould's evidence suggested a misplaced but nonetheless genuinely held belief that WACB's previous conduct over a long period of time entitled him to place certain conditions upon WACB's re-entry onto the property.

20 At paragraph 12 of the submissions, Hathersage asserts that genuine legal issues were open to be argued by the respondent, albeit that they did not find favour with the Tribunal. Hathersage also contends that the SAT Rules do not apply in this proceeding because r 40 of the SAT Rules provides that only offers made to settle a proceeding that is before the Tribunal is to be considered under r 42 of the SAT Rules and the offer was made before the proceeding was commenced with the Commissioner and long before it was referred to the Tribunal. Hathersage further contends that the rejection of the offer was not unreasonable 'given that proceedings had not been commenced and all the evidence including expert's reports relied on by WACB had not been obtained or exchanged' (Hathersage's submission filed 18 November 2016 paragraph 15). In essence, Hathersage asserts that the offer was made too early and before the legal and evidential issues had fully crystallised.

The issues

1) Did Hathersage conduct itself in the proceedings in a way that impaired the Tribunal's discharge of the functions as provided for by s 9 of the State Administrative Tribunal Act 2004 (WA) (SAT Act)?

The Tribunal concludes that there is evidence to support the contention that Hathersage's conduct in the proceeding did on two occasions impair the discharge of the Tribunal's objectives as specified in s 9 of the SAT Act, resulting in WACB incurring unnecessary legal costs.

2) Is it fair in all of the circumstances of the proceeding to award WACB's costs of the proceedings?

The Tribunal concludes that it is fair in all of the circumstances to order Hathersage to contribute to the costs incurred by WACB to the extent of $9,891.83.

The statutory provisions and principles

21 Section 87(1) of the SAT Act directs that unless otherwise specified in:

• the SAT Act;

• the relevant enabling Act; and

• in any other order of the Tribunal made pursuant to s 87(2) to s 87(6);

the parties bear their own costs in a proceeding of the Tribunal. Section 87(2) of the SAT Act confers a discretionary power on the Tribunal to make an order for the payment by a party of all or any of the costs of another party, unless specified to the contrary in the relevant enabling Act. Section 49 of the BSCRA Act (the enabling Act in this proceeding) relevantly provides:

(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.

...

(7) This section does not limit the powers of the State Administrative Tribunal under the State Administrative Tribunal Act 2004 Part 4 Division 5.

22 The principles applicable to the resolution of costs dispute in building matters was referred to in Barnett and Barrier Reef Pools (WA) Pty Ltd[2016] WASAT 50 (Barnett), following a consideration of the authorities (Hoskins and Daniel Vinci T/As D'Vinci Contracting [2011] WASAT 188 (24 November 2011) (Hoskins); Chew and Director General of the Department of Education and Training[2006] WASAT 248(Chew); Pearce & Anor and Germain[2007] WASAT 291 (S) (Pearce); Western Australia Planning Commission v Questdale Holdings Pty Ltd[2016] WASCA 32 (Questdale)). These principles are equally relevant in this proceeding (and were also referred to in WA Country Builders Pty Ltd:

1) In its original jurisdiction, by reason of s 87(5) of the SAT Act and r 42(2) of theSAT Rules, the Tribunal is bound to take into account the fact (if found) that:

a) a party made a written offer of settlement that was made in compliance with r 40 and r 41 of the SAT Rules;

b) the offer was not accepted; and

c) in the Tribunal's opinion, the Tribunal's final orders were not more favourable than the offer.


2) Beyond s 87(4) and s 87(5) of the SAT Act and r 42(2) of the SAT Rules, the facts which the Tribunal is bound to consider and is precluded from considering are to be determined by implication from the subject matter, scope and purpose of the SAT Act properly construed (Questdaleper Murphy JA (with whom Martin CJ and Corboy J agreed) at [48]).

3) The discretionary power is to be exercised judicially. That is, not arbitrarily, capriciously or so as to frustrate the legislative intent (Questdaleper Murphy JA (withwhom Martin CJ and Corboy J agreed) at [48]).

4) Although not expressed in s 87(2) of the SAT Act or elsewhere that the power is to be exercised if it is fair and reasonable in all the circumstances of the case to do so. The 'judicial nature' of the exercise of the scheme of the SAT Act indicates that legislative intention (Questdaleper Murphy JA (with whom Martin CJ and Corboy J agreed) at [49]).

5) The presumptions as to costs orders that operate in curial litigation have no application, given the provisions of s 87(1) of the SAT Act and the directive contained therein (Questdaleper Murphy JA (with whom Martin CJ and Corboy J agreed) at [50]).

6) The onus is on the party seeking an order in its favour to establish that a favourable order should be made (Questdaleper Murphy JA (with whom Martin CJ and Corboy J agreed) at [51]).

7) The nature of the dispute is a relevant consideration in any application for costs (Questdaleper Murphy JA (withwhom Martin CJ and Corboy J agreed) at [58]).

8) 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 (Questdaleper Murphy JA (with whom Martin CJ and Corboy J agreed) at [54]).

9) 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 proceeding has impaired the attainment of the Tribunal's statutory objectives to have the proceeding 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 of the parties (Questdaleper Murphy JA (withwhom Martin CJ and Corboy J agreed) at [54]).

10) 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]' (Questdaleper Murphy JA (with whom Martin CJ and Corboy J agreed) at [55]).

11) 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.

12) The relevance of a compliant offer and the weight to be attributed thereto 'is influenced by the evident legislative intent, that where possible, parties to proceeding should endeavour to consider settlement' (Questdaleper Murphy JA (with whom Martin CJ and Corboy J agreed) at [59]).

13) The weight to be given to the mandatory consideration of a complaint offer is a matter for the Tribunal in each individual case (Questdaleper Murphy JA (with whom Martin CJ and Corboy J agreed) at [59]).

23 The Tribunal concludes that the discretion conferred by s 87(2) of the SAT Act is informed by the overarching obligation to exercise the discretion judicially and where it is fair and reasonable in all of the circumstances including a consideration of the nature of the jurisdiction exercised by the Tribunal 'but starting from the position that no order for costs will be made' (Questdaleper Martin CJ at [9]). Further, the provisions of s 49(1) of the BSCRA Act do not alter the nature of the discretion to be exercised by the Tribunal in awarding costs to a party pursuant to s 87(1) and s 87(2) of the SAT Act and do not direct the Tribunal to make orders that are not consistent with the s 9 objectives of the Tribunal.

The offer

24 The offer is not one that falls for mandatory consideration pursuant to r 42 of the SAT Rules. The offer pre-dated the referral of the proceeding to the Tribunal and was made before the application was lodged with the Commissioner. The offer was not made to settle a matter that was before the Tribunal at the time of the offer. However, in exercising its discretion judicially, the Tribunal ought to have regard to non-conforming offers in exercising the power conferred by s 87(2) of the SAT Act and s 49 of the BSCRA Act judicially because:

... the consideration of offers made to resolve proceedings is relevant 'so as to encourage proper compromise of litigation in private interest of litigants and public interest of prompt and economical disposition of litigation' (South Eastern Sydney Area Health Service v King[2006] NSWCA 2 per Hunt AJA at [83] and Leichhardt Municipal Council v Green[2004] NSWCA 341(Leihhardt) per Santow J at [14]).

(Barnett at [16])

25 As the offer is expressed to be made 'without prejudice save as to costs' the Tribunal considers the letter dated 21 March 2016 admissible to establish that an offer of compromise was made (Calderbank). In considering any offers of compromise the Tribunal must have regard to whether:

(a) the offers constituted genuine offers of compromise;

(b) the failure or refusal to accept the offers was unreasonable conduct by the offerees having regard to:


(i) the prospects of the offeree's success;

(ii) whether the offer was made with sufficient time for the offeree to consider the offer;

(iii) whether the offeree had adequate information to enable the offeree to consider the offer;

(iv) whether the offer was subject to any conditions and the reasonableness of the conditions[.]


(Leichhardt Municipal Council v Green[2004] NSWCA 341; and Barnett)

Consideration

26 The Tribunal considers WACB's application for an order for costs pursuant to s 87(2) of the SAT Act and s 49 of the BSCRA Act from the starting point that each party should bear their own costs of the Tribunal proceedings.

27 The first factor the Tribunal considers is the offer. The offer must be read in conjunction with WACB's letter before action dated 3 March 2016 (Exhibit 1 pages 57-60) and notice of application dated 16 March 2016 (Exhibit 1 pages 61-73). The offer was made, in the Tribunal's view in light of WACB's full explanation of the merits of its proposed claim; the consequences in the event that the matter proceeded; and WACB obtained an order for a greater sum than that offered and was made, while Hathersage was legally represented and was able to take legal advice about the risks associated with defending or challenging WACB's claim in light of the offer. The offer remained on foot for a reasonable period of time ­ 21 days - and was not subject to any unreasonable conditions and preserved Hathersage's other rights for any defects in the construction of the dwelling. In the Tribunal's view, the offer represented WACB's genuine attempt to resolve the dispute, notwithstanding that it was made early although the parties had been involved in disputes concerning the performance of the contract for a number of years at the date of the offer.

28 The reasonable and genuine offer made by WACB by letter dated 21 March 2016 is a factor that should be taken into account in exercising the discretion conferred on the Tribunal by s 87(2) of the SAT Act and s 49 of the BSCR Act. Hathersage did not respond to the offer and it was unreasonable not to have responded. The offer was more beneficial to Hathersage than the final order made. Because of the parties' experience in Tribunal proceedings referred to herein, Hathersage ought to have known that there would be disbursements incurred in having the matter determined at a hearing. In light of the fact that WACB's expert evidence was not substantially challenged because Hathersage did not call its experts, the Tribunal concludes that in all of the circumstances, it was unreasonable to allow the offer to expire.

29 However, that alone is not sufficient for the Tribunal to make an order against Hathersage to pay for all of the legal and other costs incurred by WACB. Generally, the fact that WACB elected to be legally represented in a matter that was not legally or factually complex does not, in the Tribunal's view, justify an order against Hathersage of the magnitude sought. All other disputes having been resolved by various orders referred to above, the dispute underlying this proceeding was a relatively simple matter, albeit that the parties seemed to have taken the view that they needed legal representation at all times in the history of the various proceedings. Whether a party elects to be legally represented is not generally a matter the opposing party has any control over. If the opposing party's conduct, or the complexity of the matter, called for legal representation for all or part of the proceeding, that may be a matter that the Tribunal could consider in the context of the principles referred to above.

30 The second factor that the Tribunal considers relevant is the interrelationship of the offer and the conduct of Hathersage in not calling its expert witnesses in a challenge to WACB's expert costs calculation of the cost of work required to bring the construction of the dwelling to the stage of practical completion. The offer is relevant to the fact that WACB did unnecessarily incur disbursements in prosecuting its claim. Those disbursements include WACB's expert evidence and the cost of the expert's attendance at the final hearing in circumstances in which no real challenge was made to the expert's evidence. This represents a cost to WACB that was incurred by reason of Hathersage not accepting the offer and indicating it challenged the cost of the incomplete work and then not substantially challenging the same at the final hearing. Had the offer been accepted, the allowance for incomplete work would have been far greater than was found to be the case on the evidence to the benefit of Hathersage and WACB would have saved the expert's fees.

31 The third factor that the Tribunal considers relevant to the issue of costs is the interrelationship of the offer and the inevitable costs incurred by WACB in complying with the Tribunal's orders for the filing of six copies of the Hearing Book. By order of the Tribunal, WACB incurred the cost of producing six copies of the Hearing Books (see: order dated 10 May 2016). This cost amounts to $2,284.76 (and not $3,376.53) for the reasons explained above. Had the offer been accepted, such costs would not have been unnecessarily incurred by WACB, particularly as the Hearing Book comprised Hathersage's expert reports which it ultimately did not rely on in substance at the final hearing.

32 The fourth factor is the conduct of Hathersage in pressing the contention that the proceeding was an abuse of process and the Tribunal's finding concerning Mr Gould's evidence. The Tribunal does not rely on the Tribunal's findings concerning Mr Gould's evidence and the failure of Hathersage to succeed in its contention that the proceeding was an abuse of process in support of WACB's claim for costs. As stated, the dispute between the parties concerning the performance of the contract by WACB was at all times genuinely contested. The fact that one party's contentions fail is not of itself relevant to the Tribunal's exercise of discretion under s 87(2) of the SAT Act and s 49 of the BSCRA Act. The genuineness of the dispute despite the Tribunal's findings is a factor to support an order that each party should bear its own costs of the proceeding.

33 The fifth factor that the Tribunal relies on is the conduct of Hathersage resulting in the need for WACB to seek additional interlocutory orders from the Tribunal. In the course of this proceeding, Hathersage's conduct resulted in the need for two additional directions hearings and additional orders. The first directions hearing took place on 1 July 2016 in order for the Tribunal to make an order to facilitate WACB's expert obtaining access to the construction site and the dwelling to prepare a report for use in this proceeding. This was necessary because access could not be agreed with Hathersage. The other directions hearing occurred on 6 September 2016 when the Tribunal was required to make an order directing Hathersage to file any witness statements or expert reports upon which it intended to rely, as it had been ordered to do earlier in the proceedings, so that WACB was aware of the case that was put against it. The legal cost of preparing for and attending the directions hearing was $814 and $594, totalling $1,408. In the Tribunal's view, WACB incurring legal costs for representation on these hearings was justified because the Tribunal orders made on 1 July and 6 September 2016 were necessary and resulted from Hathersage's non­compliance with earlier orders made by the Tribunal and designed for the efficient progress of the proceeding to a final hearing to be determined on the evidence and the merits. Hathersage's conduct resulting in the need for additional directions orders falls into the category of interfering with the Tribunal's s 9 SAT Act objectives.

34 For these reasons, the Tribunal considers in all the circumstances that it is fair that it makes an order pursuant to s 87(2) of the SAT Act and s 49 of the BSCRA Act that Hathersage pay to WACB the sum of $8,189.56 being the sum of the costs of copying the Hearing Books ($2,284.76), WACB's expert report and attendance fees ($4,496.80), and the legal fees incurred by WACB in attending and preparing for the directions hearings on 1 July and 6 September 2016 ($1,408).

35 As to the claim for indemnity costs, the Tribunal accepts that the power conferred on the Tribunal by s 87(2) of the SAT Act includes or is wide enough to support the Tribunal making an indemnity costs order against a party to Tribunal proceedings. However, in this proceeding the Tribunal declines to make an indemnity costs order as such an order, in the Tribunal's view, should be reserved for the most extreme cases where the Tribunal feels compelled to exercise its discretion to award costs when the Tribunal's s 9 SAT Act objectives have been substantially impaired by reason of the conduct of a party. In this matter, the proceedings proceeded relatively quickly to a final hearing with little delay or non-compliance with the Tribunal's orders and its s 9 SAT Act objectives (save for two instances) although there has been considerable costs expended by WACB in preparing for and prosecuting the matter. The conduct of Hathersage in this proceeding does not justify an order for indemnity costs.

Orders

36 For the reasons expressed above, the Tribunal orders:

1. Upon the applicant's application for costs of the proceeding pursuant to s 49 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 shall pay the applicant the sum of $8,189.56 within 21 days of the date of this order.

2. Save as is otherwise provided for in order 1 above, each party shall bear their own costs of the proceeding.

I certify that this and the preceding [36] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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MS N OWEN-CONWAY, MEMBER