LOWKE and BGC RESIDENTIAL PTY LTD

[2017] WASAT 62 (S)

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

ACT : BUILDING SERVICES (COMPLAINT

RESOLUTION and ADMINISTRATION) ACT 2011

(WA)

CITATION	:	LOWKE and BGC RESIDENTIAL PTY LTD [2017] WASAT 62 (S)
MEMBER	:	MS H LESLIE (MEMBER) MR P MITTONETTE (SESSIONAL MEMBER)
DELIVERED	:	5 SEPTEMBER 2017
FILE NO/S	:	CC 214 of 2016

BETWEEN : SHANNON DOUGLAS LOWKE

First Applicant

TARRYN KAY HANCEY

Second Applicant

AND

BGC RESIDENTIAL PTY LTD

Respondent

Catchwords:

Application for costs - Exercise of discretion - Conduct of the applicants -

Consideration of offer of settlement - Substantive application dismissed

Legislation:

Building Services (Complaint Resolution and Administration) Act 2011 (WA),
s 11, s 49,
State Administrative Tribunal Act 2004 (WA), s 9, s 87
State Administrative Tribunal Rules 2004 (WA), r 40, r 41, r 42,

[2017] WASAT 62 (S)

Result:

Application for costs refused

Summary of Tribunal's decision:

The applicants' claim for remediation cost said by them to be necessitated by reason of faulty and defective plasterwork (the substantive application) was dismissed. The applicants failed to establish that defective workmanship by BGC Residential Pty Ltd's (BGC) plasterers was the cause of the issues (hardness and paint adhesion) with the internal wall surface of their home. BGC sought an order that the applicants pay BGC's legal costs. BGC had made a settlement offer prior to the final hearing. The evidence before the Tribunal did not persuade the Tribunal that the applicants had conducted the proceedings vexatiously, as an abuse of process or so as to impair the Tribunal achieving the objectives identified in s 9 of the State Administrative Tribunal Act 2004 (WA). The Tribunal declined to make an order for legal and other costs to be paid by the applicants 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). BGC's application for such costs was refused.

Category: B

Representation:

Counsel:

First Applicant	:	Mr S Tribble
Second Applicant	:	Mr S Tribble
Respondent	:	Mr HM Reynoldson

Solicitors:

First Applicant	:	Arns & Associates
Second Applicant	:	Arns & Associates
Respondent	:	Hotchkin Hanly

[2017] WASAT 62 (S)

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

Barnett and Barrier Reef Pools (WA) Pty Ltd [2016] WASAT 50

WA Country Builders Pty Ltd and Hathersage Nominees Pty Ltd

[2016] WASAT 70

[2017] WASAT 62 (S)

REASONS FOR DECISION OF THE TRIBUNAL:

The dispute

1              The remaining dispute before the Tribunal in this proceeding is

whether the Tribunal should make an order pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) and s 49 of the

Building Services (Complaint Resolution and Administration) Act 2011

(WA) (BSCRA Act) that the applicants pay BGC's costs of the proceeding. The substantive dispute was resolved by a final order made by the Tribunal on 31 March 2017 at which time the issue of BGC's application for costs was adjourned. Programming orders were made so that a decision on the documents could be made on BGC's application for costs to be ordered in its favour.

Background

2              On 31 March 2017, the Tribunal made a final order dismissing the

substantive application. That application to the Tribunal arose from a complaint made by the applicants with the Building Commission (the Commission) raising a building services complaint against BGC under the BSCRA Act. The complaint alleged that the internal plaster works performed by BGC at the applicants' property comprised faulty and defective workmanship. The complaint sought that the alleged defective plasterworks be repaired and that the applicants be awarded ancillary costs in the nature of relocation costs and storage costs, a total claim of some $143,000. The complaint was referred by the Commission to the Tribunal under s 11 of the BSCRA Act.

3              The painting of the property was not undertaken as part of the

contract by BGC. It had been undertaken by a third party pursuant to a separate contractual arrangement between the applicants and a painting contractor, after the plasterwork was performed by BGC. The applicants also made a complaint against the painter who performed the painting work. The hearing of the complaint in the Tribunal took place across two days in August and November 2016. Both parties called expert evidence as to the cause of the applicants' problems with the internal surface of the painted walls of the property and as to whether the responsibility for the problems lay with BGC's plasterer or with the independent painting contractor.

4              The Tribunal's decision ultimately amounted to its preference for the

evidence of one expert over the other, namely the expert called by

[2017] WASAT 62 (S)

BGC rather than the expert called by the applicants. In summary, the applicants' expert evidence was that the internal white set plaster was defective due to the application of a second very thin surface layer of plaster with an unacceptable composition having been applied. BGC's expert evidence was to the effect that the white set plaster had been applied in accordance with relevant standards and that the most likely cause of the applicants' difficulties was the applicants' painters having painted the plaster too early and having failed to apply an appropriate sealer and / or hardening agent to the plastered surfaces in the house.

5              On that basis, the Tribunal reached the view that the applicants'

allegations of defective workmanship against BGC were not made out to the requisite standard of proof, and their claim was dismissed. BGC then sought costs.

The issues

1. The issues to be determined in this matter are:

1)	Did the applicants commence or conduct the proceedings in a way that impaired the Tribunal's discharge of the functions as provided for by s 9 of the SAT Act? The Tribunal concludes that there is no evidence to support the contention that the applicants' conduct impaired the discharge of the Tribunal's objectives as specified in s 9 of the SAT Act.
2)	Is it fair in all of the circumstances of the proceeding to award BGC any costs of the proceedings? The Tribunal concludes that it is not fair in all of the circumstances to order the applicants to pay any costs of BGC.

BGC's submissions

7              BGC filed its submissions on 18 April 2017 along with a number of

attached copy letters and emails between the parties said to relate to pre-hearing 'offers' of settlement. There is no dispute that the emails and letters were sent by the parties.

8              BGC's submission urges the Tribunal to issue an order for costs. It is

agreed that any issue as to quantum of costs await the decision of whether
a costs order should be made.

[2017] WASAT 62 (S)

9              BGC's submissions advance the argument that the applicants should

be ordered to pay BGC's costs of the complaint due to the following
factors:

(a)	the applicants' unreasonable rejection of BGC's offer of settlement;
(b)	the relative complexity of the dispute;
(c)	that an injustice will result if BGC is not allowed to recover its costs; and
(d)	the strength of BGC's case.

The applicants' submissions

1. The applicants filed submission opposing any costs order on 8 May 2017.

2. In summary the applicants advance the arguments that:

a)	BGC chose to be legally represented in a dispute which did not concern complex legal issues. Any complexities in the case were of a technical or scientific nature dealt with by the expert evidence. The applicants were unrepresented until the hearing itself.
b)	The applicants' claim had merit and was based on technical advice received by the applicants; that it cannot be said to be vexatious, trivial, for an improper purpose, and abuse of process or doomed to fail from the outset and therefore unreasonable to make.
c)	That the decision turned on a preference by the Tribunal for one expert opinion over another and the applicants being unable to discharge their evidentiary onus; that the evidence given in concurrent session and the credibility of the experts could not reasonably have been foreseen by the applicants who did not have legal representation until shortly prior to the commencement of the hearing.
d)	That the applicants did not conduct themselves or the complaint in a way that they can be said to have delayed or prolonged the resolution of the dispute or impaired the Tribunal in its objectives in s 9 of the SAT Act.

[2017] WASAT 62 (S)

e) That the applicants did not 'unreasonably reject' BGC's offer of settlement; that the manner in which the applicants dealt with BGC's offer of settlement should not in the circumstances lead to a costs order in favour of BGCs.

The statutory framework regarding costs

1. Section 9 of the SAT Act provides that

   The main objectives of the Tribunal in dealing with matters within its jurisdiction are -

(a)	to achieve the resolution of questions, complaints or disputes, and make or review decisions, fairly and according to the substantial merits of the case; and
(b)	to act as speedily and with as little formality and technicality as is practicable, and minimise the costs to parties; and
(c)	to make appropriate use of the knowledge and experience of Tribunal members.

1. Section 87 of the SAT Act provides, relevantly:

(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[.]

…

1. Section 49 of the BSCRA Act provides, relevantly:

(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.

[2017] WASAT 62 (S)

1. Rules 40, 41 and 42 of the State Administrative Tribunal Rules 2004 (WA) (SAT Rules) set out the statutory framework regarding settlement offers and, in particular, the circumstances in which, the Tribunal shall have regard to an offer made by one party to another to settle a proceeding before the Tribunal.

16            The general costs principles applicable in the Tribunal in matters

such as these have been conveniently summarised in a number of recent decisions (such as Barnett and Barrier Reef Pools (WA) Pty Ltd [2016] WASAT 50 (Barnett) at [11] and repeated in WA Country Builders Pty Ltd and Hathersage Nominees Pty Ltd [2016] WASAT 70 (Hathersage) at [12] as follows:

Section 49 of the BSCRA Act is 'neutral in effect' and should be applied in a manner which is consistent with and reinforces the objectives and procedures of the Tribunal (Hoskins and Daniel Vinci T/As D'Vinci Contracting [2011] WASAT 188 (24 November 2011) (Hoskins)). In Hoskins the Tribunal commented at [19]:

… In the exercise of that discretion all of the considerations

identified above in relation to the exercise of the discretion under s 87 of the SAT Act remain relevant. Those considerations are however not exhaustive and any other factors will be relevant which point to the justice of the case requiring an award of costs.

The Tribunal stated in Chew and Director General of the Department of Education and Training [2006] WASAT 248 (Chew) at [85] that in exercising the discretion conferred on the Tribunal by s 87(2) of the SAT Act:

[T]he Tribunal should not generally make an award for costs unless a party has conducted itself in such a way as to unnecessarily prolong the hearing; has acted unreasonably or inappropriately in its conduct of the proceedings, has been capricious; or the proceedings in some other way constitute an abuse of process. The Tribunal might also make an order as to costs where a matter has been brought vexatiously or for improper purposes.

Further in Pearce & Anor and Germain [2007] WASAT 291 (S) (Pearce) at [24] the Tribunal stated:

… Where, however, there is a genuine dispute between the parties

… their respective rights are unclear and one or both seek

determination of their rights in the Tribunal, the starting point remains that each party should expect to pay their own costs, unless there are circumstances of the type identified in Chew.

[2017] WASAT 62 (S)

The Tribunal's statements in Hoskins, Chew and Pearce are consistent with

Western Australia Planning Commission v Questdale Holdings Pty Ltd

[2016] WASCA 32 (Questdale) where the Court of Appeal gave consideration to the operation of s 87(1) of the SAT Act and the exercise of the discretion conferred upon the Tribunal by s 87(2) of the SAT Act, albeit in relation to a different enabling Act. The following principles apply to the resolution of the costs dispute:

1) In its original jurisdiction, by reason of s 87(5) of the SAT Act and r 42(2) of the [SAT 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 (Questdale per 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 (Questdale per Murphy JA (with whom 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 (Questdale per 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 (Questdale per 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 (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [51]).

[2017] WASAT 62 (S)

7)         The nature of the dispute is a relevant consideration in any application for costs (Questdale per Murphy JA (with whom 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 (Questdale per 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 proceedings has impaired the attainment of the Tribunal's statutory objectives to have the proceedings determined fairly and in accordance with the substantial merits of the matter, with as little formality and technicality as possible and in a way which minimises the costs of the parties (Questdale per Murphy JA (with whom 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]' (Questdale per 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' (Questdale per 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 (Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [59]).

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' (Questdale per 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

[2017] WASAT 62 (S)

Tribunal to make orders that are not consistent with the s 9 objectives of the Tribunal.

Consideration

17            The Tribunal accepts and agrees with the arguments put forward to

the applicants. The Tribunal rejects BGC's claim that the dispute was relatively complex. It accepts the applicants' submission that the nature of the dispute did not concern complex legal issues. The law is well-established in respect of building services complaints. The case concerned technical and scientific evidence as to the cause of the issues at the surface of the internal walls but this is not uncommon in building disputes. In the view of the Tribunal, the case was a relatively straightforward workmanship matter both in terms of the management of evidence and argument. It is accepted that BGC is a well-established building company which had engaged an expert experienced in the relevant technical area and experienced in giving evidence in the Tribunal. BGC chose to be legally represented and it has that right but it is presumed to do so in the knowledge that the Tribunal is predominantly a costs neutral jurisdiction where parties meet their own costs, with any variation in that position being a matter of discretion.

18            The Tribunal rejects BGC's claim that it should have been apparent

to the applicants that their case would not succeed and therefore that the case should not have been pursued. The Tribunal rejects BGC's submission that there was some overwhelming strength in BGC's argument which should have been apparent to the applicants. The Tribunal accepts the applicants' submission that simply because they failed to discharge their burden of proof to establish their case on the balance of probabilities does not render the pursuit of their claim unreasonable. It was not unreasonable for the applicants, laypeople, to rely on the expertise of their expert who is an experienced chemist. Both experts agreed that there was an issue with the plaster and that it was not as hard as it should have been. It is to be noted that a further painting expert whose report was in evidence and who had been engaged in the context of the dispute with the independent contractor, also observed that there appeared to be problems with the plaster. The experts differed as to where the responsibility lay for the problems that the soft plaster caused and what if any were the obligations of the painter and BGC to deal with these problems. It is accepted that the applicants' position was initially supported in the Commission.

19 In relation to the offer of settlement made by BGC on 25 May 2016,
the Tribunal accepts that the applicants did not ever reject the offer

[2017] WASAT 62 (S)

outright. Prior to its expiry on 9 June 2016, the applicants sought clarification on a number of points contained in the offer and sought a deferral of the proceedings in order to further consider the situation. BGC responded to the points of clarification on the date on which the offer was due to expire. Thereafter on 13th June, the applicants, having just become aware that the independent painter had gone into liquidation, sought that BGC leave the offer of 25 May 2016 as clarified 'on the table' while they considered their position in the light of the change in the independent painter's circumstances. Further, the applicants suggested that the matter go back to mediation. BGC's response to the applicants' proposal was to reject any extension of the offer period, to reject any further mediation proposal and to request that the applicants put any counterproposal to BGC. The matter ultimately proceeded to hearing.

20            In the Tribunal's view, given the above matters, whilst the offer of

25 May 2016 is a factor to be considered in the exercise of the Tribunal's discretion, it is not a sufficient reason, notwithstanding the ultimate outcome of the proceeding, for the Tribunal's discretion to be exercised in favour of BGC.

21            As to any injustice to BGC, given all of the circumstances adverted

to above, the Tribunal is not persuaded that any injustice has been demonstrated to BGC sufficient to persuade the Tribunal to depart from its usual costs neutral position.

Conclusion

22            There is no evidence that any of the conduct of the applicants was

unreasonable in the sense described in the authorities referred to above. In the Tribunal's view, there is no evidence of any factors that would warrant the Tribunal exercising the discretion conferred on it by s 87(2) of the SAT Act. That is, there is no evidence before the Tribunal that the applicants' conduct in the proceedings impaired the Tribunal's ability to attain the objectives referred to in s 9 of the SAT Act.

1. That being the case, the Tribunal refuses BGC's application for an order for costs against the applicant.

Order

In accordance with s 87(1) of the State Administrative Tribunal
Act 2004 (WA), the Tribunal orders:

[2017] WASAT 62 (S)

1.        BGC's Residential Pty Ltd application for an order that the applicants pay BGC's Residential Pty Ltd costs of the proceedings is refused.

2.        Each party shall bear their own costs of the proceedings.

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

___________________________________

MS H LESLIE, MEMBER