MOSS and SARTZIDIS

[2017] WASAT 113

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

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

CITATION:   MOSS and SARTZIDIS [2017] WASAT 113

MEMBER:   MS H LESLIE (MEMBER)

HEARD:   DETERMINED ONTHE DOCUMENTS

DELIVERED          :   15 AUGUST 2017

PUBLISHED           :  21 AUGUST 2017

FILE NO/S:   CC 362 of 2016

BETWEEN:   MOIRA FRANCIS MOSS

Applicant

AND

THEODOROS SARTZIDIS
Respondent

Catchwords:

Building dispute - Costs - Exercise of discretion - Conduct of parties

Legislation:

Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 11, s 49
State Administrative Tribunal Act 2004 (WA), s 87

Result:

Respondent ordered to pay 85% of applicant's costs

Summary of Tribunal's decision:

The Tribunal was satisfied that fairness required that it exercise its discretion to depart from the usual costs neutral position in the Tribunal.  It was satisfied that the respondent's conduct in connection with the proceedings was such that he ought bear 85% of the applicant's legal costs of the proceeding.

Category:    B

Representation:

Counsel:

Applicant:     Ms E Rose

Respondent:     In Person

Solicitors:

Applicant:     ER Legal Pty Ltd

Respondent:     N/A

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

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

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

J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S)

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

WA Country Builders Pty Ltd v Hathersage Nominees Pty Ltd [2016] WASAT 70

REASONS FOR DECISION OF THE TRIBUNAL: 

The substantive dispute

1. On 15 March 2006, the Building Commission of Western Australia (Commission) made a decision to refer the workmanship complaint by the applicant against the respondent made on 29 January 2016 to the Tribunal, pursuant to s 11 of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act).

2. The substantive dispute was finalised by order of the Tribunal dated 15 February 2017 pursuant to which the respondent was ordered to pay $56,378.04 to the applicant within 28 days of that date, that sum being a combination of the reasonable costs of rectification of the items as yet not remedied plus, in the instance of the items already remedied at the applicant's expense, a sum to compensate her for funds expended in that exercise.

3. The respondent was also ordered to reimburse the applicant her complaint lodgement fee paid to the Commission and the costs paid by her in obtaining and presenting expert evidence in the matter, provided that the applicant vouched those disbursements satisfactorily to the Tribunal.

The remaining dispute

1. A further order was made that any application for costs be made by letter within 14 days of 15 February 2017 with supporting submissions.  The Tribunal determined that it would then obtain comment in writing from the respondent on any such application and submissions and that thereafter a decision on the costs question would be made determined on the documents.

2. On 1 March 2017, the applicant lodged a claim for costs in the sum of $20,528.75 together with a supporting submission.

3. By email dated 17 March 2017, the respondent filed comments in response.

4. The remaining dispute before the Tribunal in this proceeding is thus whether the Tribunal should make an order pursuant to s 87 to of the State Administrative Tribunal Act 2004 (WA) (SAT Act) and s 49 of the BSCA Act that the respondent pays the applicant's costs of the proceeding.

The statutory framework and legal principles relating to Costs

1. Section 87(1) of the SAT Act directs that unless otherwise specified in the SAT Act, the relevant enabling Act or an order of the Tribunal made pursuant to s 87(2) or s 87(6), the parties bear their own costs in a proceeding of the Tribunal.

2. 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.

3. The principles applicable to the resolution of costs dispute in building matters were referred to and summarised 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 v Hathersage Nominees Pty Ltd [2016] WASAT 70 (Hathersage)). 

4. The summary at [14] and [15] of Barnett is as follows:

   1.In its original jurisdiction, by reason of s 87(5) of the SAT Act and r 42(2) of the State Administrative Tribunal Rules 2004 (WA), 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]).

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

The applicant's submissions

1. The applicant referred to Pearce above-mentioned and also relied on the case of J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S) (J&P Metals (S)).

2. In particular, it was submitted that Pearce sets out at [22] an accepted, though not exhaustive, list of factors to take into consideration when determining costs in the Tribunal. These may be summarised as follows:

   a)where a party has conducted itself inappropriately, particularly where the conduct leads to unnecessary costs to the other party;

   b)where credibility of evidence is at the heart of the matter;

   c)where the application undermines the integrity of proceedings under the relevant act;

   d)whether case is weak, being incredible or implausible or obviously unmeritorious; and

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

3. In written submissions to the Tribunal, the applicant particularly relied upon (a), (c), (e) and (f) above.

4. From J & P Metals (S) at [9], the applicant relies on the following:

   (a)[In assessing a party's reasonable costs, the Tribunal will consider] the nature of the matter, its complexity, its importance, possibly its urgency and the amount of time and effort required to properly prepare and present the case.

   (b)The Tribunal will always strive to maintain proportionality between the subject matter of the proceedings in the costs associated with the proceedings.

   and at [38] that:

   (c)[In cases in which an order for costs has been made], the Tribunal's obligation to minimise costs to the parties will be reflected in the costs assessed by the Tribunal is recoverable.  That approach reflects an expectation that representatives of the parties before the Tribunal would approach a proceeding in a way that minimises costs to their clients. If clients choose to approach proceedings before the Tribunal in a way which substantially increases costs for them, it will be a rare case where that increasing costs will be recoverable through a favourable costs order

The respondent's submissions

1. The respondent's submissions in relation to costs can be summarised as follows:

   •that it was the applicant's choice to be legally represented and that he should not have to bear the cost of this;

   •that he has the right to contest the claim - to 'stand up and defend' himself;

   •that he had no 'vicious intent' and that any complication to or lengthening of procedure came from his lack of understanding of the process;

   •that his financial circumstances did not permit him to have legal representation to assist him through the process;

   •that he did the best he could based on his limited understanding;

   •although accepting that his evidence was inadmissible, he was not an 'uncooperative person';

   •that some items were found to be incomplete works rather than defective works and so were disallowed from the applicant's claim and that this vindicates his right to have defended himself in 'any possible way'; and

   •that each party should bear its own costs.

Tribunal consideration of the factors

1. Given the usual 'costs neutral' position of the Tribunal, the applicant has the onus of satisfying the Tribunal that she should have a costs order.  The written submissions made by the applicant in relation to the question of costs are cogent and relevant and are accepted in full by the Tribunal.  The respondent has not directly addressed any of the specific points raised in the submission, certainly not in a way that sufficiently answers or negates the matters raised.

2. The Tribunal rejects the respondent's claim that his conduct during and prior to the proceedings was a product of his ignorance or lack of understanding of legal issues and tribunal processes.  The respondent is a business man who runs a building business.  He presented as intelligent and articulate.  He was made well aware during the directions hearings in the Tribunal of what was required of him.  He received the full assistance of the Building Commission in trying to resolve the matter prior to its referral to the Tribunal.  He had every opportunity to correspond and negotiate with the applicant, in writing, if not in person, to try to clarify his position and to negotiate a resolution of the matter.  He had every opportunity to present evidence and argument in support of his case.  He failed to do so.  He presented as ill­prepared and, to use the vernacular, appeared to 'wing it' on the day of the hearing. 

3. In the view of the Tribunal, the respondent's approach to the whole dispute was one of trying to 'hold out' without concession in the hope that the applicant would give up her claim.  He has continued to allege that he has been 'short-changed' and is owed money and that he has a civil claim against the applicant but he appears to have failed to take any action in pursuit of that alleged claim.  The applicant's evidence is that he has been paid the full contract price.

4. Many of the findings made by the Tribunal in its substantive reasons are relevant to the question of costs.

5. The evidence led by the applicant was largely accepted by the Tribunal and supported the conclusion that much of the work done by the respondent was deficient in that it was not carried out in a proper and proficient manner or was faulty or otherwise unsatisfactory.

6. The evidence led by the applicant as to the cost of the remedial work required and, in particular, the methodology utilised by the applicant in ascribing to each item of work a remedial value was accepted by the Tribunal.

7. There were, however, a number of items that the Tribunal was satisfied should more properly be classed as incomplete work rather than defective work and which were thus disallowed from the applicant's claim (being more correctly the subject of a contractual claim rather than a workmanship claim).

8. The Tribunal accepted that it was not until the proceedings were instituted that the applicant received any response or cooperation from the respondent whatsoever.  He failed, the Tribunal found, to participate to any substantial degree in the resolving of the matter.  He further failed to comply with the directions of the Tribunal and his attitude to the claims made only emerged, and then somewhat reluctantly, as the hearing process itself proceeded. His concessions regarding the faulty work for which he was found to be responsible were extremely limited and also only emerged with any particularity during the hearing.  His approach to the complaint from its earliest stage substantially contributed to the need for a hearing and to the length of the hearing.  In the view of the Tribunal, it also required the applicant to mount a case that met all potential aspects of the matter and all conceivable arguments that might be put out by the respondent.  It also, in the view of the Tribunal, justified the decision by the applicant to be legally represented.

9. The applicant was well prepared for the hearing.  It appeared from the presentation of materials, and the Tribunal accepts that, the applicant did as much of the preparation of the evidence as could possibly be done by her as a layperson with a view to minimising legal costs.

10. The applicant provided a detailed witness statement and gave additional evidence orally as to factual matters.  Much of her evidence was not ultimately challenged by the respondent.

11. The applicant's expert provided a comprehensive report and expert testimony in the hearing which was of assistance to the Tribunal.  His expertise was not challenged by the respondent nor was much of his evidence.  Despite this, the respondent disputed many items about which expert evidence was given by the expert and this notwithstanding his concession that he was 'well aware of [the expert's] expertise' and that he had 'great respect for the expert' as he is 'very fair and diligent' in the way he conducts himself.

12. Notwithstanding his claim at a preliminary directions hearing that he proposed to call multiple witnesses, the respondent filed no evidence at all, either in the form of witness statements by himself or by any other person prior to the hearing, or in the form of any documents.  He called no expert evidence and tendered no expert reports or comparative repair or remediation quotations of any sort at the hearing.

13. He appeared to pay little heed to preliminary orders made by the Tribunal and, notwithstanding that he was out of time to file material, immediately prior to the hearing, filed a substantial quantity of paperwork upon which he proposed to rely.  All of this material was ultimately disallowed but needed to be perused and considered by the Tribunal and the applicant's representatives at the last minute.

14. As he is entitled to do, the respondent tested the applicant's case by asking some questions of the applicant and of her expert and he made submissions in relation to the various aspects of the claim during the hearing and at its conclusion.  His responses to the particular claims made by the applicant as contained in his Scott Schedule and in his other documents in reply and in his comments made the Tribunal through the course of the hearing were, at times inconsistent. The respondent's principal argument was that he had been unlawfully dismissed from the work site at the termination of the contract and that the majority of the claims made by the applicant were in fact claims for incomplete work rather than for defective workmanship; in other words that this was a contractual dispute not a workmanship dispute.

15. Notwithstanding this, in his closing submission, he ultimately conceded 32 of 133 items of defective workmanship.  He disputed the applicant's evidence as to remediation cost and sought to insert his own oral estimates for those items without an explanation as to his calculation methodology, without notice of that evidence and without properly leading any alternative costing evidence from qualified third parties.  His request was disallowed.

1. Following a consideration of all of the evidence and the submissions, the Tribunal took the view that some 20 items of the disputed 133 items were in fact correctly classed as incomplete work rather than defective workmanship.

2. As a percentage of the value claimed ($84,746.30), the disallowed items ($28,368.26) account for approximately 33% of the value of the claim.  As a percentage of the number of items listed as defective, the disallowed items account for approximately 15%.

Findings

1. The Tribunal finds that the respondent has conducted himself unreasonably and inappropriately both in the lead up to the hearing and in the conduct of the hearing and in such a way as to unnecessarily prolong the hearing; and that his conduct has led to unnecessary costs being incurred by the applicant.  In the view of the Tribunal, in 'stonewalling' the applicant by 'holding out' without concession presumably in the hope that the applicant would give up her claim, the respondent has misused the processes of the Tribunal and the Commissioner for the purposes of delay and obfuscation.

2. There were many matters that the respondent conceded or did not oppose during the hearing.  He made no effort prior to the hearing to negotiate and communicate with the applicant regarding her complaint and thus to narrow the issues as he clearly could have done, thereby leaving her with no option but to issue and pursue the proceedings.

3. The Tribunal accepts that the applicant endeavoured to engage the respondent on these matters and that she and her representatives have approached the proceeding in a way that minimises the costs to her.

4. The applicant has been largely successful but not wholly successful.  Part of the applicant's claim, some 15% of the items claimed, were disallowed by the Tribunal as being contract based rather than a workmanship based.  To that extent the respondent succeeded in part in resisting the claim.

5. As frequently occurs in workmanship disputes, the hearing was run essentially as an item by item analysis of the complaints listed in the applicant's Scott Schedule and the respondent's response to each of them.  It is appropriate to assess the extent to which the applicant has been successful by reference to the number of items the subject of complaint in respect of which she has been successful as compared to the total number complained of (an approximate ratio of 15:85), rather than by the dollar value of the items in respect of which she has been successful as a proportion of the total value of the claim (an approximate ratio of 33:67).  The fact that some items were more or less expensive to remediate had little bearing, in this case, on the time taken in the analysis in the hearing of whether the work was defective or incomplete, or indeed on what the remedy cost would be, given the absence of any alternative costings evidence to that lodged by the applicant.

6. In the circumstances, in the view of the Tribunal, fairness demands that the Tribunal should depart from its usual costs neutral position and that the applicant should receive 85% of the amount claimed by her for costs.

7. The Tribunal accepts that the costs claimed by the applicant have been calculated on a basis that is reasonable in all the circumstances.  It is noted in particular that a substantial proportion of the bill of costs is for the preparation for hearing and the hearing itself (2½ days plus an attendance for the oral decision).  Much of this could, in the view of the Tribunal, have been avoided had the respondent conducted himself in a reasonable fashion and participated more appropriately in the conduct of the dispute.  The Tribunal is of the view that the respondent's conduct in connection with the proceedings has impaired the attainment of the Tribunal's statutory objectives to have proceedings determined fairly and in accordance with the substantial merits of the matter with as little formality and technicality as possible and in a way which minimises the costs to the parties.

Conclusion

Order:

Pursuant to section 87 (1) of the State Administrative Tribunal Act 2004 (WA), the Tribunal orders:

1.The applicant's application for an order that the respondent pay the applicant's costs of the proceeding in the amount of $20,528.75 is refused.

2.The respondent shall, within 28 days of the date of this order, pay to the applicant 85% of the applicant's costs of the proceeding fixed in the amount of $17,449.44.

I certify that this and the preceding [40] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MS H LESLIE, MEMBER