9 Leave was granted in respect of Ground 3 and Ground 5. Ground 5 raised the jurisdictional issue as stated above. Ground 3 asserted that the BDT had erred in fact and law in allowing the owner costs (including witness and expert costs) and legal costs, contrary to s 38(4) of the Builders' Registration Act 1939 (WA) (BR Act). However, the leave in respect of Ground 3 was limited to a reconsideration based on the effect upon the costs order of any part of the decision under review having been made without jurisdiction.

10 The application was amended to include the jurisdictional ground only because the Tribunal raised its concerns with the parties that it appeared that, on the face of the BDT's reasons for decision, the BDT may have acted without jurisdiction. In the BDT's reasons for decision it was stated:

The complainants filed a complaint at the Building Disputes Tribunal (Disputes Tribunal) on 29 March 2006, alleging faulty and unsatisfactory workmanship. The complaint was not served on the respondent until 23 August 2006. A preliminary notice was served on 14 August 2006 in which the complainants required the respondents to rectify a large number of listed items. [at 3]

11 The lodging of a complaint with the BDT, prior to the giving of a preliminary notice to the other party, is contrary to s 12A(1) and s 12A(2) of the BR Act which provide that a complaint cannot be made to the BDT before the complainant has given to the other party a preliminary notice (the requirements of which are set out in s 12A(3) of the BR Act). Consequently, the BDT did not have jurisdiction: see the reasoning expressed in Tangent Nominees Pty Ltd and Edwards [2006] WASAT 243 (Tangent Nominees) which dealt with the identical provisions under the Home Building Contracts Act 1991 (WA) (HBC Act).

12 The circumstances which led the BDT to the above conclusion are set out below. The Tribunal's reasons for decision in respect of the leave application reflect that the Tribunal concluded that in respect of this issue, the decision of the BDT was demonstrated to be clearly wrong. That finding is confirmed.

13 During the course of the leave application, it was identified that a covering facsimile and building report dated 7 March 2006 (March notice) had been provided to the builder on or about that date and therefore approximately three weeks before the complaint was lodged with the BDT. In its reasons for decision on the leave application, the Tribunal held that the provision of the March notice met the requirements for the giving of a preliminary notice. That did not remove all of the owners' difficulties, because it was common cause that the March notice did not identify all the items of complaint. A number of additional complaints were added and all complaints incorporated in a subsequent building report dated 6 May 2006 (May report) which was served on the builder on or about 14 August 2006 and was relied on in the proceedings before the BDT as constituting the preliminary notice.

14 In the course of the Tribunal's reasons for decision on the leave application, the Tribunal identified that the following issues arose.

• Firstly, as a matter of statutory construction, if a preliminary notice was given, would that enable the claim to be amended by the BDT or by acquiescence of the parties?
• Secondly, could any of the claim items not included in the March notice be identified as being so closely associated to or incidental to claims which were included such that it could be held that sufficient notice of them had been given?

15 Having regard to the above, the following issues can be identified as being determinative of the review application.

1. Can any of the claims which were omitted from the March notice but were dealt with by the BDT be regarded as so closely associated to or incidental to claims which were described in the March notice, that sufficient notice was given of them to constitute compliance with the statutory preliminary notice requirements?
2. In any event, could the claims notified in any preliminary notice be added to by way of an amendment of the complaint by the BDT or by acquiescence of the parties?
3. Should the BDT costs order be set aside and any different costs order substituted?

16 At the review hearing on 10 November 2008, it became common cause that $5,703 of the total $6,209.50 reflected in the order under review related to items which were not included in the March notice. While counsel for the owners made various submissions aimed at showing that the amount of the order had to be seen in the context of other orders to pay which had been made during the course of the proceeding and in support of the costs order which had been made, no submissions were addressed to the issues identified by the Tribunal during the leave application. Consequently, at the conclusion of the hearing, the Tribunal issued programming orders for the filing of further submissions and reserved its decision with effect from the last date for compliance, being 1 December 2008. The parties filed further submissions.

17 On 10 December 2008, the Tribunal handed down a decision in Clintway Pty Ltd and The Owners of Strata Plan 21805 [2008] WASAT 294 (Clintway) in which the Tribunal held that the BDT had power to amend a complaint to include a matter not referred to in the preliminary notice. The Tribunal drew the decision to the attention of the parties and provided a further opportunity for submissions to be filed, and directed that the decision be reserved from the date on which those submissions were due, being 19 March 2009. On 10 March 2009, the owners' solicitors filed submissions to the effect that there is no basis for not following the Clintway decision. On 19 March 2009, the solicitors for the builder advised that the builder would not be making any further submissions.

18 The builder constructed a dwelling for the owners at No 6A Reserve Street, Bicton in the State of Western Australia.

19 Before practical completion, on or about 7 March 2006, the owners transmitted a construction report of that date (March report) to the builder with a covering facsimile. This report contained a number of complaint items.

20 On 29 March 2006, a complaint form was completed and lodged with the BDT.

21 The May report, which included the original complaint items and also additional complaint items, was given to the builder on or about 14 August 2006.

22 The complaint form was given to the builder on 23 August 2006.

23 An inspector's report dated 18 October 2006 addressed the totality of the complaint items raised.

24 On 30 October 2006, the builder's solicitors responded by letter of that date to the Registrar of the BDT with reference to the inspector's report. In that letter, a number of the complaint items not included in the March report were the subject of an undertaking by the builder to carry out remedial work. Other items which were not included in the March report were expressly placed in dispute. Examples of the former group are, with reference to the inspector's report item numbers, items 9, 24, 25, 32, 45, 53 and 65. Examples of the latter group are items 17 and 45.

25 On 19 December 2006, the BDT forwarded a notice of a directions hearing to be held on 21 February 2007. In the notice was a list of matters to be dealt with at the directions hearing. The first item on that list was:

1. Making a clear statement of the issues in dispute.

26 The notice was addressed to the builder's solicitors and to the owners personally, as they did not then have legal representation. Following the directions hearing, by letter dated 22 February 2007, the BDT confirmed the matters agreed at the directions hearing and also recorded orders made requiring the owners to file and serve a schedule of all current complaints with the remedies requested and for the builder to file and serve on the owners and the BDT its answers to the schedule. In [2] of the letter, the BDT recorded the items still in dispute which included items 17 and 37 which were not included in the March report.

27 On 21 March 2007, the owners' present solicitors gave notice to the BDT and to the builder's solicitors that they were instructed to act on behalf of the owners.

28 A schedule was prepared in accordance with the BDT's directions and addressed all matters in issue including the complaint items not referred to in the March notice. The matter came on for hearing before the BDT on 25 July 2007. The builder was represented by Mr S Boni of counsel and the owners by Mr W Vogt of counsel.

29 At the commencement of the hearing, the Chair of the BDT and counsel dealt with some housekeeping matters relating to the witnesses to be called. Mr Boni indicated that he anticipated calling the builder's witnesses later that afternoon or the next day, but that there may not be any need to call any witnesses on some particular complaint items. Mr Boni suggested that an attempt be made to 'sort out what issues are actually in dispute and what aren't' [T:3]. The learned Chair indicated that that would be done, and Mr Boni then responded that it might be possible to sort out how that affected the witnesses to be called. Mr Boni then proceeded to state:

Prior to moving onto that too I - - I just feel as though I need to raise it, there - - there may be some issue to do with the preliminary notice, it's? [sic] required? to? be? served? on the builder [sic] to a notice of complaint being filed. [T:3]

30 It is apparent that the transcriber had some difficulty with the recording as indicated by the question marks within the section quoted above. It appears likely that Mr Boni intended to, or did, say that it was a requirement that the preliminary notice be served on the builder prior to a notice of complaint being filed.

31 The learned Chair noted the point and indicated that would be an initial issue to be clarified. The learned Chair then proceeded to clarify with counsel the matters which were in issue as set out in the schedules. After clarification from Mr Vogt that the schedule at 219 of the book of papers replicated that which had been provided by the builder, Mr Boni stated that although he had only sighted it ten minutes previously, it appeared to reflect the builder's response to the claims, and there might be no difficulty in proceeding in accordance with the issues as identified in the schedule. That, at least, is the Tribunal's understanding of the discussion as reflected in the transcript at T:4.

32 After addressing the anticipated times at which witnesses would be available to be called, the issue of jurisdiction was then addressed. In the course of submissions, no reference was made to the March notice. The only document identified which might constitute a preliminary notice was the May report which was served on 13 August 2006 and was followed by service of the complaint on the builder on 24 August 2006. Mr Boni acknowledged that it was not necessary for the notice to be in the prescribed form and that the builder was willing to accept the May notice as being a preliminary notice (T:12). The issue was clearly whether or not a notice, which, in content, was sufficient to constitute a preliminary notice, given after the complaint had been lodged with the BDT was in compliance with the BR Act.

MS LANG: .... I rule that there is a preliminary notice which complies with the Act and that procedural fairness has been complied with and that there's no reason why the tribunal has no - - can be said to have no jurisdiction to proceed with the hearing today. So we'll proceed with the hearing.

MR BONI: I'm certainly happy with that.

34 It was common cause during the review hearing that the builder had placed in issue (presumably through the schedule filed) issues which it had been prepared to concede at an earlier stage and required the owners to establish their claims in respect of such items. As the hearing progressed and after evidence had been led from the owners' witnesses on various issues, the builder made concessions which resulted in two consent orders to pay compensation being issued in amounts of $25,135 and $2,608 respectively. The builder also consented to an order to remedy a number of items on the fourth day of the hearing as reflected in the BDT's reasons for decision (at 6). Taking into account the order to pay compensation which is the subject of the review, the total compensation awarded to the owners was therefore $33,952. In addition, the order under review includes an award of $9,496 in respect of expert witness costs and legal costs of $16,104.

35 It is now appropriate to examine the issues which are determinative of the application.

1. Were the claims which were dealt with by the BDT but not included in the March report closely associated to or incidental to claims described in the March report?

36 Although this issue was identified during the leave application and expressly referred to in the Tribunal's reasons for decision in granting leave, no attempt was made by the owners to attempt to justify the BDT's jurisdiction to deal with claims on this basis. This issue is therefore determined against the owners.

2. Could claims be added by amendment of the complaint by the BDT or by acquiescence of the parties?

37 In the builder's written submissions filed after the review hearing, reliance is placed on what is described as the mandatory provisions of s 12A(2) of the BR Act. Although no authority is referred to, it is submitted that the parties cannot submit to the jurisdiction of the BDT that relate to complaint items outside the jurisdiction of the BDT and the parties cannot acquiesce in those complaint items being heard. Reliance is also placed on s 12A(1aa) of the BR Act which provides that the BDT shall not have power to make an order under s 12A of the BR Act in respect of any building work 'following a complaint in respect of that work, unless such complaint is made before the expiration of six years from the time when the building work was completed ...'.

38 The owners' submissions filed subsequent to the review hearing seek to have the Tribunal accept that the BDT has an accrued jurisdiction to determine aspects falling outside the statutory jurisdiction which arise out of the same nucleus of facts in accordance with the principles applied by the Federal Court of Australia. In addition, it is submitted for the owner that, having regard to the requirement for the BDT to act according to equity, good conscience and the substantial merits of the case and without regard to technicalities and legal forms (s 36(1) of the BR Act) and the purpose of both the BR Act and the HBC Act, a more flexible approach should be adopted once the BDT is vested with jurisdiction. It is submitted that, once the BDT's jurisdiction was activated by the service of a preliminary notice, the BDT's jurisdiction should be regarded as extended to the new defective items identified in the inspector's report.

39 Tangent Nominees stands as authority for the proposition that the effect of non-compliance with the preliminary notice requirements is that the BDT's jurisdiction to deal with a complaint relating to defective building work is not enlivened. To that extent, the thrust of the builder's submissions must be accepted. The BDT has no inherent jurisdiction and its powers are to be found within the four corners of its enabling legislation. However, that includes any implied incidental power which is evident as a matter of statutory construction: see Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612 at 623 and DJL and The Central Authority [2000] HCA 17; (2000) 201 CLR 226 at 241, which has also been referred to as an inherent power: see Sparks v Bellotti (1981) WAR 65 (F.C.). This is not addressed by the builder's submissions, although it is perhaps implicit in the reference to s 12A(1aa) of the BR Act that, as a complaint cannot be made unless a preliminary notice is given, and no order can be made more than six years after the time when the building work was completed, the builder contends that on a proper statutory construction, there is no room to acquiesce in the amendment of the original complaint. This is addressed further below.

40 The submissions made on behalf of the owner based on an accrued jurisdiction in order to deal with aspects of a dispute falling outside the statutory jurisdiction but which arise out of the same nucleus of facts are rejected. The accrued jurisdiction of the Federal Court arises only as a matter of statutory construction of the Commonwealth Constitution and s 32(1) of the Federal Court of Australia Act 1976 (Cth): see Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 494.

41 It remains to consider whether, on a proper construction of the BR Act, the BDT has an incidental power to allow a complaint, once validly before it, to be amended, and if so, in the absence of any formal order, by acquiescence, the complaint is to be regarded as having been amended.

42 The Tribunal had cause to consider this question in Clintway, to which reference has been made above, and concluded, at [53]:

In our view, the purpose of the [BR] Act, which includes the establishment of a specialist tribunal, obviously intended to operate with as little formality as possible, is best furthered by a construction which enables the BDT to amend claims before it. There is no benefit in requiring one or more subsequent preliminary notices to be given, as further problems with a building work become known. Whenever a new issue is raised, and a party seeks to have it introduced into the dispute, the builder will still have an opportunity to indicate that there is no issue with it and that he will remedy the matter. The BDT will of course have a discretion to refuse to amend a claim if for any reason it is not appropriate to do so. There is simply no advantage in maintaining the formality for which the builder contends.

43 The reasons for coming to that conclusion are set out in [35] - [52] of Clintway.

44 For reasons of comity and consistency, a member of the Tribunal should generally follow an earlier decision of the Tribunal which is in point, unless satisfied that the earlier decision was clearly in error: see Re Scott and Commissioner of Superannuation (1986) 9 ALD 491 at 499; The Owners of Strata Plan 18449 and City of Joondalup [2005] WASAT 304 at 31 per Justice Barker, the then President of the Tribunal. To do otherwise would result in inconsistency and would bring the process of decision-making into disrepute, suggesting an arbitrariness which is incompatible with commonly accepted notions of justice: see Re Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179; (1979) 2 ALD 634 at 639; Commodore Homes Pty Ltd and Deegan [2007] WASAT 45 at [22].

45 The builder has elected to put no further submissions before the Tribunal addressing the effect of the Clintway decision and, in particular, whether or not there was any basis for not following the decision, although it was provided an opportunity to do so.

46 The Tribunal examined the effect of the BR Act read as a whole, relevant to this issue, in Clintway. Specific consideration was not given to the effect of s 12A(1aa) of the BR Act, to which the builder referred in its submissions filed after the review hearing and to which reference has been made above. That provision does not remove the ambiguity within s 12A of the BR Act which was identified in Clintway. The decision in Clintway should therefore be followed for the reasons given therein.

47 Once a complaint has been made to the BDT, preceded by the giving of a preliminary notice, it has jurisdiction in accordance with s 12A of the BR Act and, as there provided, if satisfied that any building work has not been carried out in a proper and workmanlike manner, it may grant relief of the nature prescribed. Insofar as the BDT is able to control its own procedures, it may therefore exercise a discretion whether or not to permit an amendment to a complaint. In exercising that discretion, it should no doubt be influenced by the same considerations as any court when considering an application to amend. It would no doubt refuse to allow new claims to be addressed which are not related to the subject matter of the dispute before it.

48 Clearly, no express order was made permitting any amendment, but the BDT has no rules prescribing its procedure, and it may be therefore that, as in Clintway, the circumstances reflect that the parties and the BDT acquiesced in an amendment to the complaint.

49 It is apparent that the inspector's report was based on the May construction report, which was initially relied upon as constituting the preliminary notice. All claims additional to the March notice and incorporated in the May construction report and inspection report were dealt with by the builder in the letter from its solicitors dated 30 October 2006 (at 105 of the BDT book of papers). Further, a directions hearing was held on 21 February 2007. The builder was represented by its solicitors and they were given notice beforehand that one of the questions to be addressed at the directions hearing was a statement of the issues in dispute (at 115 of the BDT book of papers). All of the complaint items were addressed at the directions hearing (see letter from the BDT dated 22 February 2007 recording the outcome of the directions hearing at 123 of the BDT book of papers). In the Tribunal's view, at this point, the parties and the BDT clearly regarded all complaint items then identified as being before the BDT.

50 It is apparent that the jurisdictional issue was raised somewhat tentatively before the BDT at the commencement of the hearing on the merits. It is self-evident that Mr Boni quite properly considered that the jurisdictional issue needed to be raised, but it was not pressed with any conviction, and he expressed his happiness with the ruling that was made. The jurisdictional issue was not raised by the builder on review - it was an issue raised by the Tribunal.

51 The manner in which the builder's counsel raised the jurisdictional issue, his reaction to the ruling and the fact that the issue was not raised by the builder on review is immaterial to whether or not the BDT in fact had jurisdiction to deal with the complaint items. But, it does support the conclusion reached that as at the date of the directions hearing the BDT and the parties regarded all the complaint items as being properly before it, and once the risk of the final hearing being wasted appeared to have been averted, the builder was happy to proceed to deal with the merits of all complaint items.

52 In the circumstances, the issues that came before the BDT on the first day of the hearing on 25 July 2007 included all complaint items as identified at the directions hearing and in the schedule filed. Both parties and the BDT regarded those complaint items as being before the BDT. The jurisdictional argument that was raised was based only on the circumstance that the notice constituted by the May construction report had been served on the builder after the complaint was lodged with the BDT and not on any complaint items not being before the BDT. The parties and the BDT must therefore be regarded as having treated the original complaint as having been amended.

53 It follows from the above conclusions that there is no basis to interfere with the cost order made by the BDT.

54 In any event, if it were necessary to determine the question of costs, the Tribunal is not persuaded by the submissions made on behalf of the builder that it would be appropriate for the Tribunal to substitute its own decision on costs. It was submitted on behalf of the builder that account should be taken of the time spent on issues which were not identified in the preliminary notice. The builder submitted that, by reference to the number of pages of the transcript relating to particular claim items, the Tribunal would be able to assess the time spent on those matters as compared with the other claim items, and that costs should be awarded to the builder in a proportion reflecting the time spent on matters not included in the preliminary notice.

55 On the builder's argument (based on the jurisdictional questions which have been decided adverse to the builder above), only approximately $500 of the amount which the builder was ordered to pay in respect of the order under review of $6,209.50 would have been awarded. That is not disputed by the owners.

56 The usual cost order in building cases is that costs should be awarded in accordance with the final flow of money: see Miles v Palm Bridge Pty Ltd [2001] WASC 42. This is because in building cases, there are often many issues, claims and cross-claims. The successful party is therefore regarded as the party who secures a judgment for the balance between the conflicting claims. That is, of course, only the starting point, and it is then open to the decision-maker to take into account other circumstances which might justify a departure from that principle.

57 In determining whether or not to award costs, s 38(4) of the BR Act requires that the BDT must conclude, having regard to a number of stated factors, whether it is fair to award costs. The hearing of the matter before the BDT took some four days, and it is manifestly clear that the BDT would be in a better position to determine whether or not it is fair to award costs, and if so, to what extent, having regard to the manner in which the proceedings were conducted before it. Accordingly, if the builder had succeeded on its jurisdictional arguments, the appropriate dispensation in relation to costs would have been to refer the question of costs back to the BDT for determination.

58 It follows from the above that the application for review must be dismissed.

59 In the owners' written submissions made on 10 March 2009, the owners sought programming orders to deal with the question of costs. Pursuant to s 87(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act), unless specified in the SAT Act, the enabling Act, or an order of the Tribunal under that section, the parties are to bear their own costs in a proceeding of the Tribunal. There is a general discretion under s 87(3) of the SAT Act to make an order for the payment of costs, but having regard to s 87(1) thereof, the Tribunal will need to be persuaded that it is appropriate to make any order for costs. In the circumstances, the parties will be provided a limited opportunity to make any application for costs supported by written submissions. An opportunity will be provided to the other party to file opposing submissions and the Tribunal will then review the matter and indicate whether it will determine the costs application on the documents, or whether the matter should be set down for a short oral hearing. In the event that no application for costs is filed and served within the timeframe provided, the matter will be regarded as finalised.

60 For the above reasons, the Tribunal will issue orders as follows:

1. The application for review of the decision of the Building Disputes Tribunal reflected in Order to Pay No 87/2007-08 is dismissed.
2. The parties have leave to make any application for costs by filing with the Tribunal and serving on the other party on or before 15 June 2009:

(a) a written application for costs providing sufficient details of the services provided and the rates charged for such services to enable the other party to review and make submissions thereon and the State Administrative Tribunal to assess such costs;

(b) submissions in writing supporting the application for costs.

1. If an application for costs is not made in accordance with order 2 above, the matter shall be regarded as concluded on the basis that each party shall bear their own costs.
2. A party wishing to oppose an application for costs must file with the Tribunal and serve on the other party written submissions in opposition on or before 29 June 2009.
3. In the event that an application is made for costs, the Tribunal shall review the matter after the time period for the filing of submissions has elapsed and notify the parties whether any such application will be determined on the documents, or whether the matter shall be set down for oral hearing.

I certify that this and the preceding [60] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

ACT : BUILDERS' REGISTRATION ACT 1939 (WA)

CITATION : AMPEZZO PTY LTD and FRANKEN [2009] WASAT 109 (S)

Builders' Registration Act 1939 (WA) - Review of decision of Building Disputes Tribunal dismissed - Application for costs by respondent - State Administrative Tribunal Act 2004 (WA) - Effect of written without prejudice offers to settle - Referral to offer made in mediation - Principles to be applied

Builders' Registration Act 1939 (WA), s 38(4)

State Administrative Tribunal Act 2004 (WA), s 53(b)(i), s 55, s 87, s 89

State Administrative Tribunal Rules 2004 (WA), r 40, r 41, r 42, r 43

Ampezzo Pty Ltd and Franken [2009] WASAT 109

Clifford and Shire of Busselton [2007] WASAT 89(S)

Gill and Wildnight Pty Ltd [2008] WASAT 135

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

Lai and Costa [2006] WASAT 117

Pearce and Germain [2007] WASAT 291(S)

1 The respondent to proceedings for the review of a decision of the Building Disputes Tribunal applied for costs following the publication of the Tribunal's decision dismissing the application for review.

2 On an application of the principles set out in Lai and Costa [2006] WASAT 117, the Tribunal determined that it was an appropriate matter in which to order costs. Having regard to the circumstances of the proceeding, the Tribunal concluded that the respondent should be awarded its costs reasonably incurred in respect of the application for leave but that no costs should be awarded in respect of the review.

3 In arriving at this conclusion, the Tribunal held that it was not obliged under the State Administrative Tribunal Rules 2004 (WA) to take into account two written offers of settlement made by the respondent to the applicant, which were more favourable than the Tribunal's order, because the offers did not comply with the Tribunal Rules. Although not obliged to do so, the Tribunal indicated it was in the public interest that non­complying offers of settlement be given careful consideration by the parties and the Tribunal in exercising a discretion on costs. The Tribunal stated that it was appropriate to determine whether it was reasonable for an offeree to reject an offer, and that, in doing so, regard should ordinarily be had to, at least, the following:

1. the stage of the proceeding at which the offer was received;
2. the time allowed for the offeree to consider the offer;

1. the offeree's prospects of success, assessed at the date of the offer;
2. the clarity with which the terms of the offer was expressed; and
3. whether the offer foreshadowed an application for costs in the event that it was rejected.

4 Further, the Tribunal observed that a discretion was retained even when an offer did comply with the Tribunal Rules and that the above criteria may be relevant, together with the nature of the jurisdiction being exercised and the cost rules normally applied to the particular type of case.

5 The Tribunal concluded that the applicant had not acted unreasonably by not accepting the offers of settlement.

6 The Tribunal declined to take into account an offer of settlement which was made by the applicant during the course of a mediation conducted in accordance with the Tribunal's directions. The Tribunal held that evidence of the offer was not permitted by virtue of s 55 of the State Administrative Tribunal Act 2004 (WA).

7 The Tribunal assessed that the amount of costs to be paid by the applicant to the respondent should be reduced from the amount of $16,845 claimed to an amount of $7,258.

8 The applicant in the proceeding is referred to as the builder and the respondents are referred to as the owners, unless the context requires otherwise.

9 The owners have applied for costs following the issue of an order by the Tribunal on 2 June 2009 dismissing the builder's application to review a decision of the Building Disputes Tribunal (BDT). The Tribunal then also ordered that the parties have leave to make any application for costs by filing with the Tribunal and serving on the other party a written application for costs providing sufficient details of the services provided and the rates charged for such services to enable the other party to review and make submissions thereon, and the State Administrative Tribunal to assess such costs, together with submissions in writing supporting the application for costs.

10 The owners duly filed their application for costs which incorporated a bill of costs for assessment purporting to have been drawn on the Magistrates Court of Western Australia (Civil Jurisdiction) scale of costs. The builder has filed submissions in opposition to the costs application.

11 The owners' submissions are extensive. They refer to the Tribunal's power to award costs pursuant to s 87 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) and to the relevant principles set out in cases such as Gill and Wildnight Pty Ltd [2008] WASAT 135, Pearce and Germain [2007] WASAT 291(S), J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282(S) (J & P Metals) and Lai and Costa [2006] WASAT 117 (Lai). After summarising that part of the history of the proceedings considered relevant, the owners submit that it was reasonable to instruct legal representatives, in the original BDT hearing based on complexity and, in the proceeding before this Tribunal, because the builder instructed legal representatives to present its case.

12 The owners expressly rely upon two written settlement offers, copies of which were attached to the submissions. The offers were made without prejudice save as to costs. The owners also referred to and disclosed the terms of a without prejudice offer to settle made by the owners in the course of a mediation, which had been conducted pursuant to the directions of the Tribunal.

13 It is also submitted that the builder's case was obviously unmeritorious and that is a ground for awarding costs.

14 The application for review related to an order made by the BDT requiring the builder to pay to the owners $6,209.50, as the cost to remedy faulty or unsatisfactory workmanship, expert witness costs of $9,496 and legal costs of $16,104 ­ that is a total sum of $31,809.50. The owners submitted that the Magistrates Court scale of costs would be an appropriate guide to the Tribunal. The bill of costs prepared by the owners and forming part of the costs application is attached at the end of these reasons for decision, marked 'Annexure A'.

15 The builder's opposing submissions deal in some detail with various offers to settle made, as I understand the submissions, during the mediation conference, to submit that the particular offer relied on by the owners in mediation was not a genuine offer. The builder rejects that its grounds for review were unmeritorious on the basis that the Tribunal granted leave, which reflects that the application was of sufficient merit to meet the requirements for leave to be granted. It is submitted for the builder that, pursuant to s 87(1) of the SAT Act, each party should bear their own costs. The submissions conclude to state that in the event that the Tribunal considers it appropriate that the respondent's costs are to be awarded, the builder requests that the costs be taxed, if not agreed.

16 The history of the proceedings and the basis upon which they were finally determined is fully set out in Ampezzo Pty Ltd and Franken [2009] WASAT 109 (principal decision) to which I refer and which should be read as if incorporated in these written reasons.

17 Subject to the qualifications later expressed, I accept that this is a matter in which, having regard to the principles set out in Lai, costs should be awarded. The hearing before the BDT occupied four days, which is an unusual length of time in that jurisdiction, and both parties had legal representation. The BDT held that, although the complaint was not legally complex, the number of complaint items and the breakdown of relations between the parties created a factually complex and difficult hearing. For that and other reasons, the BDT concluded that it was fair to award costs for legal representation pursuant to s 38(4) of the Builders' Registration Act 1939 (WA) (BR Act). The proposed grounds for review as set out in the application to this Tribunal raised issues of fact and law and in particular, ground 2, which alleged that complaint items had been determined based on speculation, hearsay, unqualified opinion, and not on evidence produced at the hearing, foreshadowed that a detailed examination of the transcript would be required. The conduct of an application for leave to review and a review following a hearing of this length is not a matter easily undertaken, and where the applicant for review chooses to be legally represented, it would have appeared particularly daunting for the owners to contemplate conducting the case without legal representation.

18 The owners submit that costs should be awarded in the amount of $16,845.35. Ordinarily, if costs of that proportion are reasonably incurred, relative to the amount in dispute, it can be seen that the inability to recover costs might result in an injustice. Although the costs claimed have been substantially disallowed, the amount of costs awarded is still such that I consider that an injustice would be done if the owners had to bear their own costs.

19 In the circumstances, it is not necessary to address in any detail the submission that the review was unmeritorious. It suffices to say that the submission is not accepted because, as the builder submits, leave would not have been granted if that was the case.

20 However, having regard to the history of the proceedings, and in particular, the manner in which the review was conducted, for the reasons which follow, I consider that the costs awarded to the owners should be restricted to those associated with the application for leave to have the BDT decision reviewed and to the costs application.

21 Although the builder was granted leave to review the decision of the BDT limited to two particular grounds, the owners were successful in their submissions in relation to the other three grounds raised by the application. In relation to the grounds for which leave was granted, one ground raised a jurisdictional issue which neither party had identified. It was identified by the Tribunal and resulted in the application being amended to include that ground. The second ground for review related to costs, but was limited to a consideration of the extent to which the costs order might be affected if the jurisdictional point was upheld. In these circumstances, and because the application for review ultimately failed, the owners should be entitled to costs in respect of the leave application assessed in accordance with the principles established in J & P Metals.

22 The owners did not fare as well in the review proceedings, although, ultimately, the application for review was dismissed. None of the arguments presented on behalf of the owners were accepted. In fact, the review could not be concluded at the final hearing, because the owners' counsel had not addressed issues which were clearly identified by the Tribunal in the course of giving reasons for the decision granting leave: see [14] to [16] of the principal decision. As there set out, the parties were afforded an opportunity to file further submissions addressing the matters raised by the Tribunal. The further submissions filed on behalf of the owners were not accepted.

23 As it turned out, shortly after the last date for the filing of those further submissions, the Tribunal handed down a decision in an unrelated matter which provided the basis on which the review was ultimately determined. The owners' contribution to that outcome was contained in a single paragraph of a letter dated 10 March 2009 filed with the Tribunal in which, after the Tribunal had directed the parties' attention to the decision concerned, the owners' counsel submitted that there was no basis not to follow the decision. The builder made no submission on the point.

24 In these circumstances, I consider that there is an insufficient basis to move away from the starting position in the Tribunal that, pursuant to s 87(1) of the SAT Act, each party should bear their own costs, at least in respect of the review application. In reaching this conclusion, I have had regard to and taken into account the additional considerations which follow.

25 Having decided that the owners are entitled to costs in respect of the leave application, they should also be allowed costs in respect of the application for costs and preparing the draft bill.

26 Section 87(4) of the SAT Act requires the Tribunal, in making a costs order in review proceedings, to have regard to:

(a) whether the party (in bringing or conducting the proceeding before the decision­maker in which the decision under review is made) genuinely attempted to enable and assist the decision­maker to make a declaration on its merits; and

(b) whether the party (being the decision­maker) genuinely attempted to make a decision on its merits.

27 The party referred to, in context, is the party against whom the order is contemplated. Although the BDT found that the builder had prolonged the hearing, there is no basis on which to find that the builder did not genuinely attempt to enable and assist the BDT to make a decision on its merits, nor is there any suggestion that the BDT did not genuinely attempt to determine the matter.

28 Section 87(5) of the SAT Act provides that the rules may deal with the effect of an offer to settle which complies with r 40 and r 41 of the SAT Rules, and the responses, if any, to the offer, on the making of an order for the payment by a party of the costs of another party. Rule 42 of the State Administrative Tribunal Rules 2004 (WA) (SAT Rules) obliges the Tribunal, in determining costs that may be awarded, to take into account that the party did not accept an offer more favourable than the Tribunal's order.

29 Rule 40 of the SAT Rules prescribes the manner in which settlement offers may be made either with prejudice or without prejudice. If made without prejudice, the Tribunal is not able to be told of the making of the offer until after it has made its decision in respect to the matters in dispute (other than in relation to the making of orders in respect of costs). That rule must be understood against the express provisions of s 55 of the SAT Act to the effect that evidence of anything said or done in the course of a compulsory conference or mediation is not admissible at any later stage of the proceeding unless:

...

(a) all parties agree to the admission of the evidence;

(b) it is evidence of directions given or orders made at a compulsory conference or mediation or the reasons for those directions or orders; or

(c) it is relevant to ­

(i) a proceeding for an offence in relation to the giving of false or misleading information;

(ii) a proceeding under section 100 [of the SAT Act (for contempt)]; or

(iii) a proceeding in relation to an order made under s 53(b)(i) [of the SAT Act (which refers to an order made determining a matter adversely to a person who fails to attend a compulsory conference)].

30 The SAT Rules should not be taken into account for the purposes of interpretation of the SAT Act, and s 55 thereof in particular: see the discussion in C Pearce, Statutory Interpretation in Australia, (6th ed, 2006) at [3.41]. The provisions of s 55 of the SAT Act unambiguously exclude evidence of anything said or done in a mediation, unless one of the exceptions apply. The only exception which might be said to apply is that the parties have agreed to the admission of the evidence, because both parties referred to the offer made in mediation relied on by the owners. There is, however, no evidence of any agreement to the owners referring to the offer. Reference was made to the offer in the owners' submission and the builder replied to that, and referred to other offers apparently made in mediation.

31 In my view, both parties breached s 55 of the SAT Act by making reference to an offer made during the mediation. If a party wishes to obtain protection against costs from an offer made during mediation, unless both parties clearly agree to the making of the offer later being disclosed, the offer should be repeated after the mediation on one or other of the bases referred to in r 40 of the SAT Rules and in compliance with r 41 of the Rules.

32 I accordingly have had no regard to the offer made by the owners during the mediation.

33 It is, however, necessary to have regard to the two written offers of settlement which are annexed to the owners' costs application.

34 The first offer was made on 7 December 2007, and proposed that the proceeding be dismissed and there be no order for costs. As appears from the owners' bill of costs, only an amount of $25 is claimed by the owners in respect of costs incurred prior to the making of the offer.

35 The second offer was made on 20 June 2008 and was to the same effect as the earlier offer. As will appear from the assessment below, the total costs which the Tribunal will order to be paid prior to that period amounts to $475.

36 In both instances therefore, the offer to settle on the basis that the proceedings be dismissed and that each party bear their own costs was more favourable to the builder than the orders which the Tribunal proposes to make. The first offer was expressed to be open for acceptance until 14 December 2008, a period of seven days, and the second offer until 25 June 2008, a period of five days. Rule 41 of the SAT Rules specifies that unless an offer is expressed to be open for acceptance until the commencement of the hearing, it must be open until the expiry of a specified period after the offer is made, which must be not less than 14 days. Neither is therefore a compliant offer and under r 42(1) of the SAT Rules, the rule only applies to an offer which complies with r 40 and r 41 of the Rules. Consequently, r 42 of the SAT Rules does not require the offers to be taken into account.

37 It is nevertheless in the public interest that offers of settlement that do not comply with the SAT Rules should be given careful consideration, so that settlement of disputes is encouraged. It is on that basis, notwithstanding the existence of specific rules prescribing the making of offers of compromise, that the Supreme Court of Western Australia has had regard to non­complying offers of settlement expressed in Calderbank form, in exercising its discretion on costs.

38 In Seaman P, Civil Procedure Western Australia, LexisNexis, Butterworth, 1990 at [24A.O.5A], there is a discussion of the principles to be applied in considering whether costs should be awarded where a Calderbank offer has been made. The discussion reflects that it is relevant to determine whether it was reasonable for the offeree to reject an offer in determining whether costs should be awarded. It is there stated that:

In deciding whether the rejection of a Calderbank offer was unreasonable, regard should ordinarily be had to, at least the following:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed for the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree's prospects of success, accessed at the date of the offer;

(e) the clarity with which the terms of the offer was expressed; and

(f) whether the offer foreshadowed an application for (indemnity) costs in the event of the offerees rejecting it. ((the Supreme Court of Western Australia Order 24A r 10(4) originally provided where a plaintiff made an offer, which was rejected and not bettered at trial, that costs be awarded on an indemnity basis ­ it now refers to costs on a party and party basis). (Parenthesis added.)

39 In my view, the principles referred to above are relevant to the Tribunal's taking into account of an offer of settlement which does not comply with the relevant SAT Rules. Even in the case of a complying offer, the Tribunal retains a discretion under r 42: see Clifford and Shire of Busselton [2007] WASAT 89(S) and the above criteria may be relevant, together with the nature of the particular jurisdiction being exercised and the cost rules normally applied by the tribunal to the particular type of case.

40 In this case, the extent of the compromise offered, relating as it did only to the form of the costs order, was limited, difficult to assess, because the starting point is that costs are not awarded by the Tribunal so that each party must bear its own costs, and the builder's prospects of success, assessed at the date of either offer, appeared good on the jurisdictional point, at least. Having regard to those circumstances, I do not consider that it was unreasonable for the builder not to have accepted the offers made. On that basis, I do not consider that, after taking into account the circumstances in which the offers were made, that they call for any different order being made in respect of costs to that which I have indicated above. In addition, I consider that it would be unjust to expect the builder to pay the owners' costs in respect of the review, when all of the submissions made on behalf of the owners were rejected, issues identified by the Tribunal which needed to be addressed were not, and the application for review was refused only as a result of issues raised by the Tribunal.

41 Finally, the builder submitted that if costs were to be awarded, the owners' costs should be taxed, if not agreed (and they obviously have not been agreed). Neither the SAT Act nor the SAT Rules provide for taxation. Section 89 of the SAT Act provides that if the Tribunal makes an order for the payment of costs and does not fix the amount of costs, that amount is to be assessed or settled in accordance with the rules. Rule 43 of the SAT Rules provides that if the Tribunal does not fix the amount of costs, that amount is to be assessed or settled by the Executive Officer or a member of the Tribunal nominated by the President. The costs were not fixed and the order made on 2 June 2009 gave leave for the parties to apply for costs and directed that sufficient details of the services provided and rates charged be provided to enable the other party to the review to make submissions thereon and the Tribunal to assess the costs.

42 I have been nominated by the President to constitute the Tribunal for the determination of this matter and the costs must therefore be assessed pursuant to r 43 of the SAT Rules. In carrying out that assessment, consistent with the principles set out in J & P Metals, any scale of costs which might be appropriate is to be used only as a guide. The Tribunal will take into account complexity, importance, possible urgency, the amount of time and effort required to properly prepare and present the case, and will strive to maintain proportionality between the subject matter of the proceedings and the associated costs. In assessing whether costs have been reasonably incurred, the Tribunal will expect that the representatives of the parties to approach the proceedings in a way that minimises costs to their clients.

43 The owners' application for costs provides no details whatsoever of the rates charged by their legal representative or of the time taken to provide the various services described in the bill of costs. The scale of costs provided by the Legal Practitioners (Magistrates Court) (Civil Jurisdiction) Determination 2008 (scale) varied the maximum charges set out in the scale with effect from 1 July 2008. There is nothing to indicate whether this has been taken into account in the bill of costs.

44 I accept that having regard to the quantum of the order of the BDT giving rise to the review, that the scale is capable of being used as a guide to the assessment of the costs. But, because of the above deficiencies, I shall have to do the best that I can on the information which is available to carry out the assessment.

45 I have reviewed all the documentation relevant to the various attendances described in the bill of costs in order to form some view of the reasonable time which should be allowed for provision of the relevant services. In doing so, I do not consider that the complexity of the matter, or any of the other criteria referred to above, is such as to warrant charges at the maximum of the scale. Under the scale, the maximum rate which can be charged by a practitioner admitted for five years or more, inclusive of GST, is $330 per hour. I am aware that the legal practitioner having the conduct of this matter has been admitted for in excess of that period. I have applied a rate of $300 per hour inclusive of GST.

46 By reference to the bill of costs, I consider that the costs claimed in respect of the following item numbers should be allowed in full, namely, item nos 1, 2(d), 3(a), 3(b), 4(a), 4(c), 4(g) and 4(h). All other items have either been disallowed or allowed in part only. I shall set out the approach which I have taken in respect of those other items.

47 In relation to the attendance at directions hearings, items 2(a), 2(b) and 2(c), I have allowed $150, or half an hour, in respect of each directions hearing.

48 In relation to item 4(b), I have considered that a reasonable time for preparation of the submissions, bearing in mind the time allowed for perusing and considering the transcript under item 4(c), is slightly in excess of 3 hours. I have allowed an amount of $1,000.

49 In relation to item 4(d), I have not allowed any amount, as I have regarded this attendance as being included in the time allowed for preparing the submissions on the leave application claimed under item 4(b).

51 Items 4(i), 4(j) and 5(c) have been disallowed in their entirety on the basis of my above decision that the owners should not be entitled to the costs of the review.

52 In relation to appearance at the leave hearing as claimed under items 5(a) and 5(b), I have allowed a total sum of $1,800.

53 In relation to the costs application, I have allowed the owners, in respect of item 6(a), the sum of $900, and in respect of item 6(b), the sum of $300.

54 In relation to item 7, copying, I have allowed an amount of $300. It is probable that something in the order of 400 pages has been copied and the rate, under the scale, both before and after 1 July 2008, is $1 per page. Most of the copying would have occurred prior to the leave hearing. As I have disallowed costs in respect of the review hearing, I have had to apportion this claim on an arbitrary basis.

55 The claim for provision of legal advice under item 8(a) is disallowed. I consider that this is a solicitor and client attendance. Item 26 of the scale refers to 'other work', but it is a party and party scale.

56 Item 9 is disallowed as the transcript referred to cannot be related to any particular hearing and it cannot therefore be determined that the cost was reasonably incurred.

57 The result of the above is that the total amount allowed to the owners by way of recoverable party and party legal costs is the sum of $7,258.

58 For the above reasons, the order will issue that:

On or before 30 October 2009, the applicant pay to the respondent the sum of $7,258 in respect of party and party legal costs.

I certify that this and the preceding [58] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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