The application for costs occupied most of the morning of 13 March 2009. That afternoon at 2.20 p.m. the Tribunal received a facsimile from solicitors for the Respondent stating that Mr Carr had inadvertently overlooked to request that the Tribunal certify for counsel and advising that a copy of the letter had been sent to solicitors for the Applicants.
It is not necessary for the Tribunal to certify for counsel in circumstances where counsel's fees are included in costs on County Court Scale C and all but unreasonable costs are included in indemnity costs. I decline to specifically certify for counsel, but make no comment as to whether the Respondent should recover all or part of the fees charged to it by counsel. It is therefore unnecessary for me to consider whether I should consider a submission made in the absence of a party by letter after the hearing had concluded.
Parties
Applicant/Plaintiff:
Borg
Respondent/Defendant:
Metricon Homes Pty Ltd
Cases Cited (7)
Borg v Metricon Homes Pty Ltd (Domestic Building) [2009] VCAT 507 (25 March 2009)
The Respondent bases its claim from the commencement of the proceeding to 13 June 2008 on one or more of s109(3)(c), (d) and (e) of the Act.
As emphasised by the Supreme Court in the matter of Vero Insurance Limited v Gombac Group[2007] VSC 117 at [20], the Tribunal should approach the question of entitlement to costs on a step-by-step basis:
Mr Carr submitted that as the "true" applicant is an insurance company litigating with a large building company, the dispute should properly be characterised as a commercial dispute between substantial parties. He provided no authority to support his view that I should characterise the dispute differently, depending on the parties to it. I am disinclined to do so by analogy with decisions such as Pacific Indemnity Underwriting Agency Ltd v Maclaw No 651 Pty Ltd[2005] VSCA 165 and Sabroni Pty Ltd v Catalano[2005] VCAT 374. Both concerned invitations to treat Domestic Building disputes as a special case where the parties should expect a costs order. In both cases the invitation was firmly declined.
Mr McEachern of Counsel for the Applicants submitted that I should not make an order for costs in circumstances where the letter accompanying the first settlement offer contained alleged factual inaccuracies, which failed to alert the Applicants to the weakness of their case. He called in aid two decisions concerning Calderbank v Calderbank [ (1975) 3 All ER 333] offers, Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority[2005] VSCA 298 and Fletcher Insulation (Vic) Pty Ltd v Renold Australia Pty Ltd (No 2)[2006] VSC 292.
As Mr Carr said, even if decisions regarding costs in the Supreme Court affected by Calderbank offers are relevant to this statutory scheme, the facts in Fletcher in particular, differ markedly. In that case, the party making the offer had greater means of knowing the facts relevant to reasonableness of accepting the offer, whereas in this proceeding, the Applicants had access to witnesses and the means of fully informing themselves.
Further, I note that the result of a Calderbank offer in the Supreme Court is closer to the scheme under s109 of the VCAT Act than it is to that under s112. In Hazeldene the judgement quoted with approval Redlich J in Aljade and MKIC v OCBC[2004] VSC 351 where he rejected a presumption in favour of costs beyond Supreme Court scale if a Calderbank offer was more favourable to the offeree, and said the weight of authority:
Both parties referred me to the decision of Deputy President Aird in Body Corporate Strata Plan No 405967 No 1 v Brady Constructions Pty Ltd[2008] VCAT 2305. I refer in particular to paragraph 75 where she said:
Mr McEachern also referred to my decision in Ashjam v Carroll[2007] VCAT 661 where there was an offer which was not accepted and which was more favourable to the offeree than the orders in the substantive matter. I made no order for costs for the period before the offer and made an order on a party-party basis for the period after the offer. I exercised a discretion not to order indemnity or solicitor-client costs because of the acrimonious relationship between the parties and the lateness of the offer. Such considerations do not apply in this proceeding.
The next paragraph deplored the difference which had arisen between costs of the trial (indemnity basis) and the appeal (solicitor-client) and expressed a preference from indemnity costs.
There have been occasions when the Tribunal has awarded solicitor-client costs - Panieras v Home Owners Warranty and Craigleith Constructions Pty Ltd[2000] VCAT 53 and Hanley v Transport Accident Commission[2002] VCAT 420. Recent decisions have tended to award indemnity costs as "all costs" and in light of the preference of the Court of Appeal for indemnity costs (albeit in very different circumstances) I adopt their reasoning and find that the Applicants must pay the Respondent's costs on an indemnity basis from the date the offer was made.