(a) In the decision made in Mornington Peninsula SC v Mattieson Pty Ltd, [referenced in the BAB case of Davison v Molinaro (No 4)[5], the Victorian Civil and Administrative Tribunal (VCAT) confirmed that the purpose of an award of costs is to compensate a party who has incurred costs in circumstances where it would be unfair to require them to be liable for these costs. Where costs were avoidable, it would be unfair to require a party to be liable for costs.

(b) The Applicant notes that the case of Davison v Molinary (No 4)5 at paras 10 and 11 note the BAB may consider s 109 of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act). The Applicant says that there are several circumstances set out under s 109(3)(a)(i), (ii), (b) and (c) of the VCAT Act that apply in this proceeding. In particular;

(i) the Applicant identified and articulated deficiencies in the insurance policy.

(ii) the Applicant was required to engage a solicitor to advise and prepare her application challenging the adequacy of the insurance policy based on legal principles and the insurance contract.

(iii) the Interested Party was legally represented since September 2024. The Interested Party had an obligation to prevent or minimise costs incurred by the Applicant.

(c) The Applicant requested a full copy of the insurance policy on multiple occasions and the Interested Party failed to provide a full copy of same. This unreasonably delayed the time taken for the Applicant to refer this dispute.

(d) The Applicant's solicitors informed the Respondents and Interested Party that the insurance policy failed to comply with s 93 of the Act for the same reasons set out in paragraph 37 of the BAB determination.

(e) Further, the Applicant's solicitors later identified in their letter dated 16 April 2025 that the terms of the insurance policy were a clear breach of the principles set out in the Supreme Court of Appeal decision Colonial Range Pty Ltd v CES-Queen (Vic) Pty Ltd[6]. The Respondents and the Interested Party had no reasonable defence to the Applicant's position. The Applicant submits the Interested Party would have received advice from its solicitors that their defence was hopeless and without cause. The Interested Party continued to defend on meritless grounds without reference to relevant legal principles.

(f) The Applicant submits that the Respondents and Interested Party failed to comply with multiple timelines set by the BAB in this proceeding including:

(i) Filing submissions and response to submissions. Originally the orders were to exchange submissions on 22 April 2025 but this was later amended from 2 May 2025 to 16 May 2025. However, the Respondents and Interested Party did not file their submissions until 23 May 2025 and 26 May 2025 respectively.

(ii) No justification for their failure to comply with the deadlines was provided. This created additional costs caused by having to correspond with the BAB (see email dated 23 May 2025).

1. The Respondents provided the following submissions in support of their position that costs should not be awarded in favour of the Applicant:

(a) The claim does not meet the threshold to establish there are special circumstances to justify a departure from the each bear their own costs.

(b) The decision of Davison v Molinaro (No. 4)[7] stated that costs may only be awarded where special circumstances exist. This requires more than mere success or procedural inconvenience. It requires unjustifiable, unreasonable or obstructive conduct by the other party that directly caused unnecessary legal expense.

(c) The Respondents responded to the Applicant's request for clarification engaging in site meetings and over 100 emails (including a certificate of currency) addressing the Applicant's concerns. After receiving information, the Applicant originally withdrew the BAB appeal in case number 455802 on 10 April 2024 and signed the protection work notice.

(d) The Respondents had the Applicant sign a written agreement dated 8 April 2024 prepared by the Applicant's legal representative confirming all protection work had been addressed. Further, the Respondents paid for legal fees relating to the Protection Work Notice and a good faith amount of $5,000.

(e) The present costs claim seeks compensation for the very same issues already resolved, compensated and contractually settled.

(f) The Applicant acknowledged satisfaction with the information and supporting documents provided at the time, including the insurance documents. It was only after construction commenced that the Applicant reignited objections, contrary to the written agreement, contrary to her prior consent, and after having accepted monetary payment in resolution.

(g) There is no evidence that the Respondents failed to comply with BAB directions or caused any procedural delays.

(h) The minor delay in submission filing (23 May instead of 16 May) was non-prejudicial and promptly addressed. No directions were breached intentionally or maliciously.

(i) The Applicant refused to mediate through the Dispute Settlement Centre of Victoria. Legal costs incurred following that refusal should be borne by the Applicant.

(j) The Applicant should not receive legal costs for proceedings based on or in part on the inadmissible evidence of Dr Barraclough of Barrason's Group.

(k) There was no damage to the Applicant's property.

(l) The insurance dispute is the responsibility of the builder.

(m) The Respondents have acted reasonable and in good faith to resolve the matter amicably.

1. The Interested Party says that costs should not be awarded against it based on the following submissions:

(a) There is no basis for a costs order against the Interested Party.

(b) Costs were sought on an indemnity basis which is unreasonably high and without sufficient detail.

(c) Any costs order should be made against the Respondent as the owner of the building site, beneficiary of the work and the party with the statutory obligation to provide a compliant insurance policy.

(d) No event has occurred which might trigger a claim under the insurance policy required by s 93 of the Act or the insurance obtained by the Interested Party on behalf of the Respondents. The question of the validity of the insurance policy is therefore academic and this is relevant to a question of costs.

(e) The Interested Party also notes the decision in Davison v Molinaro (No 4)6 and relies on the principles of this case (outlined above in the Respondent's submission). It further accepts that it is appropriate for the BAB to consider s 109 of the VCAT Act.

(f) In relation to s 109 of the VCAT Act the Interested Party notes the following:

(i) With regard to s 109(3)(a) there is no suggestion that the Interested Party conducted the proceeding in a way that unnecessarily disadvantaged the Applicant.

(ii) With regard to s 109(3)(b) there is no suggestion that the Interested Party has unreasonably prolonged the proceeding.

(iii) There is no suggestion the Interested Party took positions that were untenable in relation to the findings in the insurance decision.

(iv) There is nothing in the nature of complexity of the proceeding which would displace the general rule. It is an application that the BAB is called on to address and was in the contemplation of the Parliament in enacting the general rule.

(v) The Applicant does not point to any other matter in particular that would justify displacing the general rule.

(g) The Applicant states that costs of the proceedings were avoidable but this, in substance, says costs should follow the event which is insufficient to displace the general rule in BAB proceedings.

(h) There is no suggestion in the Insurance Decision that the position taken by the Respondent and/or Interested Party was unmeritorious. Absent such a finding, there is no basis for a claim for costs.

(i) All parties were legally represented, this does not displace the general rule relating to costs.

(j) A copy of the insurance policy referred to as the 24-25 Policy was provided on 25 April 2025 prior to the filing of the Applicant's points of claim on 1 May 2025. The fact the Applicant stated its position that the policy did not comply with s 93 of the Act in correspondence is irrelevant and is similar to suggesting costs follow the event.

(k) A suggestion that the Respondent and Interested Party's positions were meritless conflates success of the application with whether it was unmeritorious. There is nothing within the Insurance Decision or finding to that effect. Whilst the Insurance Decision did find the insurance policy did not satisfy s 93 of the Act, this was completed after careful analysis of the insurance documentation, the Building Act and authorities. The matter was not a foregone conclusion.

(l) The Insurance Decision notes the late filing (by 6 working days) of the submission from the Interested Party and that no prejudice was suffered.

(m) The Interested Party also considers that the costs are unreasonably high. The durations for each itemised cost was not entered and descriptions are vague. It is insufficient to determine if the costs were reasonably and necessarily incurred in respect of the Applicant's application. Further, the BAB cannot assess the 'without prejudice' entries as the offers were not disclosed. It cannot be known if the offers were unreasonably rejected by the Respondent and/or Interested Party.

(n) The Interested Party obtained insurance from a reputable broker and was in no better position that the Applicant or Respondent to know whether the insurance was likely to be outside the requirements of s 93 of the Act. It is further the owner who has the responsibility for providing the compliant insurance policy.

(o) There are no findings by the BAB against the conduct of the Interested Party such that it was unreasonable. Nor does the Applicant allege specific unreasonableness on the part of the Interested Party. Given this, there are no grounds for costs against the Interested Party. The Interested Party has further incurred significant costs in defending the proceeding.

1. The Applicant provided the following submissions in response to the defences to their costs claim:

(a) Special circumstances arise where a party acts unreasonably, obstructively or compels another to incur unnecessary legal expense.

(b) The Respondents claim that the responsibility to procuring compliant insurance rested with the Interested Party was contrary to the determination made and the legislation. This defence had no tenable legal foundation.

(c) The Applicant put her concerns to both the Respondents and Interested Party regarding the insurance policy prior to commencing the proceeding in the BAB.

(d) The Applicant wrote to the Respondents noting defects in the Interested Party's revised insurance policy in proceeding number 456412. There has been no reply or remedial steps taken. This silence demonstrates a continuing pattern of disregard for statutory duties. The Davison case confirms costs may be awarded where a party unreasonably prolongs proceedings or advances positions with no reasonable prospect of success.

(e) There was a misplaced reliance on the Form 8 and private agreement which was misconceived. The Determination held that signing the Form 8 does not amount to consent to an insurance contract, particularly when the Applicant had not seen the contract. Section 93 of the Act imposes a mandatory duty which cannot be waived.

(f) A mediation could not resolve whether the insurance complied with s 93 of the Act and the Respondents failed to mitigate costs by obtaining a compliance insurance policy.

(g) The proceeding related to statutory interpretation of the insurance documents and did not depend on any contested reports.

(h) Insurance is required prior to protection work commencing irrespective of whether damage eventuates. There is current and future risk of damage until the works are completed.

(i) The Interested Party's attempt to minimise its obligation on the basis that it was only 'minor' protection work remains as having no legal foundation.

(j) The Interested Party's claim that the Applicant has not claimed on the defective policy contradicts findings by the BAB that the Applicant cannot claim directly.

(k) The Respondents and Interested Party have demonstrated a pattern of adverse conduct:

(i) commencing works without compliant insurance

(ii) withholding and redacting insurance documents

(iii) relying on outdated regulations

(iv) advancing arguments contrary to binding authorities

(v) late filing of submissions without valid excuse

(vi) procuring possible second defective policy after the BAB determination

(vii) ignoring solicitor's letter dated 6 August 2025 creating a compliance issue.

(viii) Demonstrating disregard for mandatory legal requirements.

(l) It is common practice for a costs lawyer to be engaged only after a costs order is made. The Applicant cannot reasonably be expected to incur further expense without confirmation of entitlement. As observed in _Davison v Molinaro (No 4)_6 May 2025) [para 41], in K.S.J.A.D Nominees Pty Ltd v Goubran & Ors [2022] VBAB 78 [para 102], the BAB observed that 'There is no scale of costs applicable to proceedings before the Board. Determining the appropriate quantum of costs is at the discretion of the Board, which will consider what is just in the circumstances...'.

(m) The costs are proportionate given the extensive defects in the insurance policy, unnecessary submissions and meritless arguments which lengthened the proceeding.

1. In order for this tribunal to make an award of costs, I must be satisfied that it would be just in the circumstances.
2. Accordingly, I will address the application for costs by addressing the two relevant matters:

(a) factors which make it just in the circumstances to award costs and;

(b) has the Applicant established an award for costs should be made?

Factors which may indicate it is just in the circumstances to award costs

1. In this tribunal the parties ordinarily bear their own costs of the proceeding. A successful outcome for a party does not automatically warrant an order for costs in their favour. As the Supreme Court has stated, something more is required.
2. As part of any consideration of whether an order as to costs would be 'just' in the circumstances, I may review the party's conduct during the proceeding.
3. As noted by the parties, the BAB has previously had regard to other jurisdictions which have a 'bear own costs' jurisdiction. In particular, the VCAT which, also has a 'bear own' costs jurisdiction. Under s 109(3) of the VCAT Act that tribunal may exercise a discretion to award costs after giving consideration to:

(a) whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding by conduct such as -

(i) failing to comply with an order or direction of the Tribunal without reasonable excuse;

(ii) failing to comply with this Act, the regulations, the rules or an enabling enactment;

(iii) asking for an adjournment as a result of (i) or (ii);

(iv) causing an adjournment;

(v) attempting to deceive another party or the Tribunal; and

(vi) vexatiously conducting the proceeding;

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding;

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law;

(d) the nature and complexity of the proceeding; and

(e) any other matter the Tribunal considers relevant.

1. Section 109(3)(d) and (e) provide additional considerations of complexity or other matters which may arise in the proceeding. Whilst this tribunal is not bound by the considerations laid out in the VCAT Act, they are nevertheless, in my view, relevant considerations and therefore I am guided by them in determining whether it would be 'just' to exercise a discretion to award costs.
2. The BAB has previously considered and accepted the usefulness of the Supreme Court decision of Re Munro (Costs)[8] in considering costs. In the Re Munro (Costs) case, the Court provided an outline of when costs may be awarded. Whilst the principles were enunciated in relation to a particular Supreme Court proceeding, the Supreme Court possesses a wide discretion in relation to awarding costs which may also provide guidance here. The BAB takes the view that the following general principles identified by the Court have some general application as to when the BAB is tasked with considering an application for costs although it is underscored that the BAB must distinguish this jurisdiction from the Supreme Court's in so far as the BAB is a 'bear own' costs jurisdiction. It is further noted that the Supreme Court was considering costs over and above the ordinary order for costs that follow the event (awarded to the successful party).

(f) ...An award [for] costs over and above the ordinary is reserved for cases where the losing party[9] has engaged in unmeritorious, or deliberate or high-minded or other improper conduct such as to warrant the Court showing its disapproval and at the same time preventing the successful party being left out-of-pocket; and

(g) encompassed in unmeritorious or improper conduct is the unsuccessful party proceeding where, properly advised, they should have known that they had no real prospect of success, or allegations were made which ought never to have been made or the undue prolongation of a case by groundless contentions. In such cases, the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.[10]

1. In considering whether to grant an award of costs I may have regard to the following conduct of parties:

(a) unduly prolonging the proceeding;

(b) a failure to comply with the Act and regulations;

(c) vexatiously litigating proceedings; and

(d) the relative strengths of the claim made by each party and whether a party maintained an untenable position in fact or law.

1. These factors generally relate to what conduct occurred during the course and conduct of the proceeding rather than pre-litigation matters.
2. Turning now to consider whether it would be just in the circumstances to make an award for costs in favour of the Applicant.

Has the Applicant established an award for costs should be made?

1. The Applicant raised several grounds on which she believes a costs order is warranted (summarised above in her submissions)
2. A number of those grounds are not relevant as to whether costs should be awarded in this particular proceeding.
3. The BAB Practice Note 9A - 2023 states:
   1. The Building Appeals Board... can order that one party pay another party's costs of and incidental to a proceeding before the [BAB].[11]
   2. 'Costs of and incidental to a proceeding' usually means money paid or liabilities incurred for professional legal services and out-of-pocket disbursements or expenses, such as filing fees, expert witness fees, et cetera, where directly related to the proceeding before the [BAB].
4. The proceeding before the BAB was a matter referred pursuant to s 152 of the Act to determine whether the contract of insurance complied with s 93 of the Act.
5. This means that grounds arising post-determination or in other proceedings issued are not relevant to a determination of costs in that proceeding where the substantive matter was finalised.
6. Whilst I accept that there may have been delays in obtaining a copy of the contract of insurance, I do not accept these costs are costs of the proceeding in circumstances where the proceeding had not yet commenced. I would categorise such costs as pre-litigation costs. I accept that the Respondents did have an obligation to send a copy of the contract of insurance under s 93 of the Act and should have provided it without repeated requests. However, this occurred prior to the commencement of the proceeding and would not be characterised as costs of or incidental to the proceeding.
7. I further find that retaining legal representation of parties is not a ground which gives rise to an award for costs. It may be a cost that is claimed, but it is not in and of itself a reason to award costs.
8. In relation to the reason for late filing, I accepted at paragraph 7 and 8 of the Determination that the Interested Party had misunderstood or misread the Insurance Directions and Orders. I further accepted the late filed submissions of both the Applicants and Interested Party given this would not give rise to prejudice for any party. I do not accept that this late filed material creates a pattern of delay or obstruction of the process given my prior findings. Given this, I do not accept that this would give a basis to find it 'just' in the circumstances to award costs.
9. The arguments relating to the Form 8, formal agreement, misconstruction of the legal principles and the deficiencies in the insurance policy appear to be made on the basis that there was no tenable basis in fact or law.
10. There are a number of VCAT decisions which provide guidance on the meaning of a claim not tenable in fact or law. Those decisions suggest this provision pertains to a consideration of the relative strengths of the claims of the parties including whether a party has advanced an untenable claim. I note the following in relation to this ground:

(a) No tenable basis in fact or law does not refer to cases which are:

(i) tenuous[12]

(ii) weak or merely weak[13]

(iii) where after hearing and analysis, VCAT was able to reach a firm or comprehensive conclusion.[14]

(b) The word 'claim' in the expression 'a claim that has no tenable basis in fact or law' has been construed as extending beyond claims, cross-claims and counterclaims to include 'claims made by way of a defence'.[15]

1. There needs to be a high level of untenability or weakness to justify an order for costs on this basis.
2. I accept that the arguments on the Form 8 did not, after consideration, appear to have a satisfactory basis at law or the evidence presented. However, the Insurance Determination did have to review multiple sections of the Act, relevant Regulations and the prescribed Form 8 in Schedule 4 to the Regulations to reach this conclusion. Whilst the argument may have been weak, the analysis required to dispose of the argument meant that it cannot reach the standard of not tenable at law.
3. Similarly, the argument suggesting the BAB not have regard to the Supreme Court of Appeal decision in Colonial Range Pty Ltd v CES Queen (Vic) Pty Ltd[16] on the basis the works were more minor, did not have a proper basis at law. There was nothing within the case itself or the Act to suggest such an interpretation or distinction ought to be afforded to assist the Respondents and Interested Party. This argument could be categorised as being of little strength regarding the application of the CES Queen case. However, it does not rise to the standard of not tenable at law.
4. I accept that the Applicant and her legal representatives raised their concerns relating to the contract of insurance early. However, this does not establish that the Respondents or the Interested Party's position in relation to the contract of insurance was not tenable at law, which may give rise to a finding it was just in the circumstances to award costs.
5. The insurance determination of whether the contract of insurance was compliant with s 93 of the Act required a substantive analysis of all the documentation. The insurance determination's findings on this issue spanned from paragraph 45-68. The requirement for a substantive analysis would contraindicate a finding that this position was not tenable at law.
6. I further consider that the parties did have a substantive disagreement as to whether the contract of insurance complied with the law. I would not categorise this disagreement as trivial or not tenable at law generally. The fact that the Applicant was successful in the argument that the contract of insurance was not compliant with s 93 of the Act, after raising similar concerns with the Respondent and Interested Party previously, does not give rise to a finding that it would be 'just' in the circumstances to award costs. Something more than a successful outcome for the Applicant is required.
7. I further note that whilst some of the arguments were factually or legally weak, the central argument the subject of the Insurance Determination was not. I do not consider the weakness of the more minor arguments would establish a claim for costs given the central issue for consideration was merit worthy.
8. In conclusion I find that the factual matrix and submissions provided supports a finding that it would be not be 'just' in the circumstances to award costs.

[1] [2001] VSC 349.

[3] [2007] VSC 54.

[6] [2016] VSCA 328.

[8] [2019] VSC 243.

[9] As noted earlier in these Reasons, unlike the Supreme Court, there has to be something more than being a successful party in a costs bear own jurisdiction to make an adverse costs order against that losing party.

[11] Clause 16(2) and 17 of schedule 3 to the Building Act 1993

[12] Fuggle v Murrindindi SC [2007] VCAT 494 [12].

[13] Thirty Fourth Enterprise Pty Ltd v Leggetts Tennis and Squash Centre Pty Ltd (No 2) [2000] V ConvR 58-541; [1999] VCAT 27.

[14] unChain St Kilda Inc. v Port Phillip CC & Ano [2009] VCAT 2509 [7].

[15] Thirty Fourth Enterprise Pty Ltd v Leggetts Tennis and Squash Centre Pty Ltd (No 2) [2000] V ConvR 58-541; [1999] VCAT 27.

[16] [2016] VSCA 328.