1. The Applicant states it is just in the circumstances to pay the costs of the occupant who mistakenly responding to the Building Notice and Building Order. The Applicant notes clause 16(2) of Schedule 3 of the Building Act allows the BAB to consider any orders as to costs on application of a party.
2. The Applicant claims the following costs:

a) Engineering Report $3,938 > > b) Legal costs $26,151.48 > > c) Occupant's costs $14,371.50

1. The Respondent provided the following defence to the costs submissions:

a) The Respondent notes the language of the provision under Clause 17 of Schedule 3 of the Act is a default position. That is, each party to a proceeding generally bears their own costs. > > b) The Respondent notes the case of Stewart v Building Practitioners Board [2021] VSC 349. Further, the Respondent relies on the case of Kelly v Milner [2023] VBAB 20 noting it can be appropriate to have regard to s 109 of the VCAT Act to determine when it may be fair to award another party's costs. > > c) The Respondent relies on Riverhill Pty Ltd v Smith (No 2) [2018] VBAB 34 and Walsh v Singh [2018] VBAB as well at the BAB's Practice Notice 9A - 2023 as proposition that expenses which did not relate to the filing of an expert report or expert attendance at hearing were not costs capable of being ordered by the BAB. The expenses claimed pre-date the existence of the proceeding and were not required for the proceeding and were not relevant to the decision of the BAB. They were not incurred for the purpose of the proceeding. > > d) Further the costs incurred by the occupant are not costs incurred by a party to a proceeding before the Board. The BAB does not have jurisdiction to award costs incurred by a non-party to the proceeding. > > e) The Respondent notes the factors set out under s 109(3) of the VCAT Act do not suggest circumstances which would warrant a departure from the general costs rule. The Respondent notes the case of Beal v Williams (No 2) [2023] VBAB 155 in support of its position. > > f) The Respondent followed a well-established procedure to serve the Building Notice and Building Order on the purported owner as listed on the Certificate of Title. The Respondent is not a legal expert, and the scope of his expertise did not extend to trusts law, Religious and Successory Trusts Act 1958 (Vic) and the Transfer of Land Act 1958 (Vic). The issue of the correct party did not arise until the proceedings commenced and the Respondent had dealt with the purported owner for two years. The Respondent did not have the benefit of legal submissions or materials including details of the Trust and the cancelled Certificate of Title. > > g) There was a reasonable question of law to be answered as to whether the Respondent could rely on the Certificate of Title in identifying the registered proprietor or if there was a requirement to look beyond that to identify the correct party for the purpose of the Building Notice. The parties simply took opposing view. Even beyond the preliminary issues, the BAB requested further information from the parties including the appropriate exercise of the BAB's powers indicating the necessity of having fulsome information and analysis prior to coming to a clear determination. > > h) The Determination provided a detailed and comprehensive analysis. It further creates a useful precedent for municipal building surveyors in appropriately responding to future building issues concerning land in the ownership of trustees and the scope of the BAB's powers in respect of an invalidly issued instrument. The requirement for such a detailed analysis does not meet the threshold of inarguable such that an award of costs is warranted. It presented a legitimate legal issue appropriately brought before the expertise of the BAB for resolution.

1. Even if the BAB found that the Respondent's position was so weak as to be untenable, the Respondent could only be said to have persisted with that position from 27 March 2024. This being the date the Respondent affirmed its position. Therefore, costs which predate 27 March 2024 should be excluded.

j) Further, there has been no finding by the BAB on the substantive subject of the hearing. Accordingly, while the Applicant may have incurred the engineering expenses, it cannot be said that the basis upon which those expenses were incurred was the Respondent pursuing an untenable case. > > k) The conduct of the Respondent during the proceeding did not unnecessarily disadvantage the Applicant and the Respondent is a model litigant which conducted the proceedings in accordance with model litigant guidelines. The costs application did not allege the Respondent unnecessarily disadvantaged the Applicant or prolong the time taken to complete the proceeding.

1. The Applicant provided the following reply to the Respondent's submissions:

a) The rules as set out in Clause 17 of Schedule 3 to the Act do not establish a presumption that each party will bear their own costs. There is no interpretative justification for inferring the existence of that additional requirement. > > b) The Respondent as the municipal building surveyor wields relevant powers which have significant consequences and place an obligation upon that person to make themselves aware of the principles that guide the exercise of those powers. The Applicant relies on the case of SCI Operations Pty Ltd v Commonwealth of Australia (1996) 69 FCR 346 at 368 to support the position that the Respondent is expected to exercise power lawfully. > > c) The Respondent pressed the validity of the Building Notice and Building Order thereby leaving the Applicant with no alternative than to prepare its case on the basis that it might have to determine the issues concerning the condition of the wall that was the subject of the notices. That process of preparation was costs thrown away. > > d) The useful precedent referred to by the Respondent has been obtained at the cost of the Applicant. > > e) The relevant error in the notice and order was made at the time of issue and not a consequence of a decision to persist in a position that occurred from 27 March 2024. > > f) The Applicant concedes the claim for expenditure by the occupant would fall within the scope of a claim for damages arising from the Respondent erroneously serving a building notice and order on it. The Applicant withdraws the claim for the occupant's expenses to be paid as part of a costs order.

1. Having considered all the material including the submissions and material filed by the parties, I make the following findings and observations.
2. The BAB's Practice Note 9A - 2023 sets out claims for costs of and incidental to the proceeding of the BAB. The Practice Note defines those costs as:

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.

1. Clause 17 of Schedule 3 of the Building Act 1993 (Act) states:

Unless the Building Appeals Board otherwise determines, a part to a proceeding before the Board must bear his, her or its own costs.

1. Clause 17 of Schedule 3 of the Act should also be read in conjunction with clause 16(2) of Schedule 3 of the Act which states:

The determination may include any order as to costs that the Building Appeals Board, on the application of a party to the proceeding, considers just.

1. The BAB is not a jurisdiction in which costs follow the cause if a party is successful. Justic Gillard's comments in Stewart v Building Practitioners Board & Anor[5] as extracted above further confirm that there is a general rule that there should be no order as to costs. In this way the BAB may generally be considered a 'bear own costs' jurisdiction similar to VCAT. However, if there are circumstances which would make it just in the circumstances to award costs then the BAB may exercise its power to award costs.
2. As part of any consideration of whether an order as to costs would be 'just' in the circumstances, we may review the party's conduct during the proceedings. Further, we may have regard to factors which support an award of costs in other jurisdictions which are typically 'bear own costs' jurisdictions.
3. I consider it would be of assistance to outline those factors which might support an award for costs prior to considering the substantive application for costs brought by the Applicant against the Respondent. We will also outline the BAB's position on jurisdiction for a claim for costs where the merit of the substantive appeal has not been determined, prior to considering the costs claimed.
4. I note for the sake of completeness that the Applicant has reasonably and appropriately, in my view, withdrawn the claims of the occupant for costs.

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

1. As noted by the parties, the BAB has previously had regard to other jurisdictions which have a 'bear own costs' jurisdiction. In particular, the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act) which, like the BAB, also stipulates the Victorian Civil and Administrative Tribunal (VCAT) as being 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. Whilst we are not bound by these considerations, we take the view they are relevant considerations, and we may be 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)[6] in considering costs. In the Re Munro (Costs) case, the Court provided an outline of general costs principles and when costs should be awarded. The Supreme Court possesses a wide discretion in relation to awarding costs which may also provide guidance here. The following general principles identified by the Court we believe have some general application to when the BAB is tasked with considering an application for costs although we stress that we must distinguish this jurisdiction from the Supreme Court's in so far as it is a 'bear own' costs jurisdiction. We further note that the Supreme Court was considering costs over and above the ordinary order for costs.

(f) ...An award [for] costs over and above the ordinary is reserved for cases where the losing party[7] 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.

1. We note in considering whether to grant an award of costs we might have regard to, but are not limited to, considering the following conduct of parties in considering an application for costs:

a) Unduly prolonging the proceeding; > > b) A failure to comply with the Building Act, regulations, rules or enabling enactment; > > 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.

Jurisdiction to Award Costs when Substantive Appeal not determined

1. Both parties have acknowledged that the merits of the substantive appeal have not been determined as a result of the preliminary hearing to review the validity of the Building Order (and by implication the Building Notice on which it was based).
2. As noted above, there are a number of factors which can be considered to determine whether it is just in the circumstances to award costs. However, many of the costs claimed relate to costs incurred in preparing the substantive appeal. The merits of which have not been determined.
3. In reviewing other no cost jurisdictions, such as VCAT, it is clear that VCAT does have the option to award costs in favour of the other party in circumstances where the Applicant has withdrawn their application pursuant to s 74 of the VCAT Act. Although the BAB does not have a similar express power, there is also nothing contained in the wording of clause 16 of Schedule 3 of the Act which would preclude an order for costs of the proceeding in the event of a withdrawn application or other application disposed of in a manner where the merits of same have not been assessed. I do consider however that an award for costs would still be subject to the same condition set out under the Act that it must be just in the circumstances. I note a decision in VCAT in Marple v Indigo SC[8] held that:

Whether costs be sought under section 74(2)(b) or section 109, the power to award costs is a discretionary one. Although section 74(2)(b), on its face, does not contain the same constraints as are contained in section 109(3), the Tribunal has previously held that the circumstances relevant to the exercise of the discretion contained in section 74(2)(b) include, but are not limited to, the matters listed in section 109(3). The Tribunal has also held that in considering the matters contained in section 109(3), the Tribunal should also have regard to the provisions of section 109(1) and (2).

Thus, either way, matters such as the nature and complexity of the proceeding, the relative strengths of the claims made by the parties and the manner in which the parties have conducted the proceeding, are matters that the Tribunal may properly take into account in determining whether to exercise the discretion and award costs against the Applicants.

1. Further, Deputy President Gibson noted in Wilcon Projects Pty Ltd v Hobsons Bay CC[9] that:

Section 74(2)(b) is a separate power to order costs on a withdrawal of a proceeding. There is no rule that costs lie where they fall unless the Tribunal considers it fair to order otherwise, such as applies under section 109 of the Victorian Civil and Administrative Tribunal Act 1998. The Tribunal has an unfettered and broad discretion as to costs under section 74(2)(b). A decision as to costs must depend on all the circumstances of the case. The power to award costs under section 74(2)(b) is governed by the overarching obligation on the Tribunal to act fairly and according to the substantial merits of the case, imposed by section 97 of the Act. For this reason, the Tribunal has held that the issue of costs under section 74(2)(b) must be considered on a case by case basis.

1. In my view, however, the fact that the BAB has not determined the merits of the proceedings would preclude the BAB from making a finding of costs on a merits-based ground relating to the appeal. The approach in the VCAT jurisdiction appears to have similar limitations as indicated in the case of JD AC Nom Pty Ltd v Greater Geelong CC,[10] which held:

Ultimately, the Applicant lodged VCAT Application P974/2021 on the basis of the 6.07 metre wide easement proposal and the amended condition 14 statement and, no longer needing VCAT Application P1605/2020, sought leave to withdraw that proceeding.

Whilst this series of events seems to suggest that the Respondent was correct in its assertions regarding the technical issues with the former condition 14 (as well as whether there was a need for the 45 metre wide easement proposal) and what the Applicant was seeking to do, the Tribunal has not made any findings as to the jurisdictional matters raised by the Respondent. In the circumstances of this case, it would not be appropriate for the Tribunal to come to conclusions as to the jurisdictional issues in the absence of making findings in this respect.

I distinguish this from other instances where it might not be inappropriate for the Tribunal to draw a conclusion where an application has been withdrawn that goes to the question of costs. For instance: a council lodging an application for enforcement order in respect of a person undertaking a use on land without the requisite planning permission, in circumstances where the council had previously, repeatedly, communicated with the person of the need to obtain a planning permit, but it was not until the lodgement of enforcement proceedings that the person lodged a planning permit application with the council. The council then seeks to withdraw the enforcement order application on the grounds that it is no longer required. In a situation like that, the Tribunal might be minded to award costs in favour of the council, even though it had not made any finding that a breach had occurred, mindful of the alleged breach, what can be inferred from the person's application for planning permit and the council's statutory duty to enforce the planning scheme.

However, this is a different situation. I do not think it would be appropriate for the Tribunal to award costs on the basis that the changes made to the original statement in condition 14 in any way 'prove' that the Respondent was correct in its allegations regarding technical deficiencies in the original statement. The Tribunal has not made any findings in relation to that matter.

1. I cannot make a finding on the substantive claim made by the Applicant as it was disposed of due to the findings of the determination of the preliminary questions. This would be a precondition of a finding in favour of any aspect of the costs claim which is prosecuted on the basis that the claim was meritless. However, I may consider other grounds in the Application for costs which relate to the process undertaken in relation to the costs associated with the preliminary questions. This would exclude the expert fees but not the legal fees generated in dealing with the preliminary question.

1. The submissions provided by the Applicant in support of a claim for costs do not suggest that the Respondent's conduct during the course of the proceedings is a factor which supports a claim for costs. Rather, the Applicant's position is broadly that the Respondent has not exercised its power lawfully and pressed the validity of the Building Notice and Building Order, presumably when the Applicant considers it ought not to have done so.
2. In considering this as a basis for costs, I think it is important to consider the Respondent's exercise of power and pressing for the validity of the Building Notice and Building Order gives rise to costs.
3. The Respondent's exercise of power was made under section 106 and section 111 of the Act in issuing a Building Notice and Building Order. The Determination of the preliminary questions did not deal with the substance of whether there were or were not satisfactory grounds under s 106 and s 111 of the Act to issue a Building Notice and then a Building Order.[11] Given this, it will not be an appropriate ground to consider costs as no determination of this ground was made.
4. The Determination of the preliminary questions was focused on whether a Building Notice and Building Order had been served on the owner as required.
5. The Respondent's submissions on that point relied on section 235 of the Act and the findings of a title search/party to whom rates were charged. The Respondent had further noted a history of discussions with the occupant who erroneously represented itself as having authority to deal with the matter for a period of approximately 2 years. It is further not argued that the Respondent engaged with the occupant on any basis other than in good faith.
6. There is further no evidence to support a finding that the Respondent knowingly served an incorrect party. The submissions from the Respondent suggest it was quite the contrary. The Respondent believed it had served the owner properly and was engaged with an entity indicating it had authority to deal with the matter after being served at the address listed on the Respondent's records.
7. The issue was first raised with the parties during the Directions Hearing on 6 March 2024. The BAB considered the issue was relevant to the appeal of the Building Order and whether the Building Order (and any Building Notice on which it was based) was valid but had not been canvassed between the parties previously. The Respondent was not on notice prior to the proceedings that the service could be invalid. For this reason, the parties were asked to consider the issue and the matter adjourned off for an administrative mention on 28 March 2024 to allow the parties time for consideration.
8. The fact that the Respondent argued for the validity of the service of the Building Notice and Building Order and that position was not ultimately successful does not, in my view, mean that the Respondent's position was so weak as to be untenable at law. In fact, the relevant determination on the preliminary question was substantive and required a serious analysis of facts, evidence and law to determine the correct position of 'owner' under the Act. This typically would contraindicate a position which was untenable at law.[12]
9. The Respondent appears to have held a genuine belief that service was valid based on its interpretation of the Act. Further, the Respondent had been induced by the occupant of the relevant Building and Land to believe that the Building Notice and Building Order had been properly served in the first instance.
10. The fact that the Respondent's position was ultimately unsuccessful does not in and of itself provide grounds for finding that it would be just in the circumstances to award costs. The ultimate success of the Applicant is not a factor by itself which would generally be regarded as a basis to support a claim for costs, as this would be more akin to a costs jurisdiction which the BAB is not.
11. Whilst the Respondent did seek additional time during the course of the proceeding to determine the preliminary questions, it was not argued and there is no evidence to suggest this was to deliberately prolong the proceeding or for vexatious reasons. The additional time sought was generally to seek appropriate advice and ensure the availability of parties who could properly assist the proceeding.
12. I do not consider that any further grounds have been established to make it just in the circumstances to award costs against the Respondent for legal costs in relation to the submissions or hearing for the preliminary questions.

[1] [2001] VSC 349.

[3] [2007] VSC 54.

[5] [2001] VSC 349.

[6] [2019] VSC 243.

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

[8] [2016] VCAT 1618 [28]-[29].

[9] [2019] VCAT 190 [13].

[10] [2021] VCAT 1519 [108]-[111].

[11] See Leonard Cooper as trustee of the Melbourne Unitarian Church Trust v Municipal Building Surveyor for the City of Melbourne [2024] VBAB 173 [70].

[12] unchain St Kilda Inc v Port Phillip CC ('unchain') [2009] VCAT 2509 [7].