(3) The Tribunal may make an order under subsection (2) only if satisfied that it is fair to do so, having regard 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);

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

(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;

(e) any other matter the Tribunal considers relevant.

1. 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:

(i) The prima facie rule is that each party should bear their own costs of the proceeding.

(ii) The Tribunal should make an order awarding costs being all or a specified part of costs, only if it is satisfied that it is fair to do so; that is a finding essential to making an order.

(iii) In determining whether it is fair to do so, that is, to award costs, the Tribunal must have regard to the matters stated in s.109(3). The Tribunal must have regard to the specified matters in determining the question, and by reason of (e) the Tribunal may also take into account any other matter that it considers relevant to the question.

1. In relying on subsection 109(3)(c), the applicant refers to the following factors:

1. her claim was strong and the defence that the respondents were not owner-builders was weak; 2. the applicant was substantially successful in her claim;

1. the counterclaim had no basis in law and was untenable;

1. the second respondent had been advised by the Tribunal at a directions hearing on 21 December 2017 that her defence was not strong and she should seek legal advice.
2. Further, the applicant says that there were a number of directions hearings and adjournments of the hearing, but makes no claim for any costs in respect of those dates, apart from the directions hearing on 21 December 2017. She says that directions hearing arose as a result of a misunderstanding by the Tribunal and the costs of that directions hearing were expressly reserved.
3. She seeks the amount of costs be fixed at $5412, being costs on the Magistrates Court Scale D.
4. The second respondent opposes the application for costs and says that a proper consideration of the matters under section 109(3)(c) leads to the conclusion that her defence was not untenable and had some strength relative to the claim. She says:

1. she had obtained legal advice that she was not an owner-builder; 2. the applicant amended her claim after receiving correspondence from the respondent's then solicitor to drop her claim under the DBC Act and bring the claim under the Building Act;

1. the matter has been adjourned several times through no fault of the respondents;

1. the second respondent has suffered personal expense and time to attend each of the scheduled hearings; 2. she engaged and paid for an expert and the Tribunal accepted his expertise and that his opinions were plausible; 3. the case was decided largely on the fact there was no membrane present and the second respondent was at a disadvantage because she had not been invited to view the state of the works at the time the applicant had the balcony rectified; 4. all the respondents' records are held by the first respondent and he failed to participate in the proceeding, which meant that the second respondent was unable to prove that a registered builder had been engaged or that a waterproofing membrane had in fact been installed; 5. the applicant has received a windfall by being compensated for a new bed which she purchased months after the damage allegedly occurred; and 6. a party should be entitled to come to the Tribunal without representation and it would not be fair to penalise the respondent by a departure from subsection 109(1).
2. Weighing up the matters put by each party, I am not satisfied that it is fair to exercise the Tribunal's discretion under s109(2) and make an order for costs.
3. I do not accept that the respondents' defence was so hopeless as to be untenable:

1. Up until the hearing, the allegation made by the applicant's expert (in his written report) was that there was "inadequate membrane". It was only at the hearing that he gave evidence for the first time that there was no membrane at all. 2. The respondents had written correspondence at the time of the building works which stated that a waterproof membrane had been installed and relied on that in their defence.

1. Most significantly, the second respondent relied on the expert opinion of a consultant whose expertise the Tribunal found to be credible. His opinion was not accepted ultimately because the respondents were unable to prove that a membrane had been laid. That was a question of fact which was only determined at the hearing.

1. As for the legal advice that she was not an owner-builder, I note the response filed by the first respondent which was to the effect that he had engaged a registered builder to carry out the works. Although ultimately that could not be proven, this does not mean that the defence was untenable or significantly weaker than the claims brought by the applicant.
2. Accordingly the applicant's claim for costs is dismissed.

Finding regarding reimbursement of filing fee

1. As the applicant has been substantially successful in her claim, she is entitled under s 115B of the Victorian Civil and Administrative Tribunal Act 1998 to an order that she be reimbursed by the respondents the filing fee she paid, in the sum of $209.

[1] Douglas v Kelso [2018] VCAT 680

[2] Pizza Fellas Pty Ltd v Eat Now Services Pty Ltd [2018] VCAT 507

[3] [2016] VCAT 1005

[4] [2006] VCAT 1063

[5] [2009] VCAT 912