Order the Applicant to pay 50 per cent of the Respondents' party-party costs of the proceedings, including all reserved costs, in accordance with County Court Scale C to be assessed by the Principal Registrar in default of agreement.

1. Application has been made by the Respondents owners, Mr and Mrs Pocock for an order that the Applicant pay their costs of this proceeding on an indemnity basis. In determining whether such an order is appropriate I must start with the provisions of s109(1) of the Victorian Civil and Administrative Tribunal Act 1998 which provides: "Subject to this Division, each party is to bear their own costs in the proceeding"

2. It was submitted by Mr Smith of Counsel, on behalf of the Respondents, that his clients are entitled to an order for costs as they would not have been back before the Tribunal but for the repudiation of the Terms of Settlement by the Applicant builder. Whilst I accept this in principle, I do not accept that in renewing the matter before the Tribunal and then proceeding to hearing the Applicant can be said in any way to have been conducting the proceeding vexatiously as suggested by Mr Smith, or in a way that disadvantages the other party. A party is entitled to have their case heard and determined even if they are under a misapprehension as to their position. Renewing the proceeding was merely further evidence of the Applicant's repudiation of the Terms of Settlement.

3. Mr Smith has also submitted that the Tribunal should take into account the settlement offers dated 21 November 2001in determining the question of costs. This submission is rejected. The offers are not in accordance with the provisions of s112 of the Victorian Civil and Administrative Tribunal Act 1998 and in any event insufficient time was given to the Applicant to consider each of the offers. The first offer was served on the Applicant, by facsimile, to its place of business at 11.01 a.m. on 21 November when the employee of the company involved in the conduct of the proceeding was at the Tribunal, and was open for acceptance until 4 p.m. on that day. The second offer was sent to the Applicant by facsimile at 6.37 p.m. on the same day open for acceptance until 10 a.m. the following day. I accept the submission of Counsel for the Applicant that service of this offer is deemed to be after 9 a.m. on 22 November and, in such circumstances, I am once again satisfied insufficient time was given to the Applicant to properly consider the offer. I do not consider the authorities on which Mr Smith seeks to rely relevant in circumstances where the Act clearly sets out a procedure to be followed in respect of Offers of Compromise.

4. Mr Smith has also referred me to s109(3)(e) which provides that in determining whether to exercise its discretion, regard may be given to "any other matter the Tribunal considers relevant". In this regard he suggested that regard should be given to the proposition that it would simply be unfair to his clients if an order for costs was not made in their favour. I do not consider this to be a relevant factor - the same could be said on behalf of the builder.

5. In determining whether to exercise the Tribunal's discretion under s109(3) of the Act I must give consideration to the conduct by the parties of this proceeding. It is clear that the substantive issue to be determined related to the repudiation of the terms of settlement by the builder Applicant. There were also a number of other questions to be determined including the payment to the builder of the lock-up and fixing stages and quantum. As noted in my Reasons for Decision the Respondents' only evidence in relation to quantum was based on a quotation from Master Menders based on an hourly rate of $90 per hour, which I found to be exorbitant, and I refer to my comments at paragraphs 27-33. Not only was significant hearing time incurred during necessary and appropriate cross-examination of Mr Simpson, time was lost when during cross-examination the matter was stood down to enable Mr Simpson to prepare a take-off in circumstances where the parties were directed to provide detailed quotations at the commencement of the hearing.

6. In my Reasons for Decision at paragraph 56 I noted that "Considerable time, largely motived by the owners, was spent in attempting to establish whether or not the items identified by Mr Neil were structural defects. This is immaterial - Mr Neil was appointed by the parties as an independent expert to make this assessment/determination and the parties in signing the Terms agreed to be bound by his finding..........this case is concerned with what the terms required and whether the builder has fulfilled his obligations..." Again, additional hearing time was necessitated by the manner in which the owners' case was conducted.

7. Interestingly, the Applicant apparently served an Offer of Compromise upon the Respondent owners on 21 November 2001. Although a copy was not tendered it was not disputed by the Respondents that this offer was made. I understand that offer was that the Applicant would accept $51,000 - open for acceptance for 14 days in accordance with the provisions of the Act - in circumstances where the Respondents had offered to pay them $50,000. In other words, as at day ten of the hearing the parties were $1000 apart on quantum. Notwithstanding that the Respondents were ultimately ordered to pay to the Applicant a sum less than that contained in the various offers, it must be said that where the parties were well aware of the provisions of s109 of the Act that they continued with the hearing for a further seven days when they must have known there was no certainty of costs following the event. For the Respondents to allege that the Applicants conducted the hearing vexatiously or in a way that disadvantaged them in such circumstances is unsustainable.

8. It is submitted on behalf of the Applicant that if an order for costs is made that such order should only apply for the period from 23 November 2001 i.e. after the offer was effectively rejected. I do not accept this proposition. It is my view after considering the submissions made on behalf of both parties and having regard to the provisions of s109, and in particular s109(2) which provides that "...the Tribunal may order that a party pay all or a specified party of the costs of another party in a proceeding", and to the conduct of the parties, that the Applicant should pay fifty per cent of the costs of the Respondents on a party-party basis, on County Court Scale C. As noted above, the Respondents would not have been back before the Tribunal but for the repudiation of the Terms of Settlement by the Applicant. However, their conduct of the proceeding led to an unnecessary prolongation of the hearing which disadvantaged the Applicant, and the Applicant, having incurred significant additional costs itself because of the manner in which the proceeding was conducted by the Respondents, should not also be required to bear the additional costs incurred by the Respondents through their own actions (or those of their legal advisors). In this regard I note that the hearing was initially set down for five days but in fact continued for seventeen. The Applicant concluded its case on day six, with the first two days having been spent on openings, and a view - the remaining eleven days were taken up with the Respondents' case in circumstances where it was stood down from time to time to enable further preparation by the Respondents and their witnesses.

9. I therefore order the Applicant to pay 50 per cent of the Respondents' party-party costs of the proceedings, including all reserved costs, in accordance with County Court Scale C to be assessed by the Principal Registrar in default of agreement.