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[2003] VCAT 711
defendant. 1. Application dismissed pursuant to s.75(1) of the Victorian Civil and Administrative Tribunal Act 1998. 2. Pursuant to s.75(2) of the Act, the applicants pay the respondent's costs of the...
VCAT struck out a domestic building claim by the Howells against their builder, Supa Group, under s.75(1) because it repeated, in substance, an earlier proceeding which had been struck out and the applicants had failed to take the opportunity to amend or reinstate that earlier proceeding. The Tribunal found the later claim was frivolous, vexatious and an abuse of process, and exercised its discretion under s.75(2) to award the respondent costs on County Court Scale B; s.75(2) was held to trump the general costs provision in s.109(1) for this context.
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The Howells (applicants) commenced a proceeding in the Victorian Civil and Administrative Tribunal (Domestic Building List) against Supa Group Pty Ltd (respondent), alleging defective design and building work and that rectification carried out by the respondent had not been done with reasonable care and skill (para [1]–[2]). An earlier proceeding between the same parties concerning the same property had been brought in 1999. That earlier proceeding included pleadings referencing the original building agreement and breaches substantially identical to those set out in the 2003 Points of Claim (para [3]). The earlier matter had a complex interlocutory history: rectification works were carried out by the builder after the first proceeding was adjourned; correspondence showed the owners were dissatisfied by May 2000; leave was given on 22 June 2000 to file amended Points of Claim to plead rectification, but those amended pleadings were not served or filed (para [4]–[5]).
2 cited instruments linked from this judgment.
On 6 November 2000 Deputy President Cremean made consent orders striking out the first proceeding with a right to seek reinstatement, subject to undertakings and a time limit: reinstatement could not be sought after 6 November 2001 except for special cause (para [6]–[7]). No application for reinstatement was made before that deadline (para [7]). The current proceeding came back before VCAT on 11 June 2003. The respondent applied to strike out the current proceeding under s.75(1) of the VCAT Act, arguing it was in substance the same as the first proceeding and therefore frivolous, vexatious, lacking in substance, and an abuse of process (paras [8]–[9]). The Tribunal (Member Robert W Davis) accepted the respondent’s submissions and struck out the proceeding under s.75(1) and, exercising the discretion in s.75(2), ordered the applicants to pay the respondent’s costs on County Court Scale B if not agreed (Order and paras [15], [16]–[20]).
The Tribunal’s decision rests on three connected factual and legal findings.
First, the statutory test. Section 75(1) authorises the Tribunal to summarily dismiss or strike out proceedings that are frivolous, vexatious, misconceived, lacking in substance, or otherwise an abuse of process (para [8]). The Tribunal evaluated the present proceeding against that statutory test.
Second, the history of the earlier proceeding. The pleadings and chronology showed the earlier proceeding addressed substantially the same contractual claims, and the applicants were aware of defective design and rectification issues before the first proceeding was struck out (paras [3]–[6], [11]–[13]). The Deputy President’s order gave a specific mechanism and timeframe for reinstatement, and the applicants did not act within it (para [6]–[7]).
Third, the legal character of the rectification claim. The Tribunal treated rectification as an adjunct to the original contractual cause of action rather than a distinct claim that could be pursued afresh after the first proceeding was struck out: although some rectification concerns arose after the initial pleading they were known before the strike-out and leave to plead them had been granted (paras [4]–[6], [11]–[13]). Consequently, relitigating the matter in a new proceeding was an abuse of process.
On costs, the Tribunal accepted that s.75(2) is a specific provision connected to strike-out orders under s.75(1) and therefore governs over the general costs rule in s.109(1) (paras [16]–[18]). It exercised discretion to award costs to the respondent and fixed County Court Scale B as the appropriate scale (paras [18]–[20]).
Before this decision VCAT’s s.75 powers were already established as permitting strike out for proceedings that are frivolous or an abuse of process. The Tribunal applied that statutory test to the facts of repeated litigation in domestic building disputes. The decision reinforces that where an earlier VCAT proceeding is struck out with an express right to reinstate subject to conditions, inaction by a claimant within the conditions can render later attempts to sue on the same subject matter an abuse of process justifying a fresh strike-out under s.75(1) (paras [6]–[7], [11]–[15]).
On costs, this decision clarifies the application of s.75(2) as a specific statutory basis for awarding costs after a s.75(1) order, trumping the Tribunal’s general costs provision in s.109(1) for that context (paras [16]–[18]). The award of Scale B costs demonstrates how the Tribunal will exercise its discretion where a repeated or unmeritorious proceeding imposes significant preparation burdens on the respondent (paras [18]–[20]).
The judgment therefore affirms two practical outcomes for litigants in VCAT domestic building matters: finality must be respected where the Tribunal has provided an orderly mechanism to reinstate a struck-out matter and costs consequences can follow when a party proceeds in a way the Tribunal regards as an abuse of process.
Statutory test (para [8]): The judge quotes s.75(1). Plain English: VCAT can strike out a case without a full hearing if the claim is frivolous, vexatious, hopeless, or otherwise an improper use of the Tribunal process.
Parties had opportunity to plead rectification (paras [5]–[6], [11]): The Tribunal notes leave was given to file amended Points of Claim and the owners’ solicitors corresponded about doing so, but the amendments were never filed. Plain English: The applicants were given a chance to include the rectification complaint in the earlier case and did not use it.
Finality and abuse of process (paras [11], [13]–[14]): The Tribunal characterises the new proceeding as an attempt to re-run what could and should have been raised earlier, labelling it frivolous, vexatious and an abuse of process. Plain English: You cannot keep pressing the same claim when you had a clear, time-limited opportunity to fix your pleadings and failed to take it.
Costs and statutory interpretation (paras [16]–[18]): The Tribunal reasons that a specific cost power (s.75(2)) applies to strike-outs and overrides the general rule that parties bear their own costs. Plain English: Because the law gives the Tribunal a special power to award costs when striking out under s.75, that power governs here and the Tribunal can make a costs order.
Costs quantum and discretion (paras [18]–[20]): The Tribunal exercised discretion to award costs on County Court Scale B, rejecting indemnity costs and higher scales as inappropriate given the applicants’ conduct. Plain English: The respondent gets costs, but not the extreme measure of indemnity costs because the applicants did not act so improperly as to justify that level of penalty.
This decision is squarely about repeated litigation and the Tribunal’s power to enforce finality. The key fact pattern that triggers the precedent is:
When these elements are present, the Tribunal may summarily strike out under s.75(1) and may order costs under s.75(2) (paras [8], [16]–[20]).
The judgment itself does not survey later appellate treatment. It cites prior authorities (Tran v Swinburne University; State Electricity Commission v Rabel; R v McGowan; Rogers v Queen; Chamber; Conquer v Boot) to situate the Tribunal’s approach to strike-out and finality, but it does not report subsequent appellate consideration of this particular VCAT decision (paras [9], [12]). Practitioners should therefore treat Howell v Supa Group as a persuasive VCAT Member decision applying s.75 principles to domestic building disputes, and check for subsequent VCAT or appellate rulings that may have cited or distinguished it when relying on it in later litigation.
The judgment is fact-specific and leaves several practical questions for future cases:
What precise circumstances will convert a subsequent matter into a sufficiently different cause of action to avoid being characterised as the same claim for abuse-of-process purposes? The Tribunal here treated rectification as an adjunct to the original contract and not a new cause of action (paras [11]–[13]), but the line between a genuine new claim and an adjunct claim will turn on facts in other cases.
How strictly will deadlines and reinstatement mechanisms imposed by VCAT be enforced in other factual situations? This decision enforces the reinstatement deadline strictly because the applicants did not act within the time and terms permitted by Deputy President Cremean (paras [6]–[7], [13]).
What quantum of costs will VCAT award where there is no specified monetary claim in the pleadings? The Tribunal exercised discretion and selected County Court Scale B as an appropriate measure given the nature of arguments and preparation, but the method of scaling in uncontested-damages scenarios is pragmatic rather than formulaic (paras [18]–[20]).
To what extent will the Tribunal treat settlements or interim rectification by a builder as extinguishing implied statutory warranties under the Domestic Building Contracts Act? The Tribunal observed that warranties can effectively disappear when parties settle (para [10]), but left open the circumstances and documentation necessary to show that settlement has removed statutory warranty claims.
Practitioners should therefore apply the reasoning in Howell v Supa Group carefully, focusing on the detailed procedural history and whether the later proceedings genuinely raise new matters that could not reasonably have been raised in the earlier litigation. Where an earlier VCAT order prescribes a reinstatement route and timetable, that mechanism must be followed or a litigant risks the s.75(1) strike-out and costs under s.75(2) seen here (paras [6], [11]–[15], [16]–[20]).
Medium Neutral Citation [2003] VCAT 711
1. Application dismissed pursuant to s.75(1) of the Victorian Civil and Administrative Tribunal Act 1998 ("the Act").
2. Pursuant to s.75(2) of the Act, the applicants pay the respondent's costs of the proceeding, in default of agreement such costs to be taxed on County Court Scale "B".
1. The applicants have issued a proceeding in relation to defective building work at premises at 11 Munro Avenue, Carnegie ("the property"). The applicants are the owners of that property and the respondent is the builder.
2. In the proceeding, it is alleged that there is defective design and building work and that the applicants were owed a duty of care by the respondent. It is further alleged that there was rectification work done by the builder and that rectification work was not done with reasonable care and skill in that it was not rectified in a workmanlike manner and that the respondent was in breach of its duty of care.
3. A proceeding between the same parties in respect of the same property was issued in this Tribunal in 1999 ("the first proceeding"). In that proceeding there was an allegation of an agreement between the applicants and the respondent which is the original building agreement. The pleading referred to the terms of the agreement which are virtually identical to the terms referred to in paragraph 8 of the Points of Claim of the present proceeding. It refers to breaches of that agreement which breaches are identical to the breaches referred to in paragraph 9 of the present proceeding. The main differences as far as I can see and I did not hear Mr Riegler, who appears for the applicants, to say anything different, was that this new proceeding related to design and rectification (which was not referred to in the earlier proceeding). The earlier proceeding had a long history having been issued in March 1999 and Points of Claim being filed on 6 May 1999. There was also a Defence to Counter-Claim filed in the first proceeding.
4. By 25 October, apparently the builder had decided to do some rectification work. It is unclear as to whether this was pursuant to an agreement or not. Mr Riegler submitted there was an agreement and, indeed, in paragraph 17 of the affidavit of Mr Giannakopoulos (which affidavit is filed on behalf of the respondent in this proceeding), there is some mention of an agreement. The rectification works was undertaken when the first proceeding was adjourned for some time.
5. By May 2000, it was quite clear that the owners (who are the applicants) were dissatisfied with the rectification work because there is correspondence passing between their solicitor and the respondent's solicitor stating such. There was interlocutory applications to this Tribunal in relation to the first proceeding and, on 22 June 2000, the applicant was given leave to file an amended Points of Claim, claiming default in relation to the rectification. Those amended Points of Claim were never filed nor received by the respondent. On 31 July, Lander & Rogers, solicitors for the applicants, wrote that they were awaiting final instructions for preparation of their clients' amended Points of Claim.
6. The matter was listed to commence at this Tribunal (ie the first matter) on 8 November 2000. On 6 November, there was a Directions Hearing conducted by Deputy President Cremean and there were consent orders but pursuant to s.75(4) of the Victorian Civil and Administrative Tribunal Act 1998 ("the VCAT Act"), Cremean DP decided that the following orders should be made :
"1. This proceeding is struck out with a right to apply for reinstatement.
2. Reinstatement must be sought by way of a Direction given by the Tribunal to the Registrar upon application made upon notice.
3. Reinstatement may only be ordered by the Tribunal upon the Applicants by their solicitor undertaking to seek such Directions as may be necessary to enable the matter to be heard and undertaking also to comply with all such Directions by the times specified unless cause be shown.
4. Reinstatement of the proceeding, except for special cause shown, may not be sought after 6 November 2001".
7. No application for reinstatement was made before 6 November 2001 or at all.
8. The matter came before me this morning on an application by the Respondent that this current proceeding be struck out pursuant to s.75(1) of the VCAT Act. That section reads as follows :
"(1) At any time, the Tribunal may make an order summarily dismissing or striking out all, or any part, of a proceeding that, in its opinion -
(a) is frivolous, vexatious, misconceived or lacking in substance; or
9. Mr Roberts, who appeared for the Respondent, relied on the above section. He stated that this proceeding is, in substance, the same as that which was brought before the Tribunal in the first proceeding. He said the only difference from the first proceeding was adding design to the alleged agreement and the paragraph in relation to the rectification which does not plead an agreement but seems to plead some sort of tortiuous action. He stated that being the same proceeding, the design fault, if any, was known to the applicants at the time of the first proceeding and the applicants were given leave to amend in relation to the rectification. He therefore submitted it would be both frivolous, vexatious and lacking in substance and otherwise an abuse of process to allow it to proceed. Mr Roberts referred me to a decision of Judge Davey in Tran v Swinburne University of Technology (17 March 1999). There his Honour was dealing with s.75(1) and referred to the State Electricity Commission v Rabel (1998) 1 VR 102 at 103. His Honour then stated at p. 2:
"... an application under the section is unlike similarly named applications in the courts in that once a complaint is struck out, it is in substance dismissed. There is no opportunity to amend or replead it. Accordingly the exercise of the power to strike out a complaint may deprive a party of any hearing of the merits of a case".
10. Mr Riegler, on behalf of the applicants, stated that this matter is different to that considered by Judge Davey or the matter of Rabel, they were matters concerning equal opportunity. He stated this is a statutory scheme where s.8 and s.10 of the Domestic Building Contracts Act apply and there are implied warranties and those warranties cannot be signed away. However, in my view, clearly proceedings can be settled between parties for a sum and, in which case, those warranties would disappear.
11. In this particular instance, the parties well knew of their rights when the Deputy President made his orders in November 2000 and, in my view, that would be similar to the parties settling those rights. They had a chance to amend the proceeding and they were given leave to amend the proceeding in order to make the claim for faulty rectification. Such advantage was not taken. In my view, this is not a case to which statutory warranties would be applicable. There needs to be a point where the issues between the parties re final. The applicant should not be allowed to keep the respondent "on a string".
12. Mr Riegler stated that there was a distinction between "strike out" and "dismissal" and here the proceeding was struck out (ie the first proceeding), they were not dismissed. He stated he relied on a decision of Kaye J in R v McGowan [1984] VicRp 78; (1984) VR 1000 and 1002 where his Honour stated that that decision even though it was a criminal decision does apply as in civil proceedings. He also stated that striking out the proceeding is not a curial determination of the charge alleged, it is no more than a direction to remove the proceeding from the list of matters at hearing. However, on reading s.75 which is what Cremean DP acted under, that is different from the rules of Court. This was made very clear by a number of authorities which were cited to me and, in particular from the New South Wales Supreme Court and the decision of Judge Davey in Tran's case. Also cited to me was the authority of Construction Claims by Philip Davenport 1995 at p.107-71 where it stated :
"If a decision adjudication of a court or an arbiter is subject to an appeal before a court, the matter has not been finally determined until the appeal has been disposed of. Once a judgment is given on a claim, the claim ceases to exist. The entitlement based on the claim is extinguished and replaced by judgment. The claim can thereafter never be subject to a course of action and the principles are considered by the High Court in Rogers v Queen (1994) 68 ALJR 688".
The learned author then referred to Chamber v Deputy Commissioner of Taxation where there was a typing error which meant that the applicant was claiming $200,000 less than what he had intended. However, the High Court stated that once judgment was given, it could not be gone back on, and also refers to the case of Conquer v Boot (1928 2 Kings Bench 336). The doctrine from that case bars the cause of action and it should serve as a warning to any owner contemplating an action against a contractor for defective work. Mr Conquer, an owner, brought an action against Mr Boot, a builder, who had contracted to build the bungalow for Mr Conquer. Mr Conquer obtained judgment in respect of a list of defects. Subsequently, Mr Conquer found other defects which could not have been discovered at the time of the first action. He sued Mr Boot again but for different defects to those listed in the first action. In the second action, Mr Boot raised the defence of res judicata. The Court found for Mr Boot and awarded judgment to Mr Boot together with costs. Lord Justice Sankey said at 342 :
"The cause of action here is 1. the contractor complete in a good and workmanlike manner a bungalow and the breach of it. I do not think that every breach of any particular brick or particular room that is faulty gives rise to a separate cause of action".
13. Thus, the fact that, here the causes of action relate to both designer fault and something to do with rectification which was not pleaded in the first action in my view, does not make any difference. The designer faults were known or should have been known to the applicants at the time of the pleading in the first proceeding. Mr Riegler said that the rectification was not known at the time the cause of action was issued. That is clearly right. However, it was certainly known long before the striking out order of Cremean DP. In fact, leave had been given to amend the pleading to include the rectification. Nothing was done about it. Also, in my view, the rectification was nothing more than an adjunct to the original contract to complete the work. It was not something new. Mr Riegler suggested that it was a new agreement between the parties. However, no agreement is pleaded in this current action in relation to rectification. It appears to be a tortious type action but as that was known to the parties before the strike out. Leave was given to amend the pleadings prior to the striking out and indeed prior to the orders being made in November 2000. One would have thought that should have been done. Bearing in mind that has not been done and the applicants were given the opportunity, in my view, this proceeding certainly fits within the words of "frivolous" and "vexatious" and it is "an abuse of process" to seek to achieve in another proceeding what could not be achieved in the first proceeding.
14. Mr Riegler also, as I stated before, attempted to draw the distinction between striking out and dismissal (see paragraph 12). In my view, in this Tribunal, for the purposes of this type of situation, not always, there is no real distinction. In any event, even if there is a distinction, this type of matter still comes within the words "frivolous", "misconceived" and "an abuse of process" as used in s.75. This is especially so bearing in mind the substance of the Deputy President's order. The Deputy President gave the applicants in that order an opportunity to have the matter reinstated. Such opportunity was given until 6 November 2001, nothing was done at that time or nothing has been done since. Under those circumstances, it would seem to me to allow this action to continue would indeed be an abuse of process, it would be frivolous and it would be vexatious.
15. Under those circumstances, in my view, the current proceeding should be struck out pursuant to s.75.
16. Subsequent to the decision which I have made, Mr Roberts, for the respondent, has asked for costs pursuant to s.75(2) of the VCAT Act. That section reads as follows :
"(2) If the Tribunal makes an order under sub-section (1), it may order the applicant to pay any other party an amount to compensate that party for any costs, expenses, loss, inconvenience and embarrassment resulting from the proceeding".
17. Mr Riegler said that bearing in mind the wording of s.109(1) that the parties should bear their own costs in the proceeding, that that section should override s.75(2). Section 109 is a general section dealing with most matters that come to this Tribunal. Section 75(2) deals with matters in relation to s.75. This is a strike out application in relation to s.75 and s.75(2) is a special sub-section relating to that section. The normal rule of statutory interpretation is a special section should have precedence over a general section. Thus, in my view, s.75(2) governs the costs situation.
18. It then comes to whether I should award costs at all pursuant to s.75(2). The word "may" being used in that section clearly gives the Tribunal a discretion. I note this was a similar proceeding to the one that had been brought previously to which I referred to as the first proceeding. The respondent's solicitors wrote to the applicants' solicitors warning them that this application (for strike out) was to be made before it was made and giving them the opportunity to withdraw. In my view, the arguments that have been put before me this morning have been quite difficult and complicated and would have taken quite a lot of preparation. Therefore, it is appropriate to award costs.
19. Mr Roberts, on behalf of the applicant, has suggested that those costs should be on an indemnity basis or failing an indemnity basis on a Supreme Court basis or failing that on Scale D of the County Court. In my view, it is inappropriate to award costs on an indemnity basis in this case. Those type of costs should be reserved to where a party has acted badly and I do not think it is helpful if I go into detail as to exactly what badly is. While this application should not have been brought, I do not regard the applicants in this case as having acted badly such that an indemnity cost would be awarded. As to whether there should be costs on a Supreme Court scale, I see nothing in this matter as to why there should be costs on a Supreme Court sale. That leaves me with what scale of the County Court is appropriate.
20. Part of the difficulty that I have here, is that there is no quantified sum sought in the proceeding, it is just "damages". So, it is difficult to marry up any amount in the County Court scale with this proceeding. However, doing the best I can in all the circumstances, and looking at the type of argument that was put before me this morning, in my view, County Court Scale "B" is the appropriate scale and I will award costs on that scale.
Howell
Supa Group Pty Ltd [2003] VCAT 711
(1998) 1 VR 102
(1994) 68 ALJR 688
1. Application dismissed pursuant to s.75(1) of the Victorian Civil and Administrative Tribunal Act 1998. 2. Pursuant to s.75(2) of the Act, the applicants pay the respondent's costs of the proceeding, in default of agreement such costs to be taxed on County Court Scale 'B'.