1. The Applicants have sought their costs from the Respondents in this proceeding. On 12 April 2007 I ordered that the Respondents pay the Applicants the sum of $68,350.11 of a claim for $101,522.11. The hearing was three days in duration and witness statements had been ordered and were filed and served by both parties.

1. Section 109 of the Victorian Civil and Administrative Tribunal Act 1998 says in part:

(1) Subject to this Division, each party is to bear their own costs in the proceeding.

(2) At any time, the Tribunal may order that a party pay all or a specified part of the costs of another party in a proceeding.

(3) The Tribunal may make an order under sub-section (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. The Applicants base their claim on one or more of 109(3)(a)(i), 3(a)(v), 109(3)(c) and 109 (3)(d).
2. As recently emphasised by the Supreme Court in the matter of Vero Insurance Limited v The Gombac Group [2007] VSC 117, 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 may 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 s109(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. Mr Chris Fenwick, solicitor, who appeared on behalf of the Applicants submitted that an order for costs is justified in whole or in part because the Respondents failed to comply with orders of the Tribunal without reasonable excuse.
2. The Applicants sought further and better particulars of the Respondents' defence. On 7 December 2006, to assist the Respondents in providing the necessary particulars if they remained without the assistance of legal advisors, I made the following orders:
   1. By 12 December 2006 the Applicants have leave to file and serve a request for further particulars of defence generally in the form of the document headed "Works Performed by the Respondents", but cast in the form of a list of questions.

4. By 19 December 2006 the Respondents must either file and serve an answered copy of the Request for Particulars of Defence, or notify the Applicants and the Tribunal through their lawyer, that they will be providing fully particularised Points of Defence which must then be filed and served by 19 January 2007.

1. Mr Fenwick said that the Applicants served on the Respondents the document referred to in order 3.
2. Both the Respondents had been present at the Directions Hearing on 7 December 2006 and the possibility that they might be legally represented thereafter had been canvassed.
3. The Respondents failed to comply with either option in Order 4 by 19 December 2006, but sent a brief list of works they stated they had performed. It did not provide useful information to the Applicants or the Tribunal about work admitted to have been performed by them.
4. The Applicants also submit that the Respondents were ordered to file and serve Witness Statements by 22 January 2007 and failed to do so until 5 February 2007, which was one week before the commencement of the hearing. The joint Witness Statement filed by the Respondents should have been filed earlier and if the Applicants had sought an adjournment on the basis of failure to file on time, there may have been an order for costs thrown away in favour of the Applicants. However an adjournment was not sought and late filing of the Witness Statement alone would not justify an order for costs in the overall proceeding.

Attempting to deceive another party or the Tribunal

1. The Applicants also seek their costs on the basis that the Respondents attempted to deceive them or the Tribunal by insisting that the work undertaken by the Respondents was purely "cosmetic" rather than including important structural work regarding the sub-floor structure, sub-floor ventilation and also the moving of a structural wall between a bedroom and the family room.
2. It is true that I found some of the evidence of the Respondents "inconsistent and could not be relied upon" and some "unconvincing". I have been assisted by the decision of Deputy President Macnamara in Bevendale Ltd v Look Melbourne Pty Ltd (unreported) 22 March 1999 where he said with respect to s109(3)(a)(v):

"To make a finding of intentional deception is a very strong thing and I refrain from doing so".

1. It had not been argued in that case that the mere fact that the Tribunal prefers the account of one witness to another would be enough to amount to deception. However, Deputy President Macnamara said that his findings were, in substance, that the account given by one party accorded more fully with the probabilities than did the account given by the other party's witnesses.
2. The Respondents' evidence in the case before me is a little closer to deceptive than evidence that is, on balance, weaker than the evidence of the other party. Nevertheless this is not a case where the Respondents have clearly committed deceit as defined is Osborne's Concise Law Dictionary, 6th Edition 1976 as "the fraud or false affirmation by the Defendant of a thing within his knowledge".

The relevant strengths of the claims made by each of the parties

1. Mr Fenwick submitted that the Applicants' success in having an award for in excess of $68,000.00 made in their favour was an indication of the success of their claim and also the fact that they were successful "in relation to almost every aspect of their claim". Nevertheless, the Respondents were successful in reducing the amount that they were ordered to pay by approximately one third. In these circumstances I do not find that the strength of the claims of the Applicants far outweighed the strength of the defence of the Respondents. It is important to consider s109(3)(c) as a whole "the relevant 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".[1]. This is certainly not a case where one party has had a "walk-over win".

1. Mr Fenwick submitted that "there is a very strong tendency in the Domestic Building List to award costs where an amount in excess of $10,000.00 is ordered to be paid". I am unaware of any such tendency and suspect that such a submission may have arisen from the Tribunal's decision in Tanner v Miratoe Concreting Contractors [2007] VCAT 164 where the Member said

"The normal rule in the Tribunal is that each party bear their own costs; as the damages claimed is less than $10,000.00 this is a small claim and it is unusual for the Tribunal to issue costs in small claims in the Domestic Building List. Therefore I will make an order that there is to be no order as to costs; subject to no party making a contrary submission ..."

1. Mr Fenwick quoted the decision of Judge Bowman in Arrow International Australia Limited v Indevelco Pty Ltd [2005] VCAT 1769 where his Honour said:

"... There is nothing in the nature of a proceeding in the Domestic Building List that would justify the departure from the presumption contained in s109 and the exceptions thereto. Each case must be viewed on its merits, and I am not of the opinion that some sort of general approach should be adopted".

1. The size alone of the amount in dispute would not be enough to indicate that the proceeding was complex although a matter concerning in excess of $100,000.00 is of a different "nature" to a proceeding for $10,000.00 or less. Similarly, most of the issues before me were the sorts of issues dealt with commonly in building disputes. They concerned whether the work had been done properly, what should be done to rectify any work not done in accordance with standards of reasonable workmanship and the proper cost of such work. The length of the hearing was modest compared with all but the "small claim" hearings before the Domestic Building List. The one aspect of this proceeding which distinguishes it from most others is that, in the words of Mr Fenwick:

"The Applicants in addition to proving that work was defective, had also to prove the identity of the Builder".

1. I accept the submission of Mr Fenwick and find that this aspect of the proceeding is sufficient to add an aspect of complexity to the proceeding in addition to usual proceedings before the Domestic Building List. The complexity of this aspect of the proceeding satisfies me that it is fair to make an order for costs in favour of the Applicants. Further, I refer to the comments of Gillard J in Gombac at paragraph 22 where his Honour said:

"When dealt with in isolation, each of the matters [referred to s109(3)] may lead to the conclusion that it is not fair to make an order for costs, but when taken together, the Tribunal may be satisfied that it is fair to do so".

In addition to my comments about the complexity of the dispute, that complexity when combined with the size of the amount in dispute supports my conclusion that it is fair that the Applicants should have an order for their costs.

1. Mr Fenwick submitted that under s109(3)(e) which enables the Tribunal to take into account "any other matter the Tribunal considers relevant", I should have regard to an offer of compromise of 25 August 2006. He said that the Applicants did not seek to rely upon the offer as one which triggered the operation of s112 of the VCAT Act, but it is indeed unfortunate that the Respondents did not accept the offer. The reason why the Applicants do not rely upon the offer is that it is not in strict compliance with s113(4) of the Act as it does not specify when money is to be paid. Further, although the offer is to accept $65,000.00 together with party/party costs, and the eventual award was for in excess of $68,000.00, the offer was made before the Applicants amended their Points of Claim to increase it from $97,079.00 in total to $101,522.11 to take into account the $4,433.11 spent to that date. The amount awarded for the items that had already been expended by the Applicants was $3,285.11. Therefore, deducting that sum from the amount awarded gives the final figure of $65,065.00. Had the offer been in accordance with s113, it would have triggered s112 of the Act because under s112(1)(d) the section applies if:

"In the opinion of the Tribunal, the orders made by the Tribunal in the proceeding are not more favourable to the other party than the offer".

The orders made were, "not more favourable" to the Respondents by $65.00.

1. Although the Applicants have not relied upon the offer pursuant to s112, the offer has been shown by the order of 12 April 2007 to be reasonable. In Patsios & Anor v Glavinic & Anor [2006] VSC 92, Gillard J based his decision regarding costs on the fact that a party "faced up to the realities and behaved in a more than reasonable fashion in trying to resolve the matter ..."
2. I find that the reasonableness of the Applicants' offer is relevant and this also makes it fair for them to have an order for costs in their favour.
3. The Respondents must pay the Applicants' costs, including reserved costs, to be agreed but failing agreement to be assessed by the Principal Registrar

pursuant to s111 of the VCAT Act on a party-party basis on County Court Scale D.