1 The proceeding against the First Respondent be struck out with no order as to costs.

2 I fix the costs awarded pursuant to Order 2 of the orders of 2 March 2004 at $3320.50.

3 The Applicants pay the Second, Third and Fourth Respondents' costs of the application including reserved costs to be taxed in default of agreement on the Supreme Court Scale of Costs and I certify for counsel's attendance at the rate of $2000 per day plus reasonable preparation.

4 The Applicants pay the Second, Third and Fourth Respondents' costs of this day (the application for costs) at the same rate as referred to in Order 3 hereof.

1 In this application I made a decision on 2 April 2004 whereby I ordered that the proceedings brought by the applicants against the 2nd, 3rd and 4th named respondents be dismissed.

2 Today there is an application by the 2nd 3rd and 4th named respondents that they should have their costs on an indemnity basis.

3 Mr Aghion, who appears for the 2nd 3rd and 4th named respondents, whom I will refer to as the respondents for the purposes of this proceeding, said that the general rule that is provided in s 109 of the Victorian Civil and Administrative Tribunal Act 1998 that each party shall bear their own costs should not apply in this case because this case was complex, it had a duration of some 16 days and the applicants' case wholly failed.

4 Mr Moshidis said that this should be the sort of case that does warrant each party paying their own costs. He said that the applicants were entitled to bring their case and brought their case in a proper manner.

5 Mr Aghion relies on s 109(3)(b) ie whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings. He said that there were adjournments caused because the applicants' expert who was required to have two further reports on a matter largely concerned with box guttering where the applicants were only claiming nominal damages. He also said that in relation to other matters such as stirrups, wind portal frame and the structural integrity of joists, there was no evidence of damage at all or if there was, it was only in with other matters. He also said that there were initially matters raised to do with noggings, trimmers and shower bases, studs and ceiling joists that did not appear to be pursued. He also refers to s 109(3)(c) which deals with the relative strength of the parties case and whether it has a tenable basis in law or fact. He said the fact was that the applicant was wholly unsuccessful should be taken into account. In that case he also refers to sub-section (d) ie the complexity of the proceedings.

6 Mr Moshidis said these proceedings were not very complex. They were normal building matters. I disagree with that. In my view, there were matters here that were complex in both law and fact - extremely complex I might say. On that basis, in my view, the normal rule that each party should bear their own costs should not be followed in this case. I also take into account that this was largely a commercial case even though the applicants lived in one unit themselves, one of the units was for rent and I take into account the decision of Macnamara DP in Malthouse case, a retail tenancy case, but nonetheless it is a commercial case and, in my view, it is relevant that there should be an order for costs.

8 It seems to me that there are three possibilities. Mr Moshidis says costs on County Court Scale D, Mr Aghion says that there should be indemnity costs and another possibility which I raised during argument is whether the costs should be on a Supreme Court Scale on a party/party basis.

9 Mr Aghion states that there was two offers of compromise made by the respondent to the applicants. One was on 15 January 2003 whereby the respondent offered the applicants to withdraw if the applicants paid its costs then of $8000 and an offer was made on 15 February 2004 whereby an offer to withdraw was made if the applicants would pay the respondent's costs of $38,5000. Mr Moshidis said that they were costs on a solicitor/client basis. There are two competing affidavits in relation to this. One of Mr Aghion's solicitor who says that the costs are fair and reasonable and Mr Moshidis' solicitor who say that the costs were not reasonable and they were far more than what County Court Scale D would be taxed at. I can make no finding as to the reasonableness of the costs or which affidavit is correct. What I do say is that it would have been open to the applicants to offer tax costs on Scale D, on the other hand it would also have been open to the respondents to make an offer of compromise pursuant to s 112 of the Victorian Civil and Administrative Tribunal Act 1989 and neither of those things happened. Therefore, I put those offers of compromise aside. I cannot make any finding on whether there was a reasonable offer or whether in fact the applicants would have done better if those proceedings had stopped there.

10 I also note that on 27 February 2004, the applicants made an offer to withdraw and pay the respondent $2500 costs. That offer was not accepted. So thus, I do not place any emphasis or any weight on the offers that were made at all. I put all those offers to one side save and except for the fact of the applicants' offer was concerned and take into account that the applicants well could have withdrawn the proceedings if they wanted to get out of it on 27 February, that was some 5 days or so into the hearing. I would then have left to the Tribunal to deal with the question of costs at that stage. It would have been an advantage to all parties had that course been taken.

11 Mr Aghion has correctly said that the conduct of the proceedings was in the hands of the applicants. The applicants started the proceedings and the applicants could have stopped the proceedings at any time they wished. They did not stop the proceedings. I take that into account. As I have mentioned, I take into account that these proceedings were complex. I also take into account that they were of a long duration, however, I note that in the affidavit in support of the respondents' case it is mentioned that there were 2 or 3 days taken in opening, I have to bear some responsibility for that and I do so on the basis that I had not read the file, I make no excuse for that because I do not think I was required to, and I requested Mr Moshidis to give me a detailed opening and he did. So I do not place any emphasis on the opening for prolonging the proceedings at all. I do take into account that there was prolongation of the proceedings in the sense that the applicant introduced new matters during the hearing, namely, the box gutters which did take considerable time and in the end it was only claiming nominal damages. Also there was some time, not a long of time, spent on support columns which were covered by blue board as to whether they were inspected and a defective Form 14. I do not think the Form 14 was an utter waste of time in the same way as the box gutters were and I take that into account. However, I do take into account the fact that these proceedings did take a very long time. They were very complex.

12 Mr Aghion has referred me to Macgregor on Damages 16th edition at paras 428-429 where it makes it clear that even if the applicants had been successful in their application for nominal damages, there is no reason they would have got costs. In fact the respondent probably still would have got the costs.

13 Mr Aghion took me to a number of decisions in relation to when it is appropriate to award solicitor/client or indemnity costs and in particular, he referred me to the well known case of Colgate Palmolive Pty Ltd v Cussons Ltd 46 FCR at 225, and in particular at p 233 where his Honour Sheppard J stated as follows :

In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The test have been variously put.

Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed of warranting a departure from the usual rule. But as French J said in Tetijo, 'the categories in which the discretion may be exercised are not closed'. Davies J expressed similar views in Ragata.

Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud. .... evidence of particular misconduct that causes loss of time to the Court and to other parties, ... the fact that the proceedings were commenced or continued for some ulterior motive ... or in wilful disregard of known facts or clearly established law ... the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.

Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on an indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than a party and party basis.

14 I pause here to say that this Tribunal is different from the courts. In courts the normal rule as to costs are the costs follow the event. In Tribunals the normal rule is set out in paragraph 109(1) that subject to the division each party is to bear their own costs in the proceedings. I note that in courts indemnity costs are rarely made and I note that they are made on the grounds which Shepard J referred to in the Palmolive case. I note the submissions made by Mr Aghion that once the bar of s109 is passed, it should be the same considerations as the Court make. In my view, the intention of the legislature is clear that the test of whether indemnity costs should be awarded should be far stricter than those of that in courts. But there is a discretion. In exercising the discretion which I have had in these matters, I take into account those matters to which I have already referred. I also take into account that an offer could have been made by the respondents pursuant to s 112 which was not made. An offer to withdraw is a proper offer and I refer to the case of TAC v Coyle in the Full Court which I think was decided approximately two years ago. Under those circumstances, I do not think indemnity costs are appropriate. However, I do feel that looking at the complexity of the case, the difficulties that were involved and some of the conduct of the applicants in this case that it is proper that costs should be given not on County Court Scale D as is common in this Tribunal but is nowhere prescribed, but rather on the normal Supreme Court Scale on a party/party basis. In my view, it was appropriate for the respondent to employ counsel that was experienced and that often appears in the Supreme Court. Whether Mr Aghion does or not I do not know but I do have evidence before me that his brief fee is $2000 which is more akin to a Supreme Court barrister than it is to a County Court barrister. Taking those matters into account, in my view, it is proper that the costs should be on a Supreme Court scale and I will make an award of costs on that basis.

15 Before leaving my reasons, I should mention that on 2 March I did make an order and the order on that day was to allow Mr Atchison to file further reports and I ordered the costs of the 1st, 2nd 3rd and 4th respondents thrown away by reason of filing and serving the further reports be paid by the applicants. I do have today evidence in an affidavit sworn by the respondents' solicitor that those costs were $3320.50. While Mr Moshidis contested those costs, there is no evidence to suggest that they are not correct and I accept the sum referred to in the affidavit that they are proper, fair and reasonable as to be the costs thrown away. Thus I will fix the costs of order pursuant to paragraph 2 of the order of 2 March 2004 in the sum of $3320.50 and I will make those orders accordingly.