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Mr Girstun was the builder for his daughter's home in Berwick. Mr Matti was a subcontractor who applied exterior render. Mr Matti claimed $12,325, while Mr Girstun's counterclaim was for $20,000. The Member had refused Mr Girstun leave to be legally represented in the substantive proceeding. The central settlement offer, dated 3 October 2008, proposed that each party abandon their claims and bear their own costs.

The procedural history matters. After the substantive decision of 19 December 2008, Mr Girstun sought costs relying on the offer and VCAT Act s 112. A costs order was made on 20 January 2009 when Mr Matti was absent. Once the Member became aware of an error concerning the hearing date, the reasons record that Mr Matti received information about the statutory reopening process. On 15 May 2009, Senior Member Walker dismissed Mr Matti's application to set aside the substantive order but set aside the costs order. The effect, as Senior Member Lothian explained, was that the costs issue would be heard again as if the earlier costs hearing had not taken place.

At the rehearing, Mr Matti's agent said that an offer to walk away was not a real offer and questioned whether Mr Matti had received it while it was open. Mr Matti initially said he did not know when he first saw it, then said that the hearing day was the first time he had seen it. The offeror's solicitor, Mr Rewell, later gave evidence. The Member accepted his account that Mr Ring had telephoned him on 8 October 2008 and that the offer and notice of solicitor commencing to act had been sent together. The Member inferred from the call and the contact details that the offer had been received by that date and found it properly served.

The final order required Mr Matti to pay Mr Girstun's costs of the claim and counterclaim from 8 October 2008. The basis was party-party costs, agreed between the parties or assessed by the Principal Registrar under s 111 on County Court Scale B. Mr Rewell's costs of attending as a witness on 5 October 2009 were included. All other costs of appearance were excluded.

Why the court decided this way

The Tribunal addressed two costs routes separately. First, it considered s 109. The Member described s 109(1) as starting from the assumption that there will be no costs order, with exceptions including the discretionary factor in s 109(3)(e), “any other matter the Tribunal considers relevant”. The Member did not make an order under that section. The claim and counterclaim were not sufficiently complex or of a nature that justified costs, and their relative strengths were evenly matched because both failed.

The decisive route was s 112. The reasons set out the statutory conditions: a party gives another party a written offer to settle; the other party does not accept it while open; the offer complies with ss 113 and 114; and the Tribunal's orders are not more favourable to the recipient than the offer. The Member found the eventual dismissal of both claims to be the same result as the offer that both sides abandon their claims and bear their own costs. On that comparison, the eventual orders were not more favourable to Mr Matti.

Service was also important. Mr Matti disputed when, or whether, he had received the offer. The Member accepted Mr Rewell's evidence about the 8 October telephone call and about sending the offer with the notice of solicitor commencing to act. The Member reasoned that Mr Ring could only have obtained Mr Rewell's contact details from that notice. This supported the finding that the offer was properly served by 8 October. The costs period in the order begins on that date.

The Member rejected the argument that a walk-away offer was not a real offer. In the reasons under “Offer to walk not a real offer”, the Member said offers under ss 113 and 114 take different forms, including an arrangement where each party abandons the proceeding and bears their own costs. The finding was not that every walk-away offer will necessarily qualify. It was that this offer was a real offer in the circumstances described.

The reasons also deal with discretion under s 112(2). The Member described s 112 as the reverse of s 109: s 109 starts with a presumption against costs, while s 112 creates a presumption favouring costs where its conditions are met. But the words “unless the Tribunal orders otherwise” preserve a discretion. The Member referred to Deak v Transport Accident Commission [2002], which had treated the Tribunal as bound to order costs once the comparison condition was met, with discretion only as to amount. The Member agreed with Pizer's criticism of that approach. The result in Matti demonstrates the Member's view that the discretion is not confined to quantifying costs.

In exercising that discretion, the Member considered the nature and history of the dispute, the offer, the steps taken to settle, and the representation circumstances. Although Mr Matti could not afford representation and Mr Girstun had been refused leave to appear through a professional advocate, the Member considered it reasonable for Mr Girstun to have obtained legal advice and taken early settlement steps. The order was nevertheless limited to party-party costs, rather than the indemnity costs sought as an alternative. It also excluded ordinary appearance costs, while including Mr Rewell's attendance as a witness.

Before and after state of the law

This decision records the statutory framework as the Tribunal applied it in 2009; it does not provide a comprehensive account of the law before or after that date. Within that frame, the Member contrasted s 109 and s 112. Under the s 109 approach described in the reasons, costs are not automatic and the Tribunal considers whether an exception justifies departing from that starting point. Here, both claims failed and the Member considered the dispute insufficiently complex or otherwise deserving of costs under s 109.

Section 112 operated differently. Once its conditions were met, the section created a presumption in favour of a costs order, subject to the Tribunal ordering otherwise. The Member's analysis rejected the more restrictive understanding attributed to Deak. The reasons state that Deak treated the Tribunal as bound to award costs when the result was not more favourable than the offer, leaving discretion as to amount only. The Member agreed with Pizer's criticism. The practical significance in this decision is that the Member regarded the statutory words “unless the Tribunal orders otherwise” as leaving room to decide whether a costs order should be made, as well as its amount and basis.

The judgment does not establish that s 112 always produces party-party costs. It describes “all costs incurred” as having been interpreted in different ways, including indemnity costs, solicitor-own-client costs and party-party costs. In this case, having regard to the discretion under s 112(2), the Member selected party-party costs on County Court Scale B if not agreed. The order's treatment of appearance costs and witness costs was also specific to this dispute.

The judgment gives no account of later appellate or tribunal decisions applying or changing its approach. It would therefore be unsupported to state from this source alone that later courts adopted, confined, or overruled Matti. The relationships identifiable from the reasons are limited: the Member disapproved the position attributed to Deak, followed the statement in Coyle v Transport Accident Commission about the meaning of representation, and agreed with the commentary in Pizer's Annotated VCAT Act. Any claim about the subsequent state of the law requires sources beyond this judgment.

Key passages with plain-English translation

The reasons state: “The claim and counter-claim were not of a nature or complexity that justified an order for costs and the relative strengths of the claims were evenly matched - both were unsuccessful.” This explains the result under s 109. The fact that a party wins a costs application under another statutory provision should not be confused with success on the underlying building claim. Neither side succeeded on the substantive merits, but the later offer-based costs analysis produced a separate outcome.

On the comparison required by s 112(1)(d), the Member said the orders were “the same as Mr Girstun's offer”. In plain English, the Tribunal compared what happened at the end of the case with what the offer proposed. Since both claims were dismissed and the offer proposed that both parties abandon their claims, the Member treated the outcome as no better for Mr Matti than the offer.

On the character of the proposal, the Member concluded: “The offer was a real offer.” The reasoning explains that an offer does not have to propose a payment by one side to the other. It may instead offer finality, with each party walking away and bearing their own costs. The decision also emphasises that the offer must meet the applicable statutory requirements; the short conclusion does not remove the need to assess compliance with ss 113 and 114.

The Member's costs order provides for costs “from 8 October 2008 to be agreed on a party-party basis”. That wording makes the accepted service date consequential: costs run from that date, rather than from the date of the final substantive decision. The order is not an award of all expenses without qualification. It specifies party-party costs, a route for assessment under s 111 on County Court Scale B, the inclusion of the witness's costs, and the exclusion of other appearance costs.

The discussion of representation is similarly contextual. Mr Matti did not have a lawyer because he could not afford representation, and the Tribunal had refused Mr Girstun and his daughter leave to be represented by a professional advocate. The Member referred to Coyle for the distinction between representation before the Tribunal and acting as a solicitor or adviser. The reasons do not treat the parties' representation circumstances as cancelling the s 112 consequences; they form part of the setting in which the Member exercised discretion.

What fact patterns trigger this precedent

The decision is most directly relevant where a party relies on a written offer to settle a VCAT proceeding and seeks costs after the ultimate orders are no more favourable to the other party than the offer. The factual pattern here involved an offer to end the whole dispute, with both parties abandoning their claims and bearing their own costs, followed by dismissal of both claims.

Several features were material to the Member's analysis. There was evidence supporting service by a particular date. The offer was treated as complying with the statutory provisions, and the final orders were directly comparable with its terms. The decision also involved an initial costs order that had been set aside, requiring the costs issue to be heard afresh. These features limit the decision's usefulness as a shortcut for other matters: the reasons do not decide the effect of an offer that was not properly served, did not remain open for acceptance, or did not comply with ss 113 and 114.

The case may also be relevant when parties argue that an offer to walk away is not genuine. The Member rejected that argument for this offer, observing that such proposals are among the forms a settlement offer can take. The decision does not say that a walk-away proposal is automatically effective or advantageous. The statutory conditions still matter, as does the comparison between the offer and the orders ultimately made.

Finally, the decision may assist where the parties seek different costs bases. The Member recognised that “all costs incurred” had been interpreted in several ways, but selected party-party costs in this particular case. The order's exclusion of ordinary appearance costs and inclusion of the witness's attendance are also specific to the circumstances and terms of the order. The case should not be read as a general rule that witness expenses are always included or that appearance costs are always excluded.

How later courts have treated it

The supplied judgment contains no later judicial treatment of Matti. It was delivered in November 2009 and refers to Deak v Transport Accident Commission [2002], Coyle v Transport Accident Commission (unreported, 20 April 2001), and Pizer's Annotated VCAT Act, 3rd Edition, para 4099. Those are authorities or commentary considered by the Member, not later treatment of Matti.

The relationship to Deak is significant but should be stated narrowly. The Member reported that Deak considered the Tribunal bound to award costs where the statutory comparison condition was satisfied, with discretion as to amount. The Member said that Pizer criticised that view and that the Member agreed with the criticism. This indicates disagreement with the proposition as described in the reasons. The judgment does not say that a superior court formally overruled Deak.

The Member relied on Coyle for the proposition that “representation” in s 62 means appearance before the Tribunal, rather than acting as a solicitor or adviser. That reference informs the discussion of who may appear for a party, but it is not later treatment of Matti. A reliable account of how later courts treated Matti would require subsequent judgments or other legal sources, which are not included in the material provided.

Still-open questions

This judgment leaves several questions beyond its own facts. First, it does not set out in detail how the Tribunal should exercise the power to “order otherwise” under s 112(2) across different kinds of disputes. It identifies relevant circumstances and explains the result here, but does not provide an exhaustive list of factors or a general balancing test.

Second, although the Member states that offers come in many forms, the reasons do not explore what might make a walk-away offer insufficiently clear, conditional, or otherwise non-compliant with ss 113 and 114. Nor do they determine how the comparison should work where an offer resolves only part of a proceeding or where the eventual orders differ in multiple respects.

Third, the reasons make a factual finding about service based on the evidence concerning the telephone call and the accompanying notice of solicitor commencing to act. They do not address other service methods, disputes about whether an offer was open for a sufficient period, or the evidence needed to resolve a contested receipt date in a different case.

Fourth, the decision selects party-party costs after noting that “all costs incurred” has received different interpretations. It does not resolve, in a general way, when indemnity or solicitor-own-client costs may be appropriate. It also does not explain how the assessment on County Court Scale B interacts with every possible category of expense.

Finally, the supplied text does not establish the decision's later precedential status. Whether later VCAT decisions or courts adopted, distinguished, or rejected its treatment of s 112 requires examination of later sources. This analysis is general legal information, not legal advice. Zoe can make mistakes, and a qualified Australian lawyer should check it before anyone acts on it or relies on it.