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[2008] WASAT 302
State Administrative Tribunal (WA)
2008-12-19
Original judgment source is linked above.
ACT : BUILDERS' REGISTRATION ACT 1939 (WA)
CITATION : PERTH CENTRAL HOLDINGS PTY LTD and DORIC CONSTRUCTIONS PTY LTD
HEARD : 6 FEBRUARY 2008, 20 FEBRUARY 2008 AND 30 JUNE 2008
Building and construction - Builders' Registration Act 1939 (WA) - Faulty or unsatisfactory building work - Failure to test substrate for moisture - Tribunal had previously held that Building Disputes Tribunal had misconceived evidence - Further proceedings in the Tribunal to establish compensation sum - Costs of remedying the building work - Whether limited to damages amounts or having regard to analogous principles - Full rectification by owner sought - Builder offering replacement costs only - Tribunal held that as claim made under statute, Tribunal was not limited to common law principles - Held that owner's proposals would represent a fair compensation amount - Consideration of certain interim repair costs, legal costs and disbursements
1 In Perth Central Holdings Pty Ltd and Doric Constructions Pty Ltd [2007] WASAT 239 the State Administrative Tribunal determined that the builder, Doric Constructions Pty Ltd, had engaged in building work which was 'faulty or unsatisfactory'. The State Administrative Tribunal reversed the decision of the Building Disputes Tribunal, which had found for the builder.
2 The faulty work related to the failure to ensure that part of the roof of the Target Building in the Hay Street Mall was 'thoroughly dry' before the builder applied a new waterproof membrane to the roof. The current owner of that building was the applicant in these proceedings.
3 This part of the proceedings was a continuation of that matter and was directed at determining what amount should be paid to the owner of the building in compensation. The Tribunal was authorised to make an order under statute covering 'such costs of remedying the building work that [has been found to be] faulty or unsatisfactory as the ... Tribunal considers reasonable'.
4 The owner of the building sought payment for the costs of rectification to bring the building's roof up to a waterproof state, as had originally been intended. The builder was only prepared to pay for the replacement costs for the work already done on the basis that had they tested the roof for moisture properly at the relevant time then the owner would have had to either wait for the roof to dry out, or to seek an alternative waterproofing solution as a variation to the contract. In the alternative, the builder proposed a less expensive means of repair.
5 The State Administrative Tribunal held that as the claim was made under statute it was not limited to common law principles of determining damages (although these were relevant considerations) and that the owner's proposals would represent a fair compensation amount.
6 The applicant was also awarded some associated costs; also the costs of certain interim repairs to the roof, and its legal costs and disbursements in the Building Disputes Tribunal and the State Administrative Tribunal.
7 This matter is the continuation of proceedings from the main issues determined by the Tribunal in Perth Central Holdings Pty Ltd and Doric Constructions Pty Ltd [2007] WASAT 239 (Doric). In Doric, as the summary of the decision indicates, we decided:
that the cause of failure of the membrane [on parts of the roof of the Target building in the Hay Street Mall, Perth CBD] was that moisture had become trapped in a layer of porous lightweight concrete which formed part of the substrate of the roof and [that] the builder [the respondent, Doric Constructions Pty Ltd] had failed to ensure that the substrate was thoroughly dry before applying the membrane, as the specifications of the contract required [the builder] to do.
8 We granted leave to review the decision of the Building Disputes Tribunal (BDT) which had found for the builder and upheld the review application to set aside its decision under review. The review hearing was adjourned to deal with the relief to be sought in substitution for that granted by the BDT. No appeal has been brought from that decision.
9 The relevant findings of the Tribunal in Doric were as follows, at [83] [85], (emphasis added):
We reject the builder's submissions that it installed the membrane in a proper and workmanlike manner in accordance with the specification, but that the specification was inadequate and, in particular, that the membrane specified was unsuitable for the application. There is nothing to suggest that the membrane would not have functioned perfectly adequately if the substrate was thoroughly dry. It is true that if it had been identified by the builder, as it was obliged to do, that the substrate was not thoroughly dry, that the owner would have had to consider either delaying completion of the works, to allow the substrate to dry, or to contemplate then varying the design possibly to something akin to that which is now proposed as a remedial measure. The owner was never given that choice because the builder did not comply with its obligation to ensure that the substrate was thoroughly dry.
We find on the balance of probability that the builder's subcontractor did not carry out moisture testing on the upper roof in question. ... We find that the builder should have been, and was, alerted to the possibility of the roof having a layer of porous lightweight concrete and further, that there probably had been water ingress, so that core testing should have been conducted, to ensure that the substrate was thoroughly dry. Ultimately, we accept the submission made on behalf of the owner, that the builder's obligation to ensure that the substrate was thoroughly dry is an absolute one. It was for the builder to determine how to ensure that the substrate was dry and pursuant to [the building contract] to do whatever work was necessary to carry out the works described.
We find that the [BDT] fell into error by misconstruing the builder's obligations under the contract, in the manner outlined above, which in turn led to a failure to appreciate the significance of [certain evidence] which demonstrated that vaporised moisture was endeavouring to escape from the substrate, causing bubbling or blistering to occur before any linear failure or cracking occurred. On our findings, the only way in which that moisture could have been present in the substrate was because it was there before the membrane was applied. The [BDT] also failed to carry out any adequate analysis of the expert evidence. ... For all the above reasons, we find that the installation of the membrane without determining that the substrate was thoroughly dry means that the builder did not carry out such work in a proper and workmanlike manner and constituted faulty and unsatisfactory building work, for which the builder is liable under s 12A of the [Builders' Registration Act 1939 (WA)].
10 The Tribunal went on to say, at [87] and [89], (emphasis added):
During the course of the review hearing, counsel for the owner advised that because of the amount of time which had elapsed, the cost of remedial repairs is likely to have increased substantially_. There was some discussion as to whether the owner might wish to seek an order to remedy or an order to pay compensation. It was foreshadowed that there would be a contest between the parties as to the appropriate remedy, and consequently the costs of carrying out of such work, if an order to pay were to be claimed._ ...
It is noted that one of the orders sought by the applicant [owner] is an order that the respondent pay the costs of the application in any event. As the starting point in the Tribunal is that each party should pay their own costs, the Tribunal will need to be persuaded it is appropriate to make an order for costs in this matter. The applicant's intentions should be made clear at the directions hearing, and if it is intended to proceed with an application for costs, appropriate directions can then be made.
11 Where necessary, these reasons should be read consistently with our reasons in Doric.
12 Section 12A of the Builders' Registration Act 1939 (WA) (BR Act), so far as is relevant, provides as follows:
12A. Order to remedy unsatisfactory building work
(1) Where on complaint being made to it by any person, including the Board, the Disputes Tribunal is satisfied that any building work has not been carried out in a proper and workmanlike manner by reason that the building work is faulty or unsatisfactory the Disputes Tribunal may by order in writing served on the person who carried out the building work order him to
(a) remedy the faulty or unsatisfactory building work within such reasonable time as is specified in the order; or
(b) pay to the owner of the building such costs of remedying the building work that is faulty or unsatisfactory as the Disputes Tribunal considers reasonable in which case any costs so ordered by the Disputes Tribunal constitute a debt to the owner and are recoverable by him in a court of competent jurisdiction.
13 The way the case unfolded meant that no order under s 12A(1)(a) of the BR Act (order to remedy) was ultimately sought. This phase of the case has proceeded upon the basis that the remaining substantive issue to be determined is as follows: What sum, as is considered to be reasonable, should be ordered to be paid to the owner representing such costs of remedying the building work that has been found to be faulty or unsatisfactory?
14 In short, Mr Shaw, for the builder, says that if the relevant tests on the substrate had been properly carried out at the critical time, then the owner would have had to bear the costs of either drying out the substrate or a change of system. That is, the builder should pay for no more than the originally specified work, notionally redone: 'the reasonable cost of repairing the waterproof membrane'. He submits that the builder did not contract to produce a roofing system that was fit for its purpose. If this approach were to be adopted, then the builder would be liable for the replacement costs only. The builder submits that if what the owner now proposes were to have been proposed at the time that the builder ought to have identified the moist substrate problem, then it would properly be seen as a 'variation under the building contract'.
15 As we understand Mr Shaw's argument, s 12A of the BR Act must, therefore, be read narrowly so as to limit any claim to remedying the building work to that originally contracted for.
16 On the other hand, Mr Hotchkin, for the owner, says that the builder must bear the costs of fully remedying the fault and its consequences; the builder must in effect make good the current problems of a wet substrate (the roof having deteriorated since the critical date of around 10 years ago) by paying for more complete remedial measures reflecting the state of the roof in its current condition. He submits that 'The options that the owner had [at the relevant time] were not provided to it.' He says that the repair costs therefore cannot be compartmentalised as the builder suggests.
17 In the alternative, the builder says that if the Tribunal accepts the owner's case on this point then its experts' lower quotes for a different remedial system from that put forward by the owner should be accepted.
18 Some incidental or ancillary costs (including costs for certain interim repairs) are also sought by the owner. In addition, the owner seeks its legal costs of both these proceedings and costs below in the BDT. These matters are dealt with below.
19 It is first convenient to deal with the issue of the proper approach to the making of an order under s 12A(1)(b) (order to pay).
20 Some indication of the nature of that task given to the BDT (and, upon review, this Tribunal see BR Act s 41(5) and the State Administrative Tribunal Act 2004 (WA) (SAT Act), s 29(1)) may be found in these remarks of L A Jackson DCJ in Craig Carle Homes Pty Ltd v Rushton [2001] WADC 173, at [8]:
In par (b) the [BDT] is empowered to order payment of such costs as the [BDT] 'considers reasonable'. In my view that expression gives to the [BDT] a discretion wider than merely to order payment of an amount to rectify unsatisfactory work. It does not, in my view, require the [BDT] to closely examine to minute detail the cost of rectification. It is sufficient for the [BDT] to use what might be termed a 'broad brush' approach. To require it to be more precise would, in my opinion, be likely to stultify the nature of the jurisdiction intended to be exercised by the [BDT]. The [BDT] should act in a common sense way and to make a reasonable assessment of the cost of remedying unsatisfactory work.
21 The 'nature of the jurisdiction' alluded to by His Honour has, amongst other things, a strong flavour of the summary and practical, but fair, settlement of building disputes. Accordingly, the tests for leave to review a BDT decision, as formulated by both the District Court and this Tribunal, reflect that position: see Content Living Pty Ltd v McIntosh [2005] WADC 173 at [13] and [14]; Watson v Wallington [1999] WADC 84 at [25]; Tangent Nominees Pty Ltd v Edwards [2005] WASAT 119. And, as Hasluck J said of the Home Building Contracts Act 1991 (WA), expressly noting that that Act's scheme permitted access to the BDT: 'The decided cases suggest that remedial legislation of this kind should not be construed narrowly': Lilley v LindsaySmith [2001] WASCA 168 at [32].
22 Importantly, we are concerned with the statutory task of ascertaining what is a reasonable sum for the 'remedying' of certain work. Ordinarily, 'remedying' means, as The Macquarie Dictionary (4th Ed, 2005, Macquarie, Sydney) suggests, 'to put right, or restore to [its] ... proper condition'. Parliament has not seen fit to constrain the Tribunal solely to a matrix of contractual damages principles: Cf Commodore Homes (WA) Pty Ltd and Austin (2005) 41 SR (WA) 236, [2005] WASAT 292, at [23]:
The [BDT] may award such compensation as it considers reasonable. No doubt, in doing so the [BDT] should be guided, but not bound, by common law principles for the assessment of damages either in contract, or in tort, as may be appropriate having regard to the circumstances of each case.
23 Rather, all of the factors outlined earlier about the nature of the BDT's and therefore our statutory jurisdiction, suggest that in the context of the evident purposes of the BR Act, the respondent's objections in this case will not carry the day if what the applicant owner is proposing now by way of a sum representing remediation can fairly be said to be 'reasonable'. And, in this context what is reasonable might be informed by, but is certainly not limited to, contractual damages principles of reasonableness. Thus, a cautious approach to alleged 'betterment' by a plaintiff at common law might be relevant as regards what is an appropriate response and a reasonable sum, but it does not form a separate limiting jurisprudence in this jurisdiction.
24 Likewise, while the common law might not embrace any rectification which appears to impose additional work upon the builder (because, for example, it might be suggested that construction and design defects are both being repaired), such an approach is not necessarily applicable where, as here, the Tribunal is required to take a 'broad brush' approach when making an order to pay.
25 A related but perhaps unstated premise of the applicant's argument might be that s 12A of the BR Act would not exclude, broadly speaking, compensation for what might be described as the opportunity forgone to repair the roof if the builder had completed their task satisfactorily at the proper time. This is particularly so where, as here, a very long interval exists between the actions at fault and the eventual rectification. That is, that event having long since passed, the builder ought to do what is necessary now to reflect the roof as it might have been, but for the builder's conduct. Again, a broad reading of the underlying purpose of s 12A might permit that approach in a particular case.
26 Applying these general principles here, we think that the applicant owner has made out its case.
27 The measures proposed by the applicant, which are remedial measures reflecting the state of the roof in its current condition, can be fairly considered to be an appropriate response to the repair of this particular roof in the condition that the builder's faulty or unsatisfactory conduct has left it in, specially given the long passage of time. Speaking generally, but for the builder's conduct the roof today would have been long since repaired. To undertake the fuller remedial obligation would amount to restoring the roof to its 'proper condition', that is, as a structure which, amongst other things, ordinarily would prevent the ingress of water into its substrate. After all, the builder was previously contracted to deliver 'a new water proof membrane' on various parts of the roof and, from a practical point of view, failed to do so. The owner's proposal, shortly put, achieves that end. To describe this situation as 'betterment' is apt to mislead and draws attention away from the wide jurisdiction to compensate, that is given to the BDT.
28 The attempts at interim repairs and the extent of failure of the existing roofs has resulted in water ingress over an extended period. It is not possible to compare the level of dampness when the original work was carried out at the present time. In practical terms, any remedial work must result in a functional roof, the design of which allows moisture in the substrate to vaporise and escape, as more fully discussed below. If the builder had performed, as it should have, and identified that the substrate was not thoroughly dry, its submission is correct. The owner would have had to wait for the substrate to dry or issue a variation for any design change to the roof. Having completed the work in a faulty and unsatisfactory manner, the builder cannot now complain if the only practical remedy requires different work to be done than that originally specified.
29 We are of the view that s 12A(1)(b) of the BR Act in principle permits such a claim to be made in an appropriate case, such as this. The sum calculated for this repair is, as we shall see, in our view reasonable.
30 Also, based largely upon the same reasoning, we do not accept the submission advanced by Mr Shaw, for the builder, to the effect that the owner must call or provide additional or corroborating expert evidence showing that the quotes of his experts are somehow 'reasonable' in themselves. While it may often be of assistance to have such additional material, it does not mean that this Tribunal cannot assess, and do the best it can, on the evidence provided.
31 During the course of the proceedings it became common ground that repairs are to be effected to only two areas of the roof: these are described as 'the lower southern roof' or 'roof deck south' (hereafter, lower roof), and the 'upper northern roof' or 'roof deck north' or 'roof plant area' (hereafter, upper roof). It appears that the upper roof has suffered less damage than the lower roof, and different solutions are proposed for each section.
32 The size of the remedial project is around 809 square metres for the upper roof and around 541 square metres for the lower roof. The total coverage is therefore approximately 1,350 square metres.
33 For the reasons set out above, the builder's quote for $84,986 (representing only 'the reasonable cost of repairing the waterproof membrane' with no additional remedial work) is rejected by the Tribunal.
34 In the alternative, the builder relied upon the evidence of Mr John Holland, who is the principal of the specialised applicators, Auswest Coatings. Mr Holland produced a less expensive remedy to that proposed by the applicant (see below).
35 In summary, he proposed, in respect of the lower roof, to leave the existing membrane in place (except for damaged areas) and to install a new membrane, a 'fleecy backed' PVC based elastomeric ('Sintofoil'). This product is quite different from the product specified for the original replacement job. Core samples indicated that there was moisture present in the screed of the substrate. Some venting (roof vents) would be necessary to remove this trapped moisture. For the upper roof, a UV stable liquid polyurethane ('Duroproof') is proposed. Roofing vents would also be necessary there. Mr Holland relied upon the work of Mr Eric Byrne and, to a lesser extent, Mr Steven Howe, both from Allflow Durotech, who are the suppliers of various waterproofing membranes. A 10 year manufacturer's warranty was proposed.
36 Apart from a lower cost based upon, it appears, a difference in the respective costs of the products to be applied and the extent of their application, there is a divergence of opinion between the parties on the respective mechanisms to be deployed regarding the securing of the venting and the sheets. As will appear below, the applicant's expert proposes a mechanical form of fixing, while Auswest proposes, subject to final inspection on the day, a non-mechanical (that is, an adhesion-based) system.
37 The final total costing for this proposal came in at about $139,000, but there was evidence that that price would have escalated given the interval between the dates when it was obtained and when the matter was heard.
38 The owner called Mr Ivan Ruefli, from Central Systems, Advanced Remedial Solutions, who proposed an 'EmerClad' vented multilayer 'torchon' mineral finish sheet membrane system, mechanically fixed, with a total 20 year warranty. The mechanical fixing was necessary, in Mr Ruefli's view, to take into account 'the billowing effects of the wind' which, in his opinion, Sintofoil and adhesive vents could not cope with. He thought that the Sintofoil solution was inadequate for the conditions as it was not heavy duty enough. He also expressed concerns about the proposals for the upper roof, suggesting that it was a similar solution to the inadequate patchwork of existing repair jobs.
39 Mr Ruefli's alternative proposal would cost around $223,000 (plus GST). Unlike Mr Holland's quote, this sum had been revised in February 2008. Mr Ruefli estimated that as at June 2008 (when he gave further evidence) the price would have escalated around 5%. This figure was not challenged in crossexamination and seems reasonable.
40 We record that, in early December 2008 the owner raised the possibility of expressly agitating (whether by reopening or otherwise) the escalation of costs point. However, following a directions hearing the owner withdrew any such contemplated action.
41 It should be recalled that in the original proceedings one of the complaints of the builder, a point accepted by the BDT, was that Mr Ruefli was only a 'trouble-shooter' and not an 'everyday applicator'. However, Mr Ruefli's evidence was regarded as significant in the earlier proceedings in this Tribunal, and, importantly, his expertise as a membrane water proofer was accepted by us: see, for example, Doric at [33]. Mr Ruefli is in fact very familiar with the subject building and has, for example, performed temporary resin injection repairs on the roof. This is quite apart from his additional specific involvement in this round of the proceedings. On the face of it, he is highly qualified to express an opinion on the owner's proposal.
42 In short, Mr Ruefli's response on the central issue of the differences between him and Mr Byrne (as to which remedial system ought to be preferred) were that his proposed system was more robust, more dependable, better suited to the subject building and its conditions, and would better handle the state that the roof is in at this point of time. For example, he suggested that his proposal would handle any water in either the upper or lower roofs, whereas the builder's system tended to assume that the upper roof has significantly lower water content than the lower floor.
43 In our view, Mr Ruefli's opinions ought generally to be preferred to that of the respondent builder's witnesses, where they are in disagreement. We think that he has sufficient and recognised industry experience (both generally and as regards the subject building), and his specifications and arguments (apart from one regrettable lapse, when he unnecessarily criticised Mr Holland personally) strike us as more certain, detailed and generally persuasive.
44 The builder produced evidence suggesting an alternative and less expensive system but did not relevantly undermine Mr Ruefli's professional estimate of the costs involved as regards his proposals. Given this, and given also our acceptance of Mr Ruefli's opinions generally, we accept that his itemised estimate of the full cost of remedying the roofs' defects using his recommended systems and products is a reasonable proposal.
45 We consider that the applicant should be entitled to compensation based on what it will cost the owner to carry out the remedial work, rather than what it will cost the builder, because it cannot be said that the owner has acted unreasonably in seeking an order to pay rather than an order to remedy: see Nelson v Mardesic (1998) 22 SR (WA) 42 (Nelson). After the grant of the leave application and review on liability, the matter was adjourned to enable the applicant to decide whether to seek an order to remedy or an order to pay in substitution for the decision of the BDT. The applicant corresponded with the builder on that matter to ascertain the builder's position. By email dated 13 December 2007, the builder's solicitor advised that an order to pay should be sought by the applicant. This basis of assessment of compensation is applied by us in considering all associated cost of repair claims. Thus, the Tribunal will award the applicant the sum of $223,000 (plus GST). An additional sum of 5% representing the escalation costs on the amount specified above will be added.
46 It is common ground that a crane and bins would be needed to remove the waste materials arising from removal of the existing waterproofing, and that a crane would be needed to lift the new waterproofing materials onto the roof.
47 In dispute was the cost of the cranage arising from disagreement as to the location of the crane, the size of the crane required for the lifting, the number of occasions on which the crane would be required and the number of loads that would be lifted up or down on each occasion.
48 The owner relied upon the evidence of Mr Whalley of Boom Logistics, a hirer of cranes. He said that the crane needed to be located in the Hay Street Mall during lifting and that this necessitated closing the Hay Street Mall. A 130 tonne crane was required and the time required for each visit to the site would be an allowance of eight hours.
49 Based on the evidence of Mr Whalley, the estimated cost of the cranage was $24,000 including the cost of certain matting, regulatory permits and bins. Mr Whalley had included within his estimate the costs of obtaining a permit from the Perth City Council to close the Hay Street Mall at a cost of $2,110.
50 Upon crossexamination it became evident that Mr Whalley had not fully appreciated the opportunity to locate the crane in a laneway off the Hay Street Mall enabling a much smaller crane to be used and not requiring closure of the Hay Street Mall or the use of matting. Similarly, it became evident that Mr Whalley had been overly conservative in allowing eight hours hire of the crane on each occasion when it was used.
51 The builder relied upon the evidence of Mr Hollenberg. He was of the view that the crane could be located in a laneway off the Hay Street Mall; indeed that was the location used previously to site a crane.
52 Mr Martinazzo, of D & G Hoist and Cranes, a hirer of cranes, also gave evidence for the builder that the crane would be able to be positioned in and operate from the lane rather than within the mall; that the hire time would be a minimum of four hours for weekend work on each occasion that the crane was required, and that two trips (that is, two lots of cranage on site) would be required.
53 Once it had been established that the crane could operate from a laneway, rather than from within the Mall itself, Mr Whalley's view was that a mall closure would not be required and that the cost of the Perth City Council application fee would be $60 for a standard permit.
54 The evidence of Mr Hollenberg, and Mr Martinazzo, was consistent in that their view was that the crane would be able to be positioned in and operate from the lane rather than within the Hay Street Mall; that the hire time would be the minimum four hours for weekend work, and that two trips (lots of cranage on site) would be required.
55 On the evidence of Mr Hollenberg, six bins, of a size consistent with the capacity of that allowed for the crane, would be required to facilitate all of the removal of the waterproofing materials. The bins cost $350 each to hire and the hire cost included cartage and tipping fees.
56 We prefer the evidence given on behalf of the builder. The Tribunal is of the view that the owner has failed to satisfy the Tribunal that the estimate of crane and bin costs put forward by it is reasonable. After considering all of the evidence the Tribunal is of the view that the appropriate sum to allow for cranage and bin costs comprises the Perth City Council permit fee ($60); two crane lifts at $1,600 each ($3,200), six bins at $350 each ($2,100) making a total of $5,360. Whereas other cost estimates for roof repairs were expressed to be subject to GST, no such qualification was made in respect of these costs which we therefore take to be inclusive of GST.
57 After some initial opposition and after putting the owner to proof on certain particulars, the builder did not oppose a claim in the sum of $15,755, representing certain interim membrane repairs, from going forward. However, the builder formally disputed liability upon the basis that the BDT only had jurisdiction to entertain such an application within six years of practical completion, and that such a claim had not been made before the BDT.
58 Section 12A(1aa) of the BR Act provides that the BDT shall not have power to make an order under s 12A unless a complaint in respect of any building work is made within six years from completion of the building. The complaint relates to building work, not a particular form of order, and under s 12A(1), if the BDT is satisfied that it is faulty or unsatisfactory, it may either issue an order to remedy or an order to pay. There is no prescribed complaint form. It may be that an order to remedy is first made and that if the builder does not comply, the order is revoked and substituted with an order to pay, as prescribed by s 12A(4a). We therefore do not consider it necessary that the complaint must identify a particular part of any claim for an order to pay (or indeed, that any particular form of relief must be claimed). In this case the owner stated in the complaint that the redress sought was 'repair', but there is no basis upon which to hold the owner to that form of remedy: see Nelson.
59 The costs incurred were necessarily incurred to minimise the leaking of the roof and we are satisfied that the amounts charged are reasonable. We will allow the owner the sum of $15,755 in respect of these repairs. We understand these costs to be inclusive of GST.
60 As will be recalled, the applicant owner has now sought its costs of both these proceedings and costs below in the BDT.
61 The original complaint to the BDT only sought redress for 'repair' of the roofing membrane. The question of costs does not appear to have been raised in the BDT, and in any event the owner was, in its submission, unable to ventilate this issue in the BDT because their claim there was unsuccessful. At various points in these proceedings, costs were raised and in Doric at [89] we 'noted that one of the orders sought by the applicant is an order that the respondent pay the costs of the application in any event'. If successful, the applicant seeks to be paid at a scale consistent with the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (WA).
62 Ultimately, the builder did not oppose (but did not consent to) such a claim being made, leaving it for the Tribunal to determine the matter on its merits.
63 The provisions with respect to costs in the BR Act are found in s 38, as follows:
(3) Subject to subsection (4), the Disputes Tribunal may make such orders for costs as it thinks fit.
(4) In any proceedings costs are not to be awarded to any party to the proceedings for the services of any legal practitioner or other person representing or assisting in the representation of that party unless, in the opinion of the Disputes Tribunal, 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 Disputes Tribunal without reasonable excuse;
(ii) failing to comply with this Act or the Home Building Contracts Act 1991;
(iii) asking for an adjournment as a result of subparagraph (i) and (ii);
(v) attempting to deceive another party or the Disputes Tribunal; or
(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 where a party has made a claim that has no tenable basis in fact or law;
(d) the nature and complexity of the proceedings; or
(e) any other matter the Disputes Tribunal considers relevant.
64 In review proceedings in this Tribunal, with respect to costs, s 87(1) of the SAT Act provides as follows:
Unless otherwise specified in this Act, the enabling Act, or an order of the Tribunal under this section, parties bear their own costs in a proceeding of the Tribunal.
65 The principles to be applied to applications for costs in review proceedings before the Tribunal were considered in Lai and Costa [2006] WASAT 117 (S) (Lai and Costa), where the Tribunal said, at [17] [20]:
The legislative scheme for the review of decisions of the Disputes Tribunal is different to the Tribunal's general review jurisdiction which relates to decisions made by government, local authorities, and other bodies, which is a true administrative decision review process. The parties in proceedings before the Disputes Tribunal are private persons engaged in adversarial litigation.
There will be some cases in which an injustice could result by not allowing costs to be recovered. In this particular area of jurisdiction, it is frequently the case that costs have to be incurred in engaging engineering or building consultants. The inability to recover costs may, in some circumstances, have the practical affect of precluding an application being made because even when the prospects of success are considered to be high, the final benefit achievable after deduction of irrecoverable costs, may not justify the proceedings. Such a result would not be in the public interest.
At the other end of the spectrum, the complexity of issues raised or the value of a claim the subject of a complaint to the Disputes Tribunal, may have the result that the applicant, or even both parties, wish to have legal representation from the outset. If there is sufficient at stake, consideration will be given to the possibility that whatever the result, one of the parties will wish to have the decision reviewed. In such circumstances, the inability to recover costs may be an important consideration, so that an applicant may prefer to commence proceedings in a court, rather than before the Disputes Tribunal. The Disputes Tribunal was established in the public interest to provide a cost effective and prompt method of dispute resolution in building cases. The Disputes Tribunal is a specialist tribunal which requires that its chair be a legal practitioner and that the other members be drawn from two panels, one representing consumer interests and the other representative of the interest of builders, to facilitate that purpose. If the cost of legal representation, and even expert witness fees, could not be recovered in the review proceedings, that may therefore, impact on the use of the Disputes Tribunal, and deny any review role by this Tribunal. It is relevant in considering an application for costs for the Tribunal to take such factors into account.
Subject therefore to the starting position being that in proceedings before this Tribunal each party should bear its own costs, it must be recognised that the Tribunal nevertheless has a broad discretion in relation to costs, in the exercise of which, factors such as the above, may be taken into account, together with the particular circumstances of each case.
66 These principles were applied in Rainbow Pty Ltd and Hawkins [2007] WASAT 216 (S). The Tribunal went on to discuss how costs, if awarded, are to be determined, at [14] [17]:
... Assessing costs for the purposes of s 87 of the SAT Act will usually require a determination as to what costs are reasonable given the nature of the matter, its complexity, its importance, urgency, and the amount of time and effort required to properly prepare and present the case.
In J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282(S), the Tribunal stated at [9] as follows:
There is no prescribed scale in relation to work done in relation to proceedings before this Tribunal. Assessing costs for the purposes of s 87 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) will usually require a determination as to what costs are reasonable given the nature of the matter, its complexity, its importance, possibly its urgency, and the amount of time and effort required to properly prepare and present the case. Consideration of issues of that nature may be assisted by analogy with other legal work for which a statutory scale is applicable. Scales are, however, no more than an indication of what might be thought reasonable for certain categories of work. If a scale is to be used for that purpose, it will not always be the scale applicable to Supreme Court proceedings. There will be cases where the subject matter will make the determination in relation to Magistrates Court civil proceedings more appropriate by way of analogy. The Tribunal will always strive to maintain proportionality between the subject matter of the proceedings and the costs associated with the proceedings.
The issues involved in this matter were of some complexity. Further, prior to the introduction of this Tribunal, the avenue of review from a decision of the Disputes Tribunal was to the District Court. The scale of costs used in that jurisdiction is under the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (the Supreme Court Scale). The Tribunal is satisfied therefore, that due to the degree of complexity of this matter, regard should be had to the amounts awarded under the Supreme Court Scale.
It should also be considered that in the unusual event that a costs order [or] costs award is made by the Tribunal, the Tribunal is obliged to minimise the costs to the parties, which should necessarily be reflected in any recoverable party and party costs assessed by the Tribunal. That approach reflects an expectation that representatives of parties before the Tribunal will approach the proceeding in way that minimises costs to their clients.
67 As Lai and Costa also makes clear, the award of costs is not intended to be a full indemnity for the actual expenses incurred by a party. Hence, generally speaking, any award should be approached in a broad fashion and should not have to descend into any inquiry into small items of expenditure. We consider these principles should also be applied in assessing costs in the BDT proceedings.
68 Having regard to the complexity of the issues, the respective sums involved, the extent of legal representation, the number of experts involved, preparation time, the nature of the BDT hearing and the hearing in this Tribunal, we are of the view that it is an appropriate case to award costs having regard to the relevant principles discussed above. We consider these factors render it fair to award legal costs before the BDT, having regard to s 38(4)(d) and s 38(4)(e) of the BR Act. Such costs will be fixed by reference to the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (WA). That scale is to be used strictly for general guidance only.
69 The applicant has filed bills of costs covering the previous proceedings in this Tribunal ($19,855.50, of which $17,771 is in respect of legal costs and $2,085 is in respect of disbursements) and in the BDT ($38,457.95, of which $28,778 is in respect of legal costs and $9,670 is in respect of witness fees and disbursements). These bills appear to be consistent with the matters discussed above. Subject to what is said above, the respondent has not objected to their form or any of the claims made.
70 We accordingly fix those costs in the amount claimed.
71 The owner will be directed to bring in a final bill covering these proceedings. We again emphasise that this forum is a tribunal and not a court and that accordingly costs are expected to be considerably less than had the matter been litigated. The parties will be directed to negotiate in good faith on the applicant's claim for costs for these proceedings, and to bring in appropriate consent orders; failing which the Tribunal will fix the costs.
72 For the above reasons we find the owner is entitled to payment of the following amounts:
for current proposed repairs ($223,000 plus 5% plus 10% GST)
in respect of the leave and review (on liability only) before this Tribunal for:
73 The costs of proceedings before the Tribunal cannot be finalised until the issue of the costs of the hearing (to determine the repair costs to which the applicant is entitled, the subject of these reasons for decision), has been finalised. Consequently, an order will not yet be made in respect of the costs to be allowed in respect of the leave and review (on liability). Those costs as referred to in par (e) of the summary above will be included in the final order to be made in respect of costs.
74 The Tribunal will accordingly issue orders as follows:
(i) On or before 21 January 2009 the respondent must pay to the applicant the sum of $317,138 being:
for current proposed repairs ($223,000 plus 5% plus 10% GST)
I certify that this and the preceding [74] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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