(a) was given in writing;

(b) was to settle the proceeding;

(c) provides a time for payment of the money - being within 60 days of acceptance of the offer; and

(d) was open for acceptance for the minimum period - being 14 days after the offer was made.

1. The applicant's offer was to pay the respondent $30,000 on the terms that each party bear their own legal costs and disbursements. I accept the applicant's submission that this offer was made on an "all in" basis as described in the decision of Metricon Homes Pty Ltd v Sawyer [2013] VSC 518[3] and did not offer to pay any costs the respondent incurred prior to the offer being made.
2. Section 112(3) requires me to take into account, in order to determine if the offer of $30,000 was more favourable than the order made in the proceeding:

(a) any costs I would have ordered on the date the offer was made; and

(b) disregard any interest or costs ordered in respect of any period after the date the offer was received.

1. The orders made in the proceeding were for the applicant to pay the respondent $1,730.13. No interest or costs were part of the amount ordered. Therefore, the difference between the amount of the offer and the amount of the order made is $28,269.87.
2. The respondent has filed an affidavit in which she states that as at the date of the offer she had incurred actual costs of $21,940.28. This is the maximum amount of costs that may have been awarded.
3. Therefore, even if I was satisfied that on the date the offer was made the applicant would have been ordered to pay all of the respondent's costs, the offer of $30,000 is more favourable than any order that would have been made in the proceeding.
4. The respondent in her reply submissions accepts that the applicant's offer to pay $30,000 is more favourable than the order ultimately made after the hearing.
5. For these reasons, I am satisfied that the offer was more favourable than the orders made by the Tribunal. Therefore, the applicant is entitled to an order that the respondent pay his costs incurred after 8 February 2023, unless I order otherwise.

1. The respondent submits that I should not order that she pay the respondent's costs incurred after 8 February 2023. She submits it was reasonable for her to reject the offer given:

(a) the legal fees she had incurred by that date;

(b) the cost of the reports she had incurred; and

(c) the wide possible range of the potential cost of the rectification of defective works.

1. I accept the respondent's submission that I must evaluate and assess the offer at the time it was made, not with the benefit of hindsight and that uncertainty as to future costs may render a decision not to accept a favourable offer not unreasonable.
2. At the time the offer was made - 8 February 2023 - the proceeding had been going for three years. The parties were represented by lawyers throughout the proceeding. The parties had served Points of Claim, Points of Defence and Counterclaim, Points of Defence to Counterclaim, bundles of documents upon which the parties intended to rely at mediation, expert reports, and witness statements. A Tribunal book had been prepared, and the parties had attended a mediation. The hearing of the proceeding commenced on 23 February 2023 - about 2 weeks after the offer was made. Most of the costs in preparation for the hearing are likely to have been incurred by that time.
3. At the time the offer was made the respondent had significant information about the applicant's claims and her counterclaim to enable her to properly consider the offer. She was legally represented. She admitted that she had not paid all the amount due to the builder under the contract and therefore she knew she retained some money that could be used to rectify defects or for the late completion of the works. At the time of the offer (and the hearing) she was renting out the premises as a dental clinic and in the four plus years since the applicant finished his works, the majority of the defects she was claiming had not been rectified. As the owner builder on the permit for the works, the respondent had taken on the overall responsibility for the works and at the time of the offer, the respondent was in a position to consider how the defects were impacting her property, and how much it may cost to rectify the defects.
4. For these reasons, I do not accept that she was unable to properly consider the offer, nor do I accept that at that time she was unable to assess the potential cost of the rectification of defective works or that there was uncertainty about what the cost might be.
5. I do not accept it was reasonable for the respondent to reject the offer, or that I should order otherwise.

1. Therefore, I am satisfied that the applicant is entitled to an order that the respondent pay his costs incurred after 8 February 2023.
2. Neither party made submissions about either the basis upon which the costs should be assessed or the appropriate scale upon which the costs should be assessed.
3. All costs incurred under s.112(2) are ordinarily assessed on the standard basis, although of course the Tribunal retains the discretion to determine how those costs are to be assessed.[4] An order for indemnity costs should only be made in exceptional or extreme cases such as where the conduct of a party is vexatious or particularly obstructive or where a party's case is hopeless or fanciful and with no real prospect of success or where a claim is brought for an ulterior purpose.[5] No submission was made that such factors should be considered in this application.
4. I will therefore order that the respondent must pay the applicant's costs incurred after 8 February 2023, on the standard basis and in accordance with the scale of costs prescribed under r 1.07 of the Victorian Civil and Administrative Tribunal Rules 2018 (Vic) to be agreed between the parties, failing which to be assessed by the Victorian Costs Court.

1. The issue then remains as to what order should be made in relation to the costs of the proceeding incurred on or before 8 February 2023.
2. The respondent has sought an order that her costs of the proceeding be paid by the applicant on the basis that it is fair to do so under s.109(3). The applicant submits that the parties should bear their own costs.
3. Section 109 of the VCAT Act provides:

(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 subsection (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); > > > > > > (iv) causing an adjournment; > > > > > > (v) attempting to deceive another party or the Tribunal; > > > > > > (vi) vexatiously conducting the proceeding; > > > > (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; > > > > (d) the nature and complexity of the proceeding; > > > > (e) any other matter the Tribunal considers relevant.

4. The primary position under s.109 is that parties bear their own costs of a proceeding in the Tribunal. Unlike in the courts, success in a proceeding does not by itself justify an order for costs, something further must be shown.[6] The Tribunal does have a discretion to order costs under s.109(2) but only if it is satisfied that it is fair to do so and, in determining whether it is fair to do so, the Tribunal must have regard to the matters in s.109(3).[7]
5. For conduct to fall within s.109(3), it is required to be more than simply being successful in defending or bringing a claim.[8]
6. I have considered the parties' submissions below under the relevant provisions of s.109(3).

Whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding - s.109(3)(a)

1. Neither party expressly relied on this ground, and I am not satisfied that either party conducted the proceeding in a way that unnecessarily disadvantages the other party to the proceeding.
2. Therefore, I am not satisfied that this ground weighs in favour of it being fair to make an award of costs.

Whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding - s.109(3)(b)

1. The respondent submits that the proceeding was protracted in length. She says she consented to four extensions of time for the applicant's material, which was still filed late. However, there is no submission that the prolongation of the time to complete the proceeding was unreasonable for the purposes of s.109(3)(b).
2. The proceeding was commenced in 2020 and the hearing commenced in early 2023. During that period there were extensive delays in the Tribunal being able to schedule hearings partly due to the Covid restrictions. I am not satisfied that the applicant was responsible for the delay in listing the proceeding for hearing and therefore the time taken to complete the hearing.
3. For these reasons, I am not satisfied that this ground weighs in favour of it being fair to make an award of costs against the applicant.

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 - s.109(3)(c)

1. The respondent submits that a substantial disparity in the strength of each parties claims occurred in this proceeding due to the applicant's position in initiating the claim in the first place, and the respondent's belief that she would be entitled to a sum exceeding the applicant's claim prior to the proceedings being commenced.
2. The respondent further submits that despite being at all times aware that his workmanship was substandard and in breach of the plain language guarantees in his contract, the applicant commenced the proceeding. The respondent says the applicant was aware of the issues because the respondent had reported the defects to him in writing before he commenced the proceeding and many of the defects (such as the severe undulation in the floor) are apparent to lay-people, let alone someone with the applicant's qualifications.
3. The relative strengths of the claims are to be considered prospectively[9] not in hindsight.
4. Both parties clearly had strong claims - the applicant for the price of the works it had performed, and the respondent for damages for the delay in completing the works and for the cost of rectifying defects in the works. Whilst the issues relating to the variations claimed by the applicant and whether the respondent had suffered loss by reason of each of the defects being claimed were vigorously defended, these were arguable claims and not untenable. I found that the unlevelness of the floor claimed by the respondent as a defect was not caused by the applicant's works and it was not part of the applicant's works to relevel the floor. However, I found that the applicant should have advised the respondent that the floor was unlevel before laying flooring on top of it.
5. I am not satisfied that one party's claims were relatively stronger than the other party's claims nor that a party made an untenable claim.
6. For these reasons, I am not satisfied that this ground weighs in favour of it being fair to make an award of costs against the respondent.

The nature and complexity of the proceeding - s.109(3)(d)

1. Neither party expressly relied on this ground.
2. The respondent noted that the applicant engaged a solicitor and counsel (as did the respondent) and that both parties filed expert reports.
3. That lawyers are engaged and experts instructed does not automatically entitle a party to costs. However, I note that the hearing lasted three days, and there were issues in dispute about the parties' responsibilities for the works, 20 claimed variations to the works, 32 claimed defects and whether those defects reasonably required rectification.
4. I am therefore satisfied that the proceeding contained some degree of complexity, which does weigh in favour of an award of costs.

Any other matter the Tribunal considers relevant - s.109(3)(e)

1. The respondent submits that a relevant consideration in determining whether it is fair to make an order for costs is that there is no evidence that she would have brought a claim against the applicant if the applicant had not commenced the proceeding and but for the applicant commencing the proceedings neither party would have incurred costs at all. Further the respondent submits that the evidence shows that she was willing to try to remedy the defects with a new builder and have nothing further to do with the applicant. She says that as she sought to remedy the defects with her surgery while responding to the applicant's claim, she had no real choice other than to instruct lawyers.
2. The respondent relies on the decision in Barbican Construction Group Pty Ltd v McColl (Building and Property) (Costs) [2025] VCAT 18 ('Barbarian Construction Group') in which the Tribunal found it relevant when determining whether it fair to order costs that an application necessarily puts a party "in the position of having to defend themselves."
3. In response, the applicant submits that it is implicit in the respondent's submission that he should not have issued proceedings because he should have predicted that his claim would be more than set off by the respondent's counterclaim. He disputes that there is any basis for this assumption.
4. Further he says that there is evidence before the Tribunal that the respondent intended on making an application for damages prior to him bringing his application and relies upon:

(a) A message from the respondent to his partner dated 21 December 2018 which says, "I will be taking this further and will be suing Peter for all the damages to the business".

(b) An earlier message sent 3 December 2018 by the respondent which says: "I will also be taking this matter further to recover costs please do not contact me anymore unless it's through a solicitor".

1. The applicant accepts that texts of this nature from the respondent are not definitive, but submits they indicate an intention to issue proceedings and are inconsistent with her submission that there is no evidence that she would have brought a claim against the applicant if the applicant had not brought a claim against her.
2. The applicant further submits that the submission that the respondent intended to engage a builder to rectify defects prior to proceedings being commenced, is readily rebutted by the fact that even at the hearing date, other than minor plumbing works, the applicant had not engaged a builder to perform any remedial work to her dental clinic.
3. I am unable on the evidence before me to find that the respondent would have brought a claim against the applicant if the applicant had not commenced his claim. There is insufficient evidence before me of the respondent's intentions regarding her counterclaim at the time the applicant commenced his claim in early 2020. However, I accept that there is evidence that the respondent advised the applicant in late 2018 that she did intend to bring a claim against the applicant.
4. Further, I note that the respondent did not only make an offsetting claim but filed a counterclaim which far exceeded the applicant's claim. The outcome in this proceeding can be contrasted to the outcome in Barbarian Construction Group where the applicant's claim was dismissed and the respondent's claim was wholly successful - here the applicant's claim was wholly successful and the respondent's claim resulted in damages of only about one third of the amount which was claimed and a net result only slightly in favour of the respondent.
5. For these reasons, I am not satisfied that this ground weighs in favour of it being fair to make an award of costs against the respondent.

Conclusion as whether it is fair to make an order under s.109

1. In Vero Insurance Limited v The Gombac Group Pty Ltd [2007] VSC 117 Justice Gillard said at [22], said:

Whilst it is appropriate for the Tribunal to consider each of the specified matters in s.109(3) and express a view as to the weight that should be attached to the particular matters relied upon, in the end it is important that the Tribunal consider all the matters together and determine whether it is fair to make an order for costs. When dealt with in isolation, each of the matters 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. It is the totality of all relevant matters under s.109(3) that must be considered in the context of the prima facie rule.

1. I am satisfied that only the complexity of the proceeding is a matter that weighs in favour of it being fair to make a costs order.
2. However, in circumstances where I am not satisfied that one party's claims were relatively stronger than the other party's claims when considered prospectively, the applicant was completely successful in relation to his claim and the outcome of the proceeding was only a small award in favour of the respondent, I do not consider it fair to order costs.
3. I will order that the parties must bear their own costs of the proceeding incurred on or before 8 February 2023.

1. The dispute between the parties is a consumer and trader dispute as defined by s.182 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) ('ACLFTA') and the Tribunal has jurisdiction to hear and determine the dispute under s.184 of the ACLFTA. Section 184(2)(b)(ii) of the ACLFTA empowers the Tribunal to order the payment of a sum of money including damages in the nature of interest.
2. The respondent seeks interest on the sum of $1,730.13 being the amount to be paid by the applicant to the respondent (after offsetting the amount that the respondent was found liable to pay the applicant), from the date the applicant commenced the proceeding (11 February 2020) or alternatively from the date the respondent made its counterclaim dated 29 May 2020.
3. The applicant submits that the Tribunal should make no order for the payment of interest given that both parties succeeded to varying degrees in obtaining orders they sought, and the outcome does not justify an order for payment of interest.
4. The power to award interest under s.184(2)(b)(ii) of the ACLFTA is discretionary.
5. When considering interest under s.184(2)(b)(ii) of the ACLFTA, Acting Deputy President Mr R Tang (as he was then) set out in Pless v Keogh & Co Pty Ltd (Legal Practice) (Interest and Costs) [2025] VCAT 1010 at [12], the following passage from Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 3) [2003] VSC 244 at [61] in which Gillard J made the following observations about the 'main objectives' of an award of interest (in that case under s.60 of the Supreme Court Act 1986 (Vic)):

There are three main objectives of the award of interest. First, as compensation to the judgement creditor for being out of the funds from the date of commencement of the proceeding until judgement; secondly, to deter judgement debtors from delaying proceedings and thereby having the use of the money for a longer period; and finally, to encourage defendants to make realistic assessments of their liability in a case and to take bone fide steps to compromise the claim.

1. I agree with the comments of Senior Member Walker who considered the circumstances in which interest in the nature of damages may be awarded under s.53 of the Domestic Building Contracts Act 1995 (Vic) in Quinlan v Sinclair [2006] VCAT 1063 at [11]:
   1. ... The tribunal cannot make an award of damages in the nature of interest simply because the section confers the power. Before awarding damages in the nature of interest the Tribunal should satisfy itself that it is appropriate as a matter of law to do so in order to compensate the other party, wholly or partly, for loss and damage suffered as a result of the offending party's breach of the contract. Damages in the nature of interest are damages suffered because the successful party has been deprived of the use of the money ...
2. There were no submissions made or evidence submitted by the respondent as to how she has been deprived of the use of the funds for the damages awarded.
3. The award of damages made in the respondent's favour comprised liquidated damages of $4,125 for delay in completion of the works, a little over $2,000 worth of plumbing works already incurred by the respondent and the cost to rectify defects which had not yet been rectified of around $31,000. In relation to the amount of liquidated damages and the plumbing works already undertaken by the respondent, the respondent had not paid the amount of $35,553 to the respondent and therefore had that amount in hand before the proceeding was commenced to put towards those damages. In relation to the balance of the damages, as those amounts had not yet been incurred, the respondent was not out of pocket for those damages and therefore had not been deprived the use of those funds.
4. There is insufficient evidence that the respondent has been deprived of the use of any money. In these circumstances, I am not satisfied that I should exercise my discretion and make an order that the applicant pay interest in the nature of damages on the sum of $1,730.13.

1. I will make orders in accordance with these reasons.

[1] Pham v Lee (Building and Property) [2024] VCAT 1189.

[2] In the submissions the respondent refers to the date of the offer as 8 February 2025 on three occasions and 8 February 2023 on two occasions. The affidavit in support annexed an offer dated 8 February 2023. Therefore, the references to 8 February 2025 have been taken as typographical errors.

[3] The reference in the applicant's submissions to [2015] VSC 518 as the citation for this decision was clearly a typographical error.

[4] Platinum Construction (Vic) Pty Ltd v Straightline Contractors Pty Ltd [2021] VCAT 319 at [34] per SM Kirton, Victorian Civil and Administrative Tribunal Rules 2018 r.1.017 and Velardo v Andonov [2010] 24 VR 240; [2010] VSCA 38 at [47] which held that "all costs" would ordinarily mean party-party (now standard) costs, but that it would be open to the Tribunal in an appropriate case to award costs on a more favourable basis.

[5] Taylor v Trentwood Homes Pty Ltd [2012] VCAT 1125 at [34] per SM Farrelly.

[6] Fasham Johnson Pty Ltd v Ware [2004] VCAT 1708, [12] per SM D Cremean.

[7] Vero Insurance Ltd v The Gombac Group [2007] VSC 117, [20] - [22] per Gillard J.

[8] Fotopoulos v Landmark Building Design Pty Ltd (Building and Property) (Costs) [2021] VCAT 656 at [47].

[9] Singh v Pivot Construction Group Pty Ltd (Costs) (Building and Property) [2021] VCAT 1065 at [21] per Member A Horan referring to Cooper v Boroondara CC [2001] VCAT 2429 at [31] per Horsfall DP and Sixty-Fifth Eternity Pty Ltd v Boroondara CC [2010] VCAT 310 at [7] per Macnamara DP (as he then was).