Roupas v Metricon Homes Pty Ltd (Building and Property) (Costs) [2025] VCAT 667

1. Considering it fair to do so within the meaning of s109(3) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), the respondent must pay the costs of the applicant, save the costs of and incidental to the obtaining by the applicant of a supplementary expert's report dated 15 July 2024. If the amount of costs cannot be agreed, they must be taxed by the Victorian Costs Court on the Magistrates' Court Scale of Costs, Scale F.
2. The respondent must pay the disbursements incurred by the applicant in the amount of $9,629.00 (being the amounts referred to in paragraph 29 of the Supplementary Points of Claim dated 5 August 2024, less $955.63 being the costs of the supplementary expert's report).
3. The respondent must pay the costs so agreed or taxed directly to McCabes Solicitors and, in the case of disbursements for expert's reports, directly to JusticeConnect.

1. This is an application by the applicant ("Mr Roupas") for costs.
2. On 20 October 2020, Mr Roupas entered into a contract with the respondent ("Metricon") for the construction of a new house in Doreen, Victoria for a contract price of $264,180. An Occupancy Permit was issued on 14 October 2021.
3. Mr Roupas filed an application with the Tribunal on 4 October 2022, seeking damages in the nature of rectification costs in respect of alleged defective work, relying on breaches of the warranties given by Metricon, implied by s8 of the Domestic Building Contracts Act 1985 (Vic).
4. By orders made by the Tribunal on 10 January 2023, Mr Roupas was informed that he may be assisted by the free Domestic Building Legal Service operated by not-for-profit agency Justice Connect which provides legal support for consumers in Victoria.
5. Mr Roupas filed a report by Mr Green of The Home Inspection Hub dated 13 April 2023, in which Mr Green assessed rectification costs at $40,005.63 as follows

1. Pursuant to orders dated 4 May 2023, and notwithstanding the rectification costs identified in the earlier Green report, Mr Roupas filed and served Points of Claim dated 2 June 2023 claiming damages in the sum of $12,236 for the rectification of items of alleged defective works carried out by Metricon, unascertained damages for other alleged defective works and orders requiring Metricon to fix certain allegedly defective work.
2. By defence dated 30 June 2023, Metricon denied liability in respect of many items of alleged defective work identified in the Green report, and accepted rectification costs at $13,361 in respect of the items it had admitted. (cf. $25,300 in the Green report).
3. Two days before the commencement of the hearing on 23 May 2024, Mr Roupas served a report of Mr Tecklenburg, building consultant of Buildspect dated 21 May 2024 (the "Tecklenburg first report"), costing eight items of allegedly defective works (four of which were new claims) at $46,171 (including contingencies, margin and GST).
4. Mr Roupas also filed and served an amended Points of Claim dated 21 May 2024, in which 15 alleged defects were categorised with the letters A-O, each of which fell broadly into one or other of the Tecklenburg eight items.

1. I conducted the hearing from 2:00pm on 23 May 2024, and from 10:00am to 4:15pm on 24 May 2024. Mr Roupas appeared in person, and was assisted by Ms Pahagiotakakos. Ms Anderson, Customer Relations Manager of Metricon appeared for Metricon.
2. The hearing proceeded by way of the taking of evidence from both Mr Roupas and Ms Anderson. Leave was given to Mr Roupas to rely on the amended Points of Claim. The parties were able to agree on eight of the 15 items A-O, and I made oral findings and gave rulings in respect of the items on which the parties were unable to agree.
3. In the result, I ordered that Metricon pay $25,596 in respect of Mr Roupas's claims, as recorded in a Schedule uploaded in the Zoom chat function and progressively amended, being the progressive record of the parties' agreements and my rulings ("the Schedule").
4. Prior to orders being typed and sealed, Mr Roupas emailed the Tribunal on 26 and 27 May 2024, informing it that by reason of an allegedly rushed hearing, Mr Roupas suffered "anxiety and [loss of] concentration because of [his] disability" and, in summary, Mr Roupas sought a further sum of $17,051.00 (including contingencies, margin and GST) in respect of the allegedly defective perimeter pathways (alternatively $22,615.21 inclusive of GST the subject of a quotation that had been received, and a further sum of $4,620 in respect of the alleged need to relocate a hot water cylinder.
5. In the interests of justice, and having regard to his announced disability, the Tribunal fixed a further day for the continuation of the hearing, and declined to make an interim order sought by Mr Roupas that Metricon pay $25,596 to Mr Roupas.
6. On 5 August 2024, without leave, Mr Roupas filed and served a "Supplementary Points of Claim" prepared by McCabes Lawyers. Mr Roupas also filed and served, also without leave, a further report of Mr Tecklenburg dated 15 July 2024 (the "Tecklenburg further report") in which an item 9, being for the replacement of the perimeter pathways at a cost of $17,051 was added to the eight items the subject of the Tecklenburg first report. This meant that the total rectification costs assessed by Mr Tecklenburg was $63,222 (including contingencies, margin and GST).
7. Mr Roupas also informed the Tribunal by the Supplementary Points of Claim that he maintained his application for costs, first made in his amended Points of Claim dated 21 May 2024.
8. At the resumption of the hearing on 20 August 2024, in relation to Mr Roupas's further claim for $22,615.21 for the cost of rectifying defective perimeter pathways around his house (the "pathways claim"), I found that on a plain interpretation of the Schedule, the perimeter pathways claim was agreed to be settled (in conjunction with Mr Roupas's claim for allegedly defective driveway works) by the payment by Metricon to Mr Roupas of $10,853.00. I therefore rejected the further claim in relation to pathways.
9. In relation to Mr Roupas's further claim for $4,620 for the quoted cost of moving the hot water cylinder from Elevation B to Elevation D, I was not persuaded by Mr Roupas:

(a) that there was a contractual requirement to locate the hot water cylinder at elevation D (see final plans specifying the location of the hot water cylinder at elevation B, signed by Mr Roupas);

(b) that there are sufficient unobstructed distances between the return walls and external corners of elevation D so as to allow (having regard to the requirements of the Plumbing Regulations 2018 (Vic)) for the installation of a hot water cylinder measuring 700 mm in width and 1420 mm in height; or

(c) that he did not agree to accept a $500 ex gratia payment from Metricon, as recorded in the Schedule;

1. I also found that there were no features of Mr Roupas's behaviour, apparent comprehension skills, and general deportment before the Tribunal on 23-24 May 2024 that reasonably supported the conclusion that Mr Roupas's claimed "anxiety and [loss of] concentration because of [his] disability" on 23-24 May 2024 vitiated his consent to the various agreements he reached with Ms Anderson on behalf of the respondent with respect to his individual defective work claims, and that the final agreement whereby he agreed to accept the sum of $25,596 was therefore enforceable according to its terms.
2. My earlier findings resulting from the hearing on 23-24 May 2024 were therefore left undisturbed.
3. In the result, therefore, notwithstanding the amended claim of Mr Roupas for $63,222 (including contingencies, margin and GST), Mr Roupas was unable to disturb my earlier ruling that Metricon pay him $25,596.

1. The power to award costs is contained in s109 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (the "Act"), which relevantly provides as follows:
   1. Power to award costs

(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-

1. failing to comply with an order or direction of the Tribunal without reasonable excuse;

2. failing to comply with this Act, the regulations, the rules or an enabling enactment;

3. asking for an adjournment as a result of (i) or (ii);

   1. causing an adjournment;
   2. attempting to deceive another party or the Tribunal;
   3. 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.

1. The various elements in s109(3) are matters that the Tribunal is entitled to have regard to when considering the overarching question of fairness, and are not rules in themselves.[1] The matters in s109(3)(a)-(e) are a checklist and aid to determining what is fair in particular circumstances, however, it is not a matter for a party seeking costs simply to satisfy the Tribunal of the application of one or more of them.[2]
2. The approach of the Tribunal to the question of costs was summarised by Gillard J in the case of Vero Insurance Ltd v Gombac Group Pty Ltd [2007] VSC 117 at [20]:

The prima facie rule is that each party should bear their own costs of the proceeding.

The Tribunal may make an order awarding costs, being all or a specified part of costs, only if it is satisfied that it is fair to do so. That is a finding essential to making an order.

In determining whether it is fair to do so, that is, to award costs, the Tribunal must have regard to the matters stated in s. 109(3). The Tribunal must have regard to the specified matters in determining the question, and by reason of paragraph (e) the Tribunal may also take into account any other matter that it considers relevant to the question.

1. The prime requirement is that the costs order be fair, which has been said to require that the order be "just and appropriate in the circumstances".[3]

Would an order for costs offend the indemnity principle?

1. At some point, Mr Roupas engaged Domestic Building Legal Service, operated by Justice Connect, the not-for-profit national legal service that assists people to access the legal system. Subsequently:

(a) Mr Roupas engaged McCabes Lawyers to act in his claim against Metricon, and

(b) Justice Connect released funds from the Domestic Building Legal Service Disbursement Fund, for the purpose of Mr Roupas paying for experts reports for the purpose of his claim.

1. Mr Roupas makes a claim for the legal costs of McCabes Lawyers, who indicate that they have incurred in excess of $20,000 plus GST in "advising on merits and amending and finalising the Points of Claim".
2. Mr Roupas also make a claim for costs of Justice Connect, which disbursed $10,584.63 for the expert opinions obtained by Mr Roupas.
3. The basis on which both McCabes lawyers were engaged, and on which Justice Connect disbursed funds was by means of conditional costs agreements to the effect that while each was acting on a pro-bono basis, they would require Mr Roupas to pay the relevant fees and disbursements if the Tribunal orders, directs or otherwise compels Metricon to pay his legal costs (either in whole or in part) and, in the case of Justice Connect, the order of the Tribunal includes an itemised amount representing the relevant disbursements.
4. Conditional costs agreements are permitted by s 3.4.27 of the Legal Profession Practice Act 2004 (Vic). No distinction is drawn in the legislation between:

(i) a costs order being expressed as a condition precedent to the liability of a client for costs (such as a conditional costs agreement of the type entered into by Mr Roupas), or

(ii) there being an immediate liability of a client for costs, but subject to a condition subsequent that such liability is expunged upon an adverse outcome in the litigation.

1. The indemnity principle in relation to legal costs states that the fundamental purpose of an order that one party to litigation pay the costs of another party is to provide indemnity in relation to the whole, or usually part, of the legal obligation incurred by the other party to his or her lawyers. If that party is under no obligation to pay lawyer's fees, no amount can be recovered from the unsuccessful party: Gundry v Sainsbury [1910] 1KB 645.[4]
2. Metricon, by its written submissions, contends that the circumstances do not call for a costs order under s109. It also relies on the indemnity principal, submitting that given that there is no obligation on Mr Roupas to pay any costs at the time of his application for costs or indeed, at any time prior to any costs order being made, a costs order in his favour should not be made.
3. Johnson Tiles Pty Ltd & Anor v Esso Aust P/L & Ors (No 2)[5] arose from an explosion in 1998 at the defendant's natural gas plant at Longford, Victoria. The explosion was found to have been caused by the carelessness of the defendant in maintaining its plant. The plaintiffs unsuccessfully brought personal claims against the defendant, and also brought a representative claim on behalf of particular groups of gas customers and workers who were required to be stood down in consequence of the explosion. The plaintiffs had "no win-no fee" agreements with their lawyers, were not liable to pay costs, and were therefore not entitled to their own costs. Gillard J found, however, that where the relevant costs agreements did not address their liability to their lawyers for costs in relation to the representative aspects of the proceeding, it could not, therefore, be said that "under no circumstances was either plaintiff not liable for costs"[6]. His Honour therefore made orders that the defendants pay the plaintiffs' costs of the proceeding.
4. In Sherman v Watson[7], there was a conditional costs agreement to the same effect as the one entered into by Mr Roupas. Applying the Johnson Tiles test, Judge Bowman concluded:

...it could not be said that "under no circumstances was [Ms Watson] to be liable for costs". Indeed, the letter of engagement spells out the circumstances in which [Ms Watson] would be liable for costs. If a court makes an order for costs in her favour, she cannot simply pocket the costs and depart. Pursuant to the engagement, she has an obligation to pay the recovered costs to [her lawyers].[8]

1. Views may well have differed on when the assessment of the liability of a party to pay costs should be made: on the date of the costs application (as in Johnson Tiles) or, arguably leading to a "whirligig" of circularity,[9] on the date of any favourable costs order (as in Sherman).
2. In my view, uncertainty was resolved by the decision of the Victorian Court of Appeal in Manieri & Anor v Cirillo,[10] which expressly considered whether conditional costs agreements of the type entered into by Mr Roupas infringe the indemnity principle in relation to costs. Relying on considered obiter statements by Santow JA in Wentworth v Rogers,[11] the Court found that the indemnity principle was not infringed.[12] His Honour expressed the view that the indemnity principle, with its emphasis on flexibility, was quite capable of accommodating conditional fee agreements of this kind, recognising their importance in facilitating access to justice.[13]
3. Mainieri is to the effect that the indemnity principle is not infringed by conditional costs agreements of the type entered into by Mr Roupas.
4. It follows that I reject Metricon's principal submission.

Is it fair to order that Mr Roupas's costs be paid

1. I turn to whether it would otherwise be fair to award costs. I consider that a relevant matter within the meaning of s109(3)(e) of the Act is where, as occurred here, a party is informed by the Tribunal that he or she might be assisted by the obtaining of legal advice, and that party subsequently seeks assistance, with the consequence that an evidential basis for a claim is better articulated, it is in the interests of justice and therefore fair that the other party should pay all or a specified part of the legal costs thereby incurred. Although not the case here, where the legal basis of Mr Roupas's claim was plain, legal advice in such circumstances may often be of a nature that better articulates an applicant's cause of action, or an available legal basis for a respondent's defence.
2. I have therefore concluded that it is fair within the meaning of s109(3) to make the accompanying costs orders.
3. I have not awarded the costs of and incidental to the obtaining by the applicant of the supplementary expert's report dated 15 July 2024. I find that the obtaining of that report did not alter the outcome of the hearing on 23-24 May 2024 in relation to Mr Roupas's perimeter pathways claim, or his claim in relation to the allegedly incorrect location of the hot water cylinder.
4. Given the amount recovered by Mr Roupas, and his claim being a defects claim only, I see no cause for awarding costs on a scale other than that prescribed by the Magistrates' Court of Victoria.

[1] Mornington Peninsula SC v Fox [2003] VCAT 1524.

[2] S & R Property Developments Pty Ltd v Moonee Valley CC [2001] VCAT 541 at [36].

[3] Filippou Management Pty Ltd v MREEF Project Company No 11 Pty Ltd [2010] VCAT 1261 at [20].

[4] See also Pizer's Annotated VCAT Act 7th edition at [VCAT 109.100 Purpose of costs orders].

[5] [2003] VSC 212

[7] [2004] VCAT 1093

[9] King v King [2012] QCA 81 at [13].

[10] [2014] VSCA 227.

[11] [2006] NSWCA 145.

[12] Ibid. at [45]-[54] in which his Honour expressly considered s186 of the Legal Profession Practice Act 1987 (NSW), in terms similar to s 3.4.27 of the Legal Profession Practice Act 2004 (Vic). cf. considered obiter observations of Basten JA in Wentworth at [102]-[147], and King v King [2014] QSC 54, where views contrary to those of Santow JA are expressed.