2. The Second Respondent must pay the First Respondent's costs of and associated with this application for reinstatement to be agreed, or failing agreement to be taxed by the principal registrar pursuant to s111 of the VCAT Act on County Court Scale C on a party-party basis.

1. This Directions hearing was sought by the Second Respondent Homeowner. It is an application to:

2. Reinstate the proceeding for the determination of costs between the First Respondent Housing Guarantee Fund and the Second Respondent.

3. Obtain an order for costs for the Second Respondent against the First Respondent for $19,619.

4. Obtain "Such other orders as the Tribunal deems appropriate."

2. On 18 August the Second Respondent lodged a claim with the First Respondent claiming seven defects. By letter of 24 January 2002 the First Respondent accepted two of the seven items and rejected the other five. The accepted items were "render/exterior" and "balcony/water leak".

3. A number of quotations were obtained for each item. First the Second Respondent sent the First Respondent a quotation for $18,920 for the render/exterior, then after a request from the First Respondent, a quotation for $19,910 for the balcony/water leak, then a second quotation for the balcony/water leak for $16,497.80.

4. In May 2002 the First Respondent advised it had decided to pay $19,619 compensation. The Second Respondent pointed out to the First Respondent that this compensation related to only one of the two defects. At the request of the First Respondent the Second Respondent then obtained a quotation for $18,900 for the balcony/water leak.

5. On 22 July 2002 the Applicant-Builder commenced this proceeding against the First and Second Respondents on the grounds that the First Respondent should not have decided that the Second Respondent was entitled to compensation for the two items.

6. On 21 February 2003 the Second Respondent issued a counter-claim in this proceeding against the First Respondent and the Applicant seeking, among other things, an order that:

a. The seven matters complained of were due to the Applicant's defective workmanship,

b. The First Respondent is liable to the Second Respondents for the Applicant's defective workmanship.

c. The quantum of the Second Respondents' loss and damage be assessed, and

d. The First Respondent pay the Second Respondents' loss and damage.

7. On 15 May 2003 the First Respondent made a revised determination that the Second Respondent was entitled to $46,701, which both Respondents noted the Applicant was entitled to appeal. Thereafter the Respondents exchanged correspondence about whether the Second Respondents were also entitled to costs.

8. On 21 May 2003, three working days before trial, the Second Respondent offered to take $46,701 if settlement was reached by 3.00 pm that afternoon, in default of which the Second Respondents would brief and would therefore seek costs at the hearing. For reasons which were not entirely clear, settlement was not reached by that time.

9. On the day of the trial, 26 May 2003, the Applicant failed to appear or be represented. Mr Gilligan's evidence on affidavit is that he had instructions from the Second Respondents' solicitor to settle as follows:

b. Applicant to pay the Second Respondents' costs in relation to both [sic] proceedings on County Court Scale "C",

c. The First Respondent indemnify the Second Respondent in respect of the Applicant's liability to pay $46,701 and costs of both [sic] proceedings.

10. It is noted that there was only one proceeding, which consisted of a claim by the Applicant and a counter-claim by the Second Respondent.

11. Mr Gilligan's affidavit continues that in error, he agreed to settle on behalf of his clients as follows:

a. 1. Applicant to pay the Second Respondent $46,701,

2. Applicant to pay the Second Respondents' costs on County Court Scale "C",

3. The First Respondent indemnify the Second Respondent in respect of the Applicant's liability to pay $46,701 and costs.

b. Second Respondents' appeal in matter D406/2002 struck out with no order as to costs.

12. The difference between Mr Gilligan's instructions and the settlement reached only concerned the costs of the counter-claim.

13. Mr Gilligan's affidavit asserts that "Consent Orders" were entered. It is noted that the orders of Deputy President Macnamara are not headed "consent orders", and while discussions between the First and Second Respondent undoubtedly contributed to the outcome, the description is not entirely appropriate in circumstances where the Applicant failed to appear and there is no suggestion that he gave his consent to order 2 by other means. Paragraph 19 of Mr Gilligan's affidavit states in part "...letter dated 20 May 2003 [from] the First Respondent ... enclosed correspondence received from the Builder-Applicant's solicitors indicating albeit reluctant acceptance of the revised claim of $46,701 and to discontinue the Builder's appeal."

14. Exhibit GWC3 to the Affidavit summarised the Applicant's letter (which was not exhibited) thus:

"You will note that the builder has accepted the HGF's revised Claim Determination and is willing to discontinue its appeal on the basis that each party bears its own costs."

15. The application appears flawed from the Second Respondents' point of view. First, if the orders of 26 May 2003 ("the Orders") were vacated, one of those orders would be the order that the First Respondent pay the Second Respondent $46,701. Perhaps the Second Respondent now regards the First Respondent's determination of 15 May 2003 as sufficient, but she did not regard it as such when the Orders were made.

16. Second, vacating the Orders could breath life back into the Applicant's appeal. Mr Gilligan's affidavit does not make it clear how the sum of $46,701 was reached. It does state that the lowest quotation for the balcony/water leak was $16,497.80 and the quotation for the render/exterior was $18,920; a total of $35,417.80. This amount is $11,283.20 less than the amount agreed to be paid by the First Respondent. Even if the highest quotation for the balcony/water leak of $19,910 were accepted, the total is still $7,869 less than $46,701.

17. Third, it does not necessarily follow that the Orders as made will have a disastrous effect on the Second Respondent's claim for costs. As previously noted there was only one proceeding and the appeal by the Second Respondent was in the form of a counter-claim within proceeding D406/2002. Further, Ms Kirton , counsel for the First Respondent, said at the hearing of this application that part of the cost of the Second Respondent's expert can be considered as costs of defending the Applicant's appeal.

18. Ms Kirton submitted that the Tribunal is functus officio and has no authority to hear the Second Respondent's application. I am assisted by the decision of Deputy President Macnamara in Hill v Baylight Homes [2000] VCAT 1860. In that matter Hill sought to reinstate a claim against the builder where another member of the Tribunal had declined to extend time to appeal a decision of the statutory insurer. Deputy President Macnamara said:

"What [functus officio] means is that once the Tribunal has decided a matter once and concluded the proceeding, it cannot go back and do it a second time, or modify one that is already done, subject only to the exceptions ..."

19. The exceptions mentioned were appeal to the Supreme Court under section 148 of the Victorian Civil and Administrative Tribunal Act 1998 ("The VCAT Act") or re-opening under section 120 where a party was not present or represented at the hearing at which the order was made and can show reasonable cause for their absence.

20. I note the decision of Deputy President Macnamara's in Kataria v Gold Sea Pty Ltd [2003] VCAT 506, which drew a distinction between a proceeding where a proceeding has been struck out and one which has been withdrawn. He found that the withdrawn proceeding finalised the matter and rendered the Tribunal functus offcio.

21. I find that the Orders concluded the proceeding. The Tribunal is therefore functus officio and has no power to grant the orders sought.

22. I have expressed my view that the orders made cannot properly be regarded as consent orders, but consider whether my decision would be different if they were. Mr Gilligan admitted responsibility for what he described as an error and referred me to Kostokanellis V Allen [1974] VicRp 71; [1974] VR 596. It is of little assistance as it dealt with a rule of the County Court which specifically gave a discretion to set aside an order on summons for final judgment where the defendant had neither filed an affidavit nor appeared. In that matter, solicitors for the defendant chose not to appear. One of the reasons for non-appearance was that "if he appeared and requested an adjournment and the application for adjournment was not granted then the judgment would not `be entered in default of appearance' and his right to have it set aside at a later date might be prejudiced".[page 598] The discretion to set aside might have been general, but the trigger for the exercise of the discretion was narrow and does not equate with the facts of the matter in hand.

23. Ms Kirton referred me to a number of authorities. I am not assisted by Harvey v Phillips [1956] HCA 27; (1956) 95 CLR 235, or by Wandel & Golterman GMBH & Co V Wandel Global Services Pty Ltd [2002] FCA 1609. The former deals with a judgement, which although authorized by the judge, had not been signed by the date of appeal. The latter contemplates whether an action which is compromised by a legal adviser contrary to his instructions will be given effect by the court. In the case in hand, the assistance of the Tribunal to make a final order is no longer needed. Hansen v Marco Engineering (Aust) Pty Ltd [1948] VicLawRp 37; [1948] VLR 198 similarly deals with an action settled by Counsel under a misapprehension, however because he had ostensible authority to do so it was held that the settlement was binding and judgement was entered.

24. Nothing in the authorities lead me to conclude that, once the proceeding is concluded by counsel who had ostensible authority to do so, a defect in the course of coming to the compromise allows the judgement or order to be undone.

25. In the course argument, Mr Gilligan submitted that the First Respondent would suffer no prejudice by a delay in resolution of the proceeding of less than two months. I do not accept this submission and find that it would be of great prejudice in this matter and others before the Tribunal if orders arising from settlements were subject to attack in this way.

26. I accept the submission of Ms Kirton that the Orders represent no obvious injustice to the Second Respondent and that she would be most unlikely to succeed in obtaining an order for all the costs sought. I note in particular that her own expert agreed the appeal for the other five items was untenable.

27. Ms Kirton sought indemnity costs of $1630 for her instructing solicitor and brief fee of $1565, on the basis that the application was of no merit.

28. If the application sought had been granted, it would have been appropriate to make an order for costs against the Second Respondent. As their Honours said in Kostokanellis V Allen [1974] VicRp 71; [1974] VR 596 at 605:

"What emerges from these authorities is that under a rule such as Order 5 Rule 14, what the judge is required to do is to determine what, in his opinion, the just way in which the court's discretion should be exercised. To do this must involve weighing up the extent to which the defendant is prejudiced by allowing the order and judgment to stand and the prejudice to the plaintiff in setting them aside. In many cases the situation will be that the plaintiff will not suffer any prejudice that cannot be remedied by an appropriate order as to costs. [emphasis added].

29. I raised before Counsel the question of whether there is an entitlement to costs if the Tribunal is functus officio. Section 109(2) of the VCAT Act provides that "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." I am satisfied that "proceeding" includes the Second Respondent's application to reinstate.

30. I find that pursuant to section 109(3)(c) the Second Respondent's application is of very little merit and in the circumstances it is appropriate that the First Respondent's costs be paid.

31. At the hearing of the application I gave Mr Gilligan, and also his client, the opportunity to make submissions regarding whether costs should be ordered against him. Surprisingly, a single document, signed by Mr Gilligan, has been filed on behalf of the Second Respondent. As the Second Respondent has not made any independent submission I have not had regard to Mr Gilligan's submission, except to note that the power to order costs against a representative under section 109(4) only arises if they are responsible for conduct described in 109(3)(a) or (b). This determination does not, of course, conclude any issue which may arise between the Second Respondent and her legal advisers concerning costs.

32. The Second Respondent must pay the First Respondent's costs of and associated with this application for reinstatement to be agreed, or failing agreement to be taxed by the principal registrar pursuant to s111 of the VCAT Act on County Court Scale C on a party-party basis.