For the reasons referred to above in relation to whether I would have made a costs order as at 8 June 2011, I make no order for costs incurred by the parties up to 8 June 2011.
Parties
Applicant/Plaintiff:
Taylor
Respondent/Defendant:
Trentwood Homes Pty Ltd
Cases Cited (2)
Taylor v Trentwood Homes Pty Ltd (Domestic Building) [2012] VCAT 1125 (31 July 2012)
Where costs are ordered, it is usual for a court or tribunal to identify one of 3 alternate bases of assessment of the sum of the costs:
(i) Party and party basis. The ordinary level which generally includes all costs necessarily and properly incurred;
(ii) Solicitor and client basis. A higher level which generally includes all costs reasonabl_y_ incurred and of reasonable amount;
(iii) Indemnity basis. The highest level which generally includes all costs incurred save in so far as they are of an unreasonable amount or have been unreasonably incurred.
Mr Beck-Godoy submits that all costs, as referred to in s112(2), is a simple prescription that means costs on an indemnity basis. He finds support for the proposition in Duggan v MGS Products Pty Ltd[2002] VCAT 1764 and Geftine Pty Ltd v Dover Beach Pty Ltd[2006] VCAT 2189.
Mr Reid, on the other hand, submits that the correct interpretation is as indicated more recently by Ashley JA in Verlado (as referred to above) that costs would ordinarily be assessed on a party and party basis although the tribunal is empowered to allow costs on a more favourable basis.
I follow Ashley JA's comments in Verlado.
Mr Beck-Godoy submits that, in any event, it is appropriate in this case to award costs on an indemnity basis, or at least a solicitor and client basis, by reason of a number of matters including:
(a) My finding that the owner, Mr Taylor, lacked credibility as a witness, particularly in relation to his recollection of important conversations;
(b) My "outright dismissal" (as Mr Beck-Godoy puts it) of the owners' claim in respect of the roof trusses which accounted for more than half the total quantum of the owners' claims, particularly in view of the fact that the dismissal of the claim was founded on my finding that the builder's Mr Gorupic was a more credible witness than Mr Taylor.
(c) The failure of the owners to accept a reasonable offer.
(d) The fact that the sum of damages awarded to the owners constituted a small percentage (less than 14%) of the sum of damages claimed.
Mr Reid, on the other hand, submits that costs on a party and party basis is appropriate for a number of reasons including:
(a) It is the "ordinary" basis as confirmed in Verlado;
(b) There is no conduct of the owners to suggest an entitlement to costs over and above the ordinary measure;
(c) There are no exceptional circumstances warranting an order for costs on an indemnity basis;
(d) The owners' refusal of the offer should not be characterised as unreasonable. That the owners elected to put the builder to the truth of its denials does not amount to vexatious conduct.
In my view 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. I do not consider the present case falls within this category.
However, for the reasons that follow, I consider it appropriate that the builder recover more than just the costs necessarily and properly incurred after the offer was made. I consider the builder should recover all costs reasonably incurred, that is costs on a solicitor and client basis, after the date of the offer.
In view of my finding as to the agreement reached on site with the builder, I consider the owners had no justification in bringing the very substantial claim in respect of the roof trusses.
It is also significant, in my view, that the builder's settlement offer was made at a very early stage in the proceeding.
Following unsuccessful negotiations to settle, the owners commenced this proceeding by filing their application at the Tribunal. Before any further significant expense was incurred (and before the builder filed and served its defence) the builder made the settlement offer. That the offer turned out to be slightly more favourable than the ultimate decision is indicative, in my view, of the builder's prudent assessment of its risk coupled with a genuine desire to resolve the matter. There was, in my view, little more that the builder could have reasonably done at that point in time and I consider the owners refusal of the offer was imprudent.
Accordingly, I will order that the owners must pay the builder's costs after 8 June 2011 which, in default of agreement, are to be assessed by the Victorian Costs Court on a solicitor and client basis pursuant to County Court scale D up to 31 August 2011 and thereafter on a solicitor and client basis pursuant to County Court scale.
As I am ordering something more than party and party costs, I consider it appropriate that I certify for Counsel at $2,750 per day, a sum I consider to be reasonable.