VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
BUILDING AND PROPERTY LIST	
vcat reference No. BP1961/2021	
CATCHWORDS	
Application for costs by the successful party in a contested hearing – sections 109 and 111(a) of the Victorian Civil and Administrative Tribunal Act 1998 – no relevant offer of settlement – Rule 1.13 of Chapter I of the Rules of the County Court – distinction between costs to be assessed on a standard basis and on an indemnity basis – Southage v Vescovi [2014] VSC 176.	

APPLICANT	Mary Deris	
FIRST RESPONDENT	Howard Hunter t/as Hunter Carpentry (ABN 93 061 753 401)	
SECOND RESPONDENT	Davide Gottardello t/as DG Plumbing Maintenance (Withdrawn by order dated 29 December 2021)	
WHERE HELD	Melbourne	
BEFORE	I Lulham, Deputy President	
HEARING TYPE	Hearing	
DATE OF HEARING	18 March 2024	
DATE OF ORDER	5 April 2024	
CITATION	Deris v Hunter (Building and Property) (Costs) [2024] VCAT 316	

Order
1.	The leave previously granted to each party to be represented by a legal practitioner is confirmed. 
2.	The first respondent shall pay the applicant’s costs fixed at $22,048.50 and shall reimburse to the applicant the filing fees of $934.90. The total payable by the first respondent under this Order is $22,983.40.

I Lulham
Deputy President			

APPEARANCES:		
For the applicant	Mr C Forster, legal practitioner	
For the first respondent	In person	

Reasons
1	On 19 December 2023 an Order was made in this proceeding requiring the first respondent to pay the applicant $49,355.44, and reserving the question of costs. 
2	The applicant applied for costs and that application was heard on 18 March 2024. For the sake of clarity, I will refer to Schembri & McCluskys as the applicant’s “solicitors” rather than by the technically correct term of “legal practitioners”, to better distinguish their role in the proceeding from that of the applicant’s barrister.  I also use the words “barrister” and “Counsel” interchangeably.
3	The applicant’s solicitors had filed and served written submissions dated 9 February 2024, with copies of tax invoices issued to the applicant. 
4	The applicant applied for the Tribunal to assess the amount of costs, rather than it putting the parties to the additional delay and expense of undergoing a formal assessment before the Costs Court if costs were awarded. 
5	In their written submissions, the applicant’s solicitors showed that they had billed the applicant $15,490.00 for their own fees, that the applicant had incurred Counsel’s fees of $10,500.00, that the applicant had incurred $1,480.00 in expert witness fees to Mr Khalil, and that the applicant had paid VCAT filing fees of $934.90.
6	The applicant’s solicitors submitted that 65% of the $15,490.00 should be allowed in respect of their own fees, and that the other fees should be allowed in full, which would lead to a total award of $22,983.40 for costs and disbursements. By claiming 65%, the solicitors were conveying that the applicant was essentially seeking an award of solicitors’ costs based on a “standard basis” rather than on an “indemnity basis”.
7	In the hearing of the costs application, the applicant’s solicitors relied on the written submissions. Accordingly, I first heard the first respondent’s submissions in opposition, and then submissions in reply on behalf of the applicant.
8	At the conclusion of the hearing I advised the parties that I would be ordering the first respondent to pay an amount of costs to the applicant. I said that I would issue these written reasons to explain the grounds under section 109 of the Victorian Civil and Administrative Tribunal Act 1998 for the award of costs and so that I could properly set out my calculation of the amounts awarded.
Section 109 factors – the parties’ submissions
9	The applicant submitted that the Tribunal should be satisfied that it was fair to order the first respondent to pay costs to the applicant having regard to the criteria set out in subsections 109(3)(a), (b), (c), (d) and (e).
10	Briefly, the applicant’s submissions were to the effect that:
a.	Section 109(3)(a): the first respondent had unnecessarily disadvantaged the applicant by prolonging the proceeding, because he failed to concede the applicant’s claim and, in effect, forced her to take her claim all the way through a contested hearing. 
b.	The facts that the first respondent had been successfully prosecuted by the Victorian Building Authority (‘VBA’), and that the applicant was awarded $49,355.44, demonstrated that the first respondent should have conceded the claim. The first respondent did not even concede that his building work was defective or that the work performed by Done Rite after the first respondent repudiated the parties’ building contract amounted to rectification of his work.
c.	In addition, the first respondent did not comply with his obligations to give discovery of documents in the proceeding, and gave discovery of some documents during the hearing. The applicant submitted that this unnecessarily disadvantaged the applicant by depriving her of information which might have been relevant in settlement negotiations, and probably by prolonging the final hearing.
d.	Section 109(3)(b): the applicant relied on the same matters, as she identified in relation to section 109(3)(a).
e.	Section 109(3)(c): the applicant submitted that the fact that she was awarded $49,355.44 showed that the relative strengths of the parties’ respective positions lay with the applicant.
f.	Section 109(3)(d): the applicant submitted that the issues in the proceeding were sufficiently complex to justify the applicant retaining legal practitioners, and then to take the steps of engaging Mr Khalil as an expert. Whilst the first respondent is not a legal practitioner, he had an advantage over the applicant in that he was an experienced building practitioner. This also justified the applicant’s decision to retain legal practitioners.
g.	Section 109(3)(e): the applicant had taken steps to limit her legal costs, by engaging her solicitors to undertake discrete items of work in the proceeding from time to time, rather than engaging them at the beginning and continuing that engagement throughout the proceeding.
11	The first respondent submitted:
a.	he had never been to VCAT or a Court before;
b.	he did not engage a legal practitioner;
c.	whilst he had been prosecuted by the VBA, and fined, the VBA focused on issues to do with the form of the building contract between the parties and the first respondent not having the statutorily required insurance, rather than on the existence of building defects;
d.	the first respondent had made a settlement offer on 21 January 2023 which the applicant rejected;
e.	the applicant chose to issue the legal proceeding, and she chose to incur legal fees and expert’s witness fees in order to prosecute her case;
f.	as a matter of fact, the hearing was not prolonged, as evidenced by the fact that three days had been allocated but that the hearing took less than two days;
g.	the proceeding has cost the first respondent the $49,355.44 which was awarded against him, plus the fine imposed by the VBA and other sums.
Analysis on the issue of liability for costs 
a.	First Respondent’s submissions
12	I will deal with the first respondent’s submissions first.  At best, they largely fall within section 109(3)(e), “any other matter the Tribunal considers relevant”. The first respondent’s submissions included some matters which were irrelevant, and some others that might have been relevant “in principle” but which did not assist the first respondent in the circumstances of the case.
13	The first two submissions by the first respondent are irrelevant. Objectively, it cannot even be said that the fact that a person has not been sued before is any reflection on that person’s liability in the case which is brought against them. A party’s decision not to engage legal practitioners says nothing about their opponent’s decision to engage legal practitioners.
14	The third submission is unpersuasive. The first respondent sought to argue that the VBA had not found that the first respondent’s building work for the applicant was defective. However, the first respondent did not go so far as to say that the VBA considered the existence of defects in detail and made a positive finding that the building works were not defective. The first respondent did not argue that the VBA had conducted a hearing about allegedly defective works in the style of the VCAT hearing in this proceeding. It seemed to me that the first respondent was asserting no more than that the VBA found that he had breached obligations in relation to his documentation of the building contract and his failure to obtain the necessary insurance, and that in the course of those decisions it did not also make findings as to whether his work was defective. That is a long way from saying that the VBA exonerated the first respondent in relation to defects. I do not find the third submission to be of assistance to the first respondent.
15	The first respondent’s fourth submission, about the settlement offer, is irrelevant. The settlement offer was not made under section 112 of the Victorian Civil and Administrative Tribunal Act 1998. It was a without prejudice offer. Most relevantly, it was in the sum of $16,000.00 or thereabouts, well below the award of $49,355.44. 
16	Had the first respondent made an offer which equalled or exceeded the award of $49,355.44, the first respondent might have been in a position to argue – depending on the way in which the offer had been expressed – that the applicant’s rejection of the offer should be taken into account on the question of costs. However, the fact that the offer was so far below the amount of the award can do no more than demonstrate, in my view, that the applicant was justified in rejecting the offer.
17	The fifth submission is misconceived. Every person who engages a legal practitioner “chooses” to do so. The question under section 109(3)(d) is whether the nature and complexity of the proceeding is such that the person was sufficiently justified in engaging a legal practitioner to be able to claim the costs of doing so from their opponent. The first respondent did not address the relevant question. I find that the case was sufficiently complex to justify the applicant’s decision to engage her solicitors, Counsel, and Mr Khalil.
18	The sixth submission is artificially narrow. Section 109(3)(b) speaks of a party “prolonging unreasonably the time taken to complete the proceeding”, not “complete the hearing”. The proceeding took from the date on which it was issued until the date the hearing was completed. The length of the hearing itself is only one part of the journey. The applicant’s waiting for the hearing to arrive is also part of the journey. The sixth submission does not assist the first respondent.
19	The first respondent’s final submission is irrelevant.
b.	Applicant’s submissions 
20	Turning now to my own analysis, which addresses the points made by the applicant, I note that determining a party’s application for costs inevitably calls for an analysis which is made with the benefit of hindsight. When, for example, considering the applicant’s submission that the relative strength of her position in the proceeding exceeded the first respondent’s, I must take note that the first respondent lost the case and was ordered to pay the applicant $49,355.44. 
21	On the other hand, I place no reliance on the way in which the first respondent gave discovery of documents in the proceeding, because I found that as a result of the unfortunate way in which the Tribunal’s order for discovery had been drafted, the first respondent had not breached an Order for discovery when he belatedly disclosed that he had been prosecuted by the VBA. 
22	I do not find that the criteria under sections 109(3)(a)(i) – (vi) have been engaged. Obviously, the first respondent lost the case, but the amount awarded against him was for significantly less than the $156,999.38 which the applicant had claimed. A respondent is entitled to defend a claim. 
23	Similarly, because the first respondent was entitled to defend the claim, and because he was found liable for far less that had been claimed by the applicant, I do not find that the first respondent prolonged unreasonably the time taken to complete the proceeding within the meaning of section 109(3)(b).
24	I am satisfied that the relative strengths of the matter lay with the applicant, within the meaning of section 109(3)(c). The amount awarded of $49,355.44 is not insignificant. It is obviously substantially above zero. The first respondent does not invalidate the applicant’s reliance on section 109(3)(c) by noting that the award was substantially less than the amount claimed.
25	I am satisfied, for the purposes of section 109(3)(d), that the complexity of the issues in the proceeding justified the applicant engaging her lawyers and Mr Khalil. I have no doubt that the applicant could not have adequately presented her case without the assistance of her solicitors and Counsel.  It was entirely appropriate for the lawyers to recommend to the applicant that she engage Mr Khalil as an expert. 
26	I see from the Tribunal’s file that the applicant was not represented by her solicitors throughout the whole proceeding. It is correct to say that she engaged her solicitors to undertake discrete items of work in the proceeding. The submission that she did so in an attempt to keep her legal costs to a minimum is logical. This fact was relied upon by the applicant on the question of the respondent’s liability for costs, under the criteria in s109(3)(e), rather than being put in relation to the assessment of her costs. I accept that the applicant, and her lawyers, did not take any steps with the intention of unduly increasing her costs. I find this approach of the applicant, to engage her solicitors from time to time, as being somewhat relevant under the criteria in s109(3)(e), and because a party should not be criticised for seeking to keep costs down, I pay some heed to it. 
27	For the reasons set out above I find that it is fair to order the first respondent to pay the applicant’s costs. 
Assessment of the costs
28	There are no factors in the case which suggest that the starting point of the applicant’s entitlement to costs is anything other than the date on which she initially engaged her legal practitioners. 
29	Rule 1.07 of the of the Victorian Civil and Administrative Tribunal Rules provides that where the Tribunal orders a party to pay another party’s costs, the amount should be assessed by reference to the County Court Scale unless the Tribunal otherwise orders. As the applicant was awarded $49,355.44, I see no reason why the Tribunal would not apply the County Court Scale in this case.
30	When costs are awarded between the parties, the Tribunal must decide whether to require the costs to be assessed on the “standard basis” or the “indemnity basis”, which are concepts recognised in rule 63A.28 of the County Court Civil Procedure Rules 2008, and which have a long history in legal practice although under other names. Essentially, costs allowed on a “standard basis” are those which were reasonably incurred and in a reasonable amount, whereas costs allowed on an “indemnity basis” are all costs except in so far as they are of an unreasonable amount or have been unreasonably incurred. It is never the case, under these concepts, that one party can be guaranteed of getting “all” of their costs paid by the other party, because even if the Tribunal decides to award costs to be assessed on an “indemnity basis” unreasonable charges for services performed, or the charges rendered for services that were not reasonably required, will not be awarded. As I said at the outset of these reasons, the applicant’s suggestion that 65% of her solicitors’ fees be awarded to her is an attempt to have her costs assessed on a standard basis.
31	I have examined the tax invoices rendered by the legal practitioners to the applicant, totalling $15,490.00, and on the basis of the narratives describing the services which are the subject of each invoice, and my examination of the Tribunal’s file, I am satisfied that the services were reasonably performed. That is, the solicitors have not charged the applicant for work which should not have been performed, and nor have they over- serviced the applicant.
32	I am very familiar with the County Court’s Scale of Costs and I am satisfied that $15,490.00 was properly charged by the legal practitioners to the applicant. I simply note in this respect, by way of examples, that under the Scale:
a.	attendances by solicitors which require legal skill or knowledge are charged at $385.60 per hour [Scale item 1(a)(ii)]
b.	attendances by employee solicitors which require legal skill or knowledge are charged at $295.20 per hour [Scale item 1(b)]
c.	attendances by solicitors which do not require legal skill or knowledge, or which are performed by a clerk, are charged at $224.00 per hour [Scale item 1(c)]
d.	the preparation of Tribunal documents, such as Points of Claim, are analysed by distinguishing between the “drawing” of the document, which means the drafting of its contents, and the “engrossing” of the document, which means the mechanical production of it including its typing or other means of creation. The preparation of documents is charged at the rate of $68.32 per “folio” of 100 words. [ Scale items 2 & 3]
e.	correspondence prepared by the solicitors, whether in the form of emails to the first respondent or the Tribunal or by letter, are charged according to their length. A message of 20 words or less is charged at $19.12; a message of up to 100 words at $38.56, and a message exceeding 100 words at $68.40 per “folio” [ Scale item 4]
f.	the receipt by the solicitors of documents from the first respondent, including by email, is charged at $19.12 for the first page followed by an amount for subsequent pages to be determined by the Costs Court [ Scale items 1(c)]
g.	the careful reading (“perusal”) by the solicitors of each document received from the first respondent or others (such as an expert witness) is charged at $57.52 for the first 300 words then $19.12 for each subsequent 100 words [ Scale item 8].  Note that the charge applies to each document: you do not gather all such documents into a bundle and then apply $57.52 + $19.12 to the bundle. Inevitably, this ‘flag fall’ approach increases to amount which is charged 
h.	in addition, charges or ‘loadings’ at amounts determined by the Costs Court are made for review and consideration of the file, delegation and supervision, research, collation pagination and indexing of documents, redaction of information from documents, electronic document management and skill care and responsibility under items 11 to 17 of the Scale.
33	I am also satisfied that allowing 65% of the amount which the solicitors billed the applicant would represent the amount which she can recover from the first respondent in relation to her solicitors’ charges, on a standard basis. Accordingly, I accept the submission that $10,068.50 should be allowed in relation to those costs.
34	Counsel retained on behalf of the applicant billed $10,500.00, and in the applicant’s submission no discount is to be made against that figure. 
35	Barristers’ fees are calculated on a different basis to the fees of solicitors under the County Court Scale. For historical reasons, there remains the implication in Item 19 of the Scale that solicitors are basically clerks who have a smattering of legal knowledge, but that barristers are real lawyers who practice a noble profession. As such whilst the charges applicable to solicitors are calculated on the bases of “folios” and “attendances”, the fact that work performed by the barrister saved the client money, and even the seniority and “standing” of the individual barrister are criteria under Item 19(3) ( c) & (d).  The item still has the effect of distinguishing between “standard” and “indemnity” costs, when assessing barrister’s fees. Relevantly, in respect of Junior Counsel such as the applicant’s barrister, Item 19 of the Scale includes: 
19. COUNSEL'S FEES 
(1) Subject to paragraphs (2), (3) and (4), such fees as are allowed up to a maximum of— 
(a) appearances— 
(i) on trial or appeal (daily fee) $5,441.60
(ii) … 
(b) – (h) $544.00 for each hour for: other matters, preparation, conferences (not occurring on day of hearing), views, drawing or settling documents, opinions, advices and any other work, not otherwise provided for.  
(2) … 
(3) In allowing a fee to Counsel, the Costs Court shall have regard to the following criteria— (a) all criteria in item 17; and 
(b) the other fees and allowances to Counsel in the matter; and 
(c) payments made for interlocutory work where that work has reduced the work which would otherwise have been necessary in relation to the brief; and 
(d) the standing of Counsel. 
(4) … 
36	The reference to Item 17 in Item 19(3)(a) is to the concept of skill care and attention, which I mentioned above in relation to the charges of solicitors.
37	As the respondent acknowledges that the hearing of the proceeding lasted two days, the applicant’s Counsel’s fee could be calculated under the Scale at $10,883.20 (i.e. 2 x $5,441.60) which exceeds the $10,500.00 which he billed the applicant, even disregarding various “other matters” which he performed as part of his retainer. For that reason, I accept the applicant’s submission that in calculating the costs which are payable to her by the first respondent, the Counsel’s fee of $10,500.00 should be allowed in full.
38	There is no basis on which the applicant should recover less than the whole of Mr Khalil’s expert witness fees of $1,480.00, and it should be noted here that the first respondent gets the benefit of Mr Khalil and Mr Di Rienzo under-charging the applicant.
39	Similarly, there is no basis on which the VCAT filing fees of $934.90 incurred by the applicant should not be awarded in full.
40	For the reasons above I assess the amount of costs which the first respondent must pay the applicant at $22,983.40 comprising solicitors’ fees of $10,068.50 (being 65% of $15,490.00), Counsel’s fees of $10,500.00, expert witness fees of $1,480.00 and VCAT filing fees of $934.90.  

I Lulham
Deputy President