VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
BUILDING AND PROPERTY LIST	
vcat reference No. BP1532/2021	
CATCHWORDS	
Sections 109(1) – (3) of the Victorian Civil and Administrative Tribunal Act 1998 – Rule 1.07 of the Victorian Civil and Administrative Tribunal Rules.	

APPLICANT	Barbican Construction Group Pty Ltd (ACN 632 959 874)	
FIRST RESPONDENT	Ian McColl	
SECOND RESPONDENT	Xun (Monica) Qing	
WHERE HELD	Melbourne	
BEFORE	Deputy President I Lulham	
HEARING TYPE	Hearing	
DATE OF HEARING	16 December 2024	
DATE OF ORDER	6 January 2025	
CITATION	Barbican Construction Group Pty Ltd v McColl (Building and Property) (Costs) [2025] VCAT 18	

Order
The applicant shall pay the respondents’ costs of this VCAT proceeding including the costs of the applicant’s claim and the respondent’s counterclaim and of this application for costs, on a standard basis under the County Court Scale.

I Lulham
Deputy President			

APPEARANCES:		
For Applicant	Mr P Cott legal practitioner	
For Respondents	Mr H Shahabadi director	

Reasons
1	Following a hearing in July 2024, I dismissed the applicant’s claim and I ordered it to pay the respondents $142,961.08. I reserved the question of costs. The outcome was a substantial  victory by the respondents.
2	The respondents applied for costs in a written application dated 15 August 2024, and I heard the application on Monday morning 16 December 2024. The grounds for their application were stated in that written application, as: 
(a)	Subsections 109 (3)(a)-(e) are an exception to the general rule in subsection 109(1) and provide that VCAT may award costs “only if satisfied it is fair to do so” having regard to the criteria in subsections 109(3)(a)-(e).
(b)	Section 109(3)(c) - relative strengths of the claims made by each of the parties.
The applicant commenced the VCAT proceeding bringing a claim for payment against the respondents. The respondents had a strong claim as the applicant failed to make any real attempt to deal with issues identified by the Building Surveyor. In effect, the respondents were forced to conduct the VCAT proceeding to its conclusion in circumstances where the applicant refused to address the issues identified by the Building Surveyor and pressed for payment.
(c)	Section 109(3)(d) – nature and complexity of the proceeding.
The proceeding involved questions of law and each party called expert evidence. In such circumstances the proceeding is not simple or “run of the mill”.
(d)	Section 109(3)(e) – any other matter.
The applicant’s failure to adequately and promptly deal with the issues identified by the Building Surveyor while maintaining a claim for payment effectively forced the respondents to conduct the VCAT proceeding to its conclusion.
3	Whilst my Order of 8 July 2024 said that the parties were not to file an itemised bill of costs, reflecting the principle that the hearing would be concerned with liability for costs rather than the amount, at 3:14pm on Thursday 12 December 2024 the respondents emailed the Tribunal and the applicant a list of their costs and disbursements which totalled $24,292.69, with copies of relevant tax invoices making up that figure. In effect there was only one business day between the applicant receiving that list, and the costs hearing.
4	The respondents sought an award of $24,292.69 at the hearing. The legal practitioner for the respondents said that the amounts of solicitors’ and barrister’s fees claimed were the whole amounts which had been billed by them to the respondents. In language which has now become obsolete, the amount which lawyers charge their clients was called “solicitor/client costs”, and the amount which the client/party could claim from their opponent under section 109 was called “party/ party costs”. The modern expressions are “indemnity costs” and “standard costs” respectively. By claiming the whole $24,292.69 today, the respondents were claiming indemnity costs.
5	Whilst it is appropriate for me to determine whether the applicant is liable to pay costs to the respondents, and if so the basis on which those costs would be assessed, if I proceeded to order the applicant to pay the respondents the whole $24,292.69, I would undoubtedly be ordering the applicant to pay costs on an indemnity basis.
6	The first difficulty confronting the respondents in this respect is that they did not put the applicant on notice that they would be seeking indemnity costs until their email of 3:14pm on 12 December 2024. As the applicant is not represented by a legal practitioner, the period of notice was inadequate.
7	The second difficulty is that the respondents’ application of 15 August 2024 only said that they were seeking costs, and did not mention indemnity costs. Even though the applicant is self-represented, in my view Mr Shahabadi would have understood the application to mean that the respondents were claiming costs on a standard basis. I form this view because the standard basis is the usual way that costs are assessed (hence the word “standard”) whereas indemnity costs are an exception.
8	The third difficulty is that if I was to assess the costs today, I would be depriving the applicant of the right to challenge the amounts claimed. The process in which the party claiming costs must justify the claims and the other party may challenge the claims, is carried out by the Costs Court, which decides the claims by analysing the appropriate Scale of costs. The Costs Court would require the respondents to set out in considerable detail how the claimed costs were calculated. VCAT Members can both determine the liability for costs and assess the amount of costs, in narrow circumstances such as parties’ appearing at a directions hearing. However, assessing the amount of costs payable in relation to a whole legal proceeding is simply beyond VCAT Members’ expertise and is well and truly the job of the Costs Court.
9	I only mention these explanatory matters because in the hearing on 16 December 2024 Mr Shahabadi for the applicant basically offered no opposition to the respondents’ claim for costs, and indicated in non-technical terms that the applicant has no assets, has lost several staff members, and is in a poor financial position. Whilst he did not say that the applicant was insolvent, he certainly indicated that the applicant will prove not to have the resources which would enable it to pay any costs to the respondents. These sorts of financial disclosures by an incorporated party naturally produce a desire in its opponent to have the matter of costs resolved as soon as possible. However, VCAT must act according to law and it cannot allow pragmatism to trump its legal obligations to make legally sound decisions after affording all parties procedural fairness.
10	As such, I will proceed to determine the question of whether the applicant is liable to pay the respondents’ costs. But if I determine that the applicant is so liable, I will order the costs to be assessed by the Costs Court.
Should the applicant be ordered to pay the respondents’ costs?
11	VCAT does not have inherent jurisdiction, and its power to award costs is conferred by the Victorian Civil and Administrative Tribunal Act 1998.
12	The respondents identified the subsections of the VCAT Act on which they rely. As stated above they recognise that subsection 109(1) says that subject to other relevant provisions in the relevant Division of the VCAT Act, each party is to bear their own costs in the proceeding. Subsection 109(2) provides that VCAT may award costs “only if satisfied it is fair to do so” having regard to criteria in subsections 109 (3)(a)-(e). I now consider the parties’ submissions in the costs hearing, and the outcome of the proceeding, in the context of the criteria under section 109(3) which were relied on by the respondents.
13	Subsection 109(3)(d), “the nature and complexity of the proceeding” is relevant because a self-represented party does not incur “costs” which can be claimed from their opponent, except for such things as witness expenses and out of pocket expenses such as filing fees and photocopying expenses. The value of a self-represented party’s own time and efforts is simply an overhead. Section 109(3)(d) is directed to the question – in the context of an application for costs – of whether a party “should have” represented itself, or whether it was justified in engaging legal practitioners in the proceeding.
14	I find that the respondents were justified in engaging legal practitioners in this proceeding. The applicant sued them, and they were in effect forced to defend themselves. The dispute had some complexity. The respondents engaged an expert, and would have had difficulty instructing the expert to address the relevant issues without engaging legal practitioners. I reject Mr Shahabadi’s argument that the case was very simple.
15	Because the respondents were justified in engaging legal practitioners, section 109(3)(d) puts them in a position to be able to claim costs.
16	Subsection 109(3)(c), the “relative strengths of the claims made by each of the parties”, is a criterion which favours the respondents. Whilst it is clear that the concept of “relative strengths” of parties’ claims in section 109(3)(c) does not equate with the concept of “costs following the event”, it is a persuasive criterion in this case. The respondents wholly succeeded, and the applicant wholly failed, in both the claim and the counterclaim. The phrase “whether a party has made a claim that has no tenable basis in fact or law” (emphasis added) appears to set a fairly high bar, and certainly one higher than a situation where a party articulates an arguable claim but fails to sustain it at a hearing. However, that phrase is prefaced by the word “including”, making it just an example of how parties’ respective positions might have different strengths.
17	Subsection 109(3)(e) was submitted by the respondents to be relevant, on the basis that they were put in the position of having to defend themselves. As I said in relation to subsection 109(3)(d), I accept that this was the situation in which the respondents found themselves.
18	I am satisfied that it is fair to award costs to the respondents having regard to the criteria in subsections 109(3)(c), (d) and (e).
Should the respondents’ costs be assessed on an indemnity basis or a standard basis?
19	The respondents’ costs should be assessed on a standard basis. Even where the applicant was wholly unsuccessful, and the respondents wholly successful, this case is not one in which indemnity costs should be awarded. Many proceedings end with one party winning and the other losing entirely. It does not follow that the losing party has acted inappropriately.
What Scale of costs should apply?
20	Rule 1.07 of the VCAT Rules states, “Unless the Tribunal otherwise orders, if the Tribunal makes an order as to costs, the applicable scale of costs is the County Court costs scale as defined in Rule 1.13 of Chapter I of the Rules of the County Court”.
21	As the respondents were awarded $142,961.08 in my Order of 8 July 2024, which is an amount well within the jurisdiction of the County Court, there is no reason why I should order that costs be assessed on any basis other than the County Court Scale.
Should the Tribunal assess any of the respondents’ costs in this Order?
22	As I said above, it would not be appropriate for the Tribunal to assess the respondents’ costs in this Order, because the applicant is entitled to challenge the respondents’ claims in the Costs Court. 
23	However, Mr Shahabadi’s positive assertions that the applicant has no assets, has lost several staff members, and is in a poor financial position were not made without a reason. I can only conclude that Mr Shahabadi was suggesting to the respondents, in an unsubtle manner, that they should not bother pursuing the applicant any further. The order for the payment of $142,961.08 has been enforceable since 8 July 2024. I have considered whether to order the applicant to pay the respondents the filing fee on the counterclaim of $411.50 and a hearing fee of $187.30 which the respondents have paid, as doing so would at least enable the respondents to seek payment of those amounts without incurring the fees and delay which will inevitably be involved in proceeding and the Costs Court. Because the respondents have been able to execute on their order for $142,961.08 since July 2024 I see no point in making an order in relation to those filing fees. The respondents’ claim for filing fees can be dealt with by the Costs Court.

I Lulham
Deputy President