VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
BUILDING AND PROPERTY LIST	
vcat reference No. BP1619/2017	
CATCHWORDS	
DOMESTIC BUILDING–COSTS– Section 109 Victorian Civil and Administrative Tribunal Act 1998 (Vic)– s109(3)(e)–whether a relevant matter, when considering whether fair to make a costs order in favour of the builder where, in relation to claims in respect of an alleged defect and alleged consequential losses, the claim for consequential losses is dismissed–where it is also found that, in relation to consequential losses, the builder was required to incur legal and expert’s costs, including 8 days of hearing costs, being disproportionate to the consequential losses sought–found fair to order that owners should pay the builder a portion of its costs–also found to be a relevant matter that owners were successful in respect of about only one-third of their claimed rectification damages.
Section 109(3)(b) and s109(3)(d) of the Victorian Civil and Administrative Tribunal Act 1998 also considered to be relevant matters in consequence.
Calderbank Offer–found that the owners’ rejection of the offer was not unreasonable in the circumstances.	

FIRST APPLICANT	Mark Miller	
SECOND APPLICANT	Julie Miller	
PLATINUM	Platinum Constructions Vic Pty Ltd (ACN: 095 739 012)	
WHERE HELD	Melbourne	
BEFORE	A Kincaid, Member	
HEARING TYPE	Costs applications, on the papers.	
DATEs OF submissions	The applicants’ and respondent’s submissions both dated 31 May 2023
Applicant’s Reply Submissions dated 16 June 2023
Respondent’s Reply Submissions dated 19 June 2023	
DATE OF ORDER	29 May 2025	
CITATION	Miller v Platinum Constructions Vic Pty Ltd (Building and Property) (Costs) [2025] VCAT 483	

Order
1.	Pursuant to s53(2) Domestic Building Contracts Act 1995 (Vic) the respondent must pay to the applicants damages in the nature of interest in the sum of $32,514.09.
2.	Subject to order 3, and considering it fair to do so, the respondent must pay to the applicants 40% of the applicants’ costs from the commencement of the proceeding to 26 February 2020 (when, but for the applicants’ prosecution of their mould claims, the hearing would have likely concluded), and must pay the applicants 50% of the applicants’ costs of their final submissions and submissions in respect of costs and, in default of agreement, the applicants’ costs must be taxed by the Victorian Costs Court in accordance with the County Court scale of costs on the standard basis.
3.	In respect of the hearing days 1 August -2 August 2019 (2 days), 5 August 2019 (1 day), 25-26 February 2020 (2 days), all days taken up by concurrent expert evidence concerning mould, the respondent is not liable to pay costs to the applicants.
4.	Considering it to be fair, the applicants must pay to the respondent 80% of its costs from the start of the mould experts’ concurrent evidence on 1 August 2019 and, and 80% of the costs of the respondent’s final submissions and submissions in respect of costs, and in default of agreement, its costs must be taxed by the Victorian Costs Court in accordance with the County Court scale of costs on the standard basis.

A Kincaid
Member			

Reasons
BACKGROUND
1.	The applicants (“the Millers”) claim from the respondent (“Platinum”) interest on the sum of $92,897.45, being the damages that the Tribunal ordered on 8 May 2023 to be paid to them by Platinum. They seek interest from the date of the date that the proceeding was commenced on 15 December 2017.
2.	The parties also seek costs against each other.
3.	The Millers are the owners of a property in Caulfield North. Platinum constructed a dwelling there in 2007. The Millers purchased the property from the previous owner by contract of sale dated 6 August 2007.
4.	The Millers claimed damages against Platinum for rectification of alleged construction defects in the dwelling. They also sought damages for the cost of mould remediation works alleged to have become necessary by reason of claimed roof defects, and consequential damages.
The Hearing
5.	I conducted the hearing on 29 July 2019-2 August 2019 (days 1-5), 5 August 2019 (day 6), 6 August 2019 (converted to a directions hearing), 25 February 2020-26 February 2020 (days 7-8). The resumption of the hearing on 24 June 2020 was vacated by orders dated 11 May 2020 due to the onset of the Covid-19 pandemic. The planned resumption on 12 April 2021 subsequently fixed by orders dated 25 August 2020 was vacated by consent. The hearing resumed on 31 May 2021-4 June 2021 (days 9-13).
Damages Claimed by the Millers
6.	The Millers’ claim was made under s9 of the Domestic Building Contracts Act 1995. That is, as owners of the property subsequent to the owners for which Platinum built the dwelling, they sought damages for allegedly defective domestic building work, upon the warranties at law provided to them by Platinum relating to that work.
7.	The bulk of the Millers’ claims were in respect of an allegedly defective roof and roof drainage systems.
8.	They also alleged that mould existed in their dwelling as a consequence of water entry caused by the roof and drainage defects, to an extent that it was damaging to their health. They sought damages measured by the cost of mould remediation works ($32,730), consequential building reinstatement costs ($40,521), their accommodation costs during reinstatement ($31,920) and costs of furniture storage.
9.	The core issues in relation to the roof and drainage systems were:
(a)	was the entry of water into the dwelling caused by defects (and if so, what defects) in the construction of the roof decks and/or the storm water drainage systems of the dwelling? 
(b)	In relation to any found defects, what rectification works were reasonably required to prevent further water entry (demolition and replacement of the upper floor metal roof as contended by the Millers, or a more limited rectification as contended by Platinum)?
(c)	Was the presence of fungal structures both airborne and upon surfaces in the dwelling, by reason of water entry caused by found defects in the roof, damaging to the health of the Millers, such that the cost of mould remediation and consequential reinstatement works sought by the Millers was recoverable as a consequential loss as a result of the defects?
10.	It becomes clear from the schedule below that the cost of the mould remediation and consequential reinstatement works sought by the Millers comprised well over a quarter of the total amount claimed by them.
Damages Sought
11.	The Millers claimed damages in the amount of $300,106.91 as follows:
Item No (Ryan reports)	Description and provenance of costings.	Amount Claimed (including where relevant a contingency of 5%, margin of 35% and GST of 10%).	
	Specific Preliminaries
Ryan Second Report dated 29 November 2017 at pages 22 and 23.	$7,046.00	
23	Additional metal roof defects
Ryan Fourth Report dated 12 November 2018	$7,268.00	
56	Damaged internal areas
Ryan Second Report dated 29 November 2016 at [26]-[56] and pp 22 and 24.	$14,803.00	
58	Damaged external area. 
Rear porch ceiling
Ryan Second Report dated 29 November 2016 at [57] and pp 22 and 25.	$467.00	
31	Rectify additional plaster ceiling defects 
Ryan Fourth Report dated 12 November 2018.	$1,113.00	
72	Rendered foam cladding (front)
Ryan First Report dated 16 October 2016 pp 22 and 26, and Exhibit A16.	$12,634.81	
72	Rendered foam cladding (sides)
Ryan First Report dated 16 October 2016 pp 22 and 26, and Exhibit A17.
Exhibit A17                         $15,350.90 
Less double counting
for scaffold                            $1,698.30
                                             $13,652.60	$13,652.60
	
73	Brick articulation joints
Ryan First Report dated 16 October 2016 pp 22 and 27.	$700.00	
142	Rectify garage and all ground floor lower metal roof defects including pool room roof. 
Ryan First Report dated 16 October 2016 pp 22 and 28, as amended by Second Report dated 29 November 2017 p 28.	$34,448.00	
161-163	Rectify upper floor metal roof defects.
Ryan First Report dated 16 October 2016 pp 22 and 29, as amended by Exhibit A3A tendered 3 June 2021.	$51,339.50	
	SUB-TOTAL	$143,471.91	
	Mould remediation costs 
Quotation of Australian Advanced Carpet Care date of inspection 28 March 2019. 	$32,730.00	
36	Reinstatement costs after mould remediation works
Ryan Fourth Report dated 12 November 2018 at pp 11 and 14.
 $52,184.00	$40,521.00	
	($11,663.00) 
___________
 $40,521.00	Part Item 56 works carried out in reinstatement works		
	Contingency for plaster, painting and other rectification costs.
Ryan Fourth Report dated 12 November 2018 and Ryan Updated Report dated 9 December 2020 (exhibit A13)	$50,000.00	
	Accommodation costs 
Ryan 4th report dated 12 November 2018 at p 11. 12 weeks @ $380 per night 	$31,920.00	
	Furniture storage Three months @ $488 per month 	$1,464.00	
	TOTAL	$300,106.91	

Damages Awarded
12.	Damages were awarded as follows:
Item No (Ryan reports)	Description and provenance of costings.	Amount Awarded	
	Specific Preliminaries
Ryan Second Report dated 29 November 2017 at pages 22 and 23.	$7,046.00	
23	Additional metal roof defects
Ryan Fourth Report dated 12 November 2018	$592.51	
56	Damaged internal areas
Ryan Second Report dated 29 November 2016 at [26]-[56] and pp 22 and 24.	$14,803.00	
58	Damaged external area. 
Rear porch ceiling
Ryan Second Report dated 29 November 2016 at [57] and pp 22 and 25.	$475.56	
31	Rectify additional plaster ceiling defects 
Ryan Fourth Report dated 12 November 2018.	$1,113.00	
72	Rendered foam cladding (front)
Ryan First Report dated 16 October 2016 pp 22 and 26, and Exhibit A16.	$10,062.52	
72	Rendered foam cladding (sides)
Ryan First Report dated 16 October 2016 pp 22 and 26, and Exhibit A17.
Exhibit A17                         $15,350.90 
Less double counting
for scaffold                            $1,698.30
                                             $13,652.60	$11,812.71	
73	Brick articulation joints
Ryan First Report dated 16 October 2016 pp 22 and 27.	$700.00	
142	Rectify garage and all ground floor lower metal roof defects including pool room roof. 
Ryan First Report dated 16 October 2016 pp 22 and 28, as amended by Second Report dated 29 November 2017 p 28.	$34,448.00	
	Replace rotten timber framing above family room west side lower roof
Platinum costings.	$3,399.16	
161-163	Rectify upper floor metal roof defects.
Platinum costings	$16,314.43	
	Sarking upper roof.
Platinum costings.	$265.06	
	Mould remediation costs 
Quotation of Australian Advanced Carpet Care date of inspection 28 March 2019. 	Nil	
36	Reinstatement costs after mould remediation works
Ryan Fourth Report dated 12 November 2018 at pp 11 and 14.
$52,184.00	Nil
	
	($11,663.00) 
___________
 $40,521.00	Part Item 56 works carried out in reinstatement works		
	Contingency for plaster, painting and other rectification costs.
Ryan Fourth Report dated 12 November 2018 and Ryan Updated Report dated 9 December 2020 (exhibit A13)	Nil.	
	Accommodation costs 
Ryan 4th report dated 12 November 2018 at p 11. 12 weeks @ $380 per night 	Nil.	
	Furniture storage Three months @ $488 per month 	Nil.	
TOTAL		$101,031.95	

Interest
13.	The Millers claim interest on the amount of $92,897.45 awarded in their favour.
14.	The Tribunal may make an order for the payment of damages in the nature of interest if considered fair to do so.
15.	The Tribunal may base the amount awarded for interest on the interest rate fixed from time to time under s2 of the Penalty Interest Rates Act 1983 (Vic) or any lesser rate it think appropriate. The current penalty interest rate has remained at 10% since 1 February 2017.
16.	I accept the submission on behalf of the Millers that an award of interest in favour of the Millers is fair because, from the commencement of the proceeding, they were deprived of the use of the damages subsequently awarded to them. Platinum also had the benefit of the sum so awarded, while depriving the Millers of the use of that money.
17.	No calculation of the interest claimed by the Millers was provided.
18.	Interest on $92,897.45 since 15 December 2017, when the Millers commenced the proceeding to the date of the determination in their favour on 8 May 2023 is calculated at $50,130.66, as follows:
15 December 2017-14 December 2018	$9,289.74	
15 December 2018-14 December 2019	$9,289.74	
15 December 2019-14 December 2020	$9,289.74	
15 December 2020-14 December 2021	$9,289.74	
15 December 2021-14 December 2022	$9,289.74	
15 December 2022-8 May 2023 
4 months 23 days	$3,681.96	
TOTAL	$50,130.66	

19.	Platinum contends that the Millers’ claim to interest should not run beyond 29 July 2019 or, at the latest, 5 August 2019, because:
(a)	properly advised, the Millers should have accepted a Calderbank offer by 10:00am on 29 July 2019, the first day of the hearing, thereby ending the accrual of interest; and
(b)	much of the hearing duration from 5 August 2019 to its conclusion on 4 June 2021 was devoted to the Millers’ prosecution of their unsuccessful claims relating to mould and the upper floor metal roof, and that it would be unfair if they were to receive interest in respect of their successful claims during the period when their unsuccessful claims were being prosecuted.
20.	For the reasons set out below, I have found that Platinum has not persuaded me that the Millers’ rejection of the Calderbank was unreasonable.
21.	In regard to Platinum’s second submission, the progress and content of the hearing was as follows:
(a)	The hearing took place from 29 July 2019 to 2 August 2019, and on 5 August 2019. Due to a health event suffered by Mr Miller on 6 August 2019, I adjourned the hearing fixed for that day to 17 December 2019, with a further estimated duration of 4 days. 
(b)	By consent orders dated 22 October 2019, the planned resumption of the hearing on 17 December 2019 was vacated, and instead fixed to resume:
(i)	on 25 February 2020, for 2 days for the completion of concurrent evidence by the microbiologist experts concerning alleged mould contamination; and
(ii)	24 June 2020, for the completion of evidence concerning alleged defective roof works, and for final submissions.
(c)	By order dated 3 February 2020, the Millers’ application to call a further expert witness at the resumption of the hearing was dismissed, with costs.
(d)	Despite two further days of concurrent evidence from the microbiology experts from 25 February 2020 to 26 February 2020, it was not possible to complete their evidence. This was because Platinum wished to explore the respective fungus collection techniques of the experts, following a demonstration on 26 February 2020 by the microbiologist called by the Millers, Dr Black, of his technique for trapping airborne fungal spores. I adjourned the hearing to 24 June 2020, with an estimated further duration of 3 days, with orders also requiring each of the parties to file and serve summaries of what they each contended was the substance of the evidence given by their respective expert concerning:
(i)	the means by which airborne fungal structures (viable and non-viable) are collected by the use of a QuickTake 30 bio-pump with Air-O-Cell spore trap (in the case of Dr Black), and a Zefon bio-pump with Air-O-Cell spore trap (in the case of Dr Jones, the expert called by Platinum); and
(ii)	in the case of analysing by direct microscopy airborne fungal structures thus collected, the means by which each party’s respective microbiologist calculated the number of airborne fungal structures per m³ of air, such as led Dr Black to his calculation of 221 fungal structures per m³ taken at his single external control location, and led Dr Jones to his calculation of 867 and 800 fungal structures per m³ taken at his two external control locations.
(e)	With the onset of the Covid-19 pandemic, the Tribunal no longer conducted face-to-face hearings. By chambers orders dated 11 May 2020, I vacated the hearing fixed for 24 June 2020, with the resumption to occur on a date to be notified, and with an estimated further duration of 4 days.
(f)	By orders dated 25 August 2020, I fixed the resumption for 12 April 2021, with an estimated further duration of 5 further days. That date was subsequently vacated by consent orders. The hearing resumed on 31 May 2021, and was completed on 4 June 2021 after 5 further hearing days.
22.	Upon my consideration of this history, and doing the best I can in the inexact science of calculating what might have been, I consider it reasonable to conclude that had the Millers not prosecuted their claim in respect of mould, a claim in which they were wholly unsuccessful, the hearing of the proceeding would have ended on 26 February 2020, final submissions filed by the end of April 2020, and a decision published not on 8 May 2023 as occurred, but 12 months after final submissions, by the end of April 2021.
23.	In this circumstance, I do not think it fair that the Millers should receive interest in respect of their damages between July 2021 and the final determination on 8 May 2023. I find that it can be reasonably conjectured that this delay would not have occurred but for the Millers’ claim in relation to mould.
24.	I therefore award interest of $32,514.09 on the damages ordered in favour of the Millers to June 2021.
costs 
25.	The power to award costs is contained in s109 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (the “VCAT Act”), which relevantly provides as follows:
109.	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-
i	failing to comply with an order or direction of the Tribunal without reasonable excuse;
ii	failing to comply with this Act, the regulations, the rules or an enabling enactment;
iii	asking for an adjournment as a result of (i) or (ii);
iv	causing an adjournment;
v	attempting to deceive another party or the Tribunal;
vi	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.
26.	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. 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.
27.	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.
28.	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”. 
The matters relied on by the Millers
29.	The Millers rely on ss109(3)(d) of the VCAT Act for its submission that the nature and complexity of the proceeding make it fair to make an order for costs in their favour.
30.	I find that the nature and complexity of the matter meant that it required significant preparation, consideration and costs expended with legal representation and expert witnesses to properly conduct the proceeding.
31.	I find that it is fair in the circumstances that the Millers should be awarded their costs of the proceeding. The question arises whether there should be an order for all of the Millers’ costs, or a lesser sum having regard to other considerations.
The matters relied on by Platinum
32.	Platinum submits that for the period from the commencement of the proceeding to the service by Platinum of a Calderbank offer dated 26 July 2019, by which Platinum offered to pay $108,000 plus costs to the Millers, an offer that Platinum submits was more favourable than the damages awarded to the Millers:
(a)	there should be no order for payment by Platinum of the Millers’ costs or, failing that, an order entitling the Millers to only 30% of such costs (being, broadly, the proportion of the Millers’ damages claims in which they were successful); and
(a)	there should be an order that the Millers pay all of Platinum’s costs or, failing that, 70% of such costs.
33.	In respect of the period after 26 July 2019, Platinum submits that:
(a)	there should be no order for costs in favour of the Millers; and
(b)	there should be an order that the Millers pay Platinum’s costs on an indemnity basis or, failing that, on the standard basis.
Section 109(3)(c)-Platinum submits that it had a strong defence in respect of the bulk of the Millers’ claims, and a substantial part of the Millers’ claims had no tenable basis in fact or law
34.	It becomes clear, from the above table, that the Millers’ claims for the costs of:
(a)	$51,339.50 for the replacement of the upper floor metal roof (items 161-163) was successful only to the extent of $16,314.43;
(b)	$32,730 for remediation of allegedly deleterious levels of mould present in the dwelling as a consequence of the found roofing and other defects, and $40,521 (item 36) for necessary reinstatement works after remediation was unsuccessful;
(c)	$50,000 for contingencies; and
(d)	$31,920 for accommodation costs, and $1,464 for furniture storage costs
were unsuccessful (the “unsuccessful claims”). 
35.	Platinum submits that the unsuccessful claims were untenable, and that the Millers should have abandoned the mould claim soon after the commencement of the concurrent evidence when, Platinum submits, the methodology adopted by Dr Black was successfully challenged during cross-examination. 
Discussion
Section 109(3)(c)-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 
36.	The Millers obtained the views of microbiologist Dr Wesley Black, and Platinum obtained the views of microbiologist Dr Cameron Jones. I heard concurrent evidence from both experts.
37.	Dr Jones contested Dr Black’s proposition that extensive mould remediation and associated building works were required. The giving of the experts’ evidence was characterised by a high level of academic disputation, not uncommon between professionals who hold divergent views on an issue at hand. Given the complexities of the science, their evidence took up a substantial portion of the hearing.
38.	In relation to the mould claim, I considered that the respective methods by which the mould experts (a) collected airborne fungal structures and (b) subsequently counted them by direct microscopy analysis were reasonably arguable, but I was not persuaded on the balance of probabilities that the methods adopted by Dr Black were preferable to those adopted by Dr Jones.
39.	I found that, in view of the various difficulties with the means by which the single control sample of the total airborne fungal counts was taken by Dr Black, and his method of recording fungal counts by direct microscopy, in all the circumstances the Millers had not demonstrated on the balance of probabilities that the level of viable and non-viable fungal structures in their dwelling were at a level at which mould remediation works were required. I dismissed this claim, and the related claims for consequential costs for accommodation and furniture storage costs. 
40.	I do not consider, having regard to these considerations, that the bringing by the Millers of the unsuccessful claims attracts the operation of s109(3)(c) of the VCAT Act, as one of the circumstances for making a costs order against the Millers. It is well established that where one party is ultimately successful in relation to propositions of a technical nature advanced at the hearing does not automatically mean that the strength of that party’s claim is so weak as to attract the operation of s109(3)(c) in favour of the other party. I find from my summary of the above technical matters, and the reasons for my decision, that the Millers’ claims in this respect were not untenable as submitted by Platinum, but arguable.
Section 109(3)(e)-significant costs incurred in regard to the unsuccessful claims
41.	Platinum’s principal submission is that the Millers’ claims in respect of upper floor roof defects, mould and alleged consequential damage from these defects (including mould remediation costs, reinstatement costs, contingency costs and accommodation costs) were largely unsuccessful, and should never have been pressed to a final determination.
42.	In regard to these unsuccessful claims, Platinum submits that, given the costs reasonably assumed to have been incurred by it both in preparation for the hearing to meet the claims, and the costs of the hearing in relation to those claims, it would not be fair to order that Platinum should pay any costs to the Millers in respect of such claims, or more than a proportion only of such costs.
43.	I find that much of the 13 day hearing–1 August -2 August 2019 (2 days), 5 August 2019 (1 day), 25-26 February 2020 (2 days) and 31 May 2021 (1 day)–a total of six days, was taken up by concurrent evidence of Drs Black and Jones concerning the Millers’ mould allegations.
44.	I also estimate that an appreciable part of the hearing, 1-2 days, was also taken up by a view to better comprehend the upper roof layout and flashing structures, including concurrent evidence concerning the claim by the Millers for the replacement of the first floor metal roof. 
45.	I accept the submission of Platinum that it is not improbable that the legal and experts costs to Platinum was in the order of $10,000 per day on a party and party basis, plus the cost of preparation and obtaining expert opinion on claims ultimately found to be unsuccessful. On this basis, it can be reasonably conjectured that Platinum spent up to $80,000 in total daily legal costs for the eight hearing days spent in respect of claims ultimately found to have been unproven, plus defence preparation costs in respect of those claims.
46.	The incurring of such substantial legal fees by a Platinum in defending a claim which, although arguable, is found to be unproven does not, of itself, necessarily comprise a circumstance in which it may be found fair to make a costs order against an applicant under s109(3)(c) of the VCAT Act. However, I consider that where the amount of unproven claims (in this case, $32,730 claimed for mould remediation costs and $40,521 for post remediation reinstatement, plus an amount for accommodation) is of an appreciably lesser order than the legal costs that a properly advised applicant would be aware as being likely to be incurred by the opposing party to meet them, a relevant matter under s109(3)(e) arises.
47.	The Tribunal is quick to appreciate that an applicant will likely have no knowledge of scientific methods essential to the proof of a claim–in this case microbiological fungal collection methods and subsequent testing by microscopy. It is understandable that an applicant will, by the very nature of an extended professional engagement with an expert, fall into reliance upon the views favourable to his or her case, that may be expressed by such expert. I consider, however, that this should not lead to an applicant becoming wedded to a course when, it subsequently becomes clear, the collection and testing methods of his or her expert are vigorously and, to a large part, successfully challenged by a respondent.
48.	The need of parties to observe the principle of proportionality is expressly stated in the civil procedure rules of many jurisdictions. It is also a consideration that applies equally, in my view, when exercising the broad discretion in respect of costs. I am of the view that when considering whether it is fair to make a costs order in favour of a party under s109 of the VCAT Act, a relevant matter is where a damages claim founded on expert evidence is dismissed, but in relation to such claim (and by reason of its technical complexity) the opposing party is required to incur significant legal and expert’s costs (in this case 8 days of hearing costs), such costs being manifestly disproportionate to the amount of rectification damages and consequential losses sought. 
Section 109(3)(e)-disparity between total amount claimed and total amount recovered 
49	By the final payment order of $92,897.45, the Millers only recovered approximately 30% of the total damages sought by them. It exceeded the sum of $55,895.59 for which Platinum conceded it was liable, by only $37,001.86.
49.	I accept Platinum’s submission that the significant disparity between the amount claimed and the amount recovered, particularly where the duration of the hearing is of an appreciable length due to the claims found not proven, is a further relevant matter within the meaning of s109(3)(e) when considering whether it is fair that a party should pay all or a specified part of the costs of the other party in a proceeding.
Section 109(3(b)-the Millers were responsible for prolonging unreasonably the time taken to complete the proceeding
50.	Platinum submits that the pressing of the unsuccessful claims prolonged unreasonably the time taken to complete the proceeding within the meaning of s109(3)(b) of the VCAT Act, and is another reason why it would not be fair to make a costs order other than one of the types proposed by Platinum.
51.	I have concluded, by reference to the above analysis, that the bringing of the unsuccessful claims prolonged unreasonably the time taken to complete the proceeding.
Conclusion
52.	I consider that the two relevant matters I have addressed as falling with considerations in s109(3)(e) of the VCAT Act, the considerations in s109(3)(b) and s109(3)(b) of the VCAT Act apply so as to render it fair to make a limited costs order in favour of the Millers, and for a costs order to be made in favour of Platinum.
53.	In all the circumstances, I consider that it is fair to order that Platinum must pay Millers only a proportion of their costs, but that the Millers must pay Platinum a proportion of its costs, as set out in the accompanying orders. 
Whether there should be a special costs order
54.	An award of costs on an indemnity basis is usually made only in exceptional circumstances. 
55.	I have not made an order that the Millers must pay the costs of Platinum from 26 July 2019 on an indemnity basis, as sought by Platinum, for the following reasons. 
56.	 Section 112 of the VCAT Act allows a party to make a written offer to settle a proceeding, provided it complies with ss113 and 114 of the VCAT Act. The consequences of an offeree not accepting a complying offer are also set out in s112(2) of the VCAT Act. These costs provisions do not, however, constitute a code. 
57.	It follows that a party to a proceeding may make another type of offer to settle the proceeding, that does not meet the description of an offer in sections 113 and 114 of the VCAT Act. A Calderbank offer is where the offeror states in the offer that, although it is made “without prejudice”, the offeror reserved its right to produce it to the Tribunal for the purpose of claiming costs from the date of the offer, usually on an indemnity basis.
58.	The Tribunal is not bound to award indemnity costs when a Calderbank offer exceeds the amount awarded to an applicant, and the Tribunal would not improperly exercise its discretion under s109 of the VCAT Act if it did not award indemnity costs in such circumstances. An unreasonable rejection by an offeree of a Calderbank offer may therefore be considered as a relevant matter within the meaning of s109(3)(e) of the VCAT Act, when deciding whether it is fair in all the circumstances to order any costs in a proceeding.
59.	By email dated Friday 26 July 2019, the last day of the working week prior to the commencement date of the hearing on Monday 29 July 2019, Platinum served on the Millers’’ solicitors a letter marked “without prejudice save as to costs” in an attempt to settle the dispute, offering to pay the Millers $108,000 plus the Millers’ costs to that date to be agreed or taxed on a standard basis in accordance with the County Court scale of costs (the “Calderbank offer”). 
60.	Platinum had previously served an offer of compromise under ss112-114 of the VCAT Act dated 6 February 2019 in the sum of $26,000 exclusive of costs, a second offer under ss112-114 of the VCAT Act dated 15 May 2019 of $45,000 inclusive of costs, and a third offer in the nature of a Calderbank offer on Tuesday 23 July 2019 in the sum of $85,000 inclusive of costs, open for acceptance until 12.00 noon on 26 July 2029. I accept Platinum’s submission that although the decision of the Tribunal was more favourable than each of these previous offers, the Tribunal can infer a sincere willingness on the part of Platinum to resolve the proceeding without the need for a hearing.
61.	Calculations have not been provided on behalf of Platinum. It is relevant, for the purpose of the claim by Platinum for indemnity costs from 26 July 2019, that the interest on the sum awarded to the Millers from the date of their commencement of the proceeding to 26 July 2019, the date that Platinum made an offer of $108,000 to settle the proceeding is calculated. Such interest is $14,988.75, calculated as follows: 
Interest @ 10% per annum, 15 December 2017-14 December 2018, 1 year 	$9,289.74	
Interest @ 10% per annum, 15 December 2018-14 July 2019, 7 months @ $774.15 per month	$5,419.05 	
@ 10% per annum, 15 July 2019-26 July 2019, 11 days @ $25.45 per day	   $279.96	
TOTAL	$14,988.75	

62.	When $14,988.75 interest from the commencement of the proceeding to 26 July 2019 is added to the damages amount to which the Millers were subsequently found to be entitled of $92,897.45 a figure of $107,886.20 is therefore arrived at.
63.	I note that the amount offered to the Millers by the Calderbank offer was, therefore, $113.80 more than the amount to which the Millers were found to be entitled at the date of service of the Calderbank offer.
64.	I consider that where, in a proceeding involving a claim of the size brought by the Millers, the difference between the amount offered by a respondent way of a Calderbank offer and a lesser amount recovered by the offeree calculated at the date of the offer is a matter of mathematical nicety, it does not follow that the amount recovered is less favourable than the offer. I consider that there must be a difference of some substance between the amount offered and the amount to which the offeree was found to be entitled at the time, so as to make it fair to conclude that the offer fell for plain and ready acceptance by the offeree.
65.	If this is incorrect, and were it to be concluded that the amount offered was more favourable in fact than the amount recovered by the Millers, I now consider whether it was unreasonable for the Millers to reject the Calderbank offer. An imprudent refusal of an offer of compromise is a matter to which a Court may have regard when considering whether to order indemnity costs. The critical question is whether the rejection of an offer was unreasonable in the circumstances. In Hazeldene’s case, Warren CJ, Maxwell P and Harper AJA discussed the circumstances that might lead a court to determine whether the rejection of an offer was unreasonable:
[25]		The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. At the same time, a Court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard to at least the following matters:
(a)	the stage of the proceeding at which the offer was received;
(b)	the time allowed to the offeree to consider the offer;
(c)	the extent of the compromise offered;
(d)	the offeree’s prospects of success, assessed at the date of the offer;
(e)	the clarity with which the terms of the offer were expressed;
(f)	whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.
Circumstances surrounding the rejection of the Calderbank offer
66.	The Calderbank offer, marked “without prejudice save as to costs”, read as follows (underlining added):
1.	In accordance with the expert report of Mr Tim Sherwood, dated 22 July 2019, our client maintains that only limited rectification works are required at your clients’ Property. The total estimated cost of these works is $37,946.21.
2.	Our client maintains that the scope of works required in Mr Ken Ryan’s reports (of 29 November 2017, 21 May 2018 and 12 November 2018 ) is excessive, unreasonable and unnecessary upon which to provide the basis for an order for compensation for your clients’ loss and damage in Bellgrove v Eldridge.
3.	Our client further maintains that your clients are on risk that the Tribunal will make the following findings after hearing all the evidence in respect [of] the Property, that:
a	all roofs at the Property perform and function to the requisite standard;
b	all water ingress incidents at the Property were caused by your clients’ failure to maintain the roofs and gutters, rather than as a result of any defect with our client’s installation of the same;
c	considering paragraph 3b, your clients are entirely responsible for the growth of mould at the Property which has developed as a result of water ingress caused by your clients failure to maintain the Property;
d	your clients failed to take reasonable steps to prevent the spread of mould for example by trying damp areas following water ingress incidents;
e	to the extent that water ingress and subsequent Mould may have been caused by defects in our client’s building works (which we do not believe the case), the mould is localised to small patches that can be easily repaired; and
f	only limited rendering works are required.
4.	Notwithstanding the above, in an attempt to settle this dispute in good faith, our client offers to pay your client’s an amount of $108,000 plus your clients’ costs to date to be agreed or to be taxed on a standard basis in accordance with the County Court scale of costs by the Costs Court in full and final settlement of this matter, and that on receipt of payment, your clients release our client from any further liability whatsoever arising in respect of the Property (Offer).
5.	This Offer is open for acceptance by your client until 10 AM on this Monday, 29 July 2019, after which it will immediately expire.
6.	If this offer is not accepted and our client ultimately achieves a more favourable outcome in this proceeding, our client intends to refer to this letter on the question of costs. In that regard, our client will seek an order that your clients pay its costs in this proceeding on an indemnity basis.
7.	This Offer is made in accordance with the principles contained in Calderbank v Calderbank [1975] 3 ALL ER 333 and Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] 13 VR 435
67.	The applicants attest that they became aware of the Calderbank offer having been sent to their solicitor at 4:17 pm on Friday 26 July 2019, and that it was forwarded by their solicitor to them at 5.40 pm that day. On that day, Mr Miller was in Queensland visiting his father, and Mrs Miller was at home in Melbourne. Mr Miller attests that there was insufficient time in the circumstances to consult and obtain advice in the circumstances, and to obtain recommendations for their consideration of whether to accept or reject the offer. 
68.	Although the Tribunal may regulate its own procedure, I consider that it is open to have regard to the Supreme Court (General Civil Procedure) Rules 2015 as to the time that documents are taken to be delivered. Rule 3.05 stipulates that documents served after 4.00 pm are taken to be served on the following day. There is a respectable argument, I consider, that the Calderbank offer should be taken to have been served on Monday 26 July 2019, the first day of the hearing. 
69.	I find that in the circumstances, that there was insufficient time given to the Millers to accept the offer, as to make the Millers’ rejection of the Calderbank offer unreasonable.
70.	I also find that the requirement of the Millers’ acceptance of the offer being that they release Platinum from any further liability whatsoever arising in respect of their dwelling meant that the Millers’ rejection of the Calderbank offer was not unreasonable. The requirement meant that the Millers were to release Platinum from all future claims relating to domestic building work at the dwelling, and not only claims in relation to matters known by the Millers or matters that ought to have been known by them at that time.
71.	I find that these matters, together with the minimal extent of the compromise offered on the above mathematical analysis, meant that the Millers’ rejection of the offer was not unreasonable.
72.	I make the attached orders.

A Kincaid
Member