VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
BUILDING AND PROPERTY LIST	
vcat reference No. BP1420/2018	
CATCHWORDS	
Interest, costs and reimbursement of fees: consideration of successful first respondent’s application in each proceeding for interest, costs and reimbursement of fees against applicant.
	
BP1420/2018
APPLICANT	Marisa Rita Rodrigues	
FIRST RESPONDENT
SECOND RESPONDENT	Luper Joseph Noah t/as Arkville Homes (ABN: 28 055 890 480) 
Hugh Rodrigues	
BP1421/2018
APPLICANT

FIRST RESPONDENT

SECOND RESPONDENT
WHERE HELD	
Ricardo Alfredo Rodrigues
Luper Joseph Noah t/as Arkville Homes (ABN: 28 055 890 480)
Hugo Rodrigues
Melbourne	
BEFORE	Member C Edquist	
HEARING TYPE
DATE OF RESPONDENTS’ SUBMISSIONS

DATE OF FILING OF APPLICANT’S RESPONSE SUBMISSIONS 	In Chambers
26 May 2020

29 June 2020	
DATE OF ORDER	8 October 2020	
CITATION	Rodrigues v Noah (Costs) (Building and Property) [2020] VCAT 1118	
OrderS
In BP 1420/2018, the Tribunal orders: 
1	The time by which the applicant, Marisa Rita Rodrigues is to file and serve submissions in response to the first respondent’s submissions as to costs is extended to 29 June 2020.
2	The applicant must pay to the first respondent, Luper Joseph Noah t/as Arkville Homes, the sum of $980.35 as damages in the nature of interest.
3	In addition, the applicant must reimburse to the first respondent fees he has paid of $499.10.
4	The total amount to be paid by the applicant to the first respondent under Orders 2 and 3 of these orders is $1,479.45.
5	The applicant must also pay 50% of the first respondent’s costs assessed on the standard basis on the County Court scale of costs, such costs to be taxed by the Costs Court in default of agreement.
6	The Tribunal certifies for counsel. 
In BP 1421/2018, the Tribunal orders: 
1	The time by which the applicant Ricardo Alfredo Rodrigues is to file and serve submissions in response to the first respondent’s submissions as to costs is extended to 29 June 2020.
2	The applicant must pay to the first respondent, Luper Joseph Noah t/as Arkville Homes, the sum of $963.58 as damages in the nature of interest.
3	In addition, the applicant must reimburse to the first respondent fees of $838.25.
4	The total amount to be paid by the applicant to the first respondent under Orders 2 and 3 of these orders is $1,801.83. 
5	The applicant must also pay 50% of the first respondent’s costs assessed on the standard basis on the County Court scale of costs, such costs to be taxed by the Costs Court in default of agreement.
6	The Tribunal certifies for counsel.

C Edquist 
Member			

Reasons
Introduction
1 	This decision is concerned with the disposition of the first respondent’s claims for interest, costs and reimbursement of fees following the making of substantive orders (the Orders) with reasons (the Reasons) on 8 April 2020 published at [2020] VCAT 447.
2	The applicant in BP 1420/2018, Marisa Rita Rodrigues, is the mother of the applicant in BP1421/2018, Ricardo Alfredo Rodrigues. Each came to the Tribunal seeking damages from the respondent Luper Joseph Noah for breach of a major domestic building contract. Mr Noah counterclaimed against each of them. As I did in the Reasons, I propose without intending any disrespect to any of the Rodrigues’s, in order to avoid the prolixity and potential confusion which would follow if I was to refer to them by their surname, to call them by their first names. For purposes of consistency and fairness, and again without intending any disrespect, I will continue to refer to Mr Noah as Luper.
Background to the substantive orders
3	As explained in the Reasons, in early 2016 Marisa and Ricardo each decided to become a home owner. Ricardo identified suitable blocks of land in Crestwood Road, Greenvale, Victoria that were adjacent. Marisa purchased No. 22 (lot 19) and Ricardo bought No. 20 (lot 20). 
4 	Marisa and Ricardo each entered into an arrangement with Hugo Rodrigues pursuant to which he was to design their house. Later, through the efforts of Hugo, Marisa and Ricardo each entered into a major domestic building contract with Luper. The works under each contract progressed, albeit slowly, in parallel. Each contract was terminated in June 2018. At this point, in each case only the slab stage had been completed. Out of these unhappy circumstances these proceedings sprang.
THE CLAIMS MADE BY MARISA AND RICARDO
5 	Each of Marisa and Ricardo made a claim against Luper for delay. Their claims were identical in almost every respect. Neither Marisa nor Ricardo made a claim for defective work. However, each contended that by reason of Luper’s breach in failing to take the contract works to completion by the specified date for completion, they were entitled to agreed damages for a stipulated period of delay. 
6 	Marisa and Ricardo each also made a claim that they had lawfully terminated their contract using the show cause mechanism contained in clause 43 of the contract. An alternative claim was made for repudiation at common law, based on Luper’s intimation that he was not prepared to perform the contract, but this alternative claim was in each case subsequently abandoned.
7 	The particulars of damage claimed by Marisa were as follows:
(a) 	agreed damages- $20,500;
(b) 	insurance -$5000;
(c) 	the difference in cost between a quotation obtained from a new builder to complete the work and the contract sum, namely $37,805;
(d) 	the cost associated with obtaining a new building permit;
(e)	 the cost associated with obtaining new insurance for the works;
(f) 	extra interest payments on loans due to the works being delayed.
8 	The particulars of damage given by Ricardo were identical. 
LUPER’S DEFENCES
9 	Luper defended each claim vigorously, raising a number of arguments, and in each case brought a counterclaim. It is not necessary to consider the issues here. They were traversed in detail in the Reasons.
10 	However, it is important to note, as it is relevant to this decision, that in his counterclaim against Marisa, Luper contended that she was obligated to pay him $13,810 on account of the unpaid portion of the deposit plus $27,620 on account of the base (slab) stage. Against this obligation she had paid $5,000 plus $27,950, a total of $32,950, exposing her to a liability of $8,480. Further, it was contended that Marisa was indebted to Luper in respect of a variation of $12,000. Finally, by reason of the repudiation, Marisa was asserted to have been liable for damages in connection with Luper’s loss of profit on the job, asserted to be $36,487.50, based on a profit margin of 15%. An alternative claim based on Luper’s total expenditure on the works (said to be $50,730) was pleaded, but was not pressed at the hearing. Luper’s counterclaim against Ricardo was identical to that made against Marisa. 
LUPER’S CLAIM AGAINST HUGO 
11 	Luper also brought a claim again Hugo. Underpinning this claim was the assertion that in March 2016 Luper and Hugo had entered into an agreement under which Hugo was to produce drawings for the construction of the two houses. It was asserted that there were terms of the agreement that Hugo warranted or guaranteed that he would render the services with due care and skill, that he would produce drawings capable of being approved by a building surveyor for the purpose of obtaining a building permit, and that he would render the services without unreasonable delay. It was further asserted that Hugo breached each of those terms and was liable to Luper for damages.
12 	The next limb of the pleading was that Hugo owed a duty of care to Luper to exercise reasonable care in producing the drawings so that they would not unreasonably expose Luper to claims for breaches of his contracts with Marisa and Ricardo. 
13 	Furthermore, it was asserted that Hugo was liable as a concurrent wrongdoer in accordance with Part IVAA of the Wrongs Act 1958. 
14 	In the event, Luper gave no evidence about any damage he had suffered by reason of any breach of duty of care or any breach of contract on the part of Hugo. It was clear that Luper was not concerned about recovering from Hugo any loss or damage he had suffered by reason of delay in either building project. Rather, he was concerned about recovering contribution or indemnity in respect of any liability he had to Marisa and Ricardo by reason of breaches of the respective building contracts.
The substantive decision
In BP 1420/2018
15 	The central plank of the decision was my finding that it was Marisa who repudiated the contract, not Luper. Luper had accepted that repudiation and is entitled to damages. On the other hand, Marisa’s claim for damages against Luper was dismissed. 
16 	On Luper’s counterclaim, I declared that Marisa was indebted to Luper in the sum of $42,595 comprising the following sums:
(a) $8,975 in respect of the balance of the deposit payable under the contract;
(b) $27,620 in respect of the base (slab) stage payment;
(c) $6,000 in respect of the slab re-design variation.
17 	However, I dismissed Luper’s claim for loss of profit against Marisa.
18 	I also declared that against Marisa’s indebtedness to Luper in the sum of $42,595, Marisa was entitled to set off the sum of $32,950 (comprising $5,000 and $27,950) already paid to Luper, and accordingly Marisa had to pay to Luper the net sum of $9,645.
19 	Luper’s claim against Hugo was dismissed.
20 	I granted Luper leave to make an application against Marisa for interest, costs or reimbursement of fees. 
21	I also granted leave to Hugo to make an application against any other party for costs or reimbursement of fees. (Hugo did not do so and no more need be said about that matter.)
22 	Leave was also granted to Marisa to make a claim for costs or reimbursement of fees against Hugo. (No such application was made.)
In BP 1421/2018
23 	Against Ricardo, I made similar orders, but the figures differed slightly. On the counterclaim, I declared that Ricardo was indebted to Luper in the sum of $42,430 comprising the following sums:
(a) 	$8,810 in respect of the balance of the deposit payable under the contract;
(b) 	$27,620 in respect of the base (slab) stage payment;
(c) 	$6,000 in respect of the slab re-design variation.
24 	I dismissed Luper’s claim for loss of profit against Ricardo.
25 	I also declared that against Ricardo’s indebtedness to Luper in the sum of $42,430, Ricardo was entitled to set off the sum of $32,950 (comprising $5,000 and $27,950) and accordingly was to pay to Luper the net sum of $9,480.
26 	I made the same orders regarding applications for costs as I had in Marisa’s proceeding. Hugo did not take up the opportunity to pursue costs against any party. Like Marisa, Ricardo did not seek to pursue Hugo for costs or fees.
Luper’s applications
27 	As noted, the substantive decision was published on 8 April 2020. The orders required any application for interest, costs and fees to be made in writing within 30 days and to be supported by submissions. If any factual matters were relied on, an affidavit was required. Luper’s initial application, unsupported by any material, was filed at the start of May. A written submission was not received until on or about 26 May 2020. The time by which Luper was to file and serve submissions and any affidavit as to costs was extended to 27 May 2020. 
28 	The time by which each of Marisa and Ricardo was to respond was extended to 26 June 2020. In the event, they filed their submissions in response only on 29 June 2020. This is an immaterial delay and an extension of time for the filing of their submissions until 29 June 2020 will be granted.
29 	The response submissions were not referred to me until 25 August 2020. This was significant factor in the date of publication of this decision.
Interest
30 	Luper’s claim for interest is simple. He submits: 
It is appropriate where there is a net flow of funds in favour of the Respondent, and the respondent has been kept out of those funds for a period of time, that interest is awarded.
31 	No calculation was set out, but interest was claimed at the rate provided for by the Penalty Interest Rates Act on the date Luper commences claim to the date of payment.
32 	No submission in relation to interest was made by Marisa and Ricardo.
33 	I accept Luper’s proposition that an award of interest is appropriate. Luper did not draw my attention to any clause in the respective building contracts upon which a claim for interest might be based. I propose to rely on the Tribunal’s jurisdiction allow damages in the nature of interest given by s 53(2)(b)(ii) the Domestic Building Contracts Act 1995. Under s 53(3) of that Act, interest may be allowed at the rate set from time to time under section 2 of the Penalty Interest Rates Act 1983 or at any lesser rate. The rate currently prevailing under section 2 is 10%.
34 	In the absence of any submission from Marisa and Ricardo as to why a lesser rate should be applied, I will apply 10%. 
35 	The calculation of interest will be made in each case from the date of institution of the counterclaim, which I fix to be the date that the filing fee was received. In each proceeding, this was on 2 April 2019. Interest will be allowed until the date of the Orders, 8 April 2020. This period is 371 days. 
36 	In Marisa’s case, the net award was $9,645. I calculate interest on this sum at 10% per annum for 371 days at $980.35, and award this sum to Luper.
37 	The net award in Ricardo’s case was $9,480. I calculate interest at 10% per annum for 371 days at $963.58. I award this sum to Luper.
Costs
38 	Luper seeks an order that Marisa pay 50% of his costs of and incidental to the proceeding, to be taxed in default of agreement on the standard basis. A similar award is sought against Ricardo, which will give Luper recovery of 100% of his costs on the standard basis.
39	The power of the Tribunal to award costs is set out in s 109 of the Victorian Civil and Administrative Tribunal Act 1998. It provides:
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.
40 	The operation of this provision was explained by Gillard J in Vero Insurance Ltd v Gombac Group Pty Ltd  as follows:
20 	In approaching the question of any application for costs pursuant to s.109 in any proceeding in VCAT, the Tribunal should approach the question on a step by step basis, as follows –
(i) 	The prima facie rule is that each party should bear their own costs of the proceeding. 
(ii) 	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. 
(iii) 	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.
41 	Luper did not expressly address s109. However, he noted that the proceedings were heard together over a period of four days in February 2020 and that submissions were filed after the hearing. It was noted that the principal findings were that Marisa and Ricardo had failed in their respective claims that they had lawfully terminated the contract, and each was found to have repudiated the contract. Accordingly, Luper was entitled to certain contractual payments.
42 	Marisa and Ricardo put forward a number of arguments as to why it would not be fair to award costs having regard to the criteria set out in s 109(3). These are discussed in turn.
Conduct?
43 	Firstly, they submit that they did not conduct their proceeding in a way that disadvantaged another party. They had cooperated with Luper and orders made by the Tribunal had been complied with. I accept this submission.
Unreasonable prolongation?
44 	Secondly, Marisa and Ricardo submit that they did not prolong unreasonably the time taken to complete the proceeding. I do not accept this submission. As I explained in the reasons for decision, at [20], at the hearing it became apparent that Marisa and Ricardo’s pleadings had inadequately described their respective contracts in a number of ways. It took time for the true state of affairs to come out. I refer in this connection to the Reasons at [20-32]. Furthermore, Marisa and Ricardo did not refer to the arrangement regarding a rebate that each of them entered into with Luper’s company Arkville Homes Pty Ltd. In respect of the offer of rebate, I refer to the Reasons at [33-36]. Furthermore, as noted in the Reasons, Marisa and Ricardo were not at all times fully frank when giving evidence. I refer in particular to the reasons at [25]. 
45 	The inaccurate pleadings, coupled with a lack of frankness in giving evidence, were not conducive to an efficient hearing. I find that Marisa and Ricardo’s conduct did prolong the proceeding unreasonably.
Were the proceedings justified?
46 	Thirdly, Marisa and Ricardo assert that they were entitled to bring their claim because “the construction was not proceeding expeditiously”. I consider this is a significant oversimplification of the situation. In each case, the contractual situation was complex. Marisa’s case proceeded on the basis that Hugo had designed the house for Luper and that Hugo was Luper’s agent. Luper was accordingly blamed for design issues. Ricardo’s case proceeded on an identical basis. As explained in detail in the decision, the contractual arrangements were much more complex. I refer in particular to [20-32], [37-40] and [54-57]. Ultimately, at [57) I found that as between Marisa and Luper, it was Marisa who bore contractual responsibility for the deficiencies in Hugo’s plans, and I made a similar finding in respect of Ricardo’s contract.
47 	Had Marisa and Ricardo adopted a more realistic attitude to the contractual arrangements, perhaps they would not have brought their claims in the first place.
Luper was only partially successful
48 	Fourthly, Marisa and Ricardo point out that Luper in each case failed in his claim for loss of profit, and note that the amounts respectively awarded to Luper were $9,645 and $9,480 respectively. As a result, they suggest that Luper “has not succeeded on the majority of his claim.”. I reject this submission. The key issue in each case was whether Marisa and Ricardo respectively had lawfully terminated the contract. Each of them lost that argument. 
49 	Moreover, although it is true that Luper failed in his claim for loss of profit, he did in each proceeding succeed in the recovery of the balance of the deposit payment and the slab stage payment. He also recovered half of his variation claim. Because of this, and because he won on the issue of termination, I find that he was substantially successful in each proceeding, despite failing on the loss of profit claim.
The joinder of Hugo prolonged the proceeding
50 	Luper was also criticised for joining Hugo on the basis that this “protracted the hearing cause the parties to incur costs that would not have ordinarily been incurred.”. I reject this submission also. As I explained in the Reasons, there was a degree of artificiality in the contractual arrangements. In particular, under each contract, Luper purportedly had design obligations as well as construction obligations. However, the reality was that the contract plans had been prepared by Hugo during the period that he had been receiving instructions directly from Marisa and Ricardo respectively. I refer in this connection to the Reasons at [28]. Hugo was responsible for the contractual arrangements and it was not unreasonable that he was joined to each proceeding.
No costs to be awarded in a small claim
51 	The final matter raised was that Luper’s recovery in each case was under $10,000. This was linked to a further submission to the effect that it would not be fair to award costs because the amounts awarded in each proceeding were under the jurisdiction for “a small claim”. This presumably is a reference to a small claim brought under the Australian Consumer Law and Fair Trading Act 2012 in respect of which special rules apply under Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998, including the rule under clause 4I of the Schedule that no costs can be awarded. I consider this argument to be misconceived. These proceedings were conducted under the Domestic Building Contracts Act 1995, not under the Australian Consumer Law and Fair Trading Act 2012. There is no special rule that costs cannot be awarded in a small claim brought under the latter legislation. 
Findings regarding costs
52 	For the reasons given above, at [41-42], I find that Marisa and Ricardo did prolong unreasonably the time taken to complete the proceeding. Accordingly, my discretion to award costs is enlivened under s 109(3)(b). 
53 	Furthermore, I find that each proceeding was complex. I refer to the Reasons generally. The discretion of the Tribunal to award costs is accordingly enlivened under s 109(3)(c).
54 	Sub-sections 109(3)(b) and(c) have been engaged. It was reasonable for Luper to engage a barrister to represent him at the hearing. Neither Marisa nor Ricardo can complain about this, as they themselves were legally represented. In engaging a barrister to appear at the hearing, and to prepare submissions after the hearing, Luper necessarily incurred significant expenses. I find that it is fair to award costs to Luper.
The relevant scale
55 	The final point made by Marisa and Ricardo is that if they are ordered to pay costs, the costs should to be calculated on the standard basis in accordance with column D of the Magistrates Court Scale because the respective awards were $9,645 and $9,480. I reject this submission. Although the net result in favour of Luper in each case was under $10,000, that was the net result. It disguises the fact that substantial monetary claims were being made by each applicant against Luper and by Luper against each applicant.
56 	The default scale of costs referred to in the Tribunal’s Rules is the County Court scale of costs. I will apply that scale.
57 	In each proceeding, costs are awarded in favour of Luper on the standard basis on the County Court scale of costs, such costs to be taxed by the Costs Court in default of agreement.
58	I will certify for counsel in each proceeding. 
Fees
59 	Luper did not expressly make a claim for reimbursement of fees, but I consider that such a claim is to be implied because costs were sought, and it is easier for a successful party to obtain an order for reimbursement of fees than an order for costs.
60 	Under s 115B of the Victorian Civil and Administrative Tribunal Act 1998, the Tribunal has jurisdiction to order that one party reimburse to another party any fees the other party has paid in a proceeding. Section 115C provides that in a proceeding conducted under the Domestic Building Contracts Act 1995, there is a presumption that the successful party receive an order for reimbursement of the whole of the fees they have been paid, where they have “substantially succeeded”. 
61 	I have found above at [49] that Luper has been substantially successful in each proceeding. Accordingly, under s 115B and s 115C, he is entitled to an order for reimbursement of the fees he has paid.
62	In Marisa’s proceeding, Luper paid a fee of $475.40 on his counterclaim, and a summons fee of $23.70, a total of $499.10. I will order that Marisa must reimburse those fees to Luper. 
63	In Ricardo’s proceeding, Luper paid a fee of $475.40 on his counterclaim. He also paid 3 daily hearing fees of $120.95 each, a total of $362.85. The total is $838.25.
64	I will order that Ricardo must reimburse fees of $838.25 to Luper.

C Edquist 
Member