VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
BUILDING AND PROPERTY LIST	
vcat reference No. BP1167/2019	
CATCHWORDS	
Domestic building – terms of settlement entered into including a release for all claims “other than a breach which was known or ought reasonably to have been known to exist at the time the terms of settlement were executed” – s10 Domestic Building Contracts Act 1995 – application to reinstate – whether the new items sought to be claimed were known or ought reasonably to have been known to the applicant at the time of the settlement.	

APPLICANT	Qing Dai	
RESPONDENT	Matthew Butterworth t/as Butterworth Landscapes (ABN: 58 956 948 013)	
WHERE HELD	Melbourne	
BEFORE	Senior Member S Kirton 	
HEARING TYPE	Hearing by video	
DATE OF HEARING	9 October 2020	
DATE OF ORDER	13 October 2020	
CITATION	Dai v Butterworth (Building and Property) [2020] VCAT 1148	

Order
1.	The applicant’s application to reinstate the proceeding is dismissed.
2.	By 4pm on 16 October 2020 the applicant must provide any submissions in writing as to why she should not pay the legal costs of the respondent having regard to the matters in section 109 of the Victorian Civil and Administrative Tribunal Act 1998, and whether the amount claimed of $2,600 (made up of 2 hours preparation at $400/hour plus $1,800 appearance fee for the hearing) is not appropriate.

S Kirton 
Senior Member			

APPEARANCES:		
For Applicant	Ms Q Dai, in person	
For Respondents	Mr A Beck-Godoy, Counsel	

Reasons
1	The applicant commenced this proceeding against the respondent on 17 June 2019. In her application form, the applicant claimed “Payment of money (including damages)” with no amount specified, and “Order to comply with a contract (e.g.: rectification or completion of building work)” with no details given. Attached to the application form was a bundle of documents, including:
a.	a copy of the contract signed 23 February 2017 by the parties, which included the scope of work to be performed by the respondent and the monies to be paid by the applicant;
b.	a landscaping plan prepared by Supreme Green dated 13 December 2016;
c.	text messages which referred to issues such as:
•	“the third pier cap was installed in the wrong position” 
•	“Also how about the intercom, which should be installed before your next render for finalising the wall”
•	“Contract Termination - Hi, After the events which occurred on 22 November 2018 discussions with legal representation…”;
d.	emails between the parties referring to issues including: 
•	the termination of the contract
•	“you have got the full payment but still not to finish fully such as the low quality fence, paints, render, rubbish, damaged concrete, intercom connections…”
•	“It was the leaking irrigation system caused the huge water loss on the outside main road”;
e.	List of matters in dispute prepared for Domestic Building Dispute Resolution Victoria which included claims for:
•	front concrete fence rendering is not completely finished
•	front concrete fence capping has not been capped properly as promised
•	irrigation system does not function properly, leaks …
•	Gate intercom has not been installed
•	landscaper terminated the contract … 
2	The parties attended a mediation at the Tribunal on 14 October 2019. They signed Terms of Settlement dated that day. The relevant clauses of the Terms of Settlement provide as follows:
It is agreed as follows:
1.	The Applicant and the Respondent entered into a landscaping contract dated 23 February 2017 for the performance of works at [the property] … (‘the works’).
2.	A dispute arose between the Applicants and the Respondents in relation to the works performed and monies owed under the contract (‘the dispute’).
3.	The Applicant has lodged an Application against the Respondents in VCAT to determine the issues comprised in the dispute.
4.	In the interests of avoiding further costs and expenses, the parties have agreed to a settlement of the proceeding and the dispute in the following terms:
5.	The Respondent shall pay the Applicants the sum of $7500 (‘the settlement sum’).
6.	The Respondent is to pay the settlement sum by way of bank cheque made payable to the Applicant.  The bank cheque shall be delivered to the Applicant at [the property] by 4 p.m. on 14 November 2019.
…
9.	In consideration of the parties entering into these terms of settlement and subject to their performance, the parties mutually release and discharge each other from all further claims, demands, suits and costs of whatsoever nature, however arising out of or connected with the subject matter of the dispute and the proceedings.  Where the owner is a party, this release does not apply to a breach other than a breach that was known, or ought reasonably to have been known, to exist at the time these Terms of Settlement were executed.
•	The respondent delivered a bank cheque for $7500 to [the property] on 7 November 2019. I am satisfied based on the respondent’s evidence, including photographic and video footage, that he left the cheque at the property on that date.  
•	On 6 February 2020 the applicant wrote to the Tribunal stating: 
“Since I haven’t received any money from the landscaper so far while there is a serious new issue which my city Council passed on me for the landscaper and or his contractor unreasonable fence work against the approved build permit although I had costed extra $700 to try to fix but again the worker took the full payment running away, I also had paid.  The new Gardoner $3000 to fix the damaged plants And the irrigation system again leaking, which all I want to include in the reinstated application.”
3	The respondent delivered a bank cheque for $7,500 to [the property] on 7 November 2019. I am satisfied based on the respondent’s evidence, including photographic and video footage, that he left the cheque at the property on that date.  
4	On 6 February 2020 the applicant wrote to the Tribunal stating: 
	“Since I haven’t received any money from the landscaper so far while there is a serious new issue which my city Council passed on me for the landscaper and or his contractor unreasonable fence work against the approved build permit although I had costed extra $700 to try to fix but again the worker took the full payment running away, I also had paid.  The new Gardoner $3000 to fix the damaged plants And the irrigation system again leaking, which all I want to include in the reinstated application.”
5	The Tribunal understood this email to be a request to apply to reinstate the proceeding and listed the application for hearing. By orders made 15 July 2020, the applicant was ordered:
By 25 August 2020 the applicant is to send to the Tribunal and to the respondent a document describing all the terms of the settlement agreement and details of any alleged breach of the settlement agreement and a copy of all documents upon which they rely in respect of any claim of breach of the terms of settlement.
6	The applicant failed to comply with this order, and instead sent to the Tribunal and the respondent seven emails between 12:43 am on 7 October 2020 and 2.18pm on 9 October 2020. The hearing commenced at 2.15pm on 9 October 2020.
7	Attached to the applicant’s emails were over 60 separate attachments, although surprisingly she did not provide the Terms of Settlement. In her sixth and seventh emails the applicant attempted to consolidate all the information into a document called ‘Documents list’. Notwithstanding the late service of her material, I was able to open and read each of her documents before and during the hearing as she referred me to them. 
8	The respondent provided two emails and several attachments in response, including the photographic and video footage of him delivering the bank cheque and a copy of the Terms of Settlement.
9	As set out above, by paragraph 9 of the Terms of Settlement the parties both agreed that the proceeding and the dispute would be settled by the payment of $7500, and that no further claims could be brought in relation to the subject matter covered by the proceeding and the dispute. However because of section 10 of the Domestic Building Contracts Act 1995 (‘the DBC Act’), the release does not prevent the applicant from bringing further claims in respect of any item which she either did not know about or ought reasonably not to have known about, as at 14 October 2019. That exception to the release is reflected in the last sentence of paragraph 9.
10	At the commencement of the hearing, I asked the applicant why she was making this application in light of the release she had signed. She said that the last sentence of paragraph 9 of the Terms of Settlement meant that she could still bring a claim for any new items.
11	I asked her to tell me what new items she was claiming for, and she said they were the following five items:
a.	The height of the front wall is higher than allowed by the building permit and she has now received a Building Notice and Building Order from the Council.  he said she was not aware of the wall height at the time of the mediation and the Building Notice and the Building Order were issued after the mediation.
b.	There are cappings on the front pillars which are too close to the neighbouring property. She said she was not aware of this issue until the neighbours told her some time after the mediation.  
c.	The intercom is not working. She engaged an electrician to install the intercom after the mediation, and was told that the wiring had been destroyed underneath the driveway. Her builder, Metricon, had told her that they had left the wiring in a working condition and she said therefore it must have been damaged by the respondent. She said she was not aware of this until after the mediation.
d.	There is a leak in the irrigation system. The applicant was not clear about where or when the leak occurred. There had been a first leak prior to the mediation which she said was caused by a “technical issue”. Then she said there was a second leak caused by a cracked irrigation tube, and she paid someone on 9 December 2019 to fix it.  She said the second leak must have been the fault of the respondent, because no one had touched that irrigation tube since the respondent ceased work in November 2018. Her evidence about the leak was confused, as she was not able to say when she became aware of it, or how big it was. At one point she said she became aware of the leak in January 2020, however based on the invoice she provided, she had already had it fixed by that date.  She said it was a small leak, but then said according to the bill from her water provider, she was using 20 times more water than usual because of the leak. She later said words to the effect “I have no idea when the leak started or where - I just saw it from the water bill which showed 20 times normal usage”.
e.	The fifth claim that the applicant sought to make was that she cannot return to employment because of the stress this project has caused her.  She said she has been racially discriminated against by the respondent.  
12	I am not satisfied that any of the five items claimed are matters that the applicant either did not know of or could not reasonably have known as at 14 October 2019, when she signed the Terms of Settlement.  
13	It is uncontroversial that the legal system expects each party to a commercial dispute to assess their risks and the costs of continuing with a proceeding against their best and worst case scenarios and the most likely outcome. If a release is to be provided as part of a settlement, the party giving the release will have made a calculation which takes into account the risk of what they are giving up against the benefit of what they are receiving as part of the settlement.  
14	One purpose of settling a proceeding is to give finality to both parties to a dispute. That is why section 10 of the DBC Act and paragraph 9 of the Terms of Settlement impose an objective test as to what issues ought reasonably be known to a person in the position of the parties, as well as the subjective test of what a party actually knew. There is sound public policy for these two tests applying: otherwise one party could simply close its eyes to any issues alive at the time of the settlement, allow the other party to compromise a proceeding in good faith, and later use their wilful blindness as an excuse to reinstate the proceeding and go behind a release.  
15	What a party ought reasonably to have known must be considered in the context of what information is available or could be available at the time a dispute is settled. 
16	In the present case, the front wall had been constructed at the time the respondent left the site in November 2018. It would have been reasonable for a litigant in the applicant’s circumstances to have informed herself about any problems with the wall before compromising the proceeding. The contract had been terminated before completion and final certificates had not been issued. The application sought orders for the work to be completed, or damages for the cost of having the job completed by others. The contract made the respondent liable for all necessary permits. Accordingly obtaining a Certificate of Final Inspection is part of the work required for completion, and therefore was part of the original claim.  
17	Moreover, the applicant was aware that the height of the wall had been altered during construction and there was a live dispute as to whether this was a variation to the contract (emails passing between the parties 14, 15 August 2018). In that context, it would have been reasonable for an applicant to have contacted the building surveyor or the Council prior to compromising the proceeding to enquire about what steps they required for the work to be completed.  It would have been reasonable to take a tape measure to the wall before an applicant attended the mediation. Accordingly, I am not satisfied that this is a ‘new’ item, excluded from the release provided by paragraph 9 of the Terms of Settlement.
18	In respect of the second alleged ‘new’ item, based on the documents submitted with the application form, the applicant was aware of issues with the capping prior to the mediation. She cannot now say this is a new claim.  Alternatively, even if she was not actually aware of the location of the capping on the boundary pillar, it is something she ought reasonably to have been aware of, particularly as she has noted in a text message (12 October 2018) that the third pier cap was installed in the wrong location.
19	As for the intercom, the applicant was aware that the respondent had not completed the intercom and this is one of the items expressly claimed in the list of matters in dispute which accompanied her application form. Whether or not the intercom wiring was damaged by the respondent (and she has not provided any evidence to say that he did), the cost to complete the intercom system was part of the settlement. Accordingly, the applicant has expressly released the respondent from liability for this item in the Terms of Settlement.  
20	The water leak is also an item which is covered by the release at paragraph 9.  The applicant was aware there had been an earlier leak in the system at the time she settled her claim. Leaving aside the lack of any evidence to show that there actually was a second leak caused by the respondent (noting that the respondent ceased work more than 12 months prior to the leak being detected and other contractors had been working on the property in the intervening period), a reasonable litigant in the applicant’s position ought reasonably to have enquired whether there was the potential for further leaks, and/or made an allowance when negotiating the settlement sum for this potential risk. 
21	The fifth ‘new’ allegation relates to losses which the applicant says were consequent on the respondents breach of contract and his alleged conduct towards her. Leaving aside that the allegations are without particulars or substance, these are clearly matters which were part of the dispute and the proceeding and are incorporated in the release.  
22	Accordingly, at the conclusion of the hearing I determined that the application for the proceeding to be reinstated is dismissed and I advised the applicant of my decision during the hearing.  
23	I note for the record that a Mandarin interpreter was present for most of the hearing, up until the time I gave my decision. At that point, the interpreter’s connection to the video hearing failed and she did not re-join the hearing.  The applicant had mostly given her evidence without the use of the interpreter. I found her to be quite competent in English. She had advised me that she was a professor of science, and had either taught or been a teaching assistant at a reputable school in Melbourne. She was argumentative and passionate for the full 2 hours of the hearing, and only rarely used the interpreter. As I was at the point of handing down my decision, I continued the hearing without the interpreter.  
24	It was only when I explained to the applicant that the reason for my decision was that the matters she complained of were matters which she “knew or ought reasonably to have known” of at the time she signed the Terms of Settlement that she said she did not understand what that English phrase meant. I had used that phrase regularly for the previous 2 hours of the hearing without any comment from her.  In any event, my decision is not based on whether or not she understood that phrase. It is based on the facts which she provided, the context in which the settlement was agreed on 14 October 2019, and my assessment of what, objectively, a litigant in her position ought reasonably to have been aware of by that date.
25	The respondent then applied for his costs of the application under sections 109(3)(a)(i), (a)(vi), (c), (d) and (e) of the Victorian Civil and Administrative Tribunal Act 1998. These sections provide factors which the Tribunal may take into consideration when deciding whether or not it is fair to order that one party pay another party’s costs. The factors relied on by the respondent include that the applicant failed to comply with the order to provide her documents by 25 August 2020, meaning that the respondent and his lawyers have had to work extra hours to respond at the last minute to the applicant’s emails and voluminous attachments.  he way the applicant conducted this application has been vexatious, by bombarding the respondent and the Tribunal with voluminous emails and without specifying what her application was about. The relative hopelessness of the application and the strength of the respondent’s opposition, and the complexity of matters raised by the applicant are also factors relied on by the respondent in favour of an order for costs. Further, the respondent put the applicant on notice by an email of 8 October 2020 that he would be seeking his costs on an indemnity basis.  
26	The respondent has claimed his Counsel’s fees of $2600 (made up of 2 hours preparation at $400/hour plus $1800 appearance fee for the hearing). As the interpreter was not present at this stage of the hearing, I advised the applicant I would give her 7 days in which to make any submission in relation to costs before I made any ruling on that application. 
27	Lastly, the applicant has sent further emails and documents to the Tribunal following the conclusion of the hearing (unrelated to the question of costs). I have had no regard to these, as my decision (apart from the question of costs) was made and handed down during the hearing.

S Kirton 
Senior Member