Kellehers Australia recently secured orders that a Building Surveyor (RBS) pay the legal costs of an adjoining owner incurred as a result of a Building Appeal Board (Board) appeal. The adjoining owner appealed to the Board against a determination by the RBS approving protection work. She incurred considerable expense in and associated with that appeal. The decision is exceptional. Importantly, as the Board relied, in part, on VCAT’s costs jurisdiction, the case has importance to VCAT matters as well as Board proceedings.
This Newsflash outlines key elements of the Board’s decision.
The Board has jurisdiction, under the Building Act 1993 (Act), to order that one party pay another party’s costs of a Board proceeding[i]. However, the Act also provides that unless the Board otherwise determines, a party to a Board proceeding must bear their own costs[ii].
In this case, Kelly v Milner[iii], the Board examined the relevant provisions in considerable detail and made important linkages with VCAT’s costs powers. Referring to the earlier Victorian Supreme Court (VSC) case of Stewart v Building Practitioners Board & Anor[iv], the Board began from the position that there is no presumption that costs are awarded to a successful party and that there must be circumstances that override the general rule that each party bears its own costs[v].
Submissions
The adjoining owner sought costs against both the RBS and the owner (called the Interested Party in the proceedings). She submitted that the RBS failed to perform his statutory responsibilities in multiple respects. She also argued that the owner, having appointed the RBS, was either responsible herself or through her agent for the RBS’s failures to comply with the statutory responsibilities.
Naturally, the RBS argued that there should be no departure from the usual presumption that each party bears its own costs. He submitted that the costs claimed included costs that were distinct from the appeal costs and he maintained there was no evidence of the appeal being unreasonably complex or prolonged or that the applicant was unnecessarily disadvantaged by his conduct. He disputed a lack of knowledge and basic professional standards or that his conduct imposed an undue financial burden on the applicant. He also argued that there was no basis for an award of indemnity costs, that the costs claimed were excessive and should be assessed on a County Court scale. Finally, he argued that any costs should be paid in equal shares by him and the owner.
The Owner/Interested Party also relied on the usual presumption and argued that the costs were excessive. In addition, she claimed that she was a layperson who relied upon her builder and RBS. She maintained that her conduct did not unnecessarily disadvantage the adjoining owner and that there was nothing vexatious about her reliance upon the RBS. She included a legal costing report that assessed costs lower than the figure claimed.
Board’s Approach
The Board found that the Act conferred a broad discretion to consider any matters relevant in guiding the making of a costs order – and this included any approach it considered just. It compared the costs jurisdiction of VCAT, noting that additional statutory guidance was given in the Victorian Civil and Administrative Act 1998 (VCAT Act)[vi]. The Board found it appropriate to apply the approach articulated by the VSC in an earlier case that concerned VCAT’s costs powers[vii]. The VSC had found that VCAT should approach the question of the entitlement to costs on a step-by-step basis and have regard to s109(3) VCAT Act in considering whether it is fair to make a costs order.
Board’s Findings
RBS
The Board found that the applicant had sound reasons to and was entirely reasonable in filing her appeal and engaging legal representation to assist her. It noted the flaws in the process – erroneous Forms 6, 7 and 9. It found that the RBS ought to have ceased the process on receipt of the erroneous Form 7, and should not have determined that the proposed protection work was appropriate until satisfied that a compliant Form 7 had been served detailing proposed measures, methodologies and procedures that were reasonable in the circumstances and would minimise the risk of significant damage to the adjoining property. It found that the RBS could not have made his protection works determination with any certainty that the risk of significant damage would be adequately mitigated.
The Board found that the applicant’s rights were significantly diminished or circumnavigated by the way the process was administered. It considered that it would not be fair or just that she should have to bear the reasonable costs of lodging and contesting the appeal.
It found that the conduct of the RBS both up to making his determination and in providing submissions to the Board to have been extraordinary, considering the requirements of the Act, Regulations, information available to RBSs and his independent role. The Board recorded that the RBS expressly stated during the Board’s hearing that he did not consider the protection work before issuing his determination approving that work. The Board found that his conduct failed to meet the standard of assessment required of RBSs and that this was a relevant consideration – it applied s109(3)(e) VCAT Act. It further found that it was fair to award the applicant her costs as the nature and complexity of the matter required legal representation – it applied s109(3)(d) VCAT Act. It found that the facts in this proceeding distinguished it as an exceptional case, in which it was just to make a costs order.
Owner/ Interested Party
The Board found that the owner was not the decision maker in the matter, noting that, she was responsible to serve the Form 7 and prescribed information but was not a practitioner or expert in this field. The Board was of the view that the RBS had the opportunity at two key stages in the process to prevent the matter proceeding to a determination when there were deficiencies in the Owner’s documents. For this reason, it found no reason in the role and conduct of the Owner/ Interested Party to move from the usual presumption as to costs or to order that she pay any costs.
Quantum
The applicant sought costs assessed on an indemnity basis, but the Board noted that it is unusual for it to make a costs order at all, let alone on an indemnity basis. In ordering costs, it recorded that the facts were unique and, in its view, justified costs being so ordered in these proceedings.
In finalising the amount ordered, it held that the costs must exclude any costs prior to commencement of the proceedings and applied the County Court scale. It fixed the costs at $25,000.
KELLEHERS AUSTRALIA PTY LTD
Cameron Algie LLB (Hons); Dr Leonie Kelleher OAM, PhD, Dip TRP, LLB, BA.
2 March 2023
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[i] Cl 16(2), Schedule 3, Building Act 1993 (Act).
[ii] Cl 17, Schedule 3, Act.
[iii] Kelly v Milner BAB Case No. 453895 (27 February 2023).
[iv] [2001] VSC 349.
[v] It noted this approach as consistent with Martin v Fasham Johnson Pty Ltd [2007] VSC 54.
[vi] S109 VCAT Act.
[vii] Vero Insurance Limited v Gombac Group [2007] VSC 117 @ [20].