Costs in the Building Appeals Board
Under the Building Act 1993:
“An owner must compensate any adjoining owner or adjoining occupier for inconvenience, loss or damage suffered by the adjoining owner or adjoining occupier in connection with the carrying out of protection works under this part”.
Typically, these costs claimed are those required to engage technical experts in order to determine if the proposed protection works will provide adequate safeguards against impactful building works. The legislation does not state the rights to claim legal fees associated with these compliance claims.
In the 2023 Building Appeals Board case of Kelly v Milner, the board determined that the Act conferred broad discretion to consider any matters relevant in guiding the making of a costs order- this included any approach it considered just. The facts of this case however determined gave ‘sound reasons to file’ due to administrative and decision-making shortfalls which made it ‘entirely reasonable for the Applicant to engage legal representation’. The Board came to this decision based on these findings that the Applicant’s rights were significantly diminished or circumnavigated by the way the process was administered due to erroneous forms being completed by the Registered Building Surveyor.
It was also pointed out that while Victorian Civil and Administrative Tribunal (VCAT) was also a jurisdiction in which ‘parties bear their own costs’, unlike the BAB, VCAT has the guidance of s109 of the VCAT Act to consider in circumstances which may justify a costs order.
It is difficult to recoup legal costs at the BAB as “It is unusual for the Board to make a costs order on an indemnity basis, let alone ordering costs at all”. The decision in Kelly is likely for this reason, one limited to circumstances where an applicant’s ‘rights were significantly diminished’ to the point where it was ‘not fair or just for the applicant to bear the reasonable costs’.
Generally, costs are “Unless the Building Appeals Board otherwise determines, a party to a proceeding before the Board must bear his, her or it’s own costs”.
The Building Act 1993 allows that a determination by the Building Appeals Board “may include any order as to costs that the Building Appeals Board, on the application of a party to the proceeding, considers just”.
A 2019 BAB practice note provides examples of circumstances where a costs order may be applied for may include:
- Where a matter is brought without merit,
- Where a matter is brought to harass, annoy, or destress someone,
- Where a matter is brought without serious purpose,
- Where someone has unreasonably prolonged a hearing,
- Where someone deceived the BAB or others involved in a case,
- Where the application made is not well supported, as by fact or law.
A 2021 BAB practice note also adds “this can include non-observation of the strict timing limits for filing material. This material will not be regarded, or the hearing will be adjourned and any wasted costs incurred by the other parties will be paid by the party who fails to comply with the time limits.”
In Stewart v Building Practitioners Board & Anor The Victorian Supreme Court said on the matter:
“it is clear that the Board may, in appropriate circumstances, refuse to follow the general and make an order for costs. One looks in vain to find any criterion to guide the Board when an application is made to override the general rule and order costs”
“However, in my opinion, the presence of the general rule requires that circumstances must be established to override the general rule, and that means something more than being a successful party”.
Therefore, there is no presumption that costs will be awarded to a successful party in a proceeding before the Board.
The BAB will approach the question of costs guided by the principle that there must be circumstances which override the general rule in proceedings before the BAB before it will consider any orders for costs.
The above is consistent with the opinion of Bell J in Martin v Fasham Johnson Pty Ltd in discussing the costs discretion of the VCAT (another ‘bear own costs’ jurisdiction). In that case, his Honour stated that:
…The discretion must be exercised judicially, which means that the Tribunal must act fairly, impartially and by reference to relevant considerations and not arbitrarily, capriciously or by reference to irrelevant considerations and not in a manner that frustrates the legislative intent. The Tribunal is a creature of statute and, on the question of costs, it commences from a different starting point. Usually parties must bear their own costs, which no doubt reflects the general object of the Act. That object …. is to promote access to justice generally and to minimise the overall level of costs in tribunal proceedings as far as practicable.
In a recent case before the Building Appeals Board (BAB) the Board, in its introduction to the case said the following:
“When considering an application for costs the Board must have regard for the nature of the proceedings, the conduct of the parties, and whether there are reasons in the circumstances to move from the starting point that parties bear their own costs ….. The decision of the board must be just.
It was also noted that “It is unusual for the Board to make a costs order on an indemnity basis, let alone ordering costs at all”.
Protection Works Reimbursement
The relevant section is s97 of the Building Act, which states that:
“the owner must pay to the adjoining owner all costs and expenses necessarily incurred by the adjoining owner in assessing proposed protection work and in supervising the carrying out of protection work in respect of the adjoining property agreed between the adjoining owner and the owner or in the absence of an agreement, determined by the Building Appeals Board under part 10”.
In Morrison v Architectural Buyers Pty Ltd the BAB found that section 97:
- Does not encompass a person’s loss of income;
- Does not encompass the cost of any application to the BAB (because these costs are not incurred in assessing the protection works); and
- Encompasses the cost of assessing proposed protection works, including obtaining engineering and legal advice regarding protection works, and in relation to any supplementary building works to the extent they relate to the protection works.
As s97 entitles an adjoining of such costs, if the adjoining owner can justify that the expenses were necessary in ‘assessing’ (meaning, these costs orders are not only reserved if the protection works proceed- as the case in Morrison), the proposed protection works and the supervision of them, then the BAB can determine that these costs are paid by the owner. However, this is still a deviation from the presumption of sch 3, 17 (“each party bears their own costs”) and should not be overly relied upon.
In conclusion, s17 of sch 3 provides that a party to a proceeding before the Board must pay his, her, or it’s own costs. Although 16(2) provides that a determination may include any order as to costs that the BAB considers just, the applicable case law on the issue evinces that an applicant will likely only be successful when, for example, rights have been impeded or there is an unmeritorious claim.
This is a Lovegrove and Cotton publication, authored by construction and planning lawyer Ahmad Ali and Senior Paralegal, Cameron Wade.
This article is not legal advice and discusses it’s topic in only general terms. Should you be in need of legal advice, please contact a construction law firm. The experienced team at Lovegrove & Cotton can help property owners and building practitioners resolve any type of building dispute.
 Building Act 1993 (Vic), s98.
 Kelly v Milner, BAB, No. 453895
 Kelly v Milner, BAB, No. 453895, .
 Kelly v Milner, BAB, No. 453895, .
 Building Act 1993, sch 3, 17.
 Building Act 1993, sch 3 cl 16(2).
 Martin v Fasham Johnson Pty Ltd  VSC 54.
 Martin v Fasham Johnson Pty Ltd  VSC 54.
 Kelly v Milner  VBAB 20 (27 February 2023)