MCG QUANTITY SURVEYORS BLOG

Case Study – August 2019

In a recent expert witness case that I was asked to provide my opinion of costs on, the result has now been published.

Background
The background to both applications is best described as:
The Owners’ sought damages from the Builder in respect of:
o (Item 1) Defective and/or incomplete works (the Defects Claim);
o (Item 2) Delay (the Delay Claim); and
o (Item 3) Breach of contract giving rise to excessive costs being charged (the Costs Claim).

The Builder’s response (in summary:

o Of the Owners’ defects claim, the Builder accepted liability for $26,830.78 of defects.
o The builder offered to settle the Defects Claim for $30,000.

To aid the tribunal in them being able to resolve the dispute, 4 x expert witnesses were appointed, one being myself (engaged by the Builder).
Item 1 – As a result of a conclave of experts, the Defects Claim was reduced to $67,983.83. However, of these defects, some were still in dispute as to if they were in fact a defect or not (8 in dispute).

At the beginning of the hearing, eight items in the Scott Schedule remained in dispute. During the hearing the parties reached agreement on four of the disputed items, and the claim in respect of the remaining items in dispute was determined.


Conclusion

Item 1 – The Owners were awarded damages in respect of agreed defects and damages in respect of one of disputed items.
Item 2 – The Delay Claim was wholly successful.
Item 3 – The Costs Claim was wholly unsuccessful.

Tribunal Orders
The Tribunal relevantly made the following orders:
o The Builder was to pay the Owners the sum of $31,255.73 immediately.

In hindsight, the builder had provided a reasonable offer prior to any court proceedings starting.
In the words of the tribunal, pertaining to the builder’s original offer of $30,000:
“This represented a genuine offer of compromise. The offer was open for a reasonable period and it was unreasonable of the Owners not to accept it.”

In closing the tribunal also noted:
“In my view, both parties had a substantial degree of success in the proceedings. The proceedings therefore had a mixed result. I am satisfied that the proper exercise of the costs discretion in this case is for each party to pay their own costs.”

It is therefore, in my opinion, if the original offer was in fact accepted by the owners, many hundreds of thousands of dollars of legal fees would have not been incurred by either party.
In addition to the extraordinarily high legal fees that both parties experienced, this matter took several years to come to finality.