The builder succeeded on its costs application: the owners were ordered to pay the builder's costs on a standard basis, but the claim for indemnity costs was refused. The Tribunal departed from the default position under s 109(1) of the VCAT Act (each party bears own costs) on the basis that the owners wholly failed on their claim, the builder's counterclaim succeeded, the owners' case lacked a tenable factual or legal foundation (particularly the demolish-and-rebuild claim), and the owners' conduct — including four iterations of pleadings, five expert reports, and late introduction of new claims — unnecessarily prolonged the proceeding. Two settlement offers by the builder complied with ss 112–114 and the Tribunal's orders were not more favourable to the owners than either offer, enlivening the presumption of a costs order. However, the owners' conduct did not reach the threshold of special circumstances required under Ugly Tribe Co Pty Ltd v Sikola for indemnity costs.
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