By Nicole Wilde

13 June 2015

Litigation strategy in VCAT proceedings appears to require a ‘softer touch’ if a party wants to be able to successfully claim its legal defence costs against self-represented applicants whose VCAT applications are ‘bound to fail’.

A recent VCAT case involved self-represented lot owners and an Owners Corporation suing various repair contractors, the Owners Corporation Manager and the Owners Corporation’s strata insurer in relation to a leaking sky light at a property.

At the substantive hearing, the Owners Corporation Manager and one of the contractors were ordered to pay the Owners Corporation the sum of $2,986.75. No orders were made against the Owners Corporation’s strata insurer.

After the hearing, the insurer made an application against the lot owners and the Owners Corporation for an order that they pay the insurer’s costs in defending the proceedings. Despite implementing a number of available litigation strategy tools available under the Victorian Civil and Administrative Act 1998, including making a without prejudice settlement offer under section 112, the VCAT Senior Member hearing the costs application ultimately determined that the cover letter to the settlement offer was “…derogatory…” and “…belittling…” to the applicants in circumstances where the applicants were self-represented and therefore not in a position to interpret the letter correctly.

Accordingly, it appears lawyers defending parties to VCAT proceedings may need to re-think about how they strategically use the s.112 settlement offer strategy under the VCAT Act, even if the case against their client has no merit and is bound to fail.

Case Reference: Markessinis& Anor v D S M Coatings Pty Ltd & Ors (Owners Corporations) [2015] VCAT 50 (2 January 2015)

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