Who pays for a protection works fight? The costs asymmetry nobody warns you about

When building work starts next to a boundary, Victoria's protection works regime hands the adjoining owner a genuinely unusual entitlement: under section 97 of the Building Act 1993, the building owner must pay the neighbour's costs necessarily incurred in assessing the proposed protection work and in supervising its carrying out. Consultant's fees, engineering review, even legal advice — paid by the other side.

That word "necessarily" is where most of the fights start. And behind it sits a second, less-known battleground: who pays for the fight itself. Having acted in these disputes at the Building Appeals Board — for developers and for adjoining owners — here is what the decisions actually establish, and the asymmetry they create.

What section 97 reliably delivers

The good news for adjoining owners is real. The Board has held that assessment costs are recoverable even if the protection work never ends up being carried out — the entitlement attaches to assessing the proposal, not to the works proceeding (Morrison v Architectural Buyers Pty Ltd [2018] VBAB 21, where over $6,700 in legal fees and disbursements was allowed for a complex, shifting proposal). The Act sets no professional qualification for who does the assessing — the Board has rejected the argument that only an engineer's fees count. GST rides along with the invoice.

So the marketing line you will hear — including from us — that an adjoining owner's advice "generally costs them nothing" is accurate. But it carries conditions the promoters mention less often.

What the Board cuts, and how hard

In a matter we ran for a developer in Carnegie (Leahy v Railway Ave Pty Ltd [2021] VBAB 86), the adjoining owners' consultant invoiced roughly fifty hours across the life of the project and a five-figure claim went to the Board. The Board's approach was surgical:

• Hours were rebuilt from scratch against "an allowance of time based on experience of ordinary timeframes". Ten claimed hours for reviewing the drawings became one. Seven hours for preparing an information request became one.
• Watching the neighbour's build didn't count. Supervision under s.97 attaches to the protection work — not to general demolition or construction. Site attendances "to view the progress of demolition" were refused outright.
• Future costs don't exist. The claim included tens of thousands in projected supervision for works yet to happen. The Board held s.97 is backward-looking: costs must be incurred. No award for the future, ever.
• Repairs aren't protection work. Helping fix damage after the event is a different thing from supervising protection work, and isn't a s.97 cost.

The five-figure claim was determined at $1,159.95.

The lesson cuts both ways. For adjoining owners: engage a consultant whose work is scoped, itemised and genuinely directed at the protection work — that work gets paid. For building owners: demand itemisation, and don't be stampeded by a big number. The Board won't be.

Compensation claims fail on evidence, not sympathy

Distinct from s.97 costs, an adjoining owner can seek compensation for inconvenience, loss or damage connected to the carrying out of protection work (sections 98 and 159). In the Carnegie matter those claims — a cracked patio, water damage, a $30,000 global claim for the stress of living beside a construction site — all failed, for two recurring reasons: the causal anchor must be the protection work itself, not the building project generally; and the loss must be quantified with invoices, quotes or valuations. A claim without numbers is not a claim the Board can act on.

The asymmetry: nobody pays for the fight

Here is the part that surprises clients on both sides. The costs of the BAB proceeding itself — lawyers, experts, hearing days — are not s.97 costs. They can only be sought as costs of the proceeding, and the Board's settled default is that each party bears their own, win or lose. Displacing that default requires "something more than being a successful party" (Stewart v Building Practitioners Board [2001] VSC 349) — in practice, unreasonable conduct of the proceeding itself.

The decisions show how narrow that gate is. An adjoining owner who pressed a claim the Board had no power to hear, after being warned, was ordered to pay costs (Daley v Tricare Pty Ltd [2018] VBAB 27). An adjoining owner whose appeal was her only practical route to a remedy recovered her filing fee and a modest share of hearing costs (Zavetchanos (No 2) [2020] VBAB 46). But comprehensively winning — even against a claim that inflated recoverable costs by an order of magnitude — is not, by itself, enough.

Sit with what that means. A building owner can defeat nearly every head of an inflated claim and still wear its own five-figure defence costs. An adjoining owner can overreach dramatically and suffer no consequence beyond not winning. Whatever you think of the policy, it shapes how these disputes should be run:

1. Build the economics on s.97, not on costs orders. Recoverable, properly-scoped assessment and supervision work is the reliable money. Treat proceeding costs as sunk from day one.
2. Make sensible offers early — and in writing. They rarely shift costs at the Board, but they are cheap insurance: they frame reasonableness, they occasionally matter, and they protect you if the other side's conduct ever does cross the line.
3. Put unreasonable conduct on the record as it happens. Warnings, jurisdictional objections, offers to fund a joint expert. The only thing that ever converts "we won" into "we won with costs" is a paper trail of the other side ignoring reasonable off-ramps.
4. If you're the adjoining owner, don't let a consultant run the meter. The Board will cut the claim to ordinary timeframes, and the gap between what your consultant billed you and what the owner is ordered to pay is yours to fund.

The best costs strategy is a better Form 7

One thread runs through every decision we have examined and every dispute we have run: the fights are seeded early, by thin notices. A Form 7 package that documents the protection work properly — not just the building work — with realistic timing, engineering that answers the obvious questions, and a sensible protocol for the neighbour's assessment fees, removes most of what these proceedings are made of.

That is where we spend our clients' money: on the package, the response, and the strategy — the parts that decide matters — rather than on hearings the costs rules ensure nobody truly wins.

We act in protection works matters across Victoria — for building owners, adjoining owners, builders and surveyors. Start at town-planning.com.au/protection-works, or call for an obligation-free conversation. This article is general information about Victorian building legislation, not advice on any specific matter; costs outcomes turn on their facts.