Age Old Builders Pty Ltd v Swintons Pty Ltd - [2003] VSC 307

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 4181 of 2003

AGE OLD BUILDERS PTY LTD	Appellant
v
SWINTONS PTY LTD	Respondent

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JUDGE:	OSBORN J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	26-27 JUNE AND 3 JULY 2003
DATE OF JUDGMENT:	21 AUGUST 2003
CASE MAY BE CITED AS:	AGE OLD BUILDERS PTY LTD v SWINTONS PTY LTD
MEDIUM NEUTRAL CITATION:	[2003] VSC 307

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Appeal from VCAT – Whether s.14 and/or s.132 Domestic Building Contracts Act 1995 render void reference to an expert/arbitrator of a dispute relating to a domestic building contract – Distinction between arbitration and expert determination.

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APPEARANCES:

Counsel

Solicitors

For the Appellant

Mr J. Digby QC with
Mr J. Shaw

Mason Sier Turnbull

For the Respondent

Mr E. Magee QC with

Mr K. Oliver and
Ms P. Neskovin

Hoeys Lawyers

HIS HONOUR:

This is an appeal pursuant to s.148 of the Victorian Civil Administrative Tribunal Act 1998 against the decision of Deputy President Cremean made on 6 December 2002 with respect to preliminary questions stated in the proceedings before him. The proceedings in issue were heard in the Domestic Buildings List and this appeal raises threshold issues as to the proper construction of the Domestic Building Contracts Act 1995 ("the DBC Act") and its application to the facts of this case.

The preliminary questions in issue were decided on the basis of an agreed statement of facts. This agreement was relatively detailed and incorporated reference to 37 agreed documents. The most salient background facts can be summarised as follows.

On 28 April 1999 the appellant entered into a major domestic building contract (as defined under the DBC Act) with the respondent for the construction of four townhouses in Acland Street, South Yarra. The contract was a standard form contract but included special conditions, plans and specifications. It originally provided for practical completion by 20 March 2000. The appellant submitted a number of claims to the architect nominated in the contract seeking extensions of time. Not all of these were accepted but the date for practical completion was extended to 30 June 2000.

On 24 July 2000 the architect gave notice to the appellant that liquidated damages of $1,100 per day would be provisionally withheld from the appellant's future claims from that date until practical completion was achieved.

During the course of the works there were disputes between the parties as to alleged defects. In September 2000 the parties agreed to appoint a building consultant to conduct an independent assessment of the quality of work, and to provide a determination with respect to the alleged defects. The building consultant completed a determination ("the first determination") on 27 September 2000. On the same day the architect issued a notice of practical completion certifying that the date of practical completion was 27 September 2000.

On 26 September 2000 the parties had agreed to have certain additional disputes with respect to extensions of time, extension of time costs and liquidated damages…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2003] VSC 307
Decision Date: 21 August 2003

CaseChat Overview and Summary

Age Old Builders Pty Ltd has appealed a decision of the Victorian Civil and Administrative Tribunal (VCAT) regarding the validity of a clause in a domestic building contract that referred disputes to an expert or arbitrator. The contract in question included a clause that attempted to bind the parties to the decision of an expert or arbitrator on certain disputes. The crux of the appeal was whether sections 14 and/or 132 of the Domestic Building Contracts Act 1995 render such a clause void and, if so, whether the clause in question was an arbitration clause or an expert determination clause.

The central legal issue was the interpretation of sections 14 and 132 of the Act, specifically whether these sections prohibit the binding effect of expert determinations in domestic building contracts. The court had to discern whether the clause in question constituted an arbitration agreement or an expert determination agreement, as there is a critical distinction between the two under the Act. Arbitration clauses are generally void, while expert determination clauses are not necessarily void if certain conditions are met.

The court examined the nature of the clause in the contract, determining that it was an expert determination clause rather than an arbitration clause. The court found that expert determination clauses are not rendered void by the Act as long as they do not purport to bind the parties to a decision on a matter of law or a question of law that is not ascertainable from the contract. The clause in question did not attempt to bind the parties to a decision on a matter of law, and thus, it did not contravene the Act. The court held that the clause was valid and enforceable, leading to the conclusion that the VCAT decision was incorrect.

The appeal was allowed, and the matter was remitted to VCAT with directions to set aside its earlier decision and to determine the matter in accordance with the findings of the court. The parties were ordered to bear their own costs of the appeal.

Orders