Chocolate Factory Apartments Pty Limited v Westpoint Finance Pty Limited

[2005] NSWSC 441

CITATION:	Chocolate Factory Apartments Pty Limited v Westpoint Finance Pty Limited & Ors [2005] NSWSC 441
HEARING DATE(S):	28/04/05
JUDGMENT DATE :	28 April 2005
JURISDICTION:	Equity Division Technology and Construction List
JUDGMENT OF:	Einstein J
DECISION:	Case management of hearing to adopt/reject Part 72 Referee's Report.

CATCHWORDS:	Practice and Procedure - Rigorous approach to submissions to be made on motions to adopt/reject Part 72 Referee's Report - Overriding Purpose Rule
LEGISLATION CITED:	Supreme Court Rules (1970) (NSW)
CASES CITED:	ABB Engineering Construction Pty Limited v Abigroup Contractors Pty Limited [2003] NSWSC 665 Super Pty Limited v SJP Formwork (Aust) Pty Limited (1992) 29 NSWLR 549
PARTIES:	Chocolate Factory Apartments Pty Limited (Plaintiff) Westpoint Finance Pty Limited (First Defendant) Westpoint Constructions Pty Limited (Second Defendant) Westpoint Management Ltd (Third Defendant)
FILE NUMBER(S):	SC 55018/04
COUNSEL:	Mr F Kalyk (Plaintiff) Mr D Grieve QC, Mr Hicks (Defendants)
SOLICITORS:	Hicksons Lawyers (Plaintiff) Robinson Beale Horton McMinn (Defendants)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST

Einstein J

Thursday 28 April 2005 ex tempore
Revised 9 May 2005

55018/04 Chocolate Factory Apartments Pty Limited v Westpoint Finance Pty Limited & Ors

JUDGMENT

1 These proceedings were the subject of a reference to the Honourable J M N Rolfe QC. The referee's first report, entitled "Interim Report" delivered 6 December 2004 covers 408 pages. The referee's "Further Interim Report" dated April 2005 covers 15 pages.

2 Directions have from time to time been given by the Technology and Construction List Judge with a view to the cross exchange of submissions to be addressed in aid of the respective parties' approaches to the adoption or rejection of all or part of the report. Directions were given on 18 March 2005 requiring Chocolate Factory Apartments Limited, the plaintiff in the proceedings, to serve on or before 30 March 2005 its (a) outline of matters that it proposed to challenge, (b) grounds of challenge, (c) outline submissions. Albeit perhaps not complying to the letter with the date by which those submissions were required to be filed and served, the plaintiff has produced a 460 paragraph, 72 page submission entitled “Statement as to matters of contest, basis of contest and outline of submissions in respect of the report" [“the plaintiff’s outline”].

3 The proceedings were listed on the application of the defendants for the purpose of raising with the plaintiff and the Court, a number of suggested extremely material shortcomings in the plaintiff's submissions. For that reason a directions hearing was fixed. The plaintiffs have been represented by Mr Kalyk of junior counsel and the defendants have been represented by Mr Grieve QC and Mr Hicks of junior counsel. A full transcript of the directions hearing has been taken and I do not intend to repeat, otherwise than in relation to some matters, that which the transcript records as the defendants' complaints.

4 The formal position is that a hearing period of eight days has been fixed for the taking of submissions on the adoption or rejection of all or part of the first report. Since then the second report having come forward. It will now be necessary for the hearing dates to accommodate submissions in support of or in rejection of all or part of that second report.

5 To my observation the fact that neither party has filed a notice of motion setting out precisely what it seeks with respect to either of the reports is simply to be regarded as a procedural irregularity. Neither party opposes being directed to file such a notice of motion. Each party, by their respective counsel, has consented to a direction that they file and serve their material notices of motion within a 14 day period.

6 Where a substantial contest has taken place before a Part 72 referee and there are cross applications for adoption or rejection of all or part of the referee's report before this court, it is of course necessary for parties participating in those applications to ensure that their respective claims and submissions as pressed, comply with the relevant principles established over an extended period of time as informing the court's discretion as to whether and to what extent to adopt, vary or reject a Part 72 referee's report. The court's approach has been considered in a number of cases, generally summarised in paragraph 26 of the judgment of this Court in ABB Engineering Construction Pty Limited v Abigroup Contractors Pty Limited [2003] NSWSC 665 at 26 and following:

“34. The relevant principles include:


(a) The Supreme Court Rules confer a wide discretion on the Court considering a Referee's report and the decision as to whether or not a report should be adopted is an exercise in discretion ( SuperPty Limited v SJP Formwork (Aust) Pty Limited (1992) 29 NSWLR 549 at 557).

(b) The present rules replace earlier provisions dealing with decisions of Arbitrators and Referees, to whom matters were referred by order of the Court. Those earlier provisions had the effect of giving the decision of an Arbitrator or Referee the same effect as though the decision was a verdict of a jury; the decision was only liable to review for error of law, perversity or manifest unreasonableness ( Super at 562-563).

(c) An application under Part 72 rule 13 is not an appeal. A reviewing judge has a judicial discretion to exercise. This must be exercised in a manner which is consistent both with the object and purpose of the rules and the wider setting in which they take their place ( Super at 563).

(d) It is undesirable to attempt closely to define the manner in which the discretion is to be exercised. The nature of the complaints made about the report, the type of litigation involved as well as the length and complexity of the proceedings before the Referee are all relevant considerations ( Super at 563).

(e) A party who is dissatisfied with the Referee's report is not entitled to require a judge acting under Part 72 rule 13 to reconsider and determine afresh all issues whether of fact or law which that party wishes to contest before the judge ( Super at 562).

(f) A judge exercising his discretion under Part 72 rule 13 may consider the material before the Referee where there is a real question as to whether there was any evidence for the decision made. The requirement for a "real question" in this context goes beyond a mere suggestion of the type of factual error that, if made by a trial judge, would be corrected on appeal ( Franks at 12).

(g) A judge exercising a discretion under Part 72 rule 13 may also need to consider the evidence before the Referee where the Referee's reasons appear adequate on their face, but the challenge is based on the adequacy of the reasoning due to the Referee's failure to refer to very significant evidence against the finding ( Franks at 12).

(h) There is no implied authority given to the Referee to make errors of law. The Court is bound to decide for itself whether the Referee erred in law and, if such error be found, to correct the error in exercising its discretion under the rules ( Bermria at 609).

(i) It would ordinarily be a reason for rejecting the Report if it reveals some error of principle, some absence or excess of jurisdiction or some patent misapprehension of the evidence. Perversity or manifest unreasonableness in fact finding would also ordinarily be a reason for rejecting a Referee's report ( Super at 563 to 564).
[emphasis added]

7 At least in terms of the directions hearing of today there has been commonality on both sides of the Bar table to the effect that the principles are not in issue. The plaintiff's outline submissions advert to those principles in paragraphs 56 and following and Mr Grieve QC has accepted from the Bar table that in general terms those principles are unexceptional, indeed are pervasive.

8 The difficulties which Mr Grieve pointed up in terms of his examination of the plaintiff's outline include the fact that, albeit that the document purports to treat with particular identified grounds of challenge to the referee's report, it lapses on innumerable occasions, so Mr Grieve submitted, into many areas which he has submitted fall well outside the above described established bases upon which it is accepted that a dissatisfied party may require a judge acting under Part 72 rule 13 to reconsider or determine afresh issues of fact or law dealt with by a referee.

9 He has instanced, for example, a general claim made in paragraph 59 of the plaintiff's submissions “that the referee took a particular view of the merits of [the plaintiff's] case that caused him to use his particular judicial skills in expressing the Report and make factual findings which make it difficult for [the plaintiff] to challenge at a superficial level, by reference only to what appears on the face of the Report and without a detailed and thorough analysis of the underlying material". Mr Grieve has also referred the Court to the final paragraph of the plaintiff's outline submissions, reading,

"In the circumstances the plaintiff submits that the Court should determine all matters between the parties on the basis of the evidence as was before the Referee and enter such judgment in respect of the same as shall be proper on the evidence in accordance with the law".

10 On many occasions the plaintiff's submissions, albeit purporting to treat with suggested grounds open to the plaintiff to challenge the referee's findings, launch into propositional statements, which one might expect might have been put to the referee but are simply not tethered [or not tethered sufficiently], to a particular ground, to permit the Court to follow the basis of the proposition which is put.

11 In the circumstances where one of the relevant principles is that a judge exercising the Court's discretion under Part 72 rule 13 may consider the material before the referee where there is a real question as to whether there was any evidence for the decision made, that requirement for a real question going beyond a mere suggestion of the type of factual error [that if made by a trial judge would be corrected on appeal], it is apparent that the plaintiff must:

(1) be quite clear where seeking to invoke these matters on the adoption or rejection hearing;

(2) identify precisely what is that real question;

(3) be quite clear in identifying with precision why and how the submission goes beyond a mere suggestion of the type of factual error which would be corrected on appeal if made by a trial judge.

12 Where errors of principle or patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding is a ground for a complaint about a portion of the referee's report, each of those grounds must be very particularly particularised and the basis for the claim squarely and succinctly identified.

13 There being only approximately six weeks still remaining to the date for commencement of the hearing, it seems to me that a proper approach to the hearing, consistent with the principles of natural justice, bearing in mind the detailed nature of the complaint put by the defendants to the outline submission of the plaintiff, is to give to the plaintiff a 14 day period in which to complement its overview submissions, correcting wherever possible the failure of those submissions to squarely and fairly and in detail identify the precise ground relied upon by the plaintiff for the purpose of any particular attack upon the referee's findings or reasoning.

14 The proper exercise of a principled discretion to giving directions is to then direct that the defendant on or before 30 May 2004 serve and file a responsive submission, taking issue with every part of the plaintiff's overview or complementary submission which as put is seen to have been properly based in terms on the principles which inform the exercise of the Court's discretion.

15 The purpose of giving the parties this further opportunity to reduce their submissions to writing is particularly to avoid a scenario where on the hearing, the defendant has a legitimate complaint of having been caught unawares by what falls from the plaintiff's side of the bar table as a ground or basis for a particular complaint. The simple fact of the matter is that the proceedings were too complicated for the Court to now at this stage permit any such thing to occur.

16 Likewise, the purpose of the focus upon the defendants' written submissions is to ensure that the plaintiff not be taken by surprise/ambush by any submission put by the defendants in terms of the requirements to reject some particular part of the report and may similarly follow quite clearly the defendants’ reasoning which must also be tethered to the principled modes of attacking a referees report.

17 The trial judge will have the benefit of this judgment and of the transcript of today and will appreciate that I have made clear to the parties that subject always to the trial judge's unfettered discretion on the hearing, I would have thought that it will be likely highly inappropriate to permit either side of the Bar table to go outside of what has been clearly enunciated with proper grounds in their respective written submissions [by way of a telegraphing of submissions appropriate to be made on the hearing of a Part 72 adoption or rejection report]. The hearing cannot be a rehearing of the whole of the reference.

18 Further, as the transcript of the proceedings today will make plain, it seems to me that a principled exercise of the Court's discretion in terms of proper case management procedures is to vacate the final three days which had been fixed for the hearing and to give the parties five days only of court time in which to put their respective submissions from the Bar table. The first two days of that time will be allocated to the plaintiff's counsel. The second two days of that time will be allocated to the defendants' counsel. The final day will be fairly divided between the two counsel so that the plaintiff's counsel can first respond to the defendants' submissions and then the defendants will be entitled to further respond to the plaintiff's submissions.

19 Natural justice must of course be afforded to the parties in proceedings such as the present. However, natural justice insofar as permitting parties to address submissions to the court, can be tailored to the particular circumstances of the occasion in question. Giving the parties such an extensive opportunity to prepare detailed written submissions must be regarded as in major part, giving the parties an entitlement to put their case to the court.

20 To my mind two and a half additional days for each of the parties, albeit bound to their written submissions, to endeavour to explain or clarify what has clearly been enunciated within the relevant principles as proper ground for an attack on the referee's report, should be accepted in a circumstance such as presently faces the Court. The Court simply cannot allow the occasion for the motions to adopt/reject all or parts of a referees report to become bogged down generally meandering in directionless fashion into and out of ill defined areas where what is required is contentions which ought be poignantly and pointedly tethered back to principle.

21 In the absence of giving directions such as the directions that I have outlined require to be given, a hopelessly inefficient approach would be a clear likelihood. The overriding purpose rule dealing with the just, quick and cheap disposal of civil litigation is expressly relied upon in terms of the principled exercise of the Court's discretion in the giving of these directions aimed at achieving an efficient hearing of the motions.

22 The orders of the Court are:

1. I order that on or before 12 May 2005 the plaintiff and the defendants file and serve notices of motion seeking orders for which they will be contending on the hearing.

2. I direct that on or before 12 May 2005 the plaintiff file and serve such additional submissions as it deems appropriate in the circumstances by way of clarification and pointed identification of the particular pointed bases and grounds open to the plaintiff in terms of a challenge to a Part 72 referee's report.

3. Insofar as the defendants' submissions address areas where the referee's report is not to be adopted or is to be varied in some fashion, the defendants’ submissions are to be filed and served on or before 12 May.

4. I direct that on or before 30 May 2005 the defendants file and serve their written submissions likewise responding to the plaintiff's overview or supplementary submissions and doing so in terms of identifying matters which are germane to be dealt with by the Court on a principled approach to a Part 72 reference within the established principles.

5. I direct that the plaintiff have up to 30 May to file and serve its submissions in response to any portion of the defendants' submissions which seek to set aside or vary or deal otherwise than by adoption, with any parts of the referee's report.

6. I grant leave to the plaintiff on short notice, should it determine to do so to move to vary these directions.

7. Costs of today are reserved.

8. I order that costs of the taking of today's transcript be costs of the hearing today when determined.

I certify that paragraphs 1 - 22
are a true copy of the reasons
for judgment herein of
the Hon. Justice Einstein
given on 28 April 2005 ex tempore
revised 9 May 2005

___________________
Susan Piggott
Associate