Construction Engineering (Aust) Pty Ltd v Adams Consulting Engineering Pty Ltd (Ruling No 2)
[2016] VSC 209
•26 APRIL 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY ENGINEERING AND CONSTRUCTION LIST
S CI 2012 02389
| CONSTRUCTION ENGINEERING (AUST) PTY LTD | Plaintiff |
| v | |
| ADAMS CONSULTING ENGINEERING PTY LTD | Defendant |
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JUDGE: | VICKERY J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 26 APRIL 2016 |
DATE OF JUDGMENT: | 26 APRIL 2016 |
CASE MAY BE CITED AS: | Construction Engineering (Aust) Pty Ltd v Adams Consulting Engineering Pty Ltd (Ruling No 2) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 209 |
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PRACTICE AND PROCEDURE – Whether the Court best assisted by an assessor or special referee – Reference by the Court to a special referee – Observations on the operation of Order 50 of the Supreme Court (General Civil Procedure) Rules 2015 – Reference opposed – Referee not appointed – Appointment of assessor opposed – Function of assessor – Assessor appointed – Supreme Court Act 1986 (Vic), s 77 – Civil Procedure Act 2010 (Vic), s 65M.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M G Roberts QC with Mr L J Connolly | Gadens Lawyers |
| For the First Defendant | Mr R J Manly QC with Mr M H Whitten SC | Colin Biggers & Paisley |
HIS HONOUR:
This case involved the upgrading of a substantial shopping complex in East Burwood on the corner of Burwood Highway and Blackburn Road in Melbourne (the “Project”).
The plaintiff, Construction Engineering (Aust) Pty Ltd (“CEA”), is the design and construct head contractor on the Project.
The defendant, Adams Consulting Engineers Pty Ltd (“Adams”), is a structural engineer. It was initially engaged pursuant to a consultancy agreement (the “Consultancy Agreement”) by the principal, Heathridge. The Consultancy Agreement was subsequently novated to the plaintiff, CEA.
In essence, CEA's claims in this proceeding against Adams are that there was a substantial cost overrun suffered by CEA on the Project and this was caused by alleged defects in two tranches of structural engineering drawings produced by Adams, namely:
(a) the design and construct head contract tender drawings prepared by Adams for the principal (the “first tranche of drawings”); and
(b) the drawings prepared by Adams and used by CEA for subcontractors to tender for works on the Project following its appointment as the design and construct head contractor (the “second tranche of drawings”).
CEA's claims against Adams are pleaded in contract, in negligence and on the basis of alleged misleading and deceptive conduct. The loss and damage claimed under each cause of action is essentially the same. The claimed loss is based on the cost overrun suffered on subcontracts for the particular work, additional material required and the cost of delay allegedly occasioned by that work.
The quantum of CEA's claim is for approximately $575,000 arising from the first tranche of drawings. The quantum of CEA's claim arising from the second tranche of drawings is approximately $3.875m.
An examination of the plaintiff's further amended statement of claim dated
15 October 2014 reveals a number of issues for determination of the Court. The Court has prepared a statement of issues in draft form dated 26 April 2016 which I have circulated the parties.
The proposed statement of issues identifies the issues in three broad phases:
(a) Phase 1 being drawing defects. In each case the issues are defined by reference to the first tranche of drawings and the second tranche of drawings by reference to issues arising from the consultancy agreement, being the contractual case; the case in negligence; and, the misleading conduct case.
(b) Phase 2 of the proposed statement of issues deals with the causation of any delay and heads of loss and damage defined by reference to the amended statement of claim. It also includes in each case a reference to any other loss and damage alleged to have been caused to the plaintiff by the alleged conduct. The phase 2 is further divided into the pleaded causes of action arising under the first tranche of drawings and the pleaded causes of action under the second tranche of drawings.
(c) Phase 3 then follows, with issues relating to the quantification of any loss and damage firstly under the first tranche of drawings and under the second tranche of drawings.
I will deal with how this draft statement of issues is to be dealt with a little later in these reasons and in the proposed orders. This statement of issues may subsequently be amended as preparation for trial proceeds, however, it will suffice for present purposes in defining a structure for the case to be managed. Set out below is the draft statement of issues:
Phase 1 – Drawing Defects
First Tranche of Drawings
1.What standard was set by the Consultancy Agreement for the First Tranche of Drawings?
2.Did the First Tranche of Drawings meet the required standard or were they defective in any and what respect?
Second Tranche of Drawings
3.What standard was set by the Consultancy Agreement for the Second Tranche of Drawings?
4.Did the Second Tranche of Drawings meet the required standard or were they defective in any and what respect?
Negligence – First Tranche of Drawings
5.Did the Defendant owe any Duty of Care to the Plaintiff in performing the works under the Consulting Agreement in relation to the First Tranche of Drawings, and what was the content of any such Duty of care?
6.Did the Defendant breach any Duty of Care owed to the Plaintiff in performing the works under the Consulting Agreement in relation to the First Tranche of Drawings, in any and what manner?
Negligence – Second Tranche of Drawings
7.Did the Defendant owe any Duty of Care to the Plaintiff in performing the works under the Consulting Agreement in relation to the Second Tranche of Drawings, and what was the content of any such Duty of care?
8.Did the Defendant breach any Duty of Care owed to the Plaintiff in performing the works under the Consulting Agreement in relation to the Second Tranche of Drawings, in any and what manner?
Misleading Conduct – First Tranche of Drawings
9.Was the Defendant guilty of any and what actionable misleading conduct in relation to the First Tranche of Drawings, whether directly, by implication or by silence?
10.Did the Plaintiff rely upon any such conduct in relation to the First Tranche of Drawings in any and what respect?
Misleading Conduct – Second Tranche of Drawings
11.Was the Defendant guilty of any and what actionable misleading conduct in relation to the Second Tranche of Drawings, whether directly, by implication or by silence?
12.Did the Plaintiff rely upon any such conduct in relation to the Second Tranche of Drawings in any and what respect?
Phase 2 – Causation of any Delay and Heads of any Loss and Damage
First Tranche of Drawings
13. As a result of:
(a) any and what defects, in the First Tranche of Drawings, or
(b) negligence in the production of these drawings, or
(c) misleading conduct in the production of these drawings,
was it necessary to make any and what changes to the design specified in the First Tranche of Drawings?
14. As a result of:
(a) any and what defects, in the First Tranche of Drawings, or
(b) negligence in the production of these drawings, or
(c) misleading conduct in the production of these drawings,
was any and what additional steelwork required to construct the Project?
15. As a result of:
(a)any and what changes to the design specified in the First Tranche of Drawings defects; and
(b) the requirement for any and what additional steelwork;
was any and what delay caused in the Project reaching Practical Completion in its various Separable Portions?
16. As a result of:
(a) any and what defects, in the First Tranche of Drawings, or
(b) negligence in the production of these drawings, or
(c) misleading conduct in the production of these drawings,
was any and what other loss and damage caused to the Plaintiff?
Second Tranche of Drawings
17. As a result of:
(a) any and what defects, in the Second Tranche of Drawings, or
(b) negligence in the production of these drawings, or
(c) misleading conduct in the production of these drawings,
was it necessary to make any and what changes to the design specified in the Second Tranche of Drawings?
18. As a result of:
(a) any and what defects, in the Second Tranche of Drawings, or
(b) negligence in the production of these drawings, or
(c) misleading conduct in the production of these drawings,
was there any and what requirement for the Plaintiff to pay any and what additional costs to any and which subcontractors the Plaintiff had engaged to complete the works?
19. As a result of:
(a) any and what defects, in the Second Tranche of Drawings, or
(b) negligence in the production of these drawings, or
(c) misleading conduct in the production of these drawings,
was any and what delay caused in the Project reaching Practical Completion in its various Separable Portions?
20. As a result of:
(a) any and what defects, in the Second Tranche of Drawings, or
(b) negligence in the production of these drawings, or
(c)misleading conduct in the production of these drawings, was any and what other loss and damage caused to the Plaintiff?
Phase 3 – Quantum of any Loss and Damage
First Tranche of Drawings
21.By reason of any of the matters referred to in questions 13, 14, 15, and 16 above, what was the quantum of any and what loss and damage suffered by the Plaintiff?
Second Tranche of Drawings
22.By reason of any of the matters referred to in questions 17, 18, 19, and 20 above, what was the quantum of any and what loss and damage suffered by the Plaintiff?
It is clear, as both parties concede, that this is a case which gives rise to issues which are factually dense and technical in nature. CEA's claim principally involves allegations that the civil and structural engineering drawings prepared by the defendant, Adams, contained numerous defects and errors. These allegations raise structural and civil engineering issues. Determination of these issues will require an expert assessment of each allegation of defective work in relation to the two tranches of drawings.
The essential procedural issue before the Court in this application is whether the input of a selected expert should best be provided by a report following a reference under O 50 of the Supreme Court (General Procedure Civil Rules) 2015 (Vic) (the “Rules”), or pursuant to the appointment of an assessor under s 77 of the Supreme Court Act 1986 (Vic) and s 65M of the Civil Procedure Act 2010 (Vic) (the “CPA”).
The plaintiff contends that the expert input is best provided by a reference under O 50 of the Rules. Order 50 provides by sub-rr 50.01 to 50.04 as follows:
50.01 Reference to special referee
(1)In any proceeding the Court may, subject to any right to a trial with a jury, refer any question to a special referee for the referee to—
(a) decide the question; or
(b) give the referee's opinion with respect to it.
(2) Where an order is made under paragraph (1), the Court—
(a) shall state the question referred;
(b)shall direct that the special referee make a report in writing to the Court on the question referred to the referee stating, with reasons, the referee's decision or opinion;
(c)may direct that the special referee give such further information in the referee's report as it thinks fit.
(3)The Court may upon application by a party or by the special referee set aside or vary an order made under this Rule.
50.02 Directions as to procedure
Where an order is made under Rule 50.01, the Court may give directions for the conduct of the reference, and in particular may direct that—
(a)the special referee have the same authority with respect to discovery of documents and interrogatories as the Court;
(b)evidence be taken by the referee and the attendance of witnesses and the production of documents be compelled by subpoena.
50.03 Report on reference
(1) The special referee may in the referee's report—
(a)submit any question arising on the reference for the decision of the Court; or
(b)make a statement of facts found by the referee from which the Court may draw such inferences as it thinks fit.
(2) On the receipt of the special referee's report, the Court—
(a) shall give notice thereof to the parties; and
(b) may by order—
(i)require the special referee to provide a further report explaining any matter mentioned or not mentioned in the report;
(ii)remit the whole or any part of the question originally referred to the special referee for further consideration by that referee or any other special referee;
(iii) vary the report.
(3)An application by a party for an order under paragraph (2)(b) shall be made on not less than three days' notice to the other party or parties.
50.04 Use of report
The Court may as the interests of justice require adopt the report of a special referee or decline to adopt the report in whole or in part, and make such order or give such judgement as it thinks fit.
Order 50 references may include questions of fact and law or mixed questions of fact and law. So much is made plain by the definition of ‘question’ in r 1.13 of the Rules, which provides:
1.13 Definitions
(1)In these Rules, unless the context or subject matter otherwise requires—
…
question means any question, issue or matter for determination by the Court, whether of fact or law or of fact and law, raised by the pleadings or otherwise at any stage of a proceeding by the Court, by any party or by any person not a party who has a sufficient interest.
Section 77 of the Supreme Court Act 1986 (Vic) provides:
77 Assessors
(1)The Court may in any proceeding call in the assistance of one or more specially qualified assessors and hear the proceeding wholly or partially with their assistance but shall not be bound by their opinion or findings.
(2) The Court may determine the remuneration of the assessors.
Further, in 2012 s 65M was inserted into the CPA to enable a court to appoint an expert to assist or report to it.[1] Such an expert is the equivalent of an assessor appointed under s 77 of the Supreme Court Act 1986 (Vic). Section 65M provides:
[1]Civil Procedure Amendment Act 2012 (Vic), s 10.
65M Court appointed experts
(1) A court may make an order appointing an expert—
(a) to assist the court; and
(b) to inquire into and report on any issue in a proceeding.
(2)The court may make an order appointing a court appointed expert at any stage of the proceeding.
(3)In making an order to appoint a court appointed expert, the court must consider—
(a)whether the appointment of a court appointed expert would be disproportionate to—
(i)the complexity or importance of the issues in dispute; and
(ii) the amount in dispute in the proceeding;
(b)whether the issue falls within a substantially established area of knowledge;
(c)whether it is necessary for the court to have a range of expert opinion;
(d)the likelihood of the appointment expediting or delaying the trial;
(e) any other relevant consideration.
(4)A person must not be appointed as a court appointed expert unless he or she consents to the appointment.
There have also been recent developments in the case law as to the appointment of special referees in Victoria which are of relevance. In Matthews v SPI Electricity & Ors (Ruling No 19) (“Matthews 19”),[2] J Forrest J considered the position determined by Beach J in AT and NR Taylor and Sons Pty Ltd v Brival Pty Ltd[3] where his Honour held that, where a party does not consent, only cases of an exceptional nature should have a special referee appointed. However, in Matthews 19, J Forrest J considered that:[4]
Times have changed particularly with the introduction of the CPA. The Court is now obliged to consider far more than a party’s tactical or forensic position.
[2][2013] VSC 180, [19].
[3][1982] VR 762.
[4]Matthews (No 19) [2013] VSC 180, [20].
His Honour in Matthews 19 then made reference to the decision of Kyrou J (as his Honour then was), in Talacko & Ors v Talacko (“Talacko”),[5] a case determined prior to the introduction of the CPA. Justice Kyrou held that a special referee can indeed be appointed where a party does not consent to the appointment:[6]
Although the absence of consent by a party and the reasons given for withholding consent are clearly relevant to the exercise of the court's power under order 50 of the rules to appoint a special referee, I am not persuaded that the power to appoint a special referee over the objection of a party can only be exercised in special circumstances as suggested by AT and NR Taylor and Sons. Order 50 does not contain such a requirement, and one should not read be into it so that the discretion conferred by the rules is not unduly constrained. …
[5][2009] VSC 98.
[6]Ibid [27].
In Matthews 19, all of the parties were opposed to the referral of questions to a special referee. Nevertheless, J Forrest J held that this opposition alone would not, consistent with the provisions of the CPA and O 50 of the Rules, preclude a court from taking the step of appointing a Special Referee. His Honour noted that nothing in s 65M of the CPA requires that a party demonstrates special circumstances for the appointment of a special referee. Nor does O 50 have the effect, as Kyrou J explained in Talacko.
These developments in Victoria open the way for a wider use of special referees by the Court where it is appropriate to do so.
Reference may also be made to the procedures for the appointment of referees in the Federal Court of Australia and in the Supreme Court of New South Wales.
The primary source of power in the Federal Court for the appointment of a referee is found in s 54A of the Federal Court of Australia Act 1976 (Cth) which provides as to the referral of questions to a referee:
54A Referral of questions to a referee
(1) Subject to the Rules of Court, the Court may by order refer:
(a) a proceeding in the Court; or
(b)one or more questions arising in a proceeding in the Court;
to a referee for inquiry and report in accordance with the Rules of Court.
The facility in New South Wales for the Supreme Court is provided by r 20.14 of the Uniform Civil Procedure Rules 2005 (NSW) which deals with orders for referral in the following terms:
20.14 Orders of referral
(1)At any stage of the proceedings, the court may make orders for reference to a referee appointed by the court for inquiry and report by the referee on the whole of the proceedings or on any question arising in the proceedings.
…
(2)The Court must not make an order under subrule (1) in respect of a question to be tried with a jury.
It is to be noted that both in the Federal Court Act and the New South Wales Rules, provision is clearly made for the whole of a proceeding to be referred to a referee for an inquiry or report, without the requirement for specific questions to be stated for the referral. However the position in Victoria is that O 50 does not expressly provide for a reference of the whole of a proceeding. Order 50 is confined to a reference of ‘any question’ to a special referee. Although Nathan J in Kilpatrick Green Pty Ltd v Leading Synthetics Pty Ltd (“Kilpatrick Green”),[7] an engineering and construction case, referred all questions arising from the pleadings to a special referee without stating what those questions were, in my opinion the approach taken in Kilpatrick Green is open to doubt given the formulation of O 50 in Victoria which by r 50(2)(a) requires the Court to state the questions or questions to be referred.
[7](Unreported, Supreme Court of Victoria, Nathan J, 14 February 1997).
A potential problem which arises in Victoria is that the making of a reference order, and defining the questions to be put to the special referee, can itself give rise to significant and expensive controversy between the parties, as is amply demonstrated by the present case. The exercise involved in restating in the form of questions all the issues for determination arising from a complex pleading can be time consuming and costly.
There is also potential difficulty in separating out precise questions which are suitable for a reference from the remaining issues pleaded. They may be factually or legally intermingled. This is also illustrated by the instant case.
Further, in a complex case such as the present, additional issues may arise for determination in the course of a proceeding which call for resolution. The early statement of questions for determination by a special referee is a somewhat inflexible procedure. In some cases there may be a need for reformulation of those questions on the commissioning of a fresh reference as the case proceeds, giving rise to additional cost.
A further matter of relevance in relation to O 50 of the Victorian Rules is this: Under the present r 50.01(1) a special referee may be commissioned by the Court to decide the question or, (b) give the referee's opinion with respect to it. In my opinion this choice is unnecessary. In Re Markbys Renaissance Pty Ltd,[8] Byrne J concluded that the distinctions provided by r 50.01(1)(a) and (b) were of no significance, stating:[9]
[F]or in each case what is required is a concluded view as to the questions submitted with reasons.
[8](1999) 3 VR 851.
[9]Ibid 858 [22].
His Honour further observed:[10]
I am driven to the conclusion that there is no significance at all between the two types of reference. …
[10]Ibid.
The Federal Court and the Supreme Court of New South Wales, it is to be noted, have no such facility for different types of references along these lines. It would be appropriate for the Victorian O 50 Rules to be amended to facilitate the simple reference of the proceeding to a referee for enquiry and report. The statement of reasons of the special referee in his or her report provides the basis for the adoption of the report by the Court and the basis for the making of any appropriate order or judgment founded upon it pursuant to r 50.04. The Court may accept or refuse to accept the referee's report and may do so in whole or in part. In this context, it matters not whether the referee has purported to decide the question or give his or her opinion with respect to the question.
Of direct relevance to the present application before the Court is the position that in Victoria, as is the case with the Federal Court of Australia and the Supreme Court of New South Wales, it appears that only one referee may be appointed for each reference. This can render the procedure inappropriate in cases where one has for determination a variety of technical issues involving different technical disciplines or, as in the present case, both technical issues and legal issues involving mixed questions of fact and law.
Commonly in arbitrations, a panel of two or more arbitrators are appointed with qualifications and experience appropriate to determine the issues in the arbitration, whether legal or technical, or as in the present case, a combination of such issues. It would be a useful facility for references made under the Rules to have a similar degree of flexibility. However, as things stand at present, a factor constraining the Court in the appointment of a Special Referee in this case is that it is precluded from appointing both a commercial lawyer and a technical expert to act as joint referees, a course which may well have been desirable.
I turn briefly to the relevant case law on the appointment of an assessor, as opposed to the appointment of a referee. In Matthews 19, J Forrest J was confronted with precisely the issue raised in this application, but in a different factual context, namely whether the Court would be better assisted, consistently with the provision of the CPA, by the appointment of a special referee under O 50 of the Rules or by an assessor appointed under s 77 of the Supreme Court Act 1986 (Vic) and s 65M of the CPA.
There were a number of considerations which persuaded the Court in Matthews 19 to not refer questions in the proceeding to a special referee. Justice J Forrest recited five factors which determined the matter:[11]
[11]Matthews 19 [2013] VSC 180, [23]–[27] (citations omitted).
First, the cause of the failure is a critical issue in the case. It is to be contrasted to, say, a referral to a special referee to determine a question of quantum or a side issue. The cause of the failure and the role played by Aeolian vibration is central to SPI’s putative liability. In a case in which so much turns upon a resolution of this issue, I think I should be wary of abdicating responsibility for the determination unless absolutely persuaded as to the necessity of that course. Given, as I shall discuss in a moment, that I have the alternative course of seeking the assistance of an assessor or assessors, I think that referral to a special referee on this matter is less desirable.
Second, it is likely that there will be issues of reliability and credit of one, if not more, of the expert witnesses. This would then be a factor that a special referee may have to consider in making a determination. Gauging and determining the effect of such an attack and the application of Part 3.7 of the Evidence Act 2008 (Vic) in an expert witness session can be difficult for a judge, let alone a legally unqualified expert, no matter how experienced. Moreover, such attacks may require assessment of evidence given in the trial and outside the expert evidence session.
Third, the questions will not be solely scientific but will consist of a hybrid of legal and factual issues. For a special referee determining the issue, he or she would need to understand the factual scenario and, to an extent, the legal concepts of breach and causation. These concepts can of course be addressed by way of the questions posed to the referee but it still leaves a potential problem with the adoption of the report to which I will return in a moment.
Fourth, a referral to a special referee would have a negative impact in terms of timing and subsequent fragmentation of the entire trial. At this point in time, the expert evidence will be heard between October and December this year. In the instance of a referral to a special referee, the Court and the parties will need to wait until a special referee provides findings which then, in turn, would need to be considered by the Court. It is not in the interests of justice to allow the determination of these proceedings to be further delayed.
Finally, there is the question of adoption of the report. In VUT v Wilson & Ors, Harper J noted some of the problems associated with adoption of a special referees’ report:
The relevant authorities, which have considerably increased in number since the lament of Brooking J in Nichols v Stamer, are as one in stressing that, in exercising the responsibilities vested in him or her, the special referee is not conducting a mere prelude to further litigation. Although the courts have declined to catalogue the grounds upon which they may refuse to adopt a special referee’s report, their discretion to adopt or reject it, in whole or in part, is confined only by the interests of justice. This will depend upon the particular circumstances attending particular cases. While r 50.04 includes no guidance to those who must exercise the discretion that it confers upon them, no judicial discretion may be exercised wilfully. This means that, in deciding whether or not to adopt or decline to adopt the report of a special referee, the court must exercise its discretion “in a manner consistent with the object and purpose of the rules and the place they play in the administration of justice according to law.” If the dissatisfied party has identified an error in the law, then because there can be no implied authority to make such errors, the report may be set aside or remitted. A like result would normally - if not inevitably - follow if the referee has acted perversely or unreasonably (as he or she would if his or her decision was against the weight of the evidence). But a court cannot interfere simply because a number of alternative factual findings are open, and the special referee has chosen one or more of them rather than another or others.
As to the appointment of an assessor to assist the Court and his or her duties, reference is made to both Practice Note No.2 of 2009, set out in the TEC List Handbook,[12] and to the role of assessors referred to by J Forrest J in Matthews v SPI Electricity Pty Ltd & Ors (Ruling No 32) (“Matthews 32”):[13]
[12]Supreme Court of Victoria, Practice Note No 2 of 2009 — The Technology, Engineering and Construction List (TEC List), 19 June 2009, 10–12 [44]–[52].
[13]Matthews 32 [2013] VSC 630, [27].
The primary role of the assessors is to assist the court in understanding the evidence of the experts. Applying the CPA, combined with the principles of natural justice and the guidance from the cases I have referred to, I set out below the scope of the role of the assessors in this case:
(a)The assessors’ role is to assist the judge. The decision is that of the judge alone.
(b)The assessors will sit with me during the concurrent evidence sessions. If they wish, they may question the experts (or counsel) in this context. Such questioning however will be limited to clarification of the evidence; that is, where they consider the evidence to be ambiguous, unclear or incomplete.
(c)I may consult with the assessors while sitting if I find a point of evidence unclear and seek their immediate input as to an appropriate or useful inquiry to make.
(d)I will consult with the assessors whilst in chambers on matters raised by the experts in their oral evidence and in their individual and joint reports. This may include advice as to any questions the assessors think I should ask counsel or the experts in order to determine the questions at hand.
(e)I will seek the guidance of the assessors on technical matters upon which I lack the requisite knowledge to understand without qualified assistance. This may include “lessons” on matters fundamental to, for example in this case, fracture mechanics or vibration.
(f)If the assessors raise a theory or opinion that has not previously been identified by the parties, I will discuss this with counsel.
(g)The assessors may from time to time provide me with advice on matters over which there is dispute between the experts. Such advice is not binding and the determination of a particular issue rests with the judge.
(h)I anticipate that I will consult with the experts immediately after the conclusion of the concurrent evidence session and, from time to time, while drafting the judgment. This is likely to include seeking confirmation from them that I have properly understood the meaning of the expert evidence of conclaves 1, 3 and 4. I repeat, however, that their role is confined to providing advice and ensuring that I have comprehended the evidence given. I also repeat that the decision on these issues is mine and mine alone.
By way of conclusion, the contentions of the parties in this case were advanced with clarity and force. On balance, however, I am persuaded that the appropriate course would be to appoint an assessor for the first phase of the proceeding rather than to order a reference of those matters to a special referee. My reasons are as follows.
First a central issue in this case is the quality of the first tranche of drawings and the second tranche of drawings. The determination of this issue in terms of the issues defined by the pleadings will involve a large body of questions of fact of a technical nature as well as questions of law. Further, the cases advanced in contract, negligence and misleading conduct are likely to give rise to questions of law or mixed questions of fact and law.
Second, if these questions are left to a special referee they may well give rise to arguable issues for determination afresh on the reception of the referee's report by the Court, particularly insofar as those questions involve questions of law.
Third, a reference to a special referee, in my opinion, would not be conducive in this case to an expeditious and cost effective management regime for the trial when all things are considered. The proceeding can be best managed, consistently with the objectives of the CPA, if the following process was to be adopted.
In the management of this proceeding, I propose to divide the case into a hearing of liability followed by a judgment on liability, followed by an order to mediation, followed if necessary, if there is no mediated settlement, by a reference to a special referee of the issues of causation of any delay and heads of loss and damage, and the quantum of any loss. The questions for any such reference are presently outlined in phases 2 and 3 of the draft statement of issues.
This approach would involve splitting the trial into phase 1, where the trial on liability would be conducted by the judge assisted by an assessor, and phases 2 and 3 on loss and damage which, if necessary following any unsuccessful mediation, would be conducted by the special referee on a reference pursuant to O 50 of the Rules.
Conducted in this way, the liability trial of phase 1 by the Judge assisted by the assessor could be set down for hearing commencing at the start of the legal year in mid-February 2017.
An estimate for the trial on liability of six weeks was provided by the plaintiff and an estimate of four weeks was provided by the defendant. Both of these timeframes can be accommodated by this Court if the trial on liability commenced in mid-February 2017. However, the Court is open to ordering a limited time trial to ensure that the hearing of phase 1 can be accommodated within four weeks.
Fourth, if there was to be any challenge to the report of the expert, if appointed as a special referee, this could in my estimation occupy up to a week of court time. A judgment on the reception of the report would then have to be prepared and delivered. In the scheme of things, given the potential for this procedure of challenge to be invoked by one party or the other in this case, particularly given the legal issues involved, it would in my opinion add unnecessarily to the cost and give rise to delay in disposing of the proceeding if the reference procedure was adopted.
In determining to conduct the trial of phase one of the proceeding by the Judge with the assistance of an assessor, I am conscious of and take into account two matters raised by the plaintiff in its submissions.
First, the person proposed as the special referee and indeed the subject of an order for a reference is Mr Tozer. Mr Tozer is a qualified, experienced and highly regarded arbitrator. He has a degree of Master of Laws from the University of Melbourne and has lectured in construction law in various universities of repute in Australia.
Nevertheless given that this proceeding has been commenced in this Court and not as an arbitration, and in light of O 50 providing for the appointment of only one referee for each reference, which necessarily precludes a commercial lawyer being jointly appointed with a technical expert as referees, it would be desirable in my opinion for the Judge appointed to hear the case, and whose decision will ultimately determine the case at first instance, to hear the trial from the outset and first hand. In this process, the Court would be greatly assisted by the technical input of Mr Tozer sitting as an assessor.
Second, an order referring certain questions to a special referee was made by consent on 23 April 2015, and a question was posed pursuant to r 47.04 of the Rules. On 30 October 2015 there was considerable debate conducted before this Court as to the appropriate orders for the conduct of the special reference. The Court on this occasion directed that the reference be conducted in the three phases earlier discussed. The parties however remained at odds as to the precise formulation of the questions to be put to the special referee.
The Court of Appeal determined in relation to the preliminary question put in the orders of 23 April 2015:[14]
Consequent upon the delivery of a second further amended statement of claim and further amended defence and a further amended defence, the parties agree that the issue which had been the subject of the preliminary question no longer arose. The parties are now agreed that the preliminary question has no utility. We presume the existing order has been or will be vacated.
[14]Construction Engineering (Aust) Pty Ltd v Adams Consulting Engineering Pty Ltd (Unreported, Victorian Court of Appeal, Whelan, Ferguson and McLeish JJA, 16 October 2015), [2].
Having heard and considered the further detailed arguments of the parties in this application, I will vacate the orders made in paragraphs 3, 4 and 5 of the orders made on 23 April 2015 as to the statement of a preliminary question for determination pursuant to rule 47.04 of the rules. These orders in my opinion should not be made in the events that have happened, because they will no longer be conducive to the expeditious and cost effective disposition of the proceeding as required by the CPA, in the light of the second further amended statement of claim which has now been delivered and in the context of the observations of the Court of Appeal referred to.
As to the so called order for a reference to a special referee, on 30 October 2015 I said the following in a ruling made on that occasion:[15]
This will not be in the form of orders. It will be simply a direction as to how to proceed to prepare the orders. In my opinion, the best way in which to advance this matter is to refer the critical technical issues to a single referee for a report or reports. The reference shall be divided into three phases as follows; one, drawing defects, two, causation of any delay and heads of loss and damage, and three, quantum of any loss and damage.
The precise formulation of the questions in each case of the three phases is to be formulated by the parties in consultation, starting with the plaintiff's proposed questions for the special referee. Those questions should be expressed in a more direct fashion in the style proposed by the defendant. If there is any difficulty in the formulation of the questions, then the parties may apply by liberty to apply accordingly. Alternatively then followed another proposed procedure to deal with the formulation of the questions.
[15]Construction Engineering (Aust) Pty Ltd v Adams Consulting Engineering Pty Ltd (Ruling No 1) (Unreported, Supreme Court of Victoria, Vickery J, 30 October 2015).
I also identified in that direction the proposed special referee as being Mr Tozer which I did in the following reference:[16]
The referee, in my opinion, should be Mr Tozer. I have reviewed his qualifications and also those of Mr Easton, and I'm satisfied that Mr Tozer will be an appropriate referee for the purposes of the reference.
[16]Ibid.
Consequently in a technical sense no orders have been made as to those matters. However, I will amend my ruling of that day, being 30 October 2015, by the orders which I propose to make to reflect the reasoning in this ruling.
Section 65M(3) of the CPA sets out a number of matters the Court must consider in making an order for the appointment of an expert assessor to assist the Court:
(3)In making an order to appoint a court appointed expert, the court must consider—
(a)whether the appointment of a court appointed expert would be disproportionate to—
(i)the complexity or importance of the issues in dispute; and
(ii) the amount in dispute in the proceeding;
(b)whether the issue falls within a substantially established area of knowledge;
(c)whether it is necessary for the court to have a range of expert opinion;
(d)the likelihood of the appointment expediting or delaying the trial;
(e) any other relevant consideration.
Having considered this matter in light of s 65M(3) of the CPA, I am comfortably satisfied that each of the relevant criteria are met in this case for the appointment of an expert assessor to assist the Court in the phase 1 liability trial of the proceeding.
Accordingly, I will make the orders set out below.
(1)The orders made in paragraphs 3, 4 and 5 of the orders made on 23 April 2015 as to the statement of a preliminary question for determination pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) are vacated.
(2)The trial of the proceeding will be conducted pursuant to the statement of issues annexed to this order as a schedule, or as otherwise determined by the Court following any further submissions of the parties at the next directions hearing as to the content and structure of the statement of issues.
(3)The trial shall be split between liability, described in phase 1 in the statement of issues, and loss and damage, as described in phases 2 and 3 of the statement of issues.
(4)Phase 1 of the statement of issues shall be heard and determined by the Court with the assistance of an Assessor appointed pursuant to s 77 of the Supreme Court Act 1986 (Vic).
(5)Mr Tozer is appointed as the Assessor for the purposes of order 4, subject to him consenting to so act.
(6)The procedure to be adopted by the Assessor shall be determined at the next directions hearing taking into account the procedure contemplated by the TEC Practice Note No 2 of 2009 and the observations of J Forrest J in Matthews v SPI Electricity & Anor (Ruling No 32).[17]
[17][2013] VSC 630.
(7)Following the hearing of phase 1, the Court shall prepare and deliver its judgment on this phase.
(8)The parties will thereafter be referred to mediation following the Court delivering its judgment in respect of phase 1.
(9)In the event that the proceeding is not settled at the mediation, phases 2 and 3 of the statement of issues shall be referred to Mr Tozer as Special Referee for him to prepare and deliver his opinion on the questions outstanding, in a report to the Court, subject to him consenting to so act.
(10)Prior to commencing the reference the court will hear the parties and give directions as to the conduct of the Special Reference.
(11)The proceeding is referred for further directions on 24 May 2016 (subject to the availability of Mr Tozer to attend the directions hearing) for the purposes of:
(a) settling the statement of issues;
(b)settling the procedure to be adopted for the participation of the assessor at the trial of phase 1; and
(c)fixing the date for the commencement of the trial of phase 1 in February 2017.
(12) Costs reserved.
(13) Liberty to apply.
(14)The parties are directed to file and serve their respective outlines of submissions and proposed directions in relation to the matters to be addressed at the directions hearing by 4pm on 20 May 2016.
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