Glenvill Projects Pty Ltd v North North Melbourne Pty Ltd - [2013] VSC 717

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
TECHNOLOGY, ENGINEERING AND CONSTRUCTION LIST

No. 04583 of 2013

GLENVILL PROJECTS PTY LTD (ACN 147 526 074)	First Plaintiff
and
GLENVILL PTY LTD (ACN 150 874 356)	Second Plaintiff
v
NORTH NORTH MELBOURNE PTY LTD (ACN 103 762 563)	First Defendant
and
WILLIAM TAYLOR	Second Defendant

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JUDGE:	VICKERY J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	16 DECEMBER 2013
DATE OF JUDGMENT:	17 DECEMBER 2013
CASE MAY BE CITED AS:	GLENVILL PROJECTS PTY LTD & ORS v NORTH NORTH MELBOURNE PTY LTD & ORS
MEDIUM NEUTRAL CITATION:	[2013] VSC 717

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BUILDING CONTRACTS - Expert determination- General principles - Dispute resolution clause in contract - Expert appointed under the contract to determine issue of escalation costs - Scope of issues under expert determination agreement - Late amendment of claim - Procedural directions given by expert - Contract construction - Incorporation of IAMA rules into expert engagement contract.

EXPERT DETERMINATION - Construction disputes - Scope of expert's jurisdiction under contract - Power to vary the scope of the determination - Expert determination differs from arbitration - Whether expert determination open to review - Whether breach of expert engagement contract - Procedural fairness Manifest error.

REMEDIES - Whether expert determination reviewable - Applicability of administrative law remedies - Contractual remedies - Relief governed by terms of contract - Whether declaration should be granted.

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APPEARANCES:	Counsel	Solicitors
For the First Plaintiff	Mr A J Laird	Kalus Kenny Intelex
For the Second Plaintiff	Mr A J Laird
For the First Defendant	Mr T J Mullen	SBA Law
For the Second Defendant	No appearance

HIS HONOUR:

Background

In this proceeding the Plaintiffs (which I shall compendiously refer to as “Glenvill”) seek to challenge what is, in effect, an interlocutory procedural ruling of a contractually appointed expert the Second Defendant (“Mr Taylor”), who was appointed by the parties pursuant to the dispute resolution clauses of a construction contract entered into between Glenvill as the builder and the First Defendant (“North North Melbourne”) as the principal.

The construction contract was entered into on 22 January 2009 for the construction by Glenvill of residential premises on each lot of a subdivision on land owned by North North Melbourne (the “Land”) situated at the corners of Buncle and Sutton Streets and Buncle and Mark Streets, North Melbourne (the “Construction Contract”).

Mr Taylor has commenced, but has not yet completed, his expert determination process (the “Expert Proceeding”).

Relevant Terms of the Construction Contract

The Construction Contract contained the following terms of relevance:

It provided for the issue of a “Works Commencement Notice” in the following clause:

3.4 Commencement of Works and Building Permits
(a)Once settlement under the Contract of Sale for each lot in a Stage has occurred and:
i.The Builder has an executed copy of all Purchaser Building Contracts in respect of Lots within the Stage: or
iiThe Land Vendor has provided the Builder with notices pursuant to clause 3.3(a) and provided the Builder…

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: [2013] VSC 717
Decision Date: 17 DECEMBER 2013

CaseChat Overview and Summary

Glenvill Projects Pty Ltd brought a claim against North North Melbourne Pty Ltd for an expert determination of escalating costs under a building contract. The dispute arose from a contract that included a clause for expert determination of certain issues, with the expert's powers and jurisdiction being outlined in the contract. Glenvill Projects sought to amend its claim to include additional escalation costs after the initial determination process had begun. North North Melbourne objected to the amendment, arguing it fell outside the scope of the expert's jurisdiction. The court had to determine whether the expert had the power to vary the scope of the determination, and if the expert's engagement contract, which incorporated the rules of the Institute of Arbitrators and Mediators Australia (IAMA), was breached.

The legal issues the court needed to address included whether the expert's jurisdiction could be expanded to include the additional escalation costs, and if the procedural directions given by the expert were valid. The court also needed to consider whether the expert determination was subject to judicial review and what remedies were available under the contract. Furthermore, the court had to decide if the determination could be reviewed for manifest error and whether any breach of the expert engagement contract could be remedied through the court's powers.

The court held that the expert did not have the power to vary the scope of the determination to include the additional escalation costs, as this would have constituted a breach of the contract. The court found that the expert's jurisdiction was strictly limited to the issues specified in the contract, and any attempt to expand it was not permissible. The expert's procedural directions were also considered valid within the confines of the contract. The court further determined that the expert determination was not open to judicial review, and the remedies available were strictly those outlined in the contract. The court found no manifest error in the expert's determination and concluded that the contract did not provide for a declaration to be granted as a remedy.

The court made an order that the claim for additional escalation costs was outside the scope of the expert's jurisdiction and could not be considered. The court also confirmed that the expert's procedural directions were valid, and the determination was not subject to judicial review. The court held that the breach of the expert engagement contract did not provide a basis for relief, as the remedies were governed by the terms of the contract.

Orders