Metricon Homes Pty Ltd v Hooper
[2014] VSC 12
•3 February 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2014 00174
| METRICON HOMES PTY LTD (ACN 005 108 752) | Plaintiff |
| – and – | |
| GRAHAM HOOPER | Defendant |
---
JUDGE: | Mukhtar AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 January, 3 February 2014 |
DATE OF REASONS: | 4 February 2014 (Decision pronounced on 3 February) |
CASE MAY BE CITED AS: | Metricon Homes Pty Ltd v Hooper |
MEDIUM NEUTRAL CITATION: | [2014] VSC 12 |
APPEAL – Leave to appeal from the Victorian Civil and Administrative Tribunal – Interlocutory order – Order made in the course of hearing – Substantial building dispute − Application by builder to permit further expert investigations into cause of defects – Concurrent expert evidence already conducted and completed – Application refused − Competing considerations on the balance of justice – Natural justice – Principles applicable to appellate intervention on interlocutory discretionary orders – Leave to appeal refused – Victorian Civil and Administrative Tribunal Act 1998, ss−97, 98(1)(a), 102(1) and 148
REASONS FOR DECISION
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A C Neal SC with Mr B B Carr | David Naidoo &Associates |
| For the Defendant | Mr T G Sedal | Hayden Legro Lawyers |
HIS HONOUR:
Yesterday, 3 February 2014, the Court finished the hearing of the plaintiff’s application for leave to appeal under s 148 of the Victorian Civil and Administrative Tribunal Act. The challenge was to an interlocutory discretionary order made by Mr Walker, a Senior Member of the Tribunal, at a time when this building case had been adjourned after eight days of hearing. It is due to resume tomorrow and is expected to take another five days. Thus the Court obtained a situation of great urgency.
The application for leave to appeal was refused. The Court now publishes its reasons. But first, a prologue.
There was much material. Argument spread intensively over two days. Such is the urgency of the case that it is not possible to give reasons with attention to every facet of the case especially its technical elements. The demands put on the Court in such a technical case are a demonstration why it is that interlocutory discretionary decisions in a part heard trial are rarely the subject of appeal. The Court on appeal is made to have a re-enactment of much of the part heard trial. Moreover, this Court cannot be expected to assess, beyond forming an impression, the complex technical issues concerning the causes of the defective concrete slab and the underlying soil conditions which appears to be the dominant matter for determination in the Tribunal hearing. That is why it is said that the litigation should be left to run its course rather than fragment it with interlocutory appeals.
In the end, it will be seen that what has weighed the heaviest in my consideration in refusing leave to appeal is that the order sought to be impeached (which, it is asserted, could have had the effect of preventing the plaintiff from enlarging or augmenting the scope of its expert evidence) was not so egregiously productive of an injustice that this Court ought to take the step of interfering with a discretionary decision of the Senior Member which has been made in the running of a complex, long-running and now part-heard building dispute. On established legal principle, it is not for this Court to interfere with the discretion, even if it might have come to a different decision itself, unless it can be shown that the Member’s decision was clearly wrong. As recognised by legal authorities, it is productive of great inconvenience, disruption, delay, expense and litigation anxiety for a case to be stopped and fragmented whilst an appeal is heard on an interlocutory discretionary matter.
I cannot say the decision was wrong; or for present purposes to be so attended with doubt as to warrant leave to appeal with the concomitant of staying the proceeding pending the hearing of an appeal. In the exercise of weighing up the competing considerations the Tribunal paid more than lip service to the need to consider the tenets of natural justice as they affected the plaintiff. But the Senior Member concluded they were outweighed in the aggregate by other factors equally based on the interests of justice as affecting the defendant and the conduct of the case otherwise. Another in the same position may have come to a different view, but I cannot say it was so unreasonable or so unfair as to bespeak error. The Tribunal was in the best position to judge having heard all the geotechnical evidence and was in a position to be far more appreciative than this Court about the possible significance of the further evidence as against the unjust impact if the hearing was to become disturbed.
Moreover, I am not convinced that the plaintiff was moved to seek the opportunity to adduce new evidence as a result of some unexpected material alteration in the defendant’s case or the opinion being advanced by the defendant’s experts. I think that part of the application before me was exaggerated. Nor do I think it right to say that the plaintiff was being “punished” for making what was termed an incorrect forensic decision to not adduce the evidence in the first place. As I see it, the momentum in the case was too great for the case to stop for the sake of the plaintiff to conduct investigations (with an unknown outcome) and revisit how it might run its geotechnical case.
Whether or not the potential evidence would have mattered remains to be seen when the case is finally decided. Only then will it be apparent what the Senior Member makes of the defendant’s “changed evidence” (as the plaintiff would have it) and what bearing it has in his adjudication. If it ends up being so, then that will be a matter for the plaintiff to assess in making any possible challenge ultimately. But otherwise I think the case must go on.
An elaboration of those reasons follows.
The first question was a procedural one.
Was the plaintiff out of time for this application?
The defendant (who I shall refer to as the Owner as distinct from the plaintiff, the Builder) contends the application is out of time. Under s 148:
(2) An application for leave to appeal must be made –
(a)not later than 28 days after the day of the order of the Tribunal; and
(b) in accordance with the Rules of the Supreme Court.
…
(5)The…Trial Division…may at any time extend or abridge any time limit fixed by or under this section.
In this case, the relevant order was made by the Tribunal on 3 December 2013. The Builder requested written reasons, and they were provided on 9 December 2013. Therefore, under s 148(4), the day on which the written reasons are given is deemed to be the day of the order. If 9 December be taken to be the commencement point, then the time limit of 28 days goes to 6 January 2014. In this case, the originating motion was filed on 17 January 2014, followed by the filing and service of the accompanying summons on 22 January 2014.
The Builder contends that the filing of process was within time because the words “in accordance with the Rules of the Supreme Court” in s 148(2) (b) mean that recourse must then be had to procedural rules under Chapter II. Those rules apply to appeals from tribunals in general. Amongst other things, they prescribe manner and form provisions for the institution and procedural requirements of an appeal such as the filing of an originating motion, a summons, and supporting materials.
The Builder seizes on Rule 4.06(1) which says as a general rule that, “An application for leave to appeal shall be made within 28 days after the day of the order of the tribunal.” That reproduces the essential part of s 148 of the VCAT Act. Then, the Builder says correctly that under Rule 1.07 of Chapter II, there is the importation of the general Chapter 1 Rules in any leave application. That leads to Rule 3.04 of Chapter 1 which provides that, “In calculating the time fixed by these Rules the period from 24 December to 9 January is excluded unless the Court otherwise orders.” If that rule is in play, then the 28 day period expired on 23 January and the Builder’s originating motion was filed within time.
I have not come across this question before. If a time period is fixed by a statute then it is hard to think that rules of court can impinge on that time limit in some way unless the statute provides expressly or impliedly. The statute goes no further than saying that the Court may extend the time. But otherwise, the statute, on its ordinary reading, prescribes the ordinary effluxion of 28 days. The submission is that the expression “an application for leave to appeal must be made… in accordance with the Rules of the Supreme Court” means that if, “in accordance with” the Rules, the calculation of time is affected by the vacation period, that means Rule 3.04 was intended to come within the intrinsic operation of s 148(2) in the calculation of time.
I have my doubts about this submission. But I accept the apparent inter relationship between the Act and the vacation rule is productive of uncertainty or confusion. An applicant acting prudentially I think would file within 28 days regardless of Rule 3.04. Even though the vacation period is not taken into account as a matter of the calculation of time, the Supreme Court Registry is open and process can be filed in the period between 24 December to 9 January (except on weekends or public holidays.)
I am inclined to the view that the separate expression “in accordance with the Rules of the Supreme Court” in s 148(2) is intended to refer to the manner and form provisions of the Rules of Court. That is, it is directed at how the application for leave is to be instituted and how it then proceeds. Further, when Rule 3.04 speaks of the calculation of time “fixed by these Rules”, I see that technically there is a 28 day time period fixed by Chapter 2 but I would say that the 28 day time limit is truly fixed not by the Rules but by the Act. If one were to ask, “Whence derives the 28 day time limit?” one would naturally go to the Act which is the provenance of the right to appeal.
Given the exigencies of this case, and the Court’s greater concern with the substance of the case, it is unnecessary to form a view on this question because I would hold that an extension of time ought be given anyway as the Builder was proceeding on a genuine belief that the Rules did operate so as to prolong the calculation of the time period.[1] Thus, I ordered an extension of time.
[1]See affidavit of D.C Naidoo sworn 31 February 2014.
The order sought to be appealed
The dispute concerns a brick veneer house built by the Builder, Metricon Homes Pty Ltd in Tarneit under a contract made in November 2006. The contract price was $175 079. The house was built on a concrete waffle pod slab. As the Tribunal has already described it, since the construction of the slab and completion of the home, the building has undergone considerable movement to the extent that there is extensive cracking of internal finishes and the doors and windows will not open. The defects are of a magnitude that the house is unable to be occupied. The Owner’s claim is that the problems are so great that a reasonable remedy is to require the Builder to demolish and rebuild. In the alternative, a claim is made for damages equivalent to the diminution and value of the house.
There is no dispute that there are real problems with this house. Nor is there a dispute that the source of the problem lies in the substructure. It is convenient if I quote from an affidavit sworn on behalf of the Builder by its solicitor:[2]
9.There is no issue from the plaintiff’s side that the house exhibits some signs of distress due to movement caused by an interaction between the house and the underlying foundation soils. The contest is rather whether the plaintiff has any legal liability to the defendant for such movement and the resulting distress.
10.The defendant has advanced two theories as to the reason for the distress in the house. The first is that the slab has subsided due [to] a lack of compaction in the underlying soils. The second is that the perimeter of the slab had been forced upwards at its edges (referred to as ‘edge heave’) due to alleged inadequacies of the slab to resist upward forces caused by the expansion of the underlying soils.
11.A fundamental issue in regard to both of these theories is the allegation by the defendant [i.e. the owner] that the plaintiff [i.e. the builder] placed an additional 205mm of fill material (described as ‘builder’s fill’) on the site after Structural Works had produced their soil report and after the slab had been designed. This material is said to have been placed on top of a deeper layer (approximately 600-700mm deep) of fill which had been placed at an earlier time, described as ‘developer’s fill’.
[2]Affidavit of D.C Naidoo sworn 22 January 2014.
The case involved expert evidence, including geotechnical evidence and structural engineering. As is also not uncommon, the conduct of the hearing was preceded by the filing of principal and responsive reports from experts. I am told the expert evidence has so far been heard concurrently.
On 16 October 2013, after the case had run for eight days, the Tribunal adjourned the case. It had to be adjourned because there was insufficient time to finish the hearing. The Owner had called as a witness Mr George Cross a structural engineer and building surveyor. He, like all other experts in the case had produced an expert report. In the course of his evidence (that is, in running) he introduced some additional matters, not of a geotechnical nature, to explain the causes of the slab problems such as unvibrated concrete and concrete overspill. They were matters going to support the remedy to have the house knocked down. The evidence was significant. As those amendments had come out in the course of oral evidence, the Tribunal directed Mr Cross to make his amendments in written form to his report so that, as the Tribunal put it, “The builder would know exactly what it was that Mr Cross was saying.”
Consequently, orders were made on 16 October permitting the Builder to file a further expert report in response but as with Mr Cross, the Tribunal stipulated that the augmented material had to be confined to certain subjects; that is, confined to the subjects that had been raised by Mr Cross in the course of his evidence: overspilt concrete and unvibrated concrete (to explain slab structural defects) ; survey levels of the property (which would show movement); and the valuation of the property (for legal remedial purposes). That part of the order is uncontroversial.
But, on that occasion, the Builder sought to go further. It wanted to conduct geotechnical investigations on the site, including core drilling into the slab. The Builder had not gone into the hearing having done such investigations whereas the Owner’s experts had, and had adduced evidence based on the investigations accordingly. What follows will no doubt be imprecise or inadequate to explain why and the technical context, but it is the best the Court can do to in the circumstances to understand the issues in the case. I shall eschew technical details.
I am told that in 2007, terms of settlement were made between Builder and Owner because the slab had been constructed 205mm higher than specified under the building specifications and building permit. This consequentially inflicted additional expenses on the Owner for which he was compensated under the terms. It was supposed that in order to have built the slab that much higher, the builder must have brought extra fill onto the site (known as builder’s fill) which was placed on top of the pre-existing developer’s fill. I am also told that as part of the compensation or compensatory work, extra dirt or fill had to be brought in to be placed around the slab; that is, laid against the edge beam to hide the elevated construction of the slab.
I am told that, initially at least, there was no dispute between the parties’ experts about the presence of two distinct layers of fill. The issue was whether the structural integrity of the slab suffered because of inadequate compaction of the fill, or, whether it was due to the reactivity of the soil. In basic terms, if the soil shrinks or swells then that can cause destabilisation to a slab that has not been designed to absorb such reactive movements in the soil. That in turn can bring into play the potential liability of the second defendant to the case, the engineer, because reactive soil requires an engineer to ensure a slab design of sufficient strength to withstand reactivity. If it is not an issue of reactivity but an issue of compaction, that puts the lime light on the liability of the builder in not properly compacting the soil whether there be two layers or one layer.
The geotechnical evidence for the Builder as stated in expert reports contended that the problem here was not one of insufficient compaction, but was a case of reactive soil problems. I am told that in turn induced the owner to bring in geotechnical evidence. Shrink and swell tests were done on behalf of the Owner to assess the reactivity of the soil. The owner’s experts took core log samples in order to ascertain the material underneath the slab and form views about compaction. I am told that the geotechnical experts for the Builder chose not to do compaction tests or core tests or shrink or swell tests, and at the initial stages at least, accepted that there were two layers of fill under the slab. Subsequently, and before the hearing commenced, I am told that the builder’s experts changed their position in supplementary reports to contend that there was no builder’s fill under the slab (only developer’s fill), Their reports show that that change of position was not supported by geotechnical testing or investigation, but was something which the builder intended to establish by reference to the original site plan and from the excavation work. The decision by the Builder to embark on this case with it seems a calculated decision not to do geotechnical investigations helps understand the balancing of the interests of justice that that Senior Member was called upon the undertake. For having chosen not to conduct any core tests or compaction tests or swelling tests up until then, the builder in truth was seeking to go back against its forensic decision not to do any such testing and undertake such testing after the completion of the geotechnical evidence. No doubt another explanation can be put on it by the Builder.
But for present purposes I think I have heard enough to conclude that there does appear to be a change of position by the builder to go back and conduct geotechnical testing that for one reason or another it did not pursue as part of the preparation and presentation of its case up to that time. It also helps to understand why it is that the Builder now says the presence, or not, of a layer of builder’s fill under the slab is such a crucial issue. The riposte by the owner is that the presence of a Builder’s fill layer was never an issue because both sides proceeded on the basis that there was a builder’s layer. Rather, the Owner says, it is the Builder that has now by its own hand changed its position to make the Builder’s fill an issue and even then, to make it an issue after all the geotechnical evidence is in.
The Tribunal rejected the Builder’s application. In essence, the Tribunal regarded the body of evidence concerning geotechnical issues as having been already been dealt with and, in effect, closed. It did not want the issue re‑opened. The further evidence that was to be made the subject of an additional report by Mr Cross considered non‑geotechnical matters, and even then, to a circumscribed extent and something capable of being dealt with if necessary by one of the Builder’s engineers yet to be called.
There was no attempt by the Builder to appeal the refusal of its application on 16 October 2013.
Subsequently, on 26 November 2013, the builder reapplied for the same order as had been previously refused. That is, an order permitting it to reinspect the premises and to take a core sample through the concrete slab into the underlying soil in order to do a geotechnical analysis of the conditions of, and under, the slab. On 3 December 2013 that application was refused again, substantially for the same reasons. The case was refixed for tomorrow.
It is plain from the transcript of argument and the Senior Member’s ex tempore and subsequently reproduced reasons on 9 December, that the Tribunal member was concerned about the prolongation of the case, the expense and inconvenience to be caused to allow a revisitation of the geotechnical issues, the fact that all the geotechnical evidence was already in and completed, and the foreseeable requirement that all geotechnical witnesses would have to be recalled and the trial on that substantial issue in effect reopened if further evidence was allowed. It is also worth noting that this was not a situation where the Builder was in a position to tell the Tribunal what that evidence would be. That is, the builder was in no position to say in effect, “We seek an opportunity to make further inspections because we expect to be able to obtain evidence that … “. The Builder was seeking an opportunity, without limitation, to investigate and maybe get evidence.
That is an important factor because a good part of the resistance to the application on both occasions, and a factor underlying the Senior Member’s attitude towards the application, was the fact that there was no barrier to those investigations being conducted before the case commenced. The Builder’s response, on both occasions and before me, was to say that it had no occasion to conduct such an investigation because it was not until the cross‑examination of the owner’s experts that the need to conduct those investigations arose. I am afraid to say, it has not been demonstrated to me that is so.
The Builder focuses on the expert evidence given by Mr George Cross and a Mr S. Buffinton on behalf of the Owner. Mr Buffinton provided a geotechnical report. Mr Cross provided a building inspection report.
The Builder’s supporting affidavit for this application isolates a passage in the cross‑examination of both of those expert witnesses. I shall not go into the details. It is sufficient to say that the assertion of the Builder is that in the course of cross‑examination Cross said something which seemed to contradict or diverge what Buffinton was saying. As for Buffinton, the assertion is that his expert reports were interpreted by the Builder as accepting there was only one layer of fill under the slab (that is, there was no builder’s fill) yet in cross‑examination he contended that his report should not be read that way, and that he could not tell whether there was a layer of builder’s fill or not. For these experts, so it seems to me, the question was not so much the presence or the dimensions of more than one layer of fill, although no doubt that is a relevant factor pointing the finger at the Builder rather than the engineer that designed the slab. The real question, or the ultimate question was whether the fill, be it there by reason of the subdivision by the developer or from the builder, was not properly compacted so that in some way it affected soil swelling or soil behaviour in a way that in turn led to slab heave. An allied question was whether this slab was or was not thick enough to withstand or stiff enough to perform adequately.
The first thing I will say is that nowhere in the cross‑examination, or in any submissions made to the Tribunal, was there any assertion that the cross‑examination of these two witnesses showed that they were now resiling from a position taken in expert reports filed for the purposes of the case. For my part, doing the best I can, I do not see how it could be said that somehow the Builder had entered into this trial acting on the faith of something said in Buffinton’s statement to make a decision not to undertake geotechnical investigations, and that Buffinton’s change of position meant that the builder had somehow acted to its detriment and ought be allowed to adduce the evidence. On my reading of Buffinton’s cross‑examination, he has not in any way disavowed anything said in his expert’s report. Indeed, what he has done is disagree with the cross‑examiner’s interpretation of the content of his statement. I simply do not see, in the superficial position I am in admittedly, how it can be said stridently that there has been some change of position or that there is now a need to respond to something new or different.
As for Mr Cross, even if it be accepted that he has somehow differed from evidence given in Buffinton’s report, that is not something I would regard as remarkable. Experience has it; there is nothing unusual in one expert disagreeing with another on the same side. It may or may not matter ultimately. If there is a contradiction, and if it matters, then that is something that can be the subject of submissions made ultimately to the Tribunal. But for my part, the presence of a contradiction does not therefore mean there is some reason to re‑open the whole issue.
The Owner’s expert reports are voluminous. I cannot be expected to have absorbed all these but it is plain to me that the expert reports prepared by Mr Cross unequivocally refer to the addition of builder’s fill and inadequate compaction, as well as slab design defect. His expert reports refer to observations and test results as a result of boreholes done by him. Buffinton’s reports refer to the boreholes and the fact that there were two layers of fill material underneath the slab. Buffinton’s report explicitly says that the builder had placed additional filling that was not suitable as a foundation for the edge beams of the slab. Pausing there, it seems plain to me, that both experts, in this highly complex case, are proceeding on the basis of two layers of fill and inadequate compaction of the fill. Moreover, the builder went into this litigation knowing that the owners had conducted borehole tests which formed the basis of analysis and opinion by Buffinton and Cross. Yet, the builder chose not to conduct any such tests. Further, my examination of a report by Mr John McFarlane on behalf of the Builder shows that he was proceeding on the basis of there being two distinct layers of filling, one of which he said was likely to have been placed by the Builder. Mr Lawrence who also prepared a geotechnical report stated unequivocally in his report there were two distinct layers of filling at the site Then, come July 2013 a supplementary report from McFarlane stated a change of mind not as a result of any geological testing but on a review of documents by Earthlift Excavations and a review of the original site level plan.
There is force in Mr Sedal’s submission that in truth it is the Builder that may be seen to have changed its course, and did so before the trial started. The Builder shifted its case to contend there was only one layer beneath the slab. It did not then do its own core testing or swell testing or any other investigation to support its changed course. Instead it proceeded headlong into trial, and then after days were spent hearing and testing the evidence made an application to be able to do testing and investigations, ostensibly because of the Owner’s evidence, and even then for matters for which there was no barrier to doing before the trial commenced. That helps understand I think the Senior Member’s decision.
As I wish to emphasise, there are limits to which I can be expected to enter into the interstices of the complex geotechnical questions. They are all matters for the trial. They are all matters to which Mr Walker has already been exposed. I would say two things. It seems to me, it is not right for the builder to say that the owner’s experts have opened up a new area or that they have somehow resiled from a position previously taken which makes it unfair for the builder to be deprived of the opportunity to investigate further geotechnical matters. It seems to me to be more a case of the cross‑examiner having somehow elicited evidence from these experts that might be regarded as inimical to the builder’s case or which somehow made it re‑think its decision not to have conducted core tests before the trial. There is nothing unusual in evidence coming out in the course of trial in cross‑examination which was unexpected in some way.
The legal tests
The approach to be taken by this Court in determining applications for leave to appeal from VCAT is well‑known and emanates from the Court of Appeal’s decision in Hulls.[3] It was there said that ultimately, the governing consideration is the justice of the case as it appears to the Court, and that means justice to all parties not just the applicant. The “guidelines” laid down are plain enough. The applicant of course must identify a question of law (for that is a precondition to the appellate intervention); the importance of the question, either generally or to the applicant, will probably be relevant; and then the well-known Niemann considerations of requiring that there must be shown a real or significant argument to be put on the question of law at least to show that there is sufficient doubt about the decision under appeal, and, that if the error is uncorrected, it would impose substantial injustice.
[3]Secretary to the Department of Premiere and Cabinet v Hulls (1999) 3 VR 331; [1999] VSCA 117.
When it comes to appeal from interlocutory decisions two principles apply. First, it is not for the court on appeal to concern itself as to how it might have exercised the discretion. The decision maker must be shown to have been wrong. As stated in Urban No 1 Co Operative Society v Kilavus:[4]
The appellate court is not free to act upon its own conclusions but may only alter the decision of the tribunal at first instance if it has acted on a wrong principle of law, misapprehended the facts or made a wholly erroneous assessment of the relevant issue. In such cases, there is a strong presumption in favour of the correctness of the decision appealed from and the general rule is that that decision should be affirmed unless the appellate court of review in court is satisfied that it is clearly wrong [citations omitted]…
[4][1993] 2 VR 201 at 211.
Secondly, litigation ought be allowed to run its course, and fragmentation avoided. I would draw special attention to what was said in Hulls on the question of appeals from interlocutory orders:[5]
Where the order sought to be appealed is interlocutory (or “interim” in the terminology of the V.C.A.T. Act) there may be particular reasons, based in justice to both parties, for not granting leave to appeal. There are strong considerations against the fragmentation of any proceeding, whether it be criminal or civil. Where a court is invited to grant leave to appeal from an order which is simply interlocutory, the litigation will be interrupted by the appeal, if leave is granted. Usually it is better if litigation is left to run its course, the parties being remitted to such rights of appeal as they have at the end of the day. Not only does that ensure that the litigation is not unnecessarily interrupted and completion not delayed without warrant; it also ensures that any interlocutory dispute will be seen and adjudged in its final context. Indeed, in the context of the final judgment the interlocutory dispute may be seen as having, or having had, little or no significance. Hence, in Niemann it was said that for leave to appeal from an interlocutory order must show, not only sufficient doubt about the correctness of the order, but also that there would be substantial injustice in leaving that order unreversed.
[5]At [14].
To that I would add what was said in Adam P. Brown Male Fashions Pty Ltd v Philip Morris Inc:[6] quoting from In re the will of Gilbert:[7]
… there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercise of discretion to interlocutory applications from a Judge in Chambers to a Court of Appeal.
[6](1981) 148 CLR 170 at 177.
[7](1946) 46 SR NSW 318.
The Builder put these propositions (omitting reference to citations):
(a) failure to afford natural justice is a “question of law” for the purposes of s 148(1) of the VCAT Act;
(b) the ultimate test for the granting of leave under s 148 of the VCAT Act is the justice of the situation – the discretion is unfettered notwithstanding the existence of “guidelines”;
(c) in reviewing a decision of VCAT under s 148 the Court will “correct” a decision of the Tribunal if it involved, in all of the circumstances, a denial of natural justice;
(d) in assessing whether in the circumstances there has been a denial of natural justice the correct approach is to weigh up the prejudice to the applicant in denying its request as opposed to prejudice to other parties in acceding to the request;
(e) where it is proposed to deny a party the opportunity to adduce further evidence the appropriate test is whether the denial of such opportunity could have no bearing on the outcome;
(f) in an appeal under s 148 raising denial of natural justice a court will set aside the decision of a Tribunal where the substantive outcome involves a denial of natural justice even if a hearing was otherwise conducted “conscientiously”;
(g) where a party seeking the opportunity to adduce further evidence is regarded as trying to overcome the consequences of their own forensic decision making, the correct approach is not a punitive one but rather the balancing of prejudice to each party;
(h) if the decision to refuse the plaintiff’s request is held to be discretionary, appellable error will occur if the discretion is exercised in such a way as to result in an injustice to one of the parties.
The Owner cavilled at proposition (e). It could be put by saying that whether on appeal or under judicial review, relief will not be granted to correct a decision to disallow further evidence if the proposed evidence would not have altered the outcome. Otherwise I will not dwell on these propositions. The problem is that it is begging the question to expostulate that an injustice was caused. That is the question, and it depends on injustice not just to the Builder.
I will accept that the question whether there was a denial of natural justice is a question of law and to that extent the first pre-condition for granting leave to appeal has been satisfied.[8] I will reject Mr Sedal’s submission that the application was misconceived because, assuming the hearing rule was satisfied on the making of the Builder’s application (which it plainly was), then nothing could be the subject of appellate intervention until the ultimate decision was made by the Tribunal by reference to which a judgment could be made about the effect of the Tribunal’s interlocutory decision. The question is whether the exercise of the discretion here was oblivious to the tenet of natural justice of being allowed to adduce evidence in support of a case.
[8]See Collection House v Taylor [2004] VSC 49 at [20].
The commencement point of the builder’s application is the Tribunal’s obligation to act according to the rules of natural justice in the conduct of a hearing. Such an obligation is stated in s 98(1) (a) of the VCAT Act. The relevant rule of natural justice is the fair hearing rule – the right to make relevant submissions, give evidence and call witnesses in support. That too is recognised under s 102(1) of the Act. Both provisions cohere with the requirement on the Tribunal to act fairly and according to the substantial merits of the case, as stated in s 97.
The gist of the submission made on behalf of the builder by Mr Neal SC (who did not appear in the Tribunal hearing) was as follows:
(a)there is an obligation, not a discretion to give natural justice;
(b)a denial of natural justice was ipso facto erroneous;
(c)the Tribunal had denied the builder the opportunity to obtain and then lead relevant evidence and that was something which inflicted actual prejudice;
(d)so analysed, this is not the typical discretionary decision which traditionally courts had been reluctant to have challenged on appeal;
(e)the denial of natural justice was made all the worse because the need to adduce more evidence was brought about by the need to be “responsive” to the “evolving” case being prosecuted by the owner;
(f)the Senior Member appeared to allow case management-type considerations, the desire to avoid prolongation of the case and the indulgence factor to displace the decisive test of ensuring the builder was not denied the natural justice to be able to properly present his case;
(g)further, the case had to be adjourned anyway to allow amendments to the owner’s expert evidence and any further geotechnical evidence could have been accommodated in the hiatus period before the resumption of the trial;
(h)the better course, productive of ensuring all evidence was available to the Tribunal for adjudicative purposes, was to enable the builder to make further investigations and adduce evidence, whether or not, that is something that could have been done before;
(i)there is no place under the dictates of natural justice to punish the builder for not having pursued the course of evidence earlier, or having made the forensic decision earlier not to do so.
I will not dwell on these. These are all matters integral to the exercise of the discretion, which I am not re exercising.
I am not sure, but if the Builder’s submission went to the point of saying that the principles of natural justice dictated that the Builder be allowed to investigate and adduce the additional evidence and there was no room for discretion, then I think the submission to be plainly incorrect. It cannot be that absolutist. The content of the duty to afford procedural fairness exists on a spectrum. In assessing whether there has been denial of natural justice, the correct approach is to weigh up the prejudice to the builder in denying its request as opposed to the prejudice to other parties and the orderly conduct of litigation in acceding to the request.
I will accept that the decision here involves something more than “mere” practice and procedure in the sense of some “nuts and bolts” type case management decision. But the decision to allow additional inspection with a view to adducing further evidence was nonetheless discretionary. What informs the judicial exercise of that discretion is the critical concept of natural justice but no doubt circumstances can arise where there is no denial of natural justice where what the builder seeks is productive of a greater injustice to others in the proceeding. And it may go beyond that when Aon type considerations come into play. The natural justice of being allowed to amend a case or to make a particular case may have to be denied if a greater injustice is done to other parties in a host of ways. Or, as another example, it is not a breach of natural justice to disallow the adducement of further evidence when the proposed evidence was not apparently relevant, or it could not be shown what that evidence would be. Or, as another example, it may be that evidence was sought to be adduced which was too late or would be so disruptive to proceedings in one way or another that it inflicted weightier injustice on others, especially where the case is part heard. The examples are vast. So much depends on the particular case. It helps understand the thinking to say, as stated by Gleeson CJ in Lam[9] that:
Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.
[9](2003) 214 CLR at [38].
Senior Member is seized of this trial in an advanced way. He has been exposed to the relevant technical evidence, is well seized of its extent and its testing, and is in the best position to make an assessment of whether this truly was a situation where the need to obtain further evidence was brought about by the alleged altered position of the owner or for some other reason, and the consequential injustice of allowing the geotechnical evidence to be re‑opened. That decision may only be altered if it is shown to be wrong or would be productive of injustice if allowed to stand, compared to the injustice on others if the order was not made. The builder bears a heavy onus.
In my assessment, what the Member has done is what the law would expect him to do. That is, to consider the basis for which the builder sought to do further testing and adduce further evidence, to assess the prejudice that might be suffered by the builder, to assess the countervailing prejudice on the owner, to add to that the burdens that would be inflicted in having to in effect re-start the geotechnical evidence, to add to that the effect of the prolongation of the case, and to add to that the fact that core testing could have been done by the builder well before the commencement of the trial particularly as core testing had been done by the owner’s experts and was the basis of their expert reports. In that regard, of all things in this case, I am firmly of the view that it is not at all demonstrated that the Builder’s application was brought about by the need to be “responsive” to the “evolving” case being prosecuted by the Owner. I do not see this. Thus, faithful to the proper exercise of discretion, the Tribunal member weighed up those competing considerations and found that the prejudice to the owner outweighed the prejudice to the builder.
In my view, that decision was open to the Senior Member. I cannot say it was wrong. Moreover and more importantly, having been seized with the matter, the Member was in the best position to assess the utility or the significance of the pursuit of further evidence. The trial will proceed and submissions will be made about the expert evidence. Findings will be made by the Tribunal about the causes of the distress in the superstructure and the question whether the construction of the slab was in accordance with the contract and all other legal obligations. In the course of the Tribunal’s determination, it may be expected that findings will be made about the evidence given by Mr Cross and Mr Buffinton. Should it be the case that findings are made adverse to the Builder’s case based upon the evidence of those two experts, then it may be the case that any challenge to the ultimate decision could be made based upon the Member’s refusal to allow the further evidence to be adduced by the builder. That prospect is always there. If the Hulls test looks to the requirements of justice when assessing a leave application, then the course least productive of injustice all round is to allow the trial to proceed to its conclusion rather than stop it now for a considerable period for this Court to finally decide whether the Member’s discretion miscarried. There will be cases where a discretionary decision made in the course of running the trial may be so egregiously wrong or productive of such an injustice that it justifies the suspension of a trial and re‑opening of the discretionary judgment. In my assessment, what has occurred does not fall within that category.
It is for those reasons I refused leave to appeal.
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