The Owners Strata Plan No. 64622 v Australand Constructions Pty Limited

[2009] NSWSC 1083

CITATION:	The Owners Strata Plan No. 64622 v Australand Constructions Pty Limited [2009] NSWSC 1083
HEARING DATE(S):	6 October 2009
JUDGMENT DATE :	9 October 2009
JUDGMENT OF:	Hammerschlag J
DECISION:	Referee's reports dated 12 November 2007, 17 December 2007 (except for paragraphs 80 to 83), 5 April 2008 and 3 August 2009 adopted. Judgment for the plaintiff for $819,113.00. Plaintiff's motion dated 21 August 2009 dismissed.
CATCHWORDS:	PRACTICE AND PROCEDURE – Claim for damages by Owners’ Corporation against builders for defective construction - reference to referee of both liability and quantum – referee reports on liability and quantum – parties agree that reports on liability should be adopted – parties also agreed on quantum of damages in respect of some defects – application by plaintiff that report on quantum should be rejected and application by defendants that report on quantum should be adopted – where referee rejected entirety of plaintiff’s expert evidence on quantum and plaintiff accepts that even if admitted that evidence would not enable assessment of damages – application to lead quantum evidence of a different nature or admissible evidence of the same type rejected by the referee and for further hearing on damages in respect of defects where damages not agreed – relevant considerations – plaintiff’s application refused – referee’s report on quantum adopted – judgment for plaintiff in amount of damages agreed by parties.
LEGISLATION CITED:	Uniform Civil Procedure Rules 2005 Civil Procedure Act 2005 (NSW)
CATEGORY:	Principal judgment
CASES CITED:	Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Troulis v Vamvoukakis [1998] NSWCA 237 Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902 Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471 Joyce v GIO (Supreme Court of New South Wales, Sheppard J, 21 July 1976, unreported) Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27
PARTIES:	The Owners Strata Plan No. 64622 - Plaintiff Australand Constructions Pty Limited ACN 002 061 332 - First Defendant Australand Corporation (NSW) Pty Limited ACN 001 022 117 - Second Defendant
FILE NUMBER(S):	SC 55015/2006
COUNSEL:	D.E. Grieve QC with F.P. Hicks [Plaintiff] S.A. Kerr SC with J.P. Muir [Defendants]
SOLICITORS:	Dibbs Abbott Stillman [Plaintiff] Mallesons Stephens Jaques [Defendants]

- 1 -

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

HAMMERSCHLAG J

9 OCTOBER 2009

55015/2006 THE OWNERS STRATA PLAN NO. 64622 -V- AUSTRALAND CONSTRUCTIONS PTY LIMITED & ANOR

JUDGMENT

INTRODUCTION

1 HIS HONOUR: The plaintiff is the Owners’ Corporation of a high rise residential strata development known as the Altair at 3 Kings Cross Road, Rushcutters Bay, Sydney (“the building”), which was built by the defendants.

2 The plaintiff sued the defendants for damages for defective construction of the building.

3 The proceedings were referred to a referee, Mr Barry Tozer (“the Referee”) a consulting construction engineer, for inquiry and report on liability and quantum. In three reports the Referee found for the plaintiff on liability. The parties agree that those reports (with one minor exception) should be adopted.

4 On 3 August 2009 the Referee reported on quantum (“the Report”).

5 The Report records that agreement had been reached on the quantum of damages for several of the items requiring rectification. The amount to which the plaintiff is entitled in respect of those items is $819,113 and the parties agree that the plaintiff is entitled to judgment for it.

6 With respect to the remaining defects the Referee found that the plaintiff had not provided quantum evidence on which a recommendation to the Court could be based.

7 Presently before the Court are two motions, one by the plaintiff moving for the rejection of the Report, and one by the defendants moving for its adoption. Each motion seeks orders for judgment for the plaintiff in the amount of $819,113.

8 Accordingly, if the defendants’ motion succeeds the plaintiff will have judgment for $819,113 and the matter will (except for questions of interest and costs) end there.

9 If the plaintiff’s motion succeeds, it seeks directions to enable it to lead quantum evidence with respect to the remaining defects, and then a further hearing on damages.

BACKGROUND

10 The proceedings have a lengthy history, part of which it is necessary to recount.

11 The plaintiff commenced the proceedings in March 2006.

12 On 16 February 2007 McDougall J appointed the Referee under Part 20 r 20.14 of the Uniform Civil Procedure Rules 2005 (“the UCPR”) to inquire and report on liability and quantum.

13 In reports of 12 November 2007, 17 December 2007 and 5 April 2008, the Referee reported on liability, the extent of defects and the appropriate method of rectification (“the liability reports”).

14 Both parties accept that, except for paragraphs 80 to 83 of the 17 December 2007 report, the liability reports should be adopted, and I will so order.

15 After the liability reports, the parties engaged in settlement negotiations with a view to reaching agreement that rectification work would be done by the defendants. In aid of this endeavour the Court gave directions for the parties to serve “costings” for rectification. A number of these directions were not complied with by the plaintiff. On one occasion (13 June 2008) the Court noted the plaintiff’s failure to comply with an earlier order to serve material relating to the costings and directed the plaintiff’s solicitors to write to the plaintiff bringing to its attention s 61 of the Civil Procedure Act 2005 (NSW), in particular, subsection (3), and to the consequences which would be experienced if there were further breaches.

16 The settlement negotiations foundered and the Court made directions for the plaintiff to put on its evidence on quantum. On 15 August 2008 the plaintiff was directed to serve all of its evidence on quantum by 26 September 2008. The plaintiff did not comply.

17 On 14 November 2008 the Court extended the time for the plaintiff to serve all of its evidence on quantum to 18 December 2008, and ordered that in the event of default, any evidence on quantum which the plaintiff adduced or sought to adduce thereafter be disallowed. Again the plaintiff did not comply.

18 On 16 December 2008 in anticipation of its default, the plaintiff filed a motion returnable on 6 February 2009. The matter was listed for directions on 19 December 2008. No orders were made on that occasion.

19 On 28 January 2009 the plaintiff served a report by Mr John Palmer (“the Palmer Report”), a Chartered Builder, whose company Building Durability Pty Ltd (“Building Durability”) offers specialist services in the investigation and analysis of building and construction defects. The Palmer Report purported to quantify the cost of rectification of the defects.

20 On 6 February 2009 the Court extended the time within which the plaintiff was to serve the Palmer Report to 10 February 2009, and directed the parties to confer with the Referee.

21 On 3 April 2009 the defendants served a report by Mr Brian Gavahan (“the Gavahan Report”), a quantity surveyor, on the cost of rectification. The Gavahan Report was on a “market tested basis”, that is he called for tenders for rectification works, analysed the tenders received and then presented in his report the results of the tender process and his opinion as to the cost derived in respect of the rectification works.

22 On 15 May 2009 the plaintiff served a report by Mr Palmer in reply.

23 The defendants had earlier served on the plaintiff an affidavit of Mr Michael Newsom sworn 1 May 2009 (“the Newsom affidavit”) concerning offers by the defendants to the plaintiff to carry out rectification works, apparently intended to support, amongst others, a defence of failure to mitigate damages and to show that there were means of carrying out the rectification works less expensive than those advanced by the plaintiff. The affidavit made reference to without prejudice communications. On 29 May 2009 the defendant moved the Court for an order that the defendants not be entitled to adduce the Newsom affidavit in the reference. The Court directed that the affidavit was not to be adduced in the reference because the without prejudice communications could not be adduced and once they were removed very little of the affidavit survived.

24 The Referee conducted a conclave of experts on 1 July 2009. The Palmer Report and the Gavahan Report were discussed, and an agreement reached on the cost of rectification of some of the defects.

25 The parties failed to reach agreement on the cost of rectifying the remaining defects which related to block cavity walls, sliding doors, podium level (leaks), ceilings, balcony balustrades, and internal tiling (“the remaining defects”).

26 The Referee conducted a four day hearing on quantum from 13 to 16 July 2009 (“the quantum hearing”).

27 Mr D E Grieve QC together with Mr F P Hicks of counsel appeared for the plaintiff during the quantum hearing before the Referee. Mr S A Kerr SC (then of junior counsel) appeared for the defendants.

28 The plaintiff sought to rely on the Palmer Report. In advance of the quantum hearing the defendants had foreshadowed objecting to the whole of the Palmer Report, and did so before the Referee.

29 In support of the objection, the following points, amongst others, were made about the Palmer Report:

a it did not adequately identify Mr Palmer’s instructions;

b on its face parts of it were prepared by Mr Palmer’s son Mr Michael Palmer, a general manager and Ricky Wilson, a project manager, with Building Durability, acting under Mr Palmer’s supervision and the results of whose work were discussed with Mr Palmer throughout the course of its preparation. The Palmer Report did not specify the qualifications of Mr Michael Palmer or Mr Wilson, the work which they had done or how Mr Palmer had reviewed it;

c Mr Palmer had in some instances relied on photographs of defective work rather than on his own inspections;

d in a number of incorporated schedules, it purported to assess rectification costs (before profit margin) by adopting an hourly rate for the services of a project manager, supervisor and site technician, a number of hours which it would take for specific items of work to be done and then multiplying the two. The Report did not provide any information or process of reasoning as to how the number of workers, hourly rates or number of hours were reached and determined;

e for the purpose of assessing costs of equipment hire, it assumed a duration of 50 weeks for the project, but did not provide any information or process of reasoning as to how that figure was reached and determined; and

f it adopted a percentage profit margin but did not disclose any information or process or reasoning as to how it was reached and determined.

30 Initially the Referee admitted the Palmer Report. His ruling was in the following terms:

“I have heard the objections from Mr Kerr and your response to those, Mr Grieve, and I believe that it is in the best interests of the reference to include the reports of Mr Palmer, even though they may have some deficiencies, and to take those deficiencies into account in the course of my determination of the matter.”

31 Mr Palmer was cross-examined for a large part of the second day and the third day of the quantum hearing. On the third day counsel for the defendants renewed his application that the Report be rejected, repeating the objections which had earlier been taken.

32 Counsel for the plaintiffs put submissions in opposition to the application. The Referee then ruled as follows:

“As you say, Mr Kerr, at this point in the proceedings it's a very difficult decision to have to make in respect of the one and only expert which has been put up by the plaintiff. One of the matters to which Mr Grieve referred was the CV of John Palmer.

I note that although he has very wide experience in waterproofing and other building rectification work, I can find nowhere in his two-page CV where there is any mention of costing, estimating or allied parts of the construction industry experience. In that respect, as he's put up as a costing expert in these proceedings, I have to say that, from what I've seen of his report and from the experience which is identified in his CV, that he may well not be an expert in that field to the degree that's necessary to be able to mention and explain the manner in which costings have been derived or produced in a matter which can be understood by other costing experts and by me, as Referee.

There are some elements of his report which I think have got probative value, even if it's only to say that he's reviewed the quotations that have been provided by others and that he agrees that those prices are reasonable for some elements of the work, which he does in some instances. My major concern, however, is the one related to Makita and I don't want to be saying that I'm slavishly following Makita because I wouldn't and don't, but the fact that an expert says "Trust me, I know the answer and I'm right because I've got a lot of experience" is really not good enough in this type of proceeding where the whole matter before me is one of quantum and relates primarily to rates and costs appropriate for rectification work.

Very reluctantly, unless either party wishes to – and I'd like to give Mr Grieve the opportunity, if he wishes, to re-examination or to indeed tease out the costing experience which Mr Palmer may have, if he so wishes - I'm going to reject the application at the moment but I will leave it open to you, Mr Kerr, after Mr Grieve has had the opportunity, if he's able to address the problem, to make the application again.”

33 Supplementary examination of Mr Palmer then took place with a view to the plaintiff establishing Mr Palmer’s expert credentials to make cost estimates for repairing defective work.

34 Immediately thereafter (at the end of the third day) counsel for the defendants renewed the application that the Palmer Report be rejected on the basis that the Referee had not been provided “with any probative advice at all”. The Referee then made the following ruling:

“I made my views clear on Mr Palmer's report a short while ago. I've not been persuaded by anything I've heard since that there is material within the report which is of considerable use to me in determining what I have to in relation to quantum. I am not assisted, or have not been assisted, by the answers in cross-examination, particularly those where Mr Palmer has said that in putting things down in spreadsheets he has relied on his experience. I would have expected a costing expert to have been able to provide more detailed explanation in relation to the assumptions which had been made and the manner in which those were articulated in the report to be of some further assistance to me than what I find in the spreadsheets.

I have no confidence in the figures which are contained in the spreadsheets and despite them having the appearance of being a competent estimate, I reluctantly am left with no other option, I don't think, than to reject the report. (emphasis added)

If there's nothing further, we will adjourn to tomorrow morning to give the parties time to think about that.”

35 The following morning (that is on commencement of the fourth day) counsel for the plaintiff made an application that the matter be adjourned sine die. He put the following:

“…obviously enough, we have no further expert evidence on the subject of quantum in view of the ruling relating to Mr Palmer's evidence. There are two possibilities as to the future. One is that we proceed down essentially the same course of attempting to demonstrate quantum by way of expert evidence as to the probable cost of rectification.

The second course is that the owner's corporation make arrangements to borrow the necessary funds to go out to the market to obtain contracts for the carrying out of the work, in which event the necessity for any further hearings to determine quantum against expert evidence would not arise because we would simply be asserting that the plaintiff's damages are the sum total of the contract sum or sums, as the case may be.

Which of the two courses of action are to be followed is a matter that obviously is going to require some consideration and it's also going to require consideration, as we apprehend it, not merely by the executive committee but by the owner's in general meeting, having regard to the implications of the two courses.

A meet (sic) general meeting of the owners is to take place presently on 27 July, although that may slip by a day or so but that won't be of any moment. Which of the two courses of action is to be pursued will almost certainly be resolved then. Inquiries as to the availability of the necessary funds and so forth will be set in train between now and then. I should say that there have been some inquiries already made along those lines, so it's not as though they're proceeding from a stand-up start.

If the proprietors decide to take the course of going out to tender and demonstrating their damages in that method, then it's anticipated that that process, ie arranging the necessary finance and then going to tender and going through all the processes that are invariably involved in that, will take somewhere between three and four months and if that alternative is pursued, it may not, with respect, be necessary to trouble you any further, Mr Referee, in the sense that it may be that the court will be prepared to deal with an application for judgment in the contract sum without any further ado.

On the other hand, if our client elects to go down the valuation track, if I can so describe it, then the time involved, having regard to past experience, will probably be of a similar dimension, in any event. It may well be necessary for us to have a debate with our friend before the court about that. They may well wish to oppose any further pursuit of that alternative. It is in those circumstances that we make the application that we do here and now.

May I just add this by way of respectful submission: in anticipation that the adjournment may be the subject of opposition, you have found that the building is defective in a number of very substantial respects. You have found that the defects were the result of a breach of the home owner's warranty implied in the building contract.

There is, therefore, some sum of money and, on any view, a substantial sum of money, ultimately payable by the defendant company to the plaintiff. No-one could sensibly deny that proposition. It would therefore be inopportune for our friend to say "Aha, Mr Referee, the plaintiffs bear the burden of proof, they haven't discharged it, so you should recommend to the court that there be a judgment for the defendants". That, if I may say so, with respect, would make a mockery of the whole process and, indeed, it's not a course, if I may say so, that would realistically be open to you, since as a Referee you would be entitled to bring your own expertise to bear and find a figure. You could not, if I may say so, in conscience say "I recommend to the court that the damages payable by the defendant to the plaintiff be assessed at nil". Plainly, in light of the findings that you've made, you couldn't do that and yet we would not, for our part, be so bold as to invite you to assume a burden of working it out for yourself without the assistance of any evidence.

So, in those circumstances, we submit that it is inevitable the matter must be adjourned to await the plaintiff's election, as it were, between the two obviously available courses of action that are open. That's all wish to say at this stage, Mr Referee.”

36 The adjournment application was opposed and the Referee refused it.

37 The defendants determined not to seek to rely on the Gavahan Report in the quantum hearing.

38 The parties immediately proceeded to submissions.

39 The Referee delivered the Report on 3 August 2009.

40 In it he devoted a section to the exclusion of the Palmer Report. Paragraph 89 of the Report is as follows:

“I have rejected the Palmer Report on the basis that there was no admissible material within it upon which I could form an opinion on the reasonable cost of undertaking the rectification work. If I am wrong on that and the report is admissible, I have exercised the discretion available to me (including, for example, under s. 135c of the Evidence Act) to exclude the report because, in my opinion, it does not meet the minimum requirements of an expert report in so far as the reasoning process leading to the formation of the opinions expressed has not been exposed and that the “assumed facts” on which much of the opinion has been based have not been proved.”

41 In a section headed “Other Quantum Evidence” the Referee reported as follows:

“Following rejection of the Palmer Report, Counsel for the Plaintiff advised that it had no further evidence to offer the reference. In the absence of any evidence on quantum, there was nothing to assist me in determining the reasonable cost of the contested items of rectification work.

Counsel for the Plaintiff [T243.13] invited me to bring my expertise to bear and find some reasonable and appropriate figure for each of those items. He listed those items and noted that further allowance should also be made for preliminaries, project management and consulting fees.

Counsel for the Defendants [T244.16] submitted that I should not proceed in that manner as I do not have any evidence on which to form an opinion on those items and the manner in which the damages should be determined. Furthermore, I was not appointed by the Court to undertake the task.

I have accepted the submissions on behalf of the Defendants as an accurate summary of the position. I am, accordingly, unable to complete the assessment of quantum because the Plaintiff has not provided evidence on those items on which a recommendation to the Court could be based. I have concluded that I have not been ordered to conduct an enquiry on any other basis.

Counsel for the parties advised me that agreement had been reached on the quantum of damages for several of the items requiring rectification. Those agreements are as follows:

· Car park level louvres $628,550.00 ;

· Façade spalling $ 18,200.00 ;

· Cleaning of sliding windows $ 9,984.00 ;

· Car park floor cracking $ 30,883.00 ;

· Building air pressurization $ 99,465.00 ; and

· External tiling $ 32,031.00 ;

I have noted that the documents on which the agreed amounts appear to have been based exclude any allowance for GST.

The total amount is $819,113.00 excluding GST.”

THE PRESENT APPLICATIONS

42 On the motions Mr Grieve QC together with Mr Hicks of counsel appeared for the plaintiff and Mr Kerr SC, together with Ms Muir of counsel, appeared for the defendants.

43 Written submissions were received from both parties in advance of the hearing and additional “Notes of Argument” were handed up by Mr Grieve. The parties’ submissions were refined during oral argument which took an entire day.

The plaintiff’s submissions

44 Initially, the plaintiff’s submissions were directed to the following propositions:

a firstly, that the Report is not a report within the meaning of UCPR r 20.23 because the Referee did not complete the assessment of quantum, and that he should have, even without any evidence from the plaintiff, assessed quantum by applying his own expertise; and

b secondly, that the Referee excluded the Palmer Report (and Mr Palmer’s evidence) by wrongly applying “the Makita principle”, and by wrongly conflating admissibility with weight or probative value, as a consequence of which the plaintiff had in effect been denied a hearing on quantum.

45 The reference to the “Makita principle” is a reference to what was said in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 in particular by Heydon JA at 729, that a prime duty of experts in giving opinion evidence is to furnish the trier of fact with criteria enabling evaluation of the validity of the expert’s conclusions. The proposition put was that the principle was wrongly applied by the Referee because strict rules of evidence did not apply to the reference.

46 The first submission was abandoned at an early stage of the argument, then re-enlivened and then (as I understood it) abandoned once more. The submission is untenable and if it was abandoned, it was correctly abandoned.

47 It was not incumbent on the Referee, even if he is an expert construction engineer, to pluck a figure out of the air for quantum in the absence of any evidence from the plaintiff, irrespective of whether strict rules of evidence applied. The Court had given directions for the service of evidence for the purposes of the Referee reporting on quantum.

48 The quantum hearing was conducted on the basis that evidence was to be adduced to enable the Referee to assess the plaintiff’s damages.

49 As part of that process, which was undoubtedly adversarial, the plaintiff itself successfully moved the Court to exclude the Newsom affidavit upon which the defendants intended to rely.

50 It was incumbent on the plaintiff, which carried the onus of establishing the extent of damage suffered as a result of the defendants’ breach of contract, to adduce evidence which enabled a rational assessment of that damage to be made by the Referee (see for example Troulis v Vamvoukakis [1998] NSWCA 237 at [29] per Gleeson CJ). The Palmer Report did not enable such an assessment and the referee was correct to reject it.

51 The result of the Referee’s ruling was that there was no admissible evidence before him on quantum. The logical (and unsustainable) conclusion of the plaintiff’s submission would be that it would have been open to it to choose to lead no evidence at all and then to put it on the Referee to take steps in some fashion or other to be able to make an assessment.

52 Further, at the end of his inquiry, it was open to the Referee to report, as he in effect did, that the plaintiff had not established damage arising from the remaining defects.

53 The second submission was either abandoned or entirely undermined by an express concession by the plaintiff’s counsel that there would be no utility in a further hearing either by the Referee or by the Court even if the rejected the Palmer Report was now to be admitted, because that evidence does not enable the making of a rational assessment of damages in respect of the remaining defects.

54 The concession correctly acknowledges that the Palmer Report provided no basis upon which the Referee could evaluate its validity.

55 A faint submission was put that the defendants had made some admissions in written submissions put to the Referee which might amount to evidence of damage. This was not pressed in that it was accepted that the Court could not now fix damages on the material before it.

56 Ultimately the plaintiff’s position distilled into the submission that it should now be afforded, and presumably that the Referee should have adjourned sine die to allow it to have, a further opportunity to reconfigure or reframe its evidence and then to have a further hearing (or perhaps more correctly a re-hearing) to enable it to establish its damages.

57 It was put that at such a further hearing the plaintiff’s primary objective would be to seek to quantify its damage in a different way, namely by adducing evidence that it had obtained and accepted a competitive arms length quotation from a construction company to rectify the remaining defects, which would be an easier way of establishing its damages. It was put that if this was not allowed, it would seek to adduce admissible evidence attempting to quantify its damages by estimation using the same type of approach that Mr Palmer had taken.

58 The plaintiff relied on an affidavit sworn 1 October 2009 by its solicitor Ms Beth McIntyre (“the McIntyre affidavit”) who deposed as follows:

“Further Conduct of the Matter
11. The plaintiff has called for competitive tenders from three reputable construction companies for the rectification works that were not the subject of agreement as to quantum. Those companies are:
(a) RM Watson Pty Ltd;
(b) Structural Systems (Remedial) Pty Ltd; and
(c) Buildcorp Asset Solutions Pty Ltd.
12. The plaintiff has convened an extraordinary general meeting for 7 October 2009 and expects to receive approval to enter into a contract with the successful tenderer by 21 October 2009.
13. The plaintiff anticipates that it will be in a position to serve the executed contract on the defendants by 23 October 2009 and, allowing several weeks for the defendants to consider the evidence, the matter could be the subject of a one day hearing before the end of term.”

59 No authority in support of the plaintiff’s position was cited. It was put that although the plaintiff could have elected (which it did not) to present to the Referee both Mr Palmer and in the alternative a contract for the performance of the work to establish its damage, it is now the “supplementary course” which it desires to take, and that if denied that opportunity “manifest injustice will be placed on it” given that rectification of the remaining defects undeniably involves expense which is not nominal.

The defendants’ submissions

60 The defendants put that the Report should be adopted and the plaintiff should not be afforded the further hearing it seeks because:

a the plaintiff not only had a full opportunity to run its case but had received a number of indulgences from the Court with respect to putting on its quantum evidence;

b the position in which the plaintiff had found itself was a consequence of forensic decisions deliberately taken by it;

c to do so would be to permit the plaintiff to adopt a course where it can seek to exclude the defendants’ evidence on a final basis, but can have as many turns as it wishes to lead its own evidence;

d the plaintiff should not now be entitled to promote an entirely new case on damages;

e the plaintiff was approaching the matter “as some kind of warm-up for the real contest, contrary to the authorities”;

f to do so would redound to the significant prejudice of the defendants which will not be assuaged by an order for costs; and

g to afford the plaintiff the opportunity it seeks would not serve the overriding purpose of the Civil Procedure Act 2005 (NSW) and the Rules of Court which is to facilitate the just, quick and cheap disposition of the real issues in the proceedings.

61 The defendants relied on an affidavit by their solicitor Mr Peter Thomas Pether sworn 23 September 2009 in which he deposed as follows:

“…the Defendants have incurred considerable costs and lost irrecoverable management time in dealing with the Plaintiff’s quantum evidence; obtaining their quantum evidence in response; preparing for the reference hearing on quantum, together with the costs of the reference including fees for the Referee, venue hire and transcription service. These costs will be entirely wasted if the Plaintiff is permitted to adduce new evidence on quantum. No costs order will compensate the Defendants for the full extent of these wasted costs or its lost management time. The Defendants should not have to run the quantum case twice in my opinion.”

62 Mr Pether also deposed to the fact that he thought it inevitable that the tenders Mr Gavahan relied on were obtained in February and March 2009 and would now be out of date.

CONSIDERATION

63 Sections 56(1) and (2) of the Civil Procedure Act 2005 (NSW) (“the Act”) provides as follows:

(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

64 For the reasons set out below I have concluded that the plaintiff should not be given the further opportunity it seeks to motivate its case on quantum whether by taking its proposed new approach or by adducing admissible evidence of the type which it proposed to adduce in the Palmer Report, and that the Referee’s refusal on 16 July 2009 of the sine die adjournment application was justified.

65 In my view to accede to the plaintiff’s application would be inimical to the just, quick and cheap disposition of the real issues in the proceedings.

66 The proceedings have been on foot since 2006. The dispute is a commercial one of significant dimensions. The plaintiff had ample opportunity, and received multiple indulgences from the Court, to place before the Referee such evidence as it desired. The plaintiff had the benefit of significant legal resources to do so. It was permitted to seek to adduce the Palmer Report even though it was served after the deadline imposed in the Court’s orders of 14 November 2008. It had a right to be heard and it was heard. It does not have a right to be heard twice; see Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902 at [12] and [13]; Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 at 563 and 567.

67 Deliberate decisions were taken by the plaintiff to present its evidence on quantum in the form of the Palmer Report and not to adopt the new approach foreshadowed in its solicitors affidavit. It took no steps to cure the deficiencies in the Palmer Report before the quantum hearing. Nothing prevented it from taking the proposed new approach at any time. There was no evidence from the plaintiff or any submission that the course which it took resulted from some type of mistake. These are factors which weigh against the plaintiff; see for example in the context of an application to re-open (which is not unlike the present application) Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471 at 476 and 478 and Joyce v GIO (Supreme Court of New South Wales, Sheppard J, 21 July 1976, unreported).

68 Correspondingly, a deliberate decision was taken by the defendants not to motivate the Gavahan Report.

69 The plaintiff accepted that the position in which it now finds itself is due entirely to its own actions and is in no way attributable to any fault on the part of the defendants and during submissions proffered to pay the defendants’ costs on an indemnity basis incurred to date with respect to the quantum issues.

70 If the plaintiff were permitted to take either of the courses it now desires, the defendants would certainly be subjected to additional costs not covered by the plaintiff’s offer to pay the costs to date. If evidence in the nature of the Palmer Report were to be adduced the plaintiff might well determine to rely on evidence in the nature of the Gavahan report which would need to be updated. If the plaintiff’s new approach were adopted it is probable that the defendants would need to respond with expert or other evidence.

71 The offer of indemnity costs will not compensate the defendants for its lost management time and the prejudice of having, in effect, to run the quantum case twice.

72 There will, if the course proposed by the plaintiff is taken, be delay of uncertain duration in the resolution of a commercial dispute in which it is important, relevantly, for the defendant to know, as soon as possible, what it has to pay: Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27 at [137].

73 As early as the fourth day of the quantum hearing submissions were made that a general meeting of the plaintiff was to take place on 27 July 2009 when the course which the plaintiff intended to adopt was “almost certainly” to be resolved. However, according to the McIntyre affidavit the plaintiff now anticipates being in the position to serve an executed contract by 23 October 2009 and, allowing several weeks for the defendants to consider the evidence, the matter could be the subject of a one day hearing before the end of term. These are not realistic expectations in my view. These proceedings have been hotly contested. They will not be able to be heard before the end of the term 2009 and the estimation of one day is to my mind a significant underestimation.

74 I am mindful of the fact that the remaining defects have been established and damage with respect to them has been suffered.

75 But justice does not dictate, in the circumstances of this case, that the plaintiff be given a second opportunity to bring either a new case on damages or to re-motivate its old one.

CONCLUSION

76 There will be orders as follows:

a pursuant to UCPR r 20.24 the reports of Mr Barry Tozer dated 12 November 2007, 17 December 2007 (with the exception of paragraphs 80 to 83), 5 April 2008 and 3 August 2009 are adopted;

b judgment for the plaintiff for $819,113; and

c the plaintiff’s motion dated 21 August 2009 is otherwise dismissed.

77 I will hear the parties on any further issues, including costs, that remain to be determined in order to bring these proceedings to finality.

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