Yahome Pty Ltd v Delic

[2013] VSC 52

Do Not Send for Reporting
IN THE SUPREME COURT OF VICTORIA		Not Restricted

AT MELBOURNE

JUDICIAL REVIEW AND APPEALS LIST

S CI 2012 3756

YAHOME PTY LTD (ACN 123 170 703)	Plaintiff
v
ROSE DELIC and  OTHERS	Defendants

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JUDGE:	DALY AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	15 October 2012
DATE OF JUDGMENT:	28 February 2013
CASE MAY BE CITED AS:	Yahome Pty Ltd v Delic
MEDIUM NEUTRAL CITATION:	[2013] VSC 52

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JUDGMENT

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APPEAL from Victorian Civil and Administrative Tribunal – Procedural fairness – Refusal to grant an adjournment – AON Risk Services Pty Ltd v Australian National University (2009) 239 CLR 175 applied – Tribunal’s duty to self represented litigants – Duty of Tribunal to arrange interpreters and expert witnesses – Application for leave to appeal and appeal dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms H.J.E. Van den Heuvel	Ferraro & Company Pty Ltd
For the Defendants	Mr A.P. Dickenson	Johnston Construction Lawyers

HER HONOUR:

1. Yahome Pty Ltd (“Yahome”) is a company engaged in construction of new residential developments.  The principal of Yahome is Mr Xiaoy Lin (“Mr Lin”).  Ms Rose Delic, Mr Thanh Huynh and Ms Kristine Caberoy (“purchasers”) are the owners of three townhouses constructed by Yahome in Burnside Heights.  The three townhouses were part of a group of eight constructed by Yahome under eight separate building contracts with Ms Linh Thuy Nguyen (“vendor”).  The purchasers entered into “off the plan” sales contracts with the vendor while the townhouses were under construction. 

1. Upon or shortly prior to the settlement, each of the purchasers complained to the vendor (either directly or through the vendor’s agent) regarding the state of the townhouses, and apparent defects that had not been rectified by Yahome.  Further, upon taking possession of the townhouses, each of the purchasers became aware of other defects in the townhouses.  Communications between the purchasers, the vendor, and Yahome did not resolve the purchasers’ grievances.  Ultimately, the purchasers commenced a proceeding in the Victorian Civil and Administrative Tribunal (“VCAT”),[1] from which this appeal is brought.[2]  In January 2012 they engaged a solicitor, Johnston Construction Lawyers.  Ferraro & Co had already been engaged to act on behalf of Yahome.

   [1]Proceeding No. D672/2011.

   [2]By reason of the orders of Mukhtar AsJ on 25 July 2012, Yahome’s application for leave to appeal was referred to be heard together with the appeal.

1. In the VCAT proceeding, the purchasers claimed damages from Yahome for the cost of the rectification of the alleged defective works (“defects”), and consequential losses said to arise out of the need to rectify the defects, such as the cost of alternative accommodation, and the cost of the removal and storage of furniture.  They relied upon building inspection reports and expert evidence regarding the cost of rectification from two building consultants.  In its defence in the VCAT proceeding, Yahome did not expressly deny the existence of the defects.  It did not file any expert evidence within the time provided for by orders made at a directions hearing in March 2012, or at all.  Rather, it defended the claim on the basis that Yahome had no liability for any defects because it had previously entered into a settlement agreement with the vendor (“settlement”), under which it had been given a release in respect of all defective works, save and except for any latent structural defects. 

1. At the conclusion of the proceeding, the Tribunal found that Yahome was liable to pay the three purchasers the total of $685,418 by way of compensation for the defects.  The Senior Member rejected Yahome’s defence that its liability for the defects had been compromised by the settlement.  Yahome has applied for leave to appeal from the orders made by the Senior Member in favour of the purchasers.  As the application for leave to appeal is substantially grounded upon claims that the Senior Member, by his rulings and conduct, failed to afford Yahome natural justice, it is necessary to recount in some detail the events leading up to the hearing and what transpired during the hearing itself, in some detail. 

1. The VCAT proceeding was originally set down for hearing on 20 March 2012.  However, on 6 March 2012, Ms Johnston received a letter from Ferraro & Co requesting that the purchasers consent to an adjournment, on the basis that Yahome:

does not have financial capacity to proceed with this matter at this point in time,

and that Yahome

does not have financial capacity to obtain the expert reports for this matter nor is it able to afford to have legal representation in the conduct of this matter.

1. Following further correspondence between the solicitors for the parties, on 15 March 2012 VCAT made consent orders “on the papers”, in the following terms:

1.The time for filing and serving [the purchasers’] expert reports is  extended to 16 March 2012.

2.The time for filing and serving of [Yahome’s] expert report is extended to 23 April 2012.

3.The hearing is adjourned to a date not before 30 April 2012.

1. Ultimately, VCAT listed the hearing of the proceeding for two days commencing on 3 May 2012.  The purchasers in fact filed their expert evidence regarding the costs of rectification of the defects on 20 April 2012.  The building inspection reports upon which the costings were based had been provided to Ferraro & Co in two tranches between 9 and 15 February 2012.

1. On 26 April 2012, that is, some four business days before the scheduled commencement of the hearing, Ms Johnston received a Notice of Ceasing to Act from Ferraro & Co.  On 1 May 2012, she received a further letter from Ferraro & Co,[3] which stated, among other things, as follows:

We are instructed that [Yahome] will be seeking an adjournment of the matter on that day and requests for the [purchasers’] consent to the same.  We are further instructed that [Yahome] is not in a financial position to proceed with the hearing at this stage but is endeavouring to obtain funding for the conduct of the matter.  We will provide further details as soon as we are in receipt of same from [Yahome].  We expect to have further information on this matter tomorrow.

[3]Exhibit “JJ-13” to the affidavit of Jillian Johnston sworn 23 July 2012.

1. On the following day, 2 May 2012, Ms Johnston responded as follows:

Can you confirm whether you are now acting for the Respondent?

Since you advised you were no longer acting in the matter, we have been serving documents direct on the Respondent.

Our clients will be seeking the matter proceed tomorrow.

1. Later that day, Ferraro & Co responded, as follows:

Please note that our instructions are limited to seeking an adjournment and we do not have an instructions to otherwise act for [Yahome].  We may or may not receive instructions to appear at tomorrow’s hearing to seek adjournment [sic].

1. At the commencement of the hearing of the proceeding on 3 March 2012, before Senior Member Riegler (“Senior Member”), there was no appearance on behalf of Yahome.  The hearing proceeded.  While Ms Delic, one of the purchasers, was being taken through her evidence by Ms Johnston, Ms Susan Song, an employee of Yahome, arrived at the hearing room.  The Senior Member asked:

Ms Song, you are here as a director of the company?

In response, the transcript records the following:

My boss (indistinct) late so I need to come.

1. The Senior Member then provided Ms Song with a brief explanation as to what had taken place to date, stood the matter down for a short time to enable Ms Song to read Ms Delic’s witness statement, and explained to Ms Song that she could ask Ms Delic any questions at the conclusion of the evidence.  At one stage while Ms Delic was giving her evidence, a man who described himself as Yahome’s maintenance manager arrived at the hearing room.  After Ms Delic concluded her evidence‑in‑chief, Ms Song asked her two or three questions about the installation of a TV antenna.

1. Ms Caberoy, another purchaser, then gave evidence.  Ms Song did not ask her any questions.  After Ms Caberoy gave her evidence, the Senior Member asked Ms Song whether Yahome proposed to call any evidence.  Ms Song’s response was inaudible, but it was apparent to the Senior Member that Yahome did not propose to call any evidence. 

1. Mr Huynh, the third purchaser, had almost completed giving his evidence‑in‑chief when the director of Yahome, Mr Lin, arrived in the hearing room.  Approximately two hours had elapsed since the commencement of the hearing.  After Mr Huynh finished his evidence‑in‑chief, the Senior Member asked Mr Lin whether he wished to ask Mr Huynh any questions.  Mr Lin then made an oral application for an adjournment, on the basis that Yahome did not have sufficient funds to instruct solicitors and brief counsel to represent Yahome, or to obtain an expert report, despite expecting that Yahome would receive sufficient funds in February.   Mr Lin said that Yahome did not have sufficient funds to pay its solicitors to attend that day’s hearing to seek an adjournment, He said:[4]

   [4]Transcript 30, lines 7-16.

The thing is because we – like, I haven’t paid me for – since February, we’re waiting for $175 to do my report and I also need to - $50,000 to get my solicitor and barrister to represent myself in here.  We are not expert to represent in court at the moment.  We come against the applicant because we do know the lawyer, and there we send a letter to the other side for the adjournment on Monday.  We need opportunity to ask for my – for to represent myself, my solicitor and barrister.  I need my report to present evidence as well.

Following this statement, there was a lengthy exchange between the Senior Member, Mr Lin and Ms Johnston:[5]

[5]Transcript 30 to 37.

SENIOR MEMBER:

We are now substantially part way through this proceeding.

MR LIN:

I understand, sir.

SENIOR MEMBER:

The company Yahome Pty Ltd has appeared here this morning for the first two hours without raising any suggestion of this matter being adjourned, and now you say partway through you want an adjournment because of what – because you say that you don’t have the finances to engage counsel, correct?

MR LIN:

That’s right.  Actually, we send a letter to them on Monday already.  But even the solicitor no money to pay, then they no come here as well today – even the solicitor, only can – a thousand dollars – rely on everything.

SENIOR MEMBER:

Do you have a copy of that letter?

MR LIN:

I don’t have it with me.  The email ask me to come in the morning but I run into some other thing, appointment, so that’s why only soon as I can in the morning.

SENIOR MEMBER:

Who did you send the letter to?

MR LIN:

My solicitor send it their solicitor.

SENIOR MEMBER:

Let me understand this correctly.  The basis for the adjournment is that you say that you don’t have sufficient funds to be able to defend the matter at this time.

MR LIN:

That’s right.

SENIOR MEMBER:

That’s the sole basis for the - - -

MR LIN:

That’s right, and then the money expect coming on February and it didn’t come, so we could not organise my expert to get a report to defend myself, and also not money to pay the solicitor and the barrister to come as well.  I appreciate another adjournment already, but there is no money – money still not coming.  That’s the problem. 

SENIOR MEMBER:

Let me hear from Ms Johnston.

MS JOHNSTON:

Sir, this matter has already been adjourned once on the basis that the builder could not afford to mount a defence and I will have to get the correspondence, sir; and then the Tribunal wrote and said that there would be no further adjournment in effect after we had consented to the one adjournment on the basis of the builder not having finances.

SENIOR MEMBER:

Anything further?

MS JOHNSTON:

Sir, I would need to stand down for a moment.

SENIOR MEMBER:

What do you say about this correspondence?

MS JOHNSTON:

The correspondence said that – I will have to check it but it basically said, “We will be seeking an adjournment but we don’t know if we will be there or we won’t be.”  That was their solicitor.  When I asked whether they were acting they said their instructions were very limited.  I can hand you up a copy of those letters, sir.

We wrote back and said that we would not be consenting to any adjournment.  There was a letter – sir, I would have to have a look at it, said something to the effect that they would provide us with further information I think by about Tuesday, Wednesday, and we didn’t receive anything else.

SENIOR MEMBER:

Anything further you want to say in response to that, Mr Lin?

MR LIN:

Because actually we – with another lawyer we now going to build the house then – and then.

SENIOR MEMBER:

I beg your pardon, sir?

MR LIN:

We do another lawyer and so to present this case then we have not commence in a court.  I have to ask my solicitor, pay for the money – pay the money to pay the solicitor and my barrister, and also my expert to have everything done and come to and represent myself in the future.

SENIOR MEMBER:

You’re not a party to this proceeding.  It’s the company which is the respondent.

MR LIN:

Yes.

SENIOR MEMBER:

Do you understand that?

MR LIN:

No, cannot understand.  (indistinct).

SENIOR MEMBER:

The respondent is Yahome Pty Ltd.  It’s a company, not you.

MR LIN:

Yes.

SENIOR MEMBER:

You are a director of the company.

MR LIN:

I am director, yes, yes.

SENIOR MEMBER:

But it’s the company which is the respondent.

MR LIN:

Yes.

SENIOR MEMBER:

Are you saying that the company does not have the funds to be able to defend the action?

MR LIN:

At the moment, even myself, we’re out of all the cash at the moment – haven’t paid my salaries for two or three months already.

SENIOR MEMBER:

Why were you not here at the beginning of this hearing this morning?

MR LIN:

The solicitor asked me to come.

SENIOR MEMBER:

Why did you not turn up at ten o’clock when this matter was listed for hearing?

MR LIN:

I got the message at nine o’clock, something, already because no money to pay solicitor and he didn’t come, and asked me to come.  That’s why we were delayed, and when we knew it and it’s late already.  I got a message – he send the message to me about nine o’clock roughly but I checked message at ten past nine.  I got in here and called all – everybody coming, because I’m waiting for someone else at the moment, I can’t get it back to here straightaway and asked – ask solicitor and tell him to come to support (indistinct) – that’s why, because I haven’t got the money to pay my solicitor he no come.

SENIOR MEMBER:

Because no application was made this morning when this - - -

MR LIN:

And when I knew that it ‘s late already.

SENIOR MEMBER:

There was no application made to adjourn.

MR LIN:

That’s right, that’s right.

MS JOHNSTON:

Sir, his copy of the Tribunal of 15 March says,
“The Tribunal orders there will be no further adjournments of the hearing other than in exceptional circumstances.”

SENIOR MEMBER:

I do not consider that that order confined my discretion in terms of whether or not there ought to be an adjournment of this matter.

MR LIN:

Something is very wrong because the post payment is one take three months to pay us.  They normally take two weeks to pay, and this time we couldn’t have had anything from them.

SENIOR MEMBER:

I will just stand the matter down and have a think about this.

(Short adjournment.)

SENIOR MEMBER:

I may hand down my ruling on your application for an adjournment Mr Lin.  Is there anything you want to say before I hand down that ruling?  Anything else that you want to say before I hand down my ruling?

MR LIN:

Because I don’t quite understand all of the processes everything I hand it to my solicitor - - -

SENIOR MEMBER:

Yes.

MR LIN:

- - - and then she didn’t come in the morning and send a message to me and that’s the only thing I understand say.  I can tell them.  Because actually we need the opportunity for myself to pay my professional, my lawyer and then also the professional inspector to give (indistinct) myself in the future.  And then also this time the money coming for sure because my client tells me the money coming Friday or next Monday or next Tuesday so we can organise straight away after for that inspector, and then we’ve got her in for that, then they’ve got everything else to represent in the court in future (indistinct) myself.  That’s the only thing.

SENIOR MEMBER:

Yes.  Ms Johnston?  Anything you want to say before I hand down my ruling?

MS JOHNSTON:

Yes.  Yes, sir.  The respondent has been saying since 2010, in fact since the houses were completed, that he didn’t have the money to fix or complete.  On those circumstances he blamed the vendor of the dwellings.  We then have at the mediation it was the same - - -

SENIOR MEMBER:

Well, I don’t want to hear about that.

MS JOHNSTON:

I won’t say anything about what’s at the mediation so I’ll stop there.  On 6 March there was a letter from his solicitor saying, “We’ve been instructed to urgently seek an adjournment of the matter on the basis that our client does not have financial capacity to proceed in this matter.  Our client had previously received a loan offer which would have funded the costs of this proceeding which was then withdrawn.  We are instructed our client does not have financial capacity to obtain the expert reports nor is it able to afford to have legal representation.”

This proceeding has been on foot since 2011.  At no time has there been any attempt to obtain any expert report.  No attempt to come out and have a look at and respond to the report and the first report was provided, there was an A Plus report which we don’t rely on in this proceeding, but was provided in August 2010, and not once since this time has the builder engaged an expert.

And then the last letter in relation to what may or may not be happening today was on 1 May.  It says, “We are instructed the respondent will be seeking an adjournment.”  Requested our consent.  “We are further instructed that the respondent’s not in a financial position to proceed.  We will provide further details as soon as we are in receipt of same from the respondent.  We expect to have further information on this matter tomorrow.”  That was on 1 May and then a response to a letter from me asking them were they acting and advising that we would seek that the matter proceed.

Then I had a further letter from them saying, “Our instructions are limited to seeking an adjournment and we do not have any instructions to otherwise act for the respondent.  We may or may not receive instructions to appear at tomorrow’s hearing to seek an adjournment.”  So this builder has had plenty of time.  (Indistinct) was at 2010, there’s been no attempt to obtain any report by anybody.  There has been no affidavit material.

What you’ve heard this morning, with respect, has been from the Bar table.  There’s been no examination under oath of what the builder alleges is the situation.  There has been no further information provided as we were promised by the solicitor and our client – it’s been the subject of one cancelled mediation, one previous adjournment which we consented to on the basis that it would be a very short adjournment.

We are here today, we have started the proceeding, my clients have taken time off work.  We have done everything we should do, we have engaged the expert and two and a half hours after we were part way through hearing the Director decides that he will attend and make an application for adjournment so we strongly request that the matter proceed.

SENIOR MEMBER:

Anything further, Mr Lin?

MR LIN:

Actually for this job only my boys come all the time, not when buildings in together with the husband.  In fact everything, we always come back and fix everything and then - - -

SENIOR MEMBER:

Just to deal with this adjournment.

MR LIN:

This adjournment I can’t do any – I can’t say anything then.

1. The Senior Member’s ruling on Yahome’s application for an adjournment, given the centrality of this issue to this appeal, is reproduced in full below:[6]

   [6]Transcript 38-41.

This hearing did commence at 10 o’clock this morning and initially there was no appearance at all by the respondent company.  At about 10.20 a.m. Ms Song, the general manager of the respondent company appeared on behalf of the respondent.  She sought leave to represent the respondent company and that leave was granted.  The matter then proceeded with all of the lay witnesses having given their evidence and indeed there being some very limited cross‑examination of those witnesses by Ms Song.

I asked Ms Song during the course of the morning whether the respondent intended to call any witnesses including any expert witnesses and she said no, that there was no intention by the respondent to call any witnesses at all and that position seems to be consistent with the defence filed by the respondent’s former solicitors because the defence of the respondent which is dated 21 December 2011 does not really respond to any of the allegations of defective work but simply takes what is essentially a legal point and says that there is no cause of action available to any of the applicants because their claims were compromised by reason of some agreement entered into between the respondent company and the previous owner being the vendor of the sale contracts.

The matter was stood down at about 11.45 this morning to allow the applicants to re‑organise their papers and expert witnesses and when the matter resumed at about 12 pm Mr Lin who is a director of the company appeared and really took over as advocate for the respondent company.  It was really at that time, that was the first occasion when an application for an adjournment was made before the Tribunal.

The only ground raised by the respondent company is that it does not have sufficient funds to engage a professional advocate or to engage an expert to respond to the matters raised in the expert reports prepared and filed by the applicants.

According to Mr Lin the respondent’s former solicitors wrote to the applicant’s solicitor on Monday last, putting the applicants on notice that an adjournment would be sought and that seems to be confirmed by Ms Johnston who acts on behalf of the applicants.  However, Ms Johnston points out correctly I think that there is no evidence at all that has been forward in substantiation of the contentions made by Mr Lin.  There are no affidavits which were filed in support of the application, there are no affidavits to say that the company does not have the financial means to be able to engage experts, nothing.  All that I have got is contentions coming from the Bar table.  There is no correspondence that I saw on the Tribunal file which corroborates what Mr Lin says, despite the fact that this proceeding has been on foot since I think August 2011.

Orders were made back in November 2011 requiring the parties to file and serve expert reports and in the case of the respondent it was required to file expert reports by 7 March 2012.  At that time also this matter was listed for hearing commencing on 20 March 2012.  That did not happen, obviously, but further orders were made and they were made by consent which then extended the date by which the respondent was to file and serve its expert reports to 23 April 2012.  No expert reports were ever filed.  Again that seems to be consistent with the defence which has been made by the respondent.  In addition on that day the hearing date of the 23 March was vacated and it was re‑listed to commence today.

I accept as being trite that procedural fairness requires a party to be permitted to adduce evidence in defence of a claim that is being made against it, no question, and adjournments are often granted in this Tribunal where it is clear that a party would suffer significant prejudice if it did not have the opportunity to present the evidence and for whatever reason it was not able to do so, however looking at and determining those applications for adjournments, the Tribunal must also look at any prejudice that is being suffered by the other parties so in a sense it becomes a weighing of the two prejudices, the prejudice suffered on the one hand by the applicants in not being able to prosecute their case on the day that has been listed, and any prejudice that has been suffered by other parties, in this case the respondent, not having an opportunity to call further evidence.

In addition to that I also note that case management principles because the Tribunal is a Tribunal which prides itself on being able to give parties a start date for a hearing and it can only do that because matters when they are listed to commence, commence on that day.  If they are adjourned off or if they are not reached then it puts the whole system in a lot of difficulty.  It is a factor which I take into consideration in exercising my discretion, but more importantly in the present case I simply do not accept the submissions which have been made by Mr Lin.  As I indicate, the submissions are not supported by any evidence, by any corroborating document as to what he says is the current financial position of the company.

I do not accept the proposition that the company, the respondent company does not have sufficient funds available to it to properly defend the case against it.  In my view the failure to defend this matter on the basis of expert reports is really a choice taken by the company some time back. For that reason this application is refused.

1. After the Senior Member’s ruling, and the luncheon adjournment, the purchasers called their expert witness, Mr Croucher, who gave evidence regarding the costs of rectifying the defective works.  Mr Lin complained again about not having funds to engage a solicitor.  When queried by the Senior Member as to whether he had received copies of the building inspection reports relied upon by Mr Croucher when preparing his report regarding the costs of rectification of the defects identified in the building inspection reports, Mr Lin replied that he had received the building inspection reports prepared by the purchasers’ previous expert,[7] but he had not seen Mr Croucher’s report.[8]

   [7]Transcript 48, 29-31.

   [8]Transcript 51, 4-7.

1. Following the examination-in-chief of Mr Croucher, during which the Senior Member also asked a number of questions of Mr Croucher, the Senior Member asked Mr Lin if he had any questions of Mr Croucher.  While stating again that his solicitor had advised him that he was not the right person to talk about this issue, Mr Lin did ask some questions of Mr Croucher regarding the cost of rectification of defects.  He put to Mr Croucher that the costs of rectification were greater than the costs of actually building the properties concerned.  In response, Mr Croucher stated:[9] 

As you’d be aware being a builder, often rectification work you have to undo something and you have to support something before you can rebuild it.  So you often have double labour costs and also when a rectification builder is engaged they work on a higher margin than what you may when you’re constructing the houses initially because they have to take on some of the work you’ve done and warrant it.  So there’s always a premium on rectification works.

[9]Transcript 64, 6-14.

1. After Mr Croucher completed his evidence, the Senior Member asked Mr Lin if he wanted to call further evidence, or make further submissions.  In response, Mr Lin stated:[10]

   [10]Transcript 68, Lines 1-2.

MR LIN:	I wish to have the opportunity for me to get the money to hire my expert people
SENIOR MEMBER:	To get your what, sorry?
MR LIN:	My lawyer and also my – and the specialist like Mr (indistinct) to do my report and then representing us in court.

1. Discussion followed on the basis that Mr Lin was renewing Yahome’s application for an adjournment.  The Senior Member asked whether Yahome wanted to lead further technical evidence (presumably to respond to the evidence of Mr Croucher).  Mr Lin replied that he did.  The Senior Member then pointed out to Mr Lin that, in the defence filed on behalf of Yahome, the defective works were not denied.  Rather, the sole basis upon which Yahome defended the claim was on the basis that Yahome was not liable to the purchasers, because, as a result of negotiations between Mr Lin and the vendor, in respect of defects complained of by the vendor, Yahome agreed to accept a lesser sum for the construction works in exchange for a release from any further claim for defective works.  As such, any application by Yahome for time to lead expert evidence regarding the alleged defective works would not only involve granting an adjournment, but would involve allowing Yahome to completely recast its defence to the purchasers’ claim. 

1. The Senior Member then indicated that he proposed to give Yahome some time to file and serve further affidavit evidence and enable its lawyer to prepare closing written legal submissions, but confined the submissions to the evidence before the Tribunal and the matters raised in Yahome’s defence.

1. The solicitor for the purchasers objected to this proposed course of action, on the basis that on 4 January 2012, she had requested Yahome’s solicitors provide further and better particulars of the incomplete works and defects which were the subject of the settlement, the allegations of default under the contract, the sum paid by the vendor to Yahome pursuant to the settlement, and how those amounts were calculated.  Further, she had requested Yahome’s solicitors to provide her with copies of the building contracts between Yahome and the vendor, correspondence between Yahome and the vendor, including lists of defects and incomplete works, and other documents relevant to the settlement.  Each of these requests had been ignored.[11]

   [11]Transcript 73, lines 26-29 to T74, lines 1-16. 

1. Discussion followed regarding the proposed course of action. Ultimately, the Senior Member decided to adjourn to the following day, and explained to Mr Lin that he would have an opportunity to call his evidence regarding the settlement on the following day.  Mr Lin said he would speak to his solicitor that afternoon. 

1. The hearing resumed on the following day.  Yahome’s former solicitor, Mr Salvatore Ferraro, had sworn an affidavit overnight where he deposed, in summary, to the following matters:

(a)he represented Yahome in VCAT proceeding D844/2009 brought by Yahome against the vendor, seeking unpaid monies under the relevant building contracts;

(b)the defence filed by the vendor denied liability on the basis of various defects in the works, and signified the vendor’s intention to issue a counterclaim;

(c)in April 2010 the parties engaged in negotiations both privately and through lawyers;

(d)on 15 April 2010 he spoke with Mr Lin, who gave him instructions regarding the settlement.  He made a file note of these instructions, and sent a letter to the solicitors for the vendor, recording the terms of settlement;

(e)following the filing of consent orders dismissing the proceeding the parties decided not to bother with preparing formal terms of settlement; and

(f)Mr Ferraro exhibited a list which he said represented the defects on Lots 832, 833 and 834.  These units were yet to be completed, so the defects remained outstanding.  The defects on the completed units were rectified by Yahome. 

1. However, Mr Ferraro did not appear at the hearing that day, and Yahome continued to be represented by Mr Lin.

1. At the commencement of the hearing, the Senior Member asked Mr Lin whether he was ready to proceed today.  Mr Lin said “yes”, but also said he would need to get a “technical report” in the future.  This is reflective of the rather confused position adopted by Mr Lin during the course of the day: on a number of occasions he told the Senior Member he was ready to proceed, and only wished to rely upon the affidavit of Mr Ferraro, but also, on other occasions, he stated that  he wanted to obtain a further technical report (presumably in response to the purchasers’ allegations of defective works and the costs associated with rectifying those works), notwithstanding the fact that these issues were not raised in the defence filed and served on behalf of Yahome.

1. Then followed a further exchange between the Senior Member and Mr Lin:[12]

   [12]Transcript 82-84.

SENIOR MEMBER:	Then I am coming back to the question I have asked you a moment ago, are there any persons that you are going to ask to give evidence today?
MR LIN:	No.
SENIOR MEMBER:	Nobody is going to give any evidence today?
MR LIN:	The evidence all in the VCAT record – record in VCAT record.
SENIOR MEMBER:	So you rely upon the affidavit which has been filed as the evidence given by the respondent.
MR LIN:	Yes, that’s right.
SENIOR MEMBER:	Do I understand you correctly?
MR LIN:	No question, sir.
SENIOR MEMBER:	Let me explain it – go back one step.
MR LIN:	Yes.
SENIOR MEMBER:	When the Tribunal hears a case and makes findings it has to make those findings based on two things.  One, the evidence that is before the Tribunal and then applying the law to the evidence to get to an outcome.
MR LIN:	Yes.
SENIOR MEMBER:	If there is no evidence at all then of course the Tribunal cannot make any finding.  If the evidence is only from one side then in all likelihood that evidence will be accepted because nobody is saying anything else.  Do you understand?
MR LIN:	I see, I understand.
SENIOR MEMBER:	At the moment there is evidence which has been given, sworn evidence which has been given by each of the applicants which relates to non‑technical matters such as when they purchased the property and problems which they saw with their own eyes; and there is also evidence which was given by Mr Croucher relating to a vast number of what he says are defective works.  If the respondent is only relying upon the affidavit then I have to weigh the evidence given by the applicants against the evidence given in the form of the affidavit which you have filed up, and then make a finding by applying the law to those two sets of evidence.  Do you understand what I mean by that?
MR LIN:	Yes, I understand that.
SENIOR MEMBER:	Right.  In terms of now the respondent’s defence, do I understand you correctly that when you say that the respondent is relying upon the evidence contained in the affidavit of Mr Ferraro, which you have just handed up, that is the entirety, that is all the evidence that the respondent intends to rely upon in this proceeding.
MR LIN:	That is all.  That’s right.
SENIOR MEMBER:	All right.
MR LIN:	If you need him to come in again, he can come.
SENIOR MEMBER:	That is a matter for Ms Johnston and I will hear from her in a moment.  I just want to get the respondent’s position clearly first before we proceed any further.
MR LIN:	Yes, I understand that, sir.
SENIOR MEMBER:	You are not going to give any evidence, Ms Song is not going to give any evidence, and it is really you are relying upon what is in the affidavit.
MR LIN:	That’s right, that’s all we can give to you now.

1. Following this exchange, Ms Johnston sought, and was granted leave to recall Ms Delic in order to tender certain correspondence between the vendor and Mr Lin regarding the final payment to Yahome under the building contract, and correspondence between Ms Delic and Ferraro & Co regarding the proposed rectification of defects at Ms Delic’s property by Yahome.  This evidence was relied upon by the purchasers for the purpose of attempting to refute Yahome’s defence that the settlement released Yahome from any claims by the vendor and the purchasers in respect of any defects.  Mr Lin did not ask any questions of Ms Delic, and then stated that he did not propose to call any further evidence.

1. Ms Johnston then proceeded to make submissions on behalf of the purchasers.  She submitted, in summary, as follows:

(a)the evidence regarding the purchasers’ loss and damage, including the evidence of Mr Croucher, was not controverted in any way;

(b)there had been negotiations between the purchasers and Yahome (either directly, or through its solicitors) at various times regarding proposed rectification works, and the contention that Yahome was not liable for any defects by reason of the settlement was not raised until Yahome filed its defence in December 2011;

(c)Mr Ferraro’s affidavit should not be given any weight because he did not attend for cross‑examination;

(d)in any event, any defects which only become apparent after the purchasers took possession could not have been the subject of the settlement, and there is no evidence that any of the defects that are the subject of the purchasers’ application were the subject of the settlement;

(e)the purchasers were entitled to seek the costs of rectification because of Yahome’s breaches of the warranties under s 9 of the Domestic Building Contracts Act 1995 (Vic) (“DBCA”); and

(f)given the size of the claim, and the “feeble” attempts of Yahome to rectify the defects, Yahome should pay the legal costs of the purchasers’ claim as well as the costs of rectification.

1. Mr Lin commenced his submissions with a recount of the dispute between Yahome and the vendor.  He stated, in summary, that:

(a)Yahome issued a proceeding in VCAT seeking payment from the vendor;

(b)as the vendor did not have enough money to pay Yahome, the building works stopped for six months;

(c)with the assistance of the vendor’s brother, a friend of Mr Lin’s, Yahome and the vendor reached an agreement whereby Yahome agreed to accept a reduced payment and rectify certain listed defects; and

(d)he agreed that the terms of the settlement were recorded in the letter which was exhibit “SF-5” to Mr Ferraro’s affidavit sworn 4 May 2012.

1. At this point, the Senior Member interrupted Mr Lin, and asked:

Do you understand the difference, Mr Lin, between telling me something from the Bar table without being sworn and what is evidence?[13]

[13]Transcript 96, lines 25-26.

1. After some discussion where the Senior Member, among other things, advised Mr Lin that he could not make a finding based upon statements from the Bar table alone, the Senior Member stood the matter down to enable Mr Lin to have a discussion with Ms Song, and to decide whether he should give evidence.  Mr Lin decided to be formally sworn and give evidence.

1. Mr Lin gave evidence consistently with the submissions referred to above, and gave further detail regarding the settlement, in particular, regarding the rectification of outstanding defects.  The thrust of the settlement was that Yahome would complete the construction of the townhouses, including rectification of certain identified defects and other maintenance items, and that following completion, Yahome would not be responsible for any defects or maintenance items, save for structural defects within the meaning of the provisions of the Building Code of Australia. 

1. Mr Lin was cross-examined by Ms Johnston.  Under cross‑examination, Mr Lin gave evidence, as follows:

(a)in relation to the list of defects which was exhibit “SF‑8” to the affidavit of Mr Ferraro, the only defects which were identified at the time of the settlement as being referrable to townhouses now owned by the purchasers were some defects in the property owned by the first purchaser, Ms Delic;

(b)the discount on the amount payable to Yahome by the vendor under the settlement were referrable to the whole of the eight unit construction project;

(c)he explained, in a rather confusing fashion, how the settlement negotiations proceeded between him and the vendor, and how the settlement was documented;

(d)he agreed that the list of defects current at the time of the settlement included some defects at Ms Delic’s property, but that there were no defects listed for Mr Huynh’s or Ms Caberoy’s properties, because they had been completed at the time of the settlement, and were free of defects;

(e)the defects which had been identified in relation to Ms Delic’s property were all rectified in accordance with the settlement; and

(f)the work to rectify all of the defects was all checked by a representative of the vendor, and Yahome would not have been paid the outstanding sum under the settlement if the vendor was not satisfied that the identified defects and not been rectified.

1. After cross‑examination of Mr Lin, each party was given the opportunity to make further submissions, but declined to do so.  The Senior Member indicated that he would reserve his decision, and made orders for the parties to file and serve further written submissions, with any submissions in reply to be filed and served a week later.

1. Finally, the Senior Member asked where any documents should be served.  Mr Lin responded that they should be sent “to the solicitor”.[14]  He stated:

He is still acting for me because I just (indistinct) the price to pay him on time and that’s – he could not attend yesterday or today.”

[14]Transcript 115, line 24.

1. The parties did in fact file further written submissions.  The purchasers filed and served written submissions on or about 10 May 2012, which, in  summary, stated as follows:

(a)the purchasers have a right pursuant to section 9 of the DBCA for breach of the warranties implied into domestic building contracts by section 8 of the DBCA;

(b)consistently with the defence of Yahome as provided for in its pleadings, Yahome did not call any evidence with respect to the existence of the defects, or the costs of rectification of the defects;

(c)the settlement only released Yahome from liability for defects which had been “previously identified”: that is, those defects which were known and had been specified at the time of the settlement;

(d)the only defects which were the subject of the settlement which were possibly relevant to the purchasers’ claims in this proceeding were the defects listed for Ms Delic’s property.  However, none of the items which were included in the list of defects Yahome assumed responsibility for in accordance with the settlement were the subject of a claim by Ms Delic in this proceeding; and

(e)given that the purchasers’ claims were strong, substantial in quantum and the purchasers were forced to expend money on experts, Yahome should pay the purchasers’ costs of the proceeding.

1. In its written submissions filed and served on or about 11 May 2011, prepared by Mr Bill Gillies of counsel,  Yahome  submitted, in summary, as follows:

(a)       the terms of the settlement provided for rectification by Yahome of the defects enumerated in the letter from Ferraro & Co exhibited to Mr Ferraro’s affidavit sworn 4 May 2012;

(b)      otherwise, the acceptance by Yahome of a reduced payment under the building contracts represented compensation provided by Yahome to the vendor for any other defects not specified in the settlement;

(c)       as such, responsibility for any other defects shifted to the vendor;

(d)      as Yahome has satisfied its obligations with respect to defects to the vendor, the purchasers cannot claim for the same defects, only for new defects;

(e)       in the absence of any proof of new defects, the purchasers’ claims must be dismissed;  and

(f)       Yahome gave a discount on the contract price for the townhouses to the vendor, which should have been passed on to the purchasers.  If it has not been passed on to the purchasers, then their remedy lies with the vendor, not Yahome.

1. In response to these submissions, the purchasers filed and served further written submissions on or about 17 May 2012, which stated, in summary, as follows:

(a)       the purchasers were not appraised of any settlement that had taken place between the vendor and Yahome.  The first time the purchasers became aware of the details of the settlement was on the final day of the hearing when the affidavit of Mr Ferraro was tendered;

(b)      neither Mr Ferraro nor the vendor were called to provide evidence or attended to be available for cross-examination.  The Tribunal is therefore entitled to assume that the calling of those witnesses would not assist Yahome;

(c)       the purchasers paid the full purchase price to the vendor for the dwellings;

(d)      the defects complained of by the purchasers are new defects, and are therefore outside the scope of the settlement, such that there has been no compensation for the defects the subject of this proceeding by Yahome either to the vendor or the purchasers;

(e)       the allegation that the purchasers are “double dipping” was not borne out by the evidence;

(f)       rather, the evidence, including the list of defects exhibited to Mr Ferraro’s affidavit, positively confirmed that the defects the subject of this proceeding were not the same defects which were the subject of the settlement;

(g) pursuant to sections 8, 9 and 10 of the DBCA, Yahome had to prove on the balance of probabilities that the defects were “contracted out” of by reason of the settlement. The evidence from Mr Lin and the purchasers supported the contention that:

(i)       the list of defects at the time of the settlement were different from the defects in respect of which claims were made in this proceeding; and

(ii)      there has been no compensation in relation to the defects the subject of this proceeding.

1. Finally, in its further written submissions filed on or about 21 May 2012 (again drawn by counsel), in response to the purchasers’ written submissions of 10 May 2012, Yahome submitted, in summary, as follows:

(a) while section 10 of the DBCA says that a person cannot sign away a right to take advantage of a warranty, this was not a case of someone signing away a right to take advantage of a warranty, but rather, the breach of the warranty had already been compensated for by the payment by the vendor of a lower price for the construction of the building. Further, the DBCA does not put the onus of proof on Yahome to establish that the defects claimed by the purchases were not the subject of the settlement.

(b)      the relitigation by the purchasers of the issues in the proceeding between Yahome and the vendor amounted to an abuse of process;  and

(c)       the settlement took into account the defects.  The onus is upon the purchasers to show that there were fresh defects.

1. Neither of Yahome’s written submissions contained a submission that the Senior Member should have granted Yahome’s application for an adjournment.

1. The Senior Member reserved his decision, and, on 5 June 2012 made the following orders:

1.        The Respondent must pay the First Applicant $289,943.

2.        The Respondent must pay the Second Applicant $176,793.

3.        The Respondent must pay the Third Applicant $218,682.

4.        Costs reserved pending receipt of any written submissions in reply.

5.        By 19 June 2012, the Respondent may file and serve any written submission in reply as to the question of costs.

1. The Senior Member also prepared written reasons for judgment, which summarised the purchasers’ claims as follows:

3.        The Applicants claim substantial damages against the Builder on the ground that the building works undertaken by it are defective.  A number of building inspection reports have been prepared on behalf of the Applicants, which describe the nature of the alleged defective work and the cost to rectify that work.  In particular:

(a)       Lot 832 (No 58) owned by the First Applicant:                 $282,778

(b)       Lot 831 (No 56) owned by the Second Applicant:            $165,973

(c)       Lot 829 (No 52) owned by the Third Applicant:               $211,608

4.        In addition, the Applicants also claim consequential losses, such as the cost of alternate accommodation and removal and storage of furniture;  which they contend is necessary by reason of the rectification works.

5.        The Builder defends the claims made against it on the ground that it has no liability for the defective work because it had previously entered into a settlement agreement with the Vendor, under which it was given a release in respect of all defective work, save and except for latent structural defects.  Consequently, the only expert evidence before the Tribunal is that given by Mr Croucher, building consultant engaged by the Applicants.

6.        There is no contrary expert evidence, nor was Mr Croucher extensively cross-examined on his evidence given during the course of the hearing.  Therefore, the central issue for determination is whether, and to what extent, the claims against the Builder have been compromised pursuant to a settlement agreement between it and the Vendor.

1. The Senior Member then went on to summarise the purchasers’ claims and the evidence regarding the claims of each of the individual purchasers. He noted that the legal basis of the purchasers’ claims was the right of a subsequent purchaser under s 9 of the DBCA to bring a claim for breach of the warranties implied into domestic building contracts by s 8 of the DBCA. He noted that, in cases of breach of warranty, the reasonable measure of damages is the reasonable cost of making good the breach of warranty, which necessarily includes not only the cost of rectification of defects, but also included compensation for an innocent party for consequential losses associated with making good the breach of warranty.[15]

   [15]Reasons [19].

1. The Senior Member then summarised the evidence given by the purchasers’ expert witness, Mr Croucher, at the hearing.  Mr Croucher had given evidence that he had been provided with a number of building inspection reports previously prepared by another consultant, he had personally inspected all of the defects identified in these reports, and calculated the cost of the rectifications, then added a margin of 35 per cent for contingencies, administrative costs, and profit and supervision.  The Senior Member noted that Mr Lin did not cross-examine Mr Croucher on any particular item of defective work, or question the cost estimates, apart from suggesting that Mr Croucher’s allowance for a profit margin was excessive.  The Senior Member accepted Mr Croucher’s explanation for the magnitude of the profit margin, and accepted Mr Croucher’s evidence generally regarding the existence of defects and the costs of rectification, given that there was no contrary evidence as to quantum.

1. With respect to the purchasers’ claims for consequential losses such as relocation, accommodation and storage costs, the Senior Member accepted that the purchasers were entitled to claim compensation for such losses, but that he was not persuaded that the rectification works would take as long as contended for by the purchasers, or that it would be necessary for the purchasers to remove and store all of their furniture while the rectification works were being completed, and as such, discounted the purchasers’ claims in respect of these items. Accordingly, he found that the purchasers’ losses for breach of the warranties under section 8 of the DBCA were as follows:

(a)       first purchaser:        $289,943;

(b)      second purchaser:    $176,793;  and

(c)       third purchaser:       $218,682.

1. Having made the findings that he did regarding the existence of the defects and the quantum of the purchasers’ claims, the Senior Member then turned to Yahome’s defence that it had no liability to compensate the purchasers for the  defects (apart from any latent structural defects), on the basis that any claim regarding the condition of the townhouses was compromised by reason of the settlement.  He summarised the evidence given by Mr Lin and Mr Ferraro (in Mr Ferraro’s affidavit sworn 4 May 2012) and concluded that the settlement involved a reduction in the price paid by the vendor by $9,040.51 for each of the eight townhouses, rectification by Yahome of the defects identified in Mr Ferraro’s letter, along with an agreement by the vendor that Yahome would be released from any claims by the vendor relating to “defects previously identified”.  He rejected Mr Lin’s evidence and submissions that the effect of the settlement was that the vendor would “take the properties in the condition they were in”, and that the vendor would take responsibility for all maintenance items after settlement. 

1. The Senior Member’s discussions of the effect of the settlement upon the rights of a subsequent purchaser under section 9 of the DBCA, and his findings regarding the application of those principles in this particular proceeding are set out below:

40. In my view, a settlement agreement between an original owner and its contracting builder could affect the rights of a subsequent owner. Although s.9 of the Act gives a subsequent owner rights commensurate with the rights of the original contracting party, it does not create rights greater than the rights of that original contracting party. Therefore, one must look at the rights of the original contracting party to determine the rights of the current Applicants.

41. If the Vendor compromised her rights with respect to certain defects, then I do not accept that a subsequent owner is able to reignite those rights in reliance upon s.9 of the Act. In my view, the final words in s.9 of the Act, which state as if that person was a party to the contract are words which limit the operation of s.9 to effectively put a subsequent owner into the shoes of the original contracting party. Therefore, if the original contracting party has compromised its ability to claim for breach of a warranty, then subject to s.10 of the Act, no further action lies against a builder in respect of that particular breach. To construe s.9 in any other way would, in my opinion, be tantamount to restricting rights which crystallise upon there being an accord and satisfaction of a suit. Those rights comprise the right to be free of liability in respect of the matters so compromised. Had the legislature intended s.9 to take away or alter those common law rights, it could have drafted s.9 with clear and express words to that effect.

42.      At one point during Mr Lin’s evidence, he said that a ‘deal’ was struck between the Builder and the Vendor, which had the effect of discounting the building contract price in consideration that the Vendor took the properties in the condition that they were in.  However, that statement is inconsistent with Mr Lim’s other evidence, where he said that all items of complaint were completed to the satisfaction of the Vendor and as a result, she paid all outstanding monies due under that settlement agreement.

43.      In my view, the evidence led by the Builder is deficient in several respects.  First, no evidence was given as to what defects were actually settled.  The list of defects exhibited as SF-8 to the affidavit of Mr Ferrerro does not take the matter any further as those items merely reflect items of work for which the Builder remained responsible.  However, it is impossible to discern from that list or from the evidence adduced by the Builder, what items of work were actually compromised.  In my view, the onus rests on the Builder to satisfy me on the balance of probabilities that certain items of work, which are now the subject of the Applicants’ claims, were actually settled.  To simply say that the Vendor was to take responsibility for any maintenance items after the settlement agreement was entered into or to say that the Vendor agreed to take the properties in the condition that they were in is not sufficient.  In particular, the terms of the settlement agreement, reflected in the Builder’s solicitor’s letter dated 16 April 2010, states that the Builder is released from any further claims relating to any defects previously identified.  However, there is no evidence as to what those previously identified defects are.  For example, there is no evidence that any of the defects in the building inspection reports prepared on behalf of the applicants were the subject of the settlement agreement.  Indeed, it is unlikely that was the case given that Lot 832 was still to be completed at the time when the settlement agreement was entered into.

44.      In my view, it is unlikely that the defects identified in the building inspection reports prepared on behalf of the Applicants were compromised as part of the settlement agreement between the Builder and the Vendor, especially when one considers that the “discount” given by the Builder of $9,040 for each townhouse is disproportionate to the cost to make good defects as assessed by Mr Croucher.  Moreover, evidence was given by each of the Applicants that the Builder returned to each of the townhouses to undertake further rectification work after each of the Applicants had taken possession of their respective townhouse.  Again, that conduct is inconsistent with there being a compromise of all defects comprising the Applicants’ claims.

45.      Ultimately, however, the Builder’s defence fails because there is insufficient evidence to satisfy me on the balance of probabilities that any of the defects identified in the building inspection reports of Mr Croucher were the subject of a settlement agreement.  The hearsay evidence of Mr Ferraro, who was not called to give oral evidence and the documents produced as exhibits to his affidavit do not go far enough to satisfy me that the items of defective work listed in Mr Croucher’s report form part of the settlement agreement between the Builder and the Vendor.  Mr Lin’s evidence that the Builder was not responsible for any maintenance items after the settlement agreement was entered into is too vague and uncertain for me to draw any conclusion that any of the items listed in Mr Croucher’s report were compromised.  Therefore, I am not satisfied that any of the items listed in Mr Croucher’s report were the subject of the settlement agreement between the Builder and the Vendor.  I find that the Applicant’s rights have not been compromised by reason of any settlement agreement between the Builder and the Vendor.

1. In its draft Notice of Appeal filed on or about 2 July 2012, Yahome sought leave to appeal under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (“VCAT Act”) from the whole of the orders made by the Senior Member on 5 June 2012 on the following questions of law:

1.        Whether or not, as a matter of law the respondents were able to commence proceedings for the defects claimed as a result of the applicant having compromised the original owner’s claim for compensation.  The original owner having sold the units with defects to the respondents who then sued the applicant.

2.        Was the applicant denied natural justice as a result of the failure of the Tribunal to obtain an interpreter or other representation or to otherwise ascertain the applicant’s case?

3.        Whether or not the circumstances of the Tribunal had a duty to fully inform itself of all the circumstances surrounding the applicant’s claim in light of the applicant’s claim to have already compromised the claims with the original owner of the property, including obtaining the services of an expert to report to the Tribunal.

4.        The Tribunal failed to consider or adequately consider the question of mitigation of damages.

1. Following the original return date of the application for leave to appeal on 25 July 2012, Yahome amended its drafts Notice of Appeal to include the following additional questions of law:

[5]The Tribunal erred in law by failing to grant an adjournment to the applicant where the applicant requested an adjournment; and

[6]The Tribunal failed in law by failing to warn the applicant that if it failed to present expert evidence in relation to the costings of the building defects and the cause of the building defects then the reports of the experts of the respondents would be accepted. 

1. In a document filed in September 2012, Yahome identified the following Grounds of Appeal:

1.        The Tribunal failed to ascertain what items or defects or poor workmanship had been compromised by the Applicant with the original owner.

2.        The Tribunal erred in failing to ascertain what items of poor workmanship or defective workmanship the Applicant had rectified.

3.        The Tribunal erred in failing to obtain proper representation for the Applicant when it was clear that he had not properly expressed himself to the Tribunal.

4.        The Tribunal erred in failing to appoint or seek the assistance of expert evidence to ascertain what defects needed to be rectified.

5.        The Tribunal failed to consider or ought to adequately consider the evidence of the Respondents’ duty to mitigate their loss and damage.

6.        The Tribunal failed to consider or properly consider the Applicant’s request for an adjournment.

7.        The Tribunal failed to warn the Applicant that if the case proceeded with the evidence of the experts on behalf of the Respondents that the Respondents’ evidence would be accepted in the absence of any expert evidence from the Applicant.

1. The parties’ written and oral submissions in relation to each of the grounds identified above are summarised (in the order set out in Yahome’s written submissions annexed to the document headed “Grounds of Appeal”) in the following paragraphs.

Ground 6

1. Paragraph 6 of Yahome’s Grounds of Appeal states as follows:

The Tribunal failed to consider or properly consider the Applicant’s request for an adjournment. 

1. As indicated by counsel for Yahome, this is the primary ground of appeal. Counsel submitted that the Senior Member’s refusal to grant Yahome’s application for an adjournment of the hearing amounted to an error of law, in that he denied Yahome the opportunity to properly present its case, and to test the purchasers’ claim for damages, as it was entitled to do. As such, the Tribunal was in breach of s 98(1)(a) of the VCAT Act, which provides that the Tribunal is bound by the rules of natural justice, and s 102(1) of the VCAT Act, which provides that:

The Tribunal must allow a party a reasonable opportunity –

(a)to call or give evidence; and

(b)to examine, cross-examine or re-examine witnesses; and

(c)to make submissions to the Tribunal.

1. Counsel for Yahome submitted that given that Yahome had no legal representation, and given that its director, Mr Lin, had made it clear to the Tribunal that he did not understand the process, had not had an opportunity to instruct an expert, and it was apparent from the transcript that he struggled to communicate adequately in English, Yahome was precluded from properly presenting its case with regard to the positive defence asserted by Yahome, that is, that the defects which were the subject of the purchasers’ claims were the subject of the settlement and, as such, Yahome was absolved of any liability to compensate the purchasers for any of the defects claimed.  While counsel for Yahome accepted that there was a limit to the number of occasions upon which a party could obtain extensions of time or an adjournment, in circumstances where a party has said that it does not have the money now but it will have, and in circumstances where the purchasers’ claim was for a significant sum, it was unfair and unjust for the Tribunal to force a self-represented litigant with a lack of English to “battle on”, especially where the Tribunal had been directly informed by Mr Lin that he did not understand the process, or that it was otherwise apparent that he did not understand the process.

1. Counsel for Yahome also criticised the Senior Member for stating, in his ruling on the adjournment application, that his decision to refuse the adjournment application was based in part upon the absence of any sworn evidence from Yahome regarding its financial position, in circumstances where Mr Lin could have simply been sworn in to give evidence on the spot (as in fact occurred later in the hearing).  She also submitted that there was no evidence of any real prejudice which would have been suffered by the purchasers which could not have been cured by an order for costs, and that these matters do not seem to have to have even been taken into account by the Senior Member in giving his ruling on the adjournment application.

1. Counsel relied upon the following statement by Nettle J, as he then was, in Opeka Pty Ltd v Mackie Group Pty Ltd:[16]

If the refusal of an adjournment has shut a party out or is likely to have shut a party out of an opportunity to advance a sustainable proposition which may have affected the outcome of the proceeding, the result of the refusal will be seen to constitute a miscarriage of justice and will be set aside.

[16][2003] VSC 153, at [35].

1. In Macdiggers Pty Ltd v Dickinson & Anor,[17] the Chief Justice stated:

As a matter of general principle, a party will be granted an adjournment requested on procedural grounds provided any prejudice to the opposing parties may be compensated by an order for costs.

[17][2008] VSC 576, at [23].

1. In making the above statement, the Chief Justice expressly followed the principle established in Queensland v JL Holdings Pty Ltd,[18] which of course was overturned by the High Court in AON Risk Services v Australian National University (“AON”),[19] which, it has been accepted, substantially raises the bar facing parties seeking indulgences from a court or tribunal, whether it be a late amendment to pleadings, or an adjournment, and emphasises the importance of considerations such as the speedy and efficiency resolution of civil disputes, and the efficient use of judicial resources.

   [18][1997] 189 CLR 146.

   [19](2009) 239 CLR 175.

1. Counsel for Yahome also relied upon Furman Constructions Pty Ltd v Raju[20] where Mukhtar AsJ granted leave to appeal against a Tribunal Member’s refusal to grant an adjournment for the purpose of engaging expert evidence in a building dispute, and stated,[21] in relation to the principles set out in the cases referred to in paragraphs 56 and 57 above, that

None of this is altered by AON at least not as a matter of principle.  That case establishes, if I may put it in rudimentary terms, that speed and efficiency are essential to a just resolution of disputes and that courts are concerned to do justice to all litigants and not just the case at hand.

[20][2012] VSC 269.

[21]At [34].

1. Counsel for Yahome also submitted that the principles of fairness and the availability of a reasonable opportunity to put one’s case are particularly relevant in the circumstances where a party is not legally represented.  In such cases, there is a special burden upon the Tribunal to ensure that it complies with its obligations. 

1. Counsel for the purchasers relied upon the principles in AON in support of his submission that the appeal ought to be dismissed.  Further, counsel for the purchasers noted that, notwithstanding the fact that Yahome had been represented by solicitors in the proceeding for over four months, Yahome did not: 

(a)obtain any expert reports regarding the alleged defects:

(b)obtain any expert reports regarding the settlement, and what, if any, had been compromised by the settlement; or

(c)produce to the Tribunal any documentary evidence (such as financial statements or bank records) to corroborate its assertion that it was not in a financial position to engage experts and fund legal representation for the conduct of the hearing.

1. Yahome has still not undertaken any of the tasks referred to above, and as such, has not shown that either the refusal of the adjournment was unjustified, or that it deprived Yahome from putting forward a sustainable argument that may have affected the ultimate outcome of the proceeding. 

1. Counsel for the purchasers submitted that the reasonable inference to be drawn from the conduct of Yahome is not that it could not afford legal representation at the hearing, but that it simply chose not to engage lawyers in the hope of deferring the hearing.  In any event, it did have an opportunity to present evidence upon the limited defence it made a deliberate choice to run, being the legal point that the defects had been compromised by the settlement.  Mr Lin gave evidence on this matter, and the Tribunal accepted Mr Ferraro’s affidavit.

1. In any event, the transcript of the proceeding shows that the Senior Member did properly consider Yahome’s request for an adjournment, and that the Court should be very slow to interfere with the Tribunal’s discretion on such matters.

1. In my view, this ground of appeal fails.  First, the decision of the Senior Member to refuse an adjournment was, on the material before him, well and truly open to him to make.  Indeed, while this is not, strictly speaking, a review of the merits of the decision to refuse an adjournment, the evidence before the Tribunal favoured the refusal of an adjournment, especially having regard to the principles espoused in AON.  Further, Yahome has been unable to demonstrate that the granting of an adjournment in order to enable Yahome to obtain legal representation and expert evidence would have made a material difference to the outcome of the proceeding. 

1. While of course the paramount objective of the justice system is to dispense justice, and each case very much turns on its own facts and circumstances, giving rise to the need for judicial officers to have a broad discretion in relation to matters such as adjournments and amendments to pleadings, when evaluating whether such a discretion has been exercised according to law, the principles in AON must be given great weight. In summary, the following relevant principles can be distilled from AON in the context of an application for an adjournment:[22]

   [22]While the decision appealed from was the grant of leave to a party to amend its pleadings, the amendment necessitated an adjournment, and the principles are equally applicable to applications for adjournments.

(a)where an application is made late in the day, is inadequately explained, necessitates the vacation or adjournment of the dates set down for trial, and raises new claims not previously agitated apparently because of a deliberate tactical decision not to do so, the party making the application bears a heavy burden to show why leave should be granted;

(b)there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings;

(c)the time of the court is a publicly funded resource and inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account as is the need to maintain public confidence in the judicial system;

(d)undue delay in the resolution of civil disputes can undermine confidence in the rule of law.  To that extent its avoidance, based upon a proper regard for the interests of the parties, transcends those interests.  Another factor which relates to the interests of the parties but transcends them is the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes, vacate trial dates, or adjourn trials either because of non-compliance with court timetables or, as in this case, because of a late and deliberate tactical change by one party in the direction of its conduct of the litigation;

(e)also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to application made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes;

(f)the requirement to make amendments for the purposes of deciding “the real issues in the proceeding” does not impose some unqualified duty to permit the late addition of any new claim; the real issues in the proceeding are determined by reference to the limited way in which the party deliberately chooses to frame its original claim;

(g)the purposes of rules requiring the minimisation of the delay and expense of proceedings, are plainly intended to guide the exercise of discretion to allow amendments;

(h)the objectives of case management are now expressly stated in court rules and it cannot be overlooked that such rules are likely to have been written with the decision in JL Holdings in mind;

(i)speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings.  This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re‑pleading, when delay and cost are taken into account;

(j)the view that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants, is also now generally accepted;

(k)personal litigants are likely to feel the strain of litigation more than business corporations or commercial persons;

(l)much may depend upon the point the litigation has reached relative to a trial when the application to amend is made.  There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates.  Rules requiring the minimisation of the delay and expense of proceedings make it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court’s discretion;

(m)generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for;

(n)not only will the party applying need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court’s attention, so that they may be weighed against the effects of any delay and the objectives of the Rules; and

(o)a party has the right to bring proceedings.  Parties have choices as to what claims are to be made and how they are to be framed.  But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced.  That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate;

1. In my view, this is a case where the principles espoused in AON are particularly relevant.  First, the adjournment was sought at an extremely late stage (after the hearing had been underway for nearly half a day), and was unsupported by any affidavit material or documentary evidence.  Secondly, a judicial officer had already been allocated to hear the case for two days, so any adjournment would affect, albeit to a minor degree, the efficient use of Tribunal resources.  Thirdly, the other parties were individuals, such that the impact of delay would be more keenly felt by them than by corporate litigants.  Fourthly, what was said by Mr Lin during the course of the adjournment application and later in the hearing indicated that Yahome not only sought an adjournment in order to obtain legal representation, but also in order to obtain expert evidence, presumably to challenge the evidence of Mr Croucher regarding the existence of the defects and the costs of rectification.  If that course was to be permitted, it would not only cause further delay, but would have allowed Yahome to substantially depart from the basis of its defence to date, without having given any satisfactory explanation for doing so.  Finally, while there is no need to make an express finding as to whether or not the application for an adjournment was made on good faith, the unusual circumstances of this proceeding, where Yahome had solicitors and counsel representing it immediately before and immediately after the hearing does raise some questions regarding the bona fides of the application for an adjournment. 

1. Much was made in the written and oral submissions made on behalf of Yahome regarding the difficulties facing Mr Lin, as an unrepresented litigant with indifferent proficiency in English, and the unfairness of requiring him to “battle on” in an environment with which he was unfamiliar.  However, I agree with counsel for the purchasers that the difficulties experienced by Mr Lin may have been somewhat overstated.  First, there is no indication from the transcript that Mr Lin did not understand spoken or written English.  Secondly, while his spoken English may not be completely fluent, it is apparent that the Senior Member did not have any difficulties in understanding him (or vice versa) when he made his submissions upon the adjournment application, when discussing the manner in which the hearing would proceed, when Mr Lin was cross‑examining the purchasers’ expert witness, and when Mr Lin gave evidence about the settlement.

1. The draft grounds of appeal annexed to the originating motion filed 2 July 2012 did not include any ground that the Senior Member was wrong in refusing to grant an adjournment.  This ground was added after the first return date of the summons on originating motion on 26 May 2012,[23] notwithstanding that it is now being argued as the primary ground of appeal.  This may have been because, at the time of the filing of the originating motion the legal advisors to Yahome did not, according to Mr Lin’s affidavit, have access to the transcript of the VCAT hearing.  However, while there was a reference in Mr Lin’s affidavit to his lack of fluency in English and his feeling that he was unable to make himself clear or be understood by the Senior Member, the original draft grounds of appeal and the affidavit of Mr Lin primarily focussed upon the failure of the Senior Member to find that the defects for which the purchasers claimed compensation were compromised by the settlement.  Yahome’s contentions regarding the impact of the settlement also formed the main thrust of the two sets of written submissions filed on its behalf after the hearing of the proceeding.  These submissions did not refer to the question of whether an adjournment ought not have been granted, or make any suggestion of the need for Yahome to lead expert evidence on this or any other matter. 

   [23]See the notes in “Other Matters” in the orders of Mukhtar AsJ made on 25 July 2012.

1. In paragraphs 4, 5 and 6 of his affidavit sworn 5 July 2012 Mr Lin stated as follows:

4.As the contracts [exhibited to the affidavit] show, in 2008 I commenced to build three units.  I had purchased the land on which the units were built from Vic Urban and nominated Linh Nguyen [vendor] as a purchaser.  The applicant, Yahome Pty Ltd … and Linh Nguyen entered into building contracts for the units that are the subject of these proceedings.

5.Put simply, Yahome Pty Ltd commenced separate proceedings at VCAT for the balance of the monies due under the building works.  Linh Nguyen complained about the works performed and I gave her a discount on the cost of the building contract.

I believed I communicated these matters set out in the above paragraphs to Senior Member Riegler.

1. The reference to only three building contracts in the affidavit of course obscures the fact that the project involved the construction of eight dwellings, all of which appeared to be the subject of the settlement.  However, the affidavit, along with Mr Lin’s evidence at the hearing, and Mr Ferraro’s affidavit sworn 4 May 2012, demonstrate that Mr Lin is no naïveté, at least when it comes to matters of business.  Of course, he is not a lawyer, and there is no doubt that the presentation of Yahome’s case would have been more polished had it had the benefit of legal representation at the hearing.  However, ultimately the purchasers obtained the positive result they did (although not as much as claimed) on two bases:

(a)first, the expert evidence of Mr Croucher regarding the existence of the defects and the cost of their rectification was uncontradicted; and

(b)Yahome was unable, as a matter of fact, to establish that the purchasers’ claims for the defects which were the subject of the settlement were compromised by the terms of the settlement.

1. The defence filed by Yahome did not deny the existence of the defects.  However, there were a number of orders made, by consent, over the months prior to the hearing which provided for the filing and service of expert reports by Yahome.  Given the nature of the defence filed by Yahome, these expert reports would have been presumably directed at the quantum of the purchasers’ claims rather than the actual existence of any defects.  The purchasers’ expert report was served late (on 20 April 2012).  However, no point was taken by Yahome regarding the late service of the expert reports, either at the time of service, during the course of the hearing, or on appeal.  There was some suggestion during the course of the hearing and the appeal that expert evidence would have been called by Yahome in relation to the question of whether the defects claimed by the purchasers were compromised by the settlement, but I doubt the probative value of any such evidence; the question is a mixed question of fact and law, and was treated as such by the parties’ written submissions and the Senior Member, and expert opinion would have had little part to play in the determination of this question.  After all, Mr Lin was the person who negotiated the settlement on the part of Yahome, and therefore would have direct knowledge of what defects were complained of by the purchaser, and whether and when they were rectified.  Counsel who drew the submissions on behalf of Yahome in relation to this issue did not apparently feel constrained by the absence of expert evidence; counsel simply submitted that the purchasers had not discharged the evidentiary onus upon them of proving that the defects were not compromised by the settlement.

1. Yahome may well have been disadvantaged at the hearing by not having expert evidence to counteract Mr Croucher’s evidence regarding the cost of rectification of the defects.  However, this appears to have been a situation of Yahome’s own making.  At all times prior to 26 April 2012 Yahome was represented in the proceeding by Ferraro & Co.  There is no evidence that any expert had been engaged on behalf of Yahome prior to that date, notwithstanding the consent orders which had been agreed by the parties.  The first tranches of expert reports prepared on behalf of the purchasers (which dealt with the defects, but not rectification costs) were served on 9 and 15 February 2012.  The late service of Mr Croucher’s report (which did deal with rectification costs) on 20 April 2012 was not met with by a request for an extension of time for Yahome to obtain its own expert evidence in relation to rectification costs, but rather, the service of a Notice of Ceasing to Act by Ferraro & Co on 26 April 2012.  No evidence has been filed and served by Yahome in the course of this proceeding which would show, at least prima facie, that if Yahome had the opportunity to adduce expert evidence to challenge Mr Croucher’s costings, the findings of the Senior Member in relation to the quantum of the purchasers’ claim may have or would have been materially different. 

1. Finally, the criticisms of the Senior Member’s refusal to accept that Yahome’s contention that it was not in a financial position to obtain legal representation and engage legal representation are misconceived.  It was submitted on behalf of Yahome that, in circumstances where the Senior Member had found that there was no sworn evidence in support of this contention, just submissions from the Bar table, it would have been a simple matter for the Senior Member to give Mr Lin the option of giving sworn evidence regarding Yahome’s financial position. 

1. However, I agree with the submissions of counsel for the purchasers that if Mr Lin had given oral evidence regarding Yahome’s financial position, the findings of the Senior Member regarding the factual foundation for Yahome’s application for an adjournment would not have changed.  It would be rare for any judicial officer, on any application of any substance, except perhaps in the most urgent or pressing of cases, to accept evidence of impecuniosity in the absence of any corroborative documentation, such as bank statements, balance sheets, and land title searches.  This is especially so in the case of a trading company such as Yahome.  Indeed, the Senior Member expressly refers to the absence of any documentary evidence in his ruling.[24] 

   [24]Transcript 39, lines 16-22, 41, lines 3-5.

1. Indeed, the findings of the Senior Member that Yahome had not made out the factual basis for an adjournment is a particular feature which distinguishes the current case from the circumstances considered in the authorities relied upon by counsel for Yahome.  For example, in Furmann Constructions, which on first glance has many similar features to the current case, there were a number of matters which might lead to a conclusion that the Tribunal’s decision to refuse an adjournment was arguably unfair.  In that case, the applicant opposing the adjournment had significantly expanded the scope of its claim only shortly prior to the hearing, and had been unco‑operative by refusing to provide up to date claim documentation and to allow an inspection of the relevant site.  Further, the applicant for the adjournment had engaged an expert, and merely needed a short adjournment to enable the expert to complete his work.  Finally, the basis upon which the applicant proposed to defend the claims had not changed. 

1. Accordingly, in relation to ground six of the appeal, I would dismiss the appeal, on the basis that:

(a)it was open for the Senior Member to find that Yahome had not established the factual foundation necessary to justify the granting of an adjournment, that is, its inability, as opposed to its unwillingness, to engage legal representation for the hearing;

(b)contrary to the assertions made by and on behalf of Yahome, Mr Lin was not under any greater disadvantage than any other self‑represented litigant;

(c)Yahome had an opportunity to file and serve written submissions regarding the matters of fact and law relevant to the determination of the issues in the proceeding, and in fact did so, with the benefit of legal representation; and

(d)Yahome has not, in the course of preparing for this appeal, adduced any evidence supporting its contention that it was not in funds to engage legal representation for the hearing, or which would establish, or even suggest, that the outcome of the proceeding would have been materially different had it been successful in its application for an adjournment. 

1. Accordingly, even setting aside the considerations in AON, which, given the time the application was made, are of particular relevance here, and the question of prejudice to the purchasers, Yahome has not established, in accordance with the requirement laid down by Nettle J (as he then was) in Opeka Pty Ltd v Mackie Group Pty Ltd,[25] that

it is incumbent upon an appellant from a refusal of an adjournment to establish that the effect of the refusal was to deprive him of the opportunity of putting a sustainable proposition that may have affected the outcome of the proceeding.

[25][2003] VSC 183, [35].

Ground 3

1. Paragraph 3 of Yahome’s Grounds of Appeal states as follows:

The Tribunal erred in failing to obtain proper representation for the Applicant when it was clear that he had not properly expressed himself to the Tribunal.

1. At first glance, this ground seems to suggest that there was an obligation upon the Senior Member to ensure that Yahome had legal representation during the hearing.  However, the written and oral submissions made on behalf of Yahome indicate that Yahome’s real complaint is as follows: first, that given that English is not Mr Lin’s first language, and that it is apparent from the transcript that he was having difficulties in making himself understood, the Tribunal should have intervened to ensure that an interpreter be used during the hearing; and secondly, that in a proceeding such as this, where Yahome was not represented by a legal practitioner, the Senior Member was obliged to take a more active role in identifying the real issues between the parties and directing them as to the evidence which legally and logically bore upon those issues, and, if necessary, interrogate witnesses himself in order to inform himself with respect to those issues.

1. In relation to the first of these matters, s 63 of the VCAT Act provides that:

Unless a Tribunal directs otherwise, a party may be assisted in the proceeding by an interpreter or other person necessary or desirable to make the proceeding intelligible to that party.

1. There must be many instances where the Tribunal is faced with parties with poor English skills necessitating the use of an interpreter.  Apparently the VCAT website informs parties that if an interpreter is required, upon application VCAT will arrange for an interpreter to attend a hearing at no cost to the parties.[26] There may well be situations where, even where no such application is made, it is abundantly clear that a hearing should not proceed in the absence of an interpreter. This is not such a case. While it is apparent from the transcript that Mr Lin’s spoken English is not fluent, there is no suggestion that he was unable to understand what was said by the Senior Member, or by the witnesses or the solicitor for the purchasers. No complaint along those lines or request for assistance was made during the course of the hearing. Further, contrary to the submissions made on behalf of Yahome, it is clear from the transcript, the oral ruling delivered by the Senior Member with respect to the adjournment, and his reasons for judgment, that the Senior Member understood what Mr Lin was intending to convey in his evidence and submissions. Further, Mr Lin’s affidavit in support of the application for leave to appeal did not contain an interpreter’s certificate, he did not depose that he was unable to comprehend written or spoken English, and his solicitor, Mr Ferraro (who, given his surname, presumably took instructions from Mr Lin in English), makes no reference in his correspondence or affidavit to any difficulties Mr Lin experiences in that regard. Accordingly, even if the VCAT Act imposes upon the Tribunal an obligation to ensure that certain parties or witnesses must be assisted by an interpreter (and counsel for Yahome properly conceded there is no authority in support of that contention), the factual basis for imposing such an obligation is absent in this case.

   [26]Pizer J “Pizer’s Annotated VCAT Act” (3^rd ed.) at [2865].

1. Similarly, while the contention that there is an obligation upon the Tribunal to take a more interventionist role in the conduct of a proceeding where one or both parties are unrepresented is not particularly controversial (the debate focuses more upon how far a Tribunal member must go to assist an unrepresented litigant, and how much assistance is too much), in the current case, there is simply  no factual basis for an assertion that the Senior Member took no active part in ensuring that Yahome could present its case.  The Senior Member explained to Mr Lin the difference between evidence and submissions, and warned Mr Lin that if Yahome called no evidence to counter the purchasers’ lay and expert evidence then he was likely to accept the only evidence before him.  The Senior Member informed Mr Lin of the necessity to lead evidence in support of Yahome’s contention that the purchasers’ claims in respect of the defects had been compromised by the settlement.  When Mr Lin decided to give evidence upon that matter, the Senior Member took an active role in taking him through his evidence.  He allowed the parties to file further written submissions on the legal and factual matters which were the subject of the hearing, which, along with the affidavit sworn by Mr Ferraro, were clearly taken into account in his reasons for judgment.

1. Accordingly, this ground of appeal is unsustainable.

Ground 7

1. Paragraph 7 of the Grounds of Appeal states as follows:

The Tribunal failed to warn the Applicant that if the case proceeded with the evidence of the experts on behalf of the Respondents that the Respondents’ evidence would be accepted in the absence of any expert evidence from the Applicant.

1. It is an unremarkable proposition that, in circumstances where a party is unrepresented, the Tribunal has an obligation to inform that party of the consequences of a failure to call expert witnesses to counter the evidence of experts called on behalf of the other party, and that a failure to do so, will, if the unchallenged expert evidence is relied upon, amount to a breach of natural justice.[27]

   [27]See Xu v Director of Housing (2008) VSC 82.

1. However, while it is correct that the Senior Member did not give a warning to Yahome which expressly referred to expert evidence, he did give a clear and direct warning in relation to evidence generally.  This is apparent from the following exchange between the Senior Member and Mr Lin reproduced at paragraph 25 of these reasons.

1. It was submitted on behalf of Yahome that in circumstances where the Senior Member must have been aware that expert evidence was the key to the outcome of the case, and was not prepared to allow an adjournment to enable Yahome to instruct its expert when it had the financial means to do so, then the powers conferred upon the Senior Member by the VCAT Act enabled the Tribunal to instruct its own expert or jointly appoint an expert to give evidence on these matters (presumably the existence of the defects and the costs of rectification).

1. In response, counsel on behalf of the purchasers submitted that the decision of Yahome not to instruct an expert to give evidence was deliberate. Consent orders had been made on at least two occasions, when Yahome was legally represented, providing for a timetable for each of the parties to file and serve expert evidence. Further, even if the Senior Member was inclined to obtain further expert evidence to supplement or counter the evidence filed on behalf of the purchasers, there remained the question of who would pay. Section 94 of the VCAT Act provides that:

1.The Tribunal may call in the assistance of an expert to advise it in respect of any matter arising in a proceeding.

2.The parties are responsible for any costs of an expert, and are to pay those costs in the proportions determined by the Tribunal.

1. However, the purchasers had already engaged their own experts, so it would be unfair for the Tribunal to impose an obligation upon them to contribute to the cost of an additional expert, and Mr Lin had already stated that Yahome had no funds to prepare for the hearing, and, if that statement was in fact correct (although no evidence had been called in support of that statement), then ordering that Yahome pay the costs would be futile.  In any event, if the Tribunal were to “call in” an expert, this would have inevitably necessitated an adjournment.

1. I agree with the submissions of the purchasers in relation to these matters, and note further that while there would no doubt have been some advantage to Yahome to engage an expert to assist in evaluating and challenging the quantum of the purchasers’ claims, it is noteworthy that neither Mr Ferraro in his affidavit sworn 4 May 2012, or counsel in his two sets of written submissions, made any mention of the issue of quantum or the need for expert evidence.  Both the affidavits and the submissions focussed entirely upon the settlement and the legal implications of the settlement upon the purchasers’ claims.

1. Accordingly, I would dismiss this ground of appeal.

Grounds 5, 2 and 1

1. Paragraphs 5, 2 and 1 of the Grounds of Appeal are related, and state as follows:

The Tribunal failed to consider or ought to adequately consider the evidence of the Respondent’s duty to mitigate their loss and damage.

The Tribunal erred in failing to consider what items of poor workmanship or defective workmanship the Applicant had rectified.

The Tribunal failed to ascertain what items or defects or poor workmanship had been compromised by the Applicant with the original owner.

1. Essentially, the above grounds are directed towards one issue: whether the Senior Master was correct in deciding that the defects which were the subject of the purchasers’ claim were not compromised by the settlement, such that Yahome was liable to compensate the purchasers for the costs of their rectification.  A related question is whether, in circumstances where Yahome had asserted in its defence that the defects claim had been compromised by the settlement, the onus was upon the purchasers to prove positively that the defects claimed were not the subject of the settlement, or upon Yahome to make out the factual basis for its positive defence. 

1. Ultimately, Yahome’s submissions, both oral and written, did not attack the analysis of the Senior Member in construing s 9 of the DBCA (where he said that this provision gives a subsequent owner rights which are commensurate with, and no greater or less than, the rights of the original owner under s 8 of the Act). Rather, the written submissions filed on behalf of Yahome stated as follows:

Whilst the Learned Tribunal Member understood that Mr Lin had said a deal had been struck between the builder and the vendor and agreed that no evidence was given as to what defects were actually settled, no warning was given to Mr Lin that failure to ascertain evidence or give the evidence of what was settled.  The fact that the builder’s defence failed because of insufficient evidence should be balanced against the fact that Mr Lin was unaware of the nature or what it was he was doing, English was not his first language, and it was clear by reading the transcript that he was a fish out of water.

In short, when the Tribunal was put on notice of a line of inquiry, it should have taken a more rigorous approach in identifying what the defects were rather than simply saying the builder’s claim failed for want of evidence.

1. Notwithstanding the manner in which the above grounds are framed, the real grievance here is the failure of the Senior Member to accept Yahome’s contentions (as set out in its written submissions) that the defects claimed by the purchasers were the subject of the settlement.  In particular, the Senior Member in his reasons appeared to cast the onus upon Yahome to establish that the defects were the subject of the settlement.  Also, the written submissions filed on behalf of Yahome in support of its application for leave to appeal stated that the Senior Member had:

(a)failed to address the issue of whether the purchasers were “double dipping” by claiming damages from Yahome in respect of the defects; and

(b)had failed to warn Mr Lin that failure to ascertain or give evidence of what defects were the subject of the settlement would adversely affect Yahome’s defence of the proceeding.  Rather, the Senior Member should have taken a more rigorous approach in identifying what defects were and were not covered by the settlement rather than simply saying that Yahome’s claim failed for want of evidence.

1. In her submissions during the course of the hearing, counsel for Yahome submitted that, in the circumstances, the Senior Member was obliged to take Mr Lin through each and every defect claimed by the purchasers in order to identify whether it was the subject of the settlement.

1. While the written submissions filed on behalf of Yahome in the proceeding asserted that the onus was on the purchasers to establish that the defects claimed by them were not the subject of the settlement, this assertion was not pressed on appeal. As such, it is not necessary to say much more than that section 98(1)(b) of the VCAT Act provides that the Tribunal is not bound by the laws of evidence. However, even if it was, the fact that Yahome had asserted a positive defence, based upon facts which were peculiarly within its knowledge, means that for all practical purposes, the onus would have been upon Yahome to make good the allegations in its defence.

1. Ultimately, given that Yahome did not challenge the analysis undertaken by the Senior Member of the interaction between sections 8 and 9 of the DBCA, the question of whether the defects claimed by the purchasers were compromised by the settlement is ultimately a question of fact. There was no evidence of any “double dipping” on the part of the purchasers. As indicated in the earlier part of these reasons, the Senior Member conducted the hearing fairly, and provided the appropriate degree of assistance to Mr Lin. The documentary evidence before the Tribunal demonstrated that the only property which was the subject of the settlement was Ms Delic’s property, and the reconciliation undertaken by the purchasers’ solicitors of the defects claimed by Ms Delic with the defects in her property which formed part of the list of defects specified in the settlement was not challenged by Yahome in its written submissions filed after the hearing (and after the reconciliation was prepared), or by way of evidence in support of this application for leave to appeal.

1. Accordingly, I would dismiss these grounds of appeal.

Application for leave to appeal

1. The parties’ submissions and these reasons for judgment were prepared on the basis that this matter was to be dealt with as an appeal, as if leave had already been granted under s 148 of the VCAT Act. However, as previously noted, an associate judge made orders on 25 July 2012 that the application for leave to appeal be referred to be heard and determined with the appeal itself.

1. As I have dismissed each of the grounds of appeal, the question of whether leave to appeal ought to have been granted is not of any great practical consequence.  However, for completeness, I should add that I would not have granted Yahome leave to appeal. 

1. Section 148 of the VCAT Act provides that:

… a party to a proceeding may appeal, on a question of law, from an order of the Tribunal in the proceedings …

1. However, there is no automatic right of appeal.  An aggrieved party must apply to the Court for leave to appeal on a question of law.  The principles governing the disposition of applications for leave to appeal were laid down by the Court of Appeal in Secretary to the Department of Premier and Cabinet v Hulls,[28] as follows:

   [28][1999] 3 VR 331, see the summary in Pizer at [5095].

1.Whether leave to appeal should be granted must always depend upon the justice of the particular case (and that means justice to all parties, not just the applicant);

2.Although the discretion to grant leave cannot (and should not) be fettered by judicial discretion, it is possible to lay down guidelines concerning the exercise of that discretion;

3.These guidelines  …  may be summarised as follows:

(a)the applicant must identify a question of law arising out of the VCAT’s decision;

(b)the question of law must be relevant to the relief sought on appeal – in other words, the question must be such that, if the VCAT erred in respect of that question, the applicant’s claim to relief would be advanced;

(c)the public or general importance of the question of law may be a relevant consideration;

(d)the applicant must establish that the VCAT’s decision is “attended by sufficient doubt” to justify the granting of leave;

(e)it must be just to grant leave;

(f)an applicant 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.  Where the VCAT’s order is final, however, the injustice of leaving that order uncorrected will often be more readily discernible. 

1. Counsel for the purchasers opposed the application for leave to appeal upon the basis that Yahome had not in fact identified questions of law, or where a question of law had been identified, there was no factual basis established for the consideration of the proposed grounds of appeal.  Further, in relation to the question of whether the Senior Member erred in refusing to grant an adjournment, the question of whether an applicant had established a basis for an adjournment is a question of fact, not law, and in this case, the Senior Member had found that Yahome had not established that it was not in a financial position to proceed with the hearing.  Finally, in any event the Court is generally slow to interfere with a tribunal’s discretion upon such matters as to whether to grant an adjournment. 

1. I agree that, in the absence of any evidence or submissions that the Senior Member’s findings on these matters were so unreasonable that no reasonable Tribunal could have made those findings, and in the context of the concession by counsel for Yahome that the Senior Member did not err in his construction of ss 8 and 9 of the DBCA, the matters raised by paragraphs 1, 4 and 5 of the draft amended Notice of Appeal dated 13 August 2012 are not questions of law. However, it is generally accepted that a failure to accord procedural fairness constitutes a question of law for the purposes of s 148 of the VCAT Act. In the current case, the following conduct is said to amount to a breach of the obligation to afford procedural fairness:

(a)the refusal of the Senior Member to grant Yahome an adjournment;

(b)the failure of the Tribunal to appoint an interpreter to assist Mr Lin;

(c)the failure of the Tribunal to appoint an expert to assist the Senior Member to make a determination on Yahome’s claim that the defects which were the subject of the purchaser’s claims had been compromised by the settlement; and

(d)the failure of the Senior Member to warn Mr Lin that if Yahome failed to present expert evidence in relation to the cost of rectification of the alleged defects and the cause of the alleged defects then the evidence of the expert called by the purchasers would be accepted.

1. Notwithstanding the submissions made by counsel for the purchasers, I am prepared to accept, for present purposes, that the refusal of a tribunal to grant an adjournment of a hearing may, in certain circumstances, amount to an error of law.  However, in order to justify the grant of leave to appeal, an applicant must not only show that there is a factual foundation for the asserted error of law and that there was an arguable error of law, but that arguable error of law did affect or could have materially affected the outcome of the proceedings.  In short, if an error was made, but that error did not have or could not be shown to have affected the ultimate outcome of the proceeding (in this case, the decision to award the purchasers substantial compensation for the defects) then leave ought not be granted, as the appeal would be futile. 

1. Returning to Yahome’s proposed questions of law, I agree that, based upon a review of the transcript of the hearing, there is no factual foundation for the allegations in paragraph 6 of the draft amended Notice of Appeal that the Senior Member failed to warn Mr Lin of the possible adverse consequences of failing to present expert evidence regarding the existence and cause of the defects, the costs of rectification, and whether the defects were compromised by the settlement.  I also agree that, based upon the facts and circumstances of this case, there is no real or significant doubt of regarding the question of whether the Senior Member was in error by failing to ensure that Mr Lin was assisted by an interpreter, or by failing to appoint an independent expert to assist the Tribunal (see paragraphs 2 and 3 of the drafted amended Notice of Appeal).  In the case of the former issue, the evidence does not justify a finding that an interpreter was necessary or warranted, and in the case of the latter, the contention that there is an obligation upon VCAT to appoint its own independent expert by reason of the decision of one party not to engage its own expert is, at best, novel.

1. That leaves the question of whether the Senior Member’s refusal to grant an adjournment, and the manner in which the Senior Member informed himself regarding the issue of whether the defects which were the subject of the purchasers’ claims were compromised by the settlement were attended by sufficient doubt, and whether any arguable error may or would have had a material effect on the outcome. 

1. In my reasons above, I have found that the Senior Member did not fall into error in relation to either of the above matters, and that the decisions and conduct of the Senior Member in relation to these matters were justifiable, both in terms of legal principle, and in the context of particular facts and circumstances of this proceeding.  Of course, the threshold for the grant of leave is lower than that which applies on appeal, and a different tribunal member may have exercised his or her discretion differently.  However, the difficulty facing Yahome in its application for leave to appeal is that it has not shown that, on the evidence both in the proceeding below, and upon this application for leave to appeal, if an adjournment had been granted, or if the Senior Member had been more interventionist, the ultimate result would or even might have been different.  For example, no evidence has been adduced by Yahome that:

(a)it was not in a position to fund either legal representation or engage an expert for the hearing;

(b)if not, when it would have been in a position to do so;

(c)that if Yahome had legal representation and/or expert assistance at the hearing or at an adjourned hearing, the result of the proceeding would have been materially affected, whether in terms of its liability to compensate the purchasers, or in terms of the quantum of that compensation. 

1. There is simply no evidence regarding these matters, just a complaint that the Senior Member acted unfairly, and that if the Senior Member had taken an alternative course, Yahome would have been able to present its case better. 

1. Accordingly, I would refuse leave to appeal, but, in any event, had leave been granted, I would dismiss the appeal.

1. I will hear from counsel on the form of orders and the question of costs: in respect of costs, I would seek submissions in respect of:

(a)the costs of the application for leave to appeal;

(b)the costs of the appeal; and

(c)the costs of the Tribunal proceeding, including reserved costs.

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