Aksan v Godfrey

Decision

At the commencement of the hearing of the appeal we attempted to explain to the appellants (in summary form) the relevant legal principles (set out later below) applicable to sign-offs by independent experts in circumstances such as these, and directed them to the types of matters which might be relevant on an appeal.
We also attempted to explain the difference between the hearing before the Tribunal (which resulted in the decision now appealed against) and an appeal. Most particularly, we attempted to explain that an appeal was not a second hearing but was concerned with whether the Tribunal had made some type of mistake in its decision-making process which resulted in a flawed decision.
With no disrespect to the appellants our attempts on both counts were unsuccessful.
The appellants' submissions (including their subsequent written submissions delivered after the hearing of the appeal and without leave), and with no disrespect to Mr McInnes who is not legally trained, did not address the legal issues relevant to the appeal, but repeated the complaints made about the building work and perceived deficiencies in Mr Moroney's sign-off that had been advanced at the hearing before the Tribunal.
Accordingly, the appellants' submissions were irrelevant in the sense that they raised matters irrelevant to an appeal and failed to raise matters that were relevant on an appeal such as this.
We note that we received two lots of written submissions from the appellants after our decision had been reserved. No permission was granted to the appellants to provide these further submissions and so they shall be ignored. The appellants had ample opportunity to provide us with written submissions prior to the appeal. Further, it would be unfair for us to rely on them without providing the respondent with the opportunity to reply.
The relevant legal principles to apply to an expert determination such as this are as follows.
The leading authority in this area is the judgment of McHugh JA, as his Honour then was, in Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 (Legal & General). That case involved a rent review clause in a commercial lease which said that if the parties were unable to agree on the revised rent the question would be referred for the "decision of a qualified valuer … acting as an expert and not as an arbitrator". The decision of the valuer was, the lease said, to be "final and binding on the parties to (the) lease".
After discussing earlier authorities in which differences of opinion had been expressed, his Honour stated the correct law as his Honour understood it (and his Honour's statement of the law has been followed in Australian since).
In his Honour's judgment the question whether a valuation (or expert determination agreed on by parties generally) was binding upon the parties depended in the first instance upon the terms of the contract, express or implied (at 335.D).
In this case that "contract" would be the consent order and, most particularly, cl 1.7 which said: "The Remedial Works be considered complete when signed off by Mr Peter Moroney of Buildingwise Inspections, an independent building consultant, as being completed to the applicable building standards. Mr Godfrey is solely responsible for paying the fees of Mr Moroney."
His Honour said that a valuation obtained by fraud or collusion could usually be disregarded (at 335.D-E). But it was otherwise if a valuer had made a mistake, acted negligently or arrived at an unreasonable value. His Honour said (at 335.E): "It will be difficult, and usually impossible, however, to imply a term that a valuation can be set aside on the ground of the valuer's mistake or because the valuation is unreasonable. … But as between the parties to the main agreement the valuation can stand even though it was made negligently. While mistake or error on the part of the valuer is not by itself sufficient to invalidate the decision or the certificate of valuation, nevertheless, the mistake may be of a kind which shows that the valuation is not in accordance with the contract. A mistake concerning the identity of the premises to be valued could seldom, if ever, comply with the terms of the agreement between the parties. But a valuation which is the result of the mistaken application of the principles of valuation may still be made in accordance with the terms of the agreement. In each case the critical question must always be: Was the valuation made in accordance with the terms of a contract? If it is, it is nothing to the point that the valuation may have proceeded on the basis of error or that it constitutes a gross over or under value. Nor is it relevant that the valuer has taken into consideration matters which he should not have taken into account or has failed to take into account matters which he should have taken into account. The question is not whether there is an error in the discretionary judgment of the valuer. It is whether the valuation complies with the terms of the contract." (Emphasis ours)
In other words, if the valuer (or expert) acts in accordance with the contract, the valuation (or expert sign-off) will not be set aside for mistake, negligence or because he or she arrived at an unreasonable value (or opinion).
In Australian Vintage Limited v Belvino Investments No 2 Pty Ltd (2015) 90 NSWLR 367; [2015] NSWCA 275 (Australian Vintage) Bathurst CJ, with whom Beazley P (as Her Excellency then was) and McColl JA agreed, summarised the principles as follows (citations omitted): "[74] The parties accepted that the question depended upon whether the determination was made in accordance with the contract: Legal & General Life at 336. … . The question of whether the determination is open to review rather depends on whether or not the expert has carried out the task which he or she was contractually required to undertake: …. If the expert in fact carried out that task, the fact that he made errors or took irrelevant matters into account would not render the determination challengeable. [75] On the other hand, if the expert had not performed the task contractually conferred on him or her, but rather performed some different task, or carried out his or her task in a way not within the contractual contemplation of the parties, objectively ascertained, then the determination will be liable to be set aside. [76] That is not to say that questions of mixed fact and law, or for that matter, pure questions of law, could not be left for the determination of the expert: … . Whilst it is a matter of contractual construction in each case, it has been stated in a number of cases that parties are more likely to have left to an expert matters involving discretion or opinion, rather than matters of objective fact: … ." (Emphasis ours)
Neither before the Tribunal, nor on this appeal, did the appellants allege fraud or collusion of the relevant kind. That is, they did allege fraud from time to time in their documents, but a fair reading of those allegations is that they were not alleging fraud as lawyers would understand it (and there was no evidence to support such an allegation) but were only asserting that Mr Moroney's opinions were wrong and, on that basis alone, were therefore fraudulent.
Rather, the appellants submitted to the Tribunal, and again on this appeal, that the work Mr Moroney had signed-off on had not been completed. On this appeal, the appellants said that the Tribunal was misled by Mr Moroney's sign-off in that, they submitted, Mr Moroney's sign-off was flawed for a large number of reasons.
However, the appellant's submissions were, with no disrespect, misconceived.
An example of the type of misconceived submissions advanced by the appellants are those made in relation to Item 25 in the Schedule of Agreed Defects referred to in the Consent Order. Item 25 says: "Agricultural pipes - unsure if installed. Investigate whether it has been installed. If not installed, install it in accordance with Australian Standards and BCA."
Mr Moroney's first report (dated 15 July 2021) noted that this item was "incomplete" because an inspection could not reveal whether the pipe was installed, and the builder was to supply photographic evidence that it was. Mr Moroney also sought further information as to engineering compliance, obviously as part of his role as required by the Consent Order to determine that the work was completed to the applicable building standards.
Subsequently, on 16 July 2021, Mr Moroney said that this item was "completed", and then referred to supporting documentation with which he had been provided as to the appropriate fill material i.e. that the work had been completed to the applicable building standards.
As the Tribunal said at [6] of its decision, it also considered the alternative position if the appellants were permitted to go behind Mr Moroney's sign-off, noting that the Tribunal had sought the provision of a report by an inspector from the Department of Fair Trading.
In relation to Item 25 the Tribunal said: "49 Mr Van Der Zant (the appellants' expert before the Tribunal) suggested this pipe was not installed but did not provide the reason/s for that conclusion. Both Mr Ward (the Fair Trading inspector) and Mr Moroney expressed the view that the pipe was installed, and Mr Ward provided a supporting photo. The fact that the pipe was installed is sufficient to address this item."
Despite that finding, the appellants submitted on the appeal that: "The engineers (sic) letter relied on by Mr Maroney (sic) only speaks to the backfill material behind the wall. It does not confirm that ag pipe was present as certified by Mr Maroney. Mr Maroney was NOT charged to sign off that the work completed by the builder was acceptable. He was to certify if Drainage Line (Ag pipe) was installed. He has not certified that it was."
The Consent Order did not require Mr Moroney to give reasons for his findings that work had been completed. He was simply asked to sign-off that it had been completed and had been completed to the applicable building standards. That is what he did in relation to Item 25 (and all other Items). He said that it was completed in his note of 16 July 2021, and it is not to the point that the engineer's letter (referred to by the appellants) did not say so.
Further, and contrary to the appellants' submission quoted above, the Consent Order did require Mr Moroney to sign-off that the work had been completed to the applicable building standards. That is found in the third line of cl 1.7 of the Consent Order quoted at [22] above.
The point of setting out this exemplar of the appellants' submissions is to demonstrate that the appellants' submissions did not address the legal issue on the appeal: did Mr Moroney do what the Consent Order asked him to do?
Rather, the appellants submitted (as a global proposition) that Mr Moroney made errors or took irrelevant matters into account (of which many particulars were given).
Three things may be said about those submissions.
First, the Tribunal considered those allegations as an alternative, and with the assistance of an inspector from Fair Trading held that there were no such errors.
Second, no discernible appeal grounds are apparent to us as to why the Tribunal's "alternative" decision in relation to each item was legally flawed. To succeed on this point on this appeal the appellants needed to demonstrate that the Tribunal made a type of legal error in reaching its "alternative" decision which would allow them to appeal, something they did not do.
Third, even if there were errors made by Mr Moroney (a proposition rejected by the Tribunal), the law we have quoted above means that the appellants are not able to challenge Mr Moroney's sign-off on those bases. As Bathurst CJ said in Australian Vintage quoted above, if the expert in fact carried out the task given him, the fact that he made errors or took irrelevant matters into account would not render his sign-off challengeable.
The appellants made an agreement. Their agreement was that the work would be considered complete if Mr Moroney said so. Making that agreement meant that, as McHugh JA said in Legal & General (at 335.F) they agreed to accept his honest and impartial decision, they agreed to rely on his skill and judgment, and they agreed to be bound by his decision. There is no reason advanced by the appellants or apparent to us why they should not be held to their agreement.
In substance, the Tribunal correctly applied those principles to Mr Moroney's sign-off and did not err in holding the appellants to their agreement.

At a glance

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Judgment (8 paragraphs)

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