Appellant v Respondents

2 The builder seeks leave to appeal on the ground that the Tribunal denied him procedural fairness in refusing his adjournment application, and then deciding the case against him on the basis of the owners' (unopposed) building consultant's report when he was not able to have the opportunity to obtain his own expert report.

3 It is apparent this building dispute had become prolonged and intensive. There is a vast amount of affidavit evidence on this leave application, no doubt produced at great expense and I expect that, as often happens, the costs will be disproportionate to the amount at stake.

4 The commencement point is to recognise that the Tribunal is bound by the rules of natural justice,[3] and that the refusal of an adjournment may amount to a denial of procedural fairness if it is likely to deny a party a reasonable opportunity to present his case: see generally Aronson and ors Judicial Review of Administrative Action[4] and the body of cases referred to in Williams Supreme Court Practice.[5] A refusal of an adjournment can also be grounds for certiorari.[6] But it is not every breach of the rules of natural justice that will render a decision invalid, as the Court may refuse relief if satisfied that what appears on face to have been a denial of natural justice could have had no bearing on the outcome.[7]

5 Thus, there is what can be characterised as a question of law for procedural purposes. But, Mr Caillard, counsel for the owners, submits leave to appeal ought be refused because the builder does not have a prima facie case on appeal.[8] He submits that in the events that occurred, the builder had a reasonable opportunity to obtain expert evidence before the hearing, but did not do so and he only had himself to blame for his predicament. Thus, he submits, any prejudice at the hearing was entirely of his own making and there was not an unjust refusal of the adjournment having regard to contemporary considerations in Aon Risk Services Aust Ltd v ANU[9] which made any further delay unjust to the owners. As argument on the leave application would replicate argument on the substantive appeal, this Court determined that the leave application and the hearing of the substantive appeal would be heard concurrently.

6 Applications for adjournments are discretionary. That means in general terms:[10]

A decision-making process in which 'no one [consideration] and no combination of [considerations] is necessarily determinative of the result'. Rather the decision-maker is allowed some latitude as to the choice of the decision to be made.

7 There are some cases when a Court or Tribunal can sense that a party just does not want the case to go on. Otherwise, as has been said before, applications for adjournment are difficult to determine because of the competing interests of both parties.[11] That is why the justice of the situation (or the course that does least injustice) is the determining factor, and that requires a modern approach to court administration which pays regard to the efficient use of court resources and public confidence in the Courts and Tribunals which might be damaged if they are perceived as being too relaxed in allowing adjournments. In addition, because the adjournment of a proceeding is made in the exercise of a discretion, it is conventionally a decision which is not likely to be set aside on appeal[12] on the general principle that matters of practice and procedure are best left to the court or tribunal seized of the proceeding. But the discretion is one which must be exercised judicially.

8 All these competing considerations confirm that a grant or refusal of an adjournment turns on the circumstances in which it was made. As I said, the case was unusual (an extenuating factor relied upon by Mr Ritchie, counsel for the builder), and it requires a careful exposition of the facts.

9 This is a borderline case. But I have reached the view there was denial of procedural fairness in disallowing the adjournment. It would have been the least unjust course. The Tribunal decided the case saying explicitly there was an absence of expert evidence from the builder, yet it was the desire to adduce that evidence that actuated the adjournment application which was refused.

10 The applicant, a domestic builder, built a new dwelling at Unit 1, 7 Takapuna Street in Caulfield South. The respondents purchased it in late 2007. Under the Domestic Building Contracts Act the implied warranties for the building work done by the builder run with the building to inure for the benefit of subsequent purchasers. The respondents brought proceedings in VCAT in March 2008. Their claim concerned various defects including a leaking balcony which they said was causing damage to the loungeroom ceiling underneath. After the proceedings were commenced, some of the disputes over defects were settled but (the owners said) not the claims relating to the leaking balcony. When the owners sought to return to the Tribunal, the builder contended that the entire claim, including the alleged leaking balcony, had been settled in February 2009. On 16 July 2009, the Tribunal made orders allowing the owners to proceed with their claim for the leaking balcony. To that end, on 9 October 2009, the Tribunal made directions permitting the parties to file expert reports. At that time, the case did not proceed as sometimes happens in building cases in the Tribunal (for the sake of precision or containment) by "pleadings" in the form of points of claim and points of defence.

11 The hearing of the claim occurred on 18 December 2009 before Member Davies. For the purposes of that hearing the owners relied on a report prepared by a building consultant, Buildspect & Co Pty Ltd. The author was a Mr Laurie Mitchell. The stated purpose was to "report upon alleged water penetration from the balcony into the dwelling, damaging the ground floor living room ceiling". Mitchell's report dated 5 August 2009 said in essence:

(a) the balcony is in an exposed position;

(b) at the threshold between a doorway and the balcony there was no step down and that seriously compromised the ability to exclude wind driven water at the threshold;

(c) the step down from the doorway also should have been better positioned or recessed, about 40mm back from the doorway sill to allow drip-off;

(d) the ceramic tiles on the balcony would not create waterproof conditions. It required a membrane to be installed to ensure proper sealing and waterproofing;

(e) the balcony had to be reconstructed by removing the tiles and substrate, modifying the balcony frame to create a step down, then re-installing the substrate, installing a membrane and retiling.

12 Paragraph 5 of the report recommended concisely six steps to be taken to rectify the problem. The report did not give a pricing for the rectification works. That might explain why the outcome of the case on 18 December 2009 was not, as might have been expected, a monetary award but an order requiring the builder to go back and rectify the works.[13] The Tribunal's order said (with my emphasis):

1. That the respondent shall rectify the defects in the first floor balcony at ... which are giving rise to water penetration to the lower parts of the premises ("the repairs").

2.1 by qualified tradesmen;

2.2 in accordance with the recommendations made in paragraph 5 of the report of Buildinspect dated 5 August 2009;

2.3 so as to comply with the requirements of a suitably qualified structural engineer (to be engaged by and at the cost of the respondent) as to any modifications required to the balcony frame to allow for an adequate step down;

2.4 at the expense of the respondent; and

2.5 so as to be completed no later than 31 March 2010

13 Even though the builder carried out works to the balcony as ordered, the owners complained about continuing water leakage. Acting on the Tribunal's order giving liberty to apply the owners wrote to the Tribunal complaining that the builder "did not carry out the works stipulated by the Tribunal's order on 9th of January 2010 in accordance with the recommendations made through Buildspec.[14] This led to Senior Member Lulham, the third Member dealing with the matter, making these orders on 20 October 2011 (which is over three years since the proceeding was filed):

1. Pursuant to the liberty to apply reserved in paragraph 3 of the Order made 18 December 2009, the proceeding is reinstated.
2. The Principal Registrar shall send the Respondent a copy of the letter from the Applicant dated 6 October 2011.
3. As that letter states that the Applicant seeks compensation, the Applicant shall by 4 November 2011 file and serve Updated Point of Claim which set out the amount of compensation claim and the manner in which it is calculated.

1. Any application by either party for Directions (such as orders for inspection of the property, the exchange of relevant documents or experts' reports or other matters) shall be filed by 11 November 2011...

14 What is significant is that these orders introduced deliberately the use of points of claim as a procedural requirement. They also distinguished between points of claim (as a statement of a person's case) and the expert report as the proposed evidence in support of an updated case. What is also significant is that up until these orders, the course had been set by the Tribunal's order for the rectification works to be done according to the Buildspec report from Mitchell. That stipulated the scope of works. Thus, one would have expected phase two of the case to proceed on the basis of the owner saying how and what way the builder had not done the works stipulated in paragraph 5 of the Buildspec report.

15 The owners did not file their points of claim as ordered. Although it appears that the proceeding was being conducted by a Mr Moshe Furman, a director of the builder, come 10 November 2011 a Mr Cyngler of Messrs Cyngler Kaye Levy Lawyers, wrote to the Tribunal asking for the case to be adjourned sine die (without date) because, so he said, the owner had not provided the updated points of claim as ordered; the builder had carried out the works as ordered; and there was no need for a further directions hearing. In an order made on 11 November 2011 by yet another Member of the Tribunal, the application for an adjournment (of a directions hearing) was refused, and a directions hearing was ordered to take place on 7 December 2011.

16 A directions hearing occurred on 7 December 2011 before yet another Tribunal Member, Mr Butcher. Both parties were not legally represented. The hearing was transcribed. It seems to me there was confusion. The Tribunal questioned the owners about the delivery of the (overdue) points of claim. The owner produced a second report prepared by Buildspect dated 16 November 2011, but said nothing about it at all. He handed it to the builder. But the Member, quite rightly I think, still required the filing and service of updated points of claim, which the owner said he would do straight away. From the transcript, I think the owner believed that this second Buildspect report was, or was to be regarded as the points of claim. But the Member, so the transcript shows, said differently and directed the points of claim to be filed as a distinct document. To add to the confusion, the builder has sworn an affidavit saying:

I appeared at the Directions Hearing on 7 December 2011 without legal representation and it was my genuine belief at the time that the proceeding had been reinstated on the basis of the matters raised in the [first] 2009 Buildspect Report, pursuant to the order made by VCAT on 18 December 2009. Furthermore, it was my genuine belief at the time that the Report handed to me at the Directions Hearing on 7 December 2011 was the same as the 2009 Buildspect Report and I did not realise that the 2011 Buildspect Report was any different in substance to the 2009 Buildspect Report. I thought it was one and the same report.

17 At first, I thought this strained credulity. But on reflection, I am not willing to dismiss it as unbelievable. It may have been an honest belief; maybe not reasonable. True, the builder ought to have double-checked the document. But equally true it was right to suppose that the reinstatement of the case was for the purpose of visiting the first report (on which the Tribunal's orders were based) and hearing how and what way it was said the builder had not complied with it. Had there been less confusion, the owner might have made the purport of the (second) report clear and the Tribunal Member might have looked into it to ensure what the report was about and possibly exposed it to the builder. Whatever may be said (and I make no criticism, certainly not of the Tribunal), the outcome was for the Tribunal to maintain the requirement for points of claim to be delivered. That is what matters for present purposes.

18 Points of claim were not filed or served immediately. That is because the owner was still labouring under the confusion that the (second) expert report was the same thing as points of claim. That is evident in a letter he sent dated 12 December 2011 to the Tribunal in which he said he was enclosing the second Buildspect Report " ... with points of claim (page 17)". Page 17 of the report was the second page of a "pricing calculation" for the works to be done.

19 Nothing happened until February 2012. By then a hearing date must have been fixed for 23 February 2012. On 16 February 2012, the builder engaged Cyngler to act for him at the hearing of the matter. On 28 December, Cyngler wrote with a reasonable request but with a minatory ending:

...

We note that you are required to file and serve Updated Points of Claim, setting out the amount of compensation claimed and the manner in which it is calculated, by 4 November 2011, pursuant to VCAT order dated 20 October 2011.

Please advise us if you have filed the Updated Points of Claim and if so, please provide our office with a copy.

If you have not filed the Updated Points of Claim, we request that you file and serve the document by close of business on Friday, 2 March 2012, failing which we will seek Directions from the Tribunal to list the matter for a Contempt hearing.

20 To perpetuate the confusion, the owner responded by saying he had filed the points of claim on 7 December 2012 at the hearing before Member Butcher, which of course was a mistake in understanding of what he was asked to do. Cyngler asked again for the points of claim, and threatened the owner with a contempt hearing.

21 It is just as well that the owners then instructed a lawyer Mr Ray Abrahams of Messrs Ray Abrahams and Associates. I shall not refer in detail to the correspondence that ensued. In essence, Abrahams declined initially to provide points of claim, contending that the second Buildspect report fulfilled the same purpose. If, as the builder said, he did not realise that the report handed to him on 7 December 2011 was any different to the first report, then by now he and Cyngler were certainly made aware of the significance of the second report. It seems that the builder had not handed to Cyngler the report handed previously from the owner at the Directions hearing on 7 December 2011.

23 Cyngler insisted on points of claim. After all, the Tribunal had ordered them. They arrived on 7 March 2012 together with a copy of the second Buildspect report. There is no doubt the points of claim are predicated on the building report. And therein lies the problem, Mr Ritchie for the builder submits. The claim had obviously become enlarged. The claim was certainly not confined to the breaches of the Tribunal's orders (based on the first report) but now included additional claims for rectification works for the leaking balcony including stainless steel drainage works. In other words, it appears the scope of works had changed, as had the basis of original liability to give an additional dimension to the case. I have not looked into the matter in any detail but it appears the owners, through their expert, were now saying that there could be other explanations for the leaking balcony beyond those which had been determined in the first hearing and that required rectification works different or additional to those which had been ordered to be done at the first hearing. That is not wholly surprising because, experience in this field has it, water leakage problems are notoriously difficult to trace or diagnose.

24 The delivery of the points of claim led to another attempt by Cyngler for an adjournment. But the owners would not agree. On 15 March 2012, Cyngler wrote to the Tribunal and asked for an adjournment on the basis of late service of the points of claim. He filed an affidavit reciting the history of the matter and asked for an adjournment for "at least a further 3 weeks to prepare". This application was declined on the papers by yet another Member of the Tribunal (Mr. Kefford) not by an adjudication of its merits, but because there was an absence of consent.

25 That left only seven days to the hearing date on 23 March 2012.

26 On 20 March, Cyngler requested Abrahams to give access to the property on that day to enable a building surveyor to make an inspection on behalf of the builder. I gather that an inspection occurred, but he was unable to appear at the hearing on 23 March 2012. That is why on 21 March, Cyngler requested access for another inspection of the property on 22 March. Abrahams refused that request saying that it was unreasonable at such short notice and photographs of the balcony and the ceiling had been previously provided.

27 I come now to the hearing on 23 March 2012 before another member, Mr Smithers. There is no transcript. Cyngler swore an affidavit which was put before the Member that reiterated the history of the matter and complained that the owners' refusal to allow access for an inspection had unfairly prejudiced the builder's preparation for the hearing "particularly given that the Respondent was not served with updated Points of Claim until two weeks before the date of the hearing". He said that the builder was prejudiced as he would not have a building surveyor to give evidence to refute the second Buildspect Report. He said he had organised for another building surveyor to inspect the property on 30 March 2012. He asked for an adjournment for at least a further three weeks.

28 The Member refused the application. Paragraph 11 of the Member's reasons said this:

1. Updated Points of Claim from the applicant were provided on or soon after the 7 March 2012. The respondent claimed that he had not been given sufficient time to prepare his case and sought an adjournment on two occasions. ... For reasons I gave at the time I refused the application by the respondent for an adjournment. In summary I found that the key document which articulated the applicant's case was the 2011 Buildspect report, which was handed to the principal of the respondent, Mr Furman, by the applicant personally on 7 December. The updated Points of Claim did little more than summarise this document. The Points of Claim is a much shorter document, amounting to less than three pages. I concluded that the application was, in the applicant's words, "just a delaying tactic". Accordingly, the matter proceeded before me today.

29 I shall not refer to the rest of the reasons. The Member identified the two key issues as being whether there was an insufficient step down beneath the door to prevent water ingress from the balcony, and whether there was a sufficient recess to allow water to drip onto the balcony and not leak back inside the house by way of capillary action. That much of the case was clearly referrable to the initial order compelling the builder to perform the rectification works. The Member accepted the evidence of Ryan and said that (paragraph 16) "No expert material was produced by the respondent to challenge Mr Ryan's conclusions. ... As indicated the respondent did have time to obtain expert evidence if it had wanted to, and any prejudice that it has suffered it has brought upon itself." The reasons also show that the builder had sought to challenge the $25 059 figure for the costs of the rectification works as calculated by Ryan. But the Member went on to say "However, he did not come up with any alternative figures, nor any serious alternative expert evidence, even from himself, despite having the opportunity to do so since 20 December 2011." From there, the Member simply accepted Ryan's figure. As I have remarked earlier, it seems to me that that figure included works that went outside the scope of works to be done under the Tribunal's orders. That is not to say that there was therefore any miscarriage of the case in that regard. It only goes to point to the unusual situation that had occurred where the Tribunal was being asked to reinstate the case and invited to make compensation orders for works to be done which were outside the scope of works in the original order. Thus there was more to the case than the mere issue of compliance with the previous order. Ultimately, the Tribunal regarded Ryan's figure as being the proper measure of compensation.

30 It is true, as Mr Caillard urged, that the function of this Court is not to re-exercise the discretion anew concerning the refusal of the adjournment. Unless a legal error is shown it matters not that a Court on appeal or review might have exercised the discretion differently. The question is whether the Member had committed an error of law in denying the builder procedural fairness by not allowing him to seek and consider adducing expert evidence on liability or quantum. He submitted that the builder had, at the worst, from 7 March (when the updated points of claim were filed) to obtain expert evidence, which was ample time. But before then, it was submitted the builder should have realised the owners were re-opening the case and had for that purpose obtained another report, the contents of which told him the case to be put. In that regard, the Tribunal regarded the operative date as 7 December 2011.

31 This Court has had occasion to pronounce on the content of the requirement of natural justice in adjournment applications. In Opeka Pty Ltd v Mackie Group Pty Ltd,[15] Justice (now Justice of Appeal) Nettle of this Court surveyed the authorities (at that time, before Aon was decided) and summarised the position this way:

In short the point of these authorities seems to me that if the refusal of an adjournment has shut a party out or likely to have shut a party out of an opportunity to advance a sustainable proposition which may have affected the outcome of a proceeding, the result of the refusal will be seen to constitute a miscarriage of justice and will be set aside. But is incumbent upon an appellant from a refusal of an adjournment to establish that the effect of the refusal was to provide him of the opportunity of putting a sustainable proposition that may have affected the outcome of the proceeding.

32 In the subsequent case of Collection House Limited v Taylor,[16] his Honour on the same issue said this:

It is not to the point that the appellant might have anticipated the need for evidence ... applications for adjournments are not to be decided on the basis of whether a party could have anticipated the requirement which gives rise to the need for the adjournment. It is not an occasion for punishment of a party for its mistake or for its delay in making the application. The paramount consideration is to do justice and thus to enable the parties to present their case as fully as necessary within the limits of the law. Delay is of itself rarely a basis for refusal.

33 The same thinking was taken by the Chief Justice of this Court in MacDiggers Pty Ltd v Dickenson. Her Honour said:

Justice is the paramount consideration. Various factors will weigh in the determination of what is just in the circumstances, including of course the "litigation strain" to all involved, the prejudice to the applicant if refused, the prejudice to the respondent if granted, and the appropriateness of a costs order. The decision whether to exercise the discretion to grant an adjournment is not a situation to punish an applicant for any mistake or otherwise but to ensure a fair and reasonable hearing.

34 None of this 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 not just the litigants in the case at hand. As was said earlier in Sali v SPC Limited [17] (an adjournment case) "what may be seen as an injustice to a party when considered only in the context of an action between parties may not be so in a context which includes the claims of other litigants and the public interest of in achieving the most efficient use of Court resources."

35 It may be that such considerations although not expressed were present in the mind of the Tribunal especially as the dispute had such a long history. But the Tribunal confined itself to saying that the application was simply a delaying tactic. It may have appeared that way but to my mind although a delay (of 3 weeks) would have been caused had the adjournment been allowed, there was insufficient justification for coming to such a resolute view that it was just a delaying tactic. The fact is the builder did not want to proceed into an enlarged building case with a distinct disadvantage of not having the opinion of an opposing building expert. The disadvantage is made obvious when one comes to read the reasons of the Tribunal which accepted all that the owners' expert had to say, more so because there was no opposing expert. And this where I think the miscarriage of justice has occurred.

36 I would articulate the elements of my view in this way-

(a) The procedural events as I have recited them show that there certainly was maladroit conduct and confusion on 7 December up until 7 March 2012. That can happen in the legal process when parties are not legally represented, so allowances have to be made.

(b) Points of claim were not filed until 7 March 2012. To any lawyer this is a significant document. It was reasonable for Cyngler to insist on delivery of the points of claim especially as the case came to be shown to have become enlarged. True, had Furman been more attentive, he would have seen back in December 2011 that the case was taking on a completely different shape and might have taken steps earlier. He did not which is what pushes the case to the borderline. But the question is whether justice dictates that he be punished for that, and he be refused 3 weeks to seek expert evidence.

(c) A court or tribunal ought as a matter of experience accept that in domestic or large scale building cases, it is necessary or certainly expected that disputants bring forward expert appraisals of the building works so that the tribunal has an independent assessment. Courts and tribunals rely on such evidence in this field. That is even where one of the litigants is a builder because the Tribunal would always prefer an independent assessment. I would go further and say a party would be at a distinct disadvantage in not adducing the evidence from an expert if the case is to be contested.

(d) Cyngler did engage an expert who did conduct an inspection but who could not attend at the hearing. I think as a sign of a genuine desire to obtain the evidence, he sought to have another expert look at the property the day before the hearing, but access was refused by the owners. I think this is evidence that the adjournment was not a mere delaying tactic but there was, albeit belatedly, a desire to obtain the expert evidence. His evidence was that another expert was able to inspect on 30 March.

(e) My one reservation about the situation is that Cyngler did not inform the Tribunal as part of the adjournment application what the expected opposing evidence would be. That is, it would have aided the application if the Tribunal had been told that an inspection had revealed a basis for the builder to contend certain things in opposition to the claim put. He might have been in a position to say "Our expert will say...". Instead, it came to be an application based upon a need to obtain the opinion of an expert to consider the case to be put.

(f) But, Cyngler did try to get an expert in time and may well have been in the position to adduce the evidence or at least be in a better position on 23 March to ask for an adjournment based upon the expected content of expert evidence. Even so, the injustice caused here was having to then run a case without even the opportunity of soliciting an expert opinion and then losing a case because there was no expert opinion put in opposition to the owners' expert evidence.

(e) All things considered, I think the builder has been punished for his inattention on 7 December 2011, and come 7 March 2012 when the points of claim were filed I think it simply left insufficient time for expert evidence to be obtained and considered and a case properly prepared.

(f) The builder was seeking an adjournment for "at least" three weeks, but the miscarriage occurred I think in not allowing a short adjournment possibly no longer than three weeks. Thus, whatever the injustice on the owners in having the determination of their case delayed, the greater injustice I think lay in depriving the builder of properly considering the case put against him.

(g) One can well understand the owners' desire to proceed and the Tribunal's desire to avoid any more delay in a protracted proceeding. But if anything, the history of this case as I have recited it and the unusual orders made, and then the eventual enlargement of the case I think called for real caution.

37 It is for those reasons I would grant leave to appeal, and allow the appeal. I would set aside the order made by the Tribunal and remit the matter to the Tribunal for redetermination by a differently constituted tribunal. I will hear the parties on any ancillary orders. If there is no dispute about the content of the orders, the parties may submit a form of judgment for my authentication without the need for a Court attendance.

[1] See s 148(1) of the Victorian Civil and Administrative Tribunal Act.

[6] See McColl v Lehmann [1987] VicRp 46; [1987] VR 503, 507.

[7] See Collection House Ltd v Taylor [2004] VSC 49 at [20] (Nettle J).

[9] [2009] HCA 27; (2009) 239 CLR 175.

[10] Aon at 210 quoting Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 114.

[11] See MacDiggers Pty Ltd v Taylor [2008] VSC 576 (Warren CJ).

[12] See Sali v SPC Limited [1993] HCA 47; (1993) 67 ALJR 841 at 846.

[13] This can be done under s 53 of the Act.

[14] See exhibit RJA-6 to the affidavit of RJ Abrahams sworn 22 May 2012.

[15] [2003] VSC 183.

[16] [2004] VSC 49.

[17] [1993] HCA 47; [1993] 67 ALJR 841.