Burbank Australia Pty Ltd v Luzinat [2000] VSC 128

11. On 7 May 1999 Burbank submitted its progress claim in respect of the fixing stage and on 11 June a claim in respect of certain variations to the contract.

14. Saric did not pay the two claims. On 2 June Burbank served on Saric a notice of default and on 9 June a notice of termination of the contract.

17. On 24 June 1999 Burbank filed an application in the Domestic Building List of the Victorian Civil and Administrative Tribunal (VCAT) whereby it seeks to recover the costs of the fixing stage and the variations, namely $37,052.

20. On 4 August 1999 Saric filed points of defence to Burbank's claim and points of counterclaim.

23. By his counterclaim Saric alleges (inter alia) that Burbank failed to carry out the building works in a proper and workmanlike manner and failed to carry out the works in accordance with "all laws and legal requirements".

26. In the schedule of defective works annexed to his counterclaim, which I should add total some 42 in number, Saric has alleged that Burbank has failed to perform the building works in accordance with all legal requirements including the Building Act 1993 and the Regulations made under the Act.

29. By his counterclaim Saric seeks to recover the sum of $249,000 from Burbank.

32. On 12 August 1999 the parties attended a mediation at VCAT. The hearing that day was adjourned to 3 November to allow the parties to obtain reports concerning the works from appropriate building consultants.

35. On 3 November 1999 the hearing was further adjourned to 14 February 2000 to enable Saric to obtain an additional expert's report.

38. The mediation did not resolve the dispute between the parties and on 15 February 2000 a Deputy President of VCAT, Associate Professor Cremean, gave a number of directions concerning the further conduct of the proceeding and fixed the proceeding for hearing on 22 May 2000 with an estimated hearing time of 13 days.

41. By letter of 29 February 2000 Burbank was notified by a building surveyor acting for Saric, Bayside Building Surveyors Pty Ltd (Bayside), of the hearing of an appeal before the Building Appeals Board relating to Lot 225, an appeal which the letter stated would place issues of a substantive nature before the Board and which would, if decided in the applicant's favour, "have significant cost effects against yourselves as the builder". The letter invited Burbank to attend the appeal "for the purposes of natural justice should you desire to do so".

44. What had occurred was that Saric had consulted Bayside in relation to his dispute with Burbank and, despite the fact that he was already a party to the proceeding before VCAT, had instructed Bayside to make an application to the Board pursuant to s.157 of the Building Act 1993. That section reads:

"157. If - (a) there is a dispute about a building, building work or proposed building work between all or any of the following -

(i) the owner of the building or the land on which the building work is being or is to be carried out;

(ii) the person who carries out or is to carry out the building work;

(iii) the relevant building surveyor;

(iv) the Commission; and

(b) the dispute concerns the application or effect of any provision of the building regulations (within the meaning of section 160)or whether any provision of the building regulations is or has been complied with - any of those persons may refer the matter to the Building Appeals Board."

52. Section 161 of the Building Act then provides:

"161. The Building Appeals Board must consider and determine a matter referred or application made to it under this Act or any other Act and may make any order that it considers appropriate in the circumstances."

56. As I understand the situation, Bayside's original application did not name Burbank as a respondent but only the third-named defendant, Russell Boyd, another building surveyor who had earlier performed certain duties in respect of the work carried out at Lot 225.

59. However, under cover of a letter of 6 March 2000, Burbank received a Notice of Appeal or Referral of Matter to the Building Appeals Board in which it is also named as a respondent.

62. Attached to the notice are grounds of appeal. The grounds contain many complaints about the work performed by Burbank at Lot 225, including a number of breaches of the Building Regulations and the Building Code of Australia.

65. On 16 March 2000 Burbank appeared by counsel before the Board, submitted that for a number of reasons the Board did not have jurisdiction to entertain Bayside's dispute, but that if the Board did, the hearing before it should be adjourned until after the hearing of Burbank's claim and Saric's counterclaim by VCAT.

68. The Board refused Burbank's application, the Chairman saying at the time it did so:

"The Board has resolved as follows. One, there is a dispute between the parties. Two, that there is an argument prima facie that is in terms of section 157 of the Building Act 1993. It will be necessary to look at each issue in more detail to flesh that out. This can proceed concurrently with the VCAT hearing. The Board has resolved to proceed notwithstanding the lack of time claim. The Board will take this into account as we proceed through matters today."

72. And so Burbank, which has to date spent in excess of $25,000 on fees to lawyers and consultants concerning the dispute before VCAT (see Para.21 of the affidavit of Sebastian Failla sworn 20 March 2000), is now placed in the situation where it must fight on two fronts allegations that in carrying out the work it did at Lot 225 it did not comply with the applicable Building Regulations and the Building Code.

75. It was argued by counsel for both the Board and Saric that there is nothing objectionable about that, as the Board is made up of building experts, the dispute before the Board is more of a technical nature, not one concerned with resolving contractual disputes or allegations of bad workmanship, and that the proceeding before the Board will be heard and determined expeditiously.

78. Neither the solicitor for the Board nor counsel for Saric were able to inform me of the effect a finding by the Board concerning the Building Regulations or the Building Code adverse to Burbank would have, in so far as the proceeding before VCAT is concerned.

81. It was suggested that the most the Board might do would be to order the building surveyor Boyd to ensure that any breaches of the Building Regulations or the Building Code be rectified before any further work is done to the building on Lot 225.

84. That may well be so. But in my opinion the provisions of s.161 of the Building Act are wide enough to allow the Board to make an award of monetary compensation to Saric to cover the cost of rectifying any such defects if it were minded to do so.

87. And what then would be the situation if, at the subsequent hearing before VCAT, VCAT concluded, based upon the expert evidence adduced before it, that there had been no breach by Burbank of the Building Regulations or the Building Code?

90. Where a party to a proceeding institutes a second proceeding in a different form in relation to the same subject matter as the first proceeding, prima facie the second proceeding is vexatious and will be stayed: see McHenry v. Lewis (1882) Vol.XXII Chancery Division 399 and Williams v. Hunt (1905) 1 K.B.512.

93. In such a situation the courts have for many years taken the view that a litigant already deeply involved in one piece of litigation would be unduly harassed if a second piece of litigation was to proceed at the same time as the first. And such a principle applies to proceedings whether they be before a court, a board or a tribunal.

96. All the more so where there is a significant risk, as there is in the present case, that VCAT's findings and the Board's findings may be in conflict one with the other.

99. For many months following the institution by Burbank of its proceeding before VCAT, Saric was content to have the dispute between the parties heard and determined in that forum. He then chose, for whatever reason, to wait until a date had been fixed for the hearing of those proceedings before instructing Bayside to make an application on his behalf to the Board.

102. Having set aside 13 days for the hearing before it, it is clear that VCAT intends to investigate and determine every aspect of the dispute between the parties. Why, then, should its task in that respect be clouded by a proceeding before the Board in which certain of those same issues are to be examined?

105. Different considerations may have applied had Saric moved speedily to invoke the powers of the Board. Factors one might then have considered would have been the comparative cost of each proceeding and the speed with which one proceeding may have been determined when compared with the determination of the other. But he did not, and I consider that the proceeding before VCAT is now so far advanced and has caused the parties to incur so much expenditure to date that it should proceed to a hearing and conclusion before any further investigation is undertaken by the Board.

108. I order therefore that until the hearing and determination of application No. 406 of 1999 by the Victorian Civil and Administrative Tribunal or further order, the Building Appeals Board be restrained from hearing and determining the referral to it in which George Cross of Bayside Building Surveyors Pty Ltd is applicant and Russell Boyd and Burbank Australia Pty Ltd are respondents, which referral is dated 6 March 2000.

111. I order that the second defendant Mel Saric pay the plaintiff's costs of this application including reserved costs.