These categories were identified in Darkan v The Queen [2006] HCA 34; 80 ALJR 1250 at [94]; Weiss v The Queen [2005] HCA 81; 224 CLR 300 at [45]-[46]; Nudd v The Queen [2006] HCA 9; 80 ALJR 614 at [7]-[9] (Gleeson CJ); Cesan v Director of Public Prosecutions (Cth) [2007] NSWCCA 273; 174 A Crim R 385 at [97]-[118].
29 In civil proceedings it is also helpful to consider the nature of the error asserted by reference to the categories identified above. Stead fell within the second category. In Stead the plaintiff had been denied a "fair trial" because he had been stopped from presenting his case properly before the judge: see reference in Stead at 145 to Jones v National Coal Board [1957] 2 QB 55 at 67. Because the appeal court had not heard the witness, it could not say that the lost opportunity made no difference. To come within Stead, an appellant must first demonstrate a procedural ruling capable of preventing a trial according to law. Not every refusal of an adjournment, limitation on cross-examination or refusal to allow a plaintiff to reopen which is adverse to one party's interests will be so characterised. It is necessary in each case, therefore, to consider the extent to which the alleged unfairness may have had an impact on the outcome and, where that possibility arises, whether the extent of the impact can be assessed on the appeal.
Reliance on behaviour and demeanour in the courtroom
30 In order to assess this ground of appeal it is necessary to identify the comments in her Honour's judgment on which the appellants rely and the apparent use made of them. Before assessing that material, it is convenient to note the general principles of law which are to be applied.
31 First, it is not in dispute that a trial judge is entitled to take account of observations of a witness, or party, in the courtroom whilst not giving evidence: Government Insurance Office of New South Wales v Bailey (1992) 27 NSWLR 304 at 323B-D (Clarke JA, Hope AJA agreeing) and 313 (Kirby P, albeit in dissent). Nevertheless, it is important to distinguish two different purposes for which such material may be deployed. There are cases in which trial judges have relied on their observations of a plaintiff, often both whilst in the witness box and when sitting in the courtroom, to assess the level of pain or disability they appear to be suffering. If, on occasion, the plaintiff moves with a degree of agility, or without apparent discomfort, that may be treated as inconsistent with claims of disability or discomfort made to medical practitioners or in evidence. Alternatively, apparent disability or discomfort displayed in the courtroom may be compared with a video recording of the plaintiff, unaware of the observer, behaving without such an appearance of either disability or discomfort. That exercise must be approached with caution, whether the plaintiff is in the witness box or not. Reasons for caution include the possibility that a condition may fluctuate; that a person unfamiliar with a courtroom environment may react differently in the courtroom and outside it, and that the judge does not have medical expertise.
32 The other use which may be made of such observations is, as in the present case, to contrast behaviour in the courtroom with behaviour in the witness box. Such observations may not go directly to any issue in dispute, but may go to questions of credibility, or may merely provide some possible explanation for behaviour in the witness box otherwise deemed curious or inexplicable.
33 The second principle which is generally accepted is that it may be unfair for a trial judge to rely upon observations of a party in circumstances where his or her legal representatives are not in a position to observe the behaviour and thus to anticipate any inference which might be drawn from it by the trial judge. This is not a typical example of what might be described as breach of rules of procedural fairness. If, as appeared to have occurred in the present case, a party has deliberately placed himself in a position where the trial judge can see him, and then conveys by gestures or grimaces agreement or disagreement with particular evidence or arguments, it will not be strictly correct to say that the party does not know of a particular matter and hence has no opportunity to address it in submissions. The obligation of procedural fairness does not enure to the benefit of witnesses or lawyers, but to individual litigants. Indeed, the complaint is not raised in terms of awareness of the party, but rather by reference to the failure of the trial judge to advise the lawyers of how their client is behaving, so that they may address it by way of evidence or submissions. A more nuanced approach to the question of possible unfairness is required in order to address the possible need for a trial judge to advise the lawyers as to how their client is behaving.
34 That situation also gives rise to potential factual issues. It cannot necessarily be assumed that, because a client is sitting behind his or her solicitor, the solicitor is entirely unaware of how the client is behaving. It is not unlikely that a solicitor, knowing that the client is emotional or likely to give expression to his or her feelings, will have given advice about appropriate courtroom behaviour, not limited to dealing with questions in the witness box.
35 The question of fairness in such circumstances takes into account the relationship between lawyers and their clients and the expected dynamics of a courtroom which may be assumed in the absence of any indication to the contrary, such assumptions being conducive to the efficient administration of justice. One such assumption is that the trial judge will deal with the factual issues on the basis of the evidence presented in court of which the lawyers are aware. Economy in submissions is promoted by such an assumption and an expectation that if the trial judge considers some material or legal principle is likely to affect the outcome, but is not being addressed in argument, that fact will be identified. Similarly, some indication may be expected if an inference is being drawn which is not the inference which might reasonably be expected in a particular circumstance or which is not that which the parties appear to have assumed to be the relevant inference. For example, where an appellant was convicted and placed on recognisance, the appeal court should have given a warning that it was minded, if the conviction were upheld, to impose a custodial sentence: see Parker v Director of Public Prosecutions (1992) 28 NSWLR 282. More recently, and in a civil case, Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208; 3 DDCR 1, Ipp JA (Mason P agreeing) noted that "although the basis on which the parties conduct a trial does not bind the judge, if the judge contemplates determining the case on a different basis he or she must inform the parties of this prospect so that they have an opportunity to address any new or changed issues that may arise": at [78].
36 With respect to evidence concerning what the complainant would have said or done, given notice of the new or unanticipated issue, limited assistance is to be found in administrative law practice. In judicial review of an administrative decision, the court has no business with the merits of the decision. It is therefore not appropriate for the court to consider what result might have flowed if the decision-maker had had other information. Because the court is not empowered to enter upon that inquiry, it will usually be inappropriate to tender material to the court. However, quite a different situation arises where the complaint is one of procedural fairness at a trial and the appeal court is conducting a rehearing. In the latter case, the court is not only able, but is required, to determine the appeal on the material before it. If the appellant does not tender relevant material, the court may dismiss the appeal on the basis that it is not persuaded that any different outcome would have been achieved absent error. That is not to say that such evidence will always be necessary: where, as in Ucar v Nylex Industrial Products Pty Ltd [2007] VSCA 181; 17 VR 492, the opportunity lost was to persuade the trial judge as to a different view of the credibility of the appellant, any reassessment is likely to be one which must be carried out at a new trial, rather than in the appeal court. Nevertheless, to obtain a new trial the appellant must demonstrate some substantial wrong or miscarriage, occasioned by the error of the trial judge, at least in the circumstances identified in UCPR, r 51.53.
37 When this matter was raised in the course of the hearing, senior counsel for the appellants did not directly challenge the application of the rule, but appeared to affirm that, in accordance with Stead, the Court must be satisfied that there was no possibility of a different result, where there had been procedural unfairness. The appellants did not suggest that the rule was in any way inconsistent with s 75A of the Supreme Court Act, or that it was in its terms inapplicable to an appeal from a District Court judge sitting without a jury: cf Whisprun Pty Ltd v Dixon [2003] HCA 48; 77 ALJR 1598 at [113] (Kirby J, dissenting); Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; 209 CLR 478 at [53] (Kirby and Callinan JJ); Mastronardi v State of New South Wales [2007] NSWCA 54 at [74]-[85].
Comments as to appellant's behaviour
38 The style of the judgment was discursive and included 45 headings and subheadings. The trial judge commenced with a general statement of the background to the litigation. At p 6 (of 76 pages) her Honour addressed the topic of "Credit and reliability". She did so by identifying first the surveyor (Mr Anderson), the architect (Mr Suttor), the principal of Burke Bros (Mr Tippett) and the principal of Alvaro Homes (Mr Alvaro) each of whom she described as honest, frank and precise, or words to that effect, noting the need to resolve points of conflict. Of Mr and Mrs Chaina, her Honour took a different view (pp 6-7):
"Precisely the contrary was true of Mr Chaina, whose evidence was evasive, internally contradictory, and in various respects plain wrong. On occasions in the witness box, Mr Chaina professed an inability to understand or attend to relatively simple questions or to turn the pages of the annexures to his own affidavit to find clearly marked and numbered pages.
…
Mr Chaina sought to explain his curious manner in evidence by professing difficulties in concentration. Viewed in isolation, Mr Chaina's conduct in the witness box could suggest significant cogitative restrictions and deficiencies in concentration. But the points at which such difficulties manifested suggested a degree of artifice, being markedly (but not exclusively) in the course of cross-examination where it might be thought that a straightforward response would be contrary to the interests of the owners."
39 Her Honour noted that Mr Chaina was present and instructed lawyers throughout the hearing, continuing (pp 7-8):
"There was a striking contrast between Mr Chaina's episodic incapacity and vagueness and conduct in the witness box and his decisive and controlling conduct in the court room during the evidence of others, the conduct of proceedings generally, and his attentive behaviour during the (other) evidence, and addresses and statements by counsel.
In the court room, Mr Chaina was active, responsive and involved, frequently rising from his seat at the rear of the court room and rushing across to his solicitor to issue instructions as soon as questions were posed from the bench or the bar table. Mr Chaina demonstrated immediate comprehension, complete with head shakes and expressions of annoyance and disagreement immediately upon the articulation of that which might have been thought to be adverse to his version in the evidence of others, accompanied by repeated and rapid approaches to confer with his solicitor in the courtroom throughout the hearing.
When Mr Hill gave evidence by telephone, I observed that Mr Chaina followed the questioning and evidence closely from the rear of the court room, demonstrating rapid comprehension. Thus, for example, when answers were given by reference to the size of sandstone, Mr Chaina demonstrated to his wife by rapid hand and finger gesture the differences between sandstone crushed to 50mm and that crushed to 75-80mm, demonstrating the respective differences between splayed fingers.
On day 8, when counsel for the second and third defendants sought an adjournment, Mr Chaina communicated immediate decisions the instant issues were raised in discussions, sometimes by rapid and decisive gesture from the rear of the courtroom, and sometimes by leaping to his feet and hastening across from the rear of the courtroom to give instructions to the solicitor. Likewise, during submissions, Mr Chaina's close attention and comprehension was evident as he sat in the rear of the court, moving if his view of me was obscured by counsel addressing, and vigorously shaking his head and frowning or nodding as points were discussed with which he variously disagreed or agreed."
40 The ground of appeal complaining of procedural unfairness in making these comments faces four difficulties. First, there is no complaint in respect of the factual findings. Thus, there is no complaint about her Honour's description of Mr Chaina's conduct in the witness box, nor is there any specific complaint about her Honour's findings as to his conduct in the courtroom whilst not giving evidence.
41 Secondly, much of the conduct involved communication with his solicitor. It was, accordingly, conduct of which the solicitor must have been aware, at least in a general sense. There was no evidence tendered on the appeal from the solicitor that he was not aware of the conduct nor that he was unaware of the extent to which Mr Chaina's conduct conflicted with his demeanour and behaviour in the witness box. So far as Mr Chaina's conduct which did not involve the solicitor directly was concerned, again there was no evidence as to the seating in the courtroom, the extent to which the solicitor was in fact aware of his client's conduct or the extent to which it may have been observable by counsel. Furthermore, there were interchanges between the trial judge and counsel during the course of the hearing in which her Honour gave some indication, apparently understood by counsel, that she considered Mr Chaina's conduct curious. If, as appears from the uncontradicted statements in the judgment, Mr Chaina was effusive and expressive, it is not clear why this Court should draw the inference that his lawyers were unaware of his behaviour in a general sense, even if not perhaps in relation to specific responses.
42 The possibility of calling evidence to demonstrate a breach of procedural fairness was discussed by Ipp JA (Mason P agreeing) in Seltsam Pty Ltd v Ghaleb at [79] in a comment which followed upon the statement of principle that a trial judge must inform the parties if he or she intends to decide the case on a basis different from that on which the case was presented: see [35] above. Ipp JA continued:
"A failure so to inform the parties will ordinarily result in a denial of procedural fairness. A new trial will be ordered if a party is not afforded a fair trial in circumstances where a properly conducted trial might possibly have produced a different result. It will not ordinarily be necessary to lead evidence to prove that the denial of procedural fairness had the potential to affect the outcome; in most cases the facts will speak for themselves."
43 That approach was adopted by the Victorian Court of Appeal in Ucar, where the Court was dismissive of an affidavit in which the solicitor for the appellant indicated what explanation would have been given in respect of certain aspects of the appellant's conduct in court during the trial, had the opportunity been provided. Warren CJ noted that she did not consider the affidavit necessary to establish the appellant's submissions in the circumstances of the appeal and therefore would not consider it: at [4]. The issue was also dealt with by Redlich JA at [81]-[84], relying on Seltsam and administrative law cases.
44 In this area of discourse, it is important to distinguish two separate steps, namely, on the one hand, establishing the existence of procedural unfairness and, on the other hand, the legal consequences and the appropriate relief. In some cases, procedural unfairness is demonstrated by establishing a representation, reliance and detriment. These are matters of fact which must be established by evidence, or inference from agreed facts. In the present case, the claim of procedural unfairness had two limbs. The first was reliance by the trial judge on conduct of which the appellants' lawyers were unaware; the second was reliance on that material in a manner which could not reasonably have been anticipated. Whether the second limb was made out may have depended upon the facts of which the lawyers were aware. The first limb was not made out unless it could be inferred or was proved that the lawyers were unaware of the conduct relied upon. Either by way of inference or evidence, that was a fact which the appellants needed to establish to make out their case on appeal. That they failed to do and hence must fail on the first limb. In relation to the second limb, the question of whether the judge made use of conduct known to the parties and their lawyers in a manner which could not reasonably have been expected depends on what use she did in fact make of her observations. This raises the third difficulty faced by the appellants
45 The third difficulty is to identify the issue to which her Honour's observations of Mr Chaina's behaviour were relevant. Having referred to the curious manner in which he gave evidence (in the first passage set out above) and after recounting his conduct in court when not in the witness box, her Honour continued (p 8):
"Observing Mr Chaina testify, I formed the view that there was a contrived overlay of paranoia and blame shifting about his testimony, particularly when addressing matters adverse to his interests, which expanded to make unsubstantiated allegations against the surveyor, the architect, the builder and the road builder/plaintiff, together with anger at the suggestion that Mr Chaina should talk to the road builder, which Mr Chaina manifestly did, and indeed narrated in his own affidavit."
46 Mr Chaina's conduct in the presentation of his evidence was relied on by counsel for Alvaro Homes (judgment, p 9):
"It is submitted that Mr Chaina did not present as a credible witness both in terms of his demeanour and his evidence. The court would infer that Mr Chaina, who was apparently capable of providing cogent instructions throughout the first few days of the hearing, feigned difficulty in responding to straightforward questions in cross examination. He was obfuscator[y] and at times non-responsive. Further, the Court would consider his unsolicited allegation that not only Mr Alvaro, but also that Mr Suttor, had 'an agenda' in relation to their dealings with Mr Chaina to be illustrative of the self-serving nature of Mr Chaina's evidence."
47 After giving some examples of testimony described as "contrived" and "somewhat evasive", her Honour returned (at p 9) to the possible explanation:
"Although it is not impossible that the explanation lies in medication or capacity, I found a degree of artifice in Mr Chaina's presentation and evidence, which tended against honesty rather than capacity; and I formed the view, on the civil standard, that the explanation was artifice."
48 In conclusion, her Honour stated that Mr Chaina was "an entirely unreliable witness", that she had placed "very little weight upon the evidence of Mr Chaina and Ms Chaina generally" and that she had "rejected much of his evidence, and virtually any evidence upon which he was contradicted by another witness or a contemporaneous document": at p 10.
49 Mr Chaina's evidence was rejected on the basis of his demeanour and behaviour in the witness box, together with internal inconsistencies and established inaccuracies. The observations made in court did not cast doubt on his credibility or reliability as a witness: rather, they provided an explanation as to the reason for his poor presentation. In other words, the behaviour in court supported the inference that Mr Chaina was capable of concentration, comprehension and intelligent understanding, lack of which might have explained his poor performance as a witness. In short, the comments as to demeanour in the courtroom were not the basis of the finding with respect to credibility and reliability, nor did they impact directly on any issue in dispute.
50 Fourthly, even if the impugned comments did support the findings as to credibility, the refusal to place weight on Mr Chaina's evidence had little bearing on the outcome of the case. In written submissions, the appellants' somewhat glibly remarked (par 41):
"The effect of these observations permeate throughout the Judgment, including the terms of the main contract between the First and Second Respondents, the Claimants' Second Cross Claim in relation to the location of lower road and also the First Respondent's Third Cross Claim."
51 These matters were developed more fully in the course of oral argument and encompassed three issues. The first issue concerned the content of the road building contract. In June 2003 what were described as "series A" plans were prepared showing a driveway with a three metre width. Mr Tippett, the principal of Burke Bros, saw the plans and offered to do the work for $162,800. That quotation was not immediately accepted and, in early September 2003, fresh plans ("series B") were prepared showing a driveway with a width of five metres with 0.5 metre shoulders on either side. Initially, the roadwork was undertaken by another contractor, but the arrangement with him was terminated and in February 2004 Burke Bros was invited to take over the work in accordance with Mr Tippett's previous quote. According to the evidence given by Mr Tippett and Mr Alvaro, there was no reference in the course of the conversation to the fact that since the quotation of late August 2003 the plans had changed from a three metre wide road to a five metre wide road. Even when Mr Tippett was handed the series B plans and series C plans (which contained further changes), he was not aware of the difference between them and the series A plans on which he had quoted.
52 There were differences in minor respects between the evidence of Mr Alvaro and that of Mr Tippett. These differences were resolved by her Honour without reference to the evidence of Mr Chaina.
53 Mr Chaina's evidence was that the re-engagement of Burke Bros occurred on the telephone. He recalled Mr Tippett saying, "I have thrown everything away because I didn't get the job, the quotation, the plans, the whole lot". Mr Chaina then described the size of the road and the location ("per the Campbell & Anderson plans"), but made no specific reference to the fact that the width of the driveway had changed since Mr Tippett's original quotation.
54 The point which arose from this evidence was whether Burke Bros was entitled to recover payment for a wider driveway than that on which it had earlier quoted, or whether it was to be held to its original quotation in respect of the wider driveway.
55 The trial judge held that the agreement between Mr Alvaro and Mr Tippett was in relation to the original quotation, the increase in size being dealt with by a later variation. According to each of them, Mr Chaina was not party to that arrangement: Mr Chaina himself agreed that he did not contract with Burke Bros, but only with Alvaro Homes, which in turn contracted with Burke Bros. The terms of the contract between Alvaro Homes and Burke Bros did not turn on his evidence.
56 It is convenient to turn next to the third issue raised by the appellants as it was related to the first, although somewhat indirectly. According to counsel for the appellants, the calculation of one of the experts, Mr Grieve, instructed by Burke Bros, was accepted as the most accurate calculation of the value of the work done because it was based upon the evidence of Mr Tippett as to the resources which had been deployed in the road building, so far as it went. This was a point on which there had been a difference in the evidence of Mr Tippett and Mr Alvaro. According to the appellants, if Mr Chaina's evidence had been accepted in relation to the original contractual arrangement, that might have cast doubt upon the veracity of Mr Tippett and, as a further consequence, on his evidence as to the resources deployed. If that evidence were not accepted, the expert evidence of Mr Grieve would also be in doubt.
57 The proposed chain of connection is remote. In any event, it depends upon a challenge to Mr Tippett's evidence as to the resources and equipment used on site. Because the documents were belatedly produced, Mr Tippett was not cross-examined on this material until day nine, being 17 December 2007. The Court was not taken to any material which cast doubt upon the answers given by Mr Tippett in cross-examination. Mr Chaina himself gave no evidence as to these matters, primarily because he was not on site while the work was being performed.
58 The second issue to which Mr Chaina's evidence was said to be relevant was an attempt by Mr Chaina to relocate the road to a lower position. Mr Chaina gave evidence of conversations with Mr Alvaro, whilst the construction work was at an early stage, directing him to relocate it to a lower point on the topography, some 30 metres to the south of the then current line of construction. This evidence did not involve any dispute between Mr Chaina and Mr Tippett, but between Mr Chaina and Mr Alvaro. This evidence was highly relevant to (and indeed formed the entire basis of) the cross-claim brought by the appellants against Alvaro Homes.
59 Relevant to this issue, Mr Chaina's affidavit of 9 November 2007 stated that in early September 2003 the proposed road on the property had been pegged by Campbell & Anderson Consulting Surveyors Pty Ltd ("Campbell & Anderson") in accordance with its plans. Mr Chaina asserted an agreement that the position of the road would be changed and also claimed that with Mr Moses (who was the contractor then intended to undertake the road building) "the majority of the pegs" were moved to the new position.
60 This evidence was entirely inconsistent with that of Mr Tippett who stated that he had met Mr Alvaro on the property and asked him to get Campbell & Anderson to peg the road prior to commencement of construction. Her Honour accepted that evidence and also found that so much of the driveway as was constructed followed the course provided by the survey pegs.
61 In the course of his cross-examination, Mr Chaina was taken to a plan prepared by Campbell & Anderson and accepted that he instructed them to prepare that plan: Tcpt, 29/11/07, pp 350-351. The evidence continued (p 351):
"Q. That plan shows the driveway as it is presently built by Burke Bros, doesn't it?
A. I don't understand the plan. I don't know - I can't comment. I don't understand plan.
Q. You don't understand plans?
A. No. If I did I would have picked up the problem from plan A, but I did tell Campbell and Anderson 6 metre road.
Q. Were you ever made aware that Campbell and Anderson undertook a survey to check that the road as built was in accordance with their plans?
A. That's the point, no. It's wrong. I told him, as I said, 'I don't want the road there.' I mean this is the difficulty I'm having. I don't want the road there. Irrelevant of Campbell and Anderson, irrelevant of the architect, it's my farm, it's my land. I tell them where I want the road. It's only fair."
62 This passage was referred to by her Honour (pp 49-50) and was one of the passages to which the Court was referred by counsel for the appellants.
63 There can be little doubt that Mr Chaina was a difficult witness in a number of respects. Her Honour's description of his evidence is amply borne out by a reading of the transcript. While it is true that, at least with respect to the second issue, rejection of his evidence was critical to the outcome for this issue, a comparison of his affidavit, his evidence in chief (which was not extracted without some difficulty) and his cross-examination leaves little doubt that her Honour rejected his evidence for the reasons she gave. What is not apparent is that her comments about his demeanour in Court had any bearing on the rejection of that evidence.
64 The themes addressed by her Honour in her judgment were loosely connected and did not necessarily follow the logical structure of the legal issues to be determined. In the end, the comments on Mr Chaina's behaviour in court appear to be gratuitous, though not in any sense offensive. There is no reason to think that, if her Honour had disregarded those matters entirely, she would have come to any different conclusion about the credibility or reliability of Mr Chaina's evidence in the witness box. The appeal on this ground must fail.
Quantification of amount owing
65 The contract between Alvaro Homes and Burke Bros involved the construction of the driveway for a lump sum, to be paid by a series of progress payments. The sum originally agreed was varied so as to incorporate some additional work, such as the laying of drainage pipes and electricity cables. Work having ceased, without completion of the driveway, Burke Bros sued for moneys owing but unpaid under the contract, or by way of alternative, a quantum meruit for the work done. Assessment of the amount owing was calculated by reference to the work which had been completed. To address this issue, each party obtained and tendered a report from a civil engineer or quantity surveyor.
66 Calculations were undertaken by each of the three experts in respect of the value of the work done under the original contract to construct the driveway, and, separately, the additional work involved in the construction of batters to hold the banks of the driveway, the installation of concrete pipes and trenching for power cables. Following a joint conference of experts held over 26-28 November 2007, it appears that her Honour accepted a costing of the additional work in the sum of $31,627: judgment, p 29.
67 There was however a dispute as to the quantification of the cost of the road works completed by Burke Bros. Mr Grieve, who gave evidence for Burke Bros, costed the work done at $94,680 which, after allowance for the amount paid, left a balance outstanding of $14,680. When that sum was added to the figure for variations, it gave a total of $46,307, to which GST was to be added. Interest on the period from 14 May 2004 until 8 February 2008 was calculated at $16,110 which, with GST on the contract amount, gave a total judgment in favour of Burke Bros for $67,047.59 (in inappropriately precise terms).
68 The conference of experts took place on 26-28 November 2007. The basis of the appellants' complaint was that the principal of Burke Bros (Mr Tippett) attended the conference and provided information to the experts as to the actual equipment and resources used by Burke Bros in the construction of the driveway, including the relevant hours of usage. On 6 December 2007, the appellants sought an adjournment to allow them to "forensically examine" the log books supplied by Mr Tippett. That material was served on 29 November and formally tendered by Burke Bros at the hearing on 3 December 2007, as an annexure to a further report from Mr Grieve. On 6 December 2007 the appellants sought an adjournment to allow them to serve a notice to produce documents, assess the material produced and file a further report in response. They requested that the case be adjourned to the new year. They were given a limited adjournment, the hearing recommencing on 17 December 2007.
69 The trial had commenced on 26 November 2007. The conclave of experts was arranged on the same day, in a reasonably informal manner. The power to direct such a conference is contained in UCPR, r 31.24. The court may direct a conference be held "with or without the attendance of the parties affected": sub-r (2)(a). In the Supreme Court, Practice Note SC Gen 11 deals in more detail with the manner in which a conference may be convened and conducted. Whether it is generally followed in the District Court or whether more informal procedures apply was not part of this case. The appellants' complaint was that information was supplied to the experts in circumstances which had not been agreed in advance and was not consented to by the lawyers for the appellants.
70 This situation had the potential to create unfairness, but also to produce a more useful result than would otherwise have occurred. It is usually necessary for experts to formulate their opinions on the basis of assumed facts. If the facts as found by the trial judge differ from those relied on by the experts, the value of their opinions may be diminished. Further, because the basis of the opinion should always be expressed in the report of the expert (or the experts, in the case of a joint report from a conference) both the parties and the court should be fully aware of the material upon which the experts relied. It is undoubtedly good practice to ensure that the parties set the rules (with directions from the court) before a conference of experts commences and that any variation takes place pursuant to further directions of the court. Nevertheless, a failure to comply with such a practice does not vitiate the result.
Disposition of adjournment application
71 In order to understand the complaint about the manner in which her Honour dealt with the adjournment application made on 6 December, it is necessary to provide some further chronology of events in relation to the trial. As already noted, Mr Tippett (for Burke Bros) attended at the conference of experts and provided documents indicating the resources in fact used in the construction of the driveway. The particular schedule he produced had apparently been prepared some weeks earlier and was dated 12 August 2007. The schedule, and the underlying records from which it was prepared, were not discovered nor produced in answer to a subpoena issued in August 2005, although apparently falling within its terms. The late production of this material and its potential to affect the basis on which the experts prepared their opinions, might well have sounded in costs. However, that question may be put to one side.
72 The events at the experts' conference were known to the appellants, through their expert, Mr Keirnan, on the day on which they occurred. Complaint was raised before the trial judge shortly after lunch on that day: Tcpt, 28/11/07, p 251-253.
73 The following morning, 29 November 2007, Burke Bros served on the appellants an affidavit from Mr Tippett exhibiting the original records which provided the basis of information given in summary form to the experts on the previous day. Burke Bros also provided two further letters from Mr Grieve dated 29 November 2007. One referred to a verbal instruction of 23 November asking him to "correct the calculation of the backfill with sandstone rate". In the second, he provided an opinion with respect to the costs of equipment and plant, based on Mr Tippett's documents.
74 The experts agreed on the total of quotations submitted by Burke Bros ($191,347 plus GST) and agreed on the work done on the variations, as indicated above. On Saturday, 1 December 2007, Mr Keirnan (for the appellants) produced some further calculations based upon Mr Grieve's letter of 29 November.
75 It was recognised at this stage that the case for the plaintiff (Burke Bros) had changed significantly and counsel sought to put the pleadings in order by filing a further amended statement of claim on the morning of 29 November 2007. Counsel for the appellants stated that he had no instructions to consent, but made no submissions in opposition: Tcpt, 29/11/07, p 292. Mr Chaina was then called to give evidence in the appellants' case. The effect of the amendments was to increase the sum sought by approximately $18,000.
76 At the commencement of the hearing on Friday, 30 November, there was discussion about the anticipated report from the experts' conference and as to dates for completing the hearing. No issue was raised at that stage as to difficulties faced by the appellants with respect to the new material relied on by Mr Tippett.
77 When the hearing recommenced on Monday, 3 December, counsel for the appellants noted that he had "some very short cross-examination of Mr Tippett, on his final affidavit": Tcpt, 03/12/07, p 441. There was then a discussion as to whether Mr Tippett should be recalled before the experts gave evidence. Counsel provided an explanation of the points of difference between the experts and the reasons for the differences. The evidence proceeded with Mr Grieve being called and cross-examined by counsel for the appellants. Subject to the qualification that Mr Tippett would need to satisfy the Court as to the factual basis for Mr Grieve's opinions, there seems to have been no further complaint by the appellants as to the trial proceeding on 3 December. Mr Tippett was in fact recalled and cross-examined by counsel for the appellants, who was unavailable on the following day. There was also further cross-examination by counsel for Alvaro Homes.
78 On the morning of Tuesday, December 4, counsel for both defendants were absent and the hearing proceeded with counsel for Burke Bros cross-examining the appellants' expert, Mr Keirnan. The day ended with discussion as to the order of addresses which were to follow.
79 The Court did not sit on Wednesday, 5 December but reconvened on Thursday, 6 December with all counsel present. The hearing commenced with an application by counsel for the appellants for an adjournment "to enable [the appellants] to obtain further evidence regarding how Mr Tippett undertook the job and how he proposed to undertake the job …": Tcpt, 06/12/07, p 579. In the course of discussion, counsel for Burke Bros suggested that the problem might be resolved if he withdrew reliance upon Mr Tippett's affidavit served on 29 November and Mr Grieve's letter about the costs of equipment and plant. On obtaining those instructions, counsel for the appellants returned to his complaint as to the provision of the schedule to the experts at the joint conference: p 584. He then explained:
"Well that, in my submission, has polluted the whole expert conclave process. The other difficulty is that there has been some cross-examination about things such as supervision, some cross-examination about supply of witnesses. So, after the matter of what actually - the subjective Burke Bros work supervision has become an issue, evidence of that has got in and has been relied upon by the experts, so we say it's difficult to excise the subject Burke Bros information from the expert reports."
80 Counsel for Burke Bros objected to an adjournment being granted on the basis of an unsubstantiated claim of the possible effect of that material on the experts. The question of actual prejudice arose in part from questions by her Honour of Mr Keirnan on 4 December, when she had inquired whether it was appropriate, on a contract claim, to assess Burke Bros' costs by reference to the equipment that the expert would have deployed, rather than that which was in fact available to Burke Bros. In response to that question, Mr Keirnan had said, "very good point, and we didn't have that information": Tcpt, 04/12/07, p 568. At least with respect to the contract claim, which was by that stage the primary claim relied upon by Burke Bros, there appeared to be a degree of unanimity that the critical question was the equipment and resources available to Burke Bros.
81 The discussion on 6 December extended for some time, in the course of which the trial judge made it clear that she thought the appellants were entitled to the opportunity they sought and rejected the submissions of Burke Bros in resisting the application. The remainder of the debate, which extended over 26 pages of transcript, related to the timing of the various steps to be taken in providing the appellants with an opportunity to examine Burke Bros' original records and then seek a further opinion from their expert, Mr Keirnan, together with some further discussion in relation to costs.
82 The hearing resumed on Monday, 17 December 2007. On that day the appellants sought a further adjournment to allow Mr Keirnan two-three days in order to prepare a further report. The basis of the application was that the documents required to be produced had not been produced in accordance with the specified timetable and, instead of being made available on Friday, 7 December, had been made available on 10, 11 and 12 December and had been followed by a further explanatory affidavit of Mr Tippett, supplied (unsworn) on the evening of 13 December. In the solicitor's affidavit in support of the adjournment, an explanation was given that Mr Keirnan had expected to be able to provide a further report by 14 December but had advised on the evening of 13 December that that would not be possible because:
"(a) The documents provided on 11 December 2007, including extensive weekly wage summaries for the period 7 January 2004 to 2 June 2004 involved a further detailed analysis;
(b) The documents provided on 12 December 2007, including tax invoices from numerous different companies involved a further detailed analysis; and
(c) The unsworn affidavit of Richard Tippett received at 5.45pm on 13 December 2007 contained detailed information which required further detailed analysis, for example, the precise machinery purportedly used on site."
83 The transcript of Monday, 17 December, shows that her Honour was not satisfied with the hearsay evidence from the solicitor, reporting a telephone conversation with Mr Keirnan on the previous Thursday evening, as justifying the absence of the report on the following Monday. Her Honour was criticised on the appeal for failing to take account of the fact that two of the three preceding days had been a weekend. However, there was no clear indication in any of the evidence that the exercise proposed by the appellants was likely to have a practical bearing on the outcome of the trial, nor that an extensive analysis of wage records was justified, given the amount in dispute. When her Honour suggested that the appellants might have until the following morning to produce the report, which would have allowed three working days from the last day on which documents were produced, counsel conceded that the report might not be ready even on that timetable, although it appears to be that which he had proposed.
84 A careful reading of the transcript of these days in relation to the adjournment applications demonstrates no refusal of her Honour to give careful consideration to the claims and requests made by the appellants, nor a refusal to consider the prejudice upon which they sought to rely. Considerable time was devoted to argument of the applications before her Honour made rulings on what was a matter of practice and procedure, towards the end of a 10 day trial and thus at a time when she was fully conversant with the factual issues in dispute and the matters about which the experts might usefully give an opinion. Absent other relevant considerations, it is not a matter which would normally attract a grant of leave to appeal, having regard to the amount in dispute.
85 There is a further consideration. By the time the application was made to this Court, by summons filed on 10 April 2008, the appellants had had four months in which to determine whether there was indeed a basis for demonstrating that the evidence before her Honour proceeded upon some misapprehension or was incomplete in a material respect, having a significant financial impact, adverse to the appellants. No such evidence was produced to this Court.
86 Finally, although her Honour gave no separate reasons for her determination of the adjournment applications, she did address them in her judgment, noting that the matter was adjourned on 6 December and that there was a further adjournment application on 14 December. Her Honour stated at p 39:
"More than the requisite time had passed when the matter resumed on Monday, 17th December 2007, although no expert report had been served. When [the appellants] were given until Tuesday, 18 December 2007 (an extension of 4 days as compared with the 2-3 days nominated in the affidavit) in which to serve the expert report, counsel advised that 'I am instructed we can't do it by the time given.' There is no explanation why that is so, which is odd in the light of the solicitor's affidavit.
Putting aside the issue as to when material was made available to the [appellants'] expert, which is in issue, there was no reason to grant yet another adjournment after 9 days of hearings in respect of unexplained delays in the completion of a report said to be likely to address a claim valued by the plaintiff at $46,307.09 plus GST (and interest)."
87 Her Honour also took into account, properly, the mandate of s 60 of the Civil Procedure Act 2005 (NSW) that the court should adopt procedures "with the object of resolving the issues between the parties in such a way that the costs to the parties is proportionate to the importance and complexity of the subject matter in dispute". The appellants say that it was "erroneous" for her Honour to rely on s 60, "which is subject to the dictates of justice". With respect, it was a factor properly taken into account in balancing the various interests which attended the determination of the adjournment applications. The ground of appeal is without merit.
Reasons for rejecting the appellants' expert
88 Although there was a complaint in the notice of appeal with respect to the adequacy of her Honour's reasons for preferring the expert evidence of Mr Grieve, it was not pressed at the hearing as a separate ground, but "only in the context in the context of a complaint about the way in which the trial judge dealt with our application for adjournment": Tcpt (NSWCA), 24/09/08, p 5(10). For reasons already given, that application must fail and hence it is unnecessary to consider further what were identified as grounds 4 and 5 in the draft notice of appeal.
Costs orders
89 Having been unsuccessful in challenging the substantive orders made by the trial judge, the appellants must bear the costs of the trial. The remaining issue, as pressed at the hearing of the appeal, was a challenge to so much of the costs orders as required payment of costs on an indemnity basis.
90 The costs orders were complex. In order to understand them, it is necessary to identify the particular elements of the proceedings and the orders made in respect of each.
91 The initial claim was made by Burke Bros against Alvaro Homes. Mr and Mrs Chaina were joined as second and third defendants in response to an assertion by Alvaro Homes that it contracted with Burke Bros as agent for Mr and Mrs Chaina. That assertion failed. Mr and Mrs Chaina cross-claimed ("the first cross-claim") against Burke Bros and Alvaro Homes on the basis that the work was defective and needed rectification. That claim failed and was dismissed. There was no separate order with respect to the costs of the first cross-claim.
92 Mr and Mrs Chaina also brought a second cross-claim against Alvaro Homes and Burke Bros alleging defective work. (Why a second and more substantial cross-claim was lodged by Mr and Mrs Chaina is unclear, but may have related to the fact that the first cross-claim was originally filed in the Local Court proceedings, before they were transferred to the District Court.) The second cross-claim was dismissed.
93 The third cross-claim was brought by Alvaro Homes against Mr and Mrs Chaina. It sought indemnity or contribution from Mr and Mrs Chaina in the event that Alvaro Homes were to be found liable to Burke Bros. Alvaro Homes was successful against Mr and Mrs Chaina and obtained a judgment in the amount owing by it to Burke Bros plus its 15% margin.
94 It would have been possible for her Honour to award costs of the proceedings generally, or by reference to the claim and cross-claims individually. What was not appropriate, but was done, was a combination of the two approaches. The matter was further complicated because the original orders were made on 8 February 2002, varied on 12 February 2002 and then again on 15 February 2002. The result was unnecessarily complex and confusing. Furthermore, the general orders were qualified by a separate order made with respect to the costs of the adjournment on 6 December 2007 and a further separate order with respect to the costs of the variation on 15 February 2008.
95 One consequence of the mixed approach was that in the order with respect to Burke Bros' claim, Alvaro Homes was ordered to pay Mr and Mrs Chaina's costs of that claim. However, in a separate order relating to the proceedings generally, Mr and Mrs Chaina were ordered to pay Alvaro Homes' costs, including costs payable to the plaintiff and to Mr and Mrs Chaina. In the course of the hearing on 12 February, her Honour described this as "a slight [logical] absurdity": it was, and the order should not have been left in that form. Nevertheless, it was accepted that Mr and Mrs Chaina were, subject to the two specific qualifications noted above, to pay the costs of Burke Bros and Alvaro Homes of the proceedings generally. The appellants sought to dispute so much of the costs orders as required that they pay: