25 The Respondent has not alleged that it has been prejudiced by the delay.

Whether the delay may result, if the Applicant for extension is successful, in the unsettling of other people or of established practices

26 The Owners submit that they will be disadvantaged if the application is granted. It is accepted that the cost and delay of a more extensive legal action is disadvantageous to them.

27 The liability decision was not the first one made by the Respondent with respect to this contract. In November 1998 the Owners complained to the Applicants about cracks in the brickwork and plaster, creaking staircase and jamming doors. The Respondent sent the Applicants a decision, being a schedule of works, under cover of a letter dated 4 December 2000. Another copy of the same schedule of works was sent to the Applicants under cover of a letter dated 22 February 2001. On the same day the Applicants wrote to the Respondent to say that the work would be done within 28 days from 26 February 2001. Mr Peter Javni claimed that he told both the Respondent and Mr Rau that movement was caused by failures of the Owners to properly drain and landscape the site, but there is no documentary evidence of this.

28 The Applicants submitted that movement damage to the Owners' home which is the subject of the current claim has been caused by factors outside the control of the Applicants, such as inadequate drainage or the failure by the Owners to landscape and poor design. The Applicants' evidence is accepted that the Owners provided architectural drawings, an engineer's report and a soil report before building work commenced. The Applicants and Owners agree that they undertook certain site works including clearing and levelling, but the Owners said that the Applicants prepared the site and dug trenches. On their own admission, the Applicants installed some agricultural drains around the house.

29 An exhaustive consideration of the opinions of the experts - Mr Yttrup mentioned above and Mr Lawrence and Mr Genitsaris for the Applicants - has not been carried out, and neither would it be sensible in circumstances where the authors have not been available for cross-examination. It is sufficient to say that the reports, particularly those commissioned by the Applicants, indicate that they have an arguable case, but not more than that.

30 To take one example, Mr Yttrup said:

The causes of distress to this residence are not clear from the investigation results. There is one cause that we consider most likely to be driving the movement.

The continuous blinding concrete 'curtain' under the perimeter strip footings penetrates the fill and is founded onto the natural ground at a depth in the order of 2m to 2.5m below finished surface level. This would act as a 'cut-off' to any subsurface moisture flow.

We partially agree with the sub-ground curtain theory, however we believe that the simple fact that this localized area has up to 2.5m deep uncompacted fill, would naturally draw water to the area.

32 Matters upon which evidence would still have to be adduced would include whether the Applicants should have been aware of the fill and drawn it to the attention of the Owners, and whether the blinding concrete was part of the design provided by the Owners.

33 Mr Fitzgerald submitted:

In any event, all that Javni must show on this application is that it has an arguable case on the merits: World Link at [10].

34 At paragraph 10 of World Link Assets Pty Ltd v James Kay [1999] VCAT DB 5, Deputy President Cremean, as he then was, said:

The case for the Applicant is that I should extend time under s126(1) in all the circumstances, having regard particularly to the "merits". It was put to me that the merits are the principal ground of consideration. The authorities, however, do not uniformly or at all bear this out. But, even if they did, having regard to the width of the discretion involved, other factors might still be considered. In any event, in a sense, there was no argument from the Respondent insurers regarding the merits: they conceded that the Applicant had an arguable case on the merits. In light of this concession, other factors fall for consideration.

35 I take Mr Fitzgerald to mean that as far as this Hunter Valley principle is concerned, an arguable case is enough. I accept his submission, and if other factors had not been adverse to his clients, their submissions concerning merits would not have prevented them from obtaining an extension.

Considerations of fairness as between the Applicant and other persons otherwise in a like position

36 It is not reasonable for builders to think that they can wait and see what happens. Those with good grounds for appeal need to exercise their rights promptly in their own interests and the interest of others affected by the dispute.

Whether it is fair and equitable in the circumstances to extend time

37 Comments have been made about parties who apparently sit on their rights by Judge Davey in Grandville Homes Pty Ltd v HGF and Anor [2001] VCAT 40 and DP Aird in Seventy-Eighth Evolution v Vero [2005] VCAT 1052. In Grandville His Honour said:

In my view, there is substantial merit in the submission in this case that the Builder sat on his rights. He was made aware of the decision and he was also made aware of his right to seek a review of that decision and the fact that any application to seek a review before VCAT would involve compliance with timing limits.

Having regard to the conduct of the builder I am not satisfied this is a situation where I should exercise my discretion under s126. Time limits for the making of any application to appeal an insurer's decision are not to be ignored and should not be waived lightly by the Tribunal particularly where the builder, although notified of its rights of appeal failed to take any steps to protect its interests. The application for an extension of time in which to appeal the decision on liability is therefore dismissed.

39 On balance it is found that it is not fair to extend time for appeal of the liability decision. The quantum decision is, of course, the subject of appeal, so the matter will still have to proceed to mediation, and if that is unsuccessful, to a hearing. Nevertheless, the appeal on liability and quantum is likely to be more extensive and expensive than an appeal on quantum alone. The Applicants' failure to appeal promptly has no credible explanation and in circumstances where they were repeatedly warned of time limits, they will not be granted a further indulgence.

[1] For the purpose of these reasons "Respondent" means the Victorian Managed Insurance Authority and its predecessors, Domestic Building (HIH) Indemnity Fund, FAI Insurance and HIH Insurance.