Legal Principles on the Adoption of a Referee's Report
20Uniform Civil Procedure Rules 2005 (UCPR), Regulation 20.24 states:
20.24 Proceedings on the report
(cf SCR Part 72, rule 13)
(1) If a report is made under rule 20.23, the court may on a matter of fact or law, or both, do any of the following:
(a) it may adopt, vary or reject the report in whole or in part,
(b) it may require an explanation by way of report from the referee,
(c) it may, on any ground, remit for further consideration by the referee the whole or any part of the matter referred for a further report,
(d) it may decide any matter on the evidence taken before the referee, with or without additional evidence,
and must, in any event, give such judgment or make such order as the court thinks fit.
(2) Evidence additional to the evidence taken before the referee may not be adduced before the court except by leave of the court.
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21The principles relating to the Court's discretion in the adoption or rejection of a report were canvassed initially by McDougall J in Seven Sydney v Fuji Xerox [2004] NSWSC 9023 at [11] - [13]. His Honour ultimately consolidated those propositions and amplified them in Chocolate Factory Apartments v Westpoint Finance and Others [2005] NSWSC 784 at [7]. Those principles have been adopted regularly by judges of the Court for example, New South Wales v Bovis Lend Lease Ltd [2007] NSWSC 1045 per Einstein J at [7]; White J in Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWSC 1302 at [12]; Rein J in Sangain Pty Limited v Italform Pty Ltd [2009] NSWSC 74 at [14]; Hammerschlag J in Corbett Court Pty Ltd v Quasar Constructions (NSW) [2008] NSWSC 1163 Pty Ltd at [30] - [31].
22In Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2008] NSWCA 228 Spigelman CJ and Allsop P (with whom Campbell JA agreed) did not take issue with the adoption of this approach by Einstein J as the primary judge. Their Honours merely added at [47] to [48] that:
[47] No issue was taken with this expression of the approach to the task of the primary judge. That is not said with any unstated reservation or criticism of how McDougall J expressed the matter. We would only add that the approach of a judge faced with the requested adoption of a referee's report should be determined according to the nature of the issues and the circumstances of the case.
[48] Highly relevant to that general overall consideration is the historical context of the rules concerning references, the recognition of the reference as a special form of hearing or trial (though not one leading, without more, to a verdict or judgment) over which the Court has a power of review, and the recognition of the place of references within the wider modern framework of alternative dispute resolution: see the discussion of these matters in the reasons for judgment of Gleeson CJ in Super v SJP Formwork at 558-564. The history of references under an order of the Court in the disposition of justiciable controversies that is the subject of discussion by Stephen J and Jacobs J in Buckley v Bennell Design & Constructions Pty Limited (1978) 140 CLR 1 at 15-22 and 28-38, respectively, by Gleeson CJ in Super v SPJ Formwork and by Brooking J in Nicholls v Stamer [1980] VR 479 illuminates the wide general power available to the Court in the review and adoption process.
23Most recently in BestCare Foods v Origin Energy [2012] NSWSC 574 McDougall J repeated those principles and I respectfully adopt what his Honour there said at [15] - [18]:
[15] The discretions conferred by r 20.24 are not subject to limitations or conditions stated in the rule itself. It follows that they are to be exercised judicially, and in accordance with the dictates of, in particular, s 56 of the Civil Procedure Act 2005 (NSW) (see s 56(2)).
[16] Nonetheless, over the years, guidelines relevant to the exercise of the r 20.24 discretions (or the equivalent discretions under SCR pt 72 r 13) have been developed in many decided cases. I sought to collect the principles emerging from those cases in my judgment in Chocolate Factory Apartments v Westpoint Finance [2005] NSWSC 784 at [6] to [8].
[17] Since what I there said has received some measure of support in subsequent decisions, I venture to repeat those paragraphs:
"6 The principles to be applied, in exercising the discretion conferred upon the Court by Pt 72 r 13 to adopt, vary or reject in whole or in part a report of a referee, are well established. There are a number of cases to which, customarily, reference is made. They include Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549; the unreported proceedings in that case before Giles J (19 May 1992: the relevant considerations referred to by his Honour are sufficiently extracted in the decision of the Court of Appeal); Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60; White Constructions (NT) Pty Ltd v Commonwealth of Australia (1990) 7 BCL 193; and Foxman Holdings Pty Ltd v NMBE Pty Ltd (1994) 38 NSWLR 615. As to the nature and content of the referee's obligation to give reasons, the relevant authorities include Xuereb v Viola (1989) 18 NSWLR 453 and Hughes Bros Pty Ltd v Minister for Public Works (Rolfe J, 17 August 1994, unreported; BC 9402885).
7 The relevant principles, distilled from those decisions, can be stated as follows:
(1) An application under Pt 72 r 13 is not an appeal either by way of hearing de novo or by way of rehearing.
(2) The discretion to adopt, vary or reject the report is to be exercised in a manner consistent with both the object and purpose of the rules and the wider setting in which they take their place. Subject to this, and to what is said in the next two sub paragraphs, it is undesirable to attempt closely to confine the manner in which the discretion is to be exercised.
(3)The purpose of Pt 72 is to provide, where the interests of justice so require, a form of partial resolution of disputes alternative to orthodox litigation, that purpose would be frustrated if the reference were to be treated as some kind of warm up for the real contest.
(4) In so far as the subject matter of dissatisfaction with a report is a question of law, or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh.
(5) Where a report shows a thorough, analytical and scientific approach to the assessment of the subject matter of the reference, the Court would have a disposition towards acceptance of the report, for to do otherwise would be to negate both the purpose and the facility of referring complex technical issues to independent experts for enquiry and report.
(6) If the referee's report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection. In this context, patent misapprehension of the evidence refers to a lack of understanding of the evidence as distinct from the according to particular aspects of it different weight; and perversity or manifest unreasonableness mean a conclusion that no reasonable tribunal of fact could have reached. The test denoted by these phrases is more stringent than "unsafe and unsatisfactory".
(7) Generally, the referee's findings of fact should not be re-agitated in the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee enjoys an appropriate expertise. Thus, the Court will not ordinarily interfere with findings of fact by a referee where the referee has based his or her findings upon a choice between conflicting evidence.
(8) The purpose of Pt 72 would be frustrated if the Court were required to reconsider disputed questions of fact in circumstances where it is conceded that there was material on which the conclusions could be based.
(9)The Court is entitled to consider the futility and cost of re-litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee such evidence and submissions as they desire.
(10) Even if it were shown that the Court might have reached a different conclusion in some respect from that of the referee, it would not be (in the absence of any of the matters referred to in sub para (6) above) a proper exercise of the discretion conferred by Pt 72 r 13 to allow matters agitated before the referee to be re-explored so as to lead to qualification or rejection of the report.
(11) Referees should give reasons for their opinion so as to enable the parties, the Court and the disinterested observer to know that the conclusion is not arbitrary, or influenced by improper considerations; but that it is the result of a process of logic and the application of a considered mind to the factual circumstances proved. The reasoning process must be sufficiently disclosed so that the Court can be satisfied that the conclusions are based upon such an intellectual exercise.
(12) The right to be heard does not involve the right to be heard twice.
(13) A question as to whether there was evidence on which the referee, without manifest unreasonableness, could have come to the decision to which he or she did come is not raised "by a mere suggestion of factual error such that, if it were made by a trial judge, an appeal judge would correct it". The real question is far more limited: "to the situation where it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal of fact could have reached; that is, a decision that any reasonable referee would have known was against the evidence and weight of evidence".
(14) Where, although the referee's reasons on their face appear adequate, the party challenging the report contends that they are not adequate because there was very significant evidence against the referee's findings with which the referee did not at all deal, examination of the evidence may be undertaken to show that the reasons were in fact inadequate because they omitted any reference to significant evidence.
(15) Where the court decides that the reasons are flawed, either on their face or because they have been shown not to deal with important matters, the court has a choice. It may decline to adopt the report. Or it may itself look at the detail of the evidence to decide whether or not the expense of further proceedings before the referee (which would be the consequence of non adoption) is justified.
8.The twelfth point restates the aphorism of Mahoney JA in Super at 567. The thirteenth, fourteenth and fifteenth points are drawn (and include direct quotations) from the judgment of Hodgson CJ in Eq (with whom Priestley JA agreed and with whom, as to the relevant principles, Fitzgerald AJ also agreed) in Franks & Anor v Berem Constructions Pty Ltd (NSWCA 2 December 1998, unreported; BC 9806367). If I may say so with respect, I regard what his Honour said as giving content, on the facts of the particular case, to the operation of relevant principles rather than as stating any new principle. "
[18] I emphasise, however, that those guidelines do not confine or restrict the discretions. Nor do they override the central significance of s 56 of Civil Procedure Act. Having said that, in general and subject to the particular circumstances of each case, I remain of the view that those guidelines are relevant when considering the exercise of the r 20.24 discretions. In this case, the parties did not suggest otherwise.