Metricon Homes v Softley [2016] VSCA 60

Metricon Homes v Softley [2016] VSCA 60 - VSCA 2016 case summary — Zoe

[12]

14A Leave to appeal required for civil appeals

(1) Subject to subsection (2), any civil appeal to the Court of Appeal requires leave to appeal to be obtained from the Court of Appeal.

(2) Leave to appeal is not required -

(a) for an appeal from a refusal to grant habeas corpus; or

(b) for an appeal under the Serious Sex Offenders (Detention and Supervision) Act 2009; or

(c) if the Rules provide that leave to appeal is not required, whether in any particular class of application or proceeding or generally.

(3) For the purposes of this section, civil appeal means an appeal from a judgment or order made in exercise of civil jurisdiction, including an appeal by way of rehearing or judicial review, for which this Act, any other Act or the Rules provide an appeal to the Court of Appeal.

14B Commencing a civil appeal

(1) An applicant for leave to appeal under section 14A must file an application for leave to appeal within 28 days from the date of the judgment, order, determination or other decision which is the subject of appeal unless the Rules otherwise provide.

(2) Unless this Act, any other Act or the Rules otherwise provide, an application for leave to appeal is commenced by filing the application for leave to appeal.

14C Appeal must have real prospect of success

The Court of Appeal may grant an application for leave to appeal under section 14A only if it is satisfied that the appeal has a real prospect of success.

14D Determination of application for leave to appeal

(1) The Court of Appeal constituted by one or more Judges of Appeal may determine an application for leave to appeal under section 14A with or without an oral hearing of the parties.

(2) Subject to subsection (3), if the Court of Appeal dismisses an application for leave to appeal without an oral hearing, the applicant, in accordance with the Rules, may apply to have the dismissal set aside or varied at an oral hearing before the Court of Appeal constituted by two or more Judges of Appeal.

(3) If the Court of Appeal dismisses an application for leave to appeal without an oral hearing and has determined that the application is totally without merit, the applicant has no right to apply to have the dismissal set aside or varied.

(4) This section does not apply to -

(a) an appeal from a refusal to grant habeas corpus; or

(b) an appeal under the Serious Sex Offenders (Detention and Supervision) Act 2009.

[60]

There is some uncertainty about whether s 14C of the Supreme Court Act 1986 ('SC Act') applies to [an application for leave to appeal from an order of the President or a Vice President of VCAT]. As that section only applies to 'an application for leave to appeal under s 14A' of the SC Act, the question arises whether an application for leave to appeal from an order of VCAT constitutes an application for leave to appeal under s 14A. The starting point for analysing this issue is a consideration of whether an appeal under s 148 of the VCAT Act constitutes a 'civil appeal to the Court of Appeal' for the purposes of s 14A(1) of the SC Act. This question takes one to the definition of 'civil appeal' in s 14A(3), which provides as follows:

For the purposes of this section, civil appeal means an appeal from a judgment or order made in exercise of civil jurisdiction, including an appeal by way of rehearing or judicial review, for which this Act, any other Act or the Rules provide an appeal to the Court of Appeal.

On one view, an appeal under s 148 of the VCAT Act is 'an appeal ... for which ... any other Act ... provide[s] an appeal to the Court of Appeal' and is thus a 'civil appeal' for the purposes of s 14A(1) of the SC Act. Although an appeal under s 148 of the VCAT Act is not as of right but requires leave, s 148 can accurately be described as providing an appeal to the Court of Appeal. This is reinforced by the wording of s 148: it states that a party to a proceeding 'may appeal ... to the Court of Appeal' subject to obtaining leave, rather than that such a party 'may seek leave to appeal ... to the Court of Appeal'.

On the basis of the above analysis, it is arguable that the definition of 'civil appeal' in s 14A(3) of the SC Act is wide enough to cover an appeal under s 148 of the VCAT Act and that, consequently, such an appeal falls within s 14A(1) and is subject to the 'real prospect of success' requirement in s 14C. The obvious advantage of such a construction is that it ensures that all applications for leave to appeal to the Court of Appeal are subject to the test set out in s 14C and to the provisions of s 14D.[38]

The above construction, however, must be considered in the context of the history of the relevant provisions and the legislative schemes to which they belong. The leave obligation in s 148 of the VCAT Act has existed from the enactment of the VCAT Act in 1998. The principles that have governed applications for leave to appeal under s 148 have been clear since the Court of Appeal decided Hulls in August 1999. Those principles have operated side by side with the principles in Niemann which this Court has traditionally applied in considering applications for leave to appeal from interlocutory orders. Against this historical background, it would have been expected that if Parliament had intended to alter the settled principles governing applications for leave to appeal from an order of VCAT, it would have expressly said so. No provisions appear in the SC Act which expressly give effect to any such intention.

The fact that s 148(2) of the VCAT Act has not been amended consequent upon the enactment of s 14B of the SC Act indicates that applications for leave to appeal from an order of VCAT continue to be governed by s 148 and are not subject to ss 14A to 14D of the SC Act.

Section 14B(1) of the SC Act provides that an application for leave to appeal under s 14A must be filed 'within 28 days from the date of the ... order ... which is the subject of appeal unless the Rules otherwise provide.' Section 148(2) of the VCAT Act, on the other hand, provides that an application for leave to appeal from an order of VCAT 'must be made ... no later than 28 days after the day of the order of the Tribunal' and must be 'in accordance with the rules of the Supreme Court.' Section 148(5) provides that the Court of Appeal 'may at any time extend or abridge any time limit fixed by or under this section.'

If applications for leave to appeal from an order of VCAT were intended to be governed by ss 14A to 14D of the SC Act, there would have been no need for s 148(2) of the VCAT Act to continue to apply to applications for leave to appeal to the Court of Appeal, and that section would have been amended to confine it to applications for leave to appeal to the Trial Division. That is because s 14B(1) specifies the applicable time limit of 28 days and provides that this period can be modified by the rules. As ss 14B to 14D of the SC Act and the rules are capable of dealing with all procedural matters concerning applications for leave to appeal, it would not have been necessary for s 148(2) of the VCAT Act to continue to apply. The existence of this overlap between s 14B of the SC Act and s 148(2) of the VCAT Act suggests that it was intended that s 148 of the VCAT Act would continue to apply unaffected by ss 14A to 14D of the SC Act.

This conclusion is supported by the inconsistency between those provisions. Section 14B(1) of the SC Act specifies a 28 day deadline which is capable of modification by the rules, whereas s 148(2) of the VCAT Act specifies a 28 day deadline without providing for modification by the rules. Any modification to the time limit in s 148(2) can only be made by an order of the Court of Appeal under s 148(5).

The above discussion indicates that there are competing arguments on whether applications for leave to appeal from an order of VCAT continue to be governed solely by s 148 of the VCAT Act and thus whether such applications are to be determined by reference to the principles set out in Hulls or the 'real prospect of success' test in s 14C of the SC Act. If such applications do not constitute 'an application for leave to appeal under s 14A' then the provisions of s 14D of the SC Act - which deal with the composition and powers of the Court of Appeal - may not apply to those applications. This is because s 14D(1) applies to 'an application for leave to appeal under s 14A'.

I find it unnecessary to decide the above issues as the outcome in the present case would have been the same irrespective of which test had been applied.

Irrespective of whether ss 14A to 14D of the SC Act apply to an application for leave to appeal to the Court of Appeal from an order of the President or a Vice President of VCAT, the nature and scope of the appeal which is the subject of the application are governed by s 148 of the VCAT Act. That is, the appeal is 'on a question of law'. It follows that the application for leave to appeal must set out the questions of law that are said to be involved in the order of VCAT that is sought to be impugned.[39]

[188]

In its preface the Standard, itself, states that the Standard 'places particular emphasis on the design for reactive clay sites susceptible to significant ground movement due to moisture changes'. The design life provided for in the Standard 'may be taken as 50 years' (see paragraph 1.4.2). In paragraph 1.3.1 of the Standard the following statement appears:

The footing systems complying with this Standard are intended to achieve acceptable probabilities of serviceability and safety of the building during its design life. Buildings supported by footing systems designed and constructed in accordance with this Standard on a normal site (see Clause 1.3.2) which is -

(a) not subject to abnormal moisture conditions; and

(b) maintained such that the original site classification remains valid and abnormal moisture conditions do not develop;

are expected to experience usually no damage, a low incidence of damage Category 1 and an occasional incidence of damage Category 2.

The categorisation of damage by cracking to walls is to be found in Appendix C, Table C1. Hairline cracks which are less than 0.1mm are categorised as zero. Fine cracks which do not need repair being less than 1mm are Category 1. Cracks being less than 5mm which are noticeable but easily filled and doors and windows sticking slightly are classed as Category 2. Category 3 cracking is described as 'cracks can be repaired and possibly a small amount of wall will need to be replaced. Doors and windows stick. Service pipes can fracture. Weather tightness often impaired.' These cracks are said to be of the range of 5mm to 15mm (or a number of cracks 3mm or more in one group). These are Category 3. Category 4 cracks are described as 'extensive repair work involving breaking-out and replacing sections of walls, especially over doors and windows. Window and doorframes distort. Walls lean or bulge noticeably, some loss of bearing in beams. Service pipes disrupted. Cracks are within the range of 15mm to 25mm, 'but also depend on number of cracks.'[84]

[198]

Plainly, this slab has not met performance requirements of AS2870, whether regard is had to a test based on cracking or upon the extent of differential movement. In the course of major rectification works in September 2011, plastering contractors engaged by Metricon removed an entire plaster wall in the rumpus room. A sledgehammer was used to realign the frame. [Counsel for the Softleys] submitted that this was indicative of Category 4 damage to the walls. The descriptor of this damage was as follows, in accordance with Table C1:

Extensive repair work involving breaking-out and replacing sections of walls, especially over doors and windows. Window and door frames distort. Walls lean or bulge noticeably, some loss of bearing in beams. Service pipes disrupted.

The approximate crack width is 15mm to 25mm 'but also depends on number of cracks'. The evidence did not disclose the width of the cracks that led to this work being carried out in the rumpus room, however, we think a more likely characterisation of the cracks which led to these repairs is to be found in Category 3 which covers cracking from 5mm to 15mm or a number of cracks 3mm or more in a group with a descriptor:

Cracks can be repaired and possibly a small amount of wall will need to be replaced. Doors and windows stick. Service pipes can fracture. Weather tightness often impaired.

Whatever the correct view be, since either opinion put the cracking at worse than Category 1 or 2, cracks in which categories must be less than 5mm, the performance criterion laid down by the Standard has not been met. In addition there is at least some Category 3 cracking in the house as it now stands. At least one piece of external brickwork was photographed and identified as a Category 3 crack by Mr Price, a building inspector giving evidence for the Softleys. We observed this at the view that we carried out in the course of the hearing. Mr Price said he observed at least two other Category 3 cracks in the brickwork but there was some doubt as to their identification. Further, in identifying the work which will need to be done to rectify the house in its present state, Mr McLennan, a building surveyor and building consultant who gave evidence for Metricon, said that a 'panel', that is, part of the brickwork on the eastern wall of bedroom 2 would need to be rebuilt. Separately from chasing and re-pointing other parts of this brick veneer wall, he also recommended the removal of two to four courses in the area above window level in this wall and their replacement and re-bricking ... Again, whether one characterises this as Category 3 or Category 4 cracking, it goes beyond what AS2870 regards as acceptable performance for the slab. Expert reports, photographs and our own observation at the on-site view revealed instances of windows which were sticking and whose frames had distorted, matters which were also indicative of a performance falling short of what was required by the Standard.

[Counsel for the Softleys] said that as to Category 1 cracking, there were a multitude of such cracks, whereas AS2870 laid down as its criterion a 'low incidence' of Category 1 cracking. Again, the reports, the photographs and the view bore out this observation. [Counsel for Metricon] however, submitted that the extent of this minor cracking had to be judged against the fact that no maintenance work had been done on the house since the applicants commenced the present proceeding. In effect, no maintenance work has been done since the major work undertaken in the later part of 2011 by Metricon. In our view, there is some substance to this observation. On balance, however, even allowing for this consideration, there remains a multiplicity of Category 1 and Category 2 cracking in this house which again goes beyond the performance criterion in AS2870.[92]

[317]

[The submission of counsel for the Softleys] was that in the circumstances it was reasonable to require an award of damages sufficient to fund demolition and re-erection of the house because to do otherwise would leave the Softleys bearing the risk of future distress in the structure.

[Counsel for Metricon] referred to the possibility of further claims being made under Metricon's Structural Guarantee or perhaps some further general contractual claim if additional problems were encountered. In our view, the proper approach here is to regard ourselves as assessing damages once and for all without making any allowance for the possibility of future claims. It would require a lengthy exposition at this point to examine all of the considerations which might be brought into play relative to the doctrine of res judicata and the operation of the limitation provisions to be found in the Building Act 1993 without concluding that there definitely could not be any further claims relative to distress in the structure. Even a cursory consideration of the matters just mentioned would indicate that it is far from clear that any further claim could be made.

The choice which confronts us, therefore, in framing an appropriate remedy in damages is to determine whether, in the circumstances, it should be concluded that the worst is over and that the damage and distress which the structure has suffered already are referrable to 'one off' events during construction and that further large scale movements will not occur having regard to the 'covered structure' phenomenon and the protective effect of the pathways constructed by the Softleys. Or on the other hand if there are further factors in play that perhaps had not been fully explained, with the result that further movement beyond the parameters assumed to be reasonable in accordance with AS2870 will occur.

If the former conclusion is reached then damages should be awarded sufficient to fund a rectification of the existing structure. If the latter conclusion is reached, then the funding should be sufficient to allow for a demolition and reconstruction.

The most significant factor here is a consideration where the most significant distress is now manifesting itself. This is in the area on the eastern wall in the vicinity of bedroom 2, the laundry and WC. This is the area where, even according to Metricon's case, some of the external brickwork is in need of demolition and replacement viz. a section of approximately 7 to 8m above the windows varying from two to four courses. Apparently, there was some rectification work carried out here in 2011 but the distress and cracking has re-manifested itself. This area is remote from either of the pebble gardens. It is also protected by a concrete path. There is a related 'hotspot' of distress on the eastern side of the kitchen manifesting itself at the cornice level which is in the relatively close vicinity of the main area of distress. The persistence of these problems, despite a rectification work, to our mind, gives the lie to the contention that the worst is over and any future movement will be within what are regarded as acceptable parameters in accordance with AS2870. In accordance with the principles stated by the High Court in Bellgrove it is reasonable to fix the measure of damages by reference to the cost of demolition and a re-erection in these circumstances. To quote their Honours in the context of Bellgrove itself:

To give to the respondent the cost of a doubtful remedy would be [sic] no means adequately compensate her, for the employment of such a remedy could not in any sense be regarded as ensuring to her the equivalent of a substantial performance by the appellant of his contractual obligations.

These principles apply equally here as between the Softleys and Metricon.[151]

[325]

[Counsel for the Softleys] placed primary reliance upon a decision of the Queensland Court of Appeal in Kirkby v Coote [2006] QCA 61, in particular in the judgment of Keane JA (as he then was) where His Honour said at [53]:

[53] It should be noted here that the researches of counsel for both sides have been unable to identify any case in which it has been held to be unreasonable for a plaintiff to recover the costs of demolition and reconstruction where the defendant's defective work has affected the stability of a house structure. This suggests that the courts will be slow to characterise as unreasonable the position of a plaintiff who is unwilling to 'live with' the risk of the serious consequences which may result from substandard work which affects the stability of a structure. There is no support in principle or authority for the proposition that a court will determine a level of risk of instability which it is 'reasonable' for a plaintiff to be required to endure when the plaintiff has bargained for a level of stability which is, for all practical purposes, risk free.

[Counsel for Metricon] submitted that His Honour's remarks had to be seen in their proper context. The house in Kirkby's case was erected on steeply sloping land and heavy rains had led to some of the footings subsiding. At paragraph [54] His Honour assessed the chance of future failure as at least 1 in 20.

In closing, [counsel for the Softleys] referred us to another paragraph from the judgment of Keane JA in Kirkby's case where His Honour said:

[59] As the High Court emphasised in the passage from Bellgrove v Eldridge cited above, because the respondents' damages are assessed 'once and for all', the law must be astute to ensure that the measure of damages accurately reflects the restoration of the respondents to the position they would have been in had the appellants not failed in their duty. The respondents should recover the amount of damages necessary to enable them to own a house free of risk so far as its stability was concerned. As McLure JA, with whom Steytler P and Wheeler JA agreed, said in J-Corp Pty Ltd v Gilmour: 'Reasonableness does not require the respondent to carry those risks.'

Their submission was that in the circumstances it was reasonable to require an award of damages sufficient to fund demolition and re-erection of the house because to do otherwise would leave the Softleys bearing the risk of future distress in the structure. [159]

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