Plaintiff v Defendant

2 Dura is a company carrying out commercial and residential construction, including constructing multi-unit apartment buildings. The defendant (VMIA) is a statutory authority that acts as the agent for the State of Victoria and administers the Domestic Building (HIH) Indemnity Fund (the HIH indemnity fund) under the House Contracts Guarantee Act 1987.

3 On or about 22 May 1998, Dura entered into a contract with Cromwell Developments Pty Ltd to construct 32 residential apartments (the Cromwell development). Dura completed the works in about 2000.

4 The owners of apartments in the Cromwell development have made claims on VMIA for alleged defects in the construction of the apartments and VMIA has accepted those claims.

5 In substance, VMIA contends that Dura has taken out a policy of insurance with FAI that entitles VMIA to give directions to Dura to rectify the defects. Dura disputes that it took out such a policy and contends that it took out an earlier form of policy that does not entitle VMIA to give such directions.

6 In furtherance of its claims against Dura, VMIA has instituted proceedings in VCAT. The Tribunal ordered that several preliminary questions be answered before determining the proceedings. Some of the questions went to the issue of whether or not Dura was bound by the policy of insurance, as VMIA contends. Deputy President MacNamara heard and determined the preliminary questions in favour of VMIA.

7 Under s 148 of the Victorian Civil and Administrative Tribunal Act 1988 (the VCAT Act), an appeal to the Supreme Court lies on a question of law only and leave to appeal is required.

8 I commenced hearing the appeal from the decision of Lansdowne AsJ refusing leave to appeal on certain grounds on 28 and 29 November 2011. I ordered that the further hearing of the appeal from Lansdowne AsJ, for leave to appeal, be heard and determined along with the hearing and determination of the appeal (where leave to appeal had been granted). In the event of me allowing the appeal from Lansdowne AsJ on any ground of appeal (and leave to appeal being granted), I directed that I would decide the appeal instanter along with the grounds of appeal (where leave had been granted).

9 VMIA has raised a preliminary objection that is the subject of these reasons. VMIA contends that the answers to the preliminary questions are not orders and that they are not subject to appeal. Under the VCAT Act appeals only lie from 'an order of the Tribunal in the proceeding...'

10 For the reasons amplified below, I reject the preliminary objection. I find that the answers to the preliminary questions were orders of the Tribunal in the proceeding. The authorities which I examine establish that the answers to preliminary questions ordered to be determined are orders subject to appeal.

11 I gratefully adopt the description of the proceedings given by Lansdowne AsJ in her written reasons for judgment of 4 August 2011. In the proceedings, VIMA seeks orders that Dura is bound by a particular contract of insurance, that certain building works performed by Dura contain defects that constitute a prescribed cause within that contract of insurance and that Dura reimburse VIMA for the cost of rectifying the defects. The preliminary questions before VCAT arise out of the denial by Dura that it is bound by the particular contract of insurance relied on by VIMA.

12 The Tribunal determined six preliminary questions. The first asked if the contract of insurance between FAI General Insurance Company Ltd (FAI) and Dura entered into at the relevant time (17 May 1999) indemnified building owners, as opposed to the builder, Dura. In the previous domestic insurance policy taken out by Dura, Dura as builder was the named insured. The second question asked whether the policy was constituted by the particular documents contended for by VMIA. In particular, whether the terms of the FAI Builders Annual Blanket Extra Policy were terms of the policy.

13 The third question asked if on its proper construction that policy enabled FAI, and so now VMIA, to give directions to Dura to rectify claimed faults, which VMIA has purported to do. The final three questions relate to issues raised by Dura on the Insurance Contracts Act 1984 (Cth).

14 The Tribunal found against Dura in respect of the first three questions. That is it found that Dura was bound by the policy relied upon and the policy did permit VMIA to require it to rectify defects. The Tribunal also found against Dura in respect of the Insurance Contracts Act 1984 questions.

15 Section 148 of the VCAT Act provides that appeal to the Supreme Court lies on a question of law only and that leave to appeal is required. Dura contends in its proposed notice of appeal that the Tribunal made a number of errors of law in answering the questions that it did, and seeks leave to appeal on those grounds. Her Honour granted leave to appeal on some grounds but refused leave to appeal on a others.

16 The substance of the points of claim is as follows. I will use the paragraph numbering in the points of claim.

[3] VMIA is responsible for the administration of the indemnity scheme established under Part VI of the House Contracts Guarantee Act 1987.

[4] Dura was at all material times carrying on business in Victoria as a builder within the meaning of the Building Act 1993.

[5] In or about May 1999, Dura entered into a major domestic building contract within the meaning of the Domestic Building Contracts Act 1995 for the construction of a multi-unit development at 346-350 Toorak Road, South Yarra (the works) with Cromwell Developments Pty Ltd as owner (the building contract).

[6] On or about 17 May 1999, a panel of insurers led by FAI General Insurance Company Limited (FAI) underwrote and entered into a contract of insurance with Dura whereby FAI agreed to indemnify certain building owners for any loss or damage resulting from risks set out in clause 5 of the Ministerial Order S122 made 30 October 1998 pursuant to s 135 of the Building Act 1993 (the contract of insurance).

[7] There were terms, inter alia of the contract of insurance as follows

...

(f) Dura was obliged to promptly comply with FAI's reasonable directions in relation to the completion or rectification of any work under the major domestic building contract.

[8] The building contract is a major domestic building contract within the meaning of s 2 clause A of the contract of insurance, as it is a major domestic building contract entered into by Dura between 31 May 1997 and 31 May 1999.

[9] The contract of insurance is an HIH policy within the meaning of s 35 of the House Contracts Guarantee Act 1987.

[10] By operation of s 44 of the House Contracts Guarantee Act 1987, if a claim is made under s 40 for a statutory indemnity for loss arising from incomplete or defective building work, the VMIA may give reasonable directions to the builder concerned in respect of:

(a) the rectification of the defective building works; or

(b) the payment by the builder to the Domestic Building (HIH) Indemnity Fund of any amount in respect of the completion of the building work or the rectification of defective building works;

to the extent that HIH (as defined, which definition includes FAI) would be able to require that work or require a payment to HIH by the builder under the relevant HIH policy.

[11] Dura, in breach of the building contract, performed the work on the land defectively and in breach of the warranties imported by s 8 of the Domestic Building Contracts Act 1995.

[12] The warranties imposed on the building contract by s 8 of the Domestic Building Contracts Act 1995 inure for the benefit of the owners from time to time on the homes and common property constructed as part of the works.

[13] In 2005 and 2006, each of the owners for the time being listed in the schedule to the points of claim lodged contracts with the VMIA under the provisions of Part VI of the House Contracts Guarantee Act 1987.

[14] The breach of the warranties referred to in paragraph 11 has caused loss and damage to the claimants and each of them.

[15] On 9 October 2006, VMIA accepted the claims in respect of the defects contained in the schedule to the points of claim.

[16] VMIA reasonably directed Dura to rectify the defects contained in schedule A to the points of claim as it was entitled to do by virtue of s 44 of the House Contracts Guarantee Act 1987.

[17] Dura has refused to rectify the defects, denied it is bound by the contract of insurance and denied the defects were matters which were its responsibility under the building contract.

[18] In the premises, VMIA is entitled to exercise the claimant's rights against Dura; entitled to require Dura to pay to the Domestic Building (HIH) Indemnity Fund the cost of rectifying the defects and subrogate to the rights of the claimants to require Dura to pay the loss and damage arising from the breach of the building contract.

(A) A declaration that Dura is a party to and bound by the terms of the contract of insurance.

(B) A declaration that the building works performed under the building contract contained the defects.

(C) A declaration that the defects constitute a prescribed cause within the meaning of the contract of insurance.

(D) An order that Dura pay to VMIA the cost of rectifying the defects.

(G) Such further or other orders as the Tribunal sees fit.

18 On 7 April 2009, Dura filed and served points of defence. Amongst other matters, Dura denies the allegation in paragraphs (6) and (7) of the points in claim, that is, that it entered into the insurance policy as alleged by VMIA.

19 One of the key issues in the proceeding is whether VMIA was entitled to issue a direction to Dura in relation to certain alleged defective works in the Cromwell development under s 44 of the House Contracts Guarantee Act 1987 which the VMIA could do only to the extent that HIH (including FAI) could have done so. Dura contends it was insured under an earlier form of policy under which FAI could not give such a direction and hence VMIA cannot give such a direction.

20 On 21 October 2009, the Tribunal constituted by Deputy President Aird conducted a directions hearing. At the directions hearing, the Tribunal decided that the question of whether the VMIA had the power to direct Dura to rectify alleged defects was a fundamental issue between the parties and ought to be the subject of preliminary determination. Accordingly, the Tribunal ordered that:

The following preliminary question shall be heard by Deputy President Aird on 4 March 2010... with an estimated hearing time of one day:

Whether by operation of s 44 of the House Contracts Guarantee Act 1987, if a claim is made under s 40 for a statutory indemnity for loss arising from incomplete or defective building work, the policy of insurance referred to in paragraph (6) of [the VMIA's] points of claim dated 24 November 2008 permits [the VMIA] to give reasonable directions to [Dura]:

(i) in respect of the completion or rectification of any incomplete or defective building works; or

(ii) the payment by [Dura] to the Domestic Building (HIH) Indemnity Fund of any amount in respect of the completion of any incomplete works, or the rectification of any defective works;

to the extent that HIH (within the meaning of s 35 of the House Contracts Guarantee Act 1987, which includes FAI General Insurance Company Limited would be able to require that work or require a payment to HIH by [Dura] under the relevant HIH policy.

21 The Tribunal also made orders for the VMIA to file and serve any affidavit material together with submissions and copies of all authorities on which it would rely by 9 February 2010 and for Dura to do so by 23 February 2010. Pursuant to these orders, the parties filed various documents, including affidavits and submissions.

22 The preliminary hearing did not proceed on 4 March 2010 due to an application by VMIA to vacate the preliminary hearing, and the proceeding was adjourned to a directions hearing.

23 At a directions hearing held on 25 May 2010, Deputy President Aird determined that different questions be determined as follows:

(i) On or about 17 May 1999 (or some other date, and what date) did FAI General Insurance Company Limited (FAI) either by itself or with a panel, underwrite and enter into a contract of insurance with [Dura] whereby FAI agreed to indemnify certain building owners from any loss or damage resulting from risks set out in clause 5 of the Ministerial order s 122 made 30 October 1998 pursuant to s 135 of the Building Act 1993 (the contract of insurance) as alleged by [the VMIA] in paragraph (6) of its points of claim?

(ii) If yes to (i), insofar as the contract of insurance was in writing was it contained in the certificate of registration of builder dated 17 May 1999 and in the builder's annual blanket extra policy terms dated 29 December 1998 (the builder's annual blanket extra policy) being the documents referred to in the particulars subjoined to paragraph (6) of [the VMIA's] points of claim?

(ii) If yes, did the builder's annual blanket policy contain a term that on its proper construction empowered [the VMIA] to give the directions to [Dura] on 9 and 19 October 2006, as alleged in paragraph (16) of [the VMIA's] points of claim?

24 The Tribunal made further orders permitting the parties to file further affidavits and submissions.

25 The hearing of the preliminary questions did not proceed on 20 July 2010 due to the unavailability of the Tribunal, and was adjourned until 5 October 2010.

26 The hearing of the preliminary questions commenced on 5 October 2010 with Deputy President McNamara presiding, due to the unavailability of a judicial member. Submissions were made by each side. Dura filed a proposed further question for determination concerning ss 13 and 14 of the Insurance Contracts Act 1984. On 6 October, the solicitors for Dura put forward three further questions for determination by the Tribunal and VMIA did not object to the further questions proposed. The hearing was adjourned to 21 December 2010.

27 The matter proceeded on 21 December 2010. Leave was also given for the parties to file further written submissions at the conclusion of the hearing that day.

28 On 31 January 2011, the Tribunal published its orders and reasons in which the Tribunal member answered the questions for preliminary determination against Dura. On 31 January 2011, under the heading of 'Order', Deputy President McNamara ordered:

(1) Questions answered in accordance with the attached reasons.

(2) Adjourn to a directions hearing before Deputy President McNamara 16 February 2011.

29 The Deputy President provided extensive reasons which concluded with a page headed 'Answers to questions'.

30 The first answer to the questions was as follows:

(1) On or about 17 May 1999 (or some other date, and what date) did FAI General Insurance Company Limited (FAI) either by itself or with a panel, underwrite and enter into a contract of insurance with the respondent whereby FAI agreed to indemnify certain building owners from any loss or damage resulting from risks set out in clause 5 of the Ministerial order s 122 made 30 October 1998 pursuant to s 135 of the Building Act 1983 (the contract of insurance) as alleged by the applicant in paragraph (6) of its points of claim?

Beside paragraph 134 the Deputy President provides:

31 The Deputy President then continues to answer the questions that had been set down for preliminary determination by order of Deputy President Aird made 25 May 2010 and, in addition, answered questions raised in the three further questions relating to the Insurance Contracts Act 1984.

32 By an originating motion dated 14 February 2011, Dura sought orders including an order pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 that Dura have leave to appeal from order (1) of the VCAT orders made in proceeding number D894/2008 on 31 January 2011. As noted above, order (1) was 'Questions answered in accordance with the attached reasons'.

33 The originating motion and summons support came on before Lansdowne AsJ on 19 July 2011. Before her, Dura put forward a proposed notice of appeal which provided as follows:

Take notice that the abovenamed Appellant appeals, following leave granted by an Associate Justice of this Honourable Court... to the Supreme Court of Victoria... against the orders made by the Victorian Civil and Administrative Tribunal on 31 January 2011 in which the Tribunal ordered:

(1) Questions answered in accordance with attached reasons.

(2) Adjourned to directions hearing before Deputy President McNamara...

(3) Costs reserved.

The appellant appeals against order (1) and asks for the following orders:

(1) The appeal be allowed and that the abovementioned order made by the Tribunal on 31 January 2011 be set aside.

(2) That in lieu of the order made by the Tribunal, the Court order that preliminary question be answered as follows.

34 There follows the recitation of the question that was answered. This time Dura suggests the answer should be no. The same approach was taken for questions (2) and (3). In respect of question (4), the suggested answer is put forward as yes.

35 The VCAT Act makes provision for appeals from the Tribunal in Part V. Section 148 relevant provides:

A party to a proceeding may appeal on a question of law from an order of the Tribunal in the proceeding...

(a) to the Court of Appeal, if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others; or

(b) to the Trial Division of the Supreme Court in any other case -

if the Court of Appeal or the Trial Division, as the case requires, gives leave to appeal.

36 Under sub-s (7), the Court of Appeal or the Trial Division as the case requires may make any of the following orders on an appeal:

(a) an order affirming, varying or setting aside the order of the Tribunal;

(b) an order the Tribunal could have made in the proceeding;

(c) an order remitting the proceeding to be heard and decided again, either with or without the hearing of further evidence, by the Tribunal in the course of the direction of the Court;

(d) any other order the Court thinks appropriate.

Under s 3, 'order' of the Tribunal includes an interim order of the Tribunal.

37 On 4 August 2011, her Honour ordered that leave was granted in respect of questions (5) and (7) in the further amended proposed notice of appeal filed 19 July 2011 and that leave to appeal was refused in respect of questions (1), (1A), (2), (3), (4) and (6). Leave was granted to amend the notice of appeal in respect of questions (5) and (7) in accordance with the reasons by her Honour. The proceedings were adjourned to a date to be fixed for directions.

38 Dura appealed against the orders of Lansdowne AsJ made on 19 July 2011 refusing leave to appeal in respect of questions (1), (1A), (2), (3), (4) and (6) of the further amended proposed notice of appeal dated 19 July 2011. A second further amended proposed notice of appeal was later filed, pursuant to the order of Daly AsJ on 30 August 2011, on 12 September 2011 (amending question (1) and adding question (1B)).

39 The appeal from the decision of Lansdowne AsJ came on before me on 28 and 29 November 2011. I have adjourned the further hearing of the appeal as indicated above.[1]

Are the orders of the Deputy President appealable orders?

40 The Supreme Court (General Civil Proceeding) Rules 1985 contain provisions for the determination of separate questions before or after the trial of the proceedings. In particular Rule 47.04 of the Supreme Court (General Civil Proceeding) Rules 1985 provides for the separate trial of questions before or after the trial of the proceeding. 'Question' is defined to mean any 'question, issue or matter for determination by the Court, whether of fact or law... raised by the pleadings or otherwise...'

41 A similar provision appears in Rule 29 of the Federal Court Rules. The Federal Court of Australia has held that the determination of a separate question under Rule 29 constitutes an appealable judgment whether or not a specific order under Rule 29 was made by the trial judge.

42 In Town v ATC[2] the Full Court of the Federal Court of Australia considered whether the trial judge had made an appealable order. The appellant was employed by the Australian Telecommunications Commission (ATC). The appellant was purportedly stood down upon a declaration made by a delegate of the ATC pursuant to a statutory power. The appellant challenged the validity of the declaration under the Administrative Decisions (Judicial Review) Act 1977. The parties agreed that the trial judge should determine a series of preliminary questions one of which went to whether as a matter of law on the agreed facts the delegate was entitled to make the declaration. This issue was fundamental to the final disposition of the matter.

43 The trial judge answered yes to the question and the appellant sought to appeal against the answer. The Federal Court of Australia Act 1976 (FCA Act) permitted appeals against judgments of the Court. Judgment was defined to mean a judgment, decree or order, whether final or interlocutory, or a sentence. In Town v ATC McGregor J said that 'judgment' meant 'not the reasons therefor; but the judicial determination; decision (or sentence) of the court.'[3]

44 Although there was no mention by the trial judge at first instance of Rule 29 and the power to order the determination of separate decisions, the Full Court held that the trial judge in fact answered the relevant question under that power. The Court also held that on the basis that the question was a separate question to be determined under Rule 29 the answer was a judgment for the purposes of the FCA Act. McGregor J said:[4]

The judgment in respect of the question or questions forming part of his Honour's orders would, therefore, be the subject of an appeal pursuant to the Act, s 24. To hold otherwise would mean that O 29 made provisions for such a procedure by the judge but to be unappealable, i.e. not subject to the ordinary rights of appeal pursuant to the Act. The substance of the appeal, is therefore to be considered.

45 Sheppard J with whom Franki J, who also sat on the appeal, agreed and said on this issue:[5]

His Honour having found against the appellant, it is superficially difficult to perceive what order his Honour has made. Unless there is an order - there is certainly no judgment - there can be no appeal pursuant to s.24 because there is nothing to appeal against. But it seems to me that in deciding to answer the question in the way that he has, his Honour has in reality made an order determining the question favourably to the respondents. The order is not a final order but an appeal lies against an order which is interlocutory only. If this view is not correct, the utility of what is provided for in Order 29 will often be lost. If one party wishes to appeal but cannot do so because there is no order, both parties will have to incur expense for further costs which may prove quite unnecessary in the event that an appellate court ultimately decides the question in such a way as to bring about the disposal of the proceedings without the need for any additional evidence. The Court has entertained appeals in similar circumstances. An example is Queensland Aggregates Pty. Limited v. Trade Practices Commission (1981) 38 A.L.R.217. There a question had been determined at first instance unfavourably to a respondent to an action for penalties brought by the Commission. A favourable determination of it would have brought about an end to the proceedings. The Full Court, which heard the appeal, did not suggest that the appeal was incompetent.

46 Town v ATC was cited with approval by the Full Court of the Federal Court in Landsal Pty Ltd v Other Building Society[6] by Keely, Burchett and Drummond JJ. In that matter under the Trade Practices Act 1974 the trial judge had made orders limiting discovery and hearing questions of liability only. As summarised in the head note, the trial judge delivered findings of 'fact and law' against which the appellants sought to appeal. The Court held that if a judge could be seen to have dealt with a separate question under Order 29 an appeal would lie from such a determination even though no formal order reflecting that declaration was made. In the matter before them the trial judge did not deal with the issues as separate questions pursuant to Order 29 and regarded his findings as one step in the hearing which would be resumed when he gave judgment. The Full Court held that the findings of fact and law did not constitute a judgment subject to appeal.

47 In the matter before VCAT, orders had been made for the determination of separate questions. The questions were fundamental to the eventual disposition of the matter.

98 General procedure

(1) The Tribunal -

(a) is bound by the rules of natural justice;

(b) is not bound by the rules of evidence or any practices or procedures applicable to courts of record, except to the extent that it adopts those rules, practices or procedures;

(c) may inform itself on any matter as it sees fit;

(d) must conduct each proceeding with as little formality and technicality, and determine each proceeding with as much speed, as the requirements of this Act and the enabling enactment and a proper consideration of the matters before it permit.

49 As indicated by s 98, the Tribunal is not bound by any practice or procedures applicable to courts but may adopt such practices of procedures. In my opinion, the Tribunal has in this case adopted the well known procedure of ordering that preliminary questions be determined in a separate hearing as provided in Rule 47 of the Supreme Court (General Civil Proceeding) Rules 1985.

50 The Deputy President pronounced his decision on the separate issues as orders. The answers he gave were decisions of law. If that procedure had been followed in the Supreme Court, and the Supreme Court followed the decisions of the Full Federal Court, then the answers would have been orders whether the trial judge had expressly referred to Rule 47 or not. I see no reason why the Supreme Court would not follow the decisions of the Full Federal Court in this matter. Similarly where the Tribunal has adopted this procedure I see no reason why the 'orders' on the separate questions should not be treated as orders for the purposes of s 148 of the VCAT Act.

51 Clearly, the procedure followed by the parties treated the questions as being resolved and not open to further debate before the Tribunal.

52 The defendant relies on State of Victoria v Turner[7] a decision of Warren CJ. In that case the preliminary issue was raised that the decision of Tribunal was not an order for the purposes of s 148 of VCAT Act. Her Honour upheld the contention.

53 The decision was made under proceedings authorised by the Equal Opportunity Act 1995. Adopting the head note in the authorized report, the Tribunal made a written decision headed 'order' that the Tribunal found that the complainant, a secondary school student with a severe learning disability, had proved in part her complaint under the Act that the State of Victoria had discriminated against her by failing to provide a her with a full-time teacher's aide. The Tribunal document was expressed as making specific findings of unlawful discrimination, scheduled a directions hearing to dispose of the remedy stage of the proceeding, and dismissed the remainder of the complaints.

54 The Chief Justice found, as the head note summarises, that the Tribunal document did not constitute an order for the purposes of s 136 of the Equal Opportunity Act 1995 and s 148 of the VCAT Act because the Tribunal had completed only one part of its statutory function by making a finding that the complaint was proven in part. The Tribunal had not proceeded to take the step necessary to constitute an order by making the consequential orders. The Tribunal had merely made findings. It did not order, as that term is properly understood, the remedies that the court decided should flow from those findings.

55 As indicated above, the Tribunal was entitled in the matter before it to make interlocutory orders. In my view, it is not fatal to the contention that the tribunal did make an order for the purposes of s 148 that it did not finally dispose of the matter.

56 An order was made for the determination of preliminary issues. Those preliminary issues were resolved. Although the matter at large was not finally resolved, the matter ordered to be heard separately was. In my opinion, it is proper to characterise the decision on a separate issue, ordered to be heard separately from the trial of the matter, as an order for the purposes of s 148 of the VCAT Act.

57 Warren CJ also drew the distinction between findings and the relief that follows. The distinction is well recognised. In this case however, the material difference is that the findings were findings that the Tribunal ordered should be heard and determined separately from the final hearing of the application. The decision required of the Tribunal hearing these separate questions was only the answers to them. Nothing further was required of the Tribunal hearing the separate questions as ordered to do. It is appropriate to describe the answers it came to on the separate questions as orders.

58 In my view, the meaning of order in the VCAT Act bears no material difference to that at common law or under the Supreme Court Act and its rules.

59 I therefore hold that orders of the Deputy President were orders of the Tribunal in the proceeding for the purposes of s 148 of the VCAT Act. I dismiss the preliminary objection of the defendant and order that the defendant pay the plaintiff's costs of the hearing and determination of the preliminary objection.

[2] (1983) 47 ALR 137 (Town v ATC).

[6] [1993] FCA 121; (1993) 113 ALR 643.

[7] [2007] VSC 362; (2007) 17 VR 217.