10 As Charles, J.A. has explained, on 28 June 2005 the Court pronounced orders dismissing the appeal with costs and said that it would publish its reasons later. I now set out my reasons for joining in that decision.
11 It is appropriate first to state briefly the background circumstances giving rise to the narrow issue that arose for determination on the appeal. On 28 April 1999, the appellant, Swintons Pty Ltd, entered into a written contract with the respondent, Age Old Builders Pty Ltd, a builder, whereby the respondent agreed to construct on the appellant's land four town houses for a sum of over $2 million. The contract was a "major domestic building contract"[10] as defined by s.3 of the Domestic Building Contracts Act 1995 ("the Act"). The contract was silent as to whether any dispute between the parties was to be referred to arbitration, but clauses 13.03 and 15.1, when read together, gave each party the right to resort to litigation in respect of such
a dispute. The date of practical completion was stated in the contract to be 20 March 2000, although it was later extended, by agreement, to 30 June 2000. On 24 July 2000, the architect gave notice to the respondent that liquidated damages of $1,100 per day would be provisionally withheld from the respondent's future claims from that date until the date of practical completion. On 27 September 2000, the architect issued to the respondent a certificate of practical completion.
12 During the course of the building works disputes arose between the parties in relation to a number of matters, including: the quality of the builder's work, whether the respondent was entitled to "extensions of time costs" and whether any liquidated damages were owed to the appellant as a result of the delay in completion of the project, and if so, how much. In about mid-September 2000, the parties engaged an independent building consultant, Mr John Coghlan, to assess the quality of the construction work and make a determination in this regard ("the first reference"). By an agreement made between them on or about 26 September 2000, the parties orally referred further disputed matters to Mr Coghlan for determination ("the second reference"), informing him of the various matters that required resolution. On the following day, Mr Coghlan wrote to the parties confirming his acceptance of the second reference. It was common ground that, in respect of each of the two references, the parties had agreed that Mr Coghlan's determination would be final and binding on them.
13 On 27 September 2000, Mr Coghlan delivered his determination concerning the first reference ("the first determination"), finding largely in the appellant's favour and requiring that the respondent fix various defects before a certificate of practical completion could be properly issued. In the event, the respondent fixed the defects, the relevant certificate was issued and the builder submitted two further progress claims to the architect, who issued certificates for their payment. The appellant, however, refused to pay on the certificates.[11]
14 It was not until 15 April 2002, however, that Mr Coghlan delivered his determination upon the second reference ("the second determination"). In the meantime, on 22 August 2001, the respondent issued a proceeding in the Victorian Civil and Administrative Tribunal ("VCAT" or "the Tribunal") claiming the sum of $45,212.90, plus interest, as money owed to it by the appellant under the building contract. The claim was later increased to $100,268.14 so as to include, inter alia, the claim for money owing under the abovementioned certificates. The appellant filed a counterclaim on 25 October 2001 by which it sought an order offsetting the whole amount claimed against it by the respondent and further requiring that the respondent pay it $24,372.13. On 30 October 2001, the appellant's solicitors informed Mr Coghlan by letter that the appellant considered that the second reference was void but, notwithstanding this notification, Mr Coghlan received further written submissions from the respondent and, as I have said, completed the second determination on 15 April 2002. It provided that the respondent was entitled to be paid $150,979.30 by way of extension of time costs. The respondent subsequently added this figure to the amount claimed by it in its proceeding before the Tribunal. The second determination also provided that the appellant be paid $25,300 by way of liquidated damages.
15 On 11 July 2002, by way of its further amended points of defence and counterclaim, the appellant claimed in the Tribunal proceeding that the second reference was an "arbitration agreement" and, therefore, was void by reason of the operation of ss.14[12] and 132[13] of the Act and that, consequently, the second determination had no effect. On 6 February 2002, a Deputy President of VCAT determined that the agreement of 26 September 2000 was void because, inter alia, it breached those sections of the Act and made orders accordingly. The respondent appealed, with leave, to the Supreme Court pursuant to s.148 of the Victorian Civil and Administrative Tribunal Act 1998 against the Tribunal's orders and, on 21 August 2003, a judge of the Trial Division allowed the appeal, holding that the second reference did not breach ss. 14 and 132 of the Act. His Honour concluded that, on its proper construction, s.14 only prohibited compulsory references to arbitration of future disputes, but not ad hoc references to arbitration of existing disputes. His Honour held that, since the second reference was concerned only with a dispute that was current, it was not rendered void by the section. In any event, said the learned primary judge, the second reference was not a submission to arbitration but amounted to a request for an expert determination by Mr Coghlan and that was another reason why the section did not apply.
16 Briefly, his Honour's principal reasons for construing s.14 as he did were these. First, said his Honour, if Parliament intended that the word "disputes" in s.14 to be a reference to future and existing disputes, it would have been "relatively easy" for it to have said so in terms. That Parliament did not do so, said his Honour, showed that it did not intend the provision to operate in respect of both future and existing disputes. Rather, said his Honour, s.14 was phrased in such a way that it "is apt to describe an agreement to refer a future dispute" to arbitration. Secondly, his Honour noted that Parliament recognised that there was widespread disenchantment with the arbitration process and considered that the mischief that was sought to be overcome by s.14 was the compulsion in domestic building contracts that all future disputes under them be submitted to arbitration. In reaching this conclusion his Honour referred to the records of Parliamentary proceedings and other extrinsic material. Finally, his Honour noted that the acceptance of the Tribunal's interpretation of s.14 would mean that the parties could never validly agree to have an existing domestic building dispute arbitrated. That would amount to a significant interference with their ordinary legal rights and there was nothing in the legislation to suggest that such a drastic result was intended by Parliament. Thus, as I have said, his Honour allowed the appeal. On 19 July 2003, this Court granted the applicant leave to appeal against his Honour's decision.
Legislative scheme
17 It is convenient to highlight briefly two aspects of the Act's policy. The first is the establishment of the Tribunal as the principal forum for the resolution of disputes under domestic building contracts. This aim is made apparent by a number of sections in the Act. For example, s.1, which sets out the purposes of the Act, provides by paragraph (b) that one of the purposes of the Act is to provide for the resolution of domestic building disputes by the Tribunal. Similarly, s.4, which deals with the objects of the Act, provides by paragraph (b) that an object of the Act is "to enable disputes involving domestic building work to be resolved as quickly, as efficiently and as cheaply as is possible having regard to the needs of fairness." Consistently with this purpose and object, s.53 confers on the Tribunal wide powers to resolve such disputes, including the power to make an order in relation to them that it considers to be "fair" and s.14, as I have mentioned, strikes down any term in a domestic building contract that "requires a dispute under the contract to be referred to arbitration". Moreover, s.57 relevantly provides that if a party brings an action in a court in respect of a domestic building dispute the court must stay the action if the other party seeks such an order. But it is apparent that s.57 does not treat the Tribunal as the only forum where domestic building disputes may be resolved. Thus, if the parties agree, such a domestic building dispute may be determined by a court. Similarly, there is no prohibition in s.57 against parties seeking an expert determination in respect of such disputes, or having them resolved by mediation or like dispute resolution process.
18 The second aspect of the legislative scheme that should be mentioned is that most of its provisions impose, in some detail, rights and obligations on owners and builders under a domestic building contract, including the right to resort to the dispute resolution processes provided for by the Act. Importantly, s.132 prohibits the parties from contracting out of these provisions.
Grounds of appeal
19 The appellant's principal contention was that the language of s.14 is clear and unambiguous and makes no distinction between future and existing disputes and thus operates to prohibit the reference of either kind of domestic building dispute to arbitration. This conclusion, said Mr Magee, for the appellant, is consistent with the Act's purpose and objects. Counsel submitted that the Act essentially aims to protect the rights of owners in respect of domestic building contracts in recognition of their inferior bargaining position when compared with that of builders. Counsel went as far as to say that the Act intends to protect owners "from themselves". It was claimed that s.14 of the Act is an example of the implementation of this policy. But for this provision, said counsel, owners would, due to their inferior bargaining position, simply comply with the demands of builders to submit all domestic building disputes to arbitration. Consequently, it was contended, in order to entrench the right of owners to have disputes under domestic building contracts resolved by the Tribunal under s.53 of the Act, s.14 was enacted to take away the right of either party to refer such disputes to arbitration. Counsel argued that if the operation of s.14 was limited to rendering void only agreements to arbitrate future disputes, as his Honour had found, the benefit of s.53 would be effectively lost to owners, because it would allow builders to circumvent legislative policy by using their superior bargaining position to persuade owners to agree to refer disputes to arbitration on an ad hoc basis. It was also argued that his Honour's construction of the section would have the effect of striking down a clause that provides for disputes to be referred to arbitration but not one that gives a party an option to make such a reference. Counsel said that this would produce an irrational result that could not have been contemplated by Parliament. Mr. Magee submitted further that when s.14 is read in conjunction with s.57 of the Act it is apparent that the legislature intended the Tribunal to be the only effective forum for resolving domestic building disputes, subject only to the right of the parties to go to court. Thus, counsel said, should be construed as rendering void all agreements to refer disputes under a domestic building contracts, whether existing or future, to arbitration because "to allow parties to refer a particular dispute to arbitration would defeat the reforms".
20 I consider that the appellant's submissions as to the operation of s.14 should be rejected for the following reasons. First, Mr Magee's contention that the provision encompasses both future and existing domestic building disputes is premised on the assumption that the Act is essentially concerned to benefit owners who are parties to a domestic building contract and to protect them "from themselves". In my view, however, there is no support for this claim in the legislation. Without referring to the many sections of the Act that impose rights and obligation on owners and builders under such a contract, it is sufficient to say that they operate to confer benefits on both owners and builders who are parties to such agreements and not merely to owners as the appellant would have it. And, as has been pointed out, although the Act contemplates that the Tribunal is to be the primary forum for the resolution of disputes under domestic building contracts, it is not regarded as the sole dispute resolution forum.
21 Secondly, I consider that, on a plain reading of s.14, it is apparent that it only prohibits requirements in contracts that future domestic building disputes be referred to arbitration; it does not render void agreements that refer an existing disputes to arbitration. In my view, the words "to be" strongly point to the section being concerned only with future disputes. This becomes more apparent if one notionally takes out of s.14 the words "or other agreement". If the section did not contain those words, it would be obvious that it would operate only in respect of disputes that might arise subsequent to the execution of the contract. There would be no existing dispute under the contract at the time of this execution in respect of which s.14, so worded, could operate. In my view the inclusion of the words "or other agreement" in s. 14 does not alter that position. It seems to me that those words were inserted into the section, not for the purpose of extending its operation to agreements to refer existing disputes to arbitration, but to strike down any agreement, other than a domestic building agreement, by which the parties might seek to circumvent the prohibition against reference to arbitration of future disputes. I think that such a construction of the section is consistent with the purpose and object underlying the Act[14], namely, that domestic building disputes be resolved principally by the Tribunal albeit without taking away the parties' rights to refer specific disputes to arbitration on an ad hoc basis.
22 Next, if the section is ambiguous in relevant respects, I consider that an examination of the relevant extrinsic material[15] makes it plain that the mischief that s.14 was intended to eliminate was the compulsion in standard domestic building contracts to refer all future disputes to arbitration and that Parliament did not intend to prevent parties from agreeing to refer an existing domestic building dispute to arbitration.
23 The extrinsic material that is most relevant to this appeal is the Minister's second reading speech[16]relating to the Act. In that speech she explicitly outlined the mischief that Parliament sought to redress by the section. In particular, the Minister referred to a number of reports that dealt with the operation of the dispute resolution process under domestic building contracts and that found that, despite widespread disenchantment with arbitration, the majority of such disputes were referred to arbitration because of the operation of clauses in standard domestic building contracts that compelled such references. In the circumstances, the reports recommended that "mandatory arbitration clauses be prohibited". Importantly, however, the reports also recommended that arbitration be retained as an avenue for dispute resolution in circumstances where both parties agreed to that course in a specific instance. The Minister's speech makes it apparent that she accepted the recommendations contained in these reports. So far as is relevant, she said that, under the proposed legislative scheme, the Tribunal would be a primary forum for resolution of domestic building disputes - it was to be a "non-legalistic [body] and deal with matters quickly and at a minimal cost" - and that compulsory arbitration clauses as to future disputes would be prohibited. The Minister also made it plain that agreements that refer existing disputes to arbitration would not be prohibited. Relevantly, the Minister said: