Although not necessary to consider whether the Expert was required to give reasons to the standard with which those exercising a judicial function must comply, the Court reflected upon what standard of reasons are required to be provided by an arbitrator.  Even assuming that the standard was a lesser one, experts who are required to give reasons “should explain succinctly why, in light of what happened, they reached their decision and what the decision is (Bremer Handelsgellshcaft mbH v Westzucker GmbH ( No2) [1981] 2 Lloyd’s Rep 130 at 132-3 referring to the obligations of arbitrators: compare Oil Basins Ltd v BHP Billiton Ltd [2007]VSCA 255;(2007) 18VR 346 and Gordian Runoff Limited v Westport Insurance Corporation [2010] NSWCA 57). This standard is not complied with if the ultimate basis for a decision cannot be discerned because of inconsistency of reasons or findings.”

On this basis, the Court concluded that the contractual requirement that the Expert give reasons for his decision was not satisfied.

In a separate judgment, Campbell JA also cautioned against drawing analogies between arbitration and expert determination.

Notably, the obligation to act impartially was not affected by the bifurcated position of the contract administrator (Architects) who were also the building owner. 

In relation to the builder's claims for variations of time, the Court further held that the architects were estopped from raising non-compliance with contractual time limits, or that it would be unconscionable to raise such arguments, because neither party performed its works under the contract in strict compliance with the contractual terms nor required the other party to so act.

In reaching this conclusion, the Full Court considered the approach of the High Court of Australia in Tabcorp Holdings Ltd v Bowen Pty Ltd [2009] HCA 8 , where their Honours held that the intention of the party seeking damages is only relevant to the question of "reasonableness" of rectification. 

The Full Court also applied the rule that, unless exceptional circumstances exist, a party may not raise an argument on appeal that has not been raised at trial.  

Applicable provisions: s 134 provides, in effect, that – notwithstanding any other period of limitation – a ‘building action’ cannot be brought more than 10 years after the issue of the relevant occupancy permit. Section 129 defines ‘building action’ to include an action ‘for damages for loss or damage arising out of or concerning defective building work’. Section 3(1) defines ‘building work’ as ‘work for or in connection with the construction… of a building’.

Background

In this case, the permit was issued in February 1997, and the litigation did not commence until May 2007. The trial judge held that the proceeding was ‘wholly a building action’, and that it was therefore ‘wholly statute barred’ by operation of s 134. His Honour concluded that it was “artificial” to distinguish the “site preparation works” from the construction of the footings themselves. The builders were engaged under a single contract to perform both the site preparation works and the work of constructing the buildings. The approved plans (and building permit) made specific reference to the site preparation. Consequently, the trial judge concluded that the construction of the building, and in particular the construction of the footings, followed on from, and was directly connected to, the site preparation works.

Appeal

On Appeal, the Appellants sought to get around the 10 year cut off period by linking the relevant breach with site preparation works (which are not part of the building), as distinct from the footings (which were part of the building). They submitted that:

• Time began to run when the defects were first noticed in or about January 2000; and
• Section 134 is not relevant, because the flaw in the unit was not the result of any fault in the Respondents’ ‘building work’ itself. The problem was solely attributable to the Respondents’ site preparation works which did not constitute ‘building work’ for the purposes of the Act, because it was not work in connection with the construction of the unit, nor was it work for which a building permit was required.

Two principal grounds were advanced by the Appellants:

• That the trial judge should have decided the question by reference to the nature of the works themselves. The Appellants contended that ‘building work’, for the purposes of the Act, is only work that requires a permit, which should be determined by the nature of the work, and not by reference to whether the work is to be performed under one contract, or by one party, or included in a drawing.
• The requirement “connected with” under s 3 of the Act should be confined to activities undertaken after the commencement of the construction of the building, and not extend to preparatory site works.

The Court of Appeal concluded that, firstly, the question should have been decided by reference to the nature of the works themselves, and secondly, the trial judge had so decided. The Court of Appeal agreed with the trial judge that it was “artificial” to distinguish “site preparation works” from the construction of the footings themselves, and to then allocate the (acknowledged) breach of duty solely to site preparation.
 

This decision is consistent with the reasoning in Amaca Pty Ltd v Ellis; The State of South Australia v Ellis; Millennium Inorganic Chemicals Ltd v Ellis [2010] HCA 5 and re-affirms that the relevant standard of proof in negligence actions is the balance of probabilities.  Damages for a loss of a chance or opportunity may only be awarded in very limited circumstances. 

Until the High Court is given the opportunity to reconsider the definition of "consequential loss", these Court of Appeal cases suggest that an exclusion for "consequential loss" may exclude liability for all "loss of profits" and "expenses incurred through breach" even if they are not specifically referred to in the exclusion clause, or if they fall within the first limb of Hadley v Baxendale. 

Nick Galloway’s guidance on this summary gratefully acknowledged (any errors are ours) - Editor

The relevant intention before the Court was that of the defendant.  The Court emphasised that the defendant’s “intention [was] to be ascertained from the document as a whole, read in the context of the factual matrix as known or assumed by the parties” [at 55].  Although the Court noted (in favour of the plaintiffs’ argument) that the statement at the commencement of the execution pages that the document was “executed as a deed” and the words next to the signature of the defendant's representative that it had been signed, sealed and delivered and executed as a deed [at 56], it rejected the plaintiffs' case.  Some of the circumstances that indicated that the document was not intended by the defendant to be a deed included:

• The unambiguous statement in the document to the effect that the defendant’s promises were given for those made by other parties, was inconsistent with the notion that, at least for a length of time, the defendant should be bound whilst other parties were not bound [at 57];
• The defendant did not insert a date as “the date of this Agreement”. This indicated that the defendant was not intending to be then bound [at 58];
• The Operative part of the instrument did not use the language of deeds (whereas, in contrast, the proposed lease instrument consistently used the language of deeds) [at 59]; and
• At no stage in the dealings between the parties or their solicitors was there any suggestion that the agreement for lease should operate as a deed [at 60].

Nick Galloway’s guidance on this summary gratefully acknowledged (any errors are ours) - Editor
 

Anderson J refused to enforce the Expert's determinations, by which Abigroup was ordered to pay the professional fees of Hardesty for its design and construction support services for the Port River Expressway bridges on grounds that:

• there was a cross-referencing error in the expert determination clause in the contract that Abigroup had drafted, which permitted Abigroup to treat the clause as void for uncertainty; and
• the way in which the disputes were re-formulated by Hardesty and referred to the Expert with a view to ensuring that any amount awarded would not exceed the $500,000 ceiling amounted to a “contrivance” which was not contemplated by the agreement.

Anderson J gave comprehensive reasons for his decision that the Expert’s determinations were not binding due to lack of jurisdiction.

The Full Court reviewed the differences between the dispute resolution regimes created by the contract. There were two materially distinct regimes, general condition 8 (GC8) and special condition 12 (SC12), which would not operate to lead to a binding determination; although in each case, awards in excess of $500,000 were expressed not to be binding.

In relation to Hardesty’s appeal against Anderson J's decision [2009] SASC 95 that the determinations of the Expert were unenforceable, the Full Court dismissed the appeal, finding that there was no compliance with either regime (GC8 and SC12), and therefore the Expert had acted without jurisdiction and the determination was not binding. No right of appeal existed pursuant to s 50(1)(a) of the Supreme Court Act 1935.

In relation to Anderson J's decision [2009] SASC 132 (and consequential orders), the Full Court allowed the appeal and set aside the orders.
 

Following a tender process in 2000, BSkyB selected EDS to design, build, manage, implement and integrate the process and technology for the CRM System. In 2008 HP Enterprise Services aquired EDS. The project was problemantic, and in 2002 BSkyB took over the performance of EDS’ role of Systems Integrator. BSkyB alleged, among other things, that EDS made fraudulent misrepresentations which led to EDS being selected.

Initially the CRM Project was to go live on 31 July 2001 and be completed by 1 March 2002 at a budget of £47.6m. BSkyB claimed that the functionality for the CRM System was only completed in March 2006 at a cost of about £265m. In the Particulars of Claim, as they stood at the commencement of the hearing, Sky claimed damages of £709m.

The contract included a £30m limitation of liability clause.

The case was heard over a period of 10 months, where there were 109 hearing days. It took some 18 months, following the conclusion of the hearing, before Judgment (468 pages).

The Court ruled, among other things, that Electronic Data Systems Ltd misrepresented its capabilities when bidding for and selling the CRM system to BSkyB. There remain oustanding issues as to quantum, however HP was ordered to pay an interim amount of £200m. EDS is seeking permission to appeal the decision.

At issue in Arnold was the licensee's groundwater entitlement under an aquirer access licence issued under the NSW Water Management Act 2000, which replaced bore licences issued under the NSW Water Act 1912 (Cth). The new licences had the effect of reducing the amount of water that Arnold and others were able to take.

Special leave was sought to argue that the National Water Commission Act 2004 (Cth) and the Funding Agreement between NSW and the Cth which provided ex gratia payments to allow the transition of licence holders from bore licences to aquifer access licences.

The challenge failed. Special leave was granted but the appeal was dismissed. In so doing, however, the High Court did not have to consider the correctness of Morgan because the case could be decided on a more narrow basis, namely that the Cth laws did not apply to "waters of rivers"; rather, they applied to underground water and thus did not come within the protection of s 100: at [29] per French CJ; at [55] per Gummow and Crennan JJ; at [75] per Hayne, Kiefel and Bell JJ.

Consequently, Arnold was not an appropriate vehicle for the ventilation of the correctness or otherwise of Morgan. In those circumstances, Morgan, of course, represents accepted constitutional doctrine. A summary of the drafting background of s 100 is described by French CJ's judgment at [18]-[22], [26] and [28].

It is also interesting to note that, at [15], French CJ criticised the pleading as being a "less than substantial factual foundation" for the invocation of s 100.

In essence, the High Court did not consider the correctness of Morgan (and furthermore it did not cast any doubt on its correctness).

Albert Dinelli’s guidance on this summary gratefully acknowledged (any errors are ours) - Editor

 

(1) A notice of default must bring sufficiently to the attention of the recipient what the default is alleged to be. The notice must "direct the contractor's mind to what is said to be amiss".

(2) In order to be a valid notice under the present contract, all that was required was for the Appellant to inform the respondent subcontractor "of the details of the default" alleged.   The appellant had to clearly direct the Respondent's attention to the alleged default with sufficient specificity that the default was capable of being readily identified by the Respondent.