The attached letters between USADA and Lance Armstrong’s legal team are the first formal step in the anti-doping prosecution by USADA. The process will be, potentially, the most important case to date due to the athlete involved, but equally, the most important to date “non-analytical positive” (prosecution of an anti-doping violation in the absence of a failed test).
Lance’s response to USADA’s charging letter, the initial step prior to the review board process (an athlete protection mechanism designed to require USADA to establish a sufficient basis for the process to proceed to a hearing) was generally as follows:
1. USADA fails to disclose the proposed witnesses or their evidence, Armstrong is unable to know/answer the charges made against him. USADA is treating the review board as a rubber stamp, effectively seeking to deny Armstrong the protection of that review board process.
2. USADA has obtained evidence wrongly, in trading concessions/reduced penalties, etc, (the “jailhouse snitch”argument), for evidence, and in obtaining evidence leaked from the now-discontinued grand jury process.
3. The only 2 identifiable claims against Armstrong (the Swiss lab tests from 2001 where the lab director has since denied the tests were sufficient to found a violation, and USADA providing, raw data only, no expert analysis, 2009/2010 blood test results, which show no abnormality and which were published on Armstrong’s own website at the time as proof of the opposite) have no merit.
4. Most of the material is outside the 8 year limitation period.
USADA, conversely, says that it has ten-plus witnesses, who will say that Armstrong doped, trafficked, and participated in a conspiracy.
The process is likely, in my view, to showcase the critical justice issues that are thrown up in this key area of “non-analytical positives”. The likelihood is that Lance will challenge, in the USA courts, the level of acceptable proof against an athlete charged on the basis of evidence, not including a failed test, and the USADA/Court of Arbitration for Sport regime generally.
Doc Reid re-argues Lance’s Legal Argument – Time for the Courts to Intervene?
In Dr Bruce Malcolm Reid v Australian Football League, Supreme Court of Victoria, Proceeding No SCI 2013 04575, the universally respected Essendon Football Club doctor, Dr “Doc” Reid, is arguing for declarations and an injunction to restrain the AFL from hearing the disciplinary charges against him, and asking that such charges be heard by an independent arbiter.
The charges against Dr Reid are limited to that he:
(a) the program was to push the legal limit;
(b) the program involved innovative supplement practices and compounds;
(c) the program involved the use of allegedly beneficial, if exotic, mysterious and unfamiliar compounds;
(d) the program’s ftness strategy and use of supplements varied sharply from prior practices at the Club;
(e) the program involved injecting players with an unprecedented frequency.”
(Particulars Paragraph 3)
In Dr Reid’s case, on a careful reading of the charges, even if correct, (the charges are 100% contested), at worst it might be said that Dr Reid was not sufficiently interventionist.
There is zero suggestion in the charges (or anywhere else) that Dr Reid ever administered, or supported the use of administering, any performance enhancing drug. (In fact, Dr Reid’s letter dated 17 January 2012, and James Hird’s text message on 30 January 2012, suggest that Dr Reid positively opposed any such practice.)
Dr Reid makes the usual athlete/accused argument, ie that the sports establishment hearing structure is weighted against the athlete/accused, and that he is denied a fair hearing. The AFL runs the usual sports establishment defence, ie that it is simply a matter of contract, to which the athlete/accused previously committed, and that the sports establishment is the body best equipped to deal with such claims.
These arguments are particularly key given that Dr Reid is , like all of the category of athletes who have been charged with performing enhancing drugs charge , on the basis of evidence rather than a failed drug test (collectively called “non-analytical positives”), charged on as yet un-substantiated evidence. In their case, though the punishment in relation to the performing enhancing drug charges is no less than an athlete accused who fails a drug test, and though the mere fact of being charged will usually disrupt or end their sports career, and some instances, including Dr Reid, may have even worse consequences, the accused has none of the enduring protections of a criminal accused.
In substance, the non-analytical positive athlete/accused usually complains that they are being denied a fair hearing (in the USA, denied the Constitutional right to “due process”). There seems to be substantial strength in their complaints.
The Legal Arguments:
Dr Reid has previously made the following legal arguments to the AFL Commission in relation to the request for an independent arbiter to be appointed:
1. The AFL Commission is not a body that is equipped to provide a fair hearing, for the following reasons:
a. the complexity of the case, including (complex) legal issues;
b. the case will be of lengthy duration;
c. because of a and b, and because the Charge may affect Dr Reid’s professional reputation, the case therefore requires a full-time arbiter;
d. reduced prospect of error and appeal if heard by an appropriately qualified person;
e. less likelihood of interlocutory applications to the Supreme Court in the running of the case;
f. issues of relevance and publicity in this case require a an arbiter less likely to be affected by extrinsic factors;
g. Dr Reid’s legal case includes highly perjorative submissions about the AFL;
h. A case involving a medical professional’s reputation is in a special category;
i. Dr Reid cannot get a just hearing from the AFL Commission, after it has involved itself in the approval of the settlements with the other defendants.
2. Bias, both actual and apprehended, on the part of the AFL Commission.
In this proceeding, Dr Reid asserts that the AFL Commission cannot hear the charges against him in an unbiased manner because of:
a. The charges raise factual matters already considered and determined by the AFL Commission.
b. The determination of the charges raises questions about conduct by the AFL.
a. “a most unfortunate matter”
b. “it might be a lonely day” (for Dr Reid);
c. “We can’t let – no matter how clever they were in disguising what they were doing, we can’t ever let a group of people take hold of a player group in the way that this group did. That must never happen again”
d. “responsibility, I think, has not been easy to assign, but I think it has been reasonably assigned”
e. “frankly, what happened [at Essendon] is probably the worst thing that has happened in a footy club”
The AFL has not yet delivered its arguments. We can guess that those arguments will include:
USA Decisions on this Type of Claim:
These arguments were, in fact, recently re-run in the USA by perhaps our most famous non-analytical positive accused athlete, Lance Armstrong. On 23 August 2012, Judge Sam Sparks in the US District Court Western District of Texas (Austin) of the USA Federal Court, dismissed Lance Armstrong’s suit asking for an injunction to restrain USADA from proceeding against him. The Judge found:
Firstly, Judge Sparks concluded that the due process complaints lacked merit, and that Lance’s challenges were anticipating unfairness rather than Lance having been subject to actual unfairness. Lance’s specific due claims had included:
Judge Sparks concluded that each of these complaints were based on speculation of bias (rather than actual bias).
Judge Sparks said:
“Like the Supreme Court, this Court declines to assume either the pool of potential arbitrators, or the ultimate arbitral panel itself, will be unwilling or unable to render conscientious decision based on the evidence before it.”
Judge Sparks reasoned that Armstrong was not in danger of irreparable harm if the USADA jurisdiction issue, itself, was to be determined by the arbitrators. Further, any finding by the arbitration panel might, itself, be overturned by CAS. “In short, any harm Armstrong might suffer is, at this point, entirely speculative.”
His Honour was further confirmed in his view in that Lance had not (as yet) exhausted the avenues open to him:
“Further, Armstrong has ample appellate avenues open to him, first to the Court of Arbitration for Sport … where he is entitled to de novo review, and then to the courts of Switzerland, if he so elects.”
Judge Sparks, however, dismissed the suit without prejudice, saying that Lance could come back if and when things developed (ie if and when he was in fact subjected to actual unfairness rather than anticipated unfairness).
Secondly, Judge Sparks concluded that the Federal Court had no jurisdiction under the USA Federal Amateur Sports Act, requiring such proceedings to be referred to arbitration. His Honour noted that the Sports Act had (“whether or not this was a good choice is, of course, debatable”) determined that sports eligibility questions would be decided through arbitration rather than federal lawsuits.
His Honour referred to the Mary Decker Slaney case, noting that the court had said there:
“… when it comes to challenging the eligibility determination of the USOC, only a very specific claim will avoid the impediment to subject matter jurisdiction that (the Sports Act) poses”.
The Mary Decker Slaney court had quoted the Tonia Harding case, where an Oregon District Court had said:
“There the court cautioned that ….
…. courts should rightly hesitate before intervening in disciplinary hearings held by private associations …. Intervention is appropriate only in the most extraordinary circumstances, where the association has clearly breached its own rules, that breach will imminently result in serious and irreparable harm to the plaintiff, and the plaintiff has exhausted all remedies.
Yet, while carving out this limited exception to the preemption created by the Amateur Sports Act, the opinion forewarned that while examining whether internal rules had been complied with, the courts ‘should not intervene in the merits of the underlying dispute.”
Finally, Judge Sparks determined that, even apart from his decision on jurisdiction, if he had found that he had such jurisdiction he would have declined an equitable remedy, firstly because, for the above reasons, Armstrong was not in danger of irreparable harm, secondly because , as a matter of international comity, the court declined to: “circumvent the longstanding system of international arbitration in Olympic sports by unilaterally enjoining that system’s operation”.
As events turned out, Lance Armstrong ultimately chose not to challenge the sports drug charges, and later again, publicly admitted that the charges were true.
There can be no doubt that this case is serious. Doc Reid is universally regarded as having a brilliant, long, respected, and personally loved, life in football, faces potential public shame, the potential loss of his medical licence, and an unhappy end to that long career.
Yet Doc Reid, in the legal system, must run the same legal arguments that ultimately failed Lance Armstrong.
The Supreme Court will now determine this crucially important issue.
In Glenvill Projects Pty Ltd v North Melbourne Pty Ltd & Taylor  VSC 717 (Vickery J), Justice Vickery (the Judge in Charge of the Supreme Court Technology, Engineering and Construction List) was considering a challenge to a decision of an expert appointed under an expert determination clause in a residential building contract.
His Honour referred to 500 Burwood Highway v Australian Unity & Ors in which His Honour had analysed the role of a contractually appointed expert, and the basis upon which an expert determination might be invalidated following judicial intervention. His Honour had said in 500 Burwood Highway:
…. there is no procedural code for expert determination, in contradistinction to arbitration. The activities of an expert are subject to little control by the court, save as to jurisdiction or departure from the mandate given. Unless the parties specify the procedure, the expert determines how he will proceed; it is rare for what might be perceived as procedural unfairness in an arbitration to give rise to a ground for challenge to the procedure adopted by an expert ….
For these reasons, unless required by the contract in question, the parties have no entitlement to insist that the expert adopt any particular procedure; or that the appointed expert seek their approval to the proposed determination; or that they are given any hearing or facility to provide input into the process. An expert is not obliged to afford to the parties procedural fairness in the manner required of a court or arbitration in a curial context. A certifying expert is not under an obligation to provide procedural fairness or natural justice in the absence of an express contractual provision, and there is none in the present case …. How the task is undertaken is in the hands of the expert, subject to anything to the contrary in the contract pursuant to which the appointment was made.
This result is in part the product of the contract and what is to be gleaned from it as to the intention of the parties. When the parties appoint an expert, they usually do so because they agree to place reliance on the expert’s skill and judgment. They implicitly agree to accept and be bound by the determination. In the usual case, provided the decision is arrived at honestly and in good faith, the parties will not be able to re-open it and will be bound by the result.
It is also in part the product of a particular body of expert experience, learning, skill and judgment which the parties wish to apply to the problem to be dealt with. This is to be applied in a manner which is untrammelled by procedural considerations, so that the specialist skills and insights of the expert can be freely applied to the issue.
Finally, considerations of commercial utility are likely to be relevant factors. Efficiency, the production of a speedy and authoritative outcome and the elimination of the expense of a more elaborate procedure, undoubtedly play a part in parties selecting the contractual process of expert determination.
Mistake or error in the process of the determination of the appointed expert will not invalidate a decision. However, if the expert asks the wrong question or misconceives the function of the appointment, the task required to be performed by the contract will not have been fulfilled. In this event, the determination will be exposed to being set aside.
Parties to a contract who, by the terms of that contract, agree to submit a question to an independent expert, are bound by the determination of that expert acting honestly and in good faith.
His Honour reasoned further in relation to the construction of the expert engagement contract:
An expert is appointed by contract to make an expert determination in respect of specific matters which may arise during the course of a commercial relationship. An expert, in making a determination, is not obligated to abide by the rules of procedural fairness in the manner required of a court or an arbitration in a curial context. The expert’s obligations with regard to procedural fairness, or natural justice …. , are defined by the content of the express contractual agreement between the parties comprised in the Expert Engagement Contract, which in this case includes the terms of the IAMA Rules.
The manner in which the task of making the determination in question is undertaken is in the hands of the expert, subject to anything to the contrary in the contract which governs the appointment of the expert and in the IAMA Rules.
The result which is arrived at by the expert – the determination, in this case – is thus ultimately the product of the contract in the full sense of the word, as properly construed in accordance with the usual approach to the construction of commercial contracts.
The approach was recently considered in ICM Investments Pty Ltd v San Miguel Corporation & Ors [No 2]). Where it was observed that the applicable principle is often stated in terms of a necessity to construe commercial agreements so as to accord with ‘business commonsense’ or ‘commercial reality’.
As Santow J said in Spunwill Pty Ltd v BAB Pty Ltd, in construing a written document, the object is to discover and give effect to the contractual obligations that reasonable persons in the position of the parties would objectively have intended the document’s language to create.
Further, the language used in the contract is generally assigned its natural and ordinary meaning, read in the light of the contract as a whole. Where it is ambiguous, surrounding circumstances may be taken into account in assigning the constructed meaning. The surrounding circumstances include the matrix of mutually known facts, and the background, object, context and commercial purpose of the transaction, in the objective sense of what reasonable persons in the position of the parties would have had in mind.
…. The commercial context in which a reference of disputes to an expert in a commercial contract is thus most relevant. The decision to refer disputes for determination by a contractually appointed expert will usually arise because the parties desire a particular body of expert experience, learning, skill and judgment to be applied to the resolution of defined issues which may arise in the course of the relationship and need to be dealt with. This problem-solving role is usually intended to be applied in a manner which is untrammelled by overly restrictive procedural considerations, so that the specialist skills and insights of the expert can be fully applied to the issues for resolution, in an expeditious and cost effective manner which is attended with an appropriate measure of ‘finality’.
This may give rise to the parties agreeing that they will abide by a decision which in hindsight appears to be ‘wrong’. In such circumstances, mistake or error in the process of the determination of the appointed expert will not invalidate a decision, as long as it is made in accordance with the terms of the agreement.
This is not to say that there are no parameters of fairness or that the determination will be unreviewable. For example, if the expert asks the wrong question or misconceives the function of the appointment, the task required to be performed by the contract will not have been fulfilled…..
In this case, His Honour ultimately concluded that the Expert had acted within the terms of his engagement in making the procedural determinations that he did.
In Sugar Australia Pty Ltd v Southern Ocean Pty Ltd & Anor  VSC 535 (Vickery J), Justice Vickery, the Supreme Court of Victoria Judge in Charge of the Technology, Engineering and Construction List was invalid. His Honour discussed, in detail, earlier decisions of the courts in relation to jurisdictional error, concluding that it was open to a court in considering an application for judicial review to consider the findings of fact made by the adjudicator as to the validity of the Payment Claims in the circumstances of this case which include allegations of misleading conduct and fraud which are pressed by the applicant for relief by way of certiorari. His Honour said, at paragraphs 113-115:
113. For the purposes of s 18 of the Victorian Act, it appears to me that the elements of the section which serve to confer jurisdiction on an adjudicator to make a valid determination under s 23, on the proper construction of the Act, do not permit the adjudicator to finally determine the validity of the adjudication application. If there be any challenge to the jurisdiction assumed by the adjudicator it must finally determined on the basis of facts found by the Court on judicial review, in the course of determining whether a jurisdictional error has been exposed which calls for the exercise of the Court’s discretion to grant relief in the nature of certiorari and, if necessary, mandamus. The Court may grant relief on such relevant evidence as may be adduced before it, whether or not such evidence was before the adjudicator at first instance. Further, the Court may grant such relief without regard to any determination which may have been made on the issue of jurisdiction by the adjudicator. The Court is obliged to arrive at its own conclusion as to jurisdiction based on the law and on the facts as found by it.
114. This is not to say that an adjudicator should not make any findings of fact or rulings on law if a question of jurisdiction is raised in the course of determining an adjudication application. Clearly if an adjudicator is presented with material or submissions which bring into question the jurisdiction of the adjudicator, he or she should determine the question and give reasons for the findings of fact or rulings on law. If however the adjudicator’s decision on jurisdiction is challenged in Court on judicial review, the Court may deal with the matter afresh and receive additional evidence on the matter if the additional evidence is relevant to the determination of the question.
115. To the extent that anything inconsistent with this conclusion appears in paragraphs - of Grocon, in the light of the later reasoning of the High Court in Kirk and of the New South Wales Court of Appeal which followed it in Chase Oyster Bar, I do not follow my earlier ruling.
In Jotham Property Holdings Pty Ltd v Cooperative Builders Pty Ltd & ors  VSC 552 (Vickery J), Justice Vickery, the Supreme Court of Victoria Judge in Charge of the Technology, Engineering and Construction List, was considering whether an adjudication determination was invalid on the grounds that the particular payment claims were served multiple times, in breach of Section 14(8). His Honour held that the payment claim, the subject of the adjudication, had been the subject of an earlier payment claim. Pursuant to Section 14(8), a further payment claim may not be made for the same [progress payment] reference date under the construction contract. His Honour rejected the claimant’s argument that, pursuant to Section 14(9), if a previous payment claim had not been made, it could be claimed afresh pursuant to Section 14(9). His Honour concluded:
On a plain reading s 14(9) provides that, if another and earlier payment claim has been made, but the amount of that earlier claim has not been paid, the unpaid amount may be included in a later and different payment claim which covers different construction work or the supply of different goods and services, calculated by reference to a different reference date under the construction contract.
His Honour preferred this interpretation on the basis that this construction was consistent with Section 14(8), whereas the the claimant’s argument would render Section 14(8) otiose, and further that this construction of Section 14(8) and 14(9) was consistent with the purpose of the Act.
His Honour concluded that the payment claim was invalid.
In Plenary Research Pty Ltd v Biosciences Research Centre Pty Ltd, the Victorian Court of Appeal was considering the dispute resolution provisions under a Project Agreement for the design, construction, and operation of a biosciences research facility at Latrobe University. The parties were arguing as to the correct dispute resolution procedure under the Project Agreement in respect of three extension of time claims. At trial, the Supreme Court (Croft J) had referred to a number of Australian authorities, noted that the position is entirely dependent upon the proper construction of the relevant agreement, and decided that the particular disputes, under this agreement, were to be resolved by the “Accelerated Dispute Resolution Procedures”, essentially an expert determination procedure.
In the primary judgment, Garde AJA reasoned as follows:
Despite the arguments of the appellant, I am of the opinion that the construction of cl 26.16 adopted by the trial judge is correct.
As to the construction of cl 26.16, I note:
(a) the Project Agreement is the sole and exclusive repository of the agreement between the parties;
(b) the object is to discover and give effect to the contractual obligations that reasonable persons in the position of the parties would objectively have intended the language of the Project Agreement to create. The language of cl 26.16 and of cls 51 to 53 should be given its natural and ordinary meaning in the light of the Project Agreement as a whole;
(c) clause 26.16 is expressed to apply to ‘any dispute about an extension of time claim’ or ‘acceleration under this cl 26’. The use of the word ‘any’ suggests a comprehensive approach to the class of disputes identified in the provision;
(d) clause 26.16 stands to be read as part of cl 26, and as part of the whole Project Agreement. Clause 26 is a code dealing with ‘Time’. Clause 26.16 is the provision in that code which describes how extension of time disputes are to be resolved. Parts of that code involved the submission of Change Notices, the grant of extensions of time by the Project Director, and the unilateral extension of time by the respondent in its absolute discretion when it considers that any act or omission by it or certain other parties will, or is likely to, delay the appellant;
(e) clause 26.16 refers to any dispute about any extension of time or acceleration under cl 26.6 expressly including determinations or rejections by the Project Director under cl 26.9. Decisions of the Project Director under cl 26.9 are well suited for ‘fast track’ determination by an Independent Expert;
(f) the matrix of facts mutually known to the parties includes the background, object, context and commercial purpose of the Project Agreement, including the nature of claims and disputes as to extensions of time and acceleration, the significance of cl 26 and its provisions relating to time, and the role of the Project Director in seeking to resolve extension of time and acceleration disputes;
(g) the right to refer a dispute under cl 26.16 is conferred on either party. As the word ‘may’ indicates, it is not obligatory for either party to refer a dispute but if neither party does so, the status quo will remain. Typically, although not invariably, the status quo will be the decision made by the Project Director under cl 26.9. The use of the word ‘may’ in cl 26.16 gives either party a choice as to whether or not it seeks to invoke these provisions. Such a construction is reasonable, and consistent with business efficacy;
(h) the use of the word ‘may’ attracts a prima facie presumption that the word is to be understood in its natural meaning, that sense being permissive or facultative only. This is also the ordinary meaning of the word ‘may’ read in the light of the Project Agreement as a whole;
(i) whilst the appellant contends that the exercise of cl 26.16 by one party requires the consent of the other party before the dispute is referred to the Independent Expert under cl 52, there is nothing in cl 26.16 which supports such a limitation on the operation of the right of each party to have the dispute determined under the Accelerated Dispute Resolution Procedures. The exercise of the right conferred by cl 26.16 is open to ‘either party’;
(j) if one party does refer a dispute for resolution under cl 26.16, there are a number of important consequences:
(i) first, the dispute is referred for resolution by an Independent Expert. There is no reference to the Senior Negotiations procedure or to arbitration in cl 26.16;
(ii) secondly, cl 26.16 states that the dispute is to be resolved ‘in accordance with the Accelerated Disputes Resolution Procedures’. This is a clear and unequivocal reference to cl 52;
(iii) thirdly, cl 26.16 contemplates only the application of the Accelerated Dispute Resolution Procedures. It directs that an Independent Expert must be instructed, and that those instructions must have regard to the Change Compensation Principles;
(k) clause 26.16 requires the Independent Expert to act in accordance with the Accelerated Dispute Resolution Procedures;
(l) the definitions in the Project Agreement support such a construction of the Project Agreement:
(i) the definition of ‘Accelerated Dispute Resolution Procedures’ makes express reference to cl 52, and not to cls 51 or 53;
(ii) likewise the definition of ‘Accelerated Dispute Panel’ makes express reference to cl 52 and not to cls 51 or 53;
(iii) again, the definition of ‘Independent Expert’ makes express reference to appointment in accordance with cl 52, and does not refer to cls 51 or 53; and
(iv) clause 26.16 contemplates and proceeds on the basis of an Independent Expert determination under cl 52;
(m) the construction adopted by his Honour gives cl 26.16 important work to do. Clause 26.16 is intended as the gateway by which the code agreed by the parties as to ‘Time’ in cl 26 interacts with the dispute resolution process contained in cls 50 to 53. By contrast, the appellant’s construction of cl 26.16 would give that provision very little work to do. It is unlikely that this is what the parties intended when they agreed on cl 26.16 in the context of cl 26 which deals with the very important topic of time in a large building contract;
(n) it is commercially efficacious for the parties to agree on dispute resolution procedures so that disputes as to the decisions of the Project Director concerning extensions of time directly engage the Accelerated Dispute Resolution Procedures. Before making an extension of time decision under cl 26.9(a), the Project Director will already have taken into account all relevant evidence presented by the parties. Extension of time claims are notorious in building disputes and it is reasonable and sensible for them to be resolved using a ‘fast track’ process;
(o) the range of disputes which can be referred under cl 26.16 is limited, and not co-extensive with the disputes that fall under cl 50.1. Consistently with its role as part of a code of provisions dealing with time, cl 26.16 applies to disputes about extensions of time or acceleration under cl 26; and
(p) the selection by the parties of Accelerated Dispute Resolution Procedures for the resolution of specified types of disputes necessarily means that other types of disputes will be resolved by a different process. The parties in the Project Agreement provided for different types of disputes to be dealt with by different types of dispute resolution mechanisms. This result is not capricious, unreasonable, inconvenient or unjust. To the contrary, the reference to the Accelerated Dispute Resolution Procedures in cl 26.16 shows that the parties
intended to bypass the Senior Negotiations process contained in cl 51. They also decided not to directly engage the Arbitration procedures in cl 53. Neither consequence is in any way unlikely or unreasonable, particularly given that in the typical extension of time case the Project Director will, and is required under cl 26.09(b) to, have taken into account all relevant evidence presented by the parties. The result achieved by this construction is consistent with business efficacy.
His Honour concluded (and Maxwell P and Tate JA agreed) that the appeal should be dismissed.
 Emphasis added.
 Clauses 26.6 and 26.7.
 Clause 26.9.
 Clause 26.10.
 Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51, 63 (Mason CJ); Ward v Williams (1955) 92 CLR 496, 505 (Dixon CJ, Webb, Fullagar, Kitto and Taylor JJ).
 Clause 26.9(b).
In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd, the Judge in Charge of the Supreme Court of Victoria Technology, Engineering and Construction List (Vickery J) was considering the dispute resolution provisions under a design and construct contract for the construction of a rail freight terminal, a container paved area and a locomotive workshop together with associated facilities in Penfield, South Australia (though the Contract was governed by the law of Victoria). The General Conditions of Contract incorporated Australian Standard form of contract, AS4300-1995.
The Contractor asked for summary judgment in respect of three unpaid payment claims, for approximately $3.13 million. The Principal claimed damages for breach of contract, and claimed a number of waivers and estoppels against the Contractor. His Honour ordered that the argument as to the principles to be applied in respect of summary judgment be argued before the Court of Appeal. His Honour then applied those principles. At paragraph 19, His Honour said:
The Court of Appeal determined the following upon the present state of authority, which I adopt and apply in these reasons:
(a) the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a “real” as opposed to a “fanciful” chance of success;
(b) the test is to be applied by reference to its own language and without paraphrase or comparison with the “hopeless” or “bound to fail test” essayed in General Steel;
(c) it should be understood, however, that the test is to some degree a more liberal test than the “hopeless” or “bound to fail” test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
(d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.
His Honour then set out Clause 42.1 of the General Conditions of Contract (the standard form provision) and reviewed the facts surrounding the unpaid payment claims.
His Honour referred to a number of authorities to be followed where a progress payment certificate was not properly issued by the Superintendent under Clause 42.1. At paragraphs 29-31:
In Daysea v Pty Ld v Watpac Australia Pty Ltd (“Daysea”) the Court of Appeal of the Supreme Court of Queensland considered the position under a contract which contained provisions very similar to clause 42.1 of the AS4300-1995 standard form. In that case the Superintendent failed to issue a progress payment certificate within the stipulated 14 days after receipt of a claim, but did so before the expiry of the 28 day period for payment. The Court of Appeal accepted that if the Superintendent under an AS4300-1995 failed to respond to a claim for payment under clause 42.1 within 14 days, even if it did respond shortly thereafter, the Principal was still obliged to pay the amount of the claim. Williams JA observed that a strict approach to the construction of clause 42.1 should be adopted at least with respect to the provisions for payment, set off and deductions, and this was so because of the consequences which flow from the issuing of the certificate. His Honour reasoned as follows:
Of more significance is the decision of Rolfe J in Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd (1997) 14 BCL 215. The clause in question there was in the same terms as clause 42.1 here. The learned Judge found that the certificate issued by the Principal’s Representative did not satisfy the requirements of paragraph (a) to paragraph (f) of paragraph . In consequence he said that “the Payment Certificate failed to comply with various contractual obligations as to its contents and that, accordingly, it was not a valid notice”. His reasoning for so concluding is set out in the following passage:
“… the effect of a Payment Certificate is to require the recipient to pay the amount stated. Failure to do so could lead to summary judgment and there is no right to dispute the amounts payable until the dispute resolution procedures are activated. Accordingly, the recipient of the certificate is required to pay money during the course of the contract which, at the end of the day, it may be found it does not owe. The requirement to pay money may lead to financial difficulties for the payer, just as the failure to receive money during the course of the contract may cause financial difficulties to the payee. Also the payee may not be able, at the end of the day, to refund any overpayment. Considerations such as these lead me to the conclusion that a certificate must comply strictly with cl 42.1 if it is to have the consequences specified”.
That reasoning is in my view compelling. As all of the cases I have just referred to establish, the consequences of issuing a certificate are serious. The proprietor is bound to pay the amount of the certificate notwithstanding that the amount is provisional only and subsequently may be found to be incorrect. Notwithstanding such considerations the proprietor must pay the amount specified in the certificate and take the chance that any excess can be recovered subsequently. Similarly, the contractor is not entitled to payment of anything more than the amount specified in the certificate though it may well be less than the progress claim made. Even though it may ultimately be found that the contractor was entitled to more, the recovery of any such amount must await the determination of disputes at the end of the contract.
Because of the consequences which flow from the issuing of the certificate strict compliance with the provisions of clause 42.1 is required …
Daysea was applied by Byrne J in Southern Region Pty Ltd v State of Victoria (No 3) (“Southern Region”).
It follows that a certificate purportedly issued under clause 42.1 which does not satisfy the formal requirements of theclause is ineffective and invalid, or as Byrne J said in Southern Region: “… it was as if no certificate had issued at all.”
His Honour then considered the principles to be adopted where the Contractor failed to support the payment claim with evidence and any information required by the Superintendent. His Honour referred to the NSW Court of Appeal decision in Brewarrina Shire Council v Beckhaus Civil Pty Ltd . In that decision, the majority concluded that under clause 42.1 of AS2124–1992 the obligation of the Superintendent to issue a payment certificate in relation to a progress claim was subject to the condition precedent that the contractor support that claim with evidence of the amount due to it and with such information as the Superintendent might reasonably require.
His Honour referred to the Victorian Court of Appeal decision in Aquatec-Maxcon Pty Ltd v Minson Nacap Pty Ltd . The Court of Appeal, in adopting Brewarrina, said:
The decision is a recent, and carefully considered, decision by the New South Wales Court of Appeal which, so far as we have been told and so far as we are aware, is the only decision which currently exists on this particular point of construction of this paragraph of the clause. The point was argued by counsel for the appellant before the trial judge, in the course of which counsel referred his Honour to evidence which showed, or suggested, that the superintendent had repeatedly been seeking substantiation for the “one line variation claims”, and submitted that where the contractor persisted – in the face of opposition and request for further information – in submitting “one line claims” there must come a point where clearly the Progress Claim as presented is entitled to be regarded by the superintendent as not a claim within the meaning of clause 42.1. His Honour requested of counsel whether he (ie counsel) was able to show to him any authority where such an approach had been adopted to a claim, ie “where the claim has been treated by the court as being invalid for noncompliance …”. Trial counsel for the appellant conceded that he was not able to refer his Honour to any authority on the point; and his Honour then indicated to trial counsel for the respondent that he would not “trouble him” about the criticisms made of the progress claims.
His Honour, noting further that Warren CJ in Kane Constructions Pty Ltd v Sopov, while expressing some reservations regarding the application of Brewarrina and Aquatec as to the timing issue in the matter before her, had concluded that she was bound by the adoption of Brewarrina in Acquatec at the very least, or to regard Brewarrina as highly persuasive, concluded:
Accordingly, pursuant to clause 42.1 of the AS4300-1995 standard form contract, a failure by the contractor to support a payment claim with evidence and any information required by the Superintendent means that the Superintendent is not be obliged to issue a payment certificate to certify the payment of a progress claim.
His Honour concluded that on the facts before him, the Principal had a “real” chance of success on the material presented in the application, and concluded that summary judgment should not be awarded to the Contractor.
Stay Application – Section 8 Commercial Arbitration Act 2011 (Vic):
His Honour then addressed a claim for a stay of the Supreme Court proceedings pursuant to Section 8 of the Commercial Arbitration Act 2011 (Vic), on the grounds that there was an arbitration clause (the provision was the standard form Clause 47 of AS4300-1995). His Honour noted the important change between the new Act and the 1984 superseded Act. At paragraphs 125-126, 143 :
The use of the imperative word “must” in s 8(1), rather than the permissive “may”, which was employed in the superseded Commercial Arbitration Act 1984, removes the court’s discretion to refuse to grant a stay, and renders the provision mandatory. The only reason a court can refuse to grant a stay is if the arbitration agreement is found to be “null, void, inoperative or incapable of being performed”. This means that if the requirements of the section are met the Court has no choice but to grant a stay of the proceeding before it and refer the matter to arbitration.
This may result in some inefficiencies in case management in some cases, arising from the potential for litigation on the same project being conducted before different tribunals. Nevertheless the statutory meaning is clear.
……. It follows that a Court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests, not later than when submitting the party’s first statement on the substance of the dispute, refer the parties to arbitration.
Ultimately, His Honour decided that a stay should not be ordered in respect of certain parts of the claims, on the basis that the particular dispute was not, on the basis of other provisions of the Contract excluding a right of a party to institute proceedings to enforce payment under the Contract from the arbitration clause. In respect of the balance of the claims, His Honour ordered that those claims were to be referred to arbitration and ordered a stay.
 Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd  VSCA 158 .
 Daysea v Pty Ld v Watpac Australia Pty Ltd (2001) 17 BCL 434.
 Daysea Pty Ltd v Watpac Australia Pty Ltd (2001) 17 BCL 434, 439 –.
 Southern Region Pty Ltd v State of Victoria (No 3 ) (2002) 18 BCL 211.
 D Jones, Commercial Arbitration in Australia (2nd ed, Lawbook Co., 2013) p 108.
 Although in the 2009 Consultation Draft Bill the provisions vested a discretionary power in the court and more closely reflected s 53 of the Superseded Uniform Acts, following submissions from over 17 different organisations, the final Bill reflected s 8 of the Model Law. The imperative “must” replaced the permissive “may” such that granting a stay is now mandatory unless the court finds that the arbitration agreement is “null, void, inoperative or incapable of being performed”. D Jones, Commercial Arbitration in Australia (2nd ed, Lawbook Co., 2013) p 110.
 It has been noted that there will be situations that arise where matters are referred to arbitration as a consequence of the word “must” that would have been more efficiently conducted in court, for example, multi-party proceedings that will require arbitrations and potentially different findings of fact. See: D Jones, Commercial Arbitration in Australia (2nd ed, Lawbook Co., 2013) p 111.
In 500 Burwood Highway Pty Ltd v Australian Unity Limited & anor  VSC 596, the Victorian Supreme Court (Justice Vickery) was considering the appointment of a quantity surveyor to facilitate an adjustment to the purchase price in a Contract of Sale for an aged care facility. the Contract of Sale provided for the purchaser to appoint an “independent” quantity surveyor to assess the cost of the works required to complete the development (that cost then to be deducted from the $35 million purchase price at settlement). The independent surveyor ultimately estimated the cost to complete at $2.86 million approx, but the Vendor had its own report, by a different quantity surveyor, estimated the cost to complete at $0.52 million approx. His Honour concluded on the particular facts that the expert report did not comply with the requirements of the Contract of Sale and was not binding on the parties.
His Honour reviewed a number of key legal principles in relation to expert determination:
Legal Principles as to the Role of a Contractually Appointed Expert
164. An expert appointed under a contract is in a different position to an arbitrator and has a distinctly different range of duties. In Beevers v Port Philip Sea Pilots Pty Ltd (“Beevers”), Dodds -Streeton J described the differences in the following terms:
A valuer acting as an expert unlike an arbitrator is generally not obliged to receive submissions from the parties. An arbitration is characteristically quasi-judicial and the parties intend that they should have the right to be heard if they so desire. It is clear that, whereas a primary function of an arbitrator is to hear and resolve opposing contentions, in contrast, an expert is appointed to appraise value of loss or damage ‘by use of some special knowledge or skill … without being required to hear the parties. It has been held that, due to the distinction between the arbitral and expert functions, a report by an expert will not be vitiated by the appearance alone of partiality.
165. In Beevers Dodds-Streeton J referred to Macro v Thompson (No. 3) (“Macro”) with approval. Macro involved a valuation of shares in family companies was, under a pre-emption clause in the articles, committed to the companies’ auditor acting as an expert, rather than an arbitrator. Robert Walker J stated that
[a]n expert entrusted with the duty of issuing certificates under contractual arrangements between two other parties is under a duty to act fairly and impartially, and the other parties implicitly contract on that basis.
Robert Walker J accepted that
[o]n the authorities as a whole I accept the submission made by Mr Rhys that when the court is considering a decision reached by an expert valuer who is not an arbitrator performing a quasi-judicial function, it is actual partiality, rather than the appearance of partiality, that is the crucial test.
His Honour adopted that view because –
[t]o hold otherwise would mean that auditors who have had a longstanding professional relationship with an association with one party to the contract might be unduly inhibited in continuing to discharge their professional duty to their client, by too high an insistence on avoiding even an impression of partiality.
In Macro, as noted by Dodds -Streeton J in Beevers, Robert Walker J found that the auditor (while not guilty of fraud or collusion or any conscious and positive cooperation in forwarding the interests of one party) was extremely imprudent in seeking advice and information from the purchaser’s solicitor, with whom he discussed figures. The auditor allowed the solicitor ‘to obtain a position of psychological ascendancy over him’ which the solicitor seemed to exploit.
166. Nevertheless, Robert Walker J, despite finding that “[the auditor] should have taken a much more independent line from the outset”, on the balance of probabilities was:
not persuaded that [the auditor] yielded sufficiently to [the solicitor’s] influence as to invalidate his valuation on the ground of partiality.
167. In the recent case of McGrath v McGrath (“McGrath”)  Pembroke J cited with approval the observations of the English Court of Appeal in Barclays Bank v Nylon Capital  which are to similar effect:
As I have said, there is no procedural code for expert determination, in contradistinction to arbitration. The activities of an expert are subject to little control by the court, save as to jurisdiction or departure from the mandate given. Unless the parties specify the procedure, the expert determines how he will proceed; it is rare for what might be perceived as procedural unfairness in an arbitration to give rise to a ground for challenge to the procedure adopted by an expert: see Kendall, Freedman & Farrell, Expert Determination, 4th ed (2008), ch 16.
168. For these reasons, unless required by the contract in question, the parties have no entitlement to insist that the expert adopt any particular procedure; or that the appointed expert seek their approval to the proposed determination; or that they are given any hearing or facility to provide input into the process. An expert is not obliged to afford to the parties procedural fairness in the manner required of a court or arbitration in a curial context.  A certifying expert is not under an obligation to provide procedural fairness or natural justice in the absence of an express contractual provision, and there is none in the present case: Hounslow London Borough Council v Twickenham Garden Developments Ltd.  How the task is undertaken is in the hands of the expert, subject to anything to the contrary in the contract pursuant to which the appointment was made.
169. This result is in part the product of the contract and what is to be gleaned from it as to the intention of the parties. When the parties appoint an expert, they usually do so because they agree to place reliance on the expert’s skill and judgment. They implicitly agree to accept and be bound by the determination. In the usual case, provided the decision is arrived at honestly and in good faith, the parties will not be able to re-open it and will be bound by the result.
170. It is also in part the product of a particular body of expert experience, learning, skill and judgment which the parties wish to apply to the problem to be dealt with. This is to be applied in a manner which is untrammelled by procedural considerations, so that the specialist skills and insights of the expert can be freely applied to the issue.
171. Finally, considerations of commercial utility are likely to be relevant factors. Efficiency, the production of a speedy and authoritative outcome and the elimination of the expense of a more elaborate procedure, undoubtedly play a part in parties selecting the contractual process of expert determination.
172. Mistake or error in the process of the determination of the appointed expert will not invalidate a decision. However, if the expert asks the wrong question or misconceives the function of the appointment, the task required to be performed by the contract will not have been fulfilled. In this event, the determination will be exposed to being set aside.
173. Parties to a contract who, by the terms of that contract, agree to submit a question to an independent expert, are bound by the determination of that expert acting honestly and in good faith.
174. Actual bias or partiality must be demonstrated in order to impugn the determination. Further, the party alleging actual bias by a decision-maker carries a heavy onus. So much was made clear in Minister for Immigration v Jia by Gleeson CJ and Gummow J.
175. As observed by Pembroke J in a recent decision on point, McGrath,the appearance of partiality is not sufficient even if made out. McGrath concerned the appointment of an expert under a shareholders’ agreement to determine the value of a corporate group following a dispute between shareholders. The plaintiff shareholder sought to avoid the appointment of a particular expert to carry out the valuation on the basis of communications between that expert and one appointing shareholder prior to the expert’s formal engagement. The plaintiff’s application to avoid the expert’s appointment failed for want of evidence of partiality. Pembroke J held that, based as it was on an apprehension that, if appointed, the expert would fail to act impartially, the plaintiff’s case was akin to one of apprehended bias, which would not entitle the Court to prevent the expert from taking appointment. Pembroke J was thus not required to make findings as to whether or not the expert had breached his duty to act impartially (meaning without actual bias). His Honour made the following observations in McGrath:
The obligation on an expert to act impartially is of course a foundational requirement. It finds its source in an implied term that subsists in agreements of this kind: Ceneavenue Pty Ltd v Martin (2008) 106 SASR 1 at ; Legal & General v A Hudson Pty Ltd at 335; Holt v Cox (1997) 23 ACSR 590 at 595. Within that constraint however, the expert may act as he likes and may give such opportunities to the parties to make submissions, and on what terms, as he alone considers necessary or appropriate. He may even choose not to do so – so long as he acts honestly and impartially.
176. In Beevers Dodds-Streeton J held that “a report by an expert will not be vitiated by the appearance alone of partiality”. Having referred to the orthodox position, her Honour then introduced the concept of “a credible appearance or soundly based apprehension of partiality”. However, her Honour did not finally rule on the question on the facts of the case before her, finding it unnecessary to do so.
177. To the extent that Dodds-Streeton J in Beevers opened the door to the prospect of the appearance of bias as being sufficient to call into question and bring down the determination of a contractually appointed expert, I do not follow the decision. Absent something in the contract which works against this outcome in a particular case, actual partiality and not the appearance of partiality is the critical test: Macro v Thompson (No 3). Such observations are consistent with the views expressed by the Court of Appeal concerning experts called upon to give independent opinion evidence, such experts not being disqualified from that role due to previous association with the parties; see FGT Custodians Pty Ltd (formerly Feingold Partners Pty Ltd) v Fagenblat.
178. There is a substantial body of further authority on the point. In Ceneavenue Pty Ltd v Martin, Debelle J took the conventional approach in adopting the view that actual bias is required. In Candoora No 19 Pty Ltd v Freixenet Australasia Pty Ltd (No 2), Hargrave J referred to and approved the ruling in Macro that actual partiality, rather than the appearance of partiality, was necessary. In Kenros Nominees Pty Ltd v Tipperary Group Pty Ltd, Hollingworth J gave further approval to this approach, observing: “All of the cases to which the parties referred deal with the setting aside of a valuation after it has been performed, on the basis of actual bias”. Other authorities are to similar effect in support of the orthodox approach.
179. This view of the law accords with sound policy. Pembroke J in McGrath explained the policy considerations in the following terms:
When it comes to the principle of apprehended bias in relation to independent experts, I prefer the orthodox approach. To my mind, that approach accords with sound principle and persuasive authority. Too high an insistence on independent experts being required to avoid even an impression of partiality would not be in the interests of justice. It might, as it has in this case, encourage unwarranted challenges and unnecessary litigation by those too readily prone to suspicion and paranoia. The better course would be to allow the independent expert to complete his determination. 
180. In the light of the weight of these authorities, 500 Burwood conceded that an apprehension of bias on the part of Mr Hogg is not a sufficient basis for setting aside the DCWC assessment.
181. 500 Burwood also concedes that Mr Hogg owed no obligation to accord procedural fairness or natural justice to 500 Burwood or AU.
182. Accordingly, in order to have the DCWC assessment set aside, 500 Burwood must show, on the balance of probabilities, either actual bias or lack of impartiality on the part of Mr Hogg rather than mere apprehension of it.
Assessment in Accordance with the Contract
267. The circumstances in which a court will intervene to overturn an expert determination, where the assessment is undertaken pursuant to a contractual mechanism, are very limited.
268. In Beevers Dodds -Streeton J outlined the applicable principles in the following terms:
Historically, there has been a considerable degree of diversity in judicial identification of the deficiencies or flaws sufficient to vitiate an expert valuation. The fundamental principle endorsed in modern Australian authority is that an expert valuation will be binding if it is within the terms of the contract. Conversely, if an expert valuation can be said to depart from the terms of the contract, it will invite curial review and intervention. The fundamental principle is very general, and its application will, in each case, depend on the terms of the particular contract. The decided cases provide guidance on the construction of a contract under which an expert is appointed to determine a value or price. An expert’s determination on discretionary matters is not
ipso facto immune from review, but where, by the contract, such matters are entrusted to the expert without the prescription of criteria or restrictions, whether express or implied, it has frequently been inferred that the parties intended to be bound by the expert’s bona fide judgment, even if it is in some way erroneous. On the other hand, it has been inferred that the parties would not intend to be bound by gross errors of objective fact or mechanical calculation. Further, the expert’s determination may fail to satisfy a term of the contract because, when construed in context, the term is held to bear a special meaning which was not addressed. 
269. Recently, in TX Australia Pty Ltd v Broadcast Australia Pty Ltd (“TX Australia”) Brereton J described the potential scope of the enquiry, in a case such as the present, in the following terms:
In Legal & General Life of Aust Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314, McHugh JA recognised, and it has repeatedly been accepted, that the fundamental question is whether the exercise performed in fact satisfies the terms of the contract so as to make the determination binding. Absent fraud or collusion, a valuation is binding if it was made in accordance with the contract, and if so it is beside the point that it proceeded on the basis of error, or was a gross over or under value, or took into account irrelevant considerations [Legal & General Life of Aust Ltd v A Hudson Pty Ltd, 335-336 (McHugh JA); Holt v Cox (1997) 23 ACSR 590, 596 (Mason P)]. This does not mean that a valuation will stand regardless of error; it depends on the terms of the contract [Holt v Cox, 597 (Mason P)]. Accordingly, the question is whether the Expert’s determination binds the parties in accordance with their contract, and that depends on whether the Expert has performed the task allocated him by the contract, in a way that the contract makes binding on the parties. 
270. In Legal & General Life of Aust Ltd v A Hudson Pty Ltd (“Legal & General”) McHugh JA held:
While mistake or error on the part of the valuer is not by itself sufficient to invalidate the decision or the certificate of the valuation, nevertheless the mistake may be of a kind which shows that the valuation is not in accordance with the contract. A mistake concerning the identity of the premises to be valued could seldom, if ever, comply with the terms of the agreement between the parties. But a valuation which is the result of the mistaken application of the principles of valuation may still be made in accordance with the terms of the agreement. In each case, the critical question must always be: Was the valuation made in accordance with the terms of a contract? If it is, it is nothing to the point that the valuer may have proceeded on the basis of error or that it constitutes a gross over or under value. Nor is it relevant that the valuer has taken into account or has failed to take into account matter which he should have taken into account. The question is not whether there is an error in the discretionary judgment of the valuer. It is whether the valuation complies with the terms of the contract.
271. Accordingly, the DCWC assessment contained in the DCWC Report may not be set aside by reason of error, such as a factual or arithmetic error, even if, in some cases, that error resulted in a “gross over or under value” where it was otherwise made under the terms of and within the scope of the governing contractual terms.
272. However, and conversely, an expert determination may be set aside where it has not been undertaken in accordance with the prescription contained in the contract under which the appointment of the expert was made.
273. The distinction between those circumstances which may justify setting aside an expert determination and those which will not, was considered in Khayat Investments Pty Ltd v Winston Holdings Pty Ltd (No.2). Martin CJ, with whom Newnes and Murphy JJ agreed, explained the test, in the context of a contractual appointment of an expert valuer under a lease, as follows:
If the determination accords with the terms of the lease, it binds the parties even though it might be the product of mistake or error. As McHugh JA observed in Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314:
‘By referring the decision to a valuer, the parties agree to accept his honest and impartial decision as to the appropriate amount of the valuation. They rely on his skill and judgment and agree to be bound by his decision (335).’
However, if the determination of the rental payable does not accord with the lease agreement because, for example, it is not honest or is vitiated by collusion, or falls outside the scope of the provision in the lease because, for example, the valuer has assessed the wrong premises, the parties will not be bound, and one or other could seek a remedy setting aside the purported determination of the valuer, on the basis that it was not a valid determination under the lease. However, an error in the discretionary judgment of the valuer, or a mistake in the reasoning process, will not result in the invalidity of the determination unless it is of the limited kind to which I have referred, and which takes the purported determination beyond the scope of the powers conferred upon the valuer by the lease agreement (see also Campbell v Edwards  1 WLR 403, 407; Jones v Sherwood Computer Services plc  1 WLR 277, 287; TXU Electricity Ltd v Commonwealth Custodial Services Ltd  VSC 88).
274. In TX Australia, Brereton J formulated an appropriate test and identified the task required of the Court where an expert determination delivered under a contract is challenged, in these terms:
 It is not in doubt that there will be an error of law, and that the determination will not be binding, if the Expert misconceived his function, asked himself the wrong question or applied the wrong test [Ex parte Hebburn Limited; Re Kearsley Shire Council (1947) 47 SR (NSW) 416, 420 (Jordan CJ); Avon Downs Pty Limited v Federal Commissioner of Taxation  HCA 26; (1949) 78 CLR 353, 360 (Dixon J); Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission  HCA 47; (2000) 203 CLR 194, 208-209,  (Gleeson CJ, Gaudron and Hayne JJ)], as in that event, he would not have addressed himself to, nor performed, the task required of him by the contract.
 Consideration of this ground requires analysis of two issues: first, what was the Expert’s task; and secondly, what did the Expert actually do. 
 Beevers v Port Philip Sea Pilots Pty Ltd  VSC 556.
 Beevers v Port Philip Sea Pilots Pty Ltd  VSC 556  –[ 266].
 Macro v Thompson (No. 3)  2 BCLC 36.
 Beevers v Port Philip Sea Pilots Pty Ltd  VSC 556 [268 – 270].
 Macro v Thompson (No. 3)  2 BCLC 36 .
 Macro v Thompson (No. 3)  2 BCLC 36 .
 McGrath v McGrath  NSWSC 578.
 Barclays Bank v Nylon Capital  EWCA Vic 826;  Bus LR 542.
 McGrath v McGrath  NSWSC 578 .
 Lahoud v Lahoud  NSWSC 1297 ; Barclays Bank v Nylon Capital  EWCA Cic 826;  Bus LR 542 .
 Hounslow London Borough Council v Twickenham Garden Developments Ltd  Ch 233, 258-60; Capricorn Inks Pty Ltd v Lawter International (Australasia) Pty Ltd  1 Qd. R. 8; cf Fletcher Construction Australia Pty Ltd v MPN Group Pty Ltd (unreported) Supreme Court, NSW, 14 July 1997 p.20.
 Legal & General Life of Australia v A Hudson Pty Ltd (1985) 1 NSWLR 314, 334-336 (McHugh JA).
 TX Australia Pty Ltd v Broadcast Australia Pty Ltd  NSWSC 4  (Brereton J); AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd  VSCA 173 .
 See Campbell v Edwards  1 WLR 403, 407 per Lord Denning MR; followed in Baber v Kenwood Manufacturing Co Ltd and Whinney Murray & Co  1 Lloyds Rep 175 (Court of Appeal); Jones & Others v Sherwood Computer Services PLC  1 WLR 277; applied in Australia in Legal & General by McHugh JA. The critical distinction is between a mistake in process of the valuation or assessment where in the absence of dishonesty or partiality, the courts will not interfere, in contrast to a valuation or assessment which actually departs from the contract, where the courts will intervene.
 Minister for Immigration and Multicultural Affairs v Jia  HCA 17.
 McGrath v McGrath  NSWSC 578.
 McGrath v McGrath  NSWSC 578 .
 McGrath v McGrath  NSWSC 578 .
 McGrath v McGrath  NSWSC 578 .
 Beevers v Port Philip Sea Pilots Pty Ltd  VSC 556  and .
 Beevers v Port Philip Sea Pilots Pty Ltd  VSC 556  – .
 Beevers v Port Philip Sea Pilots Pty Ltd  VSC 556 .
 Macro v Thompson (No. 3)  2 BCLC 36.
 FGT Custodians Pty Ltd (formerly Feingold Partners Pty Ltd) v Fagenblat  VSCA 33.
 Ceneavenue Pty Ltd v Martin (2008) 106 SASR 1  and .
 Candoora No 19 Pty Ltd v Freixenet Australasia Pty Ltd (No 2)  VSC 478 .
 Kenros Nominees Pty Ltd v Tipperary Group Pty Ltd  VSC 524 .
 See: Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314, 335; Holt v Cox (1997) 23 ACSR 590, 595; Andrews v Queensland Racing Ltd (No. 2)  QSC 364  – ; Bernhard Schulte GmbH & Co KG v Nile Holdings Ltd  2 Lloyd’s Rep 352 372.
 McGrath v McGrath  NSWSC 578 .
 McGrath v McGrath  NSWSC 578 .
 Beevers v Port Philip Sea Pilots Pty Ltd  VSC 556 .
 TX Australia Pty Ltd v Broadcast Australia Pty Ltd  NSWSC 4 .
 Legal & General Life of Australia Ltd v A Hudson Pty Ltd  1 NSWLR 314; applied in Beevers v Port Philip Sea Pilots Pty Ltd  VSC 556, Candoora No 19 Pty Ltd v Freixenet Australasia Pty Ltd (No. 2)  VSC 478, Kenros Nominees Pty Ltd v Tipperary Group Pty Ltd  VSC 524 and McGrath v McGrath  NSWSC 578.
 Legal & General Life of Australia Ltd v A Hudson Pty Ltd  1 NSWLR 314, 335-6.
 Legal & General Life of Australia Ltd v A Hudson Pty Ltd  1 NSWLR 314, 336.
 Khayat Investments Pty Ltd v Winston Holdings Pty Ltd (No.2)  WASCA 196.
 Khayat Investments Pty Ltd v Winston Holdings Pty Ltd (No.2)  WASCA 196  – .
 TX Australia Pty Ltd v Broadcast Australia Pty Ltd  NSWSC 4  – .
In WTE Co-generation and Visy Energy Pty Ltd v RCR Energy Pty Ltd and RCR Tomlinson Ltd  VSC 314, , the Victorian Supreme Court, Vickery J, the Judge in Charge of the Technology List, was considering an application for a stay on the basis that the plaintiff has not complied with a dispute resolution clause requiring a meeting between senior management. His Honour reviewed the cases and set out the principles applying as follows:
PULLING THE THREADS TOGETHER, THE FOLLOWING PRINCIPLES MAY BE STATED AS TO A STAY SHOULD BE GRANTED WHERE A CONTRACTUAL DISPUTE RESOLUTION PROCESS IS EXPRESSED TO BE A PRE-CONDITION TO LITIGATION, AND WHERE THE ENFORCEABILITY OF SUCH PROVISION IS PUT IN ISSUE: 1. The general rule is that equity will not order specific performance of a dispute resolution clause, notwithstanding that it may satisfy the legal requirements necessary for the court to determine that the clause is enforceable. This is because supervision of performance pursuant to the clause would be untenable. 2. The Court may, however, effectively achieve enforcement of a dispute resolution clause by default, by ordering that a proceeding commenced in respect of a dispute subject to the clause, be stayed or adjourned until such time as the process referred to in the clause, is completed. What is enforced by this means is not co-operation and consent of the parties but participation in a process from which consent might come. 3. A circumstance which will operate to preclude the ordering of a stay on this ground arises where the particular dispute resolution clause is determined to be unenforceable, as where for example, the clause is found to be uncertain. 4. Dispute resolution clauses in contracts should be construed robustly to give them commercial effect. The modern approach to the construction of commercial agreements is generally to endeavour to uphold the bargain by eschewing a narrow or pedantic approach in favour of a commercially sensible construction, unless irremediable obscurity or a like fundamental flaw indicates that there is, in fact, no agreement. 5. Honest business people who approach a dispute about an existing contract will often be able to settle it. If business people are prepared in the exercise of their commercial judgment to constrain themselves by reference to express words that are broad and general, but which nevertheless have sensible and ascribable meaning, the task of the court is to give effect to and not to impede such solemn express contractual provisions. Uncertainty of proof does not detract from there being a real obligation with real content. 6. A dispute resolution clause in a contract, consistently with public policy in promoting efficient dispute resolution, especially commercial dispute resolution, requires that, where possible, enforceable content be given to contractual dispute resolution clauses. 7. The trend of recent authority is in favour of construing dispute resolution clauses where possible, in a way that will enable those clauses to work as the parties appear to have intended, and to be relatively slow to declare such provisions void either for uncertainty or as an attempt to oust the jurisdiction of the court. 8. The court does not need to see a set of rules set out in advance by which the agreement, if any, between the parties may in fact be achieved. The process need not be overly structured. However, the process from which consent might come must be sufficiently certain to be enforceable. A contract which leaves the process or model to be utilized for the dispute resolution ill defined, or the subject of further negotiation and agreement, will be uncertain and unenforceable. 9. An agreement to agree to another agreement may be incomplete if it lacks the essential terms of the future bargain. 10. An agreement to negotiate, if viewed as an agreement to behave in a particular way, may be uncertain, but is not incomplete. The relevant question is whether the clause has certain content. 11. An obligation to undertake discussions about a subject in an honest and genuine attempt to reach an identified result is not incomplete. His Honour concluded on the facts that the stay should be refused, in particular, on the ground that the particular clause, requiring the parties to “meet to attempt to resolve the dispute or to agree on methods for doing so”, was unenforceable. His Honour noted that further agreement would be required before the process could proceed. At paragraph 46:
It is one thing for a court to strive to give commercial effect to an imperfectly drafted contractual clause, which is well accepted as the approach to construction of contractual terms. It is also accepted that a valid dispute resolution clause does not require a set of rules to be set out in advance which directs the parties how an agreement is to be achieved, if agreement is possible. But, as a minimum, what is necessary for a valid and enforceable dispute resolution clause, is to set out the process or model to be employed, and in a manner which does not leave this to further agreement. It is not for the court to substitute its own mechanism where the parties have failed to agree upon it in their contract. To do otherwise would involve the court in contractual drafting, which is a distinctly different exercise from contractual construction of imprecise terms.
Liao Hui is a Chinese weighlifter. In September 2010 he tested positive to Boldenone (a steroid). Liao was suspended for 4 years, (rather than 2 years). Liao appealed to CAS, in relation to to testing procedure defects (this was unsuccessful, and against the increase of sanction from 2 years to 4 years. The CAS panel upheld this part of the appeal, and reduced the sanction to 2 years. The panel said:
In the present case the Panel is not persuaded to the degree of comfortable satisfaction that such aggravated circumstances exist. In the case at hand there is no indication that the Appellant committed the anti-doping rule violation “as part of a doping plan or scheme, either individually or involving a conspiracy”. Nor is there an indication that the Appellant used the prohibited substance on multiple occasions. In the case at hand the Appellant was submitted to two doping controls on the same day. The first doping control resulted – unlike the second one – in a negative finding. This is all the more surprising since the second test conducted by IWF was an“announced test”, i.e. that the Appellant knew at the time when he submitted to the first doping control that a second one would follow shortly. In addition, the Appellant has submitted to other doping tests on 24 August 2010 and 30 August 2010 all of which were reported negative. It follows from this that there is no evidence on file that Appellant has made “repetitive use of a prohibited substance” or that he was undertaking any steps beyond simply having the prohibited substance or its metabolites in his specimen. Furthermore, no evidence has been adduced that the Appellant would “likely enjoy the performance enhancing effects of the anti-doping rule violation beyond the otherwise applicable period of ineligibility” (i.e. the two-years-sanction). Finally, the Panel notes that there is no evidence on file that the Appellant “engaged in deceptive or obstructing conduct to avoid the detection or adjudication of an anti-doping rule violation”.
In Krstic, Mark Stefan & Krstic, Nicholas Thomas v State Trustees Limited (ACN 064 593 148) (who is sued as the executor of the will and estate of Peter Krstic, deceased)  VSC 344, the Supreme Court (McMillan J) was considering the interpretation of two clauses in a will (relating to contingent gifts). Her Honour reviewed the principles to be applied to the construction of a will:
‘A detailed and succinct summary of the principles is set out in Fell v Fell. Prima facie, the written words in the will must be given their ordinary meaning, with the Court making a determination of the issue by reference to the words used by the testator in the will, having regard to any established rules of construction and construing a ‘will as trained legal minds would do’.
In XZTT and Anti-Doping Rule Violation Panel AATA 728 (23 October 2012), the Administrative Appeals Tribunal of Australia was consideringa cyclist’s appeal against two decisions by ASADA’s Anti-Doping Rule Violation Panel (ADRVP) to make entries into the Register of Findings under the National Anti-Doping Scheme (the NAD Scheme).
In October 2010, the athlete (un-named) tested positive to benzoylecgonine (principal metabolite of cocaine) a race in China. Under the 2009 WADA Code, the use of cocaine is only prohibited in-competition, however the presence of the metabolite in a sample taken during a subsequent competition is an anti-doping violation. The amount detected in the sample was lower than the usual usual cut-off for a positive finding for cocaine. Article 7.2 of the 2009 WADA Code requires that an athlete be notified of the positive test result, and separately, given the right to have the B sample tested, “promptly “ (within 7 days). The athlete was not advised of the positive test for 4½ months. The race occurred on 23 October 2010, the UCI received the lab results on the A sample on 4 November 2010, but did not notify the athlete (who continued to compete). The athlete was first notified by the UCI, on 25 March 2011.
In the 25 March 2011 notice, the UCI:
The B sample confirmed the presence of benzoylecgonine. Two weeks later the UCI wrote to XZTT to “confirm the presence of the Cocaine and to advise that the UCI would be writing to CA (Cycling Australia) to request CA to open disciplinary proceedings.” On 30 May 2011, the General Manager, Anti-Doping Programs and Legal Services ASADA, advised that the matter would be referred to the ADRVP for consideration. The athlete was invited to make submissions in response to the notice. The athlete denied using a prohibited substance, and, further, argued that the UCI had breached its own rules considerably. Two 2 months later, the ADRVP advised the athlete that the panel had made two adverse findings against him. The Cyclist appealed to the AAT.
The Tribunal concluded:
The Tribunal indicated, further , that in relation to the ADRVP re-consideration, certain mitigating factors might properly be taken into account by the ADRVP:
 Included in the factors the ADRVP may wish to take into account in mitigation are those that: (a) from 25 March 2011 until the date of the Tribunal’s decision XZTT remained subject to a provisional suspension that has prevented him from participating in all professional cycling events; (b) that despite the requirements of the WADC and the UCI Anti-Doping Rules, XZTT experienced gross breaches of his entitlement to have the allegations against him dealt with in a timely way; (c) that XZTT did not contribute to the delays in any way; (d) that XZTT entered into a commercially disadvantageous contract, which included a provision to the effect that if he were to be found to have breached anti-doping rules his contract would be terminated and which he would not have entered into but for the delay in the UCI in notifying him of his testing results; (e) that the finding of a violation on his part for ‘use’ In-Competition of cocaine has been set aside by the Tribunal; and (f) that the amount of metabolite of cocaine detected in XZTT’s samples was below the threshold normally accepted as establishing a positive finding for use of cocaine and could not have affected his performance.
In Australian Football League & ESP Merchandise Pty Ltd v Hard On Sport Pty Ltd & David Sumiga  VSC 475, the Supreme Court (Vickery J) was considering an application to set aside an Anton Piller order, relating to the open sale by the defendants of AFL football merchandise without AFL authority.
The AFL and its licensee (ESP) claimed that the defendants in selling AFL merchandise without AFL authority:
No defence was made in relation to the copyright claim. (Section 10 of the Copyright Act 1968 (Cth) includes a photograph as “artistic work” whether the work is of artistic quality or not.
No defence was made in relation to the trade marks claim under Section 20 and 120 of the Trade Marks Act 1995 (Cth). The defendant, however, referred to Arsenal Football Club PLC v Reed . In that case, an unauthorised vendor sold Arsenal memorabilia outside the Arsenal ground. At trial, the court had found the vendor’s use of trade marked items as not being an indication of the origin of the goods sold, but rather, being a sign depicting club loyalty or affiliation. That decision, His Honour noted, was, however, overturned on appeal. Vickery J noted that the point remained arguable in Australia, but any defendant would face the persuasive precedent of the UK Court of Appeal.
The plaintiffs claimed that the defendants, breach of Section 18 of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) misrepresented that unauthorised AFL memorabilia was, in fact, authorised by the AFL. His Honour concluded, on the evidence as it stood when the Anton Piller order was made, was “sufficiently compelling” to make the order. Similarly, His Honour concluded that case in relation to the defendants passing off unauthorised AFL memorabilia as authorised by the AFL, the evidence as it stood when the Anton Piller order was made was, also, sufficiently strong to make the order.
In relation to the inducing breach of contract claim, His Honour concluded that, in this instance, the evidence was not sufficiently strong (on this basis) to justify the issue of a search order, noting:
His Honour further noted that there was some argument in relation to the interpretation of the player’s obligations under the CBA in this respect.
Vickery J, in deciding whether AFL had made sufficient disclosure in obtaining the original order, reviewed the legal principles underlying the grant of Anton Piller order, noting the court’s emphasis, in Anton Piller KG v Manufacturing Processes Ltd, to the effect that such an order was at the “extremity” of the court’s powers, and that “such orders would rarely be made, and only where there was no alternative way of ensuring that justice was done to the applicant”. His Honour observed that it was “in recognition of the extraordinary nature of this remedy” that certain protections were built into the court’s Practice Note, the standard of proof, and the common law supporting the order.
His Honour reviewed the authorities in relation to the obligation on the plaintiff seeking an ex parte remedy to disclose all matters relevant to the exercise of the court’s discretion. In this instance, the defendants said that the plaintiff had not given full, frank disclosure in relation to:
Ultimately, however, His Honour did not conclude that the omissions should lead to the Anton Piller order being discharged altogether, but rather, it should be discharged only in relation to those items based on the inducing breach of contract claim alone.
His Honour considered the following in relation to whether to extend the injunction and the balance of convenience:
On this basis, His Honour extended the injunction restraining the defendants from selling AFL memorabilia until further order.
n 470 St Kilda Road P/L (ACN 006 075 341) v Reed Constructions Australia P/L (ACN 003 340 341) & Philip Martin, Vickery J was reviewing an adjudication determination, where the Principal had argued that a statutory declaration provided by the Contractor was patently false. His Honour reviewed the authorities in relation to several questions, including:
In Biosciences Research Centre P/L v Plenary Research P/L Croft J, the Judge in charge of the Victorian Supreme Court Arbitration List, was considering whether three disputed claims for extension of time and delay costs in relation to delays in completing the Biosciences Research Centre at Latrobe University were to be referred to an independent expert or to arbitration for determination.
The parties were in dispute whether the interpretation of extension of time provisions, in combination with the dispute resolution provisions, had the effect that the expert determination clause was triggered. His Honour considered the authorities relating to principles of contract interpretation, adopting an interpretation guided by :
and concluded that, in relation to the particular provisions before him, that the use of the word “may” resulted in the parties having the choice whether to seek to invoke the provisions.
His Honour rejected an argument that the nature of the particular dispute was a factor in interpreting the dispute resolution provisions, preferring the view that the question is “one to be determined on the basis of proper construction of the contract”, and further concluding, the parties having contemplated extension of time disputes being referred to expert determination, there was little force in an argument that the expert determination process generally was inappropriate in this instance.
His Honour noted recent Australian judgments where the courts had considered, with approval, the expert determination process in construction cases.
No Duty of Care owed by Builder to Owners Corporation
In Owners Corporation Strata Plan 72535 v Brookfield  NSWSC 712, the NSW Supreme Court (McDougall J) reviewed the evolving law in relation to duty of care owed by a builder to future owners, with whom the builder has no contract. McDougall J concluded that the builder of a strata development in Terrigal did not owe a duty of care to the owners corporation in relation to defects in the common property. His Honour concluded that, on the basis that the apartments were residential building work (taken as at the time the building contract was entered into), and therefore the statutory warranties applied.
His Honour considered that Bryan v Maloney did not support a duty of care in this instance, for 3 reasons:
It would be anomalous to have claims relating to the condition of the building by an original owner against the builder determined by the law of contract if the relief claimed by the remote purchaser against the builder would be determined by the law of tort. Such a situation would expose the builder to a liability for pure economic loss different from that which he undertook in constructing the building and would confer a corresponding right on the remote purchaser which the purchaser had not sought to acquire from the vendor (45). It would be tantamount to the imposition on the builder of a transmissible warranty of quality. In some jurisdictions, Parliament has provided such a remedy by statute. The social question whether building costs should be inflated to cover the builder’s obligation under such a transmissible warranty in an appropriate question for parliaments to consider but, in the absence of compelling legal principle or considerations of justice reflecting the enduring values of the community, the courts should not decide to extend remedies not hitherto available to remote purchasers of buildings without considering the cost to builders and the economic effect of such an extension. Those are questions which the courts are not suited to consider. The extension of remedies in that direction is properly a matter for Parliament
His Honour noted that Woolcock Street had relied on “vulnerability” in relation to duty of care, and the availability of statutory warranties to the Owners Corporation. McDougall J further noted the potential cost if such a duty of care existed.
In Thiess Pty Ltd & Anor v Arup Pty Ltd & Ors  QSC 185, (10 July 2012), the Queensland Supreme Court (Applegarth J) was considering the terms of a Collaborative Consultancy Agreement (CCA) in relation to the Airport Link, Northern Busway (Windsor to Kedron) and East-West Arterial Gateway Projects, between Thiess John Holland (TJH) and Parsons Brinkerhoff Australia (PBA). TJH had engaged PBA as consultants for the design of the project. His Honour was asked to resolve whether, under the CCA, certain values of multipliers specified in the CCA were values agreed between the parties or were subject to audit by the Collaborative Agreement Auditor. His Honour concluded in favour of PBA, that the values were agreed between the parties and not subject to audit by the Collaborative Agreement Auditor.
His Honour considered the interpretation principles, reasoning as follows:
The proper interpretation of the contract is not determined in this case simply by competing contentions about which interpretation is the “more commercially sensible” construction. It is determined by the words of the agreement that were chosen by the parties, and the structure of Schedule 7.
His Honour reasoned in relation to the request for rectification:
These and other authorities appear to support the following propositions:
TJH had argued that there was a reasonable expectation that the multiplier was a genuine or reasonable estimate and that PBA had been acting in good faith in originally proposing them, and further, that it had a reasonable expectation of an auditor’s examination, and that if there was to be no such examination PBA would have disclosed this to TJH. His Honour summarised the cases:
 Silence or non-disclosure of information can be misleading or deceptive in various circumstances….. Whether silence constitutes misleading or deceptive conduct depends on all the relevant circumstances, and it is dangerous to essay any principle by which they might be exhaustively defined. However, “unless the circumstances are such as to give rise to the reasonable expectation that if some relevant facts exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist” …… Asking whether a reasonable expectation of disclosure exists is an aid to characterising non-disclosure as misleading or deceptive and has been described as a practical approach to the application of the prohibition in s 52.
 Sometimes a reasonable expectation of disclosure will not exist because parties to a commercial negotiation are not expected to disclose information which is confidential, and the starting point for their negotiations is the caveat emptor doctrine. On other occasions, a reasonable expectation of disclosure will exist because of the nature of the relationship, or because positive conduct or statements in the course of negotiations imply that a certain fact or matter exists or does not exist. A failure to qualify a statement made earlier in negotiations may be misleading or deceptive in the circumstances. Where, however, this is not the case, the reasonable expectation of disclosure of a certain fact must be found elsewhere. In this case, TJH seeks to source it by reference to the negotiation and entry into the Pre-Bid Agreement and the parties’ subsequent negotiations in relation to the commercial framework and the terms of Schedule 7, as pleaded in paragraph 85 of the second further amended defence and counterclaim. Whether conduct is misleading or deceptive or likely to mislead or deceive must be assessed on the basis of these facts and all the relevant circumstances.
Ultimately, His Honour concluded that there was no misleading and deceptive conduct in this instance, concluding that PBA should have the declaratory relief it sought.
In CH2M Hill v State of NSW  NSWSC 963, the NSW Supreme Court (McDougall J) was considering a design and construct contract between a joint venture (CHBM) and Sydney Water of an upgrade to a sewerage treatment plant at West Camden (His Honour that the project was “inevitably and not inappropriately” referred to as “the WC project”). CHBM and Sydney water were disputing whether damage to earthen lagoons in the plant was due to poor design or poor construction.
The substantive design defects argued were:
The substantive construction defects argued were:
CH2M argued that it was an express and/or implied term that the design would be “fit in all respects for its intended purpose”. The government department (DOC) who designed the project initially denied that term formed part of the design contract but ultimately accepted that the term was was at least an implied term.
McDougall J (a very experienced judge in the Construction List) concluded in relation to design that:
McDougall J concluded in relation to the construction:
McDougall J concluded that it was not incumbent on DOC to design under-drainage. Under-drainage would not have been required if the construction was adequate, and DOC did not have to design against every potential risk. The risk of accumulation of groundwater was remote to the point where the decision not to include under-drainage was justified. For those reasons, DOC did not breach its design obligations by designing without under-drainage. Further, DOC was entitled to proceed on the basis that its design, if followed, would have included an effective perimeter seal.
McDougall J outlined some matters of principle in relation to the entitlement to corporate overheads:
…. In Banabelle Electrical v State of New South Wales  NSWSC 714, I referred to what Giles J said in Thiess Watkins White, and to what his Honour had said (to similar effect) in Bulk Materials (Coal Handling) Pty Ltd v Compressed Air and Packaging Systems (NSW) Pty Ltd (1997) 14 BCL 109 at 133 – 135. At , I drew from those cases the proposition that:
“it is in principle wrong to make an allowance for recovery of an offsite (or head office, or fixed) overhead, or loss of profit, unless there is a basis for concluding that they could have been recovered or earned through the performance of other profitable work… where the effect of… delay is to prevent the contractor from undertaking other profitable work”.
408 I remain of that view. Further, I remain of the view that the entitlement to corporate overheads is not just a question of principle, but is entirely fact-dependent. It must be shown that the breach of contract for which damages are claimed resulted in, among other things, the loss of opportunity to undertake profitable work, from which further work corporate overheads could have been defrayed.
His Honour ultimately concluded that DOC did not breach its design obligations, the failures of the lagoons were caused by various deficiencies in CHBM’s construction work, including the unjustified omission of an anchor trench to secure the GCL, poor and uneven compaction of the embankments, and prolonged exposure of the GCL to the elements before the concrete panels were cast over it .
In Napolitano v State Trustees Ltd  VSC 345, a nephew by marriage sued the executor under Part IV of the Administration and Probate Act claiming that his uncle had a responsibility to make provision under his will for his proper maintenance and support. He asks the Court to order that provision be made for him. The executor asked for summary judgment, saying that nothing in the nephew’s affidavit is capable of showing that his uncle had a responsibility (conveniently spoken of in this field of the law as a moral responsibility on a wise and just testator) to make provision for him, and therefore the jurisdictional threshold for a Court’s intervention under the Act is not met. Mukhtar J concluded that where all the evidence is in, and (as happened here) the Court had able and extensive submissions from both counsel with reference to authorities as would be expected at the trial, then on a summary judgment application the Court is performing the similitude of the trial function. It is not so much assessing the prospects, but the actual merits. In this case, the evidence of the nature, quality and elements of the relationship between Antoine and the deceased is too imprecise, and falls well short of the types of relationship as between nephews or nieces and their aunts or uncles which might be recognised as giving rise to a responsibility to make provision for maintenance and support.
“Cases in this Court where successful claims have been made by, for example, a niece from an aunt have demonstrated strong facts are needed to show that the aunt or uncle were like de facto mothers or fathers or had otherwise played a part in the life of a niece of nephew so as to give rise to a responsibility. It requires a demonstration at least that the deceased has taken, in the many ways possible in life, some responsibility for the child’s care, upbringing and development or welfare….
….The Court’s discretionary power under s 91 of the Administration and Probate Act is cast in very broad terms. But it is important to remember that Courts do not intervene just because it would have been nice or good of a testator to give a benefit. An uncle ought to be able to develop a relationship with a nephew without apprehending the law might impose a responsibility to provide for him. That is why Courts have found it convenient and useful to resort to the concept of a moral duty and a moral claim in deciding whether provision should be made to a claimant….. The test is “whether and if so what provision a wise and just testator would have thought it his moral duty to make in the interests of the claimant” having regard to community standards….”
In Skilled Group Ltd v CSR Viridian Pty Ltd & Anor  VSC 290 (4 July 2012), Vickery J was considering a claim by Skilled Group for monies due by way of a restitutionary quantum meruit for engineering work it performed , under a subcontract that was never executed between Skilled and Pilkington, at a glass manufacturing plant in Dandenong owned by CSR. Skilled said that no concluded subcontract had been made between Skilled and Pilkington because, the parties had never agreed on two essential terms of the proposed subcontracts, namely the dates for practical completion and the proposed milestone dates for the purposes of calculation of liquidated damages.
His Honour noted previous cases where, though no contract had been executed, by the parties proceeding to perform the work, a contract had been formed. In relation to the formation of a contract, His Honour said:
94 In any determination as to whether a binding contract exists, it is the objective intent of the parties, as revealed in the factual context, that is the paramount consideration. The fact of agreement and its content is to be determined by the communications between the parties considered objectively. It is also legitimate to consider the factual context in which the communications took place. Regard may also be had to communications between the parties subsequent to the date of the alleged contract, at least to the extent to which those communications may inform the meaning of the language used by the parties in earlier exchanges between them which evidenced the fact of agreement and its content and defined the commercial context.
95 The subjective intention of the parties, as it may be expressed, for example in internal memoranda, or statements made by individuals as to as to subjective intention in the course of giving evidence, is generally inadmissible. However, in some circumstances such expressions of intention may amount to admissions and be admissible on that basis. However, care needs to be exercised in determining the content of any such admission.
His Honour considered the so-called “fourth class” of cases discussed in Masters v Cameron, where parties are content to be bound immediately and exclusively by the terms which they had agreed upon while at the same time expecting to make a further contract in substitution for the first contract, containing, additional negotiated terms, referring to Lord Loreburn, in Love & Stewart v S Instone & Co:
It was quite lawful to make a bargain containing certain terms which one was content with, dealing with what one regarded as essentials, and at the same time to say that one would have a formal document drawn up with he full expectation that one would by consent insert in it a number of further terms. If that were the intention of the parties, then a bargain had been made, none the less that both parties felt quite sure that the formal document could comprise more than was contained in the preliminary bargain.
His Honour concluded:
In my opinion, the parties reached agreement in this case in conformity with the fourth limb of Masters v Cameron as described by the High Court in Sinclair Scott. Their conduct clearly manifested an intention to elevate their commercial relationship beyond the clutches of the third class. …. By early May 2008 the parties reached finality in arranging all the terms of their bargain and intended to be immediately bound to the performance of those terms. At the same time the parties proposed to make a further contract in substitution for the first contract, containing negotiated additional terms relating to dates for practical completion of the three Sub-contracts and agreed milestone dates, upon which it was intended that the Sub-contracts would be formally executed……. 117 The factual analysis I have described, involving as it does the application of the fourth limb of Masters v Cameron, also goes to explain the negotiations between the parties which continued from early May 2008 as to dates for practical completion and milestone dates. What the parties were not about during this period was negotiating towards a set of original binding Sub-contracts, for by early May 2008 they were already bound to a concluded, but limited suite of bargains. What they were about was the negotiation of a new set of Sub-contracts in substitution for the already binding ones. The fact that the parties continued to negotiate for an alternative regime of dates, and this continued beyond early May 2008, had no bearing on the concluded bargains which were already in place. ……
In the light of the conduct described, I find it irresistible to conclude otherwise than implied contracts on the terms of the three Sub-contracts are to be inferred from the evidence and that these implied contracts operated to govern the Skilled works on the Project from the outset of their engagement.
His Honour concluded, therefore, that concluded subcontracts had been formed. Though no longer required, His Honour further concluded that, were it not possible to imply the existence of binding agreements, Skilled would have been estopped from denying the existence of the agreements as reflected in the three subcontracts.
In Ipex ITG Pty Ltd (In liquidation) & Takapana Investments Pty Ltd v State of Victoria  VSCA 201, the Victorian Court of Appeal was considering a claim by an unsuccessful tenderer for a contract for the provision of ‘system integration services’ for the Parliament of Victoria. An evaluation plan had been prepared but not distributed to tenderers. Ipex’s tender had been assessed as not demonstrating a good understanding of what Parliament was seeking under the project, and not representing value for money albeit that its tender price was low (Ipex’s tender price was around $2.8 million compared to the winner’s price around $7.8 million), and removed from further consideration.
The trial judge held, and on appeal it was common ground, that there was a binding contract (‘the tender process agreement’) between Ipex and the respondent the express terms of which were contained in the Request for Tender (RFT). Ipex’s primary claim was for damages for breach of that contract.
The Court of Appeal concluded:
In Forrest v Australian Securities and Investments Commission  HCA 39 (2 October 2012), the High Court (French CJ, Gummow, Hayne, Kieffel JJ, and Heydon J in a separate judgment) was considering whether Fortescue Metals Group ltd (FMG) and/or its chairman and chief executive, Andrew (“Twiggy”) Forrest had breached the Corporations Act 2001 in announcements to the ASX that it had entered into a binding agreement with Chinese corporations to build, finance, and transfer, a railway in the Pilbara.
The agreement was expressed to be binding, but envisaged detailed, further, agreements still to be agreed between the parties.
ASIC argued that the agreement was not a binding agreement, accordingly:
On the legal question as to whether the agreement was, in fact, binding, Heydon J said, at paragraphs 92-93:
…. ASIC’s case thus boils down to the question whether Fortescue was right to call the agreement a binding contract. It was certainly a binding contract to negotiate further contracts within the intent of the agreement which would result in the railway being built. …. Was the agreement a binding contract to build the railway? Fortescue advanced numerous arguments for the view that it was because the parties had agreed, or provided for agreement on, all essential terms. There is force in many of those arguments, but difficulty in some….
The High Court concluded that:
In Abakis v Abakis  VSC 437, the Supreme Court (Macaulay J) was considering a Testator’s Family Maintenance claim by a daughter of the deceased’s second marriage, where the deceased was survived by his second wife, her daughter, three children from his first marriage, and two stepchildren. The plaintiff was the only child to receive nothing under the Will (though she had earlier received a substantial land gift).
Macaulay J adopted the principles set out by Hargrave J in McCann v Ward & Burgess  VSC 63:
In this case, His Honour concluded that the deceased did have a responsibility to make provision for the plaintiff. Ultimately, taking into account the financial resources and needs of the plaintiff, the second wife, and the other children, and the size and nature of the estate, His Honour concluded that the plaintiff was entitled to a further provision of $475,000.
In Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd  VSC 477 (23 September 2011), His Honour Mr Justice Macaulay was considering, among other things, whether documents brought into existence for the purpose of an adjudication under the Building and Construction Industry Security of Payments Act 2002 (Vic) could attract litigation privilege. His Honour considered whether the statutory adjudication process was an “Australian proceeding” for the purposes of Section 119 of the Evidence Act 2008 (Vic)., and concluded that he should prefer a wider interpretation of the words. At paragraphs 48-50:
48 I agree …… that, because an adjudicator is not bound to apply the laws of evidence, such a person does not qualify as an ’Australian court‘ on that basis. But, is an adjudicator authorised by the Security of Payment Act to ‘hear, receive and examine evidence’? In considering whether, as a matter of statutory interpretation an adjudicator meets that description I am to prefer a construction that promotes the purpose or object of the Evidence Act……… Assuming, as I do, that the regime of privilege is intended to ensure fairness between participants in the conduct of litigious processes, I would not give that expression a narrow meaning …..
49 The adjudication occurs in a patently adversarial setting. It is determined upon the basis of evidence presented in documentary form, and upon written submissions. …… Despite the fact that the adjudication may not ultimately determine the parties’ rights if, in a subsequent court proceeding, the parties’ entitlements are litigated, the adjudication result is enforceable at law and is binding upon the parties unless and until a subsequent court order changes that outcome. I think that the nature of adjudications is such that preserving the confidentiality of communications, made for the dominant purpose of enabling the provision of legal services to participants in the adjudication, would promote the object of fairness for and between those participants.
50 Bearing those matters in mind, I conclude that the provisions of the Act I have summarised above do authorise the adjudicator to ‘hear, receive and examine evidence’ as I would construe that expression. I therefore construe the definition of ‘Australian court’ to embrace an adjudicator under the Security of Payments Act and an adjudication as an ‘Australian proceeding’ within the meaning of s119 of the Evidence Act.
In Director of Housing of State of Victoria v StructX Pty Ltd (trading as Bizibuilders)  VSC 410, Vickery J (the Judge in Charge of the Technology and Construction List) was considering an adjudication determination and the meaning of “in the business of building residences”.
“Structx” was a builder, constructing homes in Hamilton, for the Director of Housing of the State of Victoria. The Director sought to have the determination quashed on the grounds that :
1. the relevant contract was a domestic building contract and the Director was/is not in the business of building residences (Section 7(2)(c) of the Act);
2. the adjudicator erred in finding that there was no Payment Schedule (on the basis, contested by the Director) that the Superintendent’s Representative lacked authority to issue payment schedules;
3. the adjudicator erred in finding that the Payment Schedule had to be in the form prescribed by the contract (Section 15(2)(d) of the Act).
The Contract was an amended AS2124 General Conditions of Contract form of contract.
His Honour concluded:
1. (Referring to his earlier decision in Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2) ), where His Honour had said:
They [adjudicators appointed under the Act] are clothed with legal authority to make a binding determination for the purposes of the Act which affect the statutory rights or obligations of persons or individuals who are claimants for progress payments under the Act or who are respondents to such claims.
His Honour concluded, at paragraphs 17-19:
As such they are amendable to certioriari. However, an adjudicator appointed under the Act does not constitute an inferior court within the court hierarchy…..
As observed in Craig, an adjudicator is therefore exposed to fall into jurisdictional error in a broader range of circumstances than a court.
In the present case, I do not consider that the exception provided by s 7(2)(b) of the Act was intended to confer on an adjudicator the power to decide jurisdiction founded on questions of law or mixed questions of law and fact, which includes the power to decide the question wrongly, without attracting prerogative relief.
Accordingly, the adjudicator’s decision in this respect was/is open to certiorari. His Honour then went on to conclude that the Director was not “in the business of building residences” within the meaning of s 7(2)(b) of the Act, and for this reason the proviso did not operate to exempt the Construction Contract from the operation of the Act. In this respect, the adjudicator erred, and certiorari could be issued.
2. As to the adjudicator’s determination that the Superintendent’s Representative lacked authority to issue payment schedules, His Honour concluded that the purpose of the letter containing the Director’s delegation of authority (relied on by builder as not giving that authority, and accepted by the adjudicator) was to nominate a Superintendent’s Representative for the purposes of the Construction Contract, not the Act, it did not purport to limit the Director’s delegation of authority to the matters set out, nor was it evidence that the architect did not have authority to issue a payment schedule under the Act. In this respect, the adjudicator erred, and certiorari could be issued.
3. The Adjudicator also found that the payment schedule was invalid, because it was not in any prescribed form. Section 15(2)(d) of the Act provides that a payment schedule “must be in the relevant prescribed form (if any)”, however, there are no forms for payment schedules prescribed by regulation. The Adjudicator fell into further error on the face of the record, and on this ground certiorari should also issue.
4. In failing to take into account the payment schedule and the Director’s submissions founded upon it, as required by s 23(2)(d), the Adjudicator fell into further error on the face of the record, and certiorari should issue on this ground.
5. Further, in failing to take into account the payment schedule and the Director’s submissions founded upon it, the Adjudicator did not afford procedural fairness to the Director. This amounted a substantial denial of the measure of procedural fairness required under the Act. On this ground too, an order in the nature of certiorari should be made.
His Honour then considered jurisdictional error, discussed by the High Court in Craig v South Australia, and more recently in Kirk v Industrial Court (NSW). His Honour concluded that the authority of the Supreme Court to quash an adjudication determination where jurisdictional error has occurred has been reinforced by Kirk.
His Honour quashed the adjudication determination (and made the declaration sought by the Director to the effect that the Director is not in the business of building residences within the meaning of s 7(2)(b) of the Act).
In Ipex ITG Pty Ltd (in liq) v State of Victoria  VSC 480, the Supreme Court (Sifiris J) was considering a claim by an unsuccessful tenderer that the Victorian government had breached its contractual duty in relation to the evaluation of tenders for the Parleynet project in 2003. His Honour reviewed the authorities and concluded:
1. Each tender must be considered on its own facts, including the tender and/or related documents, and the relevant context and circumstances, to determine whether there is any intention to create an immediately binding contract as to process.
2. The courts have been more inclined towards finding a contract had been made in relation to the “tender process” where a timeline and detailed process, including evaluation criteria, are set out in the tender documents in a way consistent with such a promissory obligation to follow that timeline and process.
3. In this instance, the RFT was intended to be a legally binding contract as to process, including detailed evaluation criteria , rather than simply a document that provided relevant information. The RFT contained detailed evaluation criteria that Parliament said “will” or “must” be applied, suggesting a “commitment, promissory in nature, to abide by a process particularly in relation to the evaluation of tenders”.
His Honour concluded that, in this case, there had been no breach of that tender process contract.