Australia: Appeals: a useful lesson

Last Updated: 3 December 2018
Article by Sean Greenwood

The decision of PND Civil Group Pty Ltd v Bastow Civil Constructions Pty Ltd [2017] NSWCA 159 highlights the difficulty of raising new issues on appeal, in so far as a party will (generally) be bound by the way in which it conducted its case at first instance.

The facts

Bastow Civil Constructions Pty Ltd (Bastow) contracted with Ausgrid to undertake work that involved constructing trenches in public roads owned by Gosford City Council (Council), installing cable ducts in those trenches and backfilling and sealing trenches. Bastow subcontracted some of that work to PND Civil Group Pty Ltd (PND).

Bastow claimed that PND's work was defective and sued it in the District Court of New South Wales seeking damages.

On the first day of the trial a settlement agreement was reached between the parties pursuant to which PND undertook to rectify the works in accordance with a report that had been prepared by Bastow's geotechnical expert. PND was required to commence the rectification work within 3 months of reaching agreement with the Council.

The settlement agreement also stipulated that if the Council refused to permit PND to carry out the rectification works then the parties were to attend a private mediation.

PND thereafter refused to perform the rectification work and Bastow was granted leave to amend its claim to add a claim for damages for breach of the settlement agreement by PND.

PND denied the allegation of breach of the settlement agreement. It pleaded in its defence that Bastow had rejected PND's endeavour to have the matter referred to mediation and was in breach of the settlement agreement itself.

The matter was relisted and the hearing proceeded before the primary judge who upheld Bastow's primary claim for defective building work and awarded damages in an amount exceeding $250,000.

Appeal

PND appealed to the New South Wales Court of Appeal.

PND's primary ground of appeal was that the trial judge erred in finding that Bastow was entitled to damages pursuant to an alleged breach of the subcontract between PND and Bastow. This was said to be on the basis that settlement agreement, on its proper construction, operated as an ​"accord and satisfaction".

In short, an accord and satisfaction occurs where there is an immediate and enforceable settlement agreement under which the plaintiff agrees to take the defendant's new promise in substitution for the existing claim. If so, the original cause of action is extinguished and cannot be sued upon (by the plaintiff).

On that basis, PND submitted to the Court of Appeal that any liability that it may have had under the subcontract was extinguished, and there was substituted for that liability its obligations under the settlement agreement entered into with Bastow.

The problem for PND was that it has not pleaded (nor even argued in submissions) the accord and satisfaction point before the trial judge. In those circumstances, Bastow submitted that PND should be held to its pleaded case on appeal.

The Court of Appeal agreed with Bastow. In that regard, PND was not permitted to rely on the accord and satisfaction point before the Court of Appeal and, it followed, that ground was not sustained.

PND's appeal was otherwise dismissed.

Summary

It can be seen that parties need to make sure that they put all relevant arguments before the trial judge or magistrate as the case may be because, as this case shows, parties will often not get the opportunity to raise new points on appeal. As was explained by the High Court of Australia in the decision of Metwally v University of Wollongong [1985] HCA 28:

It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.

For further information please contact:

Sean Greenwood, Associate
Phone: + 61 2 9233 5544
Email: stg@swaab.com.au

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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