Appeals: a use­ful lesson

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.