A survey report from an arbitration case was not admissible before the District Court

The contractor requested to submit a survey report in a case about a floor which was partly constructed by the subcontractor. The owner sued the contractor at the Court of Arbitration because the floor had defects.

The contractor had engaged a subcontractor to construct the floor and this subcontractor appointed another subcontractor in relation to part of the flooring. The problem was that no arbitration clause had been agreed between the two subcontractors and therefore the contractor could not bring the last subcontractor into the arbitration case. Therefore, the contractor was compelled to sue this subcontractor at the District Court.

In the District Court, the contractor requested to submit the survey report from the arbitration case. The contractor emphasized that the survey report concerned the floor which the subcontractor had constructed and that the floor had not changed since the arbitration case.

The subcontractor was of the opinion that a new survey report had to be made because he was not a party to the arbitration case and because the survey report had not been drafted until after the case at the District Court had been filed.

High Court: The survey report could not be submitted in the District Court case

The High Court agreed with the subcontractor.

It was emphasized in the judgment that the survey report was one-sided, because it had been obtained by the contractor in a case where the subcontractor was not a party. The High Court also remarked that the survey report was obtained after the case against the subcontractor had been filed and that the subcontractor had informed the contractor that he was not a party to the arbitration case and therefore not the survey.

For that reason, the contractor could not submit the survey report in the case against the subcontractor.

IUNO’s opinion

The judgment illustrates that a survey report from a case between two parties can not necessarily be submitted in a case against a third party. This applies, even where the survey report concerns the same issue and where the third party has participated in the survey.

It is important that arbitration clauses are agreed in every contract and subcontract regarding a construction project. In this case the subcontractor could not be brought into the arbitration case because General Conditions for Consulting Services - ABR 89 had not been agreed between the two subcontractors.

[Judgment of the High Court 11th October 2013, U.2014.291V]