Judges in construction disputes are increasingly relying upon their ability to appoint a special referee; for example, in Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd  VSC 246 Justice Riordan of the Victorian Supreme Court accepted a referee's report, subject to some significant overriding comments on the ability of parties to use time-bars to contract out of the Australian Consumer Law.
In Harris v Morabito Holdings  NSWSC 912, the owners of a residential development claimed against the builder for defective works, and the builder argued that it was not liable for defects rectification. The matter was referred to a special referee, who reported to the NSW Supreme Court that the builder should pay $328,000 to the owners. The builder argued for the acceptance of the special referee's report. The owners argued against the adoption of the report by the Court.
Justice McDougall held that the discretion to accept, vary or reject a special referee's report must be exercised judicially. Broadly, parties will not to give a fresh hearing on the merits of the case and disputed findings of facts, but courts will consider afresh disputes on questions of law. In short, as stated in the judgment, "the right to be heard does not involve the right to be heard twice".
The owners argued that the contract to construct a luxury waterside property meant that the standard of workmanship was higher than for normal residential projects. The special referee rejected this contention, and based his report on a standard of workmanship derived from the contract documents, which did not refer to a higher standard than ordinarily applied. Justice McDougall agreed with the special referee's legal findings; to hold otherwise would be contrary to the objective approach to construing contracts, and would cause the certainty provided by the statutory warranties regime (incorporated into the contract) to evaporate.
Finally, special referees are bound to afford natural justice, but not by the rules of evidence. They may inform themselves as they see fit. In this case, the special referee undertook a site inspection and based some of his findings on that inspection. The fact that the inspection was conducted in conjunction with experts engaged by both parties meant that both parties were on notice of the issues identified during the inspection and that was considered sufficient natural justice in the circumstances of this case.