711 Hogben Pty Ltd v Tadros; Tadros v 711 Hogben Pty Ltd

Supreme Court of NSW|2016-11-16|Before: Beech-Jones J

Solicitors: OneGroup Legal Pty Ltd (Plaintiff/Cross-Defendants) Harrington Maguire & O'Brien (First to Third Defendants/Cross-Claimants) File Number(s): 2015/330101

Judgment

HIS HONOUR: The plaintiff in these proceedings, 711 Hogben Pty Ltd (the "Landlord"), is the owner of commercial premises in Kogarah. On or about 11 April 2014, the Landlord and the first and second defendants, Mr Anthony Tadros and Ms Sharon Tadros (the "Tenant"), entered into a Deed of Agreement for Lease (the "Deed") concerning levels one and two of those premises. The third defendant, George Tadros, was a guarantor of the obligations of the Tenant under the Deed. The Tenant intended to use levels one and two as a childcare centre.
In the circumstances described below, the Tenant was unable to use the premises the subject of the Deed as a childcare centre because a dispute broke out between the parties about the Commencing Date of the proposed Lease and an alleged failure by the Landlord to complete certain "Landlord's Works".

The Deed

The primary obligation imposed on the Landlord was set out in clause 10.1 of the Deed. It provided that, subject to the provisions of the Deed, "on and from the Commencing Date, the Landlord agrees to grant and the Tenant agrees to accept, the Lease of the Premises". A handwritten amendment to clause 10.3(a) obliged the Tenant to deliver to the Landlord a Lease executed by the Tenant and the Guarantor on the "Handover Date". A draft lease was annexed to the Deed.
Clause 1.1 of the Deed defined "the Premises" to mean the premises described in Item 6 of the Reference Schedule. Item 6 of the Reference Schedule relevantly defined the "Premises" as being certain lots "identified in the strata plan annexed hereto and marked "A" being the strata subdivision of lot XXX in the draft stratum plan annexed hereto and marked "B" and known as XXX Hogben Street, Kogarah, NSW 2217 having an area of approximately 800m2".
As suggested by this definition, Annexure A to the Deed was a draft strata plan and Annexure B was a draft stratum plan. An annotation to Annexure A, stated that "this plan has been compiled from architectural plans supplied by [name of architects] date 17/12/2013." The architectural plans referred to were tendered at the hearing in this Court. [1] Those architectural plans apparently depict the construction of a floor to ceiling wall in the so-called outdoor area in accordance with that which was in fact constructed by the Landlord. The architectural plans were not provided to Mr Bluth.
Clause 1.1 of the Deed defined the "Commencing Date" to mean the date referred to in Item 11 of the Reference Schedule, which in turn defined it as the earlier of the "Opening Date" or the date the Tenant began trading. The "Opening Date" was defined as being the later of the date the Landlord obtained an occupation certificate in accordance with s 109C of the Environmental Planning and Assessment Act 1979 (NSW) with respect to the Premises or the end of the "Fitting Out Period". The "Fitting Out Period" was defined in clause 1 to mean "the period set out in Item 8 of the Reference Schedule", being twenty weeks, "which period commences on the Handover Date and expires at the end of the Fitting Out Period".
The "Handover Date" was defined in clause 1.1 of the Deed as meaning: "… the date the Landlord's Works will be sufficiently completed (in the absolute and sole opinion of the Landlord) to allow the commencement of the Tenant's fitout of the Premises, an estimate of which is set out in Item 9 of the Reference Schedule." The estimate set out in Item 9 of the Reference Schedule was 30 April 2014.
The phrase "Landlord's Works" was defined in clause 1.1 of the Deed as meaning: "…the building work to be carried out by the Landlord to build the Premises including shop front, walls, concrete slab ceiling and floor, external window frames and window panels, entry door and verandah door(s), waterproofing to all wet areas, electrical power board to each floor, standard gas pipe to each floor of the Premises, and hot and cold water outlet to each floor of the Premises and numbering or labelling of car spaces." (emphasis added)
At this point it should be noted that the necessity for the Landlord to undertake the "Landlord's Works" was part of its obligation to make available the "Premises" (as defined) for lease pursuant to clause 10.1. To facilitate this occurring in a timely manner, clause 3.1 imposed an obligation on the Landlord to "use its reasonable endeavours to complete the Landlord's Works by the Handover Date". Clause 3.2 enabled the Landlord to amend the Landlord's Works in certain circumstances that are irrelevant. Clause 3.3 provided that the Landlord may make other alterations to parts of the Premises or buildings but only if it obtained the statutory approvals, the position, size and shape of the Premises remained substantially unaltered and the alterations did not materially or substantially affect the Tenant's use of the Premises. Clause 3.4 provided: "The Tenant must not make any claim for compensation, rescind or terminate this Deed in respect of any amendment to the Landlord's Works referred to under clauses 3.2 and 3.3. Clauses 3.2, 3.3 and 3.4 do not merge on completion of this Deed or after the Commencing Date."
Further, clause 4.1 provided that the Handover Date may commence "notwithstanding that minor items of the Landlord's Works are yet to be completed provided they can be carried out and completed at the same time as the Tenant's Works without material interference to the Tenant".
Clause 5 of the Deed makes provision for the completion of "Tenant's Works". Subclause 5.1(a) required the Tenant to submit for the Landlord's approval "(i) the Tenant's Fitout Plans; (ii) the Tenant's Approvals; and (iii) a certificate of currency …". The "Tenant's Fitout Plans" meant the plans, specifications and schedule of finishes in connection with the Tenant's Works.
Clause 14 dealt with dispute resolution. It provided: "14. Disputes 14.1 A party may not begin legal proceedings in connection with a dispute under this Deed unless that dispute has first been decided by a person appointed under this clause. 14.2 If there is a dispute under this Deed, either party may give the other a notice requiring the dispute to be settled under this clause. 14.3 The dispute must be referred to a person agreed on by the parties but if the parties do not agree within seven (7) days after a notice under clause 14.2 is given, then to a person appropriately qualified to deal with the dispute, appointed at the request of either party by the president of the Law Society of New South Wales. 14.4 The person acts as an expert and not as an arbitrator and must give a written decision including reasons. Unless there is manifest error, that person's decision is final and binding. 14.5 The person may enquire into the dispute as that person thinks fit including hearing representations and taking advice from people that person considers appropriate. 14.6 The parties may make submissions to and must give the person every assistance that person requires, including providing copies of relevant documents. 14.7 Each party must pay its own costs in connection with the dispute. The costs of referring the dispute to the person and that person's costs and the costs of the enquiries must be shared equally.
At this point I note two matters. First, the written submissions filed on behalf of the Landlord in these proceedings repeatedly contended that Mr Bluth fundamentally misconstrued the nature of the bargain that had been struck in the Deed as being one in which the Landlord agreed to provide the "Premises" in the form of a "child care centre when they were, in truth, [agreeing to provide] a shell of Levels 1 and 2 for later fit out by the Tenant as a child care centre". The first part of this contention mischaracterises the Determination. The latter part of this contention rests upon the premise, contrary to the finding of Mr Bluth, that the definition of the "Landlord's Works" did not incorporate Plan CD1231 noted above. Instead, the Landlord sought to construe the definition of "Landlord's Works" by reference to the "Premises" and submitted that it ultimately incorporates the architectural plans noted above (via the annotation to the draft strata plan attached to the Deed - see [9]). [2]
As I will explain, the difficulty with that contention is that Mr Bluth found to the contrary and in 711 Hogben v Tadros No 1 Stevenson J found that Mr Bluth's determination was made "in accordance with the Deed" and was not affected by "manifest error". As I will explain, the Landlord is not free to re-litigate matters already decided by his Honour. The contention suffers from the further difficulty that the architectural plans were not provided to Mr Bluth and the annotation to annexure A does not incorporate the architectural plans but only refers to them as the source for the compilation of the strata plan.
Second, clause 14.4 had the effect that unless "there is manifest error" the Determination was "final and binding". In 711 Hogben v Tadros No 1 (at [50]), Stevenson J succinctly stated the effect of various cases concerning the meaning of "manifest error" in a contractual setting as follows: " …an 'oversight [or] blunder so obvious as to admit no difference of opinion' R Banks, Lindley and Banks on Partnership, (19th ed 2013, Sweet & Maxwell) at 10-73, cited with approval by Peter Smith J in Walton Homes Ltd v Staffordshire County Council [2013] EWHC 2554 (Ch) or a conclusion 'obviously wrong' and 'apparent to the judge upon a mere perusal of the reasoned award itself without the benefit of adversarial argument' (Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724 at 742H per Lord Diplock)."
To this it can be added that in Natoli v Walker (1994) 217 ALR 201 ("Natoli") at 215, Kirby P held that a manifest error is one that "requires swift and easy persuasion and rapid recognition of the suggested error". In Veba Oil Supply & Trading Gmbh v Petrotrade Inc [2001] EWCA Civ 1832, Simon Brown LJ added a requirement of materiality such that his Honour described manifest errors as "oversights and blunders so obvious and obviously capable of affecting the determination as to admit of no difference of opinion" (at [33]).
The submissions of both parties adopted the above approach to the meaning of manifest error. Neither of them contended that anything stated in Westport Insurance Corporation & Ors v Gordian Runoff Ltd [2011] HCA 37; (2011) 281 ALR 593 concerning the meaning of "manifest error of law on the face of record" in s 38(5)(a) of the Commercial Arbitration Act 1984 (NSW) (which disapproved of Natoli at [45]), affected the meaning of "manifest error" when used in a contract such as in this case.

The Dispute and the Determination

At the hearing of this aspect of the proceedings there was tendered the correspondence that occurred in the lead-up to, and during the course of, the determination by Mr Bluth. As the Landlord contends that the Determination is affected by manifest error in the form of a denial of procedural fairness, it is necessary to describe that correspondence in some detail.
On or about 18 February 2015, the solicitors for the Landlord wrote to the Tenant's solicitors asserting that the "Commencing Date" for the purpose of the Deed was 12 February 2015. The letter was signed by Ms Maggie Elkington. The principal of the solicitors acting for the Landlord, Mr Ayache, swore an affidavit in these proceedings explaining that Ms Elkington was a conveyancing clerk. Her title as such was not stated on the correspondence she signed.
On 16 March 2015, the Tenant's solicitor, Mr O'Brien replied. He sent his response to the email address given by Ms Elkington in her letter. He raised a number of issues on behalf of the Tenant, the most significant of which was said to be a problem with the external walls of the outdoor area on the first floor. The letter contended that the plans which had been provided to the Landlord in 2009 (which became Plan CD1231), had described the external walls of that area as only being 900mm high solid wall and 1200mm high selective glazing which left a space of 700mm for ventilation. Hence the description "outdoor area". Mr O'Brien's letter complained that, instead, the Landlord had constructed floor-to-ceiling glass such that the area became uncomfortably hot and there was an appreciable risk that the Premises would not be licensed to operate as a childcare centre by the Department of Community Services ("DOCS"). Mr O'Brien invited the undertaking of rectification work to accord with the plans referred to.
On 20 March 2015, Ms Elkington signed a letter responding in which, inter alia, she denied any wrongdoing on the part of her client. The only email address provided in the letter was Ms Elkington's.
The Tenant's solicitors wrote again to "Michael Ayache/Maggie Elkington" on 24 March 2015, 14 April 2015 and 17 April 2015. The first two of these letters were sent by mail and by email to Ms Elkington's email address. The last letter of 17 April 2015 was sent by email only to Ms Elkington's email address.
On 24 April 2015, Mr O'Brien wrote to Mr Ayache in a letter that was sent by email only to Ms Elkington's address. The letter stated that, pursuant to clause 14.2 of the Deed, notification was being given to their client that the Tenant required the dispute to be referred to an arbitrator. The letter identified the subject‑matter of the dispute as being the Landlord's alteration of the configuration of the level 1 outdoor area without reference to the Tenant, and its alleged failure to provide reasonable access. The letter identified two persons as suitable arbitrators.
In an affidavit sworn in these proceedings, Mr Ayache stated that, prior to the referral of the matter to Mr Bluth for determination, the "day to day carriage" of the documentation of the lease of the Premises had been in the hands of Ms Elkington. [3] He said that when the matter became a litigated dispute by the referral of the matter, he assumed day-to-day carriage as he considered the matter to be beyond Ms Elkington's legal qualifications and skills.
Mr Ayache also stated that he did not become aware of "the tenant's issues" and specifically did not receive the letter of 24 April 2015 because Ms Elkington did not refer it to him. In that respect I note two matters. First, Ms Elkington did not provide an affidavit. No explanation has been given as to why she did not take the simple step of forwarding such correspondence to Mr Ayache. Second, aspects of the submissions and the contents of Mr Ayache's affidavit appear to suggest that somehow it was the responsibility of Mr O'Brien for Mr Ayache not becoming aware of the correspondence. If that is the suggestion, it is without foundation. Mr O'Brien swore an affidavit explaining the reasons why emails were sent to Ms Elkington's email address, namely, that Mr Ayache's personal email address had not appeared on the correspondence and that Ms Elkington's position as a conveyancing clerk had not been mentioned in the earlier correspondence. I accept that evidence.
On 4 May 2015, Mr O'Brien wrote to the President of the Law Society enclosing a copy of the Deed and the letter dated 24 April 2015, noting that no reply had been received and requesting the appointment of an appropriately qualified person under clause 14.3 of the Deed. On the same day, Mr O'Brien sent a letter to Mr Ayache at the email address of Ms Elkington which enclosed a copy of the letter to the President of the Law Society but also stated that it was "absent enclosures", ie it did not include the Deed and the letter of 24 April 2015.
On 21 May 2015, the Law Society wrote to Mr Ayache advising that the President had appointed Mr Bluth as the expert to determine the issues between the parties. On 28 May 2015, Mr Bluth wrote to Mr O'Brien referring to his appointment and stating that he had received the documentation that had been sent to the President, other than the letter of 24 April 2015. On the same day, Mr Bluth wrote to Mr Ayache and enclosed a copy of his letter to Mr O'Brien of the same date and requested a "short summary of the dispute". The next day, Mr O'Brien sent Mr Bluth a copy of the letter of 24 April 2015.
On 2 June 2015, Mr Bluth sent an email to both Mr Ayache and Mr O'Brien making arrangements for the payment of his fees. His letter also stated that "[s]ubmissions are to be made within 14 days of this letter" and that "[u]pon receipt of the said submissions, if I have any further queries, I will communicate those with you".
On 4 June 2015, Mr Ayache wrote to Mr Bluth stating that, in his view, the dispute was whether the Interim Occupation Certificate dated 12 February 2015 satisfied the requirements of paragraph (a) of the definition of Opening Date in the Deed.
On 10 June 2015, Mr O'Brien wrote to Mr Bluth referring to Mr Ayache's letter of 4 June 2015. He contended that letter only identified one aspect of the dispute and the other issues were those identified in his letter of 24 April 2015. Mr O'Brien sought to copy Mr Ayache in on this letter by sending it to an email address. However, it is agreed that the email address he listed for Mr Ayache omitted one letter.
On 17 June 2015, Mr O'Brien wrote to Mr Bluth enclosing his submissions. He also enclosed a statement of George Tadros, and various documents including a Heads of Agreement dated 8 September 2008, a Development Application which was accompanied by Plan CD1231, the Deed and various items of correspondence. On the same day, Mr O'Brien sent to Ms Elkington's email address a letter which enclosed the letter to Mr Bluth of the same date, the Tenant's submissions, the statement of Mr Tadros and stated that "we assume that you have copies of the balance of the material which we have submitted to the expert", but added that if they sought that material it would be provided to them.
The Tenant's submissions were four pages in length and were apparently drafted by Counsel. The opening paragraph of the submissions stated that "the main issue is a failure by the Landlord to build the Premises in accordance with the agreement", but it added that certain minor issues concerning access were also in dispute but it was anticipated they could be resolved. The balance of the submissions addressed at length the issue to which I have already referred, namely, what was the nature of the Landlord's Works which were required to be undertaken by the Landlord to build the Premises.
The submissions sought various "orders ... to do justice to the Tenant", specifically: that the Landlord execute a lease in the form referred to in the Deed but "conditional on approval of the premises by DOCS for use as a child care centre"; that the parties use their best endeavours to have the Premises approved by DOCS; that in the event of approval by DOCS Mr Bluth should consider what amounts should be awarded as compensation; and in the event that there is no DOCS approval, the premises should be rectified.
In his statement, Mr George Tadros stated that in 2008 he conducted some negotiations with Mr Bill Panapoulos who later became a Director of the Landlord. He said that in 2008 he signed a Heads of Agreement in respect of the same premises as were the subject of the Deed which required him to provide the then Lessor, a different entity, "plans and specification of the fit‑out as well as the specific requirements of the lessee". Mr Tadros recounted how plans were prepared that ultimately resulted in Plan CD1231. He said he showed them to Peter Panapoulos in 2011, who agreed that they could be lodged with the Council. He stated that in December 2011 he met Peter Panapoulos and his wife who signed the plans and they were lodged as part of a Development Application and submitted to the Council. He said they were approved in February 2013.
Mr Tadros stated that in April 2015, after having gained access to the Premises, he noticed that floor-to-ceiling windows had been built in the outdoor area which was inconsistent with Plan CD1231. He said he complained to Bill Panapoulos and then to Peter Panapoulos who both told him "we'll sort it out".
On 18 June 2015, Mr O'Brien sent a letter addressed "Mr Ayache" to Ms Elkington's email address stating that their submissions had been served along with Mr Tadros' statement and complaining that nothing had been received. The next morning a solicitor employed by Mr Bluth, Ms Wong, emailed Mr Ayache at his email address noting that the submissions had not been received and requested that his submissions be sent as soon as possible. She stated that "otherwise Mr Bluth will consider the issues on the submissions made by COB 22 June 2015".
In his affidavit sworn 3 October 2016, Mr Ayache stated that the receipt of that email prompted him to make enquiries of Ms Elkington. He said that he learnt that she had received Mr O'Brien's email of 17 June 2015, enclosing the Tenant's submissions and the witness statement of Mr Tadros. He said he devoted Sunday, 21 June 2015 to drafting the submissions. He said that he noticed that the Tenant's submissions included submissions in respect of the dispute that the Landlord had not agreed to refer to the expert, specifically the allegation about unauthorised alterations. He said that the director of the Landlord from whom he took instructions, Bill Panapoulos, was not available to draft a response to the witness statement of Mr Tadros and that "accordingly that witness statement went unanswered".
Mr Ayache's submissions addressed in detail the contention that the Commencing Date of the Lease should be 12 February 2015. However in paragraphs 23 and 24 of his submissions, Mr Ayache also responded to the Tenant's submissions in relation to the orders that were sought. He contended that they involved an effective redrafting of the Deed "so as to provide a new method of ascertaining the Commencing Date". He otherwise complained that the approach of the Tenant "was to go behind the term of the Deed by looking to pre-Deed discussions". Enclosed with the submissions was an email exchange between Mr George Tadros and Mr Peter Panapoulos in which Mr Tadros had, in July 2014, agreed to treat 26 May 2014 as the "Handover Date" for the purposes of the Deed.
As noted, on 28 July 2015 Mr Bluth issued the Determination. It consisted of five pages. In those reasons Mr Bluth stated that the "main issues of dispute" were: [4] "(a) the commencing date of the Lease - the Lessor maintains it is 12 February 2015 because that was when the interim occupation certificate was issued. The Lessee contends that was not the date because the interim certificate on that date excluded part of levels 1 & 2 - being the childcare area; (b) the Lessee maintains that the Lessor did not construct the premises as per the plans agreed between the Lessor and the Lessee. The Lessor disputes this and states that this is not an issue that arises out of the AFL; and (c) minor issue regarding access (which the parties will deal with between themselves)."
In relation to the first issue, Mr Bluth found that the Commencing Date of the Lease was 18 May 2015.
In relation to the second issue, Mr Bluth noted the Tenant's contention that "the final fitout of the Premises departed from the plans agreed between the Lessor and Lessee" (ie CD 1231) and the Landlord's contention that the Tenants were "seek[ing] to go behind the terms of the [Deed] by referring to pre-contractual discussions". [5] Mr Bluth then posed the question whether the Tenant "can point to pre-contractual negotiations when talking about Plan CD 1231." Mr Bluth's answer to that question was summarised by Stevenson J in 711 Hogben v Tandros No 1 at [43] as follows: "Relevantly the Expert's reasoning was as follows: (1) As a matter of construction, he was entitled to have regard to 'the factual matrix known to the parties' and 'mutually known facts' to 'identify the meaning of a descriptive term'. The Expert referred to Prenn v Simmonds [1971] 1 WLR 1381 and Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337. The words the Expert quoted were from the judgment of Stephen, Jacobs and Mason JJ in DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, at 429, cited by Mason J in Codelfa at 351 (par 8.8). (2) The meaning of 'Landlords Works' was 'informed' by CD1231 because: (a) This was 'the only plan in existence between the [Landlord] and the [Tenants] at the time of entering the [Deed]'; and (b) The Landlord had 'signed off on Plan CD 1231 to be submitted to the Council' (par 8.8). (3) [T]o give the words 'the building works to be carried out by the Landlord' any meaning' the parties 'must have agreed' that the "actual 'Landlord's Works' are the works identified in the document signed by both of them" being the 'Development Approval [sic: Application] with the Plan CD1231 annexed and submitted to the Council' (par 8.10). And; (4) The Landlords Works are 'defined by Plan CD1231 being the only agreed plan between the parties relating to the premises' (par 8.11)."
Having reached that conclusion, Mr Bluth found: 8.12 Therefore, the Lessor is bound by clause 3 and can only make other alterations to parts of the Premises or Building "…but only if the alterations do not materially or substantially affect the Tenant's permitted use of the Premises". As the end result was that the alterations reduced ventilation and prohibited the Lessee from obtaining approval from DOCS to operate the Premises until the ventilation issue was fixed (Council would not issue an occupancy certificate because the Premises had not been built according to the plans that was initially submitted to it), this substantially affected the Lessee's permitted use of the Premises. 8.13 Consequently, the Lessor was in breach of the AFL."

The Proceedings

On 10 November 2015, the Landlord filed a Commercial List Summons which sought various orders to the effect that Mr Bluth's Determination be set aside and reconsidered. The accompanying Commercial List Statement pleaded various "procedural errors" as well as "errors of fact, or of mixed fact and law" [6] affecting the Determination. Paragraph 59 of the Commercial List Statement pleaded: "Accordingly, the Determination is judicially reviewable by the Court for the manifest errors which are either alleged in this Commercial List Statement to have been committed by the Expert or which otherwise appear from the terms of the findings." (emphasis added)
In the meantime, on 2 October 2015, the three defendants to these proceedings commenced proceedings in the general list of the Equity Division against the Landlord and Bill and Peter Panapoulos. They sought various forms of declaratory relief, the effect of which was to give at least some effect to the Determination. The parties are in dispute as to whether the relief sought and claims made concern "disputes under the Deed" that must be referred for determination pursuant to clause 14.1 of the Deed.
On 20 November 2015, those proceedings were transferred into the Commercial List. The Statement of Claim was ordered to take effect as a cross-claim in these proceedings.
The proceedings came before Hammerschlag J in the Commercial List on 11 December 2015. The Landlord formulated various separate questions that it wished to have the Court determine. His Honour declined to pose questions in the terms proposed by the Landlord, but instead, made the following order: [7] "…there be heard before all other issues in the proceedings all issues arising on the plaintiff's Commercial List Summons and Statement that is in substance, whether the expert determination of Dennis Bluth is an expert determination in accordance with the Deed of Agreement for Lease and whether any part [or all] of the defendant's cross-claim should be stayed because of clause 14 of that Agreement." (emphasis added)
His Honour then fixed those issues for hearing on 18 May 2016 on an estimate of two days. The reason why his Honour posed the questions in the above terms was, or should have been, obvious to the parties. A review of the transcript of 11 December 2015 reveals that, instead of seeking to pose questions that isolated specific challenges to the Determination, his Honour considered the best approach was to "hear the summons before I hear [the] cross-claim". [8] Hence the first part of the above order makes it completely clear that what was being heard was "all issues arising on the plaintiff's Commercial List Summons", that is, all complaints made on behalf of the Landlord concerning the expert determination. Further, his Honour included the issue as to whether any part or all of the defendants' cross-claim should be stayed because, in argument, Counsel for the Landlord contended that parts of the cross-claim sought the determination of issues which under the Deed were exclusively a matter for an expert to determine pursuant to clause 14. [9]
The proceedings were listed for hearing in respect of the separate question before Stevenson J on 18 May 2016. On 1 June 2016, his Honour published reasons (711 Hogben v Tadros No 1).
At [6] of 711 Hogben v Tadros No 1, Stevenson J identified the separate question that had been ordered by Hammerschlag J to be heard separately before other issues as: "[W]hether the Determination of the Expert is an expert determination in accordance with the Deed".
His Honour responded (at [7] to [8]): "In my opinion, the answer to the separate question is "yes". It is also my opinion that the Determination is not affected by 'manifest error'."
His Honour then set out the background to the dispute and then recorded that Counsel for the Landlord had submitted that Mr Bluth had "misapprehended the nature of the 'Premises' under the Deed, had misconstrued the Deed and had thereby acted 'wholly outside the scope of [his] contractual authority'" (at [38]) and thus "the Determination was not a determination for the purposes of the Deed" (at [39]).
Stevenson J rejected that contention, holding that the expert had applied "well‑established principles and concluded that the parties must have intended that descriptive term 'the building works to be carried out by the Landlord'" in the definition of "Landlord's Works" to mean "building works carried out in accordance with CD1231" (at [47]). His Honour continued: "48 In so concluding, the Expert was not acting 'outside the scope of [his] contractual authority'. He was doing exactly what was required of him under the Deed. 49 The Expert's conclusion was one that was open to him. Apart from the definition of 'Landlord's Works' itself, the terms of the Deed were silent as to what the parties were referring to when they spoke of the 'building work' to be carried out by the Landlord. The draft strata plan annexed to the Deed cast no light on that question. 50 The conclusion most certainly did not bespeak 'manifest error' on the Expert's part, namely an 'oversight [or] blunder so obvious as to admit no difference of opinion' R Banks, Lindley and Banks on Partnership, (19th ed 2013, Sweet & Maxwell) at 10-73, cited with approval by Peter Smith J in Walton Homes Ltd v Staffordshire County Council [2013] EWHC 2554 (Ch) or a conclusion 'obviously wrong' and 'apparent to the judge upon a mere perusal of the reasoned award itself without the benefit of adversarial argument' (Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724 at 742H per Lord Diplock). 51 Having expressed this opinion, I will invite counsel to confer and agree on what should now happen in the proceedings." (emphasis added)
The Landlord applied for leave to appeal from Stevenson J's determination. On 1 September 2016, leave was refused (711 Hogben Pty Ltd v Tadros [2016] NSWCA 244; ("711 Hogben v Tadros No 2")). In refusing leave the Court of Appeal noted the width of the order made by Hammerschlag J on 11 December 2015 (at [10]) and noted that the proceedings were still before the Commercial List judge for determination of the question of whether the cross-claim should be stayed.
Apparently, grounds 1 to 6 of the proposed appeal identified alleged error on the part of Stevenson J in the construction of the Deed. The Court of Appeal held that it would only be a very clear case of error that would warrant the grant of leave to appeal at an interlocutory stage and that no such clear case was made out. Proposed ground of appeal 7 alleged error by Stevenson J in "proceeding to answer, as obiter, a further question, namely, whether there was 'manifest error' within the meaning of cl 14" (at [12]). In respect of that, Leeming JA stated at [17]: "In relation to proposed Ground 7, it is far from clear, having regard to what in fact was ordered for separate determination, that there could be any error in the primary judge saying anything about 'manifest error'. In reply, this Court was taken to some passages of the transcript where it appeared that the case advanced excluded claims of manifest error, although, on one view at least, it is not clear that these points could be separated in the way in which 711 Hogben contends." (emphasis added)
The matter came before Stevenson J on 2 September 2016. Counsel for the Landlord applied for his Honour to disqualify himself because he had expressed opinions about whether a manifest error was made in the course of the expert's determination. His Honour did not accept that there was any relevant apprehension of bias, but ultimately determined that to "avoid any suggestion of predisposition of mind" it would be better to have another judge deal with the "balance of the plaintiff's proceedings" (711 Hogben Pty Ltd v Tadros; Tadros v 711 Hogben Pty Ltd [2016] NSWSC 1238 at [12]; "711 Hogben v Tadros No 3").
In that judgment, his Honour extracted a passage from an exchange that occurred at the hearing before his Honour on 18 May 2015, which revealed that for some reason Counsel for the Landlord felt inhibited by the form of the question posed by Hammerschlag J from arguing that the expert determination was affected by a "manifest error". The passage of the transcript extracted reveals that his Honour did not accept that limitation and it was strongly resisted by Counsel for the Tenant and George Tadros.
In rejecting the suggestion of apprehended bias, Stevenson J stated as follows (711 Hogben v Tadros No 3 at [10] to [11]): "10 Mr Bevan submits that a reasonable bystander might concluded that I may have prejudged the question of 'manifest error' by reason of my remarks at [50] of my reasons and thus by Notice of Motion filed on 15 August 2016 seeks an order that I recuse myself from further involvement in the matter. 11 I certainly did not intend by my reasons to express any opinion about 'manifest error' otherwise than in relation to the question of 'landlords works'. I doubt that any reasonable reader of my reasons would come to a different conclusion." (emphasis added)
In light of the arguments advanced by Mr Bevan concerning the Determination it is necessary to address the status of Stevenson J's judgment in 711 Hogben v Tandros No 1.
In O'Toole v Charles David Pty Ltd [1991] HCA 14; 171 CLR 232 at 245, Mason CJ approved the following passage from the judgment of Diplock LJ in Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 (at 642): "Where the issue separately determined is not decisive of the suit, the judgment upon that issue is an interlocutory judgment and the suit continues. Yet I take it to be too clear to need citation of authority that the parties to the suit are bound by the determination of the issue. They cannot subsequently in the same suit advance argument or adduce further evidence directed to showing that the issue was wrongly determined. Their only remedy is by way of appeal from the interlocutory judgment and, where appropriate, an application to the appellate court to adduce further evidence ..." (emphasis added)
Relying on this passage, KR Handley in Spencer Bower and Handley, The Doctrine of Res Judicata (4th edition, 2009) at 5.28 stated that "[i]issue estoppels operate in later stages of the same suit whenever the trial is split".
The application of that principle to this matter is not straightforward. The question answered by Stevenson J in 711 Hogben v Tadros No 1 was that Mr Bluth's Determination was "an expert determination in accordance with the Deed". As noted, Counsel for the Landlord contended before Stevenson J that there was a distinction to be drawn between whether an expert determination was undertaken in "accordance with the Deed" on the one hand and whether it was affected by "manifest error" on the other, that the orders of Hammerschlag J made on 11 December 2015 precluded him from arguing before Stevenson J about the latter issue and that the judgment in 711 Hogben v Tadros No 1 only related to the former issue and had no bearing on the latter.
The second proposition, namely, that the orders of Hammerschlag J precluded the Landlord from arguing manifest error before Stevenson J, was clearly erroneous. The orders separated out for separate determination "all issues arising on the plaintiff's Commercial List Summons and Statement" and that clearly included complaints of "manifest error" (see [47] and [50]).
In relation to the first and third propositions, as noted, the Court of Appeal did not necessarily accept the distinction between finding that the Determination that was undertaken in "accordance with the Deed" and finding that it was affected by manifest error. As a matter of grammar it is hard to envisage how a Determination that is subject to a manifest error, and therefore not binding, could nevertheless be characterised as one undertaken "in accordance with the Deed". If the distinction was a false one then the effect of the answers given by Stevenson J would be that there is no remaining scope for any argument to be put that the Determination was affected by a manifest error. However, to adopt that approach would ignore the effect of the passage from 711 Hogben v Tadros No 3 at [11], set out above, which clarified the scope of the answer given by Stevenson J, namely, that it did not extend to determining whether there was any manifest error "otherwise than in relation to the question of landlord's works".
The end result is that I am obliged to treat 711 Hogben v Tadros No 1 as creating issue estoppels in respect of those matters that Stevenson J expressly found, which extends to the conclusion that there was no manifest error "in relation to the question of landlord's works", but not as creating issue estoppels in respect of any other matters now said to constitute a manifest error.

Allegations of Manifest Error

The written and oral submissions made on behalf of the Landlord identified three grounds said to constitute manifest error. It was accepted that they constituted the entirety of the matters sought to be raised and exhausted the matters in the Commercial List Summons and Statement that remained to be put. [10] Each ground will be addressed in turn.

Ground 1: Determining an issue that was notified or agreed upon as a result of a denial of procedural fairness

The manifest errors alleged under the heading of Ground 1 are best addressed by reference to the Landlord's outline of written submissions. The first part of those submissions identified two points relied on in relation to this ground as follows: "51. There are two complaints made by the plaintiff here. The first is that only one party ever referred the issue. It was not an issue referred by agreement to the Expert. This complaint is addressed in further detail later in these submissions under that heading. 52. The second is that, like the fundamentally erroneous approach to his resolution of the third issue addressed below, Mr Bluth had regard to matters that did not arise under the Deed in determining this second issue. Although the question raised by the issue arises 'under the Deed' - because it turns on the proper construction of the Deed - the issue must nonetheless first qualify as a "dispute under the Deed". 53. An issue cannot qualify as a 'dispute' if one of the parties - the plaintiff in this case - is not even aware of the existence of the dispute, or have it tried to resolve it themselves, when the other party - the defendants in this case - refers to the Expert for his expert determination and, in the result - the plaintiff in this case - simply does not address it in its submissions because that party is unaware of its determination." (emphasis added)
The various "issues" referred to in these passages are far from clear. As best as can be ascertained, the "issue" referred to in paragraph 51 and the "second issue" referred to in paragraph 52 is the second issue posed and resolved by Mr Bluth in [43] above, ie, the dispute over Landlord's Works. The "third issue" referred to in [52] is the third ground raised by the Landlord in this case, namely, whether the Determination was affected by manifest error because Mr Bluth supposedly took into account irrelevant material (see [103]).
The contentions raised in the above paragraphs of the written submissions were not addressed by Stevenson J in 711 Hogben v Tandros No 1. It follows from [69] that the Landlord is not precluded from raising them but I nevertheless reject them. I address below the significance, if any, of the circumstance that Mr Ayache was not personally aware that an issue about the Landlord's Works had been referred to Mr Bluth prior to reading Mr O'Brien's submissions. It suffices to state that only came about because of the inadequacies of communication in Mr Ayache's office. That said, it is the case that the Landlord and its solicitors did not take any step prior to Mr Bluth's appointment to signify their agreement to the referral to Mr Bluth of any dispute about the scope of the Landlord's Works. However, they did not need to. There is nothing in clause 14 of the Deed that suggests that a "dispute under this Deed" can only be referred with the agreement of both sides. To the contrary, clause 14.2 enables either party to give a notice requiring the dispute to be settled under the clause. That notice was given by Mr O'Brien on behalf of his clients on 24 April 2015, when he sent a letter of that date to Ms Elkington. The fact that Ms Elkington did not pass that letter on to Mr Ayache is irrelevant to this issue.
Otherwise, the balance of the above paragraphs from the Landlord's written submissions elide the distinction between a "dispute under this Deed' and the process of referral of the dispute to the Expert. There clearly was a "dispute under the Deed" about the scope of the Landlord's Works given the letters dated 16 March 2015 and 20 March 2015.
The next part of the written submissions under this ground take issue with the reasoning in the Determination resolving the second issue noted in [43]. [11] For example, they complain that Mr Bluth's "whole approach was flawed from start to finish because of his refusal at every stage to adhere to the express terms of the Deed and the only plans that the Deed ever incorporated (being annexures 'A' and 'B' to the Deed and the architectural plans which those plans in turn incorporated into the Deed in their express terms)". [12] Although it is not clear, it appears to be contended that because, on the proper construction of the Deed, Plan CD1231 was not part of the "Landlord's Works" then the Tenant's complaint about them did not constitute a "dispute under the Deed".
These contentions are flawed for two reasons. First, it suffices to create a dispute "under the Deed" if the Tenant asserted that the Deed required that the Landlord's Works be construed in accordance with Plan CD1231. Their submissions to Mr Bluth contended exactly that (see [36]). A dispute about what the Deed requires is a dispute "under the Deed".
Second, these contentions involve an attempt to re-litigate a matter expressly determined by Stevenson J, namely, that the Determination was undertaken "in accordance with the Deed" and that insofar as the expert determined that the Landlord's Works were constituted by Plan CD1231, there was no "manifest error". The impermissibility of this approach is illustrated when it is noted that in 711 Hogben v Tadros No 1 at [49] Stevenson J found that "[a]part from the definition of 'Landlord's Works' itself, the terms of the Deed were silent as to what the parties were referring to when they spoke of the 'building work' to be carried out by the Landlord" and "[t]he draft strata plan annexed to the Deed cast no light on that question." The effect of the Landlord's submissions is that that finding is wrong and this Court should find that the draft strata plan annexed to the Deed did "cast light" on the question of what constituted the Landlord's Works in that they supposedly incorporated the architectural plans.
I reject any attempt to re-litigate what was expressly decided by 711 Hogben v Tadros No 1. As previously stated, in any event the Landlord's architectural plans were not provided to Mr Bluth and the annotations to the strata plans attached to the Deed do not incorporate those plans.
Lastly, in relation to the first ground, the Landlord's written submissions contended that Mr Bluth failed to afford it procedural fairness in making the Determination. Both parties proceeded on the assumption that a denial of procedural fairness constitutes a "manifest error" for the purposes of clause 14.4 of the Deed. Without deciding it, I will assume that is the case. A complaint about a denial of procedural fairness was not addressed by Stevenson J in 711 Hogben v Tadros No 1 and it follows that the Landlord is not precluded from raising it.
The Landlord's written submissions in support of this issue recount the course of events from the commencement of the dispute between the solicitors for the parties and concluding with the Determination. [13] In doing so, they refer to the email from Ms Wong which revised the deadline for Mr Ayache's submission to 22 June 2015. They contend that "no permission to lodge any evidence was given" and "Mr Ayache believed that he was restricted to lodgement of submissions and that there would be no reliance on witness statements by either party". [14] The submissions also contend that Mr Bluth had "actual (or constructive) notice that the parties were at cross‑purposes about the issues in dispute which he was required to determine" in that Mr Ayache's letter of 4 June 2015 only referred to the dispute about the Commencing Date and that Mr Ayache's submissions did not engage with the totality of Mr O'Brien's submissions, or his reliance on the statement of George Tadros. [15]
The Landlord's written submissions further contended that Mr Bluth failed to accord it procedural fairness by directing an exchange of material and failing to grant either party an opportunity to object or reply to that material. [16] This was said to be contrary to clauses 14.5 and 14.6 of the Deed. [17] Otherwise, the submissions also relied on parts of affidavits sworn by Mr Ayache, [18] which contained various assertions including that his submissions were based on what he understood was meant by matters "arising under the Deed" in clause 14.1, [19] that Mr Bluth did not make "any further enquiries" of him in relation to the material provided by Mr O'Brien that (supposedly) "went beyond the scope of the Deed" [20] and that he was not given notice by Mr Bluth that his "submissions, would be ignored, would not be accepted or would be rejected". [21]
There was no breach of procedural fairness on the part of Mr Bluth. He was obliged to afford the parties a reasonable opportunity to present their cases and respond to those presented by the other party (Kioa v West (1985) 159 CLR 550 at 582 per Mason J; "Kioa").
Just as the statutory context must be considered with public bodies in determining the content of the obligation to afford procedural fairness (Mobil Oil Australia Pty Ltd v FCT (1963) 113 CLR 475 at 503-504 per Kitto J), the contractual and commercial context in which an expert determines a dispute is critical to determining the content of any corresponding obligation that applies to them. In this case, Mr Bluth was dealing with commercial parties represented by solicitors. Mr Bluth's letter of 2 June 2015 directed an exchange of submissions but indicated that further communication could occur. Mr Bluth was entitled to assume that, if any party considered that something was raised by the other party that they had not had the opportunity to address, then they would have said so.
In fact, Mr Bluth received submissions from Mr Ayache that were prepared after he had received Mr O'Brien's submissions and which responded to them. At no stage, including after he received Mr O'Brien's submissions, did Mr Ayache advise Mr Bluth that Ms Elkington had not passed on material received by her, that he felt in some way limited in responding to Mr O'Brien's submissions, that he wished to provide evidence in response to Mr Tadros' statement but that Mr Panapoulos was unavailable to provide a statement, that due to his understanding of the scope of clause 14 of the Deed he was refraining from providing an even more expansive response, or that he simply needed more time. In circumstances where none of those matters were raised with Mr Bluth, but in which he had received submissions from Mr Ayache responsive to Mr O'Brien's submissions, Mr Bluth was entitled to proceed on the basis that the Landlord had been afforded a proper opportunity to be heard, as it in fact was.
Otherwise, in response to a number of specific points noted in [79] to [80], six matters should be noted. First, contrary to his submissions, Mr Ayache did not state in his evidence that he "believed that he was restricted to lodgement of submissions and that there would be no reliance on witness statements by either party". Instead, he said that Mr Panapoulos was not available to provide an affidavit when he drafted the submissions on Sunday, 21 June 2015.
Second, by the time Mr Bluth made the Determination he was not on notice of the parties being at cross‑purposes about the issues in dispute. To the contrary, to Mr Bluth's knowledge Mr Ayache had lodged submissions after having had the benefit of reading Mr O'Brien's submissions which clearly addressed the scope of the Landlord's Works.
Third, Mr Ayache's decision to limit his submissions in response to the issue of Landlord's Works was a forensic choice he made. One alternative course was to seek further time but he did not seek to do this, for whatever reason.
Fourth, the complaint that there was a failure to afford procedural fairness by the making of a direction that there be an exchange of material overlooks the proposition that an assessment of whether or not there was such a failure involves a consideration of the decision‑making process "viewed in its entirety" (South Australia v O'Shea (1987) 163 CLR 378 at 389 per Mason CJ). In this case, the party complaining, the Landlord, in fact obtained the opportunity to respond to everything said by Mr O'Brien on behalf of the Tenant. The Landlord had the last word.
Fifth, the Landlord's submissions were not "ignored" by Mr Bluth. They were expressly addressed in the Determination.
Sixth, procedural fairness did not require Mr Bluth to advise the Landlord in advance that its "submissions would … not be accepted or would be rejected" (Kioa at 587 per Mason J; Commissioner for the Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 590-591).
Accordingly, I reject the contention that there was a breach of procedural fairness by Mr Bluth.
I reject Ground 1.

Ground 2 - Manifest error in interpreting "Landlord's Works"

Again, this ground is best addressed by referring to the Landlord's written submissions.
It was contended in the written submissions that Mr Bluth conducted a false inquiry by determining whether there was any ambiguity in the definition of "Landlord's Works". [22] This was said to be so because it was an agreed fact that the "Handover Date" was 26 May 2014 and, if that were so, it meant that there was a "binding agreement that 'the Landlord's Works' were completed on 26 May 2014, because that was the agreed "Handover Date'." [23] The submissions continued: "Therefore, the question addressed by each expert and the primary judge alike, as the central question addressed by each of them, that is, whether there was a 'constructional choice' within the meaning of [Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 89 ALJR 990] at [49], and whether its answer lay in the incorporation of the Tenant's Fit-out Plan CD1231 into the Deed, as an implied term in order to construe 'the Landlord's Works' is an irrelevant question." (emphasis added)
The reference to the "primary judge" in this passage could only be a reference to Stevenson J as the judge who decided 711 Hogben v Tadros No 1. This extract confirms, if confirmation is required, that the point sought to be raised is one that was already decided by his Honour. Consistent with what I have stated, it cannot be re‑litigated. Otherwise, I note that the argument is in any event misconceived because an agreement as to the Handover Date at most only constitutes a concession that the Landlord was of the "(absolute and sole) opinion" that its works were sufficiently completed to allow the Tenant to commence their fit‑out (see [12]). It is not a concession that the Landlord's Works were complete.
The written submissions also contended as follows in support of this ground: [24] "Secondly, even if there were a proper basis to have regard to the surrounding circumstances …. the applicable surrounding circumstance, surely, was the latter heads of agreement made between the Landlord and the Tenants, which did not refer to the Tenant's Fit-out Plan CD 1231 (as found by Stevenson J in his judgment at [34])."
The reference to the "latter heads of agreement" in this passage is to the heads of agreement referred to by Stevenson J in 711 Hogben v Tadros No 1 at [34] as follows: "On 14 February 2013 the Landlord and Tenants entered into further heads of agreement which did not, in terms, refer to CD1231, but which stated that the scope of the lessor's works would be attached to the proposed agreement for lease (ultimately, the Deed)."
His Honour recounted this in the course of setting out the background to the parties' dispute. Once again, this contention is an attempt to re-litigate the issue already resolved against the Landlord as to the absence of any manifest error in Mr Bluth's finding that Plan CD1231 represented the scope of the "Landlord's Works". For the sake of completeness I note that, even though the existence of the heads of agreement entered into in February 2013 was brought to the attention of Stevenson J, it was not brought to the attention of Mr Bluth much less was any copy provided to him. In those circumstances there could be no manifest error in his failure to treat that heads of agreement as a surrounding circumstance.
Otherwise, the submissions in respect of this ground repeat the Landlord's contention, already noted, that Mr Bluth misconstrued the nature of the bargain that had been struck in the Deed as one pursuant to which the Landlord agreed to provide the "Premises" in the form of a "child care centre when they were, in truth, [agreeing to provide] a shell of Levels 1 and 2 for later fit out by the Tenants as a child care centre". As I have explained, that much‑repeated contention rests upon a construction of the Deed that does not contemplate Plan CD1231 being part of the Landlord's Works, a matter that was resolved against the Landlord in the Determination and which Stevenson J has already found was made "in accordance with the Deed" and was not, in this respect, affected by "manifest error".
In oral submissions, Counsel for the Landlord raised a further complaint about the Determination, namely, that Mr Bluth merely found that the Landlord was in breach of the Deed but did not say what the breach was "and what flows from it". [25]
Paragraph 8.13 of the Determination contained a finding that the Landlord was in breach of the Deed. It is clear from the preceding paragraph that Mr Bluth found this to be a breach of clauses 3.2 and 3.3, which placed restrictions on the Landlord's ability to make amendments to the Landlord's Works. (Although it is not necessary to decide, it may be that the failure to complete the Landlord's Works meant that on and from the Commencing Date of 18 May 2015, the Landlord was not able to "grant ... [a] Lease of the Premises" as defined, as required by clause 10.1 of the Deed).
Otherwise, there was no error on the part of Mr Bluth in failing to determine what the consequences of the breach were. The first three of the "orders" that were sought on behalf of the Tenant noted in [37] did involve a rewriting of the Deed and are otherwise difficult to reconcile with clause 3.4 noted in [13]. The fourth order appeared to be akin to specific performance which is not precluded by clause 3.4 but which is a matter for this Court.
I reject Ground 2.

Ground 3: Manifest error by reliance upon clearly irrelevant documents

Under the heading of Ground 3, the Landlord's written submissions contend that Mr Bluth "committed 'manifest error', in the sense that he was obviously wrong, by accepting written evidence from the Tenants which did not 'arise under the Deed'". [26] The next part of the submissions identify this written evidence as the heads of agreement dated 8 September 2008 and contend that the "superseded heads of agreement … self-evidently cannot give rise to a dispute which had arisen 'under the Deed'".
None of the Tenant, Mr Bluth or Stevenson J suggested that the heads of agreement dated 8 September 2008 gave rise to a dispute "under the Deed". Instead, there was a dispute about the scope of the Landlord's Works "under the Deed". Mr Bluth resorted to the background to the Deed, including Plan CD1231, that emerged from those earlier heads of agreement to determine what the scope of the Landlord's Works were "under the Deed".
In 711 Hogben v Tadros No 1, Stevenson J concluded that this aspect of the Determination was made "in accordance with the Deed" and was not the subject of "manifest error". His Honour's findings in that respect cannot be re-litigated at first instance.
I reject Ground 3.
It follows that all of the Landlord's challenges to the Determination fail.

Stay of the Cross-Claim

The remaining issue referred for determination by Hammerschlag J's order concerns whether any part or all of the Cross-Claim should be stayed on the application of the Landlord, as well as Peter and Bill Panpoulos because it is inconsistent with clause 14 of the Deed. This was the subject of written submissions filed after the hearing on 16 November 2016.
The Cross-Claim has 11 prayers for relief. The Landlord accepted that, if the claims in its Summons failed, then prayers 2, 3, 4, 5, 9, 10 and 11 should not be stayed. I will address the remainder.
Prayer 1 seeks a declaration that the first and second (cross) defendants, being Bill and Peter Panopoulos, are estopped from allowing the premises to be built otherwise than in accordance with Plan CD1231. While I have doubts about the utility of binding directors of a landlord by an estoppel, as this prayer seeks relief against persons who are not parties to the Deed, it is not a "dispute under the Deed" and will not be stayed.
Prayers 6, 7 and 8 of the Cross-Claim provide: "6. A Declaration that the [Landlord] has not been entitled to charge the [Tenant] rent and will not be entitled to charge rent until such time as the Premises comply with [Plan CD1231] and may be used as a Child Care Centre. 7. An order that the [Cross] Defendants do all acts and things necessary to bring the Premises into compliance with [Plan CD1231] within such time as the Court shall consider appropriate. 8. A Declaration that for the purposes of Order 7, the Premises will be deemed to be in compliance with [Plan CD1231] when Kogarah Council issues an Occupation Certificate on the basis of the Plan."
In his submissions, Counsel for the Landlord contended that prayer 7 must be referred to an expert under clause 14 as the "question as to whether damages are recoverable for the breach of cl 3 of the Deed by the plaintiff, as found by Mr Bluth, is an issue which arises under the Deed". However, prayer 7 is not a claim for damages but instead simply seeks an order for specific performance to give effect to the Determination. It also relates to all three defendants, two of whom are not parties to the Deed. It will not be stayed.
For the same reason, prayer 8 will not be stayed as it is simply an adjunct to Order 7. The Landlord's submissions in reply questioned the utility of prayer 8, contending that it is an attempt to rewrite the Deed. Whether or not that is so, as with prayer 7 it does not raise a dispute "under the Deed".
I accept that prayer 6 does give rise to a "dispute under the Deed", such that the Court has a discretion to grant a stay of that part of the cross-claim (Dance with Mr D Limited v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332 at [53] per Hammerschlag J). One reason to refuse to exercise the discretion to grant a stay, is to avoid a "multiplicity of proceedings" (Dirty Dancing at [54]). In this case, to stay this part of the cross-claim while the rest of the cross-claim advances will risk similar issues being determined in alternate forums at the same time. I decline to stay this part of the cross-claim.

List of Issues and Separate Question

Prior to the hearing, the parties filed an "Agreed List of Issues for Determination" which set out various questions to be determined. Although neither the written nor the oral submissions made reference to them, I will nevertheless address that document so as to make the position clear.
The questions and the answers are as follows: 1 Whether the expert, Mr Bluth, was confined to deciding only issues in dispute that both parties had agreed to refer to him for determination, or whether it was permissible for only one of the parties to refer issues to him, on the proper interpretation of cl. 14 of the Deed (the agreed issues for referral question)? A: On the proper construction of clause 14 of the Deed it was permissible for only one of the parties to refer a Dispute under the Deed to a person referred to in clause 14.3 provided that notice was given in accordance with clause 14.2 as occurred in this case. 2 Subject to question 1, what disputes were legitimately referred to Mr Bluth for expert determination under cl. 14 of the Deed (the issues referred question)? A: The issues referred to in paragraph 5 of the Determination. 3 Whether the expert committed manifest error by determining an alleged dispute about whether the Landlord was in breach of cll. 3.1 and 3.3 of the Deed due to the failure to complete the Landlord's Works in accordance with the terms of the Deed on the ground that no notice of referral to an expert of such a dispute was given to the plaintiff, so that no referral of the dispute to the expert had been made under the Deed (the Landlord's Works jurisdictional ground)? A: This question does not arise as notice of that dispute was given to the plaintiff on 24 April 2015 by email to the person within the plaintiff's solicitors who had carriage of the matter to that time on its behalf namely Ms Elkington. 4 Whether, assuming no manifest error was committed in terms of question 3, the expert committed manifest error in his determination of the dispute about the Landlord's performance of the Landlord's Works under the Deed in breach of cl. 3.1 and 3.3 of the Deed (the Landlord's Works performance ground)? A: This question was determined adversely to the plaintiff by Stevenson J in 711 Hogben v Tadros No 1. Accordingly the answer is no. 5 Whether, assuming that no manifest error was committed in terms of questions 3 or 4, the expert committed manifest error by determining the dispute under the Landlord's Works performance ground by reference to irrelevant evidence which did not arise under the Deed within the meaning of cl. 14 of the Deed (the irrelevant evidence ground)? A: This question involves an attempt to re-litigate what was determined by Stevenson J in 711 Hogben v Tadros No 1. Accordingly the answer is no. 6 Whether, irrespective of the answer given to questions 1-5, the expert committed manifest error by conducting the determination contrary to those principles of procedural fairness which are implied into the Deed from the express terms of cl. 14 of the Deed (the procedural fairness ground)? A: The Determination was not conducted contrary to any requirement of procedural fairness. 7 Whether the plaintiff is estopped by its conduct of the expert determination from raising the procedural fairness ground, having regard to the state of the pleadings and the available evidence (the estoppel by conduct ground)? A: The plaintiff is estopped from re-litigating what was expressly decided by Stevenson in 711 Hogben v Tadros No 1 as explained in 711 Hogben v Tadros No 3. 8 Whether the expert determination dated 28 July 2015 of the fourth defendant, Mr Bluth, should be set aside for 'manifest error' on any of the grounds referred to in questions 1-7 above (the manifest error conclusion question)? A: No. 9 Whether the issues in dispute raised in the Commercial List Summons and the Cross-claim should be referred to the President of the Law Society of New South Wales pursuant to cl. 14 of the Deed for redetermination by a person appointed by the President as an expert, and whether that person should be Mr Bluth or some other person (the remitter for redetermination question)?" A: None of those issues should be so referred.
Similarly, it is appropriate to return to the order made by Hammerschlag J on 11 December 2015. The response to that order is: that all issues arising on the plaintiff's Commercial List Summons and Statement have been determined adversely to the plaintiff and there should not be a stay of any part of the cross claim by reason of clause 14 of the Deed.

Disposition

By ordering the hearing of all issues arising on the plaintiff's Commercial List Summons and Statement before other issues, the order made by Hammerschlag J on 11 December 2016 contemplated that final orders would be made in respect of the Summons. Accordingly, I will order that the Summons be dismissed. I will stand over the Cross-Claim to the first directions hearing in the Commercial List in 2017.
There remains the question of costs. I will order the parties to file and exchange submissions on costs within a short period and direct the matter be listed before me at 9.30 on Wednesday 7 December 2016 for brief oral argument if that is required.
Accordingly, the Court orders that: 1. The Plaintiff's Summons be dismissed; 2. Dismiss the cross-defendants' application for a stay of the cross-claim; 3. The parties file and exchange submissions on costs, not to exceed three pages, on or before 4.00pm on 2 December 2016; 4. The proceedings be listed before Beech-Jones J at 9.30am on Wednesday 7 December 2016; 5. The balance of the proceedings stand over to the Commercial List for directions on Friday 3 February 2017.

Endnotes

CB 3/701ff
Plaintiff's Outline of submissions 5 October 2016 at [22]
CB 1/85 at [7]
CB 675 at [5]
677A
Commercial List Statement at [52] to [53]
T 11/12/15, p 12.15
T 11/12/15, p 10.47
T 11/12/15, p 8.30
T 16/11/2016 p 26.33-42
Plaintiff's written outline of submissions at [54] to [67]
Plaintiff's written outline of submissions at [62]
Plaintiff's Outline of Submissions at [69]
Plaintiff's Outline of Submissions at [69(n)]
Plaintiff's Outline of Submissions at 69, (q)
Plaintiff's Outline of Submissions at [70]
Plaintiff's Outline of Submissions at [74]
Plaintiff's Outline of Submissions at [75]
Affidavit of Michael Ayache sworn 28 April 2016 at [6]
Affidavit of Michael Ayache sworn 28 April 2016 at [7]
Affidavit of Michael Ayache sworn 28 April 2016 at [8]
Plaintiff's Outline of Submissions at [97].
Plaintiff's Outline of Submissions at [103]
Plaintiff's Outline of Submissions at [109]
T 16/11/2016 p34.46
Plaintiff's Outline of Submissions at [125]

Amendments 30 November 2016 - [57] and [61] - correction of typographical error DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 November 2016

Commercial Arbitration Act 1984(NSW)

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