ABB Service Pty Ltd v Pyrmont Light Rail Company Ltd - [2010] NSWSC 831 - NSWSC 2010 case summary — Zoe

NSWNSWSC

ABB Service Pty Ltd v Pyrmont Light Rail Company Ltd

[2010] NSWSC 831

Supreme Court of NSW|2010-06-16|Before: Ward J

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Source facts

Court

Supreme Court of NSW

Decision date

2010-06-16

Before

Ward J

Source

Original judgment source is linked above.

Judgment (68 paragraphs)

[1]

Background 11 The arbitration in question arose out of disputes between the parties to these proceedings (to whom I refer, respectively, as ABB, PLRC and Micro) as to matters relating to contracts in connection with what is referred to as the Pyrmont Light Rail system. 12 In summary, the chronology of events as outlined by Mr Gyles is that PLRC entered into a contract with ABB and others on 13 July 1995 for the design, construction and installation of that light rail transport system. ABB and Micro were parties to a sub-contract for the performance by Micro of certain of ABB's obligations in respect of the PLRC contract. The system was installed and operational by the end of August 1997 but, presumably due to problems with the system, steps were taken from mid 1999 through to 2000 to decommission and replace aspects of the overall system. 13 In January 2005, PLRC served points of claim on ABB, claiming damages from ABB for alleged breaches of obligations relating to two aspects of the system (which were apparently provisional costs items), one being the design, construction, supply and installation of an automatic ticketing system ("ATS") and the other a communications and control system ("OCS"). In April 2005, ABB in turn served points of claim on Micro, claiming damages from Micro for alleged breaches by it in respect of both the ATS and the OCS. 14 Arbitral proceedings in respect of the said disputes (between PLRC/ABB and ABB/Micro) were consolidated and made the subject of the one arbitral hearing conducted by the arbitrator in two tranches during 2007/2008 over a period of some 65 days in total. Also before the arbitrator at that time (by way of a referral from the District Court), and heard in conjunction with the arbitration, was a separate (and much smaller) dispute between Micro and Metro Transport Sydney Pty Ltd in relation to a claim in debt for work done and material supplied in relation to the light rail system. In relation to that matter, the parties apparently relied on some of the evidence given in the arbitration itself. (Metro is not involved in the current dispute.)

[2]

15 On 29 June 2009, the arbitrator published his "Primary Findings and Reasons" in relation to the respective disputes. For present purposes, it is unnecessary to consider in any detail the arbitrator's findings in relation to the merits of those disputes. Broadly, the arbitrator found for PLRC in respect of its claim against ABB in respect of both the ATS and OCS aspects of the contract and quantified the amount payable by way of damages in relation to those breaches. The arbitrator also found that, as between ABB and Micro, the latter was responsible for 40% of the loss occasioned by the breaches in respect of the OCS. (Micro was not found to have any liability for the ATS losses.) 16 Hence the component of the overall losses for which Micro has any liability is limited to those in relation to the OCS claim and, not surprisingly, in due course its costs liability was similarly limited to a commensurate share of that component of the overall costs which related to the conduct of the OCS claim. In those circumstances it is understandable that Micro would wish to have a sufficiently detailed breakdown of the overall arbitration costs so as to satisfy itself that there has been a proper differentiation between the respective ATS/OCS components of the costs claimed and I note that Micro has asserted that it would be a denial of procedural fairness for it to be denied that opportunity. 17 The arbitrator expressly noted that the Primary Findings and Reasons he made in June 2009 were, "subject to slip rule considerations", fixed and final (CB p148.20). He left in abeyance the question of what allowance should be made for any deductions for liquidated damages in respect of PLRC's claim against ABB and ABB's corresponding cross claim against Micro. The arbitrator's award then stated "Also, the questions of costs are still outstanding. If the parties cannot agree on appropriate orders, I shall require submissions on this question". 18 At the same time, the arbitrator expressed his decision on the referred District Court claim involving Metro, finding in favour of Metro for a large proportion of the amount it had claimed. He noted that he had treated this as being an aspect of the arbitration and attached his decision as a separate document though not in 'stand alone' form. The arbitrator recommended that the parties dispose of the matter by way of entry of consent judgment in favour of Micro in the District Court, failing which he indicated that he would prepare a formal report for the court. He directed that the parties confer on the question of an appropriate award of interest and also on the question of costs (and gave the same direction in that regard as that given in respect of the PLRC/ABB/Micro matter which had been the subject of the arbitration).

[10]

Order that Micro pay ABB 40% of ABB's costs in respect of its OCS claim, including 40% of its costs payable to PLRC, on a party party basis, to be agreed or assessed . … 10. Order that the parties endeavour to agree on the appointment of a cost assessor and, if they fail to do so, that they accept an assessor appointed by the Chairman of the New South Wales Chapter of the Institute of Arbitrators and Mediators . 29 The difficulty to which the orders, as so formulated, have given rise derives from the use of the verb "assessed", which (for the reasons set out below) as a matter of statutory construction brings into operation the provisions of the Legal Profession Act in relation to costs assessment. Those provisions, among other things, do not contemplate the involvement of the parties or any external mediator in the appointment of cost assessors. Hence on the face of the orders there is an inconsistency (though sought to be characterised by Mr Turner as a modification of the cost assessment process otherwise provided for under the Act) in the arbitrator seemingly having referred the matter to a formal assessment under the Legal Profession Act but then having ordered that steps be taken which are not compatible with that process. 30 In relation to the separate Metro matter, which had been referred to the arbitrator as referee by the District Court, the arbitrator noted that Mr Turner had submitted that the arbitrator should order or report that costs be assessed on an extended basis, namely that Metro should be required to pay Micro's costs of the whole of the reference and arbitration, because the practical effect of Micro's (ultimately successful) defence on the reference was to require it to sit through the whole of the PLRC case against ABB on the basis that the positive case against ABB was the positive defence against Micro. That submission was not accepted. Rather, the arbitrator accepted the submission of Mr Gyles that he should indicate his view that the costs awarded to Micro should reflect that the hearing of the referred case should not have occupied more than one day in court. Given the context in which the matter had come before the arbitrator, it was then a matter for the District Court to make whatever costs orders it saw fit to make. 31 I raise the issue of the Metro costs only because on the hearing before me Mr Turner sought to draw some support, for the argument that there was no slip in the initial arbitration costs orders, from the fact that he had made reference (in his submissions on the Metro costs) to those being "assessed" and thus submitted that as the two costs applications were being heard at the one time the arbitrator must have had in mind that concept (when making the costs orders in the arbitration). Both Mr Seton and Mr Gyles argued that no such inference could be drawn given the very different contexts in which costs were being dealt with in the two separate matters and, in particular, the fact that in the Metro case there was no reference to costs being assessed other than in the submission by Mr Turner which the arbitrator had rejected. 32 I place no weight on the fact that there was such a submission put before the arbitrator on 18 August 2009. It seems to me that it is drawing a long bow to suggest that, because there was reference in submissions to an assessment of costs in the District Court (which would presumably have been subject to the court's formal cost assessment procedures), I should assume that the arbitrator intended, when using that word in the costs orders which were made in the main arbitration, that a formal costs assessment process should apply for the costs of the arbitration. This is particularly so where the arbitrator addressed in the arbitration the manner in which the costs assessor was to be appointed (in a way which was not and could not have been raised in the Metro matter). 33 One might have thought (having regard to the terms of the costs award) that that would have been the end of the matter from the arbitrator's perspective (and, indeed, it is the contention of Micro that after the making of the orders on 30 September 2009 the arbitrator was functus officio). Certainly, it does not appear that the arbitrator did anything in relation to the process of determining the quantum of costs payable after the making of the order. However, some five months later (there being no explanation given to me as to the delay in that regard) the matter was referred back to the arbitrator on 1 March 2010 (presumably on the application of either ABB or PLRC, although this is unclear). On that date each of the parties was represented. The half day hearing on that occasion was neither transcribed nor recorded. 34 Following that hearing, the arbitrator made the order the subject of the present application, amending the 30 September 2009 costs award in accordance with a marked up copy of the initial orders (and also made an order under which he gave liberty to the parties to apply in relation to the settlement of costs). In so doing, the arbitrator expressly invoked the power under s 30 of the Commercial Arbitration Act to amend the costs award made on 30 September 2009. During that hearing, it seems that the arbitrator had rejected a submission made by Counsel then appearing for Micro (Mr Carter) that he was functus officio, by reference to his power under the 'slip rule'. 35 The amendments made to the 30 September orders were, first, to delete the word "assessed" in the expression "agreed or assessed" where appearing in orders 1, 2 and 7, and to insert in its place in each of those orders the words "settled by me", and, secondly, to amend order 10 to read:

[15]

Mr Foster confirmed that he had not intended that the parties would be engaged in a quasi taxation exercise which would necessitate the production of itemisations of costs of either the whole of the proceedings or that work relating specifically to the OCS component of the claim. 40 Insofar as this letter purports to convey a statement (put in the past tense) by the arbitrator as to what his intentions had been at some unspecified time, it is not clear to me that this relates to any intention at the time of the making of the original orders - rather, it may be more likely that any statement made to Ms Vine-Hall would have related to the arbitrator's then intentions, since there seems no reason to think that attention had been focussed at that stage on the arbitrator's original intentions in this regard. I do not consider that I can place any weight on this statement (as attributed to the arbitrator by Ms Vine-Hall) as shedding any light on the arbitrator's intentions at the relevant time (nor was it suggested in submissions by Counsel that it did). (Even apart from the objections taken by Mr Turner to evidence being adduced of the arbitrator's subjective intentions, neither of the parties to that conversation gave evidence which could be tested in the proceedings and the statement itself is ambiguous as to the time to which it refers.) 41 Ms Vine-Hall also noted in her letter that she had discussed with the arbitrator various methodologies which could deal with the appropriate percentage of work relevant to the OCS component of the claim. Ms Vine-Hall's letter then noted three possible ways in which she could proceed with her report on the quantification of costs. The third possibility (according to her, this having been suggested by the arbitrator) was that if the parties could not come to an agreement on the way forward, they might agree to coming back before him (which, she observed, would have to be an option by consent) in order that the arbitrator might be able to assist in providing suggestions or in fact determining the appropriate methodology for calculating the OCS component of the costs. Interestingly, if that suggestion (ie that any further approach to the arbitrator would need to be by consent) had emanated from the arbitrator himself then it is inconsistent with the grant of liberty contained in the amended order 10 and with the earlier rejection by the arbitrator of the submission that he was functus officio. However, I consider that little weight can be put on the communication of this opinion, since it is unclear whether what is being asserted in the letter is Ms Vine-Hall's view or that of the arbitrator himself, and since the test as to whether the arbitrator was by then functus officio does not turn on his intention or belief. 42 On 28 April 2010, the solicitors for Micro wrote to the respective solicitors for the other parties, advising that in their view the arbitrator's correction of his award was a nullity and was made without jurisdiction, as was his direction that the parties consult a costs consultant to have that cost consultant report to the arbitrator as to costs. They asserted that Micro was not bound by the order of 1 March 2010. 43 Pausing there, complaint was made during the hearing of the application before me by Mr Seton as to what was said to be the obstructive attitude of Micro to the costs assessment process - a matter which it was submitted should be taken into account as a matter of discretion. At this stage of events, however, it is difficult to see that Micro was acting in an obstructive manner (there being no evidence as to the reason for the delay between September 2009 and March 2010 in enforcement of the costs award; the delay between 1 March and 28 April 2010 being for a reasonably short period; and it being not unreasonable for Micro to seek advice as to the position following the amendment of the orders before making the complaint that it did - it may also have been the case that Micro was considering the communications from Ms Vine-Hall before formally notifying its position). Certainly, Micro's view at least as from 1 March 2010 seems to have been that communicated during the course of the hearing on that date, namely that the arbitrator was functus officio (which would have put the other parties on notice that there might be an issue as to the validity of the amendment to the orders which had been made on that occasion). 44 Micro's position, as stated in its solicitors' letter dated 28 April 2010, is that, absent an itemised bill of costs from ABB (including an itemised bill of costs for PLRC's costs) in relation to the OCS costs, there can be no determination as to the amount of any costs payable by Micro. It was asserted that if Ms Vine-Hall were to report on Micro's liability in respect of the OCS costs without having had the benefit of an itemised bill of costs, then this would be a denial of procedural fairness. The letter, while suggesting that Micro would participate in further debate with the arbitrator on these issues, expressly disavowed any concession as to the arbitrator having any continuing jurisdiction in the matter. 45 Following receipt of a copy of the above letter, the arbitrator informed the parties that in his view the question of his further jurisdiction and the validity of the orders made on 1 March 2010 could only be settled (in the absence of agreement between the parties) by the court. 46 By letter dated 4 May 2010, Micro's solicitors (responding to a letter from PLRC's solicitors) further expressed the view that a statement they attributed to the solicitor for PLRC during the hearing on 1 March 2010 (to the effect that the consequence of the award of 30 September 2009 would be that costs of approximately $250,000 would be incurred pursuant to the proposed assessment process envisaged under the award of 30 September 2009) may have influenced the arbitrator in coming to the view that it was appropriate to amend his award. 47 These proceedings were then commenced on 31 May 2010 by summons filed by ABB, seeking in effect to enforce the costs orders as amended. PLRC generally supports the position of ABB in relation to the costs orders. (It, however, has no costs order directly in its favour against Micro.) I was informed by Counsel that, although PLRC and ABB have agreed as to the costs assessment process envisaged by the amended orders, PLRC will not proceed until Micro also accepts the process. Hence for practical purposes the quantification of (what may be not inconsiderable) costs has presently stalled. 48 In evidence before me was an affidavit sworn 15 June 2010 by Ms Anne Freeman, the solicitor on the record for PLRC both in these proceedings and in the arbitral proceedings, in which Ms Freeman deposed to the making of certain statements by the arbitrator during the course of the hearing on 1 March 2010. On the present application, Mr Turner objected to the admission into evidence of material going to the subjective intention of the arbitrator. After debate in relation to the issue (during which I was taken to a number of cases to which I will refer later) I admitted this evidence subject to relevance and I address the relevance of that evidence in due course in these reasons. 49 Ms Freeman deposed to the arbitrator having said, during the course of the hearing, words to the following effect:

[17]

In making the orders on 30 September, I did not intend for there to be a formal assessment process through the Supreme Court. It was not my intention for any assessment to be a formal assessment under the Legal Profession Act. The use of the word "assess" as defined in the Act in my 30 September award was a slip. 50 As to the first matter to which the arbitrator is said to have adverted on that occasion, it does not seem to me that it necessarily follows that orders of the kind made in March would mean that no more than one cost consultant would be appointed (since it is conceivable that one or more of the parties might seek the advice of a cost consultant in order to assist in the preparation of material or submissions to either the appointed cost consultant or the arbitrator). However, nothing turns on this. 51 In response to a question in what might be termed 'friendly' cross-examination from Mr Seton (acting for a client whose interest was aligned with hers), Ms Freeman agreed that shortly before the arbitrator had made the amended orders on 1 March 2010 he had said words to the effect that he was unaware of the definition if the word "assess" in s 4 of the Commercial Arbitration Act when he made his orders on 30 September 2009 and that the parties had not pointed it out to him (T 14.23). 52 Ms Freeman also deposed that in response to the submission by counsel for Micro that the arbitrator was functus officio on the question of the costs, the arbitrator responded that he considered he had power under s 30 to correct the award due the slip he had made in referring to the word "assess". 53 In cross-examination by Mr Turner (T 18.50), Ms Freeman said that her observation was that the arbitrator had appeared "appalled" at the proposition that the cost of preparing an itemised bill of costs would be in the order of $250,000 (thus giving some credence to the suggestion which had earlier been made by Micro that the impetus for the arbitrator's amendment of the initial orders had been the suggestion as to the likely costs of preparation of an itemised bill of costs and perhaps suggesting that the amendment was the product of the arbitrator having second thoughts as to the process he had originally put in place, as to which I say more later). Issues for determination 54 In order to answer the sole question now posed for determination, the following issues arise:

[20]

(i) Until the making of a valid costs award (which dealt finally with the issues to which it related), the arbitrator retained the jurisdiction conferred on him by the parties under their arbitration agreement. The orders made on 30 September 2009, insofar as they purported to put in place a modified cost assessment regime (or one inconsistent with the costs assessment procedure under the Legal Profession Act ) without making express provision for the ultimate settlement of the costs by the arbitrator, were not orders which the arbitrator had power to make under s 34 of the Commercial Arbitration Act . These orders were, therefore, beyond power and a nullity. Accordingly, the arbitrator was not functus officio after the making of those orders or as at the time he made the subsequent orders on 1 March 2010, which in effect validly adopted, in amended form, what had been the (invalid) costs orders made on 30 September 2009. (ii) In those circumstances, the question whether there was power under s 30 of the Act does not arise, since the arbitrator retained the necessary jurisdiction to make costs orders or directions in relation to the settlement of the costs as at 1 March 2010 and did not need to rely on the amending power. Had the orders made on 30 September 2009 been authorised under the Act, then I would have been of the view that the arbitrator was functus officio as and from the making of those orders, with the exception that in appropriate circumstances the arbitrator would have had the power to amend those costs orders in respect, relevantly, of any accidental slip or omission (s 30(b) or any defect of form (s 30(d)) relating to the orders in question. Having regard to what I find was the objective intention of the arbitrator as at 30 September 2009, I am satisfied that (had the orders made on 30 September 2009 been within power) there was an accidental slip or omission within the meaning of s 30(b) of the Act deriving from the use of the word 'assessed' which would have been sufficient to give the arbitrator power (assuming that he was otherwise functus officio ) to amend those orders to reflect his actual intention. (iii) In view of my principal finding in (i) above, this question does not strictly arise. However, in my view the amendment of the orders that the arbitrator did make in March 2010 was one which went beyond a correction of the arbitrator's orders within the scope of the 'slip rule' encapsulated in s 30 of the Act and comprised a fresh exercise of discretion in relation to the determination of costs. Therefore, had I been satisfied that the arbitrator was functus officio as at 1 March 2010, I would have found that the amendment made on 1 March 2010 was beyond power and a nullity. As it is, I find that the arbitrator was not functus officio at that date and that the orders then made were not ultra vires (and, in the absence of any basis to suggest otherwise, are binding on the parties).

[21]

57 I therefore answer the question which has been posed for determination in the negative. 58 While the question of discretion does not arise in either event (because the only issue before me was to answer the question as posed), had it arisen I would have been of the view that there was power, in the court's inherent jurisdiction, to entertain an application to set aside the arbitrator's award. 59 As to whether that discretion was one which should be exercised, the authorities require that there be exceptional circumstances shown. In circumstances where it is by no means axiomatic that Micro will not be able to obtain sufficient detailed costing information in the course of the process now contemplated by the arbitrator, it might be thought that there is insufficient prejudice occasioned to it by the amended orders in order to warrant the court's intervention. Further, the unworkability (or uncertainty as to the method of operation) of the initial regime would suggest that if (contrary to my finding) the initial orders were within power but the amending orders were not and were to be set aside, there would be a need for the matter to be referred back to the arbitrator in any event to address how the costs assessment process as originally ordered could be implemented. The arbitrator's jurisdiction (assuming he was functus officio after handing down the March award) would only revive on the setting aside of the amending orders if there was anything left to be dealt with under the earlier award. That might then give rise to a question as to whether that part of this award which was uncertain or unworkable was severable or whether it might then be appropriate or necessary to remit the matter to the arbitrator to deal with the inconsistency (as part of the power it is suggested the arbitrator would have to cure an award which is defective for uncertainty Montrose Canned Foods Ltd v Eric Wells (Merchants) Ltd [1965] 1 Lloyd's Rep 597) or for reconsideration of the exercise of the power to correct his original orders under s 30 of the Act or to address any issue of uncertainty in relation thereto. I was not addressed on the logistics of such an exercise in the present case. 60 Given the difficulty of reconciling, within the limits of the arbitrator's power under s 34 of the Act, both an objective intention to appoint an independent costs assessor and the lack of any objective intention by the arbitrator to settle the costs personally, I have some concern that if the amending order were to be set aside (as a nullity), remittal of the question of how the original cost assessment process was to be implemented (for example for the arbitrator to exercise afresh the power of amendment under s 30) would be likely to result in the same difficulty as has already arisen (i.e. that any further amendment to reflect no more than what I have found to be his objective intention would similarly be beyond the scope of the amendment power) and hence would be prone to further challenge and productive of further costs and delay in resolving the remaining issues in the arbitration. If so, then the overriding purpose mandated by s 56(2) of the Civil Procedure Act 2005 (NSW) might well have compelled a decision to decline to exercise the discretion to set aside the amending costs orders despite the conclusion that they were strictly beyond the power of the arbitrator. (Of course, the alternative might be that the arbitrator could resolve any unworkability inherent in the initial orders simply by vacating order 10 but that would not be consistent with the arbitrator's original intention.) 61 In the event, it is not necessary to grapple with the issue of discretion, save to note the weight placed by the court on the restraints on judicial intervention in the conduct of arbitrations under the Act, as I am of the view that the March 2010 amending orders were within the arbitrator's power. Reasons (i) Was the arbitrator functus officio at the relevant time? 62 The first issue which arises is whether the arbitrator was functus officio as at 1 March 2010. This is because if the arbitrator was functus officio as at 1 March 2010 and either the so-called slip rule power did not arise or the orders made on that date went beyond the scope of the power contained in s 30 of the Act, then what the arbitrator did by way of amendment was ultra vires and a nullity as a matter of law. 63 In Mordue v Palmer (1870) LR6 Ch App 22, at 31; (1870) 23 LT 752, Sir G Mellish, L.J. said that: I think the result of the cases at law is, that when an arbitrator has signed a document as and for his award, he is functus officio , and he cannot of his own authority remedy any mistake. I regret the costs and delay which have been occasioned in this case, but I think it is right that in all such cases the parties should come to the Court to remedy the mistake. 64 In Woodbud Pty Ltd v Warea Pty Ltd (1995) 125 FLR 346, Young J (as his Honour then was) noted that the arbitrator's power comes to an end when a valid award is made, stating that:

[22]

It is clear law that " When an arbitrator makes a valid award his authority as an arbitrator comes to an end and with it his powers and duties in the reference: he is then said to be functus officio ." Mustill and Boyd Commercial Arbitration , 2 nd ed at 404. At 405 the authors say that apart from certain exceptions [one of which is the slip rule exception under the Act], "nothing which the arbitrator does after he has made his award can have any effect on the rights of the parties to the reference." In particular he has no power to alter his award and if he does alter his award it is a nullity. The original award continues in force despite the purported alteration ; Henfree v Bromley (1805) 6 East 309; 102 ER 1304; Inland Revenue Commissioners v Hunter [1914] 3 KB 423, 428. (my emphasis) 65 In the passage cited from Mustill and Boyd, Commercial Arbitration, 2nd ed, Butterworths, 1989, at 404, the authors by way of footnote comment that if the award is defective, for example because it is uncertain, then it seems that the arbitrator is not functus officio for the purpose of curing the defect (citing Montrose), something potentially of relevance here in light of the issue raised as to the unworkability of the orders as initially framed. However, this was not debated before me. 66 In the curial context, a decision maker does not become functus officio where the decision or proceeding in question is a nullity (Rex v Marsham, Ex parte Lawrence [1912] 2 KB 362; Regina v Essex Justices; Ex Parte Final (1963) 2 QB 816, at 821; Ex parte Kelly; Re Teece 85 WN (Pt 1) 151; R v Seisdon Justices Ex parte Dougan [1982] 1 WLR 1476; Johnson v Gibbins (1895) 16 NSWR 27; Thomas v Bell (1989) 42 A Crim R 318, at 321; Graziers Association of New South Wales v Australian Legion of Ex-Servicemen and Women (1949) 49 SR (NSW) 300, at 303; Director General of Fair Trading v O'Shane & Or (unreported, NSWSC, 7 August 1997, Graham AJ, at [7])). 67 The reason for this is that in those circumstances the case has never been tried according to law (Regina v Essex Justices, per Salmon J, at 928; see also Thomas v Bell, per Yeldham J, summarising some of the cases cited above.) 68 Thus, if curial proceedings are a nullity, it is open to the court to retrace its steps and conduct a hearing according to law without the intervention of a higher court (Cameron v Cole (1944) 68 CLR 571, at 586; Taylor v Taylor (1979) 143 CLR 1, at 8; Rex v Marsham, at 364; Ex parte Kelly Re Teece, at 157; Ex parte Kent; Re Callaghan (1969) 2 NSWR 184, at 186; Calvin v Carr (1980) AC 574, at 589-90; Russell v Bates (1927) 40 CLR 209, at 213; Thomas v Bell, at 321; Director General of Fair Trading v O'Shane & Or, at [6]). 69 By analogy, if the initial award on 30 September 2009 was beyond power and a nullity, there has been no valid determination and the arbitrator cannot have been functus officio when the matter came before him on 1 March 2010.

[23]

70 Therefore, before one comes to the question whether the slip rule exception applies, it is necessary to determine whether there was a valid award as at 30 September 2009, ie one which was within power and whether it dealt finally with its subject matter such that there were no other matters left to be dealt with in relation to that award. Where there is an award that is on its face an interim award, then the arbitrator is only functus officio with respect to the issues dealt with in that interim award and retains the authority to deal with the remaining matters (Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630; [1965] 2 All ER 4; [1961] 1 Lloyd's Rep 223, at 231). 71 It is at this first hurdle that in my view the argument that the arbitrator was functus officio as at 1 March 2010 fails and it does so because if (as I think for the reasons set out below is the case) the costs orders in question made in September 2009 were not validly made then, on the principles outlined above, the arbitrator did not become functus officio by pronouncing those (invalid) orders. 72 The costs award made on 30 September 2009 was expressed in final terms. The arbitrator reserved no further role to play in relation to the arbitration and he made no directions as to the provision to him of a report by the costs assessor or as to liberty for the parties to apply in relation to the settlement of the costs orders (as he did in the later amended orders). 73 True it is that the arbitrator did not include in the award (as he had done in the first award of June 2009 in which he determined the substantive liability of the parties) a statement that the costs award was (subject to slip rule considerations) fixed and final. However, that omission does not lead me to conclude that the cost award was intended to be anything other than a final determination of the then outstanding issues in the arbitration in circumstances where there is nothing on the face of the award to suggest that the arbitrator was reserving to himself any further step in the cost assessment process. 74 (Indeed, when one looks to the arbitrator's subsequent conduct, the fact that the arbitrator apparently took no further step in relation to the proceeding until the parties of their own motion reconvened the matter before him some 5 months later is consistent with an understanding on the part of the arbitrator that, so far as his role was concerned, the costs award was final in nature.) 75 Although it was submitted by Mr Seton that the arbitrator would not become functus officio until the process of cost assessment was finally complete, it was not suggested that the arbitrator had any further function to perform after 30 September 2009 and no authority was cited for the proposition that if there are no outstanding issue on which a determination by the arbitrator is required after publication of the award he or she would nevertheless have a continuing jurisdiction.

[30]

4(1) … except insofar as the context or subject matter otherwise indicates or requires: … "assess", in relation to costs means assess under Division 11 of Part 3.2 of the Legal Profession Act 2004 . 82 There appears to be nothing in s 34 which indicates an intention contrary to that which is provided for in the definition clause. Thus the power given to an arbitrator under s 34 of the Act to provide in an award for costs to be assessed (or to arrange for the assessment of those costs) is one which imports the cost assessment processes under the Legal Profession Act. Further, where the award directs payment of costs by a party, assessment under the Legal Profession Act assessment processes seems to be mandatory except to the extent that costs have been "settled" by the arbitrator. 83 As can be seen, the terminology initially adopted by the arbitrator in his September 2009 costs award used the language of 'assessment' by a cost assessor; the terminology in the amended orders (after the technical meaning of "assess" had been drawn to the arbitrator's attention) was that providing for the ultimate 'settlement' of costs by the arbitrator. 84 It was submitted by Mr Turner (in the context of responding to a suggestion that the initial award was unworkable) that what the arbitrator had done was, in essence, to modify the assessment procedure (so as, for example, to enable the parties to have some means of determining who was going to assess the costs), such that this was still a valid exercise of the power to order that costs be assessed (or, perhaps, an instance where the arbitrator was exercising the power "to arrange" for the assessment of costs). Such a modification, for example, might arise if the order were to be construed as requiring assessment according to the Legal Profession Act procedure (so, perhaps, referring to the adoption of the cost assessment criteria provided under the Act and regulations) but without the formality of requiring the parties to apply to the Manager, Costs Assessment for the appointment of a cost assessor in accordance with the administrative procedures stipulated in the Act and regulations. 85 In other words, as I understood the thrust of Mr Turner's submission, it is contended that the arbitrator might validly have put in place a regime which required the same process of assessment as would be carried out under the Legal Profession Act but for this to be carried out by someone appointed outside the formal court assessment process (ie by someone consensually or otherwise appointed in the manner indicated by the arbitrator). At first blush that might well seem to fall within the concept of "arranging" an assessment and I see no reason why that could not provide a workable cost assessment regime in any particular case. However, that does not seem to me to take into account the requirement under s 34(2) that if a party is directed under an award to pay costs then unless those costs have been settled by the arbitrator they must be (formally) assessed. Mustill and Boyd, supra, in considering the relevantly similar UK provision in the 1950 Arbitration Act suggest that that sub-section (providing that any costs directed by an award to be paid shall "unless the award otherwise directs" be taxable in the court) would not appear to give the arbitrator power to direct taxation by a third party other than the taxing officer of the court (footnote 18, p 403). 86 The requirement that, unless settled by the arbitrator, an award of costs must be formally assessed makes sound commercial sense because the outcome of the court's assessment procedure (with the filing of a certificate as to costs) is that there is an enforceable judgment debt in respect of the costs as assessed (s 369(7)) (and there is also a mechanism provided for review or appeal - subdivisions 5 and 6); similarly, if the costs are formally settled by the arbitrator then there is a formal award which can be enforced (and potentially one which is open to review or appeal, although with the restrictions placed thereon under the Commercial Arbitration Act and the court's reluctance to intervene). By contrast, if a modified process were to be put in place without the arbitrator formally settling the costs at the conclusion of that process, then there could well be issues as to the enforceability of that assessment and the capacity for review thereof. 87 Therefore, while it seems to me that the arbitrator did have power in September 2009 to modify or amend the assessment process which would otherwise have applied by way of an order that costs be assessed, that could only be done if in so doing the arbitrator had assumed to himself the role of formally settling those costs once assessed by the cost assessor. That is what he ultimately did in the amended orders. It is not what he did on the face of the initial orders. 88 Accordingly, as Mr Seton submitted by way of an alternative argument to meet Mr Turner's modification argument (see T 55.17-25), I consider that insofar as the initial costs award provided for the modified assessment process (or one inconsistent with that applicable under the Legal Profession Act) but without including provision for the costs ultimately to be settled by the arbitrator, this was beyond the arbitrator's power and the award was thus ultra vires. The finding that it was not a valid award means that the arbitrator did not become functus officio when the award was published. (It seems to me that the logic of this outcome becomes evident insofar as it addresses what would otherwise be the difficulty posed by the unworkability of the provision made in the September 2009 orders for what are in essence two different cost regimes - one utilising the court processes and one operating outside the context of the court processes.) 89 My finding on that issue means that it is not necessary to consider the other basis (by way of reliance on s 366 of the Legal Profession Act) on which it was submitted by Mr Seton that the arbitrator had power to make the orders he did on 1 March 2010 whether or not the slip rule had been enlivened. However, for completeness I note that this alternative argument was to the effect that, even if the orders were not able validly to be made under s 30 of the Commercial Arbitration Act, they were nevertheless valid and binding for the reason that (assuming this were to be a cost assessment under the provisions of Division 11 Part 3.2 of the Legal Profession Act), subdivision 3 would apply. Reliance was placed on the provision contained in s 366 of the Act that "This Division does not limit any power of a court or a tribunal to determine in any particular case the amount of costs payable or that the amount of the costs is to be determined on an indemnity basis". 90 In Mr Seton's submission, s 366 applies to an arbitration (citing s 35A of the Commercial Arbitration Act which imports the substance of Division 11 of the Legal Profession Act with any necessary modifications into the procedures applicable in an arbitration under the Commercial Arbitration Act) and makes it clear that the arbitrator's power to determine the amount of costs payable is not limited by the Legal Profession Act. Thus it was submitted that the arbitrator still has power under the Commercial Arbitration Act to settle the costs, even after the costs award was published. Mr Seton submitted that the arbitrator would not become functus officio unless and until all the steps to determine the costs had been completed and therefore that the arbitrator continued to have power under s 34 to control the determination of costs and his 1 March 2010 orders should be upheld on that basis. 91 Mr Turner, in response, submitted that once the award was published, s 366 of the Legal Profession Act has no work to do. The arbitrator had already made his determination. Therefore, a provision to the effect that the Legal Profession Act does not limit his power cannot operate to confer fresh power upon the arbitrator. I agree. While I would accept that if the arbitrator had reserved to himself any particular function to perform after the referral of the issue of costs assessment to a costs assessor to be agreed by the parties or otherwise appointed by reference to the nominated external body, then s 366 might be of relevance, here (to all intents and purposes) the award on 30 September 2009 was a final award. Therefore, had that been a valid award on 30 September 2009, then I would have found that the arbitrator was functus officio from that time and s 366 could not of itself subsequently confer any fresh arbitral power on him. (For what it is worth, I note that the arbitrator when making the orders on 1 March 2010 did not assert any power beyond that arising under the slip rule.) 92 Thus, if (contrary to my finding above) the arbitrator was functus officio on 1 March 2010 (on the basis that he had made a final and, on this hypothesis, valid order referring the matter of costs to an assessment under the Legal Profession Act), then (absent consent by the parties) it would only be if he were able to correct his earlier order under s 30 that he could have validly determined to proceed on 1 March 2010 down the other path which had been open to him in September 2009, namely for him personally to settle the costs.

[39]

Where only some matters have been remitted to the arbitrator for further consideration, it does not appear settled as to whether those parts of the award not remitted are capable of enforcement pending delivery of the further award: see Merkin R, Arbitration Law (2004) [20.37]. 98 There are two relevant questions in this regard. First, was the slip rule enlivened and, secondly, was the power of correction validly exercised? Assuming the arbitrator was functus officio as at 1 March 2010, did the arbitrator have power to make the orders on that date under the slip rule? 99 The question whether the slip rule was enlivened depends on the existence of a slip of the kind identified in s 30 of the Commercial Arbitration Act. It provides that: Where an award made under an arbitration agreement contains (a) a clerical mistake (b) an error arising from accidental slip or omission (c) a material miscalculation of figures or a material miscalculation of figures or a material mistake in the description of any person, thing or matter referred to in the award, or (d) a defect of form, the arbitrator or umpire may correct the award or the court, on the application of a party to the agreement, may make an award correcting the award. 100 A similar rule is contained in Rule 36.17 of the Uniform Civil Procedure Rules but on its face s 30 appears, relevantly, to be wider in that it allows for amendment in the event of material miscalculation of figures and also where there has been a defect of form. As was made clear in Newmont Yandal Operations Pty Ltd v J. Aron Corporation and the Goldman Sachs Group Inc & 3 ors [2007] NSWCA 195; (2007) 70 NSWLR 411, (the Court of Appeal there considering the interpretation and operation of the slip rule in Rule 36.17 and the scope of the court's inherent jurisdiction) caution must be exercised in the application of case law from the past or from other jurisdictions when construing the slip rule in other contexts (at [117]). Whether section 30 is enlivened needs to be considered by reference to the kinds of errors there identified. 101 The two kinds of error said to have been made in this case were those described in s 30(b) and s 30(d), respectively. (It was accepted that the arbitrator had no inherent jurisdiction in this regard and hence, if the arbitrator was functus officio, the validity of any amending orders depended on a finding of power under s 30.) 102 Mr Seton submitted that a mere reading of the award, having regard to the arbitrator's powers under s 34 of the Act, would indicate that the arbitrator had made an error arising from an accidental slip and/or that the error contained a defect of form (because of the inconsistency highlighted above in relation to the manner in which a costs assessor was to be appointed). Error arising from accidental slip or omission - s 30(b) 103 Muir J in Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd (No 2) [2005] QSC 46; (2005) 2 Qd R 180, at [14]-[18] considered the meaning of "accidental slip or omission" for the purposes of the application of s 30 of the Commercial Arbitration Act 1990 (QLD) (which is in identical terms to s 30 of the NSW Act) and said: Having regard to the foregoing, should it be concluded that the award contains "an error arising from an accidental slip or omission"? The following discussion of the scope of the power conferred by the slip rule in the Rules of the Supreme Court (UK) in the reasons of the Court in R v Cripps provides a useful exposition of the meaning of the words "accidental slip or omission": "In the case of the High Court, the slip rule power is contained in RSC, Ord 20, r 11: 'Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the court on motion or summons without an appeal.' It is surprisingly wide in its scope. Its primary purpose is akin to rectification, namely to allow the court to amend a formal order which by accident or error does not reflect the actual decision of the judge: Preston Banking Co v William Allsup & Sons [1895] 1 Ch 141. But it also authorises the court to make an order which it failed to make as a result of the accidental omission of counsel to ask for it: In re Earl of Inchcape [1942] Ch 394, approved by the Judicial Committee of the Privy Council in Tak Ming Co v Yee Sang Metal Supplies Co [1973] 1 WLR 300, 304. It even authorises the court to vary an order which accurately reflects the oral decision of the court, if it is clear that the court inadvertently failed to express the decision which it intended : Adam & Harvey Ltd v International Maritime Supplies Co Ltd [1967] 1 WLR 445." (my emphasis)

[50]

Clause 33 enables the correction or interpretation of a provision of the award, or the making of an additional award. It makes it clear that any interpretation of the tribunal forms part of the award. 115 Looking to authorities which have considered the expression in other contexts, I note that in New Zealand Employers Federation Inc v National Union of Public Employees [2002] 2 NZLR 54, Richardson P (with whom Tipping and McGrath JJ agreed), contrasted similar words ("defect in form") with the situation where there was an act that went beyond power (saying that the latter was more than "a mere defect of form or technical irregularity" but a matter of "prime substance" (at [50])), in the context of considering an application for review in relation to a statutory power of decision under the Judicature Amendment Act 1972 (NZ). In the dissenting judgment of Keith J, the basis on which there was held to be a defect in form or technical irregularity was that there was an error on the face of a certificate of registration, which was capable of simple rectification by changing the relevant date on the certificate, which could be contrasted with a matter of substance. In that case, however, the relevant legislation coupled the words "defect in form" with "technical irregularity" which presumably set the context in which a contrast between form and substance was indicated. 116 While consideration has been given to what amounts to a "defect" for the purposes of provisions under the corporations legislation (such as in LSI Australia v LSI Holdings; LSI Australia v LSI Consulting [2007] NSWSC 1406; (2007) 25 ACLC 1,602, where Austin J considered whether a statutory demand should be set aside under s 459J of the Corporations Act 2001 (Cth) by reason of a defect), dicta in those cases need to be read in light of their different statutory context. So, for example, in the jurisdiction to set aside a statutory demand under s 459J emphasis is placed on whether substantial injustice will be caused if the demand is not set aside (see the discussion by Young CJ in Eq, (as his Honour then was) sitting in the Court of Appeal in Meehan v Glazier Holdings [2005] NSWCA 24, (2005) 53 ACSR 229). 117 In Topfelt Pty Ltd v State Bank of NSW Ltd (1993) 12 ACSR 381, at 392, Lockhart J addressed the ordinary meaning of defect as follows:

[51]

The definition of 'defect' is an inclusive definition, so one must construe the term initially according to its ordinary meaning and then introduce into it, if it is otherwise not included, the deemed statutory connotations. According to its ordinary usage a 'defect' means a lack or absence of something necessary or essential for completeness; a shortcoming or deficiency; an imperfection. (my emphasis) 118 It seems to me that, when considered in the context of a statutory provision dealing with 'slip rule' amendments, a defect of form should be construed as something going to matters of form not substance. Hence, use of the word "assessed" in place of the word "settled" (where what had been intended had been the process comprised by the latter) could amount to a defect of form but use of that word where what was intended was some form of hybrid process not within the scope of the arbitrator's power (such as has occurred in this case with the 30 September 2009) could not in my view be seen as a defect of form (but, rather, as a matter going to the substance of the order). What was the relevant error and was it one capable of correction under the slip rule? 119 In the Commercial List Statement filed for ABB, the errors identified in the original costs orders (which are contended to arise from an accidental slip or omission or to amount to a defect of form) are particularised as being, first, the use of the word "assessed" in relation to how costs should be determined, rather than providing for the costs to be "settled", and, secondly, the failure to include an order providing for the settlement of interlocutory costs orders made in the course of the arbitration, notwithstanding (it is said) having published reasons to this effect. 120 PLRC similarly contends that the arbitrator's error was in using the word "assessed" in circumstances where it is said that the arbitrator did not intend that there be an assessment by an assessor under a referral made under the Legal Profession Act by the Manager, Costs Assessment to determine the amount of costs in accordance with s 364 of the Legal Profession Act.

[52]

121 As noted earlier, the definition of "assess" in the Commercial Arbitration Act imports within it the cost assessment procedures set out in Division 11 of Part 3.2 of the Legal Profession Act and the effect of s 34(2) is that those procedures are mandatory where a party is directed to pay costs under an award (unless those costs have been settled by the arbitrator). The cost assessment process provided for under the Legal Profession Act, which involves the submission of an application in the requisite form by one party to the Manager, Costs Assessment and then for the referral of the task of assessing that application by the Manager, Costs Assessment to a costs assessor appointed under the Act, is inconsistent with the procedure contemplated both in the published reasons and in Order 10 of the original orders. 122 It is contended by Mr Seton (and it seems to me to be the case) that use of the word "assessed" in the costs orders made on 30 September 2009 of itself requires there to be a formal assessment process through the procedure established in Division 11 of the Legal Profession Act. The effect of the orders as originally phrased was thus to bring into play the operation of the provisions under the Legal Profession Act in relation to costs. Insofar as those provisions do not contemplate a mechanism by which the parties can agree as between themselves who is to be appointed to assess the costs nor provide for the appointment of costs assessors by parties external to the court, they are inconsistent with the regime required to be put in place under the September 2009 orders (unless it can be said that the arbitrator was assuming to himself the function of settling the costs). 123 Thus it is said by Mr Seton that there was a clear error discernible on the face of the orders (and when read with the reasons) in the making of the original orders (or they were defective as a matter of form) in that they made provision for assessment of costs in a manner inconsistent with the way in which such costs assessment would fall to be conducted under the Legal Profession Act without it being necessary to refer to what was said by the arbitrator on 1 March 2010. Stopping there, it is submitted that such a conclusion can be reached without any reference to what the arbitrator said on 1 March 2010. I agree. 124 As I understand it, the position of Micro is that in fact there is no such inconsistency because it would be open to construe the original costs orders as meaning no more than that the costs would be assessed using the procedure followed on a court assessment but for this to be done by an agreed (or nominated) costs assessor, with such modification to the court assessment practice as is necessary to accommodate such a change. However, for PLRC and ABB it is contended that the Commercial Arbitration Act does not empower the arbitrator to do so - rather, that the arbitrator has only two choices in this regard (to settle the costs himself or to order that they be assessed in accordance with the court's cost assessment procedures and for that purpose the matter is to be treated as if it were a court matter). 125 In passing, I note that it seems to me that where the verb "settle" is not given a specific meaning in the Commercial Arbitration Act, it would have been open to the arbitrator (as indicated earlier) to opt for the settlement route, and thus to take a personal role in settling the costs, albeit with assistance from an independent costs assessor (and, as he considered appropriate, using broadly the process provided for under the Legal Profession Act but without strict adherence to the procedures applicable under that Act). This is, in effect, what the arbitrator seems now to have done. However, it does not seem to me that that was what was done on 30 September 2009. Hence my conclusion that the orders made on that earlier date were beyond power. 126 Had it been necessary to do so (which would only have been the case if I had found the September 2009 orders to be within power) I would have found that there was a slip for the purposes of s 30(b) as manifested by the inconsistency between the order that the costs be assessed and the order that there be a cost assessor appointed independently of the mechanism provided for under the Legal Profession Act. The objective intention of the arbitrator seems clearly to have been that the assessment process by conducted otherwise than by a cost assessor required to be appointed by the Manager, Cost Assessment (and hence I would infer that his intention was that the assessment process be carried out otherwise than under the auspices of the court). 127 It is not necessary in my view to have regard to what the arbitrator is reported to have said at the time as to his intentions or as to the error he made in order to reach that conclusion. However, if regard is had to the arbitrator's statements in that regard, then there is clear support for the conclusion I would have reached without reference to those statements. (The issue as to whether regard could properly be had to what the arbitrator had said on 1 March 2010 was hotly in contest on the application before me and I address it below.) 128 To what extent is evidence of the arbitrator's subjective intention relevant? 129 In Newmont Yandal, Spigelman CJ noted (at [23]) that there was a more limited body of authority on what constitutes an 'error' and what is a permissible 'correction' for the purposes of the court's inherent jurisdiction to correct errors (which, though reflected, in the UCPR slip rule, was said to be not necessarily confined by the terminology of that rule) than as to the 'accidental' nature of a slip or omission. His Honour emphasised that, by reason of the insertion of the overriding objective into the Civil Procedure Act, words such as 'error' and 'correct' in the clip rule should not be given a narrow interpretation (at [25]). There, the error in question was as to the consequences of an order which had been made by Austin J (and which was subsequently amended by White J in the exercise of court's inherent jurisdiction and under the slip rule, after Austin J on an application by one of the parties had disqualified himself from entertaining that amendment application). In considering whether there had been an error falling within the slip rule or capable of correction within the inherent jurisdiction of the court, the Court of Appeal held that the relevant intention was the objective intention of the decision-maker (there the judge). Spigelman CJ, having said at [91] that what had to be determined was the objective intention of the court at the time the original orders were made, nevertheless considered the statements which had been made by the trial judge at the time (for the purpose of explaining why they did not have the meaning for which the appellant had contended). In the course of so doing, his Honour said at [95]:

[53]

As I have said, the relevant question is what the Court intended to do and/or what the Court would have done, if the issue had arisen at the time the orders were made. Anything a judge, even the same judge, says about what s/he would do to correct the original orders is no more than evidentiary and may not even be admissible over objection. Nevertheless, I proceed as if weight should be accorded to Austin J's ex post facto observations. 130 Weight was placed by Mr Turner on the above statement in Newmont Yandal, first when objecting to the admission of the evidence given by Ms Freeman as to the statements made by the arbitrator when he corrected the orders and later in submissions as to the existence of any mistake which would enliven the slip rule. 131 Mr Turner submitted for Micro that evidence of the subjective view of the arbitrator as to the reason why he corrected his award during the course of the debate before him was irrelevant and that all the court could look to was the objective evidence of the arbitrator's intention on 30 September 2009. (As noted above, on that evidence I would conclude that a slip had been made so that evidence of subjective intention is not necessary for the determination I have made.) 132 Nevertheless, there are a number of cases in which reference has been made to what was said in writing or orally by the decision maker in relation to the error which has been or is sought to be corrected and in which it appears there is some relevance attached to the reaction of the decision maker to news of the perceived mistake. Here, the mistake was not drawn to the arbitrator's intention at the time the initial orders were made (and presumably it was not appreciated by one or all of the parties at that time) but once it was drawn to the arbitrator's attention it seems his reaction was immediate, insofar as he said that he had not been aware of the specific definition of "assess". (I note in passing that if that was the case, and there is no reason to doubt the arbitrator's word on that point, it surely cannot have been the case that the arbitrator had consciously given thought to or intended some form of modified procedure which still involved the use of the court's assessment processes, though he may well have intended that there be an application by the independent cost assessor of the same principles as would have applied in the court procedures.) 133 Mr Turner submits that if the mistake had been drawn to the arbitrator's attention at the time (by which I understood him to mean 30 September 2009), then there would have been a significant dispute between the parties as to what order should be made (and accordingly s 30 cannot apply). I am prepared to assume (from what has since transpired) that there would have been a dispute at the time of the original orders had the arbitrator made appraised of the technical meaning of assessment under the Commercial Arbitration Act and had he then indicated that he did not intend to follow that course. However, it seems to me that the fact that there may have been a significant dispute had the issue been drawn to the arbitrator's attention at the time (i.e. on 30 September 2009) is not of itself the test (though it may be something which would go to any discretionary issue, if there was otherwise a basis for intervention, at least if it could be said that a party had been deprived of an opportunity to argue against the making of particular kinds of orders after the arbitrator had realised his mistake). 134 The question, rather, seems to me to be what, had the effect of the use of the word 'assessment' been pointed out to the arbitrator on 30 September 2009, would his initial reaction have been? That is answered in the present case by reference to the fact that when the matter came before him on 1 March 2010 (when the arbitrator was seized of the issue) the course he took was to make the amendments in question. 135 In Newmont Yandal, there was majority support for the view not only that it was not inappropriate, but that it was preferable, for the judge who made the orders in the first place to make the corrections to those orders. Spigelman CJ expressly acknowledged that the judge might in so doing be influenced by his or her subjective intention (though there this was put in the context of a question as to whether the trial judge should have disqualified himself from so doing) saying that (at [182]):

[56]

First, it was faintly submitted by the defendant that regard could not be had to what the arbitrator said concerning his correction of the award, because that would contravene the parties' agreement that a statement of the reasons for making the award would not be included therein. I do not agree. The arbitrator's letter of 18 February 1991 was not part of the amended award and did not purport to be a statement included in the amended award of a reason for making any part of it. It was the arbitrator's explanation of how the error which he corrected came to be made. If an error is not patent, it may be established by evidence; the arbitrator's letter was admitted without objection, and provides such evidence. In Mutual Shipping Corporation v Bayshore Shipping Co Ltd it was held that the court was entitled to look at the reasons given by an arbitrator expressly not as part of his award for the limited purpose of identifying the error open to be corrected, and the court also had before it a letter from the arbitrator to the parties explaining his unintentional transposition of the parties. In my view I am entitled to have regard to the arbitrator's letter . (my emphasis) 139 Mr Turner notes, however, that in Form-Quip, his Honour expressly referred to the fact that the evidence had been admitted without objection, whereas here there was a firm objection taken to the admission of evidence as to the arbitrator's subjective intention. 140 During the course of debate, there was a suggestion that there might be a difference between the court having regard to any (formal or informal) reasons of the arbitrator (as opposed to observations or comments made during the course of argument by the arbitrator) when the award was amended. If that be a relevant distinction (and bearing in mind the caution one must exercise in relying on comments in arguendo as authoritative - it having been observed by Kirby P, as his Honour then was, in Rajski v Bainton [1991] NSWCA 231 that "judges frequently put propositions in order to test them, without necessarily expressing any concluded opinion"), it might well be thought that what was said by the arbitrator at the time he corrected the award (as recounted by Ms Freeman, whose recollection I have no reason to doubt) was in the nature of ex tempore reasons. In any event, it seems to me that whether or not the statements in question could be characterised as reasons for the decision made by the arbitrator, what is relevant is that they indicate the arbitrator's immediate reaction to the position then put before him. 141 In determining objectively what was the arbitrator's original intention, one must look at what the arbitrator did and said (in his award) at the time he made the initial orders and, at the very least, at what he did (if not also what he said) when the asserted error was later put to him. Indeed, in Storey & Keers, McHugh JA said (at 453) "in general the test of whether a mistake or omission is accidental is that … if the matter had been drawn to the court's attention, would the correction at once have been made?" Similarly, in Newmont Yandal there was an acceptance that had the position been put to Austin J at the time the initial order was made he would "at once" have corrected the order (at [138]). 142 The immediate response of the arbitrator is an objective fact. Insofar as that response was evidenced by his conduct in indicating his intention to amend the orders in the way he did, that can be taken into account. Similarly, the fact that he made a particular statement (albeit one which involves his statement of subjective intention) may enable one to test objectively what his original intention had been. So, for example, if the arbitrator had debated for some time whether the initial orders were in fact the most appropriate (in light of the facts which had emerged since then or his then greater appreciation of the consequences of the original orders) then that might suggest that this was not a case where there was a mistake under the slip rule but rather it was a case where the arbitrator was having second or further thoughts as to the best way to proceed in light of the new information. However, if, as seems to be the case, the arbitrator had said (immediately the issue was raised) words to the effect 'no that is not what I had intended to happen' and indicated an immediate intention to amend the orders, then it is the very immediacy of that response which indicates objectively that the arbitrator had been mistaken as to the consequences of his order when he made the initial costs award. 143 As indicated earlier, I would have reached the conclusion that the arbitrator's original intention had been to appoint an independent cost assessor (and not himself to become involved directly in the assessment processes) based on the inconsistency between, on the one hand, making provision in his orders for the parties to agree their own cost assessor (or in default for one to be appointed by the body so nominated by him) and having, on the other hand, any intention to refer the matter for assessment in accordance with the court's assessment processes which do not permit this to occur (and having regard to the silence in the orders as to any ongoing role of the arbitrator, of the kind for which provision was later made in the amended orders). That inconsistency points to a mistake as to the effect or legal consequences of the order as framed. That mistake is explained by reference to a misunderstanding or lack of awareness of the technical definition of "assess" in the relevant legislation. 144 However, while it is not necessary for me to have regard to what was said on 1 March 2010 in order to find that there was a mistake or error in the initial orders in that they did not reflect the arbitrator's objective intention as discerned from the award and reasons themselves, I think it is permissible to have regard to what the arbitrator said on 1 March 2010 in assessing the immediacy (and unqualified nature) of his response to the discovery of the error (and this supports the conclusion I have drawn). 145 I therefore consider there to have been an error arising from an accidental slip or omission so as to enliven the power to correct the award (had it been otherwise valid) under s 30(b) of the Commercial Arbitration Act. I am not, however, convinced that there was a defect of form in the orders themselves in that the problem was not confined to use of an incorrect word (as a matter of form) but was one as to the inconsistency in the process sought to be implemented (which seems to me a matter of substance) so I would not have found that the power under s 30(d) was enlivened. 146 In any event, given that I have found that the initial orders were a nullity as they were beyond power, there is no need for the slip rule to have been enlivened in order to find (as I do) that the arbitrator had power to make the orders on 1 March 2010. (iii) Was this an amendment falling within the scope of the slip rule? 147 Again, this issue does not arise having regard to the finding made in (i) above. However, had it arisen I would have found that the amendment in fact made went beyond the scope of the power to amend contained in s 30. 148 The question is whether, in correcting his mistake, the arbitrator was amending his orders to reflect his actual intention at the time or coming to a different decision (albeit one designed to produce a similar end result) in relation to a matter already determined by him. 149 The arbitrator's objective intention, as assessed from the terms in which the initial orders were made (and the lack of provision for any ongoing role by the arbitrator in the cost assessment process), I find to have been that the costs were to be assessed by an independently appointed cost assessor (and I would be prepared to infer that he intended this to be in accordance with the standard assessment criteria adopted by costs assessors appointed by the court or practising in this field) but that he did not intend personally to be further involved in the process. It could be inferred from that that the arbitrator did not intend the cost assessment to take place as a formal procedure under the provisions set out in the Legal Profession Act since it is difficult to see how an external assessment process could be made compatible with that carried out under the Act. 150 There is nothing in what the arbitrator is reported to have said on 1 March 2010 which suggests that he had originally intended to play a formal role in the settlement of the costs. Therefore, even if reference is made to what the arbitrator in fact said, it seems to me to go no further than to support the conclusion that the arbitrator did not originally intend that the assessment of costs should take place under the administrative processes of this court. There is nothing in the orders to suggest that he intended himself to play any part in the process (and his preliminary reasons make that very clear). Therefore, the arbitrator's oral reasons on 1 March 2010 at the end take the matter no further than can be gleaned from the arbitrator's initial reasons and award (with the possible exception that the arbitrator's reported reaction to the likely cost of a formal itemised bill of cost process might indicate that this was not something which the arbitrator had taken into account in the exercise of his initial discretion and thus might support an argument of the kind now put by Micro which was, in effect, that what had happened was that the arbitrator was simply having second thoughts about any process which might include such a step). 151 Accepting that there was a mistake on the arbitrator's part as to what would be the consequences of what he had ordered in the first place, the arbitrator does not seem simply to have 'corrected' that mistake in the sense of putting in place the costs assessment procedure he originally intended (and which I have found he had no power to do). Rather, he has put in place a new procedure (no doubt intended to have a similar effect to what he originally had in mind) but this time involving his direct participation (which I do not believe can be said to have been his objective intention at the time of the initial orders). 152 I would be inclined to infer that the reason for this change was because the arbitrator realised that without his direct involvement there was no way to have the costs assessed without referring the matter to cost assessment in accordance with the court processes, but that is immaterial. What is material is that the amendments made to the orders put in place something other than what I have found was the arbitrator's original intention objectively ascertained. 153 That seems to me to be going beyond the scope of the power of correction in s 30. There is nothing, in my view, to suggest that the arbitrator had turned his mind to the possibility (let alone intended) that he would be directly involved in the costs assessment process after the making of his cost award and his reasons are inconsistent with any such involvement.

[58]

156 Thus, at first instance in J Aron Corporation v Newmont Yandal Operations [2006] NSWSC 849, White J found (at [58]; [74]; [116]) that the objective intention of the court had been not to create a res judicata estoppel and, having found the error as being that the orders as made permitted a reasonable argument that it did, held that the result could be corrected (ie the doubt removed). The fact that there were alternate ways of correcting that error did not preclude the use of the slip rule, but what was done was in order to reflect the original intention. 157 Here, as far as the original intention can be discerned it was for the cost assessment procedure to be carried out by an external cost assessor (not one appointed by the Manager, Cost Assessment under the Legal Profession Act) and without the arbitrator's involvement. 158 The only suggestion that the arbitrator contemplated a report being provided to him by the costs assessor came once the orders were amended and when he was addressing the mechanics of the amended orders (T 12.46). That speaks to the process going forward. The omission of any such consideration in September 2009 indicates that this was not the process that had initially been contemplated. 159 I do not accept the submission of Mr Seton that once the slip rule is enlivened the arbitrator can do whatever he wishes at that stage. Rather, I consider that the rule simply permits amendments to reflect the original intention. So, for example, I do not consider it would have been within the scope of the slip rule under s 30 for the arbitrator on 1 March 2010 (having recognised the unintended consequence of his earlier orders, namely that the matter would proceed to a formal costs assessment process and Order 10 would be unworkable in that process) to 'correct' his earlier orders by adopting some new process for determination which had not been the subject of his intention at the earlier time. It seems to me that that would clearly be a fresh exercise of discretion, not the exercise of a power of correction. 160 The fact that there may be different ways of achieving the original intention is not an issue, but if there is no way to achieve the original intention within the ambit of the arbitrator's powers under s 34, then it cannot be the case that the arbitrator in the exercise of a correction power under s 30 can make a fresh exercise of discretion to overcome the want of power to carry out his original intention. 161 In Newmont Yandal, White J noted (in response to an argument based on the proposition that an order under the slip rule could not be made if it was arguable whether the judge's intention as to the orders he or she intended to make was correct) that "the test is whether the amendment is beyond controversy to give effect to the judge's intention" (at [97]) and referred to the jurisdiction to give effect to his Honour's intention (focussing, it would seem, on what that intention was). On appeal, Spigelman CJ similarly referred (at [143]) to the carrying into effect of the court's intention (when noting that the existence of a choice between alternative means of carrying out that intention did not involve an evaluative or discretionary judgment of the kind to which the authorities had referred in considering whether the slip rule was enlivened). I do not understand their Honours to be suggesting that the power of correction is available to enable amendment of an order so as to accord with the original intention of the decision-maker if that intention had itself been beyond power. 162 That, to my mind, compels the conclusion that what the arbitrator did on 1 March 2010 was beyond the scope of the slip rule (though, for the reasons adverted to earlier, it was a valid exercise of the arbitrator's power at that stage by reason of the fact that he was not functus officio and did not need to rely on s 30 for power to make those orders.) 163 In summary, I find that the objective intention of the arbitrator on 30 September 2009 was to put in place a process whereby he referred the assessment of the costs payable in accordance with his orders to an external cost assessor and reserved to himself no role to play in that process. I accept that he did not intend that the assessment be conducted formally through the court processes, since the methodology he put in place for the appointment of a cost assessor was inconsistent with those processes. Such a regime was beyond his power under s 34 unless he took on to himself the role of settling the costs as assessed by the assessor. I am unable to find that it was his objective intention to do so on 30 September 2009. Therefore, the putting into place of that procedure as at 1 March 2010 was the exercise of a fresh discretion to cure a want of power (not a defect of form) and one going beyond any powers under s 30. (However, as it was not necessary for the arbitrator to rely on that section for the power in question, this does not invalidate the March 2010 orders.)

[60]

Support for this approach is found in a number of English decisions which deny the inherent power of the courts to intervene in the proceedings of commercial arbitration. Specifically, on the subject matter of interlocutory orders, Steyn J in his English High Court held that there was no inherent jurisdiction left to intervene at an interlocutory stage which did not otherwise fall to be dealt with as misconduct by the arbitrator: see Biakh & Biali v Hyundai Corporation Ltd [1988] 1 Lloyds Rep 187 at 189; Jacobs (at 2179). The theory behind this approach is that arbitrators must be given a free hand in commercial matters; that they must have a specially large jurisdiction in procedural determinations; that nothing else will avoid the pitfalls of cost and delay which are, notoriously, the features of litigation in the courts; that if a significant error occurs it will remain to be challenged at the end of the arbitration if it can get through the gateway of s 38 of the Act; and if the error amounts to "misconduct" then the parties may, if they choose, seek the drastic remedy provided by s 43 of the Act. … Where a matter is within the scope of an arbitration , I would unhesitatingly give effect to the foregoing consideration and exclude the availability of the inherent power of the Supreme Court or the power expressly elaborated by s 23 of the Supreme Court Act. (my emphasis) 167 Mr Seton submitted that the only means of challenge to the decision made in March this year was by way of appeal or one of the other limited circumstances available to Micro and that, Micro not having pursued any remedy to challenge the arbitrator's decision, the conclusive nature of arbitral decisions and the intention of the Commercial Arbitration Act to limit the intervention of the court ought to preclude Micro from now resisting the consequences of the arbitration process. 168 Mr Gyles emphasised that, in circumstances where there are statutory rights of appeal which have not been exercised within time, the court should be loathe to allow its inherent jurisdiction to get around such dilatory conduct, citing Doran Constructions Pty Ltd (in liq) v Beresfield Aluminium [2002] NSWCA 95; (2002) 54 NSWLR 416, at 431. 169 In Doran Constructions, the Court of Appeal considered an appeal from a decision of Einstein J refusing the appellant leave to amend its summons to claim a declaration that the arbitrator had no jurisdiction to award indemnity costs and to seek a declaration that the final award in relation to costs was void by reason of the lack of jurisdiction of the arbitrator making it. This arose in circumstances where Brownie AJ had earlier dismissed an application for an extension of time in which to appeal from the arbitrator's award. The Court of Appeal considered that Einstein J's conclusion that the court should not exercise its jurisdiction to intervene, in circumstances where the appellant was attempting to invoke the inherent jurisdiction of the court to overcome its dilatory conduct in allowing the time period for an appeal to elapse, was correct. Ipp JA said (at [99]-[101]):

[65]

171 As a discretionary matter it was submitted that there were very good reasons in the present case (in terms of time and expense) why one would not order an assessment of costs under the Legal Profession Act as opposed to the process put in place by the 1 March 2010 orders which allows a more flexible approach (by not requiring bills in taxable form to be prepared). (Somewhat inconsistently with the premise of this submission is the fact that, as noted by Mr Seton, neither Division 11 of the Legal Profession Act nor the regulations made thereunder in terms stipulates that there be the preparation of an itemised bill of costs, though it seems to be assumed that in practice this is what would be required by a court appointed assessor.) 172 It is said that in large commercial matters the court tends towards the making of lump sum costs orders in order to avoid the time cost and difficulty of formal assessments, and that there would be significant advantages to the court if the arbitrator were able to oversee the process. (In that regard, however, I note that the arbitrator himself seemed to eschew the "blunt instrument" of a lump sum costs order in this case and to have had in mind the necessity for an assessment process of some kind. In those circumstances the cost of preparation for such an assessment, whether or not it includes an itemised bill may not be insubstantial and may well involve more than one cost consultant if the parties wish to retain their own advisers, despite the arbitrator's observations to the contrary). I accept that it is the arbitrator who is likely to be in the best position to determine the manner in which costs should be assessed in this matter, having had the conduct of the lengthy arbitration. 173 It was further submitted that if the corrected award is a nullity there might be the need to appeal to the court in order for the quantification process to proceed (presumably to resolve any difficulties as to the workability of the process the subject of the initial orders) and at best the matter would need to go back to the arbitrator with consequential delays and additional costs. 174 Mr Gyles submitted that the use of the slip rule by the arbitrator was in substance an exercise of discretion which would not be disturbed on ordinary principles unless manifestly unreasonable. It was submitted that it is not enough for the court to take the view that the court would not have used the slip rule in that way, rather the court must go so far as to find that its use was not open to the arbitrator. (In that regard, I make no comment as to the merits of the decision as to which cost assessment process should be put in place. I simply note that, while I think it was open to the arbitrator to make the orders he did on 1 March 2010, those orders are sustained by reference to his continuing jurisdiction as arbitrator not under the slip rule power.) 175 Finally, it is submitted that even if the court were to be satisfied that the use of the slip rule was in error, there are very strong grounds not to exercise its inherent jurisdiction where the setting aside of the award would not be consistent with the proper administration of justice. It is said that it would reward the obstructive conduct of Micro as shown by its forcing the other parties to come to court to seek to bring this long running dispute to a close, and for no practical benefit. I have noted above that there is no real evidence between of dilatory or obstructive conduct between the making of the order in March 2010 and the present application. The thrust of this submission seems to be that Micro should have appealed if it wished to challenge the making of the award. Micro, as noted earlier, maintains that it is open to it to assert that the award was a nullity (and, in effect, leave it to ABB if it disagreed to enforce compliance). In that regard, I do not see this as a case akin to that considered by Einstein J in Doran Constructions where the application for leave to amend to allege a want of power came after the application to extend time for leave to appeal from the award had already been lost. Nor do I think one can describe a decision not to appeal from the award itself as obstructive. 176 I note the need for caution before the court exercises a discretion to intervene in the realm of arbitral awards (even those which are beyond power) and that the circumstances in which it is regarded as appropriate to do so are limited to exceptional or unusual circumstances, in light of the public policy underlying the restrictions on review of arbitral decisions. Those public policy reasons would seem to me to weigh against intervention in this case, particularly where it is by no means apparent that Micro's interest in having sufficient costs information to be able to test the claims put forward by ABB in relation to both its and PLRC's costs would be seriously prejudiced by the cost assessment process now contemplated by the arbitrator.

Parties

Applicant/Plaintiff:

ABB Service Pty Ltd

Respondent/Defendant:

Pyrmont Light Rail Company Ltd

Legislation Cited (9)

Commercial Arbitration Act 1984(NSW)

(UK) Civil Procedure Act 2005(NSW)

(NZ) Legal Profession Act 2004(NSW)

Legal Profession Act 2004(NSW)

Commercial Arbitration Act 2010(NSW)

Corporations Act 2001(Cth)

Supreme Court Act 1970(NSW)

Uniform Civil Procedure Rules 2005(NSW)

Civil Procedure Act 2005(NSW)

Cases Cited (21)

CITATION : ABB Service Pty Ltd v Pyrmont Light Rail Company Ltd [2010] NSWSC 831

Adam & Harvey Lt v International Maritime Supplies Co Ltd [1967] 1 All ER 533; [1967] 1 WLR 445 Alvaro v Temple [2009] WASC 205 Arnwell Pty Ltd v Teilaboot Pty Ltd & Ors [2010] VSC 123 Calvin v Carr (1980) AC 574 Cameron v Cole (1944) 68 CLR 571 Commonwealth of Australia v Cockatoo Dockyard Pty Ltd (1995) 36 NSWLR 662 Director General of Fair Trading v O'Shane & Or (unreported, NSWSC, 7 August 1997) Doran Constructions Pty Ltd (in liq) v Beresfield Aluminium [2002] NSWCA 95; (2002) 54 NSWLR 416 Ex parte Kelly; Re Teece 85 WN (Pt 1) 151 Expo Aluminium (NSW) v Patman Pty Ltd (No.2) (unreported, NSWCA, 29 April 1991) Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630; [1965] 2 All ER 4; [1961] 1 Lloyd's Rep 223 Form-Quip Ltd v Trafalgar Properties Ltd (unreported, NSWSC, 19 July 1991) Graziers Association of New South Wales v Australian Legion of Ex-Servicemen and Women (1949) 49 SR (NSW) 300 In re Swire; Mellor v Swire (1885) 30 ChD 239 Ivanhoe Gold Corporation Limited v Symonds (1906) 4 CLR 642 J Aron Corporation v Newmont Yandal Operations [2006] NSWSC 849 Johnson v Gibbins (1895) 16 NSWR 27 CASES CITED : LSI Australia v LSI Holdings; LSI Australia v LSI Consulting [2007] NSWSC 1406; (2007) 25 ACLC 1,602, Meehan v Glazier Holdings [2005] NSWCA 24, (2005) 53 ACSR 229 Montrose Canned Foods Ltd v Eric Wells (Merchants) Ltd [1965] 1 Lloyd's Rep 597 Mordue v Palmer (1870) LR6 Ch App 22, at 31; (1870) 23 LT 752 Mutual Shipping Corp of New York v Bayshore Shipping Co [1985] 1 All ER 520; [1985] 1 All ER 520; [1985] 1 Lloyd's Rep 189 Newmont Yandal Operations Pty Ltd v J. Aron Corporation and the Goldman Sachs Group Inc & 3 ors [2007] NSWCA 195; (2007) 70 NSWLR 411 New Zealand Employers Federation Inc v National Union of Public Employees [2002] 2 NZLR 54 Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd (No 2) [2005] QSC 46; (2005) 2 Qd R 180 R v Seisdon Justices Ex parte Dougan [1982] 1 WLR 1476 Rajski v Bainton [1991] NSWCA 231 Re Callaghan (1969) 2 NSWR 184 Regina v Essex Justices; Ex Parte Final (1963) 2 QB 816 Rex v Marsham, Ex parte Lawrence [1912] 2 KB 362 Storey & Keers Pty Ltd & Anor v Johnstone (1987) 9 NSWLR 446 Sutherland & Co v Hannevig Bros Ltd [1921] 1 KB 336 Taylor v Taylor (1979) 143 CLR 1 Thomas v Bell (1989) 42 A Crim R 318 Topfelt Pty Ltd v State Bank of NSW Ltd (1993) 12 ACSR 381 Woodbud Pty Ltd v Warea Pty Ltd (1995) 125 FLR 346

Cited By (1)

Yan v Yangdo Pty Ltd