Age Old Builders Pty Ltd v Swintons Pty Ltd [2003] VSC 307

Age Old Builders Pty Ltd v Swintons Pty Ltd [2003] VSC 307 - VSC 2003 case summary — Zoe

[66]

"The fundamental object of statutory construction in every case is to ascertain the legislative intention by reference to the language of the instrument viewed as a whole. But in performing that task the courts look to the operation of the statute according to its terms and to legitimate aids to construction. The rules [of construction], as DC Pearce says in his Statutory Interpretation, p.14, are no more than rules of common sense, designed to achieve this object. They are not rules of law. If the judge applies the literal rule it is because it gives emphasis to the factor which in the particular case he thinks is decisive. When he considers that the statute admits of no reasonable alternative construction it is because (a) the language is intractable or (b) although the language is not intractable, the operation of the statute, read literally, is not such as to indicate that it could not have been intended by the Legislature. On the other hand, when the judge labels the operation of the statute as 'absurd', 'extraordinary', 'capricious', 'irrational' or 'obscure' he assigns a ground for concluding that the Legislature could not have intended such an operation and that an alternative interpretation must be preferred. But the propriety of departing from the literal interpretation is not confined to situations described by these labels. It extends to any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions. Quite obviously questions of degree arise. If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended."

[79]

"Compulsory arbitration clauses appear in most standard form contracts in New South Wales, Victoria and Tasmania. In other States, for example South Australia and Western Australia, other conciliatory options are available for exploration before either party needs engage in arbitration. In Western Australia, as a result of the injury, a building disputes committee was set up (pursuant to the Home Building Contracts Act 1991). In some standard form contracts a clause is included which refers all future disputes under the contract to arbitration. These are referred to as 'mandatory arbitration clauses'. It seems that in most jurisdictions the majority of disputes go to arbitration, despite widespread disenchantment with the process in the home building market. Theoretically, arbitration offers a quick, flexible alternative to litigation. Other advantages claimed for arbitration are that it maintains privacy and brings to bear technical expertise in the resolution of disputes. In fact, on the evidence available to the Commission, including the findings of other inquiries, it appears rarely to deliver such benefits. Consumers and builders alike are critical of the excessive costs and delays of arbitration and are concerned that potential financial liabilities cannot be predicted before parties submit to it. The national Housing Industry Association's submission to this review said bluntly: 'HIA is of the view that arbitration has failed. Alternative mechanisms for dispute resolution, especially mediation, are likely to be cheaper, quicker, more effective and relevant.' Another significant problem is the public perception that the process is not impartial. Arbitration clauses in standard form residential building contacts usually provide for an arbitrator to be nominated by the head of a building industry body. It is often the case that all parties except the consumer have been intimately linked in a professional way. A perception of bias, whether supported by facts or not, is enough to diminish the effectiveness of any dispute resolution process. Both the Western Australian and Queensland inquiries found that arbitration was an inappropriate means of settling disputes. Accordingly, recommendations suggested introducing other means of resolving disputes in those jurisdictions. In Queensland, mandatory arbitration clauses have been declared void and disputes are heard by the Queensland Building Disputes Tribunal. Compulsory arbitration involves a number of stages. After a Notice of Dispute is served on the other party, the industry body specified in the arbitration clauses nominates a person to act as arbitrator. A preliminary conference is then arranged, followed by discovery of documents and various interrogatory procedures. The formalities prior to the hearing of the matter can be lengthy, and the accompanying costs incurred by the inevitable delay of the building crippling for one or both parties. In many cases the proceedings will be as long and as expensive as litigation, with the potential for hearing days to occur intermittently over weeks or even months. On completion the arbitrator's role is to assess the evidence and write an award. Costs of $2000-$3000 per hearing for each party are not uncommon."[11]

[132]

(a) First, the Tribunal appears to give substantial weight to the fact that the dispute went beyond matters in respect of which the building consultant had apparent expertise. There are two factual observations to be made with respect to this. The first is that the curriculum vitae of the building consultant which was supplied by the respondent to the appellant as evidence of his appropriateness before his appointment, is in fact so extensive as to suggest he could properly be regarded as having expertise in assessing claims under a contract of the type in issue. An expert may become an expert through experience as well as through qualification. It is very far from clear that the building consultant's expertise should be regarded as necessarily limited in the manner contemplated by the Tribunal. Secondly, the respondent put forward the building consultant as an expert presumably precisely because it believed he did have appropriate expertise to make an appropriate determination. The essence of the agreement between the parties was that the expert would perform an agreed role. It was for the parties to that agreement to agree as to whether he was for their purposes sufficiently qualified to perform that role. In circumstances of this kind considerations of convenience and cost effectiveness may lead to an agreement that a person having some relevant expertise (only) is to be regarded as sufficiently expert by the parties. I can see nothing in such an agreement which is improper or transforms the character of the expert's role into that of an arbitrator. Once it is accepted as the Master of the Rolls said in Carus Wilson that there is an intermediate category which is not to be regarded as arbitration, where though a person is appointed to settle disputes that have arisen, it is still not intended he or she should enter into an inquiry in the nature of a judicial inquiry, the extent of the expert's expertise cannot be decisive of the characterisation of his role.

[151]

"A clear distinction has always been maintained between negative restrictions upon the right to invoke the jurisdiction of the courts and positive provisions giving efficacy to the award of an arbitrator when made or to some analogous definition or ascertainment of private rights upon which otherwise the Courts might have been required to adjudicate. It has never been the policy of the law to discourage the latter. The former have always been invalid. No contractual provision which attempts to disable a party from resorting to the Courts of law was ever recognised as valid. It is not possible for a contract to create rights and at the same time to deny to the other party in whom they vest the right to invoke the jurisdiction of the courts to enforce them. Parties may agree in the sense of arriving at a common intention as to their future action but, because they do not contemplate legal relations, avoid the creation of rights and thus preclude resort to the courts. Parties may contract with the intention of affecting their legal relations, but yet make the acquisition of rights under the contract dependent upon the arbitrament or discretionary judgment of an ascertained or ascertainable person. Then no cause of action can arise before the exercise by that person of the functions committed to him. There is nothing to enforce; no cause of action accrues. But the contract does not attempt to oust the jurisdiction. What no contract can do is take from a party to whom a right actually accrues, whether ex contractu or otherwise, his power of invoking the jurisdiction of the courts to enforce it. Accordingly a contract providing for arbitration did not, apart from statute, prevent the institution of an action or suit even although an actionable breach of contract was committed by the refusal to refer. But if, before the institution of an action, an award was made, it governed the rights of the parties and precluded them from asserting in the Courts the claims which the award determined. By submitting the claims to arbitration, the parties confer upon the arbitrator an authority conclusively to determine them. That authority enables him to extinguish an original cause of action. His award will do so if it negatives the existence of liability. It will do so if it operates not merely to ascertain the existence and measure of the original liability, but to impose a new obligation as a substitute, whether the obligation results from the tenor of the award or from an antecedent undertaking of the parties to give effect to the determination it embodies. The award given under authority of the parties operates as a satisfaction pursuant to their prior accord of the causes of action awarded upon. ... Any issue might be submitted to arbitration, and upon that issue the award would be as conclusive upon the parties as an award upon the whole cause of action if that had been submitted. What at common law could not be done was to abandon by contract the power of invoking the Court's jurisdiction before the cause of action had been extinguished by an award and the power of countermanding the authority of the arbitrator. But it was never considered that the Court's jurisdiction was ousted by an award, notwithstanding that it concluded the parties with respect to matters which otherwise would be determined by the Court. It is therefore a mistake to suppose that the policy of the law exemplified in the rule against ousting the jurisdiction of the Court prevents parties giving a contractual conclusiveness to a third person's certificate of some matter upon which their rights and obligations may depend ... There are many familiar kinds of contracts containing provisions which make the certificate of some person, or the issue of some document, conclusive of some possible question. The most conspicuous example, perhaps, is the certificate of the engineer or architect under contracts for the execution of works or the construction of buildings."

(Emphasis inserted, citations omitted)

At a glance

Court

Decision date

Before

Source

Judgment (209 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (9)