Court of Appeal (WA)|2008-03-13|Before: Mr J, Hasluck J, Steytler P, Lure JA

GEBAUER NOMINEES PTY LTD -v- COLE [No 2] [2008] WASCA 41 (13 March 2008)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : GEBAUER NOMINEES PTY LTD -v- COLE [No 2] [2008] WASCA 41

GERHARD JOSEPH COLE as trustee for the HOTROX CHARCOAL UNIT TRUST t/as HOTROX CHARCOAL COMPANY

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : GEBAUER NOMINEES PTY LTD - v - COLE as Trustee for THE HOTROX CHARCOAL UNIT TRUST t/as HOTROX CHARCOAL COMPANY [2006] WASC 57

Arbitration - Application to amend name of claimant allowed by arbitrator - Order of arbitrator set aside by primary judge - Primary judge remitted to arbitrator for reconsideration question as to whether agreement entered into by claimant as individuals in personal capacity or as trustees - No issue for arbitrator to reconsider - Personal liability of trustees for contracts entered into as trustees - Turns on own facts

Arbitration - Application for removal of arbitrator for misconduct - Error of law by arbitrator in allowing change of name of claimant - No misconduct by arbitrator - Turns on own facts

1 JUDGMENT OF THE COURT: This is an appeal against the judgment of Hasluck J in which his Honour set aside the interim award of an arbitrator allowing the amendment of the name of the claimant in the arbitration and remitted the issue of the proper claimant to the arbitrator for reconsideration, but dismissed the appellant's application to remove the arbitrator for misconduct.

2 The appellant (Gebauer) now appeals against the order remitting the issue of the proper claimant in the arbitration proceedings to the arbitrator, contending that the identity of the proper claimant is plain beyond argument and there is no issue to be considered. Gebauer also contends that Hasluck J erred in law in failing to order the removal of the arbitrator.

3 This appeal arises out of extremely protracted arbitration proceedings which have an unfortunate history of interlocutory disputes involving applications to this court: see Gebauer Nominees Pty Ltd v Hotrox Charcoal Company [2002] WASC 55; Hotrox Charcoal Company v Gebauer Nominees Pty Ltd [2002] WASCA 293; Gebauer Nominees Pty Ltd v Hotrox Charcoal Co [2006] WASC 155. In addition, there was heard at the same time as this appeal an application by Gebauer for leave to appeal against the last-mentioned of those decisions.

4 The background and much of the history of the arbitration proceedings are set out in those earlier judgments, but for convenience we will refer to the pertinent facts so far as they are relevant to this appeal.

5 Gebauer is (or was) the owner of premises in O'Connor on which there is erected a factory unit. In 1998, Gebauer leased the premises to the 'Hotrox Charcoal Company' for a term of 24 months commencing 1 May 1998. Hotrox Charcoal Company was a business name registered by Gerhard Joseph Cole (Mr Cole) and Patrick Edward Mullally (Mr Mullally). For convenience we will refer to the lessee as Hotrox Charcoal Company.

6 Hotrox Charcoal Company intended to use the premises for the manufacture of a certain type of briquette. Hotrox Charcoal Company says that the briquette it intended to produce has a number of commercial and domestic applications, including in the provision of fuel for aluminium or silicon smelters.

7 A dispute subsequently arose between the parties. Hotrox Charcoal Company contended that, on or about 2 June 1999, rainwater entered the premises rendering the factory unfit for occupation, and the plant and equipment Hotrox Charcoal Company had installed in it, unusable. It alleged that the ingress of water had occurred because Gebauer had failed to maintain the premises in good repair.

8 The parties referred the dispute to arbitration pursuant to cl 28 of the lease. Clause 28.2 of the lease provided, among other things, that 'any dispute arising out of this lease is to be determined by a single Arbitrator under the provisions of the Commercial Arbitration Act 1985'. A barrister, Mr D A Forrester, was nominated as arbitrator by the chairman of the Western Australian Chapter of the Institute of Arbitrators and Mediators of Australia.

9 The claimant in the arbitration proceedings was initially described as 'The Hotrox Charcoal Unit Trust'. The respondent in the arbitration proceedings is Gebauer.

10 In the arbitration proceedings, Hotrox Charcoal Company alleged that Gebauer was in breach of its obligations under the lease in failing to maintain the premises in good repair, resulting in the ingress of water. It claimed that as a result of the ingress of water it had been unable to manufacture and sell briquettes and as a consequence had suffered damage, which it quantified at $44,392 per month. It also sought an abatement of rent.

11 Gebauer denied that it was liable to Hotrox Charcoal Company and counterclaimed for payment of rental, outgoings and interest. Relevantly for present purposes, in its defence Gebauer denied that it had entered into the lease with The Hotrox Charcoal Unit Trust - which, it said, was not a legal entity - and said that it had entered into the lease with Hotrox Charcoal Company.

12 At an early stage of the arbitration proceedings the name of the claimant was changed to 'Hotrox Charcoal Company'.

13 Following a hearing on liability extending over some nine days in late 1999 and early 2000, the arbitrator handed down an interim award dated 1 May 2000. In the interim award, the arbitrator found, in essence, that Gebauer was in breach of its obligation to repair under the lease and was liable for any loss or damage that was caused to Hotrox Charcoal Company as a result of that breach. The arbitrator also found that Hotrox Charcoal Company was entitled to an abatement of rent. The damages and the amount of the abatement of rent to which Hotrox Charcoal Company was entitled remained to be determined in the arbitration proceedings.

14 A preliminary conference in the arbitration proceedings was held on 1 December 2004. At that conference, counsel for Gebauer raised what is described in the minutes of the conference as 'a preliminary issue as to the jurisdiction of the arbitrator in relation to the description of the claimant as an alleged non-legal entity'. The arbitrator adjourned the proceedings to allow Hotrox Charcoal Company to apply to amend the description of the claimant. We should say that it appears this was the first time the issue of the identity or existence of the claimant had been raised since the initial stage of the arbitration proceedings in 1999.

15 On or about 10 December 2004, Hotrox Charcoal Company applied to amend the description of the claimant from 'Hotrox Charcoal Company' to 'Gerhard Joseph Cole as trustee for The Hotrox Charcoal Unit Trust trading as Hotrox Charcoal Company'. The application was supported by an affidavit of Mr Cole of 10 December 2004. In that affidavit, Mr Cole said, among other things, that the correct claimant in the proceedings was initially himself and Mr Mullally as trustees of The Hotrox Charcoal Unit Trust, trading as Hotrox Charcoal Company, and, following the resignation of Mr Mullally as a trustee on 16 October 1999, Mr Cole as the sole trustee.

16 Gebauer opposed the application, contending that Hotrox Charcoal Company was not a legal entity and had no capacity to contract. It was submitted that the arbitration proceedings had therefore been instituted by a non-existent party and were a nullity.

17 On 13 January 2005, the arbitrator published an interim award in which he granted leave to amend the name of the claimant to 'Gerhard Joseph Cole as trustee for The Hotrox Charcoal Unit Trust trading as Hotrox Charcoal Company'.

18 On Gebauer's contention that the arbitration proceedings were a nullity, the arbitrator said that the identity of the lessee under the lease was not determinative of that issue as his authority to arbitrate came, not from the lease, but from the agreement to arbitrate which was evidenced by the signed minutes of the preliminary conference of 7 October 1999. In that agreement the name of the claimant appeared as 'Hotrox Charcoal Unit Trust'.

19 The arbitrator said that at no time had Gebauer ever contended that there was no claimant in existence; Gebauer had always accepted that the claimant was the trustees of The Hotrox Charcoal Unit Trust, Mr Cole and Mr Mullally. It was too late for Gebauer to contend there was no claimant in existence. The arbitrator concluded that at all times 'there has been a legal entity as claimant namely two trustees and later the remaining trustee acting for and on behalf of the trust.'

20 The arbitrator concluded that the application to amend the name of the claimant was simply an application to correct a misdescription of the claimant and that the party remained the same, however it may be described. The amendment of the name was simply an expansion of the description of the existing claimant.

21 The arbitrator refused an application by Gebauer to join Mr Mullally as a party. The arbitrator concluded that he had no power to do so as the dispute was between the existing trustee or trustees of The Hotrox Charcoal Unit Trust and Gebauer. Once Mr Mullally ceased to be a trustee, he ceased to be involved in the proceedings.

22 Orders to give effect to the arbitrator's reasons were made on 19 January 2005. In an interim award of that date, the arbitrator ordered that the description of the claimant be amended to 'Gerhard Joseph Cole as trustee for the Hotrox Charcoal Unit Trust trading as Hotrox Charcoal Company'. The arbitrator ordered Gebauer to pay the costs of the application, on the basis that Gebauer's opposition to it had been unsuccessful, and ordered that those costs be payable on a solicitor and client basis, on the ground that Gebauer had raised the issue of the claimant's legal status only late in the proceedings.

23 Gebauer applied to this court under s 38 of the Commercial Arbitration Act 1985 (WA) (the Act) for leave to appeal against the interim award on a question of law, under s 42 of the Act to set aside the interim award and related orders on the ground of misconduct by the arbitrator, and under s 44 of the Act for an order that the arbitrator be removed on the ground of misconduct.

24 On those applications, counsel for Gebauer contended that the arbitrator had erred in finding that the amendment of the name of the claimant was merely to rectify a misdescription. In law it involved, not a change in description of the party, but the substitution of one party for another. Gebauer said that the arbitrator had erred in finding that the identity of the claimant in the arbitration proceedings was the trustee for the time being of Hotrox Charcoal Company, when in fact the true claimant was Messrs Cole and Mullally. It said that the effect of the interim award was to remove Mr Mullally as a claimant in the arbitration proceedings, something which the arbitrator did not have power to do.

25 Gebauer also complained that the arbitrator was in error in awarding the costs of the application to Hotrox Charcoal Company.

26 Gebauer contended that, by his errors, the arbitrator had misconducted the arbitration, warranting his removal.

27 The applications by Gebauer were heard by the learned primary judge on 1 December 2005. On 24 May 2006, the learned primary judge ordered, so far as relevant for present purposes, that the interim award amending the name of the claimant in the arbitration proceedings be set aside and the issue of the identity of the claimant and the costs of the application to amend the name of the claimant be remitted to the arbitrator for further consideration and determination. His Honour dismissed Gebauer's application for the removal of the arbitrator. The costs of the application to set aside the interim award were reserved until after reconsideration of the matter by the arbitrator, with liberty to either side to apply.

28 In his reasons for decision, which the learned primary judge had published on 30 March 2006, his Honour held that the critical issue on the application before the arbitrator was whether the lessee should be characterised as the two individuals, Messrs Cole and Mullally, who had signed the lease without qualification, or whether they should be regarded as having signed it for and on behalf of The Hotrox Charcoal Unit Trust.

29 In that connection, his Honour held that the arbitrator had erred in law in finding that his authority as arbitrator did not come from the lease but from the agreement between the parties to arbitrate on the dispute. The learned primary judge said it seemed that this erroneous finding had reinforced the arbitrator's conclusion that the claimant in the arbitration proceedings had always been, and should properly be described as, 'The Hotrox Charcoal Unit Trust'.

30 The learned primary judge said that there was nothing on the face of the lease document to indicate that Messrs Cole and Mullally were signing as trustees of The Hotrox Charcoal Unit Trust and such a conclusion could only be arrived at if it was found that the lease was ambiguous and it was permissible to resort to parol evidence to resolve the ambiguity. But that was not how the arbitrator had proceeded.

31 His Honour concluded that the arbitrator had erred in law in the manner in which he had determined that the true claimant was the trustee for the time being of The Hotrox Charcoal Company Unit Trust, and therefore in determining that the application before him was for the correction of a misdescription of the claimant. That error amounted to an interference with the rights of Gebauer and could be regarded as a breach of the rules of natural justice. His Honour found that the arbitrator had thereby misconducted the proceedings within the meaning of s 42 of the Act.

32 The learned primary judge then turned to the form of relief available to Gebauer. He said:

It will be apparent from earlier discussion that although errors of law in the Arbitrator's line of reasoning have come to light, a finding might still be open upon a proper interpretation of the subject lease that the lessee was the Hotrox Charcoal Company Unit Trust. For present purposes, as I have indicated, it is not necessary for me to express a final view about that matter [105].

33 His Honour concluded the appropriate form of relief was to set aside the second interim award and remit the matter to the arbitrator for reconsideration. He said:

If [the arbitrator] finds that the lessee was Cole and Mullally trading as Hotrox Charcoal Company then he will be obliged to dismiss the application to correct a misdescription in the manner proposed because to allow it would be to allow for the substitution of a new party. On the other hand, if he finds that the lessee was the Unit Trust it will be open to him to allow the application [112].

34 We should say that in his reasons for decision, the learned primary judge did not deal expressly with Gebauer's application for the removal of the arbitrator, but it is necessarily implicit in the orders his Honour made that he rejected the application.

35 Gebauer relied upon the following grounds of appeal.

(1) in remitting the issue of identity of the claimant in the arbitration to the arbitrator for reconsideration;

(2) in failing to exercise his discretion to remove the arbitrator; and

(3) in failing to exercise his discretion to award the costs to Gebauer as the successful party.

37 It was submitted that, the learned primary judge having found that the identity of the claimant was determined by the identity of the lessee to the lease, it necessarily followed that the application to amend the name of the claimant must fail. The lease was signed by Messrs Cole and Mullally, and they were the proper parties as claimants to the arbitration proceedings. It was immaterial whether they signed the lease in their own right or as trustees for The Hotrox Charcoal Unit Trust. The Hotrox Charcoal Unit Trust is not a legal entity and could not be the lessee or the claimant. There was therefore no issue for the arbitrator to reconsider.

38 On Gebauer's application to remove the arbitrator, it was submitted that the confidence of the parties to arbitration proceedings in the arbitrator was of primary importance because the arbitrator was paid by the parties and there were limited rights of appeal from the decision of an arbitrator. Counsel argued that in circumstances where the learned primary judge had found that intervention by the court was justified to the extent of setting aside the interim award, and in light of his Honour's finding that the errors he had identified amounted to an interference with the rights of Gebauer and a breach of the rules of natural justice, it was incumbent upon the learned primary judge to exercise his discretion to remove the arbitrator in order to restore the confidence of the parties in the arbitral process. Counsel submitted that in declining to do so the learned primary judge had placed too much weight on the general rule that a court should interfere with an arbitration as little as possible and had failed to take into account the need to preserve the parties' confidence in the arbitral process.

39 Counsel submitted that as liability had already been determined by the arbitrator, and the remaining substantive issue of damages, which involved questions of causation, mitigation and quantum, had not yet been the subject of any substantive hearing, there would be no significant prejudice to the parties in the removal of the arbitrator at this point. The damages to which Hotrox Charcoal Company was entitled was a discrete issue and no practical issues therefore militated against the appointment of a new arbitrator.

40 On the question of the costs, it was submitted that the learned primary judge erred in the exercise of his discretion by failing to award the costs to Gebauer as the successful party. Whilst his Honour had not allowed Gebauer's application for removal of the arbitrator or its application to dismiss or stay the arbitration proceedings, the application to set aside the interim award had been allowed. The learned primary judge had failed to give consideration to the fact that Gebauer had been vindicated by the outcome of its application, which Hotrox Charcoal Company had unsuccessfully opposed.

Submissions of the respondent on the appeal

41 It was submitted on behalf of the respondent that it was open to the learned primary judge, and compelling on the evidence before him, to remit the issue of the identity of the claimant to the arbitrator for reconsideration.

42 On the removal of the arbitrator, it was submitted that such a serious step is only justified if the arbitrator's conduct is of so serious a nature that the arbitrator cannot be trusted to complete the arbitration fairly and properly, even with the benefit of the examination of his conduct by the parties, their representatives and guidance from the court. Misconduct of a technical nature should not lead to the removal of the arbitrator.

43 Counsel submitted that it was irrelevant that Gebauer contended it had lost confidence in the arbitrator. That would not lead to an order removing the arbitrator without evidence of real and substantial injustice. There is no such evidence and Hotrox Charcoal Company has not lost confidence in the arbitrator.

44 Counsel submitted that it was also an important consideration that the arbitration has been conducted before the current arbitrator since it commenced in 1999. Since that time the arbitrator had made a finding on liability against Gebauer on 1 May 2000, following a nine-day hearing on liability, and, during the period 7 October 1999 to 19 January 2005, had presided over a very large number of preliminary conferences and had made orders and directions at each of those conferences in relation to the conduct of the arbitration.

45 Throughout that period there had been no complaint by Gebauer as to the competence or ability of the arbitrator fairly to conduct and complete the arbitration proceedings. Moreover, the arbitrator was now thoroughly familiar with the matter. It involved complex facts and no transcript exists of any of the proceedings in the arbitration to date. There would be substantial delay and prohibitive expense involved in having a new arbitrator familiarise himself or herself with it. All that remains to complete the arbitration is the hearing of the issue of quantum of damages.

46 On the issue of costs, it was submitted that the court has a wide discretion as to costs and no grounds had been shown which would warrant the learned primary judge's exercise of discretion being interfered with. Gebauer was not successful on all of the issues before the learned primary judge and, as his Honour observed, it could not easily and confidently be said that Gebauer should necessarily be characterised as the successful party.

47 We will take each of the grounds of appeal in turn.

The learned primary judge erred in remitting the issue of identity of the claimant in the arbitration to the arbitrator for reconsideration

48 The lease describes the lessee as 'Hot Rox [sic] Charcoal Company'. In the space provided for execution by the lessee, the lease was signed by Mr Cole and Mr Mullally. At the time of execution of the lease, the business name 'The Hotrox Charcoal Company' was registered in the names of Messrs Cole and Mullally.

49 Mr Cole, however, says that the business name was owned by himself and Mr Mullally as trustees for The Hotrox Charcoal Unit Trust. That is immaterial. It is clear that a trust is not a separate legal entity, so a trustee cannot contract as agent for a trust. As it is not a separate legal entity, The Hotrox Charcoal Unit Trust could not be a party to the lease.

50 It is also immaterial whether or not Messrs Cole and Mullally entered into the lease as trustees. Trustees are not distinct legal persons in a representative capacity, separate from themselves in a personal capacity. As Gummow J explained in Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd [1987] FCA 332; (1987) 78 ALR 193, 253, it is fundamental that the common law does not recognise a trustee as having assumed an additional or qualified legal personality.

51 This means that in the ordinary course the personal liability of a trustee in respect of contracts he or she enters into in the course of the performance of the trust is not limited or qualified: Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360, 367, Re Johnson (1880) 15 Ch D 548, 552.

52 Of course, while a trustee is personally liable on any contract which he or she enters into as trustee, the law does permit a trustee to contract with a third party on the basis that the trustee's personal liability is limited - for example, to the extent of their right to indemnity from the trust funds - but clear words are necessary to limit what is prima facie the unlimited personal liability of a trustee. A trustee's liability will not be limited to his or her right to indemnity from the trust funds simply because the other contracting party knew the person was a trustee; nor will a statement that a person contracts 'as trustee' be sufficient to exclude full personal liability: Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773. There must be evident a clear intention of the parties that the liability of the trustee is to be limited: see Ford & Lee, Principles of the Law of Trusts (3rd ed, 1996) [14010].

53 However, no issue of limitation of liability is relevant on the present appeal.

54 In our view, it is clear that the lessees under the lease were the signatories to it, Messrs Cole and Mullally. As Messrs Cole and Mullally were the lessees under the lease, they are the proper claimants in the arbitration.

55 It follows, in our respectful view, that the learned primary judge erred in concluding that in order to determine the application to amend the description of the claimant it was first necessary for the arbitrator to find whether the lessee was Messrs Cole and Mullally or The Hotrox Charcoal Unit Trust. The Trust is not an available alternative because, not being a separate legal entity, it cannot be a party to a contract. We would therefore uphold this ground of appeal.

56 There is a further matter that arose on the hearing of the appeal. The respondent accepts that the arbitrator erred in ordering that Mr Cole as trustee for The Hotrox Charcoal Unit Trust be substituted as the claimant. Gebauer accepts that the proper claimants are Messrs Cole and Mullally. The respondent also accepts that the proper claimants are Messrs Cole and Mullally but wants the matter referred back to the arbitrator for him to determine whether the proper claimant is those gentlemen in their capacity as trustees of The Hotrox Charcoal Unit Trust. A technical difficulty for the respondent is that there was no relevant amendment application before the arbitrator or the primary judge. A more significant consideration is the potential for the parties to waste further time and money arguing about whether the proper claimants are Messrs Cole and Mullally or Messrs Cole and Mullally as trustees of The Hotrox Charcoal Unit Trust. That would be a sterile debate. The absence of any reference to the lessee's capacity as trustee in the name of the party would not prevent the respondent (claimant) from proving in the damages claim that the lease was trust property as would be the damages flowing from the breach.

57 If this court set aside the order remitting the matter to the arbitrator, the claimant would remain Hotrox Charcoal Company. Having regard to the tortured conduct of this litigation that is an entirely unsatisfactory outcome. If the parties consent, this court would be prepared to make an order that Messrs Cole and Mullally be substituted as the claimant and that the interim award be amended accordingly. If that consent is not forthcoming we would permit the respondent to amend his application relating to the proper claimant and, subject to considering the terms of the application, remit it back to the arbitrator.

The learned primary judge erred in failing to exercise his discretion to remove the arbitrator

58 On this ground, Gebauer relied on s 44(a) of the Act, which is as follows:

Where the Court is satisfied that -

(a) there has been misconduct on the part of an arbitrator or umpire or an arbitrator or umpire has misconducted the proceedings;

...

the Court may, on the application of a party to the arbitration agreement, remove the arbitrator.

59 Gebauer contended that the arbitrator had misconducted the arbitration proceedings in relation to the application to amend the name of the claimant, which had the effect of causing substantial injustice to Gebauer. The arbitrator should therefore be removed.

60 There can be no doubt that the power to remove an arbitrator for misconduct is a drastic remedy and not one to be exercised lightly. The value of arbitration as a method of resolving disputes, and the willingness of disputants to commit the necessary time and money to the arbitration process, would be seriously undermined if the courts were too ready to intervene to remove an arbitrator.

61 It is, however, impossible to provide a comprehensive definition of what would constitute misconduct within the meaning of s 44 of the Act warranting the removal of an arbitrator. Given the infinite variety of circumstances that could arise, it would be unwise to attempt to do so.

62 But what is clear is that an error of law, even a serious error of law, does not of itself amount to misconduct: Moran v Lloyd's [1983] QB 542, Forsayth NL v Australasian Gold Mines NL (No 1) (1992) 7 WAR 549, 560 - 561. In that connection, it is important to recognise that while parties to arbitration, like parties to litigation, are entitled to expect that the arbitration will be conducted without mishap or misunderstanding, and that the procedure adopted will be fair and appropriate, they are not entitled to expect of an arbitrator, any more than of a judge, that he or she will necessarily and in all circumstances arrive at the 'right' answer as a matter of fact or law: King v Thomas McKenna Ltd [1991] 2 QB 480, 491.

63 If the position were otherwise it would make unrealistic demands of arbitrators and would be likely to discourage parties from undertaking arbitration as a means of dispute resolution. We respectfully agree with the view of the learned authors (Mustill & Boyd) of the Law & Practice of Commercial Arbitration in England (2nd ed, 1989), where they say:

The fact that the court is given a wide power to remove the arbitrator in cases of misconduct does not mean that the power will be freely exercised. An arbitrator may commit errors - even serious errors - in the course of the reference, and yet remain perfectly able to carry the arbitration to a successful conclusion once his mistakes have been pointed out. Justice requires that in such a case the arbitrator should be left in office, rather than that the parties should suffer the delay and expense of beginning arbitration afresh (530).

64 As Miles CJ observed in Holland Stolte Pty Ltd v Murbay Pty Ltd (1991) 105 FLR 304:

To remove an arbitrator from office for [procedural errors or errors of law] which must inevitably occur from time to time would render the position of an arbitrator too precarious and deprive the arbitration system of the regularity and stability necessary to an efficacious dispute resolution system which might be a proper alternative to judicial resolution (309).

65 In our view, an arbitrator will be removed by reason of an error made in the course of an arbitration proceeding only where the error indicates some impropriety, partiality or general lack of capacity on the part of the arbitrator, so that 'a reasonable person would no longer have confidence in the ... arbitrator's ability to come to a fair and balanced conclusion on the issues if remitted': see Lovell Partnerships (Northern) Ltd v AW Construction Plc (1996) 81 BLR 83.

66 In the present case, there is nothing to suggest that the arbitrator could not be relied upon to come to a fair and balanced conclusion on the issues in the arbitration. The arbitrator has been seised of the matter since 1999 and since that time has conducted a nine-day hearing on liability and numerous interlocutory conferences, apparently without complaint by either party. The findings of the learned primary judge relate to an error of law on the part of the arbitrator on a discrete issue and to no more. Nothing has been shown which would warrant the removal of the arbitrator.

The learned primary judge failed to exercise his discretion to award the costs to Gebauer as the successful party

68 As we have mentioned, the learned primary judge ordered that the question of the costs of the application to amend the name of the claimant be remitted to the arbitrator and reserved the costs of the application to set aside the interim award until after reconsideration by the arbitrator of the issue of the identity of the claimant. In light of our conclusions on the first ground of appeal, those orders must be set aside.

69 The question then is how the costs of those applications should be dealt with. It is clear that the application by Hotrox Charcoal Company to the arbitrator to amend the name of the claimant was misconceived. On the other hand, so too was Gebauer's opposition to it, insofar as Gebauer contended that the arbitration proceedings had been instituted by a non-existent party and were a nullity.

70 In the subsequent proceedings before the learned primary judge, whilst Gebauer succeeded in having the decision of the arbitrator set aside, it failed in its application to have the arbitrator removed for misconduct.

71 In those circumstances, it is appropriate that each party bear its own costs of the application before the arbitrator and of the appeal to the learned primary judge.

72 We would hear from the parties on whether they consent to an order that Messrs Cole and Mullally be substituted as the claimant and that the interim award be amended accordingly. After hearing from the parties, the court will determine whether or not any amended application by the respondent should be remitted to the arbitrator.

73 Each party should bear its own costs of the application before the arbitrator and of the appeal to the learned primary judge.

Arbitration Act 1985

Citation : GEBAUER NOMINEES PTY LTD - v - COLE as Trustee for THE HOTROX CHARCOAL UNIT TRUST t/as HOTROX CHARCOAL COMPANY

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (92 paragraphs)

GEBAUER NOMINEES PTY LTD -v- COLE [No 2] [2008] WASCA 41 (13 March 2008)

The learned primary judge erred in remitting the issue of identity of the claimant in the arbitration to the arbitrator for reconsideration

The learned primary judge erred in failing to exercise his discretion to remove the arbitrator

The learned primary judge failed to exercise his discretion to award the costs to Gebauer as the successful party

Parties

Legislation Cited (1)

Cases Cited (4)

**Citation :** GEBAUER NOMINEES PTY LTD - v - COLE as Trustee for THE HOTROX CHARCOAL UNIT TRUST t/as HOTROX CHARCOAL COMPANY

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (92 paragraphs)

GEBAUER NOMINEES PTY LTD -v- COLE [No 2] [2008] WASCA 41 (13 March 2008)

The learned primary judge erred in remitting the issue of identity of the claimant in the arbitration to the arbitrator for reconsideration

The learned primary judge erred in failing to exercise his discretion to remove the arbitrator

The learned primary judge failed to exercise his discretion to award the costs to Gebauer as the successful party

Parties

Legislation Cited (1)

Cases Cited (4)

Citation : GEBAUER NOMINEES PTY LTD - v - COLE as Trustee for THE HOTROX CHARCOAL UNIT TRUST t/as HOTROX CHARCOAL COMPANY