Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd

Solicitors: Macpherson & Kelley Lawyers Pty Ltd - Plaintiff Goodman Law - Defendant File Number(s): 2014/370641

Judgment

1. HIS HONOUR: On 12 June 2015 I dismissed the challenge by the plaintiff (Joss) under the public policy exception in s 34(2)(b)(ii) of the Commercial Arbitration Act 2010 (Cth) (the Act) to an arbitral award comprising an Interim Award and Final Award. I determined that the defendant (Cube) is entitled to orders recognising and enforcing the award as a judgment of this Court; Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd [2015] NSWSC 735. The Arbitrator had also made an award for security for costs on 16 October 2013. There is no issue that that award should be recognised and enforced.
2. Initially Cube had sought an order under s 36(2) of the Act that, pending determination of these proceedings, Joss provide security for the award. The necessity to determine that application dissipated because the proceedings for recognition and enforcement were brought on swiftly.
3. The question of costs and some ancillary matters require determination.
4. Cube seeks the costs of these proceedings on an indemnity basis. Amongst other things, it cites in support of its position the Hong Kong decision in A v R [2009] 3 HKLRD 389 in which Reyes J said: 67. Parties should comply with arbitration awards. A person who obtains an award in his favour pursuant to an arbitration agreement should be entitled to expect that the Court will enforce the award as a matter of course. 68. Applications by a party to appeal against or set aside an award or for an Order refusing enforcement should be exceptional events. Where a party unsuccessfully makes such application, he should in principle expect to have to pay costs on a higher basis. This is because a party seeking to enforce an award should not have had to contend with such type of challenge. 69. Further, given the recent introduction of Civil Justice Reform (CJR), the Court ought not normally to be troubled by such type of application. A party unmeritoriously seeking to challenge an award would not be complying with its obligation to the Court under Order 1A Rule 3 to further the underlying objectives of CJR, in particular the duty to assist the Court in the just, cost-effective and efficient resolution of a dispute. 70. If the losing party is only made to pay costs on a conventional party-and-party basis, the winning party would in effect be subsidising the losing party's abortive attempt to frustrate enforcement of a valid award. The winning party would only be able to recover about two-thirds of its costs of the challenge and would be out of pocket as to one-third. This is despite the winning party already having successfully gone through an arbitration and obtained an award in its favour. The losing party, in contrast, would not be bearing the full consequences of its abortive application. 71. Such a state of affairs would only encourage the bringing of unmeritorious challenges to an award. It would turn what should be an exceptional and high-risk strategy into something which was potentially "worth a go". That cannot be conducive to CJR and its underlying objectives. 72. Accordingly, in the absence of special circumstances, when an award is unsuccessfully challenged, the Court will henceforth normally consider awarding costs against a losing party on an indemnity basis. The Respondent will here pay the Applicant's costs on an indemnity basis.