Elspan v Eurocopter

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION - COMMERCIAL LIST

Elspan International Limited v. Eurocopter International Pacific Ltd and ors. Proceedings 55047/97 and 55046/98

JUDGMENT 1 On 14 October 1998 the second defendant ('the Arbitrator'), made an interim award in an arbitration between the plaintiff, Elspan International Limited ('Elspan') and the first defendant, Eurocopter International Pacific Limited ('Eurocopter') with respect to a cross-claim brought by Elspan against Eurocopter. Elspan was awarded an amount of $18,874 plus interest. Costs were reserved and remain reserved. 2 There are before the Court two sets of proceedings in which Elspan seeks to impugn the award. 3 In proceedings 55047 of 1998, Elspan seeks orders pursuant to section 42(1)(a) of the Commercial Arbitration Act 1984 (NSW) ('the Act') setting aside parts of the Award on the ground that there is said to have been legal and/or technical misconduct on the part of the Arbitrator or alternatively, the Arbitrator is said to have misconducted the proceedings. Those parts of the Award which Elspan seeks to be set aside are: (a) Paragraphs 51-54 and the rejection by the Arbitrator of Elspan's claim for $3,600 for higher strength concrete in wall panels. (b) Paragraphs 63-69 leading to Elspan's claim of a further amount of $78,300 in respect of jacking. (c) Paragraphs 103-105 leading to the rejection of Elspan's claim of $10,625 for awning canopies. (d) Paragraphs 109-111 leading to the rejection of Elspan's claim of $14,343.28 for a hangar crane. (e) Paragraphs 117-123 leading to the rejection of Elspan's further claim of $21,752 for doors. 4 Orders are sought remitting the issues submitted to the Arbitrator for determination but said to have been left undetermined by him, namely: (a) the scrap value of steel in the steel building; and (b) the value of plans for the works. 5 The orders seek for these matters to be remitted to a new Arbitrator, or alternatively to the Arbitrator, for determination. 6 Eurocopter is the first defendant. The Arbitrator is joined as second defendant. An order is sought pursuant to section 44(a) and/or 44(c) of the Act, removing the second defendant as Arbitrator. 7 As against both defendants, Elspan seeks pursuant to section 11(1)(a) of the Act that the Court appoint a new Arbitrator to deal with those matters remitted to the Arbitrator and to finalise all outstanding issues. Alternatively, pursuant to section 43 of the Act, Elspan seeks that those parts of the Arbitrator's award dealing with the matter of concrete strength and identified in section 6 of the Notice of Contentions be remitted to the Arbitrator to be reconsidered in the light of the Court's judgment and for the Arbitrator to determine the further issues submitted to him for determination but not determined by him. 8 The second set of proceedings, number 55046 of 1998, are also proceedings brought against Eurocopter. Elspan seeks leave to appeal pursuant to section 38(4)(b) as read with section 38(5)(a) and section 38(5)(b)(i) and (ii) of the Act, against those parts of the Award identified in Elspan's contentions section (C) of the Summons. Section (C) deals with a number of discrete matters which will be referred to below. In a number of instances, the matters which require consideration and are dealt with in the two summonses are the same but plainly different principles apply. Background to the Arbitration 9 On 19 February 1990, Aerospatiale Holdings Australia Pty Limited ('Aerospatiale Holdings') and Elspan entered into a contract for the design and construction of an office and hangar complex at Bankstown Airport. The agreement had a contract sum of some $2.4million. Elspan is a company incorporated in Hong Kong. 10 The design of the two-level office building was described by the Arbitrator in paragraph 2 of the Award as 'a lift slab building whereby the first and roof slabs were cast at ground level and subsequently lifted into position by a jacking process'. Post-tensioned concrete is said to have been employed in the ground floor raft slab at grade, the suspended slabs and wall panels. The steel structure of the hangar involved an innovative design and construction method involving post-tensioning principles. 11 Work on that project is said to have commenced in about February 1990. Disputes arose thereafter between the parties concerning the execution of the works and an arbitration clause in the original agreement was enlivened following which, in about July 1991, Mr J.I. Muirhead was appointed as Arbitrator. Following a period of negotiation, a second agreement was entered into and it is this agreement which is the subject of the arbitration leading to the Award now in dispute. Parties to this second agreement were Aerospatiale Helicopters Australia Limited (which was described as the owner) Aerospatiale Holdings and Elspan. Subsequently, Aerospatiale Helicopters Australia Limited changed its name to Eurocopter International Pacific Limited ('Eurocopter'). The agreement in effect named Elspan (Australia) Pty Limited as Elspan's representative in performance of its obligations under the agreement in Australia - clause 16.2. The agreement was described by the Arbitrator as one in respect of which Elspan was to complete the remaining works for a contract sum of $910,400. The scope of the remaining works was particularised in a schedule 'A' to the second agreement and payment stages were set out in a schedule 'D'. [Award paragraph 4] 12 Elspan was required to bring the remaining works to practical completion by 24 January 1992 or such date as may be extended pursuant to the agreement. The remaining works under the second agreement commenced, but further disputes arose and on 10 February 1992, Eurocopter purported to terminate the agreement and took possession of the site. It was common ground before the Arbitrator that Eurocopter had paid Elspan the total sum of $581,000 under the second agreement. 13 Disputes which then arose resulted in a dual arbitration and reference to the Honourable Gordon Samuels AC QC under the provisions of the Act and pursuant to Part 72 of the Supreme Court Rules. That dual process apparently arose as the disputes involved parties other than those who were parties to the Arbitration Agreement in the second agreement. 14 Mr Samuels only considered Eurocopter's claim against Elspan, Elspan's cross-claim being stayed pending Elspan providing security for Eurocopter's costs. Ultimately, in the combined referee's report and award of 23 July 1993, Mr Samuels found in favour of Elspan as follows: (a) Eurocopter's claims of its lawful termination were dismissed. (b) Eurocopter's purported termination was held itself to amount to a repudiation. (c) Elspan's notice of 24 February 1992 was held to have effect as an acceptance of that repudiation and a termination by Elspan of the Agreement. (d) Because Eurocopter's unjustified termination amounted to a breach of the Agreement, the mutual waivers for which clause 2.2(b) provided, were enlivened. 15 Mr Samuels' report was brought down on 23 July 1993. 16 On 27 May 1994, Mr Samuels brought down a referee's report and decision (award) on costs. In that award, Mr Samuels made certain findings in relation to Mr Peter Ellen's conduct before the Tribunal which the Arbitrator, Mr Markham, adopted pursuant to section 21 of the Act - see paragraph 11 award. 17 On 28 July 1994, Mr Samuels awarded that Elspan provide security for Eurocopter's costs and stayed the cross-claim until security was provided. At that time, Elspan's cross-claim pleaded a claim in quantum meruit, unjust enrichment and four other heads of damages. Elspan then elected to only pursue its claim in quantum meruit and subsequently in an interim award, Mr Samuels reduced the security previously ordered to be paid and continued the stay of proceedings until the security was provided. 18 On 3 April 1996 by consent of the parties, Hunter J ordered that Mr Markham be appointed Arbitrator in the arbitration in place of Mr Samuels. The Court consented to the parties agreement that the Arbitrator have jurisdiction in terms of security for costs and a stay. 19 After some further applications before the Arbitrator, relating to an amendment foreshadowed by Elspan to its cross-claim, so as to include loss of profits in addition to a quantum meruit, and in relation to a stay application, Elspan elected only to press its cross-claim for a quantum meruit and provided the security as ordered. The security for costs decision of the Arbitrator included a finding that some evidence given in the hearing was relevant to the cross-claim and should not be adduced again at the later hearing, other than by reference. 20 Eurocopter's original defence to the cross-claim sought a set-off against any quantum meruit in respect of rectification of defects and unsatisfactory workmanship, but Eurocopter subsequently abandoned that limb of its defence. 21 Elspan's cross-claim was pleaded as follows: 'The cross-Claimant alleges that the value of the work completed and material supplied to complete "the Remaining Works" exceeds the total sum paid by the Cross-Respondent to the Cross-Claimant in respect of such work and materials. The Cross-Claimant claims in quantum meruit for the value of the work completed and materials supplied to complete "the Remaining Works" and for which it has not been paid by the Cross-Respondent.' 22 During its case, Elspan extended its quantum meruit claim to include obligations incurred for elements of work not supplied and further, a claimed entitlement to interest, being a special detriment, on certain Hong Kong loan accounts with Westpac. The cross claim finally pressed sought an amount of approximately A$1.195 million. 23 As part of the background material, it is necessary to note that the Arbitrator held hearings from 30 April 1996 to 22 September 1997, during which 14 full hearing days were occupied. Counsel for Eurocopter had suggested that the issues be narrowed by the parties attempting to reach agreement wherever possible and at the same time to identify the areas in dispute. The Arbitrator who had thought this to be a good idea had said "I believe that the most effective way of doing this would be to have a short adjournment and for counsel for both parties to sit down with the affidavits and statements of Messrs Ellen, Stone and Islaub and reach agreement where possible on those paragraphs which are not to be read". This was followed with the Arbitrator stating, "Yes, obviously, if there is an item which is not agreed, then the paragraph has got to remain (sic) and be read". This was the background to the non-reading of certain paragraphs of Mr John Ellen's affidavit. 24 The Arbitrator required the expert quantity surveyors to prepare a joint report which they did on 27 June 1997 ('the Joint Report'). The quantity surveyor called by Eurocopter was Mr Moir. The quantity surveyor called by Elspan was Mr Horley. 25 Certain further questions were put to the quantity surveyors who prepared a second report. 26 In the Joint Report, Eurocopter's quantity surveyor marked some items which it claimed had been paid for under the first contract by Aerospatiale. The Arbitrator rejected the submission that Eurocopter would be entitled to claim a set-off of the amount of such items. 27 As has already been mentioned, the parties agreed on a list of factual issues. This agreement took place on 28 June 1997. The agreed list of issues for determination was reduced to writing in Exhibit P5. [See Tab 27 of Exhibit PX] The Relevant Principles 28 As Brooking J stated in Stannard v Sperway Constructions Pty Ltd (1990) VR 673 at 678: '. . . "Misconduct", when used in relation to Arbitrators, is a term of art and one which, as the inclusive definition in s.4 accepts, cannot be succinctly defined. It is rather like the elephant - we know it when we see it. If we are in doubt we may gain assistance from the books, where we will however find no rigid definition of the species but instead statements of principle and multifarious examples of their application.' 29 In Doran Constructions Pty Limited v Health Administration Corporation of NSW & Anor (Unreported, New South Wales Court of Appeal, 10 October 1994) Kirby P at pages 8 to 9 made a number of observations with respect to use of the word 'misconduct' referred to in the Act. These included the statement that the term may not, by the authorities, amount to much more than such a mishandling of the arbitration as to be likely to amount to a substantial miscarriage of justice. However, the mere failure to put a party on notice of an argument as to a point which might be decided against it might not, in the context of an arbitration, necessarily amount to misconduct. 30 Mere delay must be adjudicated in context on each occasion. 31 Elspan seeks leave to appeal against the interim award in respect of questions of law arising out of the Award pursuant to section 38(4) of the Act. As no consent has been given to the bringing of an appeal, the leave of the Court is required for the bringing of the appeal [section 38(4)(b) of the Act]. 32 Section 38(5) of the Act provides: 'The Supreme Court shall not grant leave under sub-section (4)(b) unless it considers that: (a) having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more of the parties to the arbitration agreement; and (b) there is : (i) a manifest error of law on the face of the award; or (ii) strong evidence that the arbitrator or umpire made an error of law, and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law.' 33 Elspan asserted, as I understood it, that the requirements of section 38(5)(a) and section 38(5)(b)(i) or (ii) were satisfied. 34 The principles dealing with applications of this type were generally dealt with in Horizons Corporation Pty Ltd v Lahey Constructions Pty Ltd (Unreported, Supreme Court of New South Wales, 27 November 1998, Einstein J). In that decision, the principles laid down by the New South Wales Court of Appeal in Promenade Investments Pty Ltd v State of New South Wales (1991) 26 NSWLR 203 and in Natoli v Walker (Unreported, Court of Appeal, 26 May 1994) were repeated. In short, as those decisions make clear, section 38(5) of the Act sets a number of thresholds which must be surmounted by an applicant before leave to appeal can be granted. 35 It is unnecessary to here repeat those statement of principle which are adopted. In particular, the expression 'error of law in the face of the award', is used in the Act to indicate something evident or obvious rather than arguable. The word 'manifest' requires swift and easy persuasion and rapid recognition of a suggested error. 36 A number of the issues raised by Elspan were relevant to both the Section 42 and the section 38 proceedings, although obviously put in different (but sometimes overlapping) ways in each suit. The convenient way forward is to deal with Elspan's claims, as appropriate making plain whether and if so how, a particular claim was put as part of the section 42 case, or as part of the section 38 case. The credit findings against Mr John Ellen 37 Mr John Ellen, a director of Elspan Australia, was described by the Arbitrator in paragraph 23 of the Award as 'the authorised representative of Elspan in the cross-claim'. Mr John Ellen gave evidence. During the original and the second agreements, Mr Ellen was responsible for the management of the construction works on site. 38 In paragraphs 24, 25 and 26 of the Award, the Arbitrator stated as follows: '24. During the hearing before Mr Samuels on Eurocopter's and Aerospatiale Holdings' claims, in the main, Mr Ellen conducted Elspan's defence. Mr Samuels had found at that time, that he regarded Mr John Ellen as, on the whole, a reliable witness who endeavoured to describe events as he believed them to have occurred. Later in his report, he qualified this by saying that, as might be expected, Mr Ellen's evidence was affected by his advocate's role and that he was adversely influenced by his understandable attempts to give evidence from the Bar table. 25. In his later report and decision on costs dated 27 May 1994, the former learned Arbitrator came to the conclusion that Mr John Ellen had deliberately decided not to inform the Tribunal of the substantial legal work undertaken by Elspan's solicitor and that this was in order to obtain the forensic advantage in procedural matters that a litigant in person might enjoy (P19-P21). This deception was clearly of concern to Mr Samuels as it is to me. In my opinion, it demonstrates bias on Mr Ellen's part over a continuing period. Mr Ellen's credibility was the subject of several attacks by counsel for Eurocopter during the hearing and in submissions . I will return to this matter later. 26. During the security for costs hearing, I accepted that Elspan was probably owned by Muse Consultants Limited. In that hearing, Mr Ellen gave evidence that Muse owned no assets. I found this evidence to be non-persuasive, absent supporting documents . I made this finding at a time when I had not read Mr Samuels' report and decision on costs.' [Emphasis added] 39 In paragraphs 46 and following of the Award, the Arbitrator dealt with matters touching Elspan's claim for additional concrete additives. This was a claim for the value of higher strength concrete in wall panels. 40 Paragraphs 46 through to 54 inclusive, are in the following terms: '46. The quantity surveyors assumed that the wall panels were constructed with a characteristic concrete strength F'c of 35 or 32 MPa. Based on concrete test cores out from the floor slabs, Mr Ellen told Mr Horley: "That the strength of concrete used in the wall panels is 65MPa" 47. Assuming this fact, Mr Horley recommended that the value of the concrete in the wall panels be increased by $3,600. Mr Moir generally agreed on the same assumption. 48. What Mr Ellen did not do was to refer Mr Horley to page 1 of Schedule B of the second agreement which specified that the wall panels were to have a characteristic concrete strength F'c of 40MPa. F'c or more correctly f'c is defined in AS 3600 - 1988, the Concrete Structures Standard. 49. I have not been able to identify with certainty what concrete strength was specified for the floor and roof slabs. Page 26 of the specification, which formed part of the original agreement, scheduled the concrete strengths, as follows: "Minimum Design F'c = 40MPa and 50MPa" 50. From this, I think it is reasonable to infer from Elspan's specification that F'c 50 MPa concrete was probably specified for the suspended slabs. With grade 50 MPa concrete specified, compressive strength test results in the range of 55 MPa to above 60 MPa could be expected and this is consistent with the core strength tests. 51. Mr Ellen in his affidavit said that the same specification concrete was used throughout the works and that the effective concrete strength was 65.5 MPa. Effective concrete strength is not a term normally used by engineers. On this issue, I have formed the view that Mr Ellen, who is an experienced engineer, deliberately sought to mislead Mr Horley and the tribunal, to Elspan's advantage, in an attempt to increase a sum agreed by the quantity surveyors. 52. As the quantity surveyors had assumed a panel strength of F'c 32 or 35 MPa and Elspan's specification stated F'c 40 MPa, an increase of $600 is appropriate for the concrete wall panels. 53. Based on Mr Samuels' adverse finding on Mr Ellen's conduct, Mr Ellen's evidence on the Muse matter, both referred to earlier and his deception, which seems to me deliberate, on the concrete panel strength issue, I have significant reservations concerning Mr Ellen's credibility. As a consequence, I do not accept Mr Ellen's evidence unless it is corroborated by independent documents or other credible material. 54. Mr Ellen also sought an extra allowance in the concrete wall panels for the use of a wax emulsion, retarder and superplasticiser additives which he said were not available in Australia. Later in oral evidence, he quantified this as an extra cost of $3,108.85 to what the quantity surveyors had agreed. Mr Moir's evidence was that the rates used would cover the cost of additives and I accept this. I say in passing, that concrete additives of the kind described were available and in use in Australia in 1990 and 1991.' 41 In paragraph 16 of his affidavit, sworn on 2 July 1997, Mr John Ellen had maintained that 'the effective compressive strength of the concrete was 65.5Mpa, based upon an average of the core samples divided by 0.85 as per the concrete code, being slightly more than double the strength assumed by Mr Horley'. 42 Elspan has pointed out that the contents of paragraph 16 of Mr Ellen's affidavit was not challenged in cross-examination by Eurocopter's counsel. Read before the Court was an affidavit made by Mr John Ellen on 18 December 1998 in which, in paragraph 7.91 he deposes that he was not cross-examined on his statement in paragraph 16 of his affidavit of 2 July 1997. He further deposes that the Arbitrator did not question him on those allegations and that neither the Arbitrator nor Eurocopter's counsel put to him that there was a conflict between the allegations in paragraph 16 and any provision of the second contract. He further deposes as follows: 'Had I been afforded an opportunity to explain, I would have stated that "effective concrete strength" is the actual concrete strength that we sought to achieve and did achieve on the project greater than the concrete specifications provided for in the contract. The reason I use the word "effective" is that the concrete strength is arrived at by calculation as specified in my affidavit and is clearly laid down in the Concrete Code and that this figure differs from concrete core compressive strength as used in the "Eurocopter" tests. Furthermore, that the core samples which were obtained by Eurocopter for the floor slabs were similar in value to the compression tests taken by Elspan for other concrete structures in the project. I could have provided the results of these tests if asked for. In addition, if I had been asked about whether I had referred Mr Horley to the concrete specifications in the contract I would have said that I did provide the contract together with those specifications to Mr Horley and I expected him to produce his report taking into account those specifications. I did not pick up his error until I was working on my affidavit. In summary I would have confirmed my affidavit evidence had I been given the opportunity.' 43 Mr Ellen also deposed that he had not been cross-examined in regard to the assets of Muse and that it had not been put to him that any evidence which he gave concerning Muse was false. 44 Elspan submits that for these reasons, there has been misconduct on behalf of the Arbitrator which has unjustly prejudiced Elspan. Elspan submits that the Arbitrator did not act fairly and did not give the appearance of acting fairly and impartially. 45 Eurocopter accepts that the Arbitrator erred in paragraph 26 of the Award when he stated that in the hearing [this was the security for costs hearing], Mr Ellen had given evidence that Muse owned no assets. Eurocopter accepts that the Arbitrator's finding that Mr Ellen deliberately sought to mislead the expert witness, Mr Horley, [paragraph 51 Award] was not put to Elspan's counsel by the Arbitrator during the proceedings. 46 Paragraph 51 of the Award has already been set out. 47 Eurocopter submits that those matters did not lead to procedural unfairness and did not amount to misconduct. Nine reasons are put forward for this submission. These are as follows: '10(i) In paragraphs 25 and 26 of his award, the arbitrator was considering the finding of the previous arbitrator, Mr Samuels QC, that Mr John Ellen had deliberately deceived Mr Samuels. In his award, paragraph 26, the present arbitrator recalled that he made the (erroneous) finding regarding John Elspan's evidence about the assets of Mews at a time when he was not aware of Mr Samuels' finding of deception. He said that in effect in paragraph 26. (ii) The arbitrator based his credit finding in paragraph 53 on three matters: (a) the previous arbitrator's adverse finding of deception by Mr Ellen; and (b) the (erroneous) finding by the present arbitrator on the Mews matter; and (c) Mr Ellen's attempted deception of the expert, Mr Horley, as found in paragraph 51 of the award (which finding was not based upon the erroneous finding as to the Mews matter). (iii) In paragraph 53 of his award, the arbitrator relied upon: (a) two matters of proven deception, viz the deception of Mr Samuels (paragraph 25) and the attempt to deceive Mr Horley (paragraph 51); and (b) one matter of evidence that he found merely to be "non-persuasive", viz, John Ellen's evidence that Mews had no assets (paragraph 26). Only this last matter was an error. (iv) The arbitrator had ample grounds to draw the conclusion against John Ellen's credit at the end of paragraph 53. The written submissions of Eurocopter to the arbitrator had made numerous assertions against the credit and truthfulness of John Ellen, and in those submissions the arbitrator was urged not to accept any of Mr Ellen's evidence. John Ellen's credit was also dealt with in Elspan's submissions to the arbitrator in reply, commencing at paragraph 1 of those submissions. (v) The relevant finding in paragraph 50, as to concrete strength, was not based upon the Ellen credit finding in paragraph 53, rather it was based upon the arbitrator's assessment of the specification and documentary evidence of concrete strength, and upon Mr Ellen's attempted deception of Mr Horley. Such reliance upon the attempted Horley deception was without error. The finding in paragraph 50 was not based on error. (vi) It is submitted that the findings upon concrete strength (paragraphs 46-52) contain no error, and the arbitrator was not incorrect in his approach in determining concrete strength by reference to Elspan's specification and compressive test results and by his refusal to rely upon a mere assertion by John Ellen as to alleged actual concrete strength. (vii) It is submitted that the findings as to concrete additives (paragraph 54) were not in error. The arbitrator accepted the evidence of the expert, Mr Moir, that the rates used covered the cost of additives. Mr Moir's evidence on that point was not challenged. (viii) Ultimately, the finding of deception by John Ellen was not part of the reasoning process wherein the arbitrator accepted the evidence of the expert. (ix) Further, the approach taken by the arbitrator was not different to that of the parties, that is they presented their evidence in the joint report of the expert for each of the parties and the arbitrator applied that evidence in paragraph 54: compare Giles J in Motrix Supplies Pty Limited v Bonds & Kirby Pty Limited (unreported, Supreme Court NSW, 12 September 1990).' [Eurocopter's outline submissions, 6 May 1999, Part B] 48 Eurocopter's alternative submission is put in the following terms: 'Alternatively, if Elspan was prejudiced by the error regarding Mr Ellen's evidence as to the Mews assets, it is submitted that the error did not "unjustly prejudice" Elspan, within the principle stated by Isaacs J in Melbourne Harbour Trust Commissioners v Hancock. First, as stated in (iii)(b) above, it was only one of three matters relied upon, and was the least sinister in that the arbitrator had found that aspect of evidence to be "non persuasive". Secondly, the arbitrator was, in effect, restating his finding in paragraph 32 of the reasons for his decision in the security for costs application dated 17 December 1996 as follows: ". . . The evidence about Mews, in the absence of financial statements and Trust Deed(s) was clouded, however I accept it as the probable owner of Elspan. Viva voce evidence of Mr John Ellen that Mews owned no assets was not persuasive absent supporting documents, which Mr Williamson said he examined prior recommending [sic] approval of the HK3.5m loan in November 1991." Mr Williamson was the Westpac Banking officer called by Elspan. Elspan now seeks to demonstrate that that finding was in error. It was incumbent upon Elspan via its legal advisors to have pointed out that error to the arbitrator long ago. As between the parties, it is not just for Elspan to have allowed it to stand to this time, and now challenge it as "misconduct" upon the arbitrator's reapplication of his previous finding that remained uncorrected.' 49 Elspan's submission was that both on the basis of procedural fairness and legal principle, it was necessary that an allegation of deliberate deceit be put to any witness specifically before a finding adverse to that witness on that point could possibly be made. In this regard, Elspan cited inter alia Boston Clothing Co v Margaronis (1992) 27 NSWLR 580 at 590 A - B where Kirby P said: 'I am inclined to agree with Burke CCJ that the practical rule of fairness enshrined in the Browne v Dunn principle required that the suggested contradictions in the worker's history should have been put to the worker before they were used as a basis not of challenging the opinions resting on them but of challenging the truth of the worker's evidence. No such challenge was put to the worker by counsel for the employer in his economical cross-examination. If the Commissioner himself intended to rely upon the evidence in the way he did, procedural fairness required that he should have drawn the suggested inconsistencies which were troubling him to the notice of the worker or of counsel. Then the worker would have the opportunity of explaining the suggested inconsistencies. Her counsel would have had the chance of calling oral evidence from her medical advisers to supplement the written opinions which they had provided. In the course adopted by the Commissioner, there was a real risk of injustice to the worker. Burke CCJ recognised that risk and his review dealt with it.' 50 Elspan's submission was that in the premises, the Arbitrator had committed legal and/or technical misconduct or alternatively, that there had been a breach of procedural fairness. Elspan submitted that those serious credit findings for which it is submitted 'there was absolutely no basis', must remain with the Arbitrator and will have probable impact on his mind in dealing with the costs of the Arbitration. 51 Elspan, although seeking to set aside those parts of the Award referred to in paragraph 2, ultimately accepted in argument that those findings on the credit of Mr John Ellen, impacted on the Arbitrator's mind in making his interim award insofar as three particular claims were concerned and insofar as the Arbitrator's pending decision on costs, not yet argued, were concerned.. The three claims are : (a) The claim for additional concrete additives - $3,600 (b) The rejection of Mr John Ellen's evidence that the amount of deposit reflected in the long span lease of the jacking equipment, a factor leading to the rejection of the higher claim for jacking - $78,300 (c) The finding that the Valley Steel invoices relating to awning canopies where insufficient to find that Elspan either paid for the canopies or had a continuing obligation to pay for them - $4,293 52 These matters will be referred to below. 53 As to costs, Elspan submitted that it had a justifiable lack of confidence in the Arbitrator now determining costs. 54 It is clear then that Elspan's complaint is that Mr John Ellen was not cross-examined by counsel for Eurocopter in relation to specific facts ultimately found by the Arbitrator and further, that Mr John Ellen was not given notice by the Arbitrator in relation to the Arbitrator's finding of deception about the issue of concrete strengths. 55 Eurocopter's response to those complaints is as follows: '(i) John Ellen's credit was very much in issue throughout the entire arbitration and it was put specifically to him that he was prepared to deceive the Arbitrator on any issue if he thought it would provide a forensic advantage to Elspan. (ii) There could be no doubt that Elspan's counsel was aware that John Ellen's credit was under attack on every issue. Counsel for Elspan referred to the credit attack on John Ellen and said that he had been 'attacked quite viciously' . (iii) The Browne v Dunn point was not taken by Elspan in the Arbitration.' [Emphasis added] 56 Eurocopter submits that Elspan's complaint in effect is that, as to every fact in issue involving Mr John Ellen's evidence, and as to every finding on credit to be made, each of those matters were required to be specifically put to Mr John Ellen before a finding could be made adverse to Elspan. Eurocopter submitted and I accept, that that contention is incorrect for a number of reasons which include the following: (i) The rule in Browne v Dunn does not apply where the witness is on notice that his version is in contest. (ii) That notice may come from the pleadings; Seymour v ABC (1977) 19 NSWLR 219 at 224-225 per Glass JA. (iii) That notice may come from the other side's evidence or the other side's opening; Browne v Dunn (1894) 6R 67 at 70 (HL). (iv) That notice may come from the general manner in which the case is conducted: Seymour v ABC at 236 per Mahoney JA. (v) Where there is a general attack on a witness's credit, made known to the witness, either through pleadings or cross-examination, counsel is permitted to argue, and the Court is permitted to make findings, that a witness is deliberately giving false evidence without the necessity of putting that to the witness. In Thomas v Van Den Yssel (1976) 14 SASR 205 at 207, Bray CJ said in discussion of the rule in Browne v Dunn : ' But these principles cannot, in my view, be applied without qualification to a challenge to a witnesses credit generally , particularly the credit of a Plaintiff in an action for damages for personal injuries in relation to his evidence about his symptoms and incapacities. Damages are always in issue. Such a Plaintiff knows that the Defendant will contend that his injuries do not deserve the sum which he himself has placed on them. And in many other cases the witness must know that the other side will contend that he is not telling the truth, and even in some cases that he is deliberately not telling the truth. I cannot assent to the proposition that counsel cannot argue or the Court find that a witness is deliberately giving false evidence unless the witness is asked some such question as "I put it to you that your evidence is false", or "I suggest that that is a deliberate lie" or the like . Indeed a successful objection might be taken to such evidence as needlessly offensive.' [Emphasis added] 57 I note that in Bulstrode v Trimble [1970] VR 840 Newton J extensively reviewed the application of the rule in Browne v Dunn and at page 848 his Honour said: '. . . if a witness's evidence . . . was contradicted by other evidence which appeared worthy of credence, the fact that the witness had not been cross-examined would, or might be of little importance in deciding whether to accept his evidence.' 58 In Re Brace [1966] 1 WLR 595 (CA), a debtor denied service of a bankruptcy petition. The debtor and another person swore affidavits in which they contended that there had been no service of the petition. The creditor tendered an affidavit of the process server who swore that he had served the debtor with the petition. He was cross-examined about that. The debtor and his witness were 'present in Court and were tendered for cross-examination' (page 596); '. . . the witnesses were there and were offered for cross-examination'; per Sellers LJ at 597. 59 Counsel for the creditor did not examine them. 60 The Registrar found against the debtor. The debtor appealed on the ground that the Registrar was not entitled to decide the question of service without hearing cross-examination of the debtor and his witness. The appeal failed. At page 579 Sellers LJ said: 'I can see no occasion for cross-examination at all'. At page 598, Russell LJ said: 'This is not a case in which the debtor was shut out from leading further or supplementary evidence. The only complaint is that there was no cross-examination of him and his witness, which it is said might have given them an opportunity (so to speak) to show their paces. The point is hopeless.' 61 The application of the rule in Browne v Dunn is to be found in principles enunciated by Mahoney J in Seymour v ABC. At page 236, his Honour discussed the principles to be applied where a witness is on notice that his evidence is in contest. His Honour said: 'Where in a civil case, a witness is not cross-examined, it may normally be assumed that the evidence of that witness is not in contest . . . But the circumstances of the particular case may negative such an assumption . . . Similarly, failure to cross-examine a witness may not found such an assumption or render the course of the trial unfair if it is clear from the manner in which generally the case has been conducted that his evidence will be contested . . . The nature of the defendant's case and the particulars given, and otherwise the conduct of it may make it sufficiently clear that such an assumption is unwarranted and that there has been no surprise or prejudice concerning the matter.' 62 In Seymour, because there was a general contest as to the veracity of the appellant Seymour, the Court of appeal held that there was no unfairness where the defendant's counsel sought a finding (but did not put to the plaintiff in cross-examination), that it was to be inferred that he was a party to the fraud, knowingly associated with it and an associate of criminals. 63 I accept Eurocopter's submission that Elspan and its legal advisers cannot seriously assert that it was not assumed throughout the arbitration that the evidence of Mr Ellen was in contest. Elspan and its legal advisers were plainly under no illusion that Mr John Ellen's evidence was contested in its entirety. This is made plain by : (i) The challenges in the cross-examination of Mr Ellen before the Arbitrator; (ii) Eurocopter's express reliance and cross-examination of Mr John Ellen as to the finding of deception by Mr Samuels QC; (iii) Eurocopter's written submissions and Elspan's written and oral submissions in reply before the Arbitrator; (iv) The fact that Elspan made no submission before the Arbitrator on Browne v Dunn principles and sought no opportunity to recall witnesses or deduce further evidence; (v) The fact that Elspan did not assert injustice to the Arbitrator. 64 I accept that Elspan's actions left the Arbitrator in no doubt but that he was to approach the matter upon the assumption that Mr John Ellen's evidence was in contest on every issue and as to all aspects of his evidence. This is clear from the following material which was before the Arbitrator: (i) Mr Samuels QC had recorded the severity of the challenge to Mr John Ellen by Eurocopter in the second arbitration before him as follows: (Page 19.9 of Mr Samuels' report of 23 July 1993): 'Mr McDougall mounted the strongest of attacks upon the credit of each of them, urging me to disregard their evidence entirely in the resolution of any conflict, save for external corroboration and so forth.' (ii) The challenges in the proceedings before the Arbitrator to be found in the transcript on 5 July 1997 appended as Appendix 'A' to this Judgment and in particular page 106 lines 20-30; page 109 line 28; page 112-113 and particularly lines 27 on page 112 onwards where Mr Samuels' deception finding was put to Mr John Ellen; page 112 line 34 where the transcript reads: 'Mr Faulkner: I put it to you Mr Ellen that you are prepared to deceive the arbitrator on any issue if you think it will provide a forensic advantage to Elspan in these proceedings. That is correct isn't it?'; page 126 lines 23-51; page 130 line 39-43 65 Also appended to this Judgment as Appendix 'B', are Eurocopter's written submissions before the Arbitrator - the appendix being extracts of those written submissions which speak for themselves. 66 Appended to this Judgment as Appendix C, are Elspan's written submissions in reply before the Arbitrator and portions of Elspan's oral submissions to him. As will be seen from paragraph 1 of the written submissions, Elspan submitted that: 'Eurocopter's submissions are replete with emotive language such as the allegation in paragraph 3.4 that Mr John Ellen's evidence was completely disingenuous, the allegation in paragraph 3.8 that Elspan had made a special distinction, the allegation in paragraph 4.2 that Elspan's evidence was disingenuous and opportunistic, and the allegation in paragraph 10 that it was characteristics of Elspan's lack of frankness that preliminaries are still challenged.' 67 The oral portion of Mr Jacobs' address before the Arbitrator appearing at page 245 of the transcript and reproduced in Appendix 'C', includes the following : '. . . an unfortunate note has been injected in this case. . . . Not only has Mr John Ellen been attacked quite viciously, with respect, and really without any foundation being laid for such an attack . . .'. 68 I accept Eurocopter's submission that Elspan is bound by the course which it adopted at the trial. In Multicon Engineering Pty Ltd v Federal Airports Corporation (Unreported, New South Wales Court of Appeal, 15 October 1997), the following passage from University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481 at 483 was applied: 'It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case has been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.' 69 In Bulstrode v Trimble at 849, Newton J said: 'I know of no case where it has been held that where evidence of a witness upon a particular matter is allowed to pass without cross-examination, but evidence of a substantial character is called by the opposite party in direct contradiction thereof, the judge or jury is required in law to accept the former evidence. And, in my view, this is plainly not the law.' 70 Eurocopter submits that as to all issues presently under consideration, opposing evidence of a substantial character was before the Arbitrator. It is submitted that in each instance, the evidence of Mr John Ellen was elicited to contradict expert evidence in an attempt to increase the amounts allowed by the Joint Report of the two experts who had, of course, included Elspan's expert witness. It is submitted that the evidence of Mr John Ellen as a whole was contested and that it was made quite plain to him and his counsel that that was so. It seems to me that these submissions require to be accepted. 71 It is important that it is understood that what was in issue was plainly known to Mr John Ellen and to counsel for Eurocopter and in particular, that all matters which are the subject of Elspan's present application were in issue. In this regard, Eurocopter points out the following factors: '. Elspan and Eurocopter called expert evidence via a quantity surveyor for each - Mr Horley for Elspan and Mr Moir for Eurocopter. . The experts produced a joint report which Eurocopter accepted in its entirety. . Elspan did not accept the joint report and through John Ellen's evidence, sought to challenge the joint report and contend for higher amounts. That was so for the following items: (i) Concrete strength; (ii) Concrete additives; (iii) Cost of jacking; (iv) Amount allowed for the 'complex works'; (v) Amount for preliminaries; (vi) Amount for design; (vii) Decommissioning of site; (viii) Amount for shipping containers. . Elspan persuaded the Arbitrator to allow supplementary questions to be put to the experts. Elspan then challenged those supplementary answers, including those of their expert Mr Horley.' 72 In so far as the issues in contest being known to Elspan are concerned, they were referred to by the Arbitrator in the Award, paragraph 38, where the Arbitrator stated that following receipt and consideration of the experts' joint report 'Elspan counter attacked announcing that it challenged some significant aspects of the joint report and filed a further late affidavit of Mr Ellen dated 2 July 1997 . . .'. 73 Eurocopter points out that as to the matters in the Joint Report which Elspan contested through Mr John Ellen's evidence, Eurocopter sought to uphold the experts' joint report. Hence, as to each issue, Mr John Ellen and his counsel were on notice that his version was in contest. 74 Eurocopter then submit that the Arbitrator was bound to make his decision upon the material before him. The submission is that in full knowledge of all issues, the parties had placed before the Arbitrator all evidence that they wished him to have. The submission is that as Newton J in Bulstrode v Trimble said at 848, the tribunal was '. . . fully entitled to decide the case upon the evidence which the parties by their legal advisers chose to place before him; indeed this was his primary function'. 75 As a result of those submissions, Eurocopter puts that there was no unfairness to Elspan as regards the findings made against Elspan and against Mr John Ellen by the Arbitrator. 76 Elspan then submits that the only error which the Arbitrator made was with regard to the finding that Mr John Ellen had given evidence about assets of Muse. It is said that this did not amount to misconduct when seen in context. 77 I have given close consideration to the respective arguments put in relation to the Arbitrator's clear error in paragraph 26 of his Award in having stated that in the security for costs hearing Mr Ellen had given evidence that Muse owned no assets and that the Arbitrator found that evidence to be non-persuasive absent supporting documents. There is no doubt that the Arbitrator was in error in stating that Mr Ellen had given evidence that Muse had no assets. As earlier pointed out, Mr John Ellen deposed before this Court in paragraph 7.17.4 that he had not given any such evidence. 78 In the context earlier referred to, in which the credit of Mr John Ellen was so very plainly at issue as a general matter, it does not seem to me that the Arbitrator misconducted himself by finding that Mr Ellen had deliberately sought to mislead Mr Horley without that matter having been put to the plaintiff's counsel or to Mr John Ellen by the Arbitrator during the proceedings. 79 In consequence, the question which arises is as to the Arbitrator's error with respect to the Muse evidence matter. The Arbitrator clearly misconducted himself in that regard. But to what extent, if any, does his misconduct on that matter require segments of the Award to be set aside? 80 Having given the matter some close consideration and particularly bearing in mind the fact that the reservations which the Arbitrator expressed as to Mr Ellen's credibility in the Award and in particular in paragraph 53 of the Award [but see also paragraph 51 . . .] to my mind at the end of the day, fairness does not dictate that any section of the Award, be set aside on that basis. The Claim for Additional Concrete Additives 81 The challenge to the Arbitrator's finding in this regard is squarely based upon the matters already referred to. I do not accept that the Arbitrator was not entitled in the context of this case to find that Mr Ellen had deliberately sought to mislead Mr Horley and the Tribunal to Elspan's advantage in an attempt to increase a sum agreed by the quantity survey. Whilst it is a close question as to whether the Arbitrator's error should permit any section of the Award to be set aside, it seems to me that the Arbitrator had an entitlement resting on more than one basis to express the reservations which he did in relation to Mr Ellen's credit. The fact that the Arbitrator came to an erroneous finding in relation to the Muse matter does not necessarily mean that the general credit findings based on entirely valid considerations, require to be set aside. I reject Elspan's claim to set aside any sections of the report by reason of the Arbitrator's error with respect to the Muse matter. 82 I turn now to examine the further particular claims pursued pursuant to section 42 against the above background. Jacking 83 Elspan's submission in this regard is as follows: '7.1 In paras.63-69 of "the Award" (Item 50 of the joint report Exhibit" EXPT) the Second Defendant: (a) Adopted the quantity surveyor's estimate in an amount of $72,720.00, as the fair market value of the jacking; (b) noted in paragraphs 28 and 63 of his reasons that the Plaintiff had failed to produce documentary confirmation of or an invoice from Longspan (a company in the Elspan group), to the Plaintiff for the leasing charges, or evidence of payment of the rental under the lease; for lifting equipment; (c) held in paragraph 66 that he could refer to items 4 and 5 of Schedule "D"; see the documents contained in Tab 2 p.58 at 59, of the second contract to ascertain what the Plaintiff and the first Defendant allowed for lifting. In his holding that Schedule "D"; see the documents contained in Tab 2 p.58 at 59, related to the value of Items of work under the Second Contract, the Second Defendant overlooked the finding of the Honourable Gordon Samuels QC. on 23 July 1993 that Schedule "D"; see the documents contained in Tab 2 p.58 at 59,identified stages in the execution of the work when the Superintendent would be required to certify for payments, and his own finding in paragraph 4 of his reasons that Schedule "D"; see the documents contained in Tab 2 p.58 at 59, recorded payment stages (milestones for payments). (d) found in para.67 of "the Award" that Schedule "D"; see the documents contained in Tab 2 p.58 at 59, to the Second Building Contract dated 5 September 1991, provided in Items 4 and 5 a total amount of $106,000.00 for lifting, which was less than the amount determined by the quantity surveyors ie. $72,720.00 for slab lifting and $7,430.00 for slab raising and concrete infills (together with a portion of the preliminaries); (e) found that, "Elspan was seeking (in the second contract) to recover about $100,000 in total for lifting and slab bracing. "and this was well below the amount allowed by the quantity surveyors for direct costs of lifting and special supervision; (f) found in paragraph 68 that although the quantity surveyors joint report on the quantum meruit to be allowed for lifting costs may have been based on an erroneous interpretation of the "Elspan"/Longspan lease, he was sure that they had benchmarked their total allowance for lifting against the cost of form work for conventionally constructed, suspended post-tensioned slabs and the amounts in items 4 & 5 of Schedule "D"; (a document that came into existence during the negotiations leading up to the second building contract), see the documents contained in Tab 2 p.58 at 59. 7.2 It was not put to Mr. John Ellen either by the Second Defendant or by First Defendant's counsel in cross-examination that either: (a) Schedule "D"; see the documents contained in Tab 2 p.58 at 59, to the second Building Contract was a quantification of the contract sum; see para.7.11.1 of Mr. John Ellen's Founding Affidavit of 18 December 1998, see the documents contained in Tab 2 pp.57-60; and/or (b) That Items 4 and 5 thereof represented the contract sum for jacking and lifting; see para.7.11.1 of Mr. John Ellen's Founding Affidavit of 18 December 1998, see the documents contained in Tab 2 pp.57-60. 7.3 Had this issue been raised with Mr. John Ellen by the Second Defendant or in cross-examination by First Defendant's counsel, the Second Defendant would have been informed that Schedule "D"; see the documents contained in Tab 2 p.58 at 59, to the Second Building Contract was a list of milestone payments and not a list containing the contract values for any items of work; and further that in any event, the items in Schedule "D"; see the documents contained in Tab 2 p.58 at 59, relating to lifting and jacking were not confined to Items 4 and 5, but included Items 2A and 3; see para.7.11.2 of Mr. John Ellen's Founding Affidavit of 18 December 1998, see the documents contained in Tab 2 pp.57-60. 7.4 The Second Defendant's holdings in paragraphs 4 on the one hand and in paragraphs 66, 67, 68;, and 69 on the other, of the interim award, as to the function and effect of Schedule "D"; (see the documents contained in Tab 2 p.58 at 59), are contradictory., see the documents contained in Tab 33 pp.1302-1303. 7.5 The fact found by the second Defendant that the Plaintiff did not produce documentary confirmation of the Plaintiff's obligation to "Longspan" for the rental payment under the "Elspan" "Longspan" lease was one of the factors that impacted on his mind in rejecting the Plaintiff's claim for the lifting charges. 7.6 This issue was not put to Mr John Ellen by the Second Defendant, nor was Mr John Ellen cross examined on it by First Defendant's counsel. See paras.7.12.1 and 7.12.2 of Mr. John Ellen's Founding Affidavit of 18 December 1998. 7.7 No opportunity was afforded to the Plaintiff to clear up the matter. 7.8 Nor was this issue, an issue of fact referred to the Second Defendant in Exhibit "P5" for determination; for Exhibit "P5" see the documents contained in Tab 28 pp.1229-1230. 7.9 The assumptions made by the Second Defendant (and which impacted on his mind in rejecting the Plaintiff's claim for jacking), in paragraph 68 of the interim award and as summarized in paragraph 9(1)(d) of the Plaintiff's contentions in the Plaintiff's Summons, were not put by the Second Defendant to the quantity surveyors in conclave or at all. 7.10 The Plaintiff was not given an opportunity of refuting or dealing with them during the arbitration. 7.11 In summary, on this issue the Plaintiff alleges that the Second Defendant inter alia relied on the assessment by the quantity surveyors in their joint report of the quantum meruit to be allowed for lifting, in the knowledge that the quantity surveyors might have erred in respect of their interpretation of the terms of the "Elspan/Longspan" Lease, but he discarded that factor because of his benchmark assumptions that were neither put to the quantity surveyors nor Mr. John Ellen. 7.12 In the premises, the Plaintiff alleges that the Second Defendant has committed legal and/or technical misconduct, alternatively that the Second Defendant has misconducted the proceedings, and that the Second Defendant's rejection of the Plaintiff's claim for jacking should be set aside and the matter remitted to a new Arbitrator for determination.' 84 To my mind, Elspan's submissions do not show relevant misconduct by the Arbitrator. The Arbitrator's reasoning in paragraphs 28-33 and 55-69 reveals that he had regard to Items 4 and 5 of Schedule 'D' as only one of several matters to be considered but ultimately did not apply those items. The Arbitrator adopted the quantum agreed jointly by both quantity surveyors - see particularly the last sentence of paragraph 67 of the Award. He adopted the quantum agreed upon by both quantity surveyor expert witnesses which was based upon their professional assessments and not upon Schedule 'D'. 85 Elspan's submissions overlook, it seems to me, an important finding of the Arbitrator set out in paragraph 32 of the Award. Paragraph 32 of the Award was in the following terms: '32. Mr Horley, in his 20 June 1997 report, allowed a sum of $220,940 for preliminaries which included the supervision of jacking. In his 26 June 1997 report in reply, Elspan's expert stated: "I note the statement in item 23.3 of the affidavit of John Ellen dated 23/6/97 that, in his opinion, the cost of lifting the roof and office slabs was $164,000.00 compared to my assessment of $72,720.00. In my opinion the difference between the two amounts is due to my allowing the supervisory costs of this process in the preliminaries section. This allowance in preliminaries explains my contention that preliminaries appear high."' 86 The preliminaries are of course the indirect costs in the nature of overheads and may be compared, for example, with items which are purchased or materials which are purchased or labour which is paid for directly by way of the works. Particularly important here is the fact, as the Arbitrator indicates, that Mr Horley had allowed a sum of $220,940 for preliminaries, which sum included the supervision of jacking. Mr Morley, being Elspan's own expert, stated that Mr John Ellen had allowed the supervisory costs of the relevant process in the costs of that process. 87 In the result, no Section 42 misconduct is shown. Insofar as Elspan relies on this item in its section 38 claim, that claim is without substance. The Arbitrator was engaged upon the task of ascertaining as a fact, the reasonable value of Elspan's lifting work. He did so on the evidence. He made no error. There is no issue of law. The issue does not, it seems to me, arise on the face of the Award. There is clearly no evidence of error of law, and if, contrary to my view, an error of law is arguably exposed, it is neither plain in the sense of being obvious, nor manifest in the sense that there was little or no doubt that an error it was. This is a factual consideration. 88 The section 38(5)(b)(ii) claim fails for the same reasons there being no strong evidence of the making of an error of law. Awning Canopies 89 Elspan's complaint in relation to awning canopies is as follows: '8.1 In regard to the Plaintiff's claim for the value of awning canopies (Items 5 & 10 of the Quantity Surveyors' Joint Report), the Second Defendant in para.104, held that there was no documentary evidence provided by the Plaintiff, see the documents contained in Tab 33 p.1309, (a) Confirming the existence of the fabricated canopies; (b) That payment had been made for the canopies, and if not; (c) That a debt remained owing to Valley Steel; and (d) What the fate was of the canopies; and that it was within the Plaintiff's power to produce the evidence referred to in sub-paras.(a)-(d) above. 8.2 In para.105, see the documents contained in Tab 34 p.1309, the Second Defendant held that having regard to the reservations in respect of Mr. John Ellen's evidence (and for which see para.53 of the interim award, Tab 33 p.1300, he did not consider that the Valley Steel invoices annexed to the affidavit of Mr. John Ellen sworn on 23 June 1997 and marked "M" (Exhibit "P8"), Tab 17 Annexure "M", were sufficient proof on the balance of probabilities that the Plaintiff either paid for the canopies or had a continuing obligation to pay for them. In the premises, he dismissed the Plaintiff's claim under this heading for the sum of $10,625.00. 8.3 Mr. John Ellen in para.14 of his affidavit sworn 23 June 1997, Exhibit "P8", see the documents contained in Tab 17, annexed the Valley Steel invoices to the Plaintiff for the aforesaid canopies, and stated that these invoices reflected the cost of the aforesaid canopies to the Plaintiff. 8.4 This evidence was neither challenged in cross-examination or in submissions by the First Defendant, see paras.7.13.1 - 7.13.3 of Mr. John Ellen's Founding Affidavit of 18 December 1998, see the documents contained in Tab 17 pp.0746-0747. 8.5 At no stage during the Arbitration did the Second Defendant ask Mr. John Ellen any questions concerning the allegation made by him in para.14.2 of his aforesaid affidavit that the invoices annexed to the aforesaid affidavit reflected the cost to the Plaintiff of the aforesaid awning canopies. 8.6 In the issues of fact which the parties submitted in Exhibit "P5", see the documents contained in Tab 27 pp.1229-1280, to the Second Defendant for determination, the issues concerning these items were as follows: Para.2 "As to Item 5 (awnings) and 10 (work shop crane): (i) Has Eurocopter paid for them; (ii) Were they supplied by Elspan to Eurocopter. 8.7 The facts forming the basis of the Second Defendant's rejection of this claim were not issues of fact referred to the Second Defendant by the parties for determination. 8.8 Notwithstanding the afore going, the Second Defendant rejected this claim on the basis that the Plaintiff had failed to prove that it had paid for the canopies, alternatively that the debt was still owing. 8.9 In the premises, the Second Defendant has committed legal and/or technical misconduct, alternatively the Second Defendant has misconducted the proceedings.' 90 This is another area in respect of which Elspan seeks to revert to the credit findings related to Mr John Ellen. That attack fails. 91 The exercise upon which the Arbitrator was engaged, was to determine as a fact the reasonable remuneration for Elspan regarding the canopies. That required the Arbitrator to ascertain if Elspan had in fact done anything for which it could be recompensed. He found that it had not. To my mind there was no error. There is no issue of law raised by this consideration and no error arises on the face of the Award. There is certainly no strong evidence of error of law. 92 I further note in relation to the same matter, that invoices were annexed to the affidavit of Mr John Ellen before this Court, sworn on 18 December 1998 at Tabs 15 and 17. These were the documents before the Arbitrator. They are copies of invoices issued to Elspan Australia Pty Limited which was not a party to the Arbitration. No invoice was issued to Elspan International Limited. To my mind, the evidence adduced before me from Mr John Ellen, took the matter no further. No reason was advanced for Elspan's failure to produce the document called 'guarantee' before the Arbitrator. The Arbitrator must further be taken to have been well aware of the identity and role of Elspan Australia Pty Limited. Hangar Crane 93 Elspan's submissions on this topic are as follows: '9.1 In para.111 of "the Award", see the documents contained in Tab 33 p.1310, the Second Defendant held that there was insufficient evidence to find on a balance of probabilities that the Plaintiff either paid for the hangar crane, or had a continuing obligation to pay for it. 9.2 Furthermore, the question whether or not the Plaintiff had paid for the hangar crane or incurred liability to make payment was not submitted to the Second Defendant for determination, Exhibit "P5", see the documents contained in Tab 27 pp.1229-1280. 9.3 On 27 June 1997, the Second Defendant informed the parties that his understanding was that the only issues of fact left in contention were those marked with a single asterisk in "the joint report.", see para.7.14.1 of Mr. John Ellen's Founding Affidavit of 18 December 1998, Tab 29 pp.1233-1234. 9.4 As there was no indication to the contrary by the Second Defendant at the time Mr. Ellen's affidavit "P8", Tab 29 pp.1133-1234, was read, the Plaintiff's legal representatives were of the view that the First Defendant no longer contended that the Plaintiff could not recover for Item 12, referred to in the Quantity Surveyor's Joint Report, Exhibit "EXPT1" in Tab 24 pp.1199-1212, (ie. The hangar crane) and that the only issue that remained in contention on this aspect was whether that the First Defendant or Aerospatiale had already paid for it, see paragraph 7.13.2 Tab 17 pp 746-747, as read with the documents in Tab 29 pp.1133-11234 and para 7.15.1, Tab 17 pp 746 and 1124-1131. 9.5 The sole factual issues submitted for determination by the parties to the Second Defendant in regard to the hangar crane Item 12, were set out in para.4 of the List of Joint Issues, Exhibit "P5", see the documents contained in Tab 27 pp.1229-1280, viz: (a) Has Eurocopter paid for them (sic) the crane; (emphasis added) [ not the Plaintiff (b) They (sic) (the hangar crane) supplied by Elspan to Eurocopter. 9.6 It was against this background that paragraph 14.8 of Mr. Ellen's affidavit "P8", see the documents contained in Tab 17 p.746 was not read. 9.7 Notwithstanding the agreement reached in para.4 of Exhibit "P5", as with the the (sic) documents contained in Tab 27 pp.1229-1280, the Second Defendant rejected the Plaintiff's claim of $14,343.28 on issues of fact not submitted to him for determination ie that set out in paragraph 9.7 above . 9.8 In paragraph 109 of the Second Defendant's interim award, Tab 33 p.1310 the Second Defendant noted that it was common ground that the Hangar Crane was not delivered on site. In note 1 of Table 2, see the documents contained in Tab 33 p.1313, the Second Defendant recorded that the aforesaid crane was not supplied. 9.9 In paragraph 110 of the interim award, the Second Defendant recorded that there was evidence that the Hangar Crane had been manufactured off site, Tab 33 p.1310. 9.10 the finding by the Second Defendant in paragraph 109 of the interim award, Tab 33 p.1310, and in note 1 to Table 2, see the documents contained in Tab 33 p.1313, that the Hangar Crane was either not delivered to the site or "supplied", appears to have impacted on the Second Defendant's mind in rejecting the Plaintiff's claim for a quantum meruit under this heading. 9.11 In those findings he overlooked: (a) the recordal in Schedule "D"; Tab 2 p.58 at 59, that it was certified (by the Superintendent) that the crane had been ordered by Elspan; and (b) The finding by the first Arbitration that the Superintendent's certification was correct. 9.12 But the non delivery to the site or the non "supply" do not appear in the Second Defendant's reasons for the rejection of this claim. 9.13 In the premises, the Plaintiff alleges that the Second Defendant has committed legal and/or technical misconduct, in the alternative the Second Defendant has misconducted the arbitration.' 94 In effect, Elspan's submissions contend that no issue was live as to whether Elspan had a liability to pay. I accept Eurocopter's submission that it was Elspan who opened this topic in its final submissions in reply (paragraph 5.3.1) before the Arbitrator by asserting that Elspan had 'incurred a liability of $14,343.28 in respect of the hangar roof crane'. Elspan had made that submission to the Arbitrator based upon 'restitution' [see paragraph 99 of the Award]. Elspan's counsel had relied on an authority where the claimant had expended money and had successfully sought restitution. I accept Eurocopter's submission that an issue was therefore open as to whether the plaintiff had expended money on the hangar crane, thus giving it an entitlement based on restitution. The Arbitrator was obliged to deal with that issue on the evidence before him. 95 I accept Eurocopter's submission that the Arbitrator considered carefully the submission on restitution [Award paragraphs 99-102], including as to the hangar crane [paragraph 102]. The Arbitrator found that there was no evidence that Elspan had either paid for the crane or had a continuing obligation to pay for it [paragraph 111]. He was searching for 'evidence of an expense incurred' [paragraph 100]. He found in effect that nothing had occurred upon which to found an entitlement in quantum meruit. 96 Elspan's present assertion [Submissions paragraph 9.3-9.6] that Elspan's advisers did not read paragraph 14.8 of Mr John Ellen's affidavit because of their interpretation of what matters remained in dispute, following comments by the Arbitrator on 27 June 1998, does not seem to take into account the fact that Elspan's counsel sought to read paragraph 14.8 of Mr John Ellen's affidavit in final submissions but the Arbitrator refused to permit it on the grounds that this would be unfair to Eurocopter unless it was able to cross-examine on the orders and invoices referred to in Mr Ellen's paragraph 14.8, which are not in evidence.. [See paragraph 110 of the Award] 97 I further accept Eurocopter's submission that it is not correct to submit [see Elspan's submissions paragraph 9.4] that the only issue remaining as to the hangar crane was as to whether Eurocopter or Aerospatiale had paid for it. Item 2 in Exhibit P5 as regards awnings and hangar crane, was described as : (i) Has Eurocopter paid for them? (ii) Were they supplied by Elspan to Eurocopter? 98 No error of law, no strong evidence of any such error of law and no misconduct has been shown with respect to the hangar crane issue. Steel Doors 99 Elspan's Submissions in this respect are as follows: '10.1 In para.123 of the interim award, see the documents contained in Tab 33 p.1312, the Second Defendant rejected the Plaintiff's claim for the difference between $21,752.00 being the amount which the Plaintiff claimed for steel doors (Item 55 of the joint report) and the amount of $5,770.00 made up of the items listed by the Second Defendant in para.122 of his award viz $15,982.00. 10.2 the Second Defendant in para. 123 of the interim award, see the documents contained in Tab 33 p.1312, gave as his reason for rejecting the claim of $15,982.00 that there was no documentary evidence confirming the fate of the remaining doors, payment by the Plaintiff or that a debt remained owing. 10.3 The Second Defendant also held that the evidence was insufficient to find on a balance of probabilities that the Plaintiff either paid for the remaining doors or had a continuing obligation to pay for them. 10.4 In para.14.19 of Mr. John Ellen's affidavit sworn on 23 June 1997, Exhibit "P8", Tab 17 p.744 at 746, and the invoices annexed to that affidavit marked "L", Mr. John Ellen alleged that the cost to the Plaintiff of the aforesaid doors was in the amount as claimed. 10.5 This evidence was not challenged in cross-examination, see para.7.15.1 of Mr. John Ellen's Founding Affidavit sworn 18 December 1998 together with the material contained in Tab 17 pp.746 and 1124-1131. 10.6 The Second Defendant at no stage challenged the authenticity of the invoices, Annexure "L" to Mr. John Ellen's affidavit of 23 June 1997, Exhibit "P8", or put to Mr Ellen that the Plaintiff did not have any liability for payment of the amounts reflected therein, see para.7.15.1 of Mr. John Ellen's Founding Affidavit sworn 18 December 1998 together with the material contained in Tab 17 pp.746 and 1124-1131. 10.7 The question whether the Plaintiff paid for the remaining doors or had a continuing obligation to pay for them was in any event not one of the issues of fact put to the Second Defendant in Exhibit "P5", for the Second Defendant's determination, see the documents contained in Tab 27 pp.1229-1281. 10.8 In the premises, the Plaintiff submits that the Second Defendant has committed legal and/or technical misconduct or alternatively misconducted the proceedings by : (a) Deciding this issue against the Plaintiff when there was no challenge to Mr. John Ellen's affidavit in para.14.19 of his affidavit of 23 June 1997 Exhibit "P8" and the invoices attached thereto marked "L". (b) not providing an opportunity to the Plaintiff to deal with the Second Defendant's reservation concerning the question whether the Plaintiff paid for the remaining doors or had a continuing obligation to pay for them; and (c) by deciding this issue on a question not submitted by the parties to him for determination.' 100 The exercise upon which the Arbitrator was engaged was to determine as a fact, reasonable remuneration for Elspan regarding the steel doors. That required the Arbitrator to ascertain if Elspan had in fact done anything for which it ought to be recompensed. He found that it had in the sum of $5,770. There is, therefore, no error. There is no misconduct. In fact the Arbitrator proceeded correctly on the assumption that Eurocopter had not paid for the subject doors and had stated that he could not determine 'the fate of the remaining doors and that he could not find that Elspan either paid for the remaining doors or had a continuing obligation to pay for them'. Contrary to what Elspan now submits, that finding was in answer to Exhibit P5 Issues of fact, item 4 - as to whether the doors were supplied by Elspan to Eurocopter. Eurocopter, it seems to me, is correct in its submission that it was not an answer to item 4(i) as to whether Eurocopter had paid for them [see the Arbitrator's Award paragraphs 117-123]. See also the similar logic adopted by the Arbitrator in his Award as to the hangar crane (paragraphs 109-112) and the awning canopies (paragraph 103-105). 101 It is clear, considering the whole of the relevant parts of the Arbitrator's Award, that he had determined this issue (contrary to Elspan's present contention) on the basis that the doors were not supplied and that Elspan was unable to establish that it had provided anything to Eurocopter which was of value in the context of quantum meruit beyond the items that he expressly found were delivered and which he allowed in full at $5,770. Elspan was therefore unable to establish that it had incurred any obligation upon which to found an entitlement to quantum meruit for the balance. 102 No misconduct is shown, no error of law is shown and no strong evidence of an error of law is shown. Failure to deal with Items 103 This is a matter which is dealt with only in Elspan's Section 38 case. The submissions here are as follows: '6.1 The following issues were referred by agreement between the parties to the Arbitrator for determination in Ex. "P5", Tab 28 pp.01229-01230: (a) Item 17 - Plans of steel building and concrete building: (i) did Elspan prepare and provide drawings (is Eurocopter in possession of the drawings); (ii) if so, is Elspan entitled to the sum of $30,000.00 or some other sum for these drawings; (b) Scrap: (i) was Elspan paid by Eurocopter for the steel building; (ii) if not, has the scrap been utilised and does Eurocopter owe Elspan a sum for it. If so, what amount? 6.2 The Arbitrator in "the Award" failed to deal with either of the issues referred to above.' 104 To my mind, Eurocopter's submissions in this regard require to be accepted. They were that Elspan had established, through cross-examination of Mr Stone, that Eurocopter had taken and copied some drawings. Neither party had sought to adduce any evidence of the value of the drawings and the experts were not asked questions about them. I accept that it should be assumed that Elspan chose not to open the issue with its expert, bearing in mind that the experts were asked, and did provide, evidence (design fee of 7.4%) as to the value of other drawings. The design fee issue is dealt with below. 105 Eurocopter submitted and I accept, that except for Elspan establishing through cross-examination of Mr Stone that Eurocopter had taken and copied some drawings, nothing further was said in the proceedings about the issue. Neither Elspan nor Eurocopter mentioned the claim in their respective submissions. Mr Jacobs QC submitted that this was incorrect and that in his submissions below at paragraph 5.5, that matter was raised. This is incorrect as it seems to me, when one examines that paragraph as it is in the middle of a heading entitled 'Design Fee'. See generally the structure of Elspan's submissions below, where for example paragraph 3.5 dealt with the awning canopy; paragraph 3.6 dealt with the hangar; paragraph 3.8 dealt with equipment supply; paragraph 5 dealt with the design fee; paragraph 6 dealt with lifting and so on. Paragraphs 5.5 and 5.6 make plain that the submissions below dealt with only the design fee claim. 106 The Arbitrator was, it seems to me, entitled to assume that the issue was abandoned. Plainly, the Court may have regard to evidence as to how the case was presented - see Brownie J in Graham Evans & Co Pty Ltd v EPF Formwork Pty Ltd (1992) 8 BCL 147 at 149 per Brownie J. No error of law on the face of the award is established. See generally Horizons Corporation Pty Ltd v Lahey Constructions Pty Ltd (Unreported, Supreme Court of New South Wales, Einstein J, 27 November 1998) dealing with the entitlement of the Court to take into account the manner in which the Arbitration was conducted, when an issue of this nature arises. Design Fee 107 The complaint pleaded pursuant to the Section 42 claim in this regard is as follows: '15.1 In Table 2 of the Award, the Second Defendant determined the quantum meruit to be allowed for the design fee at 7.4% of the quantum meruit of $558,542.00, in an amount of $41,332.00. 15.2.1 Mr Horley when questioned by counsel for the Plaintiff stated that he calculated the design fee in an amount of $62,700 on a contract value of $910,000. 15.2.2 and stated that both he and Eurocopter's expert were agreed in this respect (see T/R 15 lines 43-54 and T/R 16- 1 - 40 of 27 June 1997). 15.2.3 In response to a question from the Arbitrator at T/r 27 June 1997 (p 7 lines 36-45), Mr Horley stated that the design fee should be calculated on 7.4% of the net value of the contract. 15.3 The Arbitrator in his additional reasons dated 4 November 1998 referred to cross-examination of Mr Horley by Mr Woods as a basis for concluding that the 7.4% should be applied to the sum of $581,892.00, without referring to the uncontradicted evidence above. 15.4 In so doing, the Arbitrator ignored the uncontradicted evidence of the agreement between the two experts and also the answer given to the Arbitrator by Mr Horley. 15.5.1 In paragraph 45 of his reasons, the Arbitrator stated that the aforesaid amount of 7.4% should be calculated on the net value of the work undertaken by the Plaintiff under the "second contract." 15.5.2 In the Arbitrator's calculations of the quantum meruit at p 25 of his reasons he allowed 7.4% of the quantum meruit, and not the value of the work undertaken under the second contract. 15.5.3 Therefore, there is a conflict in the award, which the Arbitrator's additional reasons of 4 November fail to clear up. 15.5.4 Mr Horley stated in evidence that the figure of 7.4%, was given to him by Mr Moir. 15.5.5 The Arbitrator's determination of the quantum meruit for the design fee was based upon his acceptance of Mr Horley's evidence as to the percentage of 7.4% to be applied. 15.5.6 Mr Moir stated that the percentage of 7.4% had been given by him by Mr. Stone as the allowance built into the "first contract" for design. 15.5.7 In therefore accepting the percentage of 7.4% as the basis for his determination of the quantum meruit for the design fee, the Arbitrator ignored the evidence that this percentage was based on a statement by Mr Stone to Mr Moir as the sum built into the "first contract" as a design fee. 15.6 In the premises, the Second Defendant has committed legal and/or technical misconduct, alternatively has misconducted the proceedings.' [Amended Summons 55047/98] 108 To my mind, the exercise upon which the Arbitrator was engaged was clearly to determine, as a question of fact, the reasonable remuneration for such design work as had been undertaken at the date of repudiation and termination. As to that question of fact, the Arbitrator accepted the joint evidence of the experts. He was not bound to adopt another course. The question, it seems to me, is one of fact alone. It does not appear to me that there has been any error shown. It does not appear to me that there has been any misconduct of the Arbitrator shown. 109 One has to approach the exercise by considering that in paragraph 42 to 45 of the Award, the Arbitrator accepted that for the provision of full design services for the complete work involved in the second contract, the figure of 7.4% would be appropriate for the design element within the second contract lump sum of $910,400 pursuant to clause 3.6 of the second contract. 110 In paragraph 43, the Arbitrator observed that 'it seems clear that the majority of design work, including that for the remaining works, was undertaken during the original agreement', (that is during the work done on the first contract). 111 In paragraph 42, the Arbitrator observed the time records relating to Mr Peter Ellen's design of the second contract were not produced and that the design work described by Mr Peter Ellen in relation to the second contract could be described as relatively minor. 112 It seems clear then that the Arbitrator in paragraph 44 for those reasons determined that the most satisfactory method of determining a design fee for such of the second contract works was by reference to that proportion of the work that had been undertaken at the date of repudiation, thereby recognising that some design work would remain not done at the time of termination. Hence, the design fee was allowed on the value of the work as assessed by the experts as having been performed by Elspan under the second contract. 113 Eurocopter submitted that 7.4% of the value of the work done at the date of termination ($558,542 - see Table 2 page 25 of the Award), was a reasonable method of determining value of design work carried out by Elspan. I accept that submission as correct. Both experts agreed as to the appropriateness of that calculation. Eurocopter pointed out that reading paragraphs 42 to 45 of the Award, it is clear beyond argument that 7.4% of $558,542 was very generous as a design fee in relation to the second contract for work actually done, because most of that design work was in fact done under the first contract. Eurocopter points out that counsel for Elspan never specifically challenged the statement on page 3 of the experts' Joint Report which stated: 'In relation to design we note that 7.4% of the net cost of the works is allowed for design fees in the first contract.' 114 Finally, Eurocopter submitted that during the examination of the quantity surveyors during the conclave on 27 June 1997, senior counsel for Elspan elicited a response from his client's expert witness, Mr Horley, to the effect that the appropriate method of determining the design fee in the present circumstances was 7.4% of the 'net construction costs of the work', (T 16(8)) following Mr Horley's answer at T14(1-40) that the appropriate value for the present project was 7.4% of $581,892. Eurocopter submitted that the following examination by counsel for Elspan of both experts on that day and the later opportunity to seek supplementary evidence from them, elicited no further specific enquiry from counsel for Elspan who did not put to either of the experts the specific proposition presently contended for, namely that the 7.4% should be based upon the second contract value as a whole, rather than upon a value which took into account that all the design work had not been completed. 115 To my mind, the suggestion that there is a conflict in the Award and that it was inappropriate for the Arbitrator to proceed by allowing for the design fee at 7.4% of the quantum meruit allowed, does not expose any error and does not expose any misconduct by the Arbitrator. 116 The important point to bear in mind is that the Arbitrator had to determine what design fee should be allowed in a circumstance where there was an issue as to how much design work had been undertaken at the date of repudiation and termination. The amount of design fee could only be assessed if one was able to work out how much design work had been carried out. The Arbitrator elected as a factual matter, to determine the reasonable remuneration for the design work as had been undertaken. He was entitled to apply the 7.4% to the quantum meruit and not to the value of the work undertaken under the contract. It cannot be said that he overlooked the fact that the design responsibility for the work covered by the second building contract was for its entirety and not merely for the work done up to the stage of its unlawful termination. Special Detriment 117 Elspan's submissions as part of its section 42 challenge in relation to this issue were as follows: '12.1 In paragraph 139 of the Award, Tab 33 p1317, the Second Defendant gave as one of his reasons for rejecting the Plaintiff's claim for special detriment, (i.e. the amount of interest due to Westpac, Hong Kong, in respect of the back to back facility provided by Westpac, Hong Kong for the funding of the second contract), that the Plaintiff did not produce direct evidence that there was any indebtedness by the Plaintiff to Westpac at the date of the arbitration. 12.2 In Mr Andrew Williamson's affidavit, "Ex.A8" paragraph 8, Tab 12 page 576 and page 666-668 it is stated that as the Plaintiff failed to repay the capital and interest under the Westpac loan, additional interest had been incurred. 12.3 There was no cross-examination of Mr Andrew Williamson, Mr John and/or Mr Peter Ellen on this question, see paras. 7.16.1 and 7.16.2 of Mr John Ellen's affidavit of 18 December 1998. 12.4 It was impermissible for the Second Defendant to have come to the conclusion to which he did, which was in breach of the principles of procedural fairness / natural justice.' 118 Elspan also claimed compound interest as part of the Section 38 challenge and in this regard, Elspan's submission are as follows: '8. Compound Interest 8.1 The relevant facts are : (a) Schedule "D" to the second contract required Eurocopter to set up an irrevocable documentary letter of credit for the entire contract sum. The whole tenor of Schedule "D" is that timely payment was of critical importance to Elspan; Tab 4,p 57-58. At the very least, Eurocopter knew that Elspan could not fund the construction costs itself and that Elspan was financed by a Westpac bank loan. (b) Westpac Banking Corporation provided Elspan with a loan facility in November 1991 in an amount of HK$3.5 million, secured by a mortgage over a separate cash deposit account into which payments were made on behalf of Aerospatiale on the Bankstown project through a letter of credit established by that company with the French bank, Credit Lyonnaise, in Sydney. The purpose of the loan was to provide Elspan with working capital and to cover any gaps in project payment receipts (Mr Andrew Williamson, para,2, 16 December 1993); Tab 12, p.574. (c) In January 1992, after commencement of the second contract, the Elspan loan facility was extended by a further amount of HK$1.2 million (para.5, Williamson);Tab12,p. 574. (d) The interest rate payable under the loan facility was 1.5% above the lender's prime lending rate from time to time. See clause 6(a) of the Loan Agreement attached to Mr Williamson's affidavit. The interest rates charged from 5 November 1991 - 29 October 1993 appear from Exhibit "L" to Mr Williamson's affidavit sworn 16 December 1993, Tab 12, pp.663-665. Interest accrued up to 31 March 1993 and was in an amount of HK$25,041.17. See page 126 of Mr Williamson's affidavit, at Tab 12, p.665. (e) The terms of the loan with Westpac provided for the application of the milestone payments to be paid by Eurocopter through Credit Lyonnais [sic] directly to Westpac, whereupon the monies were to be applied to the reduction of the principal and interest of the loan. (Mr Peter Ellen, para.19, 21 June 1996); Tab 10, p.231. (f) Provided the milestone payments were made and the contract went to completion, the loan from Westpac would be fully discharged. (Para.20, Mr Peter Ellen's affidavit); Tab 10, p 231. (g) Because Eurocopter was intimately involved in the negotiations leading to the establishment of schedule "D" and "E" of the contract and the provisions of security for the loan, it knew that by repudiating the contract and preventing Elspan from completing the contract, Elspan would be placed at immediate risk of default under the loan. (Mr Peter Ellen, para.22); Tab 10, p.231. 8.2 Elspan is liable to pay Westpac compound interest on either the amount of $3.5 million or $1.2 million and that has been brought about by Eurocopter's wrongful repudiation. Elspan has therefore suffered this "real detriment" and is entitled to be compensated in that amount on that basis, irrespective of whether or not the Hungerfords principles referred to below apply. 8.3 Alternatively, Elspan contends that it is entitled to compound interest on the amount of the quantum meruit awarded by the Arbitrator. It is stressed that this is not to be confused with the claim for compound interest by way of a "real detriment" referred to above. The two claims are juristically distinct, although if Elspan is awarded the former, it cannot get the latter as there would be an overlap. 8.4 In Leighton Contractors Pty Ltd v Kilpatrick Green Pty Ltd [1992] 2 VR 505 at 520, it was held that the Hungerfords principle referred to below has been held applicable to commercial arbitrations, and that sections 31 and 32 of the Act are not a complete code. 8.5 In Walker v Hungerfords (1989) 63 ALJR 210, the High Court held that when awarding damages at common law for breach of contract or negligence, the Tribunal can include an award for damages by way of interest for the loss of the use of money which the plaintiff paid or lost as a direct result of the defendant's breach of contract or negligence. 8.6 Although Hungerfords dealt with a contractual breach and tort, there can be no reason in principle why such damages cannot be claimed within the context of a quantum meruit, which flows from a wrongful repudiation. The High Court has confirmed that simple interest can be recovered for unjust enrichment. Australia & New Zealand Banking Group v Westpac (1988) 164 CLR 662. In West Deutsche [sic] Landesbank Girozentrale v Islington London BC [1996] 2 All ER 961 HL - the House of Lords, by a bare majority held that compound interest could not be claimed in a claim for unjust enrichment. There appears to be no Australian authority one way or the other as to whether or not compound interest as compensation can be awarded in a quantum meruit claim. Santow J in Budget Stationery Supplies Pty Ltd v National Australia Bank (unreported, Sup Ct NSW 25 September 1996) considered this issue in obiter dicta as follows: "The final question, even if these hurdles were cleared, is what basis of interest (simple at common law or compound in equity) would be recoverable by way of common law restitution. I refer here to the decision of the House of Lords in Westdeutsche Landesbank Cirozentrale [sic] v Islington London Borough Council 2 WLR 802 denying compound interest, through by bare majority. Lord Goff (at 817B) in dissent concluded that compound interest should have been awarded, relying inter alia upon Hungerfords v Walker (1989) 171 CLR 125 at 148. However in light of my earlier conclusions I do not need to deal with that difficult question." Lord Goff held as follows in Girozentrale at [1996] 2 All.ER 961 @ 976 d-f: "With great respect I myself consider that, if the jurisdiction to award compound interest is available where justice so demands, it cannot be so confined as to exclude any class of case simply because that class of case has not previously been recognised as falling within it. I prefer therefore to read the passage quoted from Lord Brandon's speech as Mason CJ. And [sic] Wilson J. read in Hungerfords v Walker (1988) 171 CLR 125 at 148, as providing examples (ie not exclusive examples) of the application of the underlying principle of justice." Lord Goff was clearly of the view that had he been free to follow the High Court in Hungerfords , he would have awarded interest at compound rates. The tenor of Santow J's judgment was that if His Honour were to have decided the Girozentrale case, His Honour would have agreed with Lord Goff, whose powerful dissent, based as it was on the High Court's decision in Hungerfords , is a very persuasive indicator of how an Australian court would decide if faced with the matter. Accordingly, it is submitted that there is strong evidence of an error of law on the face of the Award. It is to be emphasised that compound interest as compensation is claimed in this arbitration first as compensation for the "real detriment" that Elspan has suffered, i.e. the compound interest which it is contractually obliged to pay Westpac; alternatively compound interest on the amount of the quantum meruit awarded by the Arbitrator. An analysis of the case shows that when interest by way of damages became allowable in England, the plaintiff in order to be successful, was required to show that the damages claimed fell within the "second limb" in Hadley v Baxendale (1854) 9 EX 341, viz. that the defendant had actual knowledge at the time that the contract was concluded of the circumstances that would give rise to the loss on wrongful repudiation. 8.7 The majority in Hungerfords swept away the distinction between the first and the second limb in Hadley v Baxendale and held that it was not necessary to establish actual knowledge of the loss that would be sustained upon breach, at the time the contract was executed. Although it is submitted that on the probabilities, because of the special deal struck with Westpac, with Eurocopter's knowledge, Eurocopter knew that Elspan would have had to be paid by Eurocopter in order to enable Elspan to discharge the special loan taken from Westpac to complete the Bankstown project, proof of actual knowledge by Eurocopter is not required. In any event, as Giles J observed in Multiplex Constructions v Abgarus Pty Limited (1994) 33 NSWLR 504 at 521G, (dealing with presumed intention in this day and age) parties to a construction contract know that "at the date of contract … delay in achieving practical completion will necessarily result in additional holding costs. Such damages … fall within the first rule in Hadley v Baxendale (1854) 9 Ex 341. . . . In other words, such losses flow naturally from a breach, in the ordinary course of things".' 119 To my mind, Elspan's claims are simply answered. The Arbitrator accepted the proposition that Elspan had an arguable legal entitlement to claim special detriment 'if a real detriment can be identified' - see Award paragraph 134. The Arbitrator then proceeded to examine the evidence to ascertain if Elspan had shown that there had been a 'special detriment' as alleged and at paragraph 141 he held as a factual matter that he was unable to identify any special detriment related to interest on the Hong Kong loans. Earlier he had, in paragraph 139, referred to the doubt as to whether or not Westpac had written off the balances of the two Hong Kong loans and had stated that if the loans were current at the time of the hearing and later, it would have been in Elspan's power to produce direct evidence to that effect, but that it had not. 120 To my mind, Elspan's special detriment claims require to be rejected. It was open to the Arbitrator to find as he did. The finding of fact that the Arbitrator was unable to identify any special detriment relating to interest on the Hong Kong loans if they still existed at paragraph 141, does not indicate manifest error on the face of the Award nor misconduct by the Arbitrator. The section 38(5)(b)(ii) claim is rejected. 121 There is no doubt but that the question of whether or not compound interest may be claimed in a claim for unjust enrichment is a difficult question. I do not see that it is necessary for that question to be decided here. Decommissioning Costs 122 Elspan's submissions pursued pursuant to its section 38 case, in relation to this matter are as follows: '1.1 In paragraph 41 of the Arbitrator's interim award of 14 October 1998 Tab.33 p.01298, the Arbitrator held that because of the provisions of Clause 14.5 of the "Second Building Contract" dated 5 September 1991, Tab.2 p.31, the Plaintiff was precluded from claiming on a quantum meruit for decommissioning the building site. 1.2 As a consequence of the repudiation of the Building Contract by the Defendant, the Plaintiff was compelled at a premature stage to decommission the site and incur expenses in so doing. 1.3 The incurring of such expenses constituted a real "detriment" or material damage sustained by the Plaintiff; Jennings Construction Ltd. v Q.H.&.M. Birt Pty. Limited (unreported Sup.Ct. NSW 16 December 1988) per Cole J. (as he then was); in circumstances where these were incurred before the Plaintiff could recoup its contractual benefit (the contract price) and an amount representing such real "detriment" or material damage is recoverable by way of a quantum meruit. 1.4 Alternatively and in any event the contractual terms of the repudiated agreement insofar as they relate to the entitlement of the innocent party are not determinative of a quantum meruit; Pavey & Matthews Pty. Limited v Paul (1987) 162 CLR 221. 123 Clause 14.5 of the second agreement read as follows: 'Following termination, completion or suspension of the Remaining Works the Owner shall give Elspan access to the Site for the purpose of removing its temporary buildings, plan, tools, equipment, goods, materials and things ("Equipment") the property of Elspan and Elspan agrees not to interfere with or disrupt work being undertaken by contractors employed by the Owner. Elspan shall remove the equipment within 14 days of the termination, completion or suspension. Elspan shall make no claim upon the owner for costs incurred by it in removing its Equipment . . .'. 124 J.W. Carter 'Breach of Contract', Second Edition, Law Book Company Limited, 1991, examines the extent to which contractual terms continue to operate after a termination of performance for breach or repudiation [paragraphs 1224 through to 1262]. As the author makes plain, a contractual term intended to operate after termination may or may not create a primary contractual duty. Irrespective of the nature of the term, whether or not the term operates after termination depends on the intention of the parties. It is more difficult to establish an intention that the term is to operate where the term creates a primary legal duty. However, 'there is no rule to the effect that the mere fact of breach prevents reliance on a term, otherwise intended to operate after termination'. [Paragraph 1260] 125 At paragraph 1224 the author, in examining the extent to which contractual terms continue to operate after a termination of performance for breach or repudiation, draws the distinction between 'terms which create primary contractual duties in the sense that their breach gives rise to a liability in damages', and 'terms which regulate the rights and liabilities of the parties without creating any primary contractual duties'. That distinction is significant because of the general rule that termination for breach or repudiation discharges both parties from the obligation to perform their contractual duties. 126 At paragraph 1232, the author points out that the general principle at common law is that the operation of exclusion clauses, whatever their nature, depends upon the construction of the contract. 127 To my mind, no error of law and certainly no manifest error of law has been demonstrated by the Arbitrator's decision in Award paragraphs 38 to 41. The holding was that Eurocopter was entitled to rely upon contract clause 14.5 as applying to the parties rights on termination. In Van Der Sterren (H&E) v Cibernetics (Holdings) Pty Ltd (1970) 44 ALJR 157, the High Court accepted that a clause limiting the time within which the plaintiff was to notify defects in goods was a clause available to the defendant, even if it had committed a breach justifying termination. In Life Savers (Australasia) Ltd v Frigmobile Pty Ltd & Anor [1983] 1 NSWLR 431, Hutley JA at 434-435 dealt with circumstances in which exception clauses should be left to operate according to their terms. His Honour cited H & E Van Derran per Walsh J at 434. Walsh J had said at 158: 'The terms of exception clauses must sometimes be read down if they cannot be applied literally without creating an absurdity or defeating the main object of the contract'. As Hutley JA pointed out, similar language had been used by Barwick CJ in Port Jackson Stevedoring Pty v Salmond & Spraggon (Australia) Pty Ltd (1978) 139 CLR 231 at 238. His Honour could see no bar to the Court, following Photo Production Ltd v Securicor Transport Ltd [1980] AC 827. 128 There was no manifest error of law in my view, to be found in the Arbitrator's holding in relation to decommissioning costs. 129 In any event, Eurocopter's submissions made plain that the quantity surveyor experts for both parties had jointly allowed (in 'preliminaries') a sum for progressive cleaning up. 130 Eurocopter pointed out that the experts had not been examined about quantum for 'decommissioning'. Eurocopter pointed out that at paragraph 75 of his Award, the Arbitrator disallowed a claim for $65,000 for 'start up' costs on the basis that such claim and quantum were not put to either quantity surveyor and that the quantity surveyors were ' . . . correct in not treating start up costs separately given their approach to costing the preliminaries'. 131 Eurocopter pointed out as follows: 'The experts were cross-examined (27 June 1997 - see TP. Pages 4 -19, Tab 25), and senior counsel for Elspan sought and was granted leave to ask supplementary questions in writing of the experts upon the "Issues of Fact" (Ex.P5) see TP 35-40 of 28 June 1997 on the issue. The supplementary questions became exhibit Expt 2A, and question 9.0 was in the following terms: "Is Elspan entitled to a sum for de-commissioning and cleaning up the site? If so, in what amount?" That question was answered in the supplementary joint report of the experts of 4 July 1997, exhibit Expt 2B. The answer to question 9.0 was as follows: "The joint report allows for preliminaries for a 12-week period. The labour included in the preliminaries allows for progressive site cleaning. There is no special allowance for any cleaning up or de-commissioning after termination." (iv) There was, in the proceedings, no real distinction between "de-commissioning" and "site clean up". Elspan's submissions now refer to it virtually exclusively as "de-commissioning" but, in cross examination before the arbitrator, Mr John Ellen was content to refer to it s "site clean up" for a claim for $10,000; transcript 5 July 1997, pages 118(46); (48-54). During his examination in chief, Elspan's counsel had referred to it as "site clean up costs"; TP91 (27). (v) It is submitted that it is clear from the joint supplementary report that the expert quantity surveyors considered that all reasonable costs after termination were included in the amount of $184,780 for preliminaries.' 132 Elspan's claims including the section 38(5)(b)(ii) claim, with respect to this item are rejected. Delay 133 Elspan's submissions in this regard pressed in its section 42 case, were as follows: '2.1 Substantial periods of time still remain unaccounted for even making full allowances for all the factors which Mr Markham in his undisputed oral and written statements referred to the affidavits of Mr W Biggs sworn 18th December 1998 and Mr John Ellen sworn 18th December 1998 claims to have caused his delay in making the award. 2.2 Furthermore some of the statements made by him are not supported by the facts which he has disclosed. 2.3 On the 29th May 1998, Mr Biggs received a fax from Mr Markham Tab "D", in which Mr Markham blamed the delay on a priority reference having been sent to him by the Supreme Court. On 25 August 1998, Tab "J" to Mr W Biggs' affidavit, Mr Markham stated that on several occasions the quality time allocated to writing the Award was consumed by other hearings extending unexpectedly, due to circumstances outside his control. 2.4 From the chronology, (extracted from Mr Markham's Fax of the 10th November 1999, Tab "U"), from the 22nd September 1997 to 9 January 1998, Mr Markham sat as Arbitrator for not longer than one day ie. in the Dorr Oliver case, when he had a preliminary conference on the 8th December 1997 see para 2 of Tab "U", p.42 and a hearing of unspecified length in an unnamed matter in December 1997, see para. 11 p.43. 2.5 So therefore from the 22nd September 1997 to the 9th January 1998, there was a substantial slab of time (say 100 days, less the time devoted to the matters stated in para 2.1 above), available to the Arbitrator in which he could have written his award. 2.6 Consequently, his statement to Mr Biggs on 9 January 1998, and for which see para.4 of Mr Biggs' affidavit sworn 18th December 1998 that "The delay is due to other matters", presumably relates to "other matters" not stated in the Arbitrator's fax of 10th November 1998, Tab "U" to Mr Biggs' affidavit. The delay during that period is unexplained. 2.7.1 On 12 May 1998, Tab "B", he told Mr Biggs that he started working on Elspan in January 1998. He had set aside time in February 1998 for the writing of the Award, but an urgent matter which had ran out to 7 weeks precluded that. 2.7.2 The above statement must be read with his fax of 29th May 1998 Tab "D", in which Mr Markham stated that a block of time for the writing of this award was set aside at the end of February - early March, but this was overridden by a "priority reference" ( Kezarne ). 2.8 The Arbitrator's fax Tab "U" discloses that between the 9th January 1998 and the 12th May 1998: Days (a) He was away from 11th - 16th January 1998; 5 (b) There was a half day conference Kezarne on 27th January 1998; ½ (c) There was a preliminary conference in Schultz on 28th January 1998; 1 (d) From 2nd February to 25th March 1998, he heard the Kezarne matter ± 38 (Working) (e) There was a preliminary conference in Dorr Oliver on 25 March 1998; 1 (f) There was a preliminary conference in Brett Manning on 11 March 1998; 1 (g) There were oral submissions in Kezarne , 1st April 1998; 1 (h) There was a hearing in Schultz , on 14th and 15th April 1998 2 (i) There was the report in Kezarne 28 April 1998 (not stated how long it took to write); and nothing else until the 12th May. Total 47 over a period of 9th January - 12th May 1998. 2.9 Over a period of some 6 weeks, from 25th March - 12th May 1998 only 5 days were taken up with sitting as Arbitrator, there was time (not stated) taken for the writing of the Kezarne report. 2.10 Even allowing for Kezarne (both the hearing and writing of the report), what is not explained is why the rest of this fairly lengthy period was not used for the writing of the Award. 2.11 As stated above, Mr Markham said on 12 May 1998 Tab "B", that he had set aside time in February 1998 to write his Award. 2.12 In his letter of 25 August 1998 Tab "J", Mr Markham said that "Unfortunately on 'several' occasions the quality time allocated to this important task has been consumed by other hearings extending unexpectedly due to circumstances outside my control". 2.13 In paragraph 15 of his fax of 10 November 1998, Tab "U", he said that he had set aside the period 29 June to 15 July to write the Award, ie. Some 2 weeks. 2.14 In all his statements purporting to explain his delay, the only specific times detailed by him as having been set aside for the writing of the Award over the period 22 September 1997 to 14 October 1998, were two 2 week periods ie 2 weeks at the end of February / beginning March 1998, and 2 weeks say from 29 June to 15 July, 1998. The use of the word "several", in his fax of 25th August 1998 was infelicitous. 2.15 In paragraph 12 of Mr Biggs' affidavit he states that on 21st August 1999, Mr Markham told him inter alia that the matter was complex and he did not have quality time to devote to it. But as analysed above there were substantial periods of apparently available time within which to write the Award. 2.16 Upon analysis, the only hearings of any length covering the entire period was the matter of Kezarne , and the two week arbitration in the unnamed matter commencing 15 June 1998. 2.17 By a coincidence the two periods which were used for the Kezarne hearing and the writing of the Kezarne Award, were apparently the two periods which he had set aside to write his Award in Elspan. He admits as much in the first paragraph after his point 18 in his letter of 10 November 1998 (Ex. "U" p.4). 2.18 Accordingly, the "other matters" were in reality two other matters, being Kezarne , and the unnamed matter. Neither were "priority" matters, nor were they matters beyond his control. It follows from the above analysis that: (a) The Arbitrator's progressive reasons for delay are not substantiated by his formal response of the 10th November 1998; (b) Contrary to the assertion in his letter of 25th August 1998, other hearings did not extend unexpectedly "due to factors outside [his] control"; (c) Most of the other matters which post dated Elspan were within his control and consumed very much less time than the 13 months delay period; (d) The only two occasions Mr Markham says he allocated to the Elspan Award were both taken up because of Kezarne which at the most consumed 9 weeks out of 13 Months; (e) Kezarne post dated Elspan, and was taken voluntarily; (f) He failed until the last to disclose his involvement in the work of the Institute, which started in May 1998.' 134 Plainly misconduct within the meaning of section 42 may include a mistake in procedure which unjustly prejudices a party. Cf Melbourne Harbour Trust Commissioners v Hancock (1927) 39 CLR 570 at 588 per Isaacs J. 135 In Doran Constructions Pty Ltd v Health Administration Corporation of NSW (1996) 12 BCL 59 Kirby P observed that legal authorities make plain a number of well established propositions. While these are not strict rules of law, they are instances of alleged 'misconduct' as found by the Courts. 136 Kirby P outlined the propositions as follows: '(1) The "misconduct" referred to in the Act does not necessarily involve, at least in the context of arbitration, personal turpitude on the part of the arbitrator. See eg. London Export Corporation Limited v Jubilee Coffee Roasting Company Limited [1958] 1 WLR 661 (CA) at 676. (2) In fact, the term may not, by the authorities, amount to much more than such a mishandling of the arbitration as to be likely to amount to a substantial miscarriage of justice. See Williams v Wallis and Cox [1914] 2 KB 478 (DC) at 485. (3) The mere failure in an arbitration to follow normal court procedures will not necessarily constitute misconduct in the context of an arbitration. This is especially so if a degree of informality was contemplated by the contract between the parties or by their subsequent agreement. See The Owners of the MV Myron v Tradax Export SA [1970] 1 QB 527 (QB) at 535. (4) The mere failure to put a party on notice of an argument as to a point which might be decided it may not, in the context of an arbitration, necessarily amount to misconduct. See Edible Oils, above at 97. (5) A misconception, even of the nature of the contentions which the parties to the arbitration are putting to the arbitrator, may not necessarily amount to misconduct. See Macpherson Train & Company Limited v J Milhem & Sons [1955] 2 Lloyds Rep 396. 137 Elspan asserts that by reason of the Arbitrator's delay in making the award, the Arbitrator ought be removed as Arbitrator pursuant to s44(a), there having been misconduct on the part of the Arbitrator or the Arbitrator having misconducted the proceedings. It is on these same grounds that Elspan puts its s42 case. Elspan submits that the grounds on which 'misconduct' may be found include: 13.3… (b) the Second Defendant's culpable delay in making his award to the plaintiff; Succula Ltd and Pomona Shipping Co Ltd v Harland and Woolf Ltd [1980] 2 Lloyd's Rep 381 at 384, and Lewis Emanuel & Sons Ltd v Sammut [1959] 2 Lloyd's Rep 629, coupled with prejudice, Boncorp Pty Ltd v Thames Water Asia/Pacific Pty Ltd (1996) 12 BCL 139, and or a justifiable lack of confidence in the second Defendant being able to properly complete his task, State Construction Pty Ltd v Boulderstone - Hornibrook Engineering Pty Ltd (unreported SA Sup Ct 27 March 1997); (c) the lack of frankness in Second Defendant's explanation for the delay … 13.4 In amplification of the submission that the Plaintiff has been prejudiced by the delay, there are the following considerations: (a) Because of the extraordinary culpable and unexplained delay in making the interim award, and the rush in so doing that followed when the Second Defendant was threatened with an application for his removal, the Second Defendant forgot the evidence …and was generally driven into error; (b) the delay has resulted in the Plaintiff losing interest on costs invested in the arbitration and also put up as security for costs 138 In considering Elpan's argument that the Arbitrator's delay in giving his determination amounted to misconduct, I have had regard to the relevant authorities. 139 In Haskins & Anor v Brae-Villa Homes Pty Ltd (Unreported, Supreme Court of Vic, 15 Dec 1995, Nathan J) Nathan J made it clear that he was prepared to accept that a ground for seeking relief under s42 is delay of the Arbitrator where the Arbitrator was "tardy in the process of arbitration to such a degree, that it should be seen that he misconducted himself" (at page 5). However, his Honour found that in the circumstances of the case, the delay between the hearing and the delivery of the Interim Award some six months later was not productive of misconduct of the Arbitrator. This is because, as a finding of fact, the reasons for the delay were manifold, including a delay generated by the applicants themselves and by the respondents. 140 Delay in the context of s42 had previously been considered by Byrne J in Boncorp Pty Ltd v Thames Water Asia/Pacific Pty Ltd (1996) 12 BCL 139. In that case, the plaintiff submitted that the Arbitrator's long delay in publishing the award (some eight and half months), the reasons given for the delay, and the terms of the award itself led to an inference that the Arbitrator misconducted himself inasmuch as he did not decide the dispute on its merits and did not bring to task a fair and unprejudiced mind. In dismissing the application, his Honour concluded at 142: 'The period of time which has elapsed from the completion of the hearing and the publication of the award is doubtless a matter of regret. Doubtless, also, it made the award writing task of the arbitrator so much more difficult. But I do not consider that the legitimate interests of either party were prejudiced as a result. I conclude that the fact of delay and the terms of the award do not lead to the kind of inference for which Boncorp contended.' 141 Similarly, in State Construction Pty Ltd v Boulderstone - Hornibrook Engineering Pty Ltd (Unreported, Supreme Court of SA, 27 March 1997, Matheson J) Matheson J held that although the Arbitrator took a longer time than was desirable in ruling on a pleading, in the circumstances of the case such delay did not amount to misconduct. His Honour held that neither the Arbitrator's statement that his decision would be delivered "in about a week's time", or the failure of the Arbitrator to provide reasons for the delay, which exceeded six months, really advanced the plaintiff's argument in all the circumstances of the case. 142 Clearly, Elspan's submissions as to the effect of the Arbitrator's delay (in combination with other factors) require to be weighed in the particular circumstances before the Court when raised. 143 None of the matters here relied upon by Elspan satisfy me that the delay that was here involved and the matters relied upon in association with it amounted relevantly to misconduct. This is not to say that the Arbitrator approached the matter with expedition. His delay in handing down the Award is to be regretted. However, none of the matters relied upon by Elspan to my mind, show that the delay which undoubtedly occurred, resulted in a particular prejudice to Elspan. 144 There is further the consideration that Elspan elected to await the decision of the Arbitrator and clearly enough to abide the decision if it was favourable to Elspan. Conduct of that type was dealt with by Bingham J in Shield Properties & Investments Limited v Anglo Overseas Trade Co Ltd [12 January 1985] 273 (6216) Estate Gazettes 69. 145 In that case, the respondents to an arbitration applied to set aside or remit the award of a sole arbitrator under sections 22 or 23 of the Arbitration Act (1950) UK on the grounds of misconduct or procedural irregularity. The 'misconduct' complained of was that the applicant, contrary to preliminary direction by the Arbitrator, referred to 'without prejudice' negotiations between the parties in submissions before the Arbitrator. 146 Bingham J, in examining the circumstances which gave rise to the complaint, noted that while the respondent referred to the transgression by the applicants in counter-submission to the Arbitrator, they did not seek to halt the proceedings, or to require a decision by the Arbitrator that the negotiations had been without prejudice, or to require an undertaking that the reference would be ignored. In short, they allowed the matter to proceed. 147 His Honour stated at 73: 'It seems to me that the situation was clearly one in which the tenants had an election. Either they made a bold and unequivocal protest and raised the matter, either seeking a determination or seeking to halt the proceedings entirely on the basis that the arbitrator could no longer fairly dispose of the matter or they could allow the matter to continue. It seems to me plain on the information before me that they adopted that latter course and I bear in mind that even if the material was brought to his attention, and should not have been, he had a discretion to continue if satisfied that no injustice would be done by doing so. Had the matter been explored I have no doubt that he would have indicated that he paid no attention to that evidence at all and I very strongly suspect that the matter would have proceeded on that understanding. But, be that as it may, it was, I think, up to the tenants to make their position plain, to make a stand if they wished to insist on this point and not to allow the arbiration [sic] to proceed, reserving their right to challenge the result on this ground if it proved to be unattractive to them. Accordingly, as it seems to me, this ground of challenge fails.' 148 To my mind, the delay, and/or the delay in combination with the other matters complained of, do not amount to misconduct on the part of the Arbitrator, or the Arbitrator having misconducted the proceedings. Elspan's submissions in this regard are without substance. They are rejected. Costs and Further Orders 149 I reject Elspan's submissions that in the circumstances, the Arbitrator ought no longer be permitted to determine costs of the arbitration. There is no lack of confidence in the Arbitrator determining that matter entirely impartially. The Arbitrator's own conduct which has been found to amount to relevant misconduct does not lead to a holding that he has not retained the degree of impartiality necessary to enable him to determine costs. 150 Short Minutes of Order should be brought in. Costs may be argued when Short Minutes are brought in.

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