REASONS FOR JUDGMENT
1 The applicant ("Emerald Grain") seeks to set aside an Arbitral Award dated 20 August 2013 ("the Award") made in favour of the respondent ("Agrocorp"). The claim by Emerald Grain relies upon Article 34(2)(b)(ii) of the UNCITRAL Model Law on International Commercial Arbitration ("the Model Law") which provides that an arbitral award may be set aside by a court if the court finds that the award "is in conflict with the public policy" of, relevantly, Australia. The Model Law has force in Australia by reason of s 16 of the International Arbitration Act 1974 (Cth) and s 19 declares that, for the avoidance of any doubt, an award is in conflict with, or is contrary to, the public policy of Australia within the meaning of Article 34(2)(b)(ii) if, amongst other matters, a breach of the rules of natural justice occurred in connection with the making of the award.
2 The Award was made to resolve a dispute between Emerald Grain and Agrocorp about the performance of a contract for the sale by Emerald Grain to Agrocorp of a quantity of Australian canola in bulk for delivery in Bangladesh. The contract between Emerald Grain and Agrocorp included a document dated 26 June 2012 numbered 1206296 from McDonald Pelz Global Commodities LLC (as broker) and an Emerald Grain FOB Short Form Contract dated 27 June 2012 numbered 12321. The contract between Emerald Grain and Agrocorp also incorporated the Grain Trade Australia ("GTA") FOB Contract No 1 (which in turn incorporated the GTA Trade Rules and the INCOTERMS 2010) and some clauses of the Australian Wheat Voyage Charter 2007.
3 Agrocorp commenced the arbitration, as claimant, pursuant to the International Arbitration Act 1974 (Cth) and clause 32 of the GTA FOB Contract No 1. The Tribunal comprised a chairman (nominated by GTA) and one arbitrator appointed by each of Emerald Grain and Agrocorp. The contract was expressed to be for the sale by Emerald Grain of "40,000mt +/- 10% at [Agrocorp's] option" of Australian canola bound for Bangladesh. The price was agreed at US$600 per tonne FOB Victorian ports for delivery between 15 and 31 July 2012. The nominated vessel, the MT STX Pride, arrived at the load port and tendered Notice of Readiness on 25 July 2012 but did not complete loading cargo of 40,000 metric tonnes of canola until 16 August 2012. Difficulties arose in the performance of the contract concerning the quantity of canola which was required to be loaded and concerning requirements occasioned by the import permits. Agrocorp claimed that 44,000 metric tonnes of canola ought to have been loaded and that it incurred costs and lost profits because only 40,000 metric tonnes was loaded and also claimed to have incurred damage because of delays relating to the import permits which Agrocorp said were caused by Emerald Grain.
4 Agrocorp's claims against Emerald Grain in the arbitration were primarily for (a) demurrage of US$179,525, (b) dead-freight of US$134,000 for 4,000 metric tonnes of canola, namely, the additional 10% of 40,000 metric tonnes which had not been loaded onto the vessel, and (c) loss of profits of US$180,000 said by Agrocorp to have arisen from the 4,000 metric tonnes of canola which Emerald Grain had not loaded onto the ship. Emerald Grain cross claimed for US$58,950.75 for breach of contract and alternatively in negligence. The Tribunal found substantially in favour of Agrocorp and awarded an amount of US$469,625, being $179,525 for the demurrage claim, US$134,000 for the dead-freight claim and US$156,000 for the loss of profits claim (based on a market differential of US$39 as at 16 August 2012 between the contract price of US$600 per tonne and the market value as at that date).
5 Emerald Grain contended in the proceeding in this Court that the Award made by the Tribunal was in breach of the rules of natural justice because, as was contended, there was no evidence of probative value before the Tribunal to permit it to make certain findings ("the "no evidence" claim") and also because the Tribunal made those findings based on its own opinions and ideas without having given Emerald Grain adequate notice ("the "no hearing" claim").
6 The application by Emerald Grain in this Court identified the grounds relied upon as those stated in an affidavit accompanying the application. That affidavit was dated 20 November 2013 and was made by Mr Thompson, the solicitor for Emerald Grain who had the carriage and conduct of the proceeding on its behalf. In paragraph 14 of his affidavit, Mr Thompson deposed to the grounds relied upon for setting aside the Arbitral Award. On 10 February 2014 written submissions of 63 pages were filed for Emerald Grain identifying (under the heading "the aspects of the Award being challenged") ten matters described as "essential findings" which were said to have been made by the Tribunal and which Emerald Grain contended to have been made in breach of the two rules of natural justice relied upon. Each of these ten essential findings was elaborated upon in other parts of the written submissions by reference to what were said to be specific findings made by the Tribunal in its reasons for the Award. The grounds relied upon by Emerald Grain in its written submissions, however, were not linked to the grounds appearing in Mr Thompson's affidavit which, as had been said in the application, were the grounds relied upon. Agrocorp contended that Emerald Grain could not rely upon the matters raised in the written submissions which exceeded the matters properly engaged by the Court by the terms of the application and the grounds stated in the accompanying affidavit which had set out the grounds to be relied upon. The proceeding was adjourned for a few days for Emerald Grain to consider whether to seek leave to amend its application (assuming it was in time to, and could, do so), or to amend the written submissions to accord with the grounds as specified in the application and accompanying affidavit (to the extent that they were sufficiently articulated as grounds capable of engaging a claim contemplated by the Model Law and the International Arbitration Act 1974 (Cth)). Emerald Grain elected, when the hearing resumed, to proceed with the application as originally filed with the statement of the grounds appearing in Mr Thompson's affidavit without amendment, but also to rely upon the written submissions and oral submissions in support of its claim at least to the extent that the written submissions adressed the grounds in Mr Thompson's affidavit. Agrocorp maintained its contention that the written submissions by Emerald Grain exceeded the grounds raised in the application but, in any event, contended that Emerald Grain had failed to satisfy the basis for setting aside the Award whether or not Emerald Grain was limited to the grounds in the affidavit which had accompanied its application.
7 An arbitral award governed by the Model Law and the International Arbitration Act 1974 (Cth) is required to be regarded by the courts as binding and is not to be set aside other than as provided for by the Act. An application to this Court to set aside an arbitral award is by originating application and must be accompanied by "a statement of claim or an affidavit": Federal Court Rules 2011 (Cth), r 8.05(1)(b). An affidavit accompanying an originating application in lieu of a statement of claim "must state the material facts on which the applicant relies that are necessary to give the respondent fair notice of the case to be made against the respondent at trial": r 8.05(2). The precise and careful articulation of any grounds to be relied upon in an affidavit accompanying an application is essential. An affidavit may accompany the application instead of a statement of claim but its contents must have the material facts relied upon by the applicant. The Court may, as is urged in this case, set aside an award if the Court finds that the award is in conflict with the public policy of Australia. That public policy includes compliance with the rules of natural justice, but the grounds stated must set out those matters which disclose how the award is in conflict with the public policy in those rules. Grounds to be relied upon, like grounds of appeal, should be capable of use as a sensible framework for submissions to be made to the Court: see Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 [4]-[5]; see also State of Victoria v Bacon [1998] 4 VR 269, 289-290. It is not sufficient, for example, to assert simply that there has been an error (see SQMB v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 165 [10]) or that "the award is in conflict with the public policy" of Australia or that the award was in conflict with or contrary to the public policy of Australia by a breach of the rules of natural justice having occurred in connection with the making of the award. These matters may be the conclusions which the Court will be asked to make, but they are not a statement of the material facts which are relied upon, nor would they, in any meaningful sense, be those material facts which are necessary to give a respondent fair notice of the case to be made against the respondent at trial.
8 Agrocorp contended, in my view correctly, that the written submissions of Emerald Grain may be disregarded to the extent that they raise matters which are not found in the affidavit accompanying the application. The application did attempt to leave open the possibility of adding to the grounds by describing in the affidavit the matters relied upon as being inclusive of those specified, namely, by describing the grounds relied upon as being some "among other things". However, reliance upon such words as "among other things" is ineffective to incorporate grounds which are not sufficiently raised by a fair reading of the grounds as articulated in a statement of claim or an accompanying affidavit. Article 34(3) provides that applications to set aside awards are to be made within three months of the date of making the award and that limitation would be frustrated, and the policy of upholding arbitral awards would be compromised, if the party challenging an award was permitted to rely upon grounds at trial which were not sufficiently raised on a fair reading of the grounds in a statement of claim or in the affidavit accompanying an application made within time.
9 Counsel for Emerald Grain contended that a more liberal view than that had been adopted in LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2013] 1 SLR 125 and that a more liberal view had also been expressed in commentary on s 34 by D Jones in Commercial Arbitration in Australia at para 10.150. However, LW Infrastructure Pte Ltd was not concerned with the sufficiency of the articulation of the grounds which had been raised to challenge the arbitral award in that case. Nor does the passage relied upon in the commentary by Jones assist in curing any defect in the grounds relied upon by an applicant. The passage relied upon in the commentary by Jones was:
Section 34(2)(b) states simply that the award may be set aside "if the court finds" that the subject matter of the dispute is not capable of settlement by arbitration on sub-para (i), or that the award is in conflict with public policy of the state under sub para (ii). That is, it is incumbent upon the court to consider s 34(2)(b) in the event of an application to set aside an award and it may do so even where the applicant does not raise the grounds contained therein. [Emphasis added].
What the commentary refers to is not to an applicant's ability to rely upon grounds not expressly stated, but to the continuing power of a court to determine for itself that an award offends public policy even though a party may not have raised that as an objection. A provision to that effect preserves the court's ability to give effect to public policy in its jurisdiction, and is in part directed to protecting the integrity of the judicial system of the court, but does not authorise new grounds to be relied upon by a party in adversarial proceedings where the application does not otherwise sufficiently do so on a fair reading. The words "if […] the court finds" in Article 34(2)(b) do not impose upon the court an obligation to embark upon its own inquiry into matters which were not properly, or sufficiently, raised by an applicant in adversarial proceedings; nor do the words enlarge a claim made by an applicant to include matters that were not properly, or sufficiently, relied upon as grounds to set aside an award. The grounds set out in the written submissions in this case go beyond those which are found in the statement of the grounds in Mr Thompson's affidavit and, to that extent, can be ignored. It will be, therefore, to the grounds in the affidavit to which one must turn and to consider the written submissions (as supplemented by the oral submission) where they deal with the grounds in Mr Thompson's affidavit.
10 Emerald Grain contended that the Award was in conflict with the public policy of Australia in that the Award was in conflict with both the "hearing rule" and the "no evidence" rule of the rules of natural justice. The grounds set out in paragraph 14 of Mr Thompson's affidavit, under the heading "grounds to set aside Arbitral Award", were:
14. Emerald is seeking an order setting aside the Arbitral Award on the ground that it is in conflict with the public policy of Australia, and, more specifically, in conflict with or contrary to the rules of natural justice (both the "hearing rule" and the "no evidence" rule), due to, among other things:
(a) there being no evidence of probative value before the tribunal that would permit it to find that:
(i) the Import Permits were in conformity with the Contract;
(ii) on 25 July 2012 or otherwise, the parties resolved their dispute as to the adequacy of the Import Permits issued by Agrocorp in respect of the export of 40,000 MT of the goods, such that Agrocorp was not still required to provide Import Permits that were in conformity with the Contract;
(iii) on 25 July 2012 or otherwise, the parties resolved their dispute as to the adequacy of the Import Permits issued by Agrocorp in respect of the export of 40,000 MT of the goods, relative to the stated requirements in the Import Permits as to when fumigation was to take place and where certification of such fumigation was to be recorded;
(iv) on 25 July 2012 or otherwise, the parties resolved their dispute as to the adequacy of the import permits issued by Agrocorp in respect of the export of 40,000 MT of the goods, relative to the stated requirements in the Import Permits as to where certification as to extraneous materials was to be recorded;
(v) on 25 July 2012 or otherwise, the parties resolved their dispute as to the adequacy of the Import Permits issued by Agrocorp in respect of the export of 40,000 MT of the goods and that their alleged agreement pre-supposed that fumigation take place prior to shipment;
(vi) the vessel came into the berth at the GrainCorp port terminal before 13 August 2012;
(vii) GrainCorp, as the port terminal operator, sent the vessel back to anchorage from its berth;
(viii) the port terminal operator, GrainCorp, sent the vessel back to anchorage from its berth because of any uncertainty about when the vessel could load;
(ix) the port terminal operator, GrainCorp, sent the vessel back to anchorage because of its alleged understanding that Emerald was unable to load a cargo in compliance with the Contract;
(x) the requirements as to extraneous material and the recording of same, as set out in the Import Permits issued by Agrocorp, were in conformity with the [Manual of Importing Country Requirements ('MICoR')];
(xi) the existence of a provision within a MICOR requiring that Import Permits issued by Agrocorp be presented to AQIS/DAFF for inspection before exporting may commence would not effectively prevent the exportation of the relevant goods where the Import Permits did not comply with the MICOR;
(xii) AQIS/DAFF and/or GrainCorp as the port terminal operator did not raise issue with the content of the Import Permits issued by Agrocorp and take steps that impacted the timely export of the relevant goods;
(xiii) in circumstances where the Tribunal held that it was a condition of the Contract that, at the time of nomination of the carrying vessel, Agrocorp was obliged to give notice of the quantity of cargo to be loaded, and held that at no stage during the said nomination or afterwards did Agrocorp discharge that contractual obligation, Emerald load 44,000 MT, or that would permit it to find that Emerald was contractually obliged to load 44,000 MT;
(xiv) any workable import permit for the export of the alleged additional 4,000 MT was ever presented by Agrocorp to Emerald;
(xv) a "mid-range differential" of US$39/MT was an appropriate figure to calculate any alleged market loss;
(b) the Tribunal having made the said findings based on its own opinions and ideas which were surprising or not reasonably foreseeable as potential corollaries of those opinions and ideas which were expressly traversed in the arbitration, and which Emerald could, with adequate notice, have possibly been able to persuade the tribunal away from.
In considering these grounds it is necessary to keep in mind that the challenge to an arbitral award permitted by the Model Law, and which is given effect to by domestic legislation, is a challenge based upon preserving the public policy of the domestic forum expressed in the rules of natural justice. A dissatisfied party to an arbitral award is not given a right of appeal to challenge a tribunal's findings of fact, and a court which is asked to set aside an award must be vigilant not to treat a challenge to an arbitral award on the grounds of it being in conflict with the rules of natural justice like an appeal challenging the facts found by a first instance tribunal from which an appeal may lie. It is not for the Court to examine the facts of the case afresh and to revisit in full the questions that were before the Tribunal: Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd (2011) 277 ALR 415, 439 [132]; Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 2) (2012) 201 FCR 535, 557 [96]. The Court's task in applications of the kind brought by Emerald Grain is not to consider the correctness of the facts found by the Tribunal but to determine whether the Tribunal in finding the facts (whether correctly or incorrectly) did so in breach of the rules of natural justice.
11 Counsel for Emerald Grain disavowed any attempt to seek an appeal or review, in the sense of challenging the facts found by the Tribunal, but contended only to maintain the more limited claim of a breach of the rules of natural justice. Thus, in opening, counsel for Emerald Grain said:
Now, your Honour, importantly, as we've said in paragraph 10 of the outline of the submissions, that it may seem strange at first that we've gone into so much detail on the facts and the law and so on, and I want and wish to make the point clear that in doing so it is not to show that the Tribunal made errors of law or fact, which they did, but we're not in an appeal or a review in that sense. But that is - but the reason why we've done it is to highlight the materiality and the essential nature of the legal and factual issues which the Tribunal had to determine, having regard to the case put forward and the claim put forward by Agrocorp and the defence to the claim.
It's also to establish what evidence, or to show the lack of evidence in respect of the factual issues and the findings the Tribunal made and then also what the parties' submissions were in respect of that, and that the Tribunal failed to grasp and deal with Emerald's submissions and as I've already pointed out, insofar as the finding about the agreement… and the 25 July email is concerned, the Tribunal actually went beyond the submissions of the parties. And then also to specify the rules of natural justice breach and then to clearly make not why the factual findings in the award lacked merit but to show the merit of this challenge and why the award should be set aside.
These passages highlight the difficulty arising in challenges to an arbitral award on the basis of insufficiency of probative evidence as a breach of the rules of natural justice. The distinction between a permissible error of fact and a decision based upon no probative evidence may be difficult, but is essential, to maintain. The difficulty in maintaining the distinction, and the need for the challenge to be firmly based upon the "no evidence" rule or the hearing rule as a breach of the rules of natural justice, points to the need for the most precise identification of what is challenged, of the basis for that challenge, and of how that fits firmly within the basis of a legitimate claim of a breach of the "no evidence" rule (as distinct from a complaint that facts were found incorrectly or not as the losing party had wished) or of the hearing rule (as distinct from a complaint that submissions were rejected or not accepted as the losing party had wished). To that extent the position of an applicant challenging an arbitral award is, broadly speaking, similar to that of a party seeking to invoke the Court's jurisdiction under such provisions as s 44 of the Administrative Appeals Tribunal Act 1975 (Cth): see Osland v Secretary to the Department of Justice (2010) 241 CLR 320.
12 It is also important to bear in mind in claims of any breach of the rules of natural justice that the content of the rules of natural justice varies with the context in which the question arises. Tucker LJ said in Russell v Duke of Norfolk [1949] 1 All ER 109 at 118:
The requirements of natural justice must depend upon the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. [See also R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546, 552-3].
The content of the hearing rule can vary greatly from case to case depending upon many factors (see M Aronson and M Groves, Judicial Review of Administrative Action (5th edition, 2013) at 8.50) and what may be a breach in one context may not be a breach in another. The applicant must first identify the content, or the requirement of the rules of natural justice in the particular context before it can be determined whether there has been a breach. Emerald Grain relied heavily upon the observation by Murphy J in Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd (No 2) [2012] FCA 1214 at [29] that "the plain words of s 19(b) unambiguously declare that if any breach of natural justice occurs in connection with the making of an award then, for the purposes of Arts 34 and 36, the award is in conflict with or contrary to the public policy of Australia". However, whether there has been any breach depends upon the content of the rules in the particular context in which the question arises. It is for the applicant to establish that the rule said to be breached in any given case was a rule which applied to the case. The applicant must then also establish how the breach materially bore upon the adverse decision.
13 One consideration to determine the requirements of natural justice in this case is that the arbitration was governed by the International Arbitration Act 1974 (Cth) and the Model Law. The parties to such an arbitration can, and are entitled to, expect that the relevant provisions of the Model Law and of the domestic legislation will be construed and applied with some uniformity in the convention countries: see Castel at [36]-[38]. Relevant decisions in other countries have been reluctant to find an award to be in conflict with or contrary to public policy unless the complaint offends fundamental notions of justice and fairness: see Deutsche Schachtbau und Tiefbohrgesellschaft mbH v Shell International Petroleum Co Ltd [1990] 1 AC 296, 316; PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597, 622 [59]; Hebei Import and Export Corp v Polytek Engineering Co Ltd [1999] 2 HKC 205, 215, 232-3; Amaltal Corporation Ltd v Maruha (NZ) Corporation Ltd [2004] 2 NZLR 614, 627 [47]; Downer-Hill Joint Venture v Government of Fiji [2005] 1 NZLR 554, 570 [81], [82], [84]. In Soh Beng Tee & Co Pty Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86, [65(f)] it was said that an "arbitral award should be read generously such that only meaningful breaches of the rules of natural justice that have actually caused prejudice are ultimately remedied" (see also TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186, [126]; Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd (No 2) [2012] FCA 1214, [60]). That does not mean that a tribunal can decide an arbitration in breach of the "no evidence" or the hearing rule, but that whether there has been a breach depends upon the content of the rule in any given case and that its content in the case of an international arbitration governed by the International Arbitration Act 1974 (Cth) and the Model Law will be influenced by how the relevant provisions have been understood and applied in the courts of the convention countries, if only as an indication of what the parties to an international arbitration understood or expected.
14 Paragraph 14 of Mr Thompson's affidavit claimed that the Tribunal's award in this case breached both the "no evidence" rule and the hearing rule. The "no evidence" claim was made by Emerald Grain in paragraph 14(a) of Mr Thompson's affidavit and the "no hearing" claim was made in paragraph 14(b) (although the latter incorporated the specific subparagraphs numbered (i) to (xv) of paragraph 14(a)). Before turning to the specific grounds of the "no evidence" claim raised in paragraph 14(a) of Mr Thompson's affidavit, it may be useful to say something generally about the "no evidence" rule.
15 The difficulty of establishing the "no evidence" ground at common law has been the subject of academic comment: see M Aronson and M Groves, Judicial Review of Administrative Action (5th edition, 2013) at 4.14. There was, in fact, no disagreement between the parties, although counsel for Emerald Grain insisted otherwise, about the law concerning the "no evidence" rule, and its role in proceedings of this kind. Such difference as there may have been between them lay in the emphasis placed by Mr Trichardt of counsel, appearing for Emerald Grain, on the word "probative" as a qualification of the "no evidence" rule. In Skiwing Pty Ltd v Trust Company of Australia [2006] NSWCA 276 Spigelman CJ said at [52] that "acting without probative evidence is the equivalent of acting without evidence". Similarly in Haider v JP Morgan Holdings Aust Ltd [2007] NSWCA 158 Basten JA (with whom Giles and McColl JJA agreed) said at [33]:
Broadly speaking, error of law will arise in circumstances where a fact is found where there is in truth no relevant and probative material capable of supporting it, or an inference is drawn from a particular fact, which is not reasonably capable of supporting the inference [citing Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 367 and Minister for Immigration and Multicultural Affairs v Rajamanikkam (2002) 210 CLR 222, [25]].
In SAS Trustee Corporation v Pearce [2009] NSWCA 302 Giles JA at [20] had similarly said that a finding made in the absence of evidence, or on evidence which was "incapable of supporting the finding", was an error of law. Counsel for Agrocorp, Mr Harvey, however, did not contend the law to be otherwise. What he drew attention to was the need to distinguish between the "no evidence" rule (or, as Emerald Grain preferred to describe it, the "no probative evidence" rule) and a challenge to the correctness of a finding made by the Tribunal upon probative evidence. The "no evidence" (or "no probative evidence") rule of natural justice is not breached by showing error in the facts found by the tribunal charged with the authority to find the facts. In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Mason CJ said at 355-6
So, in the context of judicial review, it has been accepted that the making of findings and the drawing of inferences in the absence of evidence is an error of law: Sinclair v. Maryborough Mining Warden (1975) 132 CLR 473, at pp 481, 483.
But it is said that "[t]here is no error of law simply in making a wrong finding of fact": Waterford v. The Commonwealth (1987) 163 CLR 54, per Brennan J. at p 77. Similarly, Menzies J. observed in Reg. v. The District Court; Ex parte White (1966) 116 CLR 644, at p 654:
"Even if the reasoning whereby the Court reached its conclusion of fact were demonstrably unsound, this would not amount to an error of law on the face of the record. To establish some faulty (e.g. illogical) inference of fact would not disclose an error of law."
Thus, at common law, according to the Australian authorities, want of logic is not synonymous with error of law. So long as there is some basis for an inference - in other words, the particular inference is reasonably open - even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place.
In Minister for Immigration and Multicultural Affairs v Al-Miahi (2001) 65 ALD 141 Sundberg, Emmett and Finkelstein JJ said at 149 [34]:
The question whether there is any evidence of a particular fact is a question of law. Likewise, the question whether a particular inference can be drawn from facts found or agreed is a question of law. That is because, before the inference is drawn, there is a preliminary question as to whether the evidence reasonably admits a different conclusion. Accordingly, in the context of judicial review, the making of findings and the drawing of inferences in the absence of evidence is an error of law. On the other hand, there is no error of law simply in making a wrong finding of fact. Even if the reasoning whereby the Court reached its conclusion of fact were demonstrably unsound, that would not amount to an error of law. A party does not establish an error of law by showing that the decision-maker inferred the existence of a particular fact by a faulty process, for example by engaging in an illogical course of reasoning. Thus, at common law, want of logic is not synonymous with error of law. So long as the particular inference is reasonably open, even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-6.
In L & B Linings Pty Ltd v WorkCover Authority of New South Wales [2012] NSWCA 15, Basten JA said at [34] in relation to the dicta of Mason CJ concerning the "no evidence" rule:
Four points of caution should be made. First, this passage indicates that the "no evidence" ground of judicial review depends not on the reasoning of the decision-maker, but on a comparison between the material available to the decision-maker and the conclusion reached. Secondly, care must be taken with the term "no evidence", as an administrative decision-maker is usually entitled to take into account material which would not count as "evidence" in a judicial context. In what is essentially an inquisitorial inquiry, that material is not necessarily limited to the material placed before the decision-maker by the applicant for review. Thirdly, it is important to bear in mind that the decision-maker may be entitled to seek support for a particular inference from the absence of material supportive of a contrary view. Fourthly, where an evaluative judgment is to be formed on the basis of conflicting indicators, it will be difficult if not impossible to establish a "no evidence" ground of review.
The task for the Court, therefore, is to determine whether the facts found (presuming them even to be wrong) had no foundation on the (probative) evidence before the Tribunal or from permissible inferences from that evidence. The Court's role in cases of this kind, consistently with the objectives of the Act (including in that the facilitation of those objectives by preferring uniformity of decisions amongst the courts in the countries where the Model Law applies), is to ensure that the facts found were open to the Tribunal upon the material that was before it rather than determining that the facts were found correctly. What will amount to probative evidence must, of course, vary with the circumstances, but amongst such circumstances in this case is that the Tribunal had before it the documentary material upon which the parties had elected to base their claims and that the Tribunal was required by the parties to determine the dispute "on the papers" without oral testimony or oral hearing.
16 Assessing a challenge on the "no evidence" basis needs also to take into account that an award is not to be read in the same way as a reasoned decision of a court of law. The reasons which an arbitral tribunal must give for its decision are not like those of a court of law and ought not to be scrutinised as such. The Tribunal had been required by the parties to make the determination "on the papers" as submitted by the parties rather than after oral hearing with the testing of evidence through witnesses and the testing of argument by oral debate. The Tribunal was not required to set out detailed findings of fact or to give lengthy reasons. In Westport Insurance Corporation v Gordian Runoff Ltd (2011) 244 CLR 239 French CJ, Gummow, Crennan and Bell JJ (see also per Kiefel J at [169]) in a joint judgment said at [51]-[54], in the context of considering the adequacy of reasons given by arbitrators in a tribunal:
51. Allsop P considered that the applicable standard was that stated by Donaldson LJ when giving the judgment of the English Court of Appeal in Bremer Handelsgesellschaft mbH v Westzucker GmbH [No 2]. As his Lordship had said:
"All that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in the light of what happened, they have reached their decision and what that decision is. This is all that is meant by a 'reasoned award' [in s 1(6) of the 1979 UK Act]."
It may be noted that immediately following this passage Donaldson LJ had gone on to distinguish a reasoned award from reasons for judgment.
52. This Court granted special leave to appeal on the ground that the Court of Appeal had erred in not concluding that the arbitrators had failed to give reasons as required by para (c) of s 29(1) of the Arbitration Act for their conclusion that it was reasonable for the reinsurers to be required to indemnify Gordian within the meaning of the proviso to s 18B(1) of the Insurance Act, and for their conclusion that considerations of general justice and fairness did not compel the conclusion that the reinsurers should not be required to indemnify Gordian within the meaning and on the proper construction of s 22(2) of the Arbitration Act. In the circumstances of this matter the considerations of general justice and fairness spoken of in s 22(2) are encompassed within the alleged failure to give reasons for the applicability of s 18B(1) of the Insurance Act, as required by s 29(1)(c) of the Arbitration Act. This ground of appeal is subsumed within the first ground.
53. The reference in Oil Basins to the giving by the arbitrators in that dispute of reasons to a "judicial standard" and cognate expressions placed an unfortunate gloss upon the terms of s 29(1)(c). More to the point were observations in Oil Basins to the effect that what is required to satisfy that provision will depend upon the nature of the dispute and the particular circumstances of the case. Their Honours illustrated the point by saying:
"If a dispute turns on a single short issue of fact, and it is apparent that the arbitrator has been chosen for his or her expertise in the trade or calling with which the dispute is concerned, a court might well not expect anything more than rudimentary identification of the issues, evidence and reasoning from the evidence to the facts and from the facts to the conclusion."
But in Oil Basins itself, the central issue in dispute in the hard-fought and lengthy arbitration:
"was whether the expression 'overriding royalty' in the royalty agreement was used as a term of art, as the respondents contended (with the result that any right to royalty ceased upon surrender of the tenement to which it related (a 'title based' royalty)), or whether the expression meant simply an additional royalty, as the appellant argued (with the result that royalty was payable in respect of production derived by the respondents from within the area regardless of surrenders (an 'area based' royalty))."
The primary judge in Oil Basins had, as the Court of Appeal put it, properly:
"held that, in order to provide reasons of the standard required by s 29(1)(c), it was necessary for the arbitrators to decide and give reasons for deciding whether 'overriding royalty' was a technical term with a meaning usually understood by persons in the oil and gas industry and, if so, whether the context of the royalty agreement or the surrounding circumstances implied that the parties intended a different meaning from the technical meaning."
This the arbitrators in Oil Basins had failed to do.
54. In the present case, the reinsurers correctly submit that no wholly satisfactory formula can be found to flesh out the requirement in s 29(1)(c). Both Gordian and the reinsurers are content in this Court to rest, like Allsop P, upon what was set out above from the reasons of Donaldson LJ in Bremer. But the parties differ respecting the outcome of applying Bremer to the Reasons. The submissions of the reinsurers on this point should be accepted.
[Footnotes omitted].
Accordingly, there is no expectation in arbitral awards for every argument to be analysed and for every fact to be identified by reference to supporting evidence. The task falling upon a party seeking to challenge an arbitral award is, therefore, necessarily exacting. The role of the Court in ensuring compliance with the rules of natural justice is, in essence, supervisory (see, in a different context, Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 40-1), and the Court's jurisdiction in this case is exercised in the context of private rights where the parties have, as part of their private rights, agreed to resolve their dispute by private arbitration: TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 87 ALJR 410. The parties could have agreed, but did not agree, to have the private arbitration conducted or resolved differently, and the Tribunal in acting and deciding as it did, was not exercising sovereign power to resolve disputes: see TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 87 ALJR 410, [28], [29], [31], [107], [108], [111]. The party seeking to challenge an award on the no (probative) evidence ground must, therefore, focus precisely upon the absence of (probative) evidence as distinct from error in the findings that were made upon the evidence. The court must be satisfied that the facts challenged lacked evidence upon which they could be made rather than that the facts were wrongly decided.
17 In this proceeding the affidavit of Mr Thompson identified 15 matters said to have been found by the Tribunal, not just incorrectly, but contrary to the rules of natural justice in the sense of there being no probative evidence upon which the Tribunal could have made the findings. The written submissions also dealt with most of the 15 specific matters identified in paragraph 14(a) of Mr Thompson's affidavit but did so differently. The structure of the written submissions filed for Emerald Grain identified, in paragraph 10, the aspects of the Award being challenged and described them as ten essential findings which had been made by the Tribunal. The ten essential findings were dealt with in the written submissions under three broad headings, namely, the dead-freight findings, the loss of market findings, and the demurrage findings. The matters covered by those three headings were dealt with later in the written submissions where the specific findings which were challenged were identified and where the evidence and arguments relating to each were located. Counsel for Agrocorp at the hearing in this Court provided a number of charts identifying the extent of overlap and departure between the grounds which had been raised for Emerald Grain in paragraph 14 of Mr Thompson's affidavit and those which had been raised in the written submissions.
18 Ground 14(a)(i) in Mr Thompson's affidavit was that there had been no evidence of probative value before the Tribunal that would permit it to find that the import permits were in conformity with the contracts. In oral submissions it was contended that this finding was to be located in lines 5 to 7 on page 5 and lines 12 to 14 on page 8 of the Tribunal's decision. In the first of those two references the Tribunal had referred to communications between the parties and said:
From this exchange it appears to us that the parties had agreed that the requirements of the IPs [import permits] could be satisfied by issuing a separate Customs Certificate with the Phytosanitary certificate. [page 5, lines 5-7]
In the latter passage the Tribunal had referred to import permits which ultimately issued saying:
The Import Permits when sent through were entirely consistent with the parties' agreement that [Emerald Grain] would procure and provide the relevant certification of fumigation before shipment. [page 8, lines 12-14]
Ground 14(a)(i) was dealt with in Emerald Grain's written submissions as part of the demurrage findings. One of the ten essential findings described in paragraph 10(c)(iii) was described as the "Import Permit Agreement Finding, set out in paragraph 76(c) below". Paragraph 76(c), in turn, referred to the "three findings set out in paragraph 105" which stated:
The Tribunal based its finding as to the parties' purported agreement upon an email from Emerald to Agrocorp dated 25 July 2012. That email, even the inadequately paraphrased version at page 4 of the Award, does not support the Tribunal's findings.
Presumably, however, the reference in paragraph 76(c) of the written submissions to paragraph 105 was intended to be a reference to paragraph 102 where passages from the Tribunal's reasons are more specifically referred to, including the two quoted above. An additional finding said in paragraph 102 to have been made by the Tribunal and challenged as part of the "Import Permits Agreement Finding" was described as a finding:
…as to whether the Import Permits were "unworkable" or not, the Tribunal then held that "the only issue was that the IP stated that the fumigation certificate should be endorsed on the Phytosanitary Certificate. However this was resolved between the parties in the exchange of emails between them on 25 July 2012. [Emphasis in original].
The submissions then went on to contend that the evidence before the Tribunal did not permit it to find that the parties had agreed that the requirements of the import permits could be satisfied in the manner described by the Tribunal.
19 The factual dispute concerning what was described as the import permit agreement finding had arisen because of the commercial need to comply with the import permits for the cargo to enter Bangladesh. Emerald Grain had nominated MV STX Pride as the vessel on 4 July 2012. On 11 July Agrocorp informed Emerald Grain that the buyer in Bangladesh required the cargo to be described as "Australian Rapeseed (Canola)" in all documents. Emerald Grain responded later that day saying:
We cannot have the phytosanitary and radioactivity certificates issued with "AUSTRALIAN RAPESEED (CANOLA)" [as] they are issued by AQIS. They will be issued with name of produce: CANOLA and the botanical name: BRASSICA NAPUS. We can put [the] description you have requested on all other docs".
The following day Agrocorp sent six import permits dated 9 July 2012 and numbered between 305 and 310 for 40,000 metric tonnes of the cargo. The reverse of the permits had additional conditions required by the Bangladesh Government, namely:
1. The Phytosanitary Certificate should have additional declaration that the consignments have been fumigated with appropriate fumigant at recommended dose before shipment.
2. The Phytosanitary Certificate should in additional declaration [sic] that:
(a) The consignments shall be free from sand & soil.
(b) Extraneous materials should not be above 1%.
3. The import permit (IP) number shall be quoted in the Phytosanitary Certificate.
There then followed other correspondence between the parties during which time the vessel sailed and Emerald Grain had been dealing with the Department of Agriculture & Fisheries ('DAFF') in Australia. On 25 July 2012 Agrocorp was informed by Emerald Grain that DAFF would issue certificates satisfying conditions 1 and 2 but that the information that had been requested would not appear on the phytosanitary certificate, although the number of the import permit would appear on the phytosanitary certificate. Accordingly, Emerald Grain requested that the import permit be amended as follows:
1. Certificate of Conditions issued by Australian Government Department of Agriculture, Fisheries and Forestry declaring that the consignment has been fumigated with appropriate fumigant.
2. Certificate of Condition issued by Australian Government Department of Agriculture:
a) The consignment shall be free from sand and soil.
b) Extraneous material should not be above 1%.
Emerald Grain also said:
For the fumigation please ensure that "before shipment" is not stated on the import permit, we require it to be possible that we can fumigate before or on board the vessel.
Later on 25 July, Agrocorp responded to Emerald Grain's email saying that the import permits could not be amended, but requested that Agrocorp be sent the additional certificates. The response from Emerald Grain was to say that the two declarations would not be stated "on the phyto, [but] will send the Custom Certificate with the Phyto". Agrocorp's response to that (also on 25 July) was "this is OK".
20 It can be seen from this account of the material before the Tribunal that it is not accurate to contend, as was contended in the written submissions, that the finding about agreement was based upon "an" email. There was more than one email and, whether or not it be a correct finding, there was evidence (including the email referred to by Emerald Grain) upon which the Tribunal could make the finding. It may be, as the written submissions went on to contend, and consistently with other material before the Tribunal, that other proposals were pursued by the parties after 25 July 2012, namely from 27 July 2012, and, therefore, that there might have been other evidence upon which the Tribunal could have made a different finding, but that does not establish that the finding the Tribunal preferred was not a finding which was made upon probative evidence. Emerald Grain had submitted in the arbitration that the agreement on 25 July had been withdrawn and that a subsequent proposal had been put on 27 July which required the import permits to be amended. Other import permits were provided on 2 August, 13 August and 14 August but only the last proved to be workable, and those circumstances may have permitted the finding which Emerald Grain had argued that the Tribunal ought to have made. However the task for the Court is not to sit on appeal from the Tribunal's findings of fact but to consider whether its findings were without probative evidence. The Tribunal did not find as Emerald Grain had submitted, but there was evidence before the Tribunal that from an exchange of emails there had been an agreement between the parties on 25 July 2012.
21 An aspect of Emerald Grain's challenge in ground 14(a)(i) is a complaint that there was no probative evidence of the Tribunal's "findings" that the import permit requirements in relation to extraneous material were "consistent" with the MICoR (Award page 7 lines 26-27) and that the import permits when sent through were "entirely consistent" with the parties' agreement (Award page 8, lines 12-14). A similar challenge was made in ground 14(a)(x). In each case the complaint is in part one about whether the Tribunal misconstrued the evidence and material it had rather than a complaint that it had no probative evidence to find as it did. The Tribunal had ample evidence upon which it could base its findings and, indeed, it was the existence of that evidence upon which Emerald Grain relied to demonstrate error in what was concluded from it. The primary materials given to the Tribunal had included a copy of the MICoR published by DAFF for Bangladesh for "Grains/Seeds - Consumption" initially uploaded and reviewed on 24 November 2011, a copy of the MICoR for Bangladesh for "Brassica napus Canola" initially uploaded on 9 July 2012 and reviewed on 12 April 2013, and also a copy of the MICoR for Bangladesh for "Brassica napus var. Napus Canola Seed" initially uploaded and reviewed on 17 July 2011. The Tribunal also had the four sets of import permits in the dispute, namely those dated 9 July 2012, 31 July 2012, 8 August 2012 and 14 August 2012, and the parties' detailed submissions. Emerald Grain contended that none of the import permits were consistent with the MICoR except those dated 14 August 2012, but such a contention, even if it be accurate, does not demonstrate a lack of probative evidence upon which the Tribunal made findings.
22 Grounds (14)(a)(ii) to (v) in Mr Thompson's affidavit refer to the findings at lines 5-7 on page 5 (set out above), lines 28-31 on page 7 and lines 12-14 on page 8 (set out above). It may be helpful for ease of exposition to repeat the references already quoted with the additional one not previously quoted:
From this exchange it appears to us that the parties had agreed that the requirements of the IPs [import permits] could be satisfied by issuing a separate Customs Certificate with the Phytosanitary certificate. [page 5, lines 5-7]
[…]
The only issue was that the [import permit] stated that the fumigation certificate should be endorsed on the phytosanitary certificate. However, this was resolved between the parties in the exchange of emails between them on 25 July 2012. [page 7, lines 28-31]
[…]
The Import Permits when sent through were entirely consistent with the parties' agreement that [Emerald Grain] would procure and provide the relevant certification of fumigation before shipment. [page 8, lines 12-14]
Each of these findings was dealt with in the written submissions as part of the demurrage findings described in paragraph 10(c)(iii) which refers, through paragraph 76(c), to paragraph 105 as set out above (although the reference to paragraph 105 was probably meant to be to paragraph 102).
23 In the case of each of these findings there was probative evidence, to which reference has already been made, upon which the Tribunal was able to make the findings. On 12 July 2012 Agrocorp sent an email to Emerald Grain attaching six import permits in respect of 40,000 metric tonnes of seed. On 13 July 2012 Ms McNulty, on behalf of Emerald Grain, sent an email to Agrocorp stating:
I noticed that on your permits that you have Rape Seed and so I have rechecked with AQIS and we are able to put Rape Seed on the phyto, but not Australian Rape Seed (Canola). Phyto would have
Rape Seed Brassica napus 12051000.
Later that day Lee Kiew (for Agrocorp) wrote to Ms McNulty (for Emerald Grain) asking whether the certificates issued by DAFF would be able to show the additional conditions that were mentioned on page 2 of the import permit relating to appropriate fumigation and the consignments being free from sand and soil with extraneous material not being above 1%. On 25 July Agrocorp wrote to Ms McNulty stating that the import permits could not be amended and requested the additional certificates. There were four emails on that day between the parties which were referred to and in part set out in the Tribunal's reasons as follows:
On or about 25 July Anne McNulty for [Emerald Grain] acknowledged [Agrocorp's] request, and advised that;
"DAFF will issue a Certificate as to Condition stating the additional conditions No 1 & 2. This means the additional declaration No 1 & 2 will not appear on the Phytosanitary certificate issued by DAFF, they will insert the import number on the Phytosanitary certificate.
[…]
For the fumigation please ensure that "before shipment" is not stated on the import permit, we require it to be possible that we can fumigate before or on board the vessel."
Ms McNulty also asked [Agrocorp] to obtain amended IPs.
Lee Kiew for [Agrocorp] responded later that day (the nominated vessel having arrived on 24 July 2012) that it would not amend the IPs but agreed to the separate certificate as to fumigation.
[Emerald Grain] replied the same day advising
"Those two declarations will not be stated on the phyto, will send the Custom Certificate with the Phyto"
[Agrocorp] responded: "Dear Anne, this is ok."
The statement in paragraph 14(a) of Mr Thompson's affidavit, and also in the written submissions, of what the Tribunal found does not accurately reproduce the Tribunal's findings as set out above, however the findings themselves were based upon probative evidence before the Tribunal. The exchange of correspondence between the parties leading to, and including that on, 25 July 2012 was relevant to and probative of the finding that on that day the parties had agreed that the requirements of the import permits could be satisfied as described. The finding by the Tribunal is not without evidence just because there was other evidence tending to suggest a different conclusion or which might have justified a different finding, namely, that any proposal which had been agreed to on 25 July had been withdrawn on 27 July. There was also probative evidence that the issue which had been raised by the exchange of communication as at 25 July 2012 had concerned, and had resolved, the need for the additional declaration required as stated on the reverse of the import permits. Those declarations related to pre-shipment fumigation and extraneous material.
24 Ground 14(a)(vi) in Mr Thompson's affidavit was said to be a finding made by the Tribunal without sufficient probative evidence that the vessel had come into berth at the GrainCorp Port Terminal before 13 August 2012. The location of such a finding in the Tribunal's decision was not identified and it appears not to be a finding which was actually made by the Tribunal. It seems not to be raised specifically in Emerald Grain's written submissions except possibly as another demurrage claim in paragraph 96, through paragraphs 10(c)(ii) and 76, although what appears there more aptly deals with grounds 14(a)(vii) to (ix) to be considered below. However, the finding to the extent raised in ground 14(a)(vi) would seem to have been a finding that the Tribunal was capable of having made on the evidence before it if it did make such a finding. The material before the Tribunal included the working log for the vessel for the period from 24 July 2012 to 14 August 2012. It showed that the vessel was at anchor on 13 August 2012 from 0001 hours to 1730 hours because the berth was occupied. The log stated that the pilot was on board from 1730 hours to 2230 hours on that day and that the vessel proceeded to berth. From 2230 hours the vessel was described as being all fast, awaiting the AQIS surveyor.
25 Grounds (vii), (viii) and (ix) were complaints about there being no evidence of probative value before the Tribunal concerning the movement of the vessel back to anchorage from its berth. This ground was dealt with as part of the demurrage claims in Emerald Grain's submissions through paragraphs 10(c)(ii) and 76(b) to paragraph 96 (although the reference to paragraph 96 is likely to have been intended to be to paragraph 94). In the Award the Tribunal said:
On 27 July 2012, [Emerald Grain] advised [Agrocorp] that AQIS had passed new regulations requiring that cargo be fumigated within 3- months of shipment. [Emerald Grain] also advised [Agrocorp] that the ship had been put off the berth and back to the anchorage due to the uncertainty about when it would load. [page 5, lines 8-11].
The Tribunal also said:
Viewed objectively, the delay in loading occurred when the Port Terminal Operator, GrainCorp, sent the vessel back to anchorage, apparently because of uncertainty about when the vessel could load. While we have no evidence from GrainCorp as to why it took this step, it appears that this uncertainty was caused by the inability of [Emerald Grain] to load a cargo in compliance with the contractual requirements, namely to promptly load a fumigated cargo and provide a fumigation certificate. [page 6, lines 13-18]
The Tribunal had evidence on which to make such findings. It had the notice of readiness of the vessel sent to Emerald Grain tendered at 0238 hours on 25 July 2012 which advised Emerald Grain that the vessel had arrived at that time and that it was in all respects ready to commence loading in accordance with the terms and conditions of the relative charter party. The Tribunal also had the laytime statement of Emerald Grain setting out the date of arrival, the times of the tender of the notice of readiness, and other material relevant to the completion of the laytime on 17 August 2012, identifying the demurrage which had been incurred as US$179,625 being 14.9604167 days at US$12,000 per day. The vessel's logbook for 30 July 2012 described the vessel at anchor "awaiting berth" which, if it be relevant, can be contrasted with the entries for the preceding and succeeding day as being "berth occupied". On 2 August 2012 Emerald Grain sent an email to Agrocorp stating that the terminal had moved out the loading of the vessel due to the fact that the import permit was then unworkable.
26 Ground 14(a)(x) was directed to the evidentiary foundation of the Tribunal's conclusion about the requirements concerning what was described as the "extraneous material and the recording of same" as set out in the import permits being in conformity with the MICoR. Ground 14(a)(x) has some overlap with ground 14(a)(i) but it was dealt with separately in Emerald Grain's written submissions as part of the demurrage claim in paragraph 115, through paragraphs 10(c)(iv) and 76(d) (although it was said in paragraph 76(d) to be set out in paragraph 118 rather than 115). What the Tribunal said in relation to these matters was:
The role of the MICoR however is to provide a helpful summary for Australian exporters of import requirements in other countries. It does not purport to ban or prohibit exports which do not comply with the MICoR. [page 7, lines 21-23]
[…]
The IP requirements in relation to extraneous material are consistent with the MICoR. [page 7, lines 26-27]
[…]
It was not a condition of the contract that [Agrocorp] produce import permits acceptable to either AQIS or the Port Terminal Operator prior to shipment. [page 6, lines 38-39]
Emerald Grain's contentions were that the Tribunal had no probative evidence to find that "the [import permit] requirements in relation to extraneous material [were] consistent with MICoR" and that "it was not a condition of the contract that [Agrocorp] produce Import Permits acceptable to either AQIS or the Port Terminal Operator prior to shipment". Emerald Grain supported the first contention by pointing to uncertainty about which version of the Import Permits the Tribunal was referring to in its findings, because, of the four sets in evidence (being dated respectively 12-13 July, 2 August, 13 August and 14 August versions), it was only the last that was said by Emerald Grain to be consistent with MICoR. However the proceeding to set aside an arbitral award is not an appeal on the facts and the reasons of the Tribunal are not to be construed as if it were a decision of a court. The Tribunal had material upon which it was able to make probative findings and the question in this proceeding is not whether those findings were wrong. The import permits were before the Tribunal as were the relevant extracts from MICoR. The Tribunal also had, as previously mentioned, the contractual documents.
27 Ground 14(a)(xi) does not appear to be a finding made by the Tribunal and may have been intended as part of an argument upon which the other grounds might have been based and, therefore, need not be considered separately.
28 Ground 14(a)(xii) was a complaint concerning the basis of a finding that the port terminal operator did not raise issue with the content of the import permits. The Tribunal said:
It was not a condition of the contract that [Agrocorp] produce import permits acceptable to either AQIS or the Port Terminal Operator prior to shipment.
Indeed the issue does not appear (from either GrainCorp or DAFF's side) to have been whether the import permits were workable, but whether DAFF could indeed comply with the certificates by certifying that the canola had been fumigated, given that the fumigation appears to have occurred outside DAFF's guidelines. [pages 6-7]
The Tribunal had before it material upon which it was able to make such a finding. In particular it had an email sent by Emerald Grain on 25 July 2012 to GrainCorp to say that Emerald Grain had checked the fumigation certificate with AQIS against the import permit from Bangladesh and that AQIS had said that the certificate was acceptable. The Tribunal also, as previously mentioned, had the contract, the import permits, the fact of the lack of any evidence that AQIS, GrainCorp or DAFF had rejected the import permits or had raised any issue with respect to them, and an email dated 20 July 2012 in which Emerald Grain had told GrainCorp that the import permit required the phytosanitary certificate to carry an additional declaration as to fumigation before shipment.
29 Ground 14(a)(xiii) appears to have been directed not to any finding of fact as such but, rather, to the conclusions drawn by the Tribunal from other facts which had been found. It was identified in oral submission as based upon what the Tribunal had said on page 9, and in particular in the passages in which the Tribunal had said:
It is not disputed that at no stage during the vessel nomination and substitution process, or afterwards, did [Agrocorp] expressly nominate the quantity of cargo to be loaded. However [Emerald Grain] did not take issue with the allegedly defective nominations. Nor did it prevent [Emerald Grain's] loading of 40,000mt of cargo.
The tender of the IPs was no more a binding nomination as to the quantity to be shipped than the stowage plan.
We believe that it was [Emerald Grain]'s obligation to load the maximum tonnage required by [Agrocorp] within the agreed tolerance. If [Emerald Grain] was genuinely concerned about the failure to nominate and/or the apparent disparity between the Import Permits and the Contract tolerance it should have taken this up with [Agrocorp]. It was certainly possible that [Agrocorp] may have intended to ship the balance of 4,000mt to another destination where import permits and phytosanitary certificates were not required. [pages 8-9]
It cannot be said that statements by the Tribunal, to the extent that they contain findings, were based upon no probative evidence available to the Tribunal (as distinct from whether they were correct). Much of the evidence available to it on this point has previously been referred to, including the email sent on 13 July 2012 from Agrocorp to Emerald Grain attaching a pre-stowage plan for 44,000 metric tonnes of grain. A subsequent email of 9 August 2012 from Mr McMullen to DAFF (forwarded to Emerald Grain together with DAFF's response on 10 August 2012) sought confirmation that the import permits in respect of a tonnage of "40,000 MT +/- 10%" were satisfactory, but noted that there had not yet been received an import permit for the final 4,000 metric tonnes. On 13 August 2012 Agrocorp sent an email to Emerald Grain attaching a 'Correction Notification' in respect of the import permits which included a reference to a seventh import permit dated 16 July 2012 and numbered 480. The Tribunal also had the evidence of there having been no protest from Emerald Grain at the time of loading that it was not obliged to supply the additional 4,000 metric tonnes.
30 Ground 14(a)(xiv) is in much the same position as many of the others and, indeed, counsel submitted that it was to be read in conjunction with the findings that the Tribunal had made in respect of the demurrage claim which were to be found in the other grounds to which reference has already been made.
31 Ground 14(a)(xv) concerned the Tribunal's decision to pick US$39 as an appropriate mid-range differential for an award of US$156,000. The specific finding by the Tribunal was:
We are inclined to pick US$39 as an appropriate mid-range differential, for a total of US$156,000. [page 9, lines 36-37]
It cannot be said, however, that there was either no evidence or no probative evidence for the Tribunal to pick US$39 as an appropriate mid-range differential. Plainly the Tribunal had evidence concerning the amounts that Agrocorp and Emerald Grain had each claimed. What the Tribunal did was to exercise a judgment about the measure for damages in the context of a fluctuating market. Agrocorp had claimed damages for the contract market differential between what it undertook to pay for the canola (US$600 per tonne) and what it said was the market value as at 16 August 2013, namely, US$645 per tonne. Emerald Grain had contended that if it was liable, the true differential was US$32.32 per tonne for reasons which had been set out in its defence and cross claim. It was in that context, and upon that material, that the Tribunal made a judgment in picking a figure as an appropriate differential in the context of a fluctuating market.
32 There was also other evidence available to the Tribunal bearing upon the question of the amount it might award if satisfied of the claim brought by Agrocorp. That evidence included an internal Agrocorp email sent on 15 August 2012 to Lee Kiew stating that the market value had been established for the 4,000 metric tonnes, which attached a chain of other emails including one from Cargill to Agrocorp identifying the rough price as at 15 August 2012 to be US$645 per tonne FOB. On 20 February 2013 Fox Commodities had sent a letter to Emerald Grain, which was given to the Tribunal, quoting the Australian dollar price per metric tonne of canola in respect of the August 2012 period at $560 to $580 depending upon various factors including different delivery locations. The Tribunal also had: a document showing a premium at $5.46; a GrainCorp Elevator Fee Schedule Summary showing various additional fees applied to grain loaded at Geelong; and a print-out from the internet showing exchange rates of Australian dollars against foreign currencies as at 17 August 2012. The decision made by the Tribunal was to determine an amount within a range of the figures available and reflected a judgment about what it considered to be a fair outcome. It might not have been correct but it cannot be said to have been based upon no evidence or no probative evidence.
33 Each of the additional grounds seeking to challenge the Award in the written submissions which were not in the affidavit accompanying the application are not effectively raised for consideration. However, each was the subject of detailed argument in the written submissions filed by Emerald Grain. They were also each the subject of detailed argument by Agrocorp, both through the detailed charts provided by counsel at the hearing and in counsel's oral argument, and although it is not strictly relevant to deal with them it may be desirable to say something about them if only to deal with them to the extent that they may arguably come within those which were properly raised in the affidavit accompanying the application. Each of the additional grounds which had not been raised in the affidavit of Mr Thompson similarly fail to establish that there was no probative evidence upon which the Tribunal was able to make its Award.
34 Paragraph 10(a) of Emerald Grain's written submissions described three essential findings of the Tribunal as the "Dead-freight Findings" which Emerald Grain sought to challenge. The first was described as the "Dead-freight Obligation Finding" said to be set out in paragraph 41(a) of the written submissions. In paragraph 41(a) of the written submissions for Emerald Grain it was said that Emerald Grain challenged the Tribunal's dead-freight obligation finding to the effect that "it was [Emerald Grain's] obligation to load the maximum tonnage required by [Agrocorp] within the agreed tolerance" (emphasis as in the submissions). The relevant lines in the Tribunal's decision were:
We believe that it was [Emerald Grain's] obligation to load the maximum tonnage required by [Agrocorp] within the agreed tolerance. [page 8, lines 36-37]
The detailed submissions for Emerald Grain challenged this finding because:
a. there was no evidence before the Tribunal for it to conclude that Emerald was contractually obliged to load 44,000mt of canola (that is, the mean contract quantity as agreed, plus the maximum optional additional + 10% Agrocorp could request under the contract):
i. there was no evidence before the Tribunal of any express term of the Contract obliging Emerald to load 44,000mt (nor did Agrocorp submit there was any such express term of the Contract);
ii. there was no evidence before the Tribunal of Agrocorp having discharged its contractual obligation to "nominate" to Emerald the tonnage to be loaded - indeed, the Tribunal held that Agrocorp had not made any "nomination";
iii. there was no evidence before the Tribunal of Agrocorp having communicated to Emerald that it was exercising its contractual option as buyer and "required" Emerald to accumulate and load an additional + 10% of canola (i.e. 4,000mt) over the mean contract quantity that was loaded.
In particular, and a fact relevant to the belowmentioned breaches of the no hearing rule, the evidence before the Tribunal was that the first provision by Agrocorp of any Import Permit for the additional 4,000mt was via email at 5:32pm on 14 August, which was 7 ½ hours into the loading of the vessel which was not in conformity with the other amended Import Permits and there was no evidence before the Tribunal of any amended version of that Import Permit ever having been sent to Emerald (nor did Agrocorp submit to the contrary).
Emerald Grain may, perhaps, be correct in its contention that the Tribunal's finding about Emerald Grain's obligation was wrong but not in its contention that there was no probative evidence upon which it could have reached it. Much of that evidence has already been referred to. The contractual documents included the letter from the broker, McDonald Pelz, dated 26 June 2014 identifying the quantity of canola as "40,000 metric tonnes +/- 10% in buyer's option and at contract price". The contract also included the FOB short form contract from Emerald Grain dated 27 June 2012 identifying the quantity of canola to be "40,000 tonnes, 10% more or less at buyer's option". A significant part of the arbitration had been whether Emerald Grain had caused Agrocorp loss by not having loaded the 4,000 metric tonnes which Agrocorp had maintained in the arbitration that Emerald Grain had been "obliged" to load. There was evidence upon which the Tribunal was able to reach a conclusion about whether Emerald Grain had been obliged to load the additional 4,000 metric tonnes.
35 There were also at least five items of correspondence bearing upon the issue upon which the Tribunal could base its findings. The first was an email sent on 11 July 2012 from Monson Agencies Australia Pty Ltd to Ms Anne McNulty enclosing the pre-stowage plan on the vessel and describing the quantity to be loaded as being "44,000 MT of canola". The reference to the quantity of the canola to be boarded upon that vessel was referred to twice in that email as being 44,000 metric tonnes. On 13 July 2012 an email was sent by Lee Kiew at Agrocorp to, amongst others, Ms McNulty of Emerald Grain attaching the stowage plan as Ms McNulty had requested earlier that morning. The attached stowage plan identified the five holds of the vessel and the precise amount of canola to be stored on each. 8,799 metric tonnes was to be stowed in the number one hold, 10,370 metric tonnes in the number two hold, 5,395 metric tonnes in the number three hold, 10,370 metric tonnes in the number four hold and 9,066 metric tonnes in the number five hold. The total of the amounts in that plan is 44,000 metric tonnes and not 40,000 metric tonnes. On 9 August 2012 an email was sent by a Mr Gerard McMullen on behalf of Emerald Grain which, amongst other things, described the import permits as being in respect of "40,000 MT +/- 10%". That email went on to note that there had not yet been received the import permit for the final 4,000 metric tonnes. On 13 August 2012 an email was sent by Agrocorp to Emerald Grain attaching the corrected import permits which included a reference to a seventh import permit numbered 480 and dated 16 July 2012. On 14 August 2012 Emerald Grain sent an email to Agrocorp stating that it was in position to commence loading the vessel that day and that 40,000 metric tonnes would be loaded by 16 August but that the "additional 4K could not be delivered to [the] port as it had not been fumigated".
36 The second of the dead-freight findings described in paragraph 10(a) of the written submissions was described as the "Dead-freight Paid under the Charter-party Finding" set out in paragraph 41(b). Paragraph 41(b) of the written submissions for Emerald Grain challenged the Tribunal's finding that Agrocorp had claimed dead-freight in the amount of US$134,000 (at US$33.50 per tonne) which Agrocorp had paid to the owners under the charter party. The relevant statement in the Award said:
Next, [Agrocorp] claims deadfreight in the amount of US$134,000 (at US$33.50 per tonne) which [Agrocorp] has paid to Owners under the charterparty. [page 9, lines 17-18]
It is unnecessary to set out the submissions for Emerald Grain concerning the lack of evidence other than to note that the complaint was in substance that there was no evidence before the Tribunal that Agrocorp had paid the amount for dead-freight under the charter party contract and that the only documentation which Agrocorp had adduced was an invoice from the vessel owners to Agrocorp "for a balance allegedly due for dead-freight under the charterparty of US$123,950 and a bank swift statement from Agrocorp showing payment by Agrocorp to the vessel owners of a sum of US$123,950". The invoice relied upon by Emerald Grain, however, made clear that the balance which had been claimed from Agrocorp was a balance from the dead-freight claimed for 4,000 metric tonnes at $33.50 per tonne totalling $134,000. The invoice was headed "dead freight invoice" in respect of the relevant vessel and began by stating the amount due as $134,000. Two amounts were then deducted from that starting figure leading to the balance as stated in Emerald Grain's submissions and about which it claimed that there was no evidence for the finding. It may be that any finding should have been that only $123,950 was incurred by Agrocorp because, perhaps, the two amounts deducted from the starting figure were commissions, but it cannot be said that there was no probative evidence upon which the Tribunal could make its findings in the context of a claim which had been made in the Tribunal by Agrocorp that it had paid $134,000. In any event, this ground would fail on the additional basis that the Tribunal was not making a finding in the passage complained about but simply stating, undoubtedly accurately, what Agrocorp's claim had been. To see the passage as a finding of fact, as distinct from the statement of a claimant's position, is a misreading of the passage.
37 The third of the dead-freight findings described in paragraph 10(a) of the written submissions was described as the "Dead-freight Liability and Quantum Finding" set out in paragraph 41(c). Paragraph 41(c) sought to challenge the following passages of the Award:
…as [Emerald Grain] was in breach of contract by not shipping the full quantity, it is liable for [Agrocorp's] losses naturally flowing from the breach. In our view, liability for deadfreight is such a natural and foreseeable consequence.
We find therefore that [Emerald Grain] is required to indemnify [Agrocorp] for deadfreight as claimed in the amount of US$134,000. [page 9, lines 24-28]
The written submissions for Emerald Grain made, in essence, the same complaint about there having been no evidence for what was described as a finding made by the Tribunal. However, it is plain that the Tribunal was expressing its conclusion and reasons in this passage rather than making any finding as such. The Tribunal, in the context of a referral to arbitration which the parties had elected to be determined on the papers, was informing the parties of its conclusion, and, in brief form, explaining its reason for the conclusion. The bases for those reasons were those facts which it had previously found and to which reference has already been made. There was, therefore, for the reasons previously given, no foundation to the claim that there was no probative evidence for what the Tribunal said even if it be assumed that it was making findings of fact as distinct from expressing its conclusion and reasons.
38 Paragraph 10(b) of the written submissions described two of the ten essential findings of the Tribunal as the "Loss of Market Findings". The first was described as the "Loss of Market Liability Finding" set out in paragraph 66(a), and the second was described as the "Mid-range Market Differential Finding" set out in paragraph 66(b). Paragraph 66(a) does not identify a finding which was said to have been made by the Tribunal (indeed, in paragraph 67 the written submissions state that the finding complained of had not expressly been made by the Tribunal). In paragraph 67, however, the written submissions said that it had to be assumed that the Tribunal had concluded that Emerald Grain was liable for loss of market before the Tribunal was able to make the mid-range market differential finding (described in paragraphs 10(b) and 66(b)) and before it was able to order Emerald Grain to pay Agrocorp $156,000.
39 There was, however, evidence upon which both aspects of the market loss claim could be based. That evidence, in relation to the implied finding of liability, included the contractual documents. The letter from McDonald Pelz dated 26 June 2012 had identified the Australian canola as the commodity to be purchased at the price of US$600 "per gross metric tonne of 1,000 kilos each free on board buyer's tonnage". Corresponding terms were found in the short form contract from Emerald Grain dated 27 June 2012, namely, the Australian canola was shown as the commodity at the price of US$600 per tonne (FOB stowed and sprout trimmed). Clause 27 of the GTA FOB Contract Number 1 for grain and oil seeds in bulk FOB terms provided that the damages to be awarded against a defaulter were to be limited to the difference between the contract price and the actual or estimated market price on the day of default. There was also before the Tribunal an email sent on 16 August 2012 from Agrocorp to Emerald Grain which in part stated that it had established the market price as US$645 per tonne FOB for the position. In relation to the finding of the quantum of the loss, namely of US$39 per tonne as the appropriate mid-range differential, the Tribunal said:
We are inclined to pick US$39 as an appropriate mid-range differential, for a total of US$156,000. [page 9, lines 36-37]
This finding was that previously considered above in relation to the claim found in paragraph 14(a)(xv) of Mr Thompson's affidavit and has been dealt with above. For those reasons there was evidence available to the Tribunal for its finding.
40 The written submissions for Emerald Grain also sought to challenge what were described as demurrage findings. A number have already been dealt with in the context of the demurrage claims found in the grounds in Mr Thompson's affidavit but the claims in the written submissions went further. Paragraph 10(c) in the written submission identified (as part of the ten essential findings) five matters described as demurrage findings which were set out in five sub paragraphs in paragraph 76 in the written submissions as follows:
There are five intertwined findings being challenged by Emerald in respect of the Demurrage Claim and the Tribunal's consideration, or lack thereof, of the issues relating to which party was liable for the delays in the loading of the vessel:
(a) the so called Date of Contract Finding, which comprises three conflicting findings as set out in paragraph 88 below;
(b) the so called Sending the Vessel Back to Anchorage Finding, which is a key finding and set out in paragraph 96 below;
(c) the so called Import Permit Agreement Finding, which comprises three findings as set out in paragraph 105 below;
(d) the so called MICOR and Import Permit Oversight Findings, which comprises three findings as set out in paragraph 118 below; and
(e) the so called McMullen Finding as set out in paragraph 132 below.
The complaints in paragraph 76(a) and (e) were not encompassed by the grounds set out in Mr Thompson's affidavit, but those in paragraphs 76(b), (c) and (d) have been considered above: the claim in paragraph 76(b) has been considered in the context of the claim in paragraph 14(a)(vii), (viii) and (ix) in the grounds in Mr Thompson's affidavit; the ground in paragraph 76(c) was that raised in paragraph 14(a)(ii)-(v) of Mr Thompson's affidavit and has been dealt with in that context; and the ground in paragraph 76(d) was that raised in ground 14(a)(x) in Mr Thompson's affidavit and has been considered in that context above.
41 The complaint described as the "Date of Contract Finding" in paragraph 76(a) was that the Tribunal was said to have made three conflicting findings. To that extent the complaint is not that there was no probative evidence for any of the findings but, rather, that the findings were inconsistent. The inconsistency was said to have arisen in respect of a finding by the Tribunal that the contract had been entered into on 3 July 2012 in the face of other findings to the effect that the execution copy of the contract was not sent to Agrocorp until 3 July 2012. The relevant passages in the Award were:
It appears to be common ground that on or after 26 June 2012 [Agrocorp] purchased from [Emerald Grain] 40,000mt (+/- 10% at Buyer's option) Australian Canola, in bulk, at US$600 per tonne FOB Victorian ports for delivery 15 to 31 July 2012 ("Contract"). [page 2, lines 18-21]
[…]
The Broker's Note contract was dated 26 June 2012. This is despite the fact that the terms of the contract and the letter of credit were still under negotiations into early July. While the Emerald contract documentation is dated 27 June 2012, the execution copy of the Emerald contract was not sent to [Agrocorp] until 3 July 2012. [page 3, lines 7-10]
[…]
We are entitled to form an objective assessment of the parties' agreement in the knowledge that the final form of the contract was not settled until 3 July 2012. [page 8, lines 10-11]
The findings made by the Tribunal in these three paragraphs are capable of being read consistently with each other, and they should so be read in order to give effect to the policy of the International Arbitration Act 1974 (Cth) of upholding arbitral awards. The argument for Emerald Grain on this point depends, as the written submissions made clear, upon interpreting the finding to have been that the contract between the parties had been entered into on 3 July 2012. Paragraph 87 of the written submissions for Emerald Grain said:
If the Date of Contract Finding is interpreted to mean that the Tribunal held the contract to have been entered into on 3 July 2012, then the Date of Contract Finding is in breach of the no evidence rule because there was no evidence before the Tribunal for it to conclude that "the execution copy of the Emerald Contract was not sent to [Agrocorp] until 3 July 2012".
It is inapt for the "no evidence" rule to be engaged in such a hypothetical manner in all but the clearest case compelling the conclusion of a lack of evidence. Thus, any ambiguity in interpretation should be read in favour of consistency unless that is not possible and, even then, it does not mean that the "no evidence" rule has been engaged. The passages from the Tribunal's reasons quoted above do not compel the conclusion hypothesised in the argument advanced for Emerald Grain and, furthermore, there was evidence upon which the Tribunal was basing its findings concerning the date upon which the contract was entered into.
42 Reference has already been made to the contractual documents constituted by the exchange of correspondence on 26 June 2012 and 27 June 2012. The Tribunal also had 15 emails bearing upon this matter. On 27 June 2012 McDonald Pelz had sent an email to Emerald Grain with copies to Agrocorp attaching "our contract 1206296". The following day there was an email from Agrocorp to McDonald Pelz and to Emerald Grain referring to discrepancies on the contract but noting a number of matters which Lee Kiew (for Agrocorp) had asked to be incorporated into the contract. On the same day Emerald Grain sent an email to McDonald Pelz setting out the former's responses to Agrocorp's proposed amendments. The following day, 29 June 2012, an email was sent from Agrocorp to McDonald Pelz, and to Emerald Grain, referring to an attached letter of credit and concluding the email by saying that Agrocorp was still waiting for Emerald Grain's reply concerning the comments which had been made on the contract. Later that day McDonald Pelz sent an email to Emerald Grain indicating that the latter's responses had not yet been passed on to Agrocorp. On 1 July 2012 Emerald Grain sent an email to McDonald Pelz explaining why a particular proposed amendment was not acceptable. Later that day an email was sent from Emerald Grain to McDonald Pelz stating that the parties were still negotiating and the email concluded with the expectation that the contract would be finalised that day. On 2 July 2012 an email was sent from McDonald Pelz to Agrocorp attaching Emerald Grain's comments. Later that day an email was sent by Agrocorp to McDonald Pelz (and copied to Emerald Grain) which asked in part that the contract be passed on to Emerald Grain and for confirmation that the draft letter of credit was in order to enable the parties to "proceed accordingly". On 3 July 2012, at 10:23am, an email was sent from McDonald Pelz to Agrocorp with the subject matter "our canola contract 1206296" requesting the attached contract to be signed and returned by email. At 10:25am an email was sent from Emerald Grain to Agrocorp requesting amendments to the letter of credit. At 12:55pm an email was sent from Agrocorp to Emerald Grain which thanked Emerald Grain for its comments and stated that Agrocorp would "correct accordingly and proceed with the same". At 1:46pm an email from McDonald Pelz to Emerald Grain referred to a number of comments from Agrocorp concerning a draft letter of credit and the last item concerning the contract. At 7:48pm an email from Emerald Grain to McDonald Pelz replied to the requested changes stating:
With regard to the requested changes to l/c clause our response is as follows:
1. (a) Expiry draft l/c shows at 25th August agree to this date.
(b) Should be Beneficiary not Applicant - will amend.
(c) We will keep the latest shipment date to remain as 15th August.
2. This is our standard clause and remains as contracted.
The material before the Tribunal permitted it to conclude that no final agreement had been reached about the terms of the contract until 3 July 2012 and there is no necessary inconsistency between that finding and the Tribunal finding that a final form of that contract had not been sent to Agrocorp before that date.
43 The other complaint raised in paragraph 76, not already considered as part of the grounds in Mr Thompson's affidavit, was that in paragraph 76(e) which concerned the conclusion of the Tribunal that evidence given by a party for Emerald Grain had not been as an independent expert. The Tribunal said:
In this regard Mr McMullen is clearly speaking as an agent and advocate for [Emerald Grain], and not as an independent expert. We do not agree with Mr McMullen's conclusion. Even if what he says is correct, it was not what was represented to [Agrocorp] by [Emerald Grain] on 25 July 2012, five days before Mr McMullen was retained to assist [Emerald Grain]. [page 7, line 36 to page 8, line 3]
Whether or not the Tribunal was correct in its conclusion that Mr McMullen was not acting as an independent expert, there was evidence from which it could draw that conclusion. Emerald Grain had sent an email on 3 August 2012 seeking Mr McMullen's assistance in having the import permits cleared with AQIS. The email informed Mr McMullen that the vessel had arrived in Geelong but that GrainCorp had prevented Emerald Grain from delivering stock into port until import permits had been cleared with AQIS. It informed Mr McMullen that Emerald Grain had a letter of credit in place with the latest shipment period being 10 August 2012 and that they had requested an amendment to the shipment period until 15 August 2012 but that they were still waiting for confirmation of the shipment extension. Mr McMullen had been informed by Emerald Grain that it needed AQIS either to accept the documentation from GrainCorp verifying that the cargo had been fumigated prior to shipment, or to accept on board fumigation. That issue needed to be resolved quickly and Mr McMullen was informed that unless it was resolved immediately Emerald Grain would face the serious problem of being unable to meet the terms of the letter of credit. That email concluded by Mr McMullen being asked urgently to advise of the outcome of his discussions with AQIS to allow Emerald Grain to proceed with the accumulation of cargo and to endeavour to conclude the shipment before the shipment expiry date on the letter of credit. On 9 August 2012 Mr McMullen sent an email expressing his understanding that the issues had then all been sorted out and that he would advise Emerald Grain to commence further planning for loading and not to pursue seeking a revised import permit.
44 This evidence revealed that Mr McMullen's role was as a participant on behalf of Emerald Grain in respect of the difficulties which had confronted the parties concerning the canola shipment. His role was, on no view, that of an independent expert asked to express an opinion without involvement in the very subject matter of the dispute. On 9 September 2012 Mr McMullen sent an invoice to Emerald Grain for "technical consultancy services" describing his work as having been involved in providing assistance "to resolve quarantine issues for an impending export shipment of canola". The invoice specifically referred to having spent a total of four hours "liaising with staff from [the Emerald Group, GrainCorp Operations, and DAFF] to seek a solution and permit canola stocks to be loaded as per requirements of the importing country". The Tribunal also had, of course, the statement of Mr McMullen. Whether or not the conclusion was correct that Mr McMullen was not an independent expert, there was plainly evidence upon which such a conclusion could be reached.
45 The second group of grounds upon which the Award was challenged in Mr Thompson's affidavit was the "no hearing" claim raised in paragraph 14(b). The hearing rule was considered in Trustees of Rotoaira Forest Trust v Attorney-General [1999] 2 NZLR 452 where Fisher J said at 463:
The principles which need to be applied in the present case therefore appear to be the following:
(a) Arbitrators must observe the requirements of natural justice and treat each party equally.
(b) The detailed demands of natural justice in a given case turn on a proper construction of the particular agreement to arbitrate, the nature of the dispute, and any inferences properly to be drawn from the appointment of arbitrators known to have special expertise.
(c) As a minimum each party must be given full opportunity to present its case.
(d) In the absence of express or implied provisions to the contrary, it will also be necessary that each party be given an opportunity to understand, test and rebut its opponent's case; that there be a hearing of which there is reasonable notice; that the parties and their advisers have the opportunity to be present throughout the hearing; and that each party be given reasonable opportunity to present evidence and argument in support of its own case, test its opponent's case in cross-examination, and rebut adverse evidence and argument.
(e) In the absence of express or implied agreement to the contrary, the arbitrator will normally be precluded from taking into account evidence or argument extraneous to the hearing without giving the parties further notice and the opportunity to respond.
(f) The last principle extends to the arbitrator's own opinions and ideas if these were not reasonably foreseeable as potential corollaries of those opinions and ideas which were expressly traversed during the hearing.
(g) On the other hand, an arbitrator is not bound to slavishly adopt the position advocated by one party or the other. It will usually be no cause for surprise that arbitrators make their own assessments of evidentiary weight and credibility, pick and choose between different aspects of an expert's evidence, reshuffle the way in which different concepts have been combined, make their own value judgments between the extremes presented, and exercise reasonable latitude in drawing their own conclusions from the material presented.
(h) Nor is an arbitrator under any general obligation to disclose what he is minded to decide so that the parties may have a further opportunity of criticising his mental processes before he finally commits himself.
(i) It follows from these principles that when it comes to ideas rather than facts, the overriding task for the plaintiff is to show that a reasonable litigant in his shoes would not have foreseen the possibility of reasoning of the type revealed in the award, and further that with adequate notice it might have been possible to persuade the arbitrator to a different result.
(j) Once it is shown that there was significant surprise it will usually be reasonable to assume procedural prejudice in the absence of indications to the contrary.
These principles were referred to, and agreed with, by Murphy J in Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd (No 2) [2012] FCA 1214 at [163]. His Honour also agreed with the additional observation made by Fisher J that once it had been shown that "the fact or idea introduced by the decision maker had not been reasonably foreseeable, it will be a very short step indeed to the possibility that a party was procedurally prejudiced": Castel at [164].
46 The task to establish a breach of the hearing rule as summarised by Fisher J in (i) above imposes an obligation upon an applicant to demonstrate that it, as a reasonable litigant, would not have foreseen the possibility of the Tribunal's reasoning. It must also show that "it might have been possible to persuade" the Tribunal otherwise if the Tribunal had given adequate notice. The evidence tendered for Emerald Grain in this case, however, falls short of that task. The evidence in Mr Thompson's affidavit establishes neither that Emerald Grain, as a reasonable litigant, would not have foreseen any of the matters complained about, nor does it show how it could have persuaded the arbitrator otherwise if Emerald Grain had been given adequate notice of the matters complained about. The written submissions in this proceeding took this matter no further. It complained, under the heading "breach of the no hearing rule", in each of the paragraphs relating to the different facts complained about, that the Tribunal had ignored critical submissions which Emerald Grain had made. They may have been surprised that their submissions were not accepted but there is no foundation to conclude that the findings "would not have been foreseen" by a reasonable litigant nor that Emerald Grain might have submitted something else if they had received notice.
47 It is sufficient to reject the "no hearing" claim on the basis that Emerald Grain has failed to establish that any finding "would not have been foreseen" by a reasonable litigant or that it might have persuaded the Tribunal to reach a different conclusion if it had received notice of that which Emerald Grain contended would not have been foreseen. However it may be desirable to say something about other aspects of the "no hearing" claim as advanced.
48 The ground that the Tribunal had breached the hearing rule was in paragraph 14(b) in Mr Thompson's affidavit and was expressed as being that the findings which had been set out in the preceding sub-paragraph (namely in paragraph 14(a)) had been based upon the Tribunal's own opinions and ideas and that they were both surprising and not reasonably foreseeable as potential corollaries of those opinions and ideas which were expressly traversed in the arbitration and that Emerald Grain could, with adequate notice, have possibly been able to persuade the Tribunal away from them. The written submissions, however, put the ground differently. The structure of the written submissions for Emerald Grain was to identify in paragraph 10 what were described as ten essential findings and to address each of the ten findings separately by dealing first with the "no evidence" claim and next the "no hearing" claim. The submissions concerning the contentions of the "no hearing" claim were not precisely the same in respect of each of the ten essential findings but they overlapped significantly.
49 The case concerning the "no hearing" claim in relation to the dead-freight obligation finding (being the first group of the ten essential findings in paragraph 10(a)) was that the Tribunal had "ignored the critical submissions Emerald [Grain] made in both its Defence Submissions and its Reply Submissions on the essential issue as to Agrocorp's contractual duty". Thus the case was not that the Tribunal had not given Emerald Grain a hearing but that, having been given a hearing, the Tribunal's decision had "ignored" the critical submissions which Emerald Grain had made. The ground which had been stated in paragraph 14(b) in Mr Thompson's affidavit had been different. He claimed that Emerald Grain had been surprised by a conclusion which was said not to have been supported by the evidence. He said that it was a surprise which was not reasonably foreseeable as a potential corollary of the opinions and ideas which were expressly traversed in the arbitration and which Emerald Grain could possibly have been able to persuade the Tribunal away from. The ground in Mr Thompson's affidavit is different from a claim of being surprised because submissions which had been made had not been accepted. Paragraph 47 in the written submissions went on to contend that the Tribunal had, without the required analysis, reached a surprising conclusion which was not supported by any evidence adduced in the arbitration or in its own stated findings in the Award and that it had failed to provide any reasons or explanation for its ultimate findings in the Award. That, however, was not the way in which the ground had been put in Mr Thompson's affidavit. Grounds to the same effect as those in paragraph 47 were found in relation to the contentions of breaches of the hearing rule in respect of the dead-freight liability and quantum finding (paragraph 59), loss of market liability finding (paragraph 69), the sending the vessel back to anchorage finding (paragraph 96) and the import agreement finding (paragraph 112).
50 A consideration of the submissions before the Tribunal in respect of each of the contentions raised by Emerald Grain in its "no hearing" claims fails to establish that any of the ten essential findings breached the hearing rule. It may be expedient to consider the "no hearing" claims by reference to the relevant paragraphs in the written submissions. The ten essential findings are, as previously mentioned, set out in three groups in paragraph 10. The first group is then set out in paragraph 46, the second group in paragraph 66 and the third in paragraph 76. Some, but not all of the grounds in those paragraphs, of course, were not raised in Mr Thompson's affidavit but for convenience they will be considered as if they had.
51 The ground in paragraph 41(a) (which was not found in Mr Thompson's affidavit at paragraph 14) had been the subject of both Agrocorp's and Emerald Grain's submissions to the Tribunal. Agrocorp had, in its claim submission to the Tribunal, maintained in summary, that it was entitled to "US$134,000 being deadfreight due to [Agrocorp] on account of [Emerald Grain's] failure to ship 4,000mt of cargo…". The submissions went on to contend that Agrocorp had always intended to load 44,000 metric tonnes of canola and that it was an option which had been declared by Agrocorp to Emerald Grain as early as 13 July 2012. The submission contended that Emerald Grain had, however, in fact, loaded only 40,000 metric tonnes leaving Agrocorp to incur the liability to the ship owner for dead-freight of 4,000 metric tonnes in the sum of US$134,000 at US$33.50 per tonne which Agrocorp had paid. Paragraph 13 of the claim submissions had maintained that there was no valid basis for Emerald Grain not having loaded the 4,000 metric tonnes. Emerald Grain's defence had clearly joined issue with that claim by contending that the contract was only for the sale of 40,000 metric tonnes and that the terms of the contract did not give Agrocorp, as the buyer, the right to seek to exercise at its option the shipment of the additional 10% "at the proverbial 11th hour". The matter was dealt with extensively in paragraphs 4.1 to 4.16 of the defence submissions and taken up in both Agrocorp's reply submissions (paragraph 52) and in Emerald Grain's reply submissions (paragraph 4.6). In those circumstances it cannot be said that there had been a breach of the hearing rule in the Tribunal having found that it was Emerald Grain's obligation to load the maximum tonnage required by Agrocorp within the agreed tolerance nor can it be said that a reasonable litigant would not have foreseen that the Tribunal would have reached the conclusions advanced by Agrocorp and rejected those of Emerald Grain.
52 The ground in paragraph 41(b) (which was also not found in paragraph 14 of Mr Thompson's affidavit) was the subject of submissions and evidence to the Tribunal by the parties. Agrocorp's claims had stated a claim for the amount as dead-freight by reference to the alleged failure by Emerald Grain to ship the 4,000 metric tonnes of cargo. Agrocorp went on to maintain that it incurred a liability to the ship owner for the dead-freight which it had paid because of the fact that Emerald Grain had loaded only 40,000 metric tonnes. Emerald Grain left unchallenged both the calculation of the amount claimed and the evidence of Agrocorp's payment. There is nothing unforeseeable about the Tribunal accepting the claim made by one of the parties, and Emerald Grain had an opportunity to put material and submissions against that claim. Leaving a matter unchallenged does not, of course, mean that Emerald Grain had accepted the position advanced by Agrocorp, but it had been on notice of what was claimed and could have responded.
53 The ground in paragraph 41(c) in the written submissions (which was also not found in paragraph 14 of Mr Thompson's affidavit) was the subject of submissions and evidence before the Tribunal. In part the submissions and evidence was the same as that in relation to grounds 41(a) and (b) considered in the preceding paragraph. The issues raised by paragraph 41(c) were also the subject of other submissions before the Tribunal. Emerald Grain had contended in its defence submissions that what obligations Agrocorp may have owed the ship owner under its charter party, and what liability it may have incurred to the owners in respect of the dead-freight, were completely irrelevant to the question of what rights and obligations Emerald Grain and Agrocorp had as against each other under their contract. Agrocorp responded in its reply submission by contending that it was liable to the vessel owner for dead-freight because Emerald Grain had failed to ship the additional quantity of 4,000 metric tonnes. It was said by Agrocorp in the submissions that it was Emerald Grain's failure to ship the additional 4,000 metric tonnes that exposed Agrocorp to the liability to the ship owners. The specific submission made by Agrocorp was specifically addressed in Emerald Grain's submissions in reply by maintaining, again, the complete irrelevance of the obligation of Agrocorp to the ship owner when considering the obligations as between Emerald Grain and Agrocorp. It can hardly have come as a surprise in the circumstances for the Tribunal to have found that the contention of one of the parties was accepted and that the counter contention by the other party (Emerald Grain) had been rejected.
54 The ground in paragraph 66(a) of the written submissions (which was also not raised by paragraph 14 of Mr Thompson's affidavit) was also the subject of submissions to the Tribunal. Agrocorp's claim had been summarised to include "US$180,000.00 being the market/contract differential as loss suffered on account of [Emerald Grain's] failure to ship 4,000mt of the cargo". Agrocorp had referred in its submissions to communications between them where on 16 August 2012 Agrocorp had said that both parties had reserved their respective positions and that Agrocorp "had established the market price at US$645 per unit FOB and freight at US$33.50 per mt…". At paragraph 14 of the claim submissions Agrocorp had specifically said that it followed from what had been pleaded in the submissions that Emerald Grain was "also liable for the contract-market differential for the unshipped 4,000mt of cargo". The submissions had been made in the context of the material before the Tribunal to which reference has already been made above. Emerald Grain did not challenge the submission before the Tribunal that Emerald Grain was liable for market loss damages. Its submissions to the Tribunal, rather, focused on three other issues: first, whether it was obliged to load the 4,000 metric tonnes of canola; secondly, on what the market value of the Australian canola was at the relevant time; and thirdly, whether Agrocorp had proved actual loss. In those circumstances there was plainly no breach of the hearing rule concerning the finding complained of in paragraph 66(a) of the written submissions and it could not have come as a surprise that the Tribunal expressed a view that Emerald Grain was liable to Agrocorp for market loss damages as had been contended by one of the parties and not addressed by the other. Emerald Grain knew what had been said by Agrocorp and it is not a breach of the hearing rule for a tribunal to decide consistently with submissions which have not been replied to specifically.
55 The ground in paragraph 66(b) in the written submissions (which may be found in paragraph 14(b) of Mr Thompson's affidavit by its incorporation of the ground in paragraph 14(a)(xv)) was the subject of submissions to the Tribunal. Agrocorp had contended that as at 16 August the market value of the cargo had been US$645 per tonne FOB and that its loss for non-delivery was US$180,000 being US$45 x 4,000. Emerald Grain's submission had challenged Agrocorp's calculation as having been based on what was asserted to be an unreliable calculation of what would otherwise have been the market value. Emerald Grain submitted that the market value, if applicable (which Emerald Grain, however, denied), should be US$632.32. Its submission to the Tribunal included a table showing how the amount was calculated and the submissions concluded that the correct amount of the claim, if any merit were found in it, was US$129,280 based upon a calculation of US$32.32 x 4,000. It went on to submit that the calculation was, in any event, irrelevant. Agrocorp's reply submission joined issue with Emerald Grain and noted that Emerald Grain's assessment of the market price was not significantly different from what Cargill had advised. Emerald Grain replied to this submission maintaining, and largely repeating, its contention of error in Agrocorp's calculation as based on an unreliable calculation and went on to describe as "flippant" Agrocorp's comment that the calculation proposed by Emerald Grain was not significantly different to that put forward by Agrocorp. It was in this context, and upon the evidence to which reference has previously been made in these reasons, that the Tribunal decided to pick US$39 as an appropriate mid-range differential in calculating an amount for loss of US$156,000. Whether or not the amount is accurate, it was squarely within the range of the competing figures which had been submitted by the parties to the Tribunal which adopted an amount which reduced in favour of Emerald Grain the amount for which Agrocorp had been contending. It is difficult to see how Emerald Grain can contend that it was surprised that the Tribunal awarded a figure less than the amount which had been sought against it.
56 The grounds maintained in paragraph 76(a) (and paragraph 85) of the written submissions (but which are not found in the grounds in paragraph 14 of the affidavit of Mr Thompson) were the subject of submissions to the Tribunal. The claim submission had stated that on 26 June Agrocorp and Emerald Grain had entered into a contract through the brokers McDonald Pelz for 40,000 metric tonnes of Australian canola as encapsulated in a short form confirmation dated 26 June sent by Mr Alex Duncan. The submissions contended that between 27 June and about 3 July the parties exchanged communications on the draft contract which was eventually signed (as was said in the submissions) on about 2 or 3 July with the letter of credit, and the sale and purchase contract being sent to Agrocorp to sign on 3 July. Emerald Grain had admitted that the parties had entered into a contract on 26 June 2012 as evidenced by the McDonald Pelz document bearing the number 1206296 and the Emerald Grain "FOB short form contract" bearing the number 12321. All of the email exchanges in various annexures contained in the material before the Tribunal were said by Emerald Grain to be "post-contractual exchanges". The issues were also raised in Agrocorp's reply submissions, Emerald Grain's reply submissions, Agrocorp's rejoinder submission and Emerald Grain's surrejoinder submissions.
57 The grounds in paragraph 76(b) (and paragraph 93) in the written submissions (which incorporated grounds 14(a)(vii), (viii), and (ix) into paragraph 14(b) of Mr Thompson's affidavit) were the subject of submissions to the Tribunal. The claim submissions had maintained that the berth for the vessel was not free on arrival because of a delay for which Emerald Grain was contended to have been responsible. The claim submissions noted that on 24 July the vessel arrived at the load port and tendered notice of readiness on 25 July. It went on to contend that Emerald Grain's initial response on 30 July had been to ask that the letter of credit's latest expiry date be extended to 15 August 2012, claiming that the "terminal had moved the vessel out" because the import permits were unworkable as they stood. The position of Emerald Grain in the submissions to the Tribunal had been silent on whether GrainCorp had sent the vessel back to anchorage. However, there were submissions concerning the responsibility for the delays to the vessel in the defence submissions and in Emerald Grain's reply submissions.
58 The ground in paragraph 76(c) (and paragraph 102) in the written submissions (which may be found in paragraph 14(b) of Mr Thompson's affidavit by its incorporation of grounds 14(a)(ii)-(v)) was the subject of submissions to the Tribunal by the parties. Agrocorp had contended that on 12 July 2012 it had sent to Emerald Grain copies of six import permits, all of which were said to be dated 9 July 2012, and which, on the reverse side, had stated the additional conditions required by the Bangladeshi Government for the importation of the canola. The specific conditions were identified in the submissions to the Tribunal and were stated in the claim submissions to be:
1. The Phytosanitary Certificate should have additional declaration that the consignments have been fumigated with appropriate fumigant at recommended dose before shipment
2. The Phytosanitary Certificate should in additional declaration [sic] that:
(a) The consignments shall be free from sand & soil.
(b) Extraneous materials should not be above 1%.
The submissions went on to state that on 13 July Agrocorp had sent the reverse of the import permits to Emerald Grain and had asked Emerald Grain if it could meet the additional conditions as stated. The Tribunal was informed in the claim submissions of the details of the emails to which reference has previously been made above. Emerald Grain's response had been that it would have been able to obtain the required export permit in good time and that "Graincorp would not have had cause to restrict the accumulation at port and after the loading order" (causing the loading delay) if Agrocorp had for its part done certain things. Agrocorp's reply submission denied Emerald Grain's defence, and the issues in dispute were raised again in Emerald Grain's reply submission and Agrocorp's rejoinder submissions. Whatever the merits of the point either way, the parties were heard on the issue and there is no foundation for establishing surprise by the Tribunal's conclusion.
59 The ground in paragraph 76(d) (and paragraph 115) in the written submissions (which may be found in paragraph 14(b) of Mr Thompson's affidavit by its incorporation of the finding challenged in paragraph 14(a)(x)) was similarly the subject of submissions by the parties to the Tribunal. The evidence to which reference has been made above in relation to these findings (see discussion above concerning ground 14(a)(x)) was the subject of submissions in various places in Emerald Grain's defence submissions, Agrocorp's reply submissions, Agrocorp's rejoinder submissions and Emerald Grain's surrejoinder submissions.
60 The last of the grounds relied upon in contending that the Tribunal had breached the hearing rule was that found in paragraph 76(e) and paragraph 129 of the written submissions concerning the finding that Mr McMullen was not an independent expert. The ground is not found in paragraph 14(b) in Mr Thompson's affidavit accompanying the application but, in any event, the parties were heard in the matter (to the extent relevant) in the submissions to the Tribunal. Emerald Grain had specifically referred to its engagement of Mr McMullen as a consultant in an attempt to find a solution to make the import permits work with the contract. Emerald Grain's submissions referred in terms to Mr McMullen as its consultant. In its surrejoinder submissions Emerald Grain, on the invitation of the Tribunal, said that it then adduced what it described as "a third party witness statement", namely Mr McMullen, "whom Emerald [Grain had] engaged to liaise with GrainCorp and AQIS in respect of the difficulties that arose from the IPs tendered by Agrocorp". The surrejoinder submission went on to say that Mr McMullen's statement "supports the submissions made by Emerald [Grain]" but not that he was being put forward as an independent expert. It could not have been a surprise that the Tribunal should find, as was the fact, that Mr McMullen was not an independent expert in light of the description used by Emerald Grain of its own witness.
61 Accordingly, the proceeding will be dismissed but I will hear the parties on any order for costs.
I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Pagone .