Energy Brix Australia Corporation Pty Ltd v National Logistics Coordinators

7. Energy Brix Australia Corporation Pty. Ltd. (which for convenience I shall call "the appellant"[2]) filed on the same day both a notice of appeal against an order of a judge of the Trial Division and an application seeking leave to appeal against that order. The learned judge had refused leave to appeal under s.38(4) of the Commercial Arbitration Act 1984 ("the Act") against an award of an arbitrator who had brought down a final award resolving certain questions referred for his determination. His Honour had held in succinct terms, to which reference will be later made, that he did

not think that there was any "manifest error of law on the face of the award", within the meaning of sub-s.(5)(b) of s.38, so that leave to appeal should not be granted from the award. The primary issue in this Court is whether there is a right of appeal from that order, having regard to the history and policy of the Act. That objection has been taken by the respondents[3]

both as a complete answer to the application for leave to appeal, if that otherwise were the correct procedure, and by way of oral objection to the competency of the appeal itself, there being no criticism of the way in which the objection has been raised.[4]

13. Both the application and appeal have been listed together so that, if the objections to the competency of the application and the appeal are unsuccessful, this Court may determine the further questions which have arisen and have been argued as to whether the appeal itself should be allowed. In turn that has raised a number of subsidiary questions. One such question is whether the learned judge erred by stating, in refusing leave to appeal from the award, that "I do not give reasons for my decision", which he said was consistent with decisions such as that of the House of Lords in Antaios Compania Naviera S.A. v. Salen Rederierna A.B.[5] and that of the Full Court in Leighton Contractors Pty. Ltd. v. Kilpatrick Green Pty. Ltd.[6] A second procedural question is whether, if this Court considers that the appeal from the judge in the Trial Division is competent or that leave to appeal from him should properly be granted, this Court should merely remit the question whether leave to appeal to the Trial Division under s.38(4) should be granted or whether in the circumstances it should resolve also the question whether the appellant had satisfied the provisions of s.38(5) so as to entitle it to an order giving leave to appeal to the Trial Division. A further question was mooted, whether in the latter circumstances, this Court should also resolve the appeal itself from the arbitrator's award, primarily because the result was so obvious or "manifest", but counsel for the parties disagreed as to whether this Court could assume jurisdiction to hear the appeal under s.38 itself and as to whether our function is confined to resolving what the Trial Division should or should not have done in considering only the question as to the granting of leave to appeal. A further subsidiary question raised by the appellant was whether the learned judge was wrong because he permitted the respondents to go behind the face of the award and to rely upon new affidavit material which, according to the appellant, "was directly contrary to the evidence presented to the arbitrator and the findings of fact made by the arbitrator". The circumstances which lay behind this, if I might say so, curious ground, will have to be mentioned later but it seems that the appellant relied upon an inference, which it said could be drawn, to the effect that the judge himself relied on that extraneous material to reach his conclusion.

16. The other principal question, arising only if this Court has jurisdiction to entertain the appeal, is whether "any question of law", within the meaning of sub-s.(2) of s.38 of the Act, arose out of the arbitrator's award of a kind which required the learned judge to grant leave to appeal pursuant to sub-s.(4) of that section and, in particular, since this was the only basis for that leave suggested by the appellant, whether there was a "manifest error on the face of the award", within the meaning of sub-s.(5)(b)(i) of that section.

19. In short, the error said to be manifest was the conclusion of the arbitrator that, where, as he found, there are two "inconsistent" agreements signed by the parties, one a deed and the other a later signed agreement for good consideration, then "at law" the contract under seal "has precedence" over the signed "informal agreement", so as here to entitle the respondents to rely on the inconsistent terms of the earlier deed. The circumstances, in general terms, will be described below, but the appellant says that such a conclusion is contrary to established principle stated in cases such as Berry v. Berry[7] and Creamoata Ltd. v. The Rice Equalisation Board Ltd.[8].

22. For the purposes of the primary jurisdictional question the following brief outline of the circumstances giving rise to that question in this Court should suffice. The appellant, amongst various activities, manufactures for sale brown coal briquettes and other products, which business was carried out not only in the Latrobe Valley but also from various depots, including one at Yarraville called the "Footscray depot". In 1997 the appellant determined to "out-source" many of its handling, storage and distribution activities to a company, the first-named respondent, which was formed by the appellant's former distribution manager Jeffrey William Goss. The parties at first operated pursuant to heads of agreement signed on 5 October 1997 but in due course a formal long-term contract was drawn up, which was executed by the affixing and witnessing of the corporate seals of both the appellant and the first-named respondent and which was called the "National Transport, Handling and Distribution Alliance Contract" ("the Alliance contract"). As part of a "dispute resolution" clause, the parties agreed under clause 48.4 of the Alliance contract that either party might refer any question, dispute or difference between them to arbitration by giving appropriate notice of the existence thereof. It was agreed that any award of the arbitrator should be "final and binding on the parties". The Alliance contract was the deed to which I have already referred and the later informal agreement, likewise referred to, was signed by the parties[9] on 11 January 1999 but did not purport to alter the arbitration clause. A series of six issues were listed in terms of reference dated 7 February 2001, although the parties now included the three other respondents (for reasons which need not be here examined), which all parties agreed should be determined by an arbitrator. Then on 13 February 2001 the parties, including the appellant and all respondents, entered into an arbitration agreement with the arbitrator, who was an accountant, seeking that the issues be resolved. As to the terms of that agreement it is relevant to know only that (i) the issues in dispute were referred to specifically as those being contained in the terms of reference, that (ii) the parties required the arbitrator "to apply principles of general justice and fairness" in preference to making "decisions in accordance with the law", but that (iii), nevertheless, the parties explicitly stated that they did not wish "to exclude all rights of appeal against the arbitrator's decisions on any questions of law or fact ...".

25. After a two-day hearing the arbitrator handed down his final award which was dated 2 April 2001. In dealing with the first matter in dispute, which was described in both the terms of reference and the award as "Footscray depot costs, reimbursement and briquette handling charges", the arbitrator made the holding that the Alliance contract being under seal had precedence over the later agreement, so that the appellant's claim for some $916,000 reimbursements, which it sought to justify by reference to the later agreement, failed in that it was inconsistent with the parties' contractual relationship under the Alliance contract. Accordingly, he found that none of the amount claimed was payable by the first-named respondent to the appellant. No doubt it is the latter conclusion which provoked the appellant's application for leave to appeal on the question of law earlier identified. That application was brought by originating motion dated 30 April 2001 but the application was dismissed by the learned judge on 17 May that year, his Honour holding that he was "not persuaded" that the arbitrator had made "any error of law on the face of the award".

29. The principal question raised before this Court is whether the Court of Appeal has any jurisdiction to hear an appeal from a decision of a judge of the Trial Division refusing leave to appeal under s.38(4) of the Act. Indeed, the wider issue is incidentally raised, though not to any extent separately discussed in argument, as to whether this Court has any appellate jurisdiction in respect to decisions of Trial Division judges when exercising jurisdiction under s.38, including review of decisions made after leave to appeal has been granted.

32. The primary answer to these questions which was advanced by counsel for the respondents is that, there being no explicit grant of a right of appeal to this Court, the purpose and intent of the legislation, namely the Commercial Arbitration Act 1984, especially as expressed in and to be inferred from s.38, is that no right of appeal of any kind lies to the Court of Appeal in relation to questions of law arising out of an award. In addition to relying on earlier authorities said to support this contention, counsel pointed also to the fact that, whereas in the Arbitration Act 1984, as first enacted, there were explicit provisions then contained in sub-ss.(6) and (7) of s.38[10]

, setting out the circumstances in which an appeal might lie at that time to the Full Court, those provisions had been repealed, so that one should thereby infer an intention by Parliament to take away the right of appeal set out in those sub-sections.

37. Nevertheless, the principal source of this alleged bar to jurisdiction was said to lie in s.38(1) of the Act, which is to the effect that, subject to sub-s.(2), "the Court shall not have jurisdiction to set aside an award on the ground of error of fact or law ...". In these circumstances it is perhaps best to set out the whole of the section as it presently stands and as was applicable to the arbitration here in question:

"38. Judicial review of awards (1) Without prejudice to the right of appeal conferred by sub-section (2), the Court shall not have jurisdiction to set aside or remit an award on the ground of error of fact or law on the face of the award. (2) Subject to sub-section (4), an appeal shall lie to the Supreme Court[11] on any question of law arising out of an award. (3) On the determination of an appeal under sub-section (2) the Supreme Court may by order - (a) confirm, vary or set aside the award; or (b) remit the award, together with the Supreme Court's opinion on the question of law which was the subject of the appeal, to the arbitrator or umpire for reconsideration or, where a new arbitrator or umpire has been appointed, to that arbitrator or umpire for consideration - and where the award is remitted under paragraph (b) the arbitrator or umpire shall, unless the order otherwise directs, make the award within three months after the date of the order. (4) An appeal under sub-section (2) may be brought by any of the parties to an arbitration agreement - (a) with the consent of all the other parties to the arbitration agreement; or (b) subject to section 40, with the leave of the Supreme Court. (5) The Supreme Court shall not grant leave under sub-section (4)(b) unless it considers that - (a) having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and (b) there is - (i) a manifest error of law on the face of the award; or (ii) strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law. (6) The Supreme Court may make any leave which it grants under sub-section (4)(b) subject to the applicant complying with any conditions it considers appropriate. * * * * * (7) Where the award of an arbitrator or umpire is varied on an appeal under sub-section (2), the award as varied shall have effect (except for the purposes of this section) as if it were the award of the arbitrator or umpire."

41. In my opinion neither sub-s.(1) of s.38, whether or not taken in combination with sub-s.(2) of that section, nor s.38 as a whole, nor the repeal in 1993 of the former sub-ss.(6) and (7) specifically dealing with rights of appeal, can lead to the conclusion that the right of appeal to this Court from the Trial Division given generally by s.17(2) of the Supreme Court Act 1986 has been taken away or is now otherwise inapplicable to an order under s.38 of the Commercial Arbitration Act. Section 17(2) is general in its operation and the rights given under it cannot be taken away except by clear intendment of some other statutory provision. The terms of s.17(2) provide that, "unless otherwise expressly provided by this or any other Act", an appeal lies to the Court of Appeal from all "determinations" of judges of the Trial Division of the Supreme Court.[12] For present purposes a judge's order under s.38 is clearly a "determination" within the meaning of s.17(2), whatever else that word might denote on other occasions: see Roy Morgan Research Centre Pty. Ltd. v. Commissioner of State Revenue (Victoria)[13]. There is no express provision to the contrary which would deny the appellant the right of appeal to this Court, whether one seeks to glean it from s.38 itself or from any of the other materials to which counsel for the respondents took us. The mere fact that the right of appeal to the Trial Division is couched in limited terms requiring leave where there is no consent cannot be treated as an express provision, or even an implied provision, to the contrary. Nor can the legislative scheme or the use of words which suggest that an award or other decision of an arbitrator shall be final[14] or otherwise of a kind which may be interfered with only in the most limited of circumstances.

44. It is necessary to emphasise that an appeal to the Court of Appeal is quite different in nature from that which is conferred on Trial Division judges to review awards. There can be no suggestion, nor should any inference be drawn, that the limits imposed by s.38 itself may or will be bypassed because this Court can review the decision of a trial judge. What this Court of Appeal is called upon to do on an appeal in a case such as the present is to determine merely whether the judge has correctly applied the criteria laid down in the statute, in this case in s.38. This Court cannot re-exercise the judge's powers or discretions unless and until it is satisfied that the judge erred in the application of the section, and then only subject to its very obvious restrictions which would confine review of an award (except by consent) either to manifest errors or to errors the determination of which would add substantially to the certainty of commercial law, as provided in sub-s.(5)(b)(ii).

47. Various arguments were put to the Court to support the conclusion that by implication the legislature intended that there should be no further appeal beyond the application made to a judge of the Trial Division. Those should be looked at briefly later but essentially the question here is whether there is express provision to the contrary and it has been said by a majority of the High Court in Roy Morgan Research Centre that it is doubtful whether one can ever look "beyond express words of exclusion"[15]. Whether or not one can in certain cases discern that it has been "otherwise expressly provided"[16], perhaps by the emphatic use of positive words in another provision, no such conclusion can here be drawn. The language used here is, in most relevant respects, not dissimilar to that used by the legislature in s.148(2) of the Victorian Civil and Administrative Tribunal Act 1998 (as considered by the High Court), at least to the extent that the right of appeal to the Trial Division given in both Acts is subject to the requirement of leave. The absence of any express denial of the Court of Appeal's jurisdiction "may very well be reason enough to reach the conclusion" that s.38 is not an express provision of the kind contemplated by s.17(2).[17] More importantly the majority of the High Court in Roy Morgan Research Centre said that s.17(2) is "to be given no narrow construction. Rather, it is to be construed with all the amplitude that the ordinary meaning of its words admits."[18] As I have said, s.38 says nothing about any right of appeal to the Court of Appeal, whatever was formerly provided, and the width or narrowness of the right given to challenge an award under s.38 is in no way affected by the right given under s.17(2) of the Supreme Court Act. The review conducted on an appeal to the Court of Appeal can in no way expand the nature of the right of appeal from an arbitrator's award given under that section. All that the Court of Appeal can do is to ensure that the provisions of that section are applied correctly which means, as is obviously the case, that we can consider not only erroneous refusals to grant leave but also, and just as importantly, erroneous grants of leave which would wrongly expand the rights given under s.38, if those grants were incapable of review by an appellate court.

50. In the light of the High Court's emphatic assertion of the primacy of appeal provisions such as those contained in s.17(2) of the Supreme Court Act, it is not necessary to spend much time discussing the respondent's arguments that some different intention should be imputed to the legislature. Even if, as the majority of the High Court clearly doubted[19], inference, implication or imputation be sufficient, then the meaning of any contrary provisions must be so clear that they can be characterised as an express provision to that effect and there are no such provisions, taken either singly or in combination, in the present case.

53. I take first the inference said to be drawn from the repeal of the former sub-ss.(6) and (7) which occurred in consequence of the passing of the Commercial Arbitration (Amendment) Act 1993.[20] The repealed sections read:

"(6) Unless the Supreme Court gives leave, an appeal shall not lie to the Full Court of the Supreme Court from a decision of the Supreme Court to grant or refuse leave under sub-section (4)(b). (7) An appeal shall not lie to the Full Court of the Supreme Court from a decision of the Supreme Court on an appeal under sub-section (2) unless - (a) the Supreme Court or the Full Court of the Supreme Court grants leave; and (b) it is certified by the Supreme Court that the question of law to which its decision relates either is one of general public importance or is one which for some other special reason should be considered by the Full Court of the Supreme Court."[21]

In the former sub-s.(5), although paragraph (a) was almost identical to the present sub-s.(5)(a), on the face of the statute that paragraph apparently imposed the sole criterion for granting leave, and there was no provision similar to the present paragraph (b) requiring there to be either a manifest error or an error of a kind the correction of which might add substantially to the certainty of commercial law. It was the interpretation put on provisions such as the former sub-s.(5) by the courts, particularly in consequence of the decision of the House of Lords in Pioneer Shipping Ltd. v. BTP Tioxide Ltd. ("The Nema")[22] and a long series of decisions in many jurisdictions following it, which led to a construction imposing the most stringent conditions on the granting of leave by a court under sections such as s.38. It appears from the former sub-ss.(6) and (7) that the policy then of the legislature was to deny an appellate court the right to grant leave to appeal from a grant or refusal of leave and to give a very limited right of appeal after review by a judge, ordinarily only if the matter was one of general public importance.

58. Both sub-sections (6) and (7) were repealed in 1993. The effect was, as is plain from a reading of the two sub-sections, not to take away a right of appeal thereby conferred but to repeal provisions which placed a fetter on the right of appeal to the Full Court, as was then the final appellate court in this State.[23] Ordinarily, the repeal of a bar to the exercise of a right has the consequence that that right may be exercised without limitation and it says nothing about the nature of the appeal right itself. Moreover, the former sub-ss.(6) and (7) assumed the existence of a right of appeal, at least in their language, which was the right of appeal given in turn under the Supreme Court Acts 1958 and 1986, so that it was that right in its unimpaired form which was, in effect, restored. In a sense, of course, there was no preceding right of appeal in the context of the Commercial Arbitration Act 1984, for the review provisions were quite new. On the other hand, under the preceding Arbitration Act 1958, if the Court assumed jurisdiction to review an award, then there was no reason why an appeal would not and did not lie to the Full Court.

61. There is a further factor which was relied upon by the respondents but which, on analysis, points in the opposite direction. They referred to the provisions in s.39 of the Commercial Arbitration Act, particularly those in sub-ss.(3) and (4) which are and were expressed in almost identical terms to those in the former sub-ss.(6) and (7) of s.38, except that they describe rights of appeal from the determination of a judge on a preliminary point of law, rights which sub-ss.(3) and (4) give explicitly to the parties in certain circumstances. Counsel pointed out that those sub-sections of s.39 dealing with the right of appeal to the Full Court were not repealed in 1993, as were the equivalent sections in s.38, and from that counsel sought to deduce that the rights of appeal to the Full Court (and later to the Court of Appeal) should be taken as having been preserved under s.39, while those under s.38 should properly be treated as having been entirely repealed, including any rights now given under s.17(2) of the Supreme Court Act. But there was good reason for the difference, or at least so it may have appeared, for s.39 was the successor to the provisions in the earlier legislation, especially s.8 of the Arbitration Act 1958, which permitted the arbitrator to state a case for the opinion of the Court. Under that earlier legislation, however, the Court's "opinion" was treated as advisory only, so precluding, as the High Court has held,[24] any right of appeal to a higher court from that merely advisory determination. Whether or not s.39 should be treated as having the same consequences in law is a question which need not here be resolved,[25] but those drafting the amendments may well have had good reason for retaining the limited appeal rights in s.39, if only to avoid any risk that the decision of a judge might not be considered a "determination" for the purposes of s.17(2) of the Supreme Court Act.

64. In any event it would have been entirely illogical for Parliament to retain a right of appeal to the Full Court (and later to the Court of Appeal) for what was in effect still an advisory opinion on a question which arose in running, if at the same time it intended to take away altogether any right of appeal to the Full Court (and later to the Court of Appeal) from a final award on a question of law which might have conclusively resolved the ultimate dispute in favour of one or other of the parties. In the end nothing can properly be drawn from the retention of the appeal provisions in s.39 which could assist in drawing so powerful an inference in relation to s.38 as to constitute an express provision to the contrary for the purposes of s.17(2).

67. Further, counsel for the respondents said that a decision of the Western Australian Full Court in Aintree Holdings Pty. Ltd. v. Corderoy[26], that no further appeal lay under sections such as s.38, should be preferred to decisions of other appeal courts and in particular should be preferred to the only decision on such appeals which had examined the matter in detail but had reached a contrary conclusion, namely the decision of the South Australian Full Court in Minister for Industrial Affairs v. Civil Tech Pty. Ltd.[27]. Counsel said that the Western Australian decision gave powerful reasons for concluding that a contrary intention as to the right of appeal to an intermediate appellate court such as the Full Court in Western Australia should be inferred from the form of sections such as s.38 so as to deny the existence of such a right. In essence the judgments in the Western Australian Full Court had looked at the totality of the legislation common to each jurisdiction, including s.28 of each Act, which states that an award made by an arbitrator shall be final and binding on the parties, so that an intention to exclude further appeal to an appellate court should properly be implied so as to give effect to this special legislation ensuring prompt and unchallengeable resolution of disputes by arbitration.

70. It may be that, were it not for the subsequent decision of the High Court in Roy Morgan Research Centre, some further analysis of the two competing decisions would have been required, especially by reason of the rule that on uniform legislation the appeal courts of the States should ensure as far as practicable that it be uniformly interpreted, so that courts should only refuse to follow a decision of another appellate court if it can be seen to be plainly wrong. However, not only do I think that the reasoning of Lander, J. in the Civil Tech case should be preferred, but the clear reasoning of the High Court in Roy Morgan Research Centre must now make it well nigh impossible to raise arguments along lines which were preferred by the members of the Western Australian Full Court. It is sufficient that I say that I agree with Lander, J.'s analysis of the two judgments given in the Western Australian decision[28], although counsel criticised his Honour for failing to deal with a line of authority, discussed by Rowland, J. in the Western Australian decision, which derived from the decision of the House of Lords in Lane v. Esdaile[29]. That decision, however, was firmly disapproved, at least in its general application to cases such as the present, in Roy Morgan Research Centre.[30] It is therefore sufficient to say that nothing in the decision of the Western Australian Full Court in Aintree Holdings persuades me to take a different view of the proper meaning and intendment of s.38, nor as to the effect of s.17(2) of the Supreme Court Act, from that which I have already formed and stated.

73. Finally, counsel for the respondents submitted that their contentions as to the intention of Parliament were supported by its legislative history. Although it was conceded that neither in any explanatory memorandum, nor in either Second Reading Speech introducing the Bill, had the relevant Minister made any mention of the repealing sections and of the intention to be deduced therefrom, one backbench member of the Government party at the time said that the Bill attempted to limit significantly the extent to which appeals could be heard. It was also stated that the Attorney-General who had moved the Bill later congratulated those members who had spoken on the Bill for their contributions, but, for myself, I would treat the latter observation as merely a conventional expression of politeness. In any event I cannot draw anything conclusive from the brief, casual observation of one member of Parliament. Even if one could, the inquiry ordinarily becomes relevant only when there is ambiguity in the language adopted by Parliament. In this case there is no relevant ambiguity and, in the light of the High Court's construction of s.17(2), there can be no real argument as to Parliament's intention in the present case.

76. Consequently, although in this instance the judge's decision under s.38(4) may be interlocutory[31]

and thus require a grant of leave before the matter can be heard in this Court, a right of appeal is otherwise relevantly granted by s.17(2) of the Supreme Court Act against a refusal of a judge pursuant to s.38(4) of the Commercial Arbitration Act to grant leave to appeal on a question of law from an arbitrator's award.[32]

Whether appeal lies as of right or whether leave is required

82. Pursuant to the directions earlier given the parties presented their arguments upon the basis that, if there were no proper objection in this case to the competency of the appeal, the appellant might still have to persuade the Court that it should give it leave to appeal against the decision of the learned judge. This latter question raised the issue whether his Honour's decision was "interlocutory", within the meaning of s.17A of the Supreme Court Act. There is now a vast range of authority on the meaning of that term in statutes over the years and it is sufficient to say that the answer to the question posed in this particular case is by no means easy and is not the subject of binding authority. The matter was discussed in Costain Australia Ltd. v. Frederick W. Nielson Pty. Ltd.[33], but there was little detailed analysis and s.38 was then quite different in the sense that sub-s.(6) (set out above[34]

) expressly required that leave be granted. Subsequently in Roy Morgan Research Centre, in relation to a not dissimilar provision, the matter was discussed in passing[35], but not for the purpose of expressing a concluded opinion, and so the matter is beset with uncertainty, a characteristic of such provisions over the years.

87. Fortunately in the present case I do not believe it is necessary to resolve the question. In my opinion, for reasons which will appear later in this judgment, the conventional test for resolving whether leave to appeal should be granted is here clearly satisfied in that the determination of the learned judge was attended with sufficient doubt and, moreover, substantial injustice would be caused to the appellant if the primary order were allowed to stand.[36] In the light of that conclusion I do not believe it would be profitable to examine the present question further, for the outcome will be same, namely, that this Court should consider the merits of the appeal. I would therefore grant leave to appeal, if necessary.

Whether the judge erred in determining that there was no manifest error of law

91. A number of issues are wrapped up in this question. Not only must the appellant show that there was in fact a manifest error on the face of the award, but in addition it must show that the judge made an error in the way he disposed of the issue raised under s.38(5) of the Act. In other words, having regard to the manner in which the issue was raised, did the judge err in his approach to, and his conclusions on, the relevant question? Having regard to the opinions expressed by courts on provisions of a similar kind, it is by no means obvious that, where an apparent error is shown, an appellate court will always be obliged to conclude that a judge has wrongly declined to find a "manifest" error of law. An incidental question, but one important in reaching such a conclusion, is whether and to what extent a judge is obliged to give reasons for refusing to give leave under s.38(4) of the Act. Having regard, however, to the issue here raised, it is perhaps preferable to deal with the primary question first as to whether the award disclosed a manifest error and in addition to set out the circumstances which the respondents, at least, said were relevant to resolving that issue.

(a) Whether manifest error of law on the face of the award

95. There would seem little doubt that the arbitrator expressed himself in terms that, because the Alliance contract was executed "under seal", it had precedence over the later signed, "informal" agreement dated 11 January 1999. The respondents' argument suggested, nevertheless, that the arbitrator was attempting to state in somewhat inadequate terms that in all the circumstances the Alliance contract was the controlling arrangement between the parties and that, on their contention, the later agreement was not sufficiently certain to be given any legal effect. I shall return to the arbitrator's reasoning later, but it is presently necessary to set out a little more of the factual background to see how this argument could be put forward.

98. The essential circumstances leading to the present dispute are set out above[37]

but these additional matters may be thought to be relevant to the arguments put to this Court. The Alliance contract[38], which came into effect on 1 July 1998, was an elaborate document with 18 schedules and was set out over some 70 pages. It stated in great detail the first-named respondent's obligations for the storage, handling, transport, logistics and distribution of the appellant's products, primarily briquettes and the like, which were for the most part to be taken from the appellant's factories in the Latrobe Valley to the Footscray depot for distribution in carefully defined ways. For various reasons the first-named respondent was to be paid partly by reimbursing a large number of its defined costs and partly by a management fee of $100,000 per annum, together with possible bonuses. It was recited in the Alliance contract that the first-named respondent would take a sublease from the appellant of the Footscray depot but that was to be under a separate agreement and in fact did not occur. Indeed, there were other aspects of the Alliance contract which the arbitrator pointed out had also not been finally agreed, especially some six uncompleted schedules which the parties had agreed to complete within six months. Nevertheless the parties' arrangements were carried into effect throughout this period: the first term of the agreement was in fact intended to be five years with a possible extension for a further five years.

103. Although the Alliance contract continued to be implemented, discussions took place between the parties particularly in relation to the unresolved question as to the lease of the Footscray depot. It seems that by 11 January 1999 the issues had clarified themselves sufficiently for the parties to agree that it would be impractical to sublease or "assign" the appellant's lease to the first respondent. To make allowance for this the parties then appear to have reached agreement on a number of matters which were reflected in the document described as an agreement and dated 11 January 1999. In essence, as the arbitrator held, this latter agreement made the first-named respondent "responsible for lease payments and outgoings" on the Footscray depot from the second quarter of the 1998-1999 year "in return for any income" which the first-named respondent might earn from the property after 1 December 1998.[39] There were eight other clauses in the contract, each somewhat informally expressed, though most were clear in their operation. For example the first-named respondent was thereafter obliged to pay all outgoings associated with the Footscray depot and was free to use assets found in the depot. Clause 10, however, was referred to by the arbitrator as one upon which the respondents heavily relied in that it said: "NLC[40] will negotiate with EBAC's Manager Marketing for future services associated with the distribution of briquettes and/or other services [utilising] Footscray." Undoubtedly this clause foreshadowed a possible agreement in the future relating to services for which the Footscray depot might be used. It is unnecessary to examine the extent to which an agreement to "negotiate" might, in certain circumstances, be treated as enforceable. Suffice it to say that apparently the respondents contended that the insertion of this clause showed that no agreement had been reached on 11 January, whereas the appellant contended that at least the matters agreed in the other clauses could be treated as enforceable.

106. It is unnecessary to examine further the nature of the dispute between the parties over the precise ambit of what was agreed in January 1999 and the consequences of that agreement on the parties' relationships. It might have been otherwise if the arbitrator's reasoning had taken a different course. For some reason the apparent difficulties I have outlined above did not provide a reason for the parties to take the matter immediately to arbitration and eventually they entered into new agreements covering the whole of the subject matter. It was only after that occurred that the remaining disputed matters were referred to the arbitrator in the manner already described.[41]

There were six matters in dispute referred to arbitration but only one, "Footscray depot costs, reimbursements and briquette handling charges", directly raised the effects of the Alliance contract and the agreement of 11 January 1999. Under that heading the appellant sought $916,000 for reimbursement of rent and outgoings and conceded an obligation to pay $100,000, whereas the respondents made a claim under this heading for reimbursement of $120,000.

111. It is important to note the way in which the arbitrator perceived the dispute. He recited some history of the parties' arrangements, including the original heads of agreement. He then referred to the making of the Alliance contract on 30 June 1998 which he said required the appellant to "reimburse approved direct costs and overheads, plus payment of a management fee". He noted the respondents' right to develop other business interests, so long as those did not compete with their obligations towards the appellant, and that various schedules in the Alliance contract had not been completed. He turned then to the 11 January 1999 agreement of which he said: "NLCM and EBAC executed a supplementary agreement entitled `Footscray depot arrangement'". This he said made the respondents responsible for lease payments and outgoings in the manner already described, partly in return for allowing the respondents free use of the appellant's assets on site. He continued:

"The agreement concludes with an imprecise requirement for NLCM to negotiate with EBAC: `for future services associated with the distribution of briquettes and/or other services utilising Footscray'. There does not appear to be any way to quantify the value, use or importance of this `term'."

It was at this stage that he came to the apparent inconsistency between the Alliance contract and the later agreement. On this matter he said only this:

"5.1.13 This agreement [scil. that of 11 January 1999] appears to contradict the content and intent of the Alliance contract. 5.1.14 The Alliance contract was executed under seal, whereas the agreement dated 11 January 1999 was a signed, informal contract. 5.1.15 I find the two agreements to be inconsistent with each other. At law, the Alliance contract (under seal) has precedence over the signed agreement."

The arbitrator then turned to the claim for cost reimbursements made by the appellant which consisted of $548,000 in lease payments and $368,000 in outgoings for the period January 1999 to March 2001. He said of this claim merely that "I find these claims to be inconsistent with the contractual relationship between the parties." He therefore rejected the appellant's claim. At the same time, however, he said that the appellant admitted a charge for briquette handling of $100,000, whereas for this the first respondent had claimed $120,000. Because he was unable to reconcile the two sums he limited the amount payable to the first respondent to $100,000.

118. It is the legal conclusion expressed in the quoted paragraphs 5.1.13-5.1.15 which is said to contain the alleged error of law. In the circumstances it is unnecessary to examine the relevant test as to what is "manifest error of law" other than to cite the frequently quoted passage from the judgment of Sheller, J.A. in Promenade Investments Pty. Ltd. v. New South Wales[42] to the effect that a manifest error may be demonstrated if there "be powerful reasons for considering on a preliminary basis, without any prolonged adversarial argument, that there is on the face of the award an error of law".

121. I have no doubt that such a manifest error has been demonstrated by the appellant in the present case. The language of the arbitrator was not only uncomplicated, but was also unfortunate if he meant only to express a conclusion as to the uncertainty of the agreement of 11 January 1999. Indeed the language he adopted otherwise in his award suggests that he thought that there was an agreement made on that day, albeit that he thought clause 10 was imprecise. There is, however, no reason for thinking that in relation to a continuing commercial arrangement parties may not reach agreement on a number of issues while leaving others to be resolved on another day, so long as there is a sufficiently certain arrangement in place binding on the parties which controls their rights and obligations to the necessary extent before further agreement is reached. The Alliance contract itself had several gaps of that kind which required further arrangements between the parties, but it was never suggested that that was not a concluded agreement. However, I mention these matters only to show that in the end the respondents' arguments as to uncertainty need not have succeeded and, in the future, may not succeed, for that is not the issue presently before this Court.

124. The error of the arbitrator is plain, in my opinion, in that he thought that the law[43] gave precedence to a contract under seal over one which was merely a signed, informal contract. Whatever may have been the true common law rule before the passing of the Judicature Act, there can be little doubt as to what the principle is today. The rule may be seen to be comprehensively stated in this passage from Halsbury's Laws of Australia[44]:

"Although at common law a contract under seal could not be released or discharged except by another contract under seal, the equitable rule that a release, though not under seal, if given for consideration, was enforced by injunction is now of general application and allows a contract under seal to be discharged (or varied) by simple contract."

It is unnecessary to examine the authorities leading the author to this conclusion but they include Creamoata Ltd.[45]. Although not referred to in other Australian textbooks, the rule is also authoritatively stated in English textbooks such as Chitty on Contracts[46] and Halsbury's Laws of England[47].

129. It was argued for the respondents that the rule applied only in equity and to releases strictly so called, as described in the chapter on "Release" in Meagher, Gummow and Lehane: Equity: Doctrines and Remedies (3rd ed.), but I do not believe that anything contained in that chapter was intended to limit the effect of the rule as it has been understood now for many years in this country.

132. I would therefore conclude that the appellant has demonstrated a manifest error of law on the face of the record in the present case.

136. It is necessary then to return to the other issue raised by the appellant as to whether the judge erred by failing to state his reasons, for, arguably a correct answer to this question may set some limits to the practical question as to how far an appellate court can go behind a judge's decision on an application under s.38(4). There is little doubt that, at least before the 1993 amendments, and consistent with authority both in England and this country, a firm view had been expressed that a judge was not obliged to give reasons for refusing leave: see Leighton Contractors[48]. It was not difficult to see why that was then thought to be the proper approach, for the limits to any review of arbitrator's awards had been clearly stated in cases such as The Nema, regularly followed in Australia. But the rationale, in part, of such cases was that a right of appeal was exceptional, being available only in the most obvious of circumstances and where the need for reasoning was almost otiose. Moreover, any further right of appeal was even more heavily circumscribed, as is again apparent both from the terms of the former sub-s.(6) and from cases such as those just cited.

139. Where, however, the right of appeal should be approached in the manner now dictated by Roy Morgan Research Centre, different considerations apply. Moreover in that very case the need for the giving of reasons was itself addressed by the High Court and a very clear answer given. Where leave to appeal is being refused from a body other than a court, there are reasons of policy why the judge's method of reasoning should be set out in the judgment, albeit that it may be expressed in succinct terms.[49] Although Roy Morgan Research Centre arose from a refusal of leave to appeal from a tribunal, namely the Victorian Civil and Administrative Tribunal, there seems no good reason to distinguish for present purposes between decisions of that kind of tribunal and those of arbitrators. Prima facie, therefore, some reasons should be given in refusing leave to appeal.

142. A second objection may be raised against the need for reasons, peculiar to commercial arbitrations, namely that the need to ensure the finality of awards should make the grant of leave exceptional and that a refusal on broad discretionary grounds, requiring no explanation, was consistent with the purpose of the Act. That, however, is to confuse two issues, the first being whether there is a "manifest error on the face of the award" and the second being whether the conditions of sub-s.(5)(a) have been satisfied. This latter paragraph provides the answer to the ultimate question whether leave should be granted, for it requires the judge to consider whether the determination of the question of law could substantially affect the rights of one or more parties. However in such a case it should be apparent from the judge's reasons that it is by reference to that paragraph that leave has been refused, rather than on the ground of the absence of any manifest error. In the present case there is certainly no reason to believe that paragraph (a) was relied on, for we were taken to nothing in the materials which suggested that that formed part of the argument before the learned judge.

145. The other objection to requiring reasons is that a decision as to what is a "manifest" error admits of little argument, as is frequently said in other contexts, so that detailed examination of the question might be said to be unnecessary. If leave is granted, it is of course undesirable for the judge to say too much, as the issue of error must still be finally resolved on the ultimate hearing of the appeal. If leave is refused, then the reason itself should ordinarily not require a great deal of explanation, for obvious reasons. At the least, however, the question of law relied on by the applicant should be identified and possibly also the context in which it was claimed to arise. Beyond that it is undesirable presently to say more, as each case will depend on its own circumstances.

148. What is clear, however, is that in this instance the reasons given by the learned judge, consistent as they may well have been with existing authority, did not comply with the requirements laid down three months later by the High Court in Roy Morgan Research Centre. It is not that the judge failed to set out the circumstances in which the matter came before the Court. He described the nature of the proceeding, the Act under which application was made and set out the whole of sub-s.(5) of s.38. But he concluded by saying only:

"It is the case for the plaintiff that in this case the arbitrator made a manifest error of law on the face of the award. I have listened to the submissions of the parties and read the affidavits, exhibits and the plaintiff's outline of argument. I have not read the full substance of the defendants' outline of argument. Mr North [counsel for the respondent] has drawn my attention to the significant arguments and submissions of the defendants. I am not persuaded that the arbitrator made any error of law on the face of the award. Consistent with the decision of the House of Lords in Antaios ... and the decision of the Appeal Division of this Court in Leighton Contractors ..., I do not give any reasons for my decision. I will dismiss the plaintiff's application and order the plaintiff pay the defendants' costs of the application."

If the only argument had been whether the arbitrator's opinion as to inconsistency between deed and written agreement was correct or not, then the judge's reasoning might have been plain, but equally plainly wrong, so that the present issue as to inadequate reasoning would have been unnecessary. The respondents' argument to the judge, however, depended on characterising the arbitrator's conclusions differently, so that what seemed a patent error was explained away by asserting that the arbitrator's decision was really based on the uncertainty of the second agreement. All that had to be dealt with, in simple terms perhaps, so that the parties would know why the appellant's contentions as to "manifest error" had been rejected. Of course, if the judge had decided to rely on sub-s.(5)(a), by saying that the resolution of the legal question could not have "substantially" affected the parties' rights, then that should have been stated, but that is not what here occurred.

153. It is sufficient to say that the reasoning was here deficient and that would, if necessary, have been another basis upon which to set aside the order of the judge in the Trial Division. In the present case, however, manifest error of law on the face of the award has been shown. Of course, as previously explained, merely because there has been an error by an arbitrator does not necessarily lead to the conclusion that the judge has erred, but it will ordinarily go a very long way to showing that the judge has misdirected himself or herself as to the exercise of the power given pursuant to sub-s.(4) of s.38. The present case is plain, so that that issue need not be further examined.

156. Nor is it necessary to examine further the ground of appeal which asserted that the judge had improperly relied upon extraneous material in reaching his decision to refuse the application. So far as it is possible to ascertain what occurred at the arbitration and what occurred before the learned judge, it is more likely than not that some additional material was relied on before the judge, primarily, as I would understand it, in order to show that the agreement of 11 January 1999 was uncertain or otherwise unenforceable, so that the question of inconsistency could not properly be said to have arisen. Even if one could draw the necessary inference, namely that the judge was wrongly influenced by the admission of this additional material, it is not relevant to the outcome of the present proceeding and so it is not necessary to examine this issue any further.

159. For these reasons I am of opinion that the judge was in error both in failing to find that there was a manifest error on the face of the award and in refusing leave to appeal to the Trial Division.

163. Having reached these conclusions, it is necessary then to decide what orders this Court should make in lieu of the order refusing leave.

166. There seemed little doubt that both parties were content that, upon the assumption that the judge was held to have erred in refusing leave to appeal under s.38(4), the Court of Appeal should not remit the application for leave to appeal for determination by a judge of the Trial Division but should resolve that application itself. There can be little doubt that this Court has the necessary powers of a judge of the Trial Division in appropriate cases, where the outcome of a particular application is clear. In the present case, having regard to what has already been said, there would indeed be little purpose in remitting the leave application itself to a judge, for I am of opinion that that application must have been allowed, at least on the materials before the Court and having regard to the manner in which it was argued. I did not understand that sub-s.(5)(a) had been relied upon either before the judge or in this Court, but in any event I doubt that it could have had any effect on the outcome. The arbitrator's statement of law was clearly erroneous and thereby he had misdirected himself on an issue which was seen by the parties as critical, namely the binding effect of the document under the common seal of each of the parties and of the later informal agreement. The arbitrator purported to resolve the matter by the application of a principle of law which is no longer good law, so that there was a relevant manifest error on his part. It is appropriate, therefore, that the judge's error be corrected by granting leave to appeal to the Trial Division. I am of opinion that this Court should make an order in lieu of that made by the learned judge, substituting an order to the effect that the plaintiff have leave to appeal to the Trial Division against the award made by the arbitrator on 3 April 2001.

169. A somewhat harder question arises as to whether this Court should, in effect, hear that appeal and resolve it by making appropriate orders, either setting aside the award or remitting it to the arbitrator together with the Court's opinion on the relevant question of law. The question is harder, not because the proper outcome is difficult to state, but because it is effectively seeking an order which has not been the subject so far of any hearing nor any granting or refusal of relief by a judge of the Trial Division. In other words, although there is clear jurisdiction for this Court to substitute an order for that which the Trial Division judge made on the application for leave to appeal, it is a quite different matter whether this Court should actually hear the appeal from the arbitrator and make final orders resolving that proceeding. In the end, although examples were cited where an appellate court had made what appeared to be a final order dealing with an award, there was no discussion as to whether that course was appropriate, and in all the circumstances I am not yet persuaded that the Court of Appeal would be asserting a jurisdiction which it properly has. Moreover, although, in accordance with the earlier directions of this Court, this Court has what is said by the parties to be the whole of the material which would come before the Trial Division upon an appeal, no appeal has in fact been instituted pursuant to that leave, nor has this Court the benefit, as is customary, of any decision of a Trial Division judge on the issue raised by an appeal pursuant to sub-s.(2) of s.38.

172. None the less, it is true that, having regard to the clear opinion which I believe this Court should state as to the manifest error of the arbitrator, there would seem little doubt that the matter must be remitted in due course to the arbitrator to be dealt with according to law and in the light of the Court's views on the question of law which will be the subject of the appeal to the Trial Division. In those circumstances, subject to the necessary formalities being observed so far as the issue of process is concerned, the hearing of the appeal should take only a very short time in the Practice Court, unless there are matters to which our attention has not been drawn. Thus, once the appeal has been instituted it would seem that appropriate orders could be devised by the parties and submitted to a judge in the Trial Division which would have the award remitted to the arbitrator to be dealt with appropriately. I am not convinced that we should go further upon the proceeding presently before this Court.

175. In the circumstances I would grant leave to appeal, if that be necessary, and allow the appeal and set aside the orders of the learned judge made on 17 May 2001. I would substitute orders that the application for leave to appeal against the award be granted, that the appeal to the Trial Division be instituted by the filing of the requisite notice of appeal within 14 days of the making of the order of the Court of Appeal and that the defendants should pay the plaintiff's costs of the application.

180. I too agree in the judgment of Mr Justice Ormiston. I agree in the orders which his Honour proposes and in the reasons given for them.

185. In my opinion this Court has jurisdiction to entertain the appeal for the reasons stated by Ormiston, J.A. I agree with his Honour that leave should be granted if it is necessary, the appeal should be allowed and orders made as his Honour proposes.

190. I agree for the reasons advanced by Ormiston, J.A. in his judgment.

[1] [2001] H.C.A. 49; 75 A.L.J.R. 1342.

[2] In a number of documents, including the award, it is also abbreviated to "EBAC".

[3] Four related companies were named as defendants and respondents, although the first-named respondent ("NLCM") is most frequently named as the principal representative of the group, largely because it was named as the group's sole party to the primary "Alliance contract" with the appellant (see para.[[]). However in argument no distinction was sought to be drawn between the members of the group.

4] These matters were raised before, and procedural directions were given by, a court consisting of Brooking and Batt, JJ.A. on 20 July 2001.

[5] [1985] A.C. 191.

[6] [1992] VicRp 83; [1992] 2 V.R. 505.

[7] [1929] 2 K.B. 316.

[8] [1953] HCA 40; (1953) 89 C.L.R. 286 esp. at 306, 326.

[9] On this occasion the second-named respondent appears to have been named as representing the respondent group of companies. Again no issue was raised as to this apparent difference.

[10] See below at para.[[].

11] It was accepted that "the Supreme Court", wherever it appears in s.38, means the Trial Division of the Court.

[12] Section 17A of the Supreme Court Act contains a number of explicit provisions to the contrary, including the requirement of leave in the case of orders on "interlocutory applications". The latter qualification must be considered again below, but the other exceptions do not have any direct bearing on the outcome of the present question.

[13] [2001] H.C.A. 49; 75 A.L.J.R. 1342 at 1344-1345 para.[10].

[14] As is provided by s.28 of the Act.

[15] At 1347 para.[21], per Gaudron, Gummow, Hayne and Callinan, JJ.

[16] One must assume that the slightly wider interpretation of those words earlier given by members of the High Court, in cases such as Byrne v. McLeod (Dixon, J.) [1934] HCA 61; (1934) 52 C.L.R. 1, Rose v. Hvric [1963] HCA 13; (1963) 108 C.L.R. 353 and Walden v. Hensler [1987] HCA 54; (1987) 163 C.L.R. 561, should be seen as inapplicable to rights of appeal.

[17] See Roy Morgan Research Centre at 1345 para.[12].

[20] See s.16(2) of Act No. 15 of 1993.

[21] It should be noted that what now appears in sub-s.(6) of s.38 formerly appeared in sub-s.(5)(d) and that on the repeal of the former sub-ss.(5) and (6) the former sub-s.(8) was renumbered as sub-s.(7).

[22] [1982] A.C. 724.

[23] That right of appeal to the Full Court was then given under s.42(2) of the Supreme Court Act 1958, which had recently (earlier in 1984) been amended to include a provision almost identical in form to the present s.17(2): see Act No. 10075 s.4. Section 42(2) was re-enacted in almost identical terms as s.10(2) of the Supreme Court Act 1986.

[24] See President of India v. Moor Line Ltd. (No. 2) [1958] HCA 25; (1958) 99 C.L.R. 212 and Minister of Works (W.A.) v. Civil & Civic Pty. Ltd. [1967] HCA 18; (1967) 116 C.L.R. 273.

[25] The word "opinion" does not appear in the new section but the "jurisdiction to determine any question of law ..." may yet be considered advisory only.

[26] (1996) 16 W.A.R 416.

[27] [1997] SASC 6298; (1997) 69 S.A.S.R. 348.

[28] Rowland, J. and Steytler, J. gave the principal judgments, Wallwork, J. concurring in Steytler, J.'s judgment.

[29] [1891] A.C. 210.

[30] See per Gaudron, Gummow, Hayne and Callinan, JJ. at 1345-1346 paras.[14]-[17], and also their discussion of the more recent decision of the Privy Council in Kemper Reinsurance Co. v. Minister of Finance [2000] 1 A.C. 1.

[31] See below paras.[[]]-[[]].

[32] It would follow, though it is unnecessary here to decide, that a right of appeal lies against the grant of leave under sub-s.(4) and against any other determination under s.38 by a judge of the Trial Division.

[33] [1988] VicRp 32; [1988] V.R. 235.

[36] See the conventional test as laid down in cases such as Niemann v. Electronics Industries Ltd. [1978] VicRp 44; [1978] V.R. 431.

[37] In paragraphs [[] and [].

38] Although that document was executed under the common seals of the appellant and first respondent and has frequently been referred to as a "deed", that was not the description given to it either by the arbitrator in his award or by the parties in the contract itself. Not only did the opening words commence "This contract is made ..." but the execution clause was expressed in the terms: "executed as an agreement". No point was taken that this consequently did not constitute a "deed": see, e.g., Comptroller of Stamps v. Associated Broadcasting Services Ltd. [1990] VicRp 31; [1990] V.R. 335 esp. at 340-342, but the arbitrator's reasoning seemed to depend merely on it being "under seal".

[39] See para.5.1.10 of the award and cf. clauses 1 and 8 of the agreement of 11 January 1999. The arbitrator in fact stated the date for lease payments as being 1 January 2000 and the right to retain income as dating from 1 January 1998. The latter is clearly incorrect as it is wrongly quoted from clause 8 of the January agreement and the lease obligations seem equally inconsistent with clause 1 of the new agreement, but doubtless the parties were well aware of the relevant dates.

[40] Although this abbreviation might appear to refer to the second-named respondent, the respondents said in evidence that this agreement was signed on behalf of the first-named respondent NLCM.

42] [1992] 26 N.S.W.L.R. 203 at 225, with which Mahoney and Meagher, JJ.A. concurred. Although the decision was given in 1992 the New South Wales Act had already been amended in the same terms as are presently under consideration.

[43] One may forgive him the error, if it so be properly described, of expressing his conclusion as one "at law" and I have little doubt that he was speaking merely of a legal conclusion as opposed to a factual one and that he was not contrasting legal and equitable rules.

[44] Title: Contract para.110-1090, current to 13 February 1997. The title was contributed by Professor J.W. Carter, but unfortunately the present issue is not discussed in his textbook: see Carter & Harland, Contract Law in Australia, 4th ed.

[45] [1953] HCA 40; (1953) 89 C.L.R. 286 at 306, 326: see also Berry.

[46] 28th ed. (1999) paras.23-030, 23-032, 23-033 and the cases therein cited.

[47] 4th ed. (reissue) (1998) paras.1018, 1020 and 1024.

[48] [1992] VicRp 83; [1992] 2 V.R. 505 at 514 per Fullagar, J. (with whom Ashley, J. agreed).

[49] Roy Morgan Research Centre at 1348 paras.[25]-[26].