Enterra Pty Limited & Ors v ADI Limited

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST

Thursday 1 August 2002 ex tempore Revised Wednesday 14 August 2002

55032/02 ENTERRA PTY LIMITED & ORS v ADI LIMITED JUDGMENT 1 These proceedings concern the proper construction of section 44(c) of the Commercial Arbitration Act 1984 which empowers the Court on the application of a party to the arbitration agreement to remove an arbitrator where the Court is satisfied that the arbitrator is "unsuitable to deal with the particular dispute". The plaintiffs seek orders that the Honourable John Brownie QC be removed as arbitrator in the matter of an arbitration arising out of a dispute concerning an agreement between the parties dated 17 March 2000 relating to the purchase by the first plaintiff from the defendant of its environmental business ["the sale agreement"]. The threshold question 2 Both parties have accepted that the construction issue constitutes a threshold question which falls for determination in relation to dealing with the summons. Diametrically opposed constructions are put forward by both parties. 3 Section 44 of the Commercial Arbitration Act 1984 is in the following terms:

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

(b) undue influence has been exercised in relation to an arbitrator or umpire; or

(c) an arbitrator or umpire is incompetent or unsuitable to deal with the particular dispute, the Court may, on the application of a party to the arbitration agreement, remove the arbitrator or umpire." 4 The Act is part of uniform commercial arbitration legislation in place in each State and Territory of Australia: Commercial Arbitration Act 1984 (VIC); Commercial Arbitration Act 1986 (SA); Commercial Arbitration Act 1985 (WA); Commercial Arbitration Act 1985 (NT); Commercial Arbitration Act 1986 (TAS); Commercial Arbitration Ordinance 1986 (ACT); and Commercial Arbitration Act 1990 (QLD). 5 There is a very soundly established principle relating to the uniform construction of uniform legislation in place in Australia:

"…uniformity of decision in the interpretation of uniform national legislation..is a sufficiently important consideration to require that an intermediate appellate court-and all the more so a single judge-should not depart from an interpretation placed on such legislation by another Australian intermediate appellate court unless confidence that that interpretation is plainly wrong." [ Australian Securities Commission v Marlborough Gold Mines Limited (1993) 112 ALR 627 Per Mason CJ, Dawson, Toohey and Gaudron JJ at 629] 6 The construction of the subject legislation clearly requires this approach. 7 Section 44(c) and in particular the notion of "unsuitability" has been the subject of only limited judicial consideration. The leading analysis is that of Brooking J in Korin v McInnes, [1990] VR 723. Brooking J put the matter as follows: "Only once, so far as I know, has para(c) of s44 been judicially considered, and that briefly. In New South Wales, Smart J. removed as unsuitable to deal with the particular dispute an arbitrator who had a connection with an important witness and the company of which the witness was a director: Commissioner for Main Roads v Leighton Contractors Ltd ., unreported, 4 July 1986). At p. 18, after referring to dictionary definitions of " unsuitable ", his Honour described the word as one of wide import whose meaning should not be unduly circumscribed and said that the word "at least means inappropriate". In Stannard's Case, I asked whether the words " to deal with the particular dispute " in para(c) of s44 attached only to "unsuitable". As a matter of textual construction the phrase seems to me more naturally to be attached only to that adjective. In addition one can, I think, say that it is likely that the intention is to cover with the first branch of the paragraph (" incompetent ") unfitness as regards arbitrations generally and to cover with the second branch ("unsuitable to deal with the particular dispute") unfitness by reason of some aspect of the dispute that has been submitted to arbitration. If the contrary view is taken and the concluding six words are viewed as qualifying both adjectives, one has the striking result, for example, that madness, which is I suppose as extreme a form of incompetence as any, would not be covered by the paragraph because it was an incapacity as regards all arbitrations. On this view madness could be relied on as a ground for removal under the section only by invoking para(a). But then it might be said that " misconduct " in para(a) was to be read down as not covering incompetence, a matter specifically dealt with in para(c). [1990] VR 723 at 726 No light is thrown on s44 by s45, with its use of the words "impartial, suitable or competent". (45 is derived from s24 of the Arbitration Act 1950 of the United Kingdom, re-enacting a section of the Act of 1934.) I cannot for the moment think of a variety of " incompetence " or " unsuitability to deal with the particular dispute " which could not have been raised for consideration as possible misconduct under the law in force before the Act of 1984. I gave one or two examples in Stannard's Case and I now give one or two more. Corruption was treated as a variety of incompetence or incapacity by Sir George Jessel in Malmesbury Railway Co.v Budd . Two years later, the same judge, in Beddow v Beddow , where the arbitrator had hopelessly compromised his impartiality, said that the only question was whether the arbitrator had so acted that he was unfit to proceed with the arbitration and observed that one of the well known grounds of incompetence was personal interest. Those cases were before the Arbitration Act 1889 and recognised the power to grant an injunction restraining an arbitrator from acting as such so as in effect to remove him. It is also worth noting Jackson v Barry Railway Co. [1893] 1 Ch 238 and Barry v Minister for Works (1906) 8 WALR 53. In Beddow v Beddow , at p. 93, Sir George Jessel said no arbitrator should be allowed to proceed in the hearing of a case which he was for any special reason unfit or incompetent to hear, an observation referred to by AL Smith LJ in Jackson v Barry Railway Co . [1893] 1 Ch 238, at p. 249 and applied by McGregor J. in Re Hawke's Bay Electric Power Board and Napier Borough Council [1930] NZLR 162, at p. 168. Judges have accepted that someone may be unsuitable as an arbitrator because he lacks knowledge or experience: Re WE Clouston and Co. (Ltd.) and Corry (1904) 23 NZLR 597 and Re Tankoos Yarmon Ltd and T. Eaton Co Ltd (1982) 125 DLR (3d) 233. Those were both cases where an arbitrator or umpire was to be appointed by the court. But it is probable, in view of current notions, that unsuitability in this sense might in a strong enough case have been relied upon on an application to remove an arbitrator under the legislation in force before the present Act. Bear in mind the extent to which the finding went in the Clouston Case - that the umpire's experience and training were not such as to make him " competent to examine and review the transactions and accounts in question " (p. 600) - a finding described in the Canadian decision as one which disabled him from carrying out his duties properly (p. 236).

The question arises whether what I might describe as a lesser degree of incompetence or unsuitability will suffice for the purposes of an application under s44 than would have been necessary on an application under s12(1)of the Arbitration Act 1958 for the removal of an incompetent or unsuitable arbitrator on the ground of misconduct. I think not. I consider that para (c)is not satisfied unless the circumstances are such that a satisfactory arbitration cannot be had , and that if this is established then the power to remove under the section formerly in force would also have arisen. If the paragraph enables an arbitrator to be removed who suffers from some defect which is not such as to prevent a satisfactory arbitration from being had, then I find it difficult to see where the line is to be drawn. No doubt some arbitrators are able to get through the hearing more quickly than others. If an arbitrator conducts the proceedings slowly but is not preternaturally slow, not slow to an extent that enables one to say, " This goes quite beyond normal limits: the man is not fit to be an arbitrator", may he be removed as incompetent? If an arbitrator lacks specialised knowledge and experience in the field in which the dispute arises, yet the court is not satisfied that he is unable properly to discharge the functions of an arbitrator, may he be removed as unsuitable to deal with the particular dispute because an expert in that field would, in a sense, be more satisfactory? Where, as I say, is the line to be drawn between competence and incompetence and between suitability and unsuitability, unless it is by asking whether a satisfactory arbitration can be had, or whether the arbitrator is able properly to perform his functions (which tests I regard as one and the same)? Can a person be said to be competent or suitable in this sense yet be removed because there is someone who is more competent or more suitable? Is the court to exercise a wide and undefined discretion to ensure that an arbitrator who is in some sense inferior does not determine a dispute? It seems to me that one cannot, in applying s44, take the Orwellian farmyard approach and say that, while a given arbitrator is competent and suitable in the sense that he can do a satisfactory job, other possible arbitrators are more competent or more suitable. In other words, it seems to me that the test to be applied under para(c) is the same as that which would be applied on an application under the section formerly in force or on an application for an injunction to restrain an arbitrator from acting where incompetence or unsuitability was set up. Can the arbitrator properly perform his functions, so that a satisfactory arbitration can be had? Of course it is for the applicant to prove that he cannot."

8 Brooking J had earlier dealt with the same issue in Stannard's case, namely, Stannard v Spurway Constructions [1990] VR 673, where his Honour had said, inter alia:-

"Para(a) of s44 of the Commercial Arbitration Act 1984 says that the court may remove an arbitrator if satisfied that there has been misconduct on his part or that he has misconducted the proceedings. The section replaces s12(1) of the Arbitration Act 1958, whereby the court was empowered to remove an arbitrator who had misconducted himself. The change is derived from s23(1) of the Arbitration Act 1950 of the United Kingdom, it having been introduced there by the Arbitration Act 1934 in deference to the susceptibilities of arbitrators. The additional words seem not to have changed the law. They appear also in s42, dealing with the setting aside of awards.

S4 of the Commercial Arbitration Act 1984 essays a definition of misconduct as including corruption, fraud, partiality, bias and a breach of the rules of natural justice. Hansard shows that the reference to natural justice was added by amendment (vol. 375, Legislative Council, p. 182). The definition is inclusive and seems to me, if I may say so, to be of questionable utility. It does not, I think, prevent anything that would formerly have been regarded as misconduct from being treated as misconduct for the purposes of the new Act.

There is a short note of an unreported decision of Hunt J. of the Supreme Court of New South Wales on an application under s44 of the Uniform Act which suggests that his Honour took this view: Traynor v Panan Constructions Pty Ltd , 11 July 1986, noted in The Arbitrator, vol. 5, p. 43.The contrary submission has not been put by Mr Neal in the present case.

Although the definition of misconduct does not itself prevent anything that would formerly have been regarded as misconduct from still being characterised as such, it is arguable that, as regards the removal of arbitrators as opposed to the setting aside of awards, para(c) of s44 does by implication affect the scope of misconduct. For not only does s4 of the new Act introduce a definition of misconduct and s44 introduce the notion of misconducting the proceedings, but s44 goes on, in para(b) and para(c), to provide what appear at first sight to be additional grounds for the removal of an arbitrator, in that they enable an order to be made where the court is satisfied that:

(b) undue influence has been exercised in relation to an arbitrator . . .; or

(c) an arbitrator ... is incompetent or unsuitable to deal with the particular dispute." [1990] VR 673 at 678

I cannot help wondering whether the new Act would not at the same time have been more clear and have achieved the result intended by Parliament if the definition of " misconduct " had been omitted and the sole ground for removal had been expressed as misconduct or, if you like, misconducting himself or the proceedings. " Misconduct ", when used in relation to arbitrators, is a term of art and one which, as the inclusive definition in s4 accepts, cannot be succinctly defined. It is rather like the elephant - we know it when we see it. If we are in doubt we may gain assistance from the books, where we will however find no rigid definition of the species but instead statements of principle and multifarious examples of their application. As to the new grounds on which removal may now be sought, I have difficulty in seeing how an arbitrator in relation to whom undue influence had been exercised would not be liable to be removed for misconduct. But the effect of para(b) of s44 can be left for another day. Para(c) presents its own problems. Arbitrators may make serious mistakes without being ousted for misconduct ( Schofield v Allen (1904) Sol. J. 176), although in a bad enough case they will have to go: Pratt v Swanmore Builders Ltd . [1980] 2 Lloyd's Rep 504. Does para(c) require a case less strong than would be required for " misconduct "? If it does not, why is incompetence, of all the many varieties of misconduct, mentioned in para(c) and so treated as something distinct from misconduct? Para(c) goes on to refer to the arbitrator who is "unsuitable to deal with the particular dispute". (I take the last six words to be attached only to " unsuitable " and not to qualify also " incompetent ", although the contrary view is arguable.) A serious question arises whether this second branch of para(c) does not have the effect of considerably widening the grounds on which, under the legislation previously in force, an arbitrator could be removed. And of course one should, as I have said, begin with the presupposition that both para(b) and para(c) are concerned with situations that are not covered by para(a). " An arbitrator may be removed for misconduct if he has allowed himself to be appointed when he is, by reason of his close association with one of the parties to the dispute, manifestly not a suitable arbitrator: Veritas Shipping Corporation v Anglo Canadian Cement Ltd [1966] 1 Lloyd's Rep 76. Unsuitability in its widest sense may arise from innumerable causes. And, like incompetence, it is a matter of degree. Para(c) is concerned with unsuitability " to deal with the particular dispute " and those words have a limiting effect. Whether, subject to that limitation, the paragraph covers unsuitability from any cause remains to be seen."

9 The Victorian Court of Appeal in Gascor v Ellicott [1997] 1 VR 332 at 353, had occasion to consider an argument that Mr Ellicott was "unsuitable" within the meaning of section 44 of the Commercial Arbitration Act. Ormiston JA, said at 353:

"It was sought to argue that Mr. Ellicott QC was in some other way "unsuitable" within the meaning of s. 44 of the Commercial Arbitration Act . No reason has been put to the court to differ from the conclusions reached by Brooking J. on the meaning of the word "unsuitable" in that section as expressed in Stannard v. Sperway Constructions Pty. Ltd. [1990] V.R. 673 and Korin v. McInnes [1990] V.R. 723 . No doubt the word has a wide connotation but I would not conclude that in relation to possible bias or want of impartiality any different test was intended to be imposed by the section from the wide and flexible test of bias now laid down by the High Court. I am therefore not satisfied that by reason of his conduct in these arbitrations Mr. Ellicott was or is unsuitable to participate in the present arbitration. 10 Further, Debelle J in Minister for Industrial Affairs v Civil Tech Pty Limited, [1999] SASC 22 at paragraph 27, [BC 9900055] adopted the analysis given by Brooking J in Stannard and in Korin. The opposing submissions 11 The defendant's submission has been that as a matter of construction, unsuitability requires more than a delay in the hearing and that the plaintiffs must show, consistently, with the judgments of Brooking J, that a satisfactory arbitration cannot be had. The submission is:

"If the power to remove an arbitrator for unsuitability was enlivened merely because a party, having sought and obtained the vacation of the hearing dates, subsequently alters its view and then seeks to have the arbitration proceed but on dates not convenient to the arbitrator, then the "line" drawn by the section would be at far too low a threshold. It would, it is respectfully submitted, be an open invitation to parties to arbitration agreements to apply to the court for removal of an arbitrator for merely tactical or forensic purposes. That cannot be the intent of the section, and having regard to the dicta of Brooking, J. in Korin, it is not. To permit a party the degree of latitude the plaintiff's application involves results in the very 'Orwellian farmyard' against which Brooking, J. cautioned ." 12 The submissions for the plaintiff in treating with this issue have centrally first focused on some suggested statutory interpretation principles and then continue: · "The plaintiffs rely in these proceedings on the power to remove Mr Brownie QC which can be found in Section 44(c) of the Act in the words "unsuitable to deal with a particular dispute". The word "unsuitable" is a word of "wide import" and it's meaning "should not be unduly circumscribed", Smart J in Commissioner for Main Roads v Leighton Contractors Pty Limited (unreported, 4 July 1986, BC8601264 at 18). Support for this approach can be found in the Director-General of Health v Robinson (1984) 1 FCR 179 at 184. It is to be noted that this support is by way of analogy as the Court was dealing with a different statutory provision and considering the ordinary usage of the word "suitable". · It is clear that Section 44 of the Act provides three separate categories pursuant to which power is conferred on the Court to remove an arbitrator if in the exercise of the Court's discretion that action is warranted. It is quite clear from the way the three subsections of Section 44 of the Act are drafted that they are separate and distinct categories each providing an independent basis upon which the Court is given a power to exercise its discretion. · In construing statutory provisions all words must, prima facie, be given some meaning and effect: Commonwealth v Baume (1905) 2 CLR 405 per Griffith CJ at 414. This approach has been recently repeated by the High Court in Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355 at 382, where McHugh, Gummow, Kirby and Hayne JJ said in paragraph 71: "…a Court construing a statutory provision must strive to give meaning to every word of the provision". Further passages on the approach to be taken in the construing of statutes can be found in the judgment at paragraphs 69 and 78. · It is clear that the principles of statutory interpretation are directed at ascertaining the intention of the legislature from the words used in the statute: Balog v Independent Commission Against Corruption (1989) 18 NSWLR 356 at 372 (C). · The defendant relies on the decision of Brooking J in Korin v McInnes (1990) VR 723 (paragraph 16 of the Defendant's Submissions). With respect to His Honour's decision, he failed to apply the appropriate rules of statutory interpretation in reaching the view he expresses therein. Rather than giving meaning to each of the words contained in the three separate and distinct subsections of Section 44 of the Act, His Honour when considering the scope and effect of the words in subparagraph (c) misdirected himself by construing the meaning of the words "unsuitability to deal with the particular dispute", appearing as they do, in subparagraph (c) by reference to the word "misconduct". This approach can be seen throughout His Honour's judgment. It is most clearly expressed in the following paragraph appearing on page 726 of the report: "I cannot for the moment think if a variety of "incompetence" or "unsuitability to deal with the particular dispute" which could not have been raised for consideration as possible misconduct under the law enforced before the Act of 1984"." 13 Hence the plaintiffs submit that Brooking J was in error in his approach to the question before him when he is said to have construed the terms used in section 44(c) by reference to the different terms which were found in the section formerly in force. The submission is that, in doing so, his Honour imposed upon the words contained in section 44(c), requirements or constraints that do not flow from the words themselves and that his Honour did not strive to give meaning to every word of the provision. 14 The submission is that the words "unsuitability to deal with the particular dispute" cannot be read down so as to impose upon them a restriction not consistent with their normal meaning by suggesting that the circumstances must be such that "a satisfactory arbitration cannot be had". 15 In the result, the plaintiffs' submission is that for the reasons advanced by it, the test properly applied is not that the plaintiffs must show that a satisfactory arbitration cannot be held. The submission is that the question is defined by the terms found in section 44(c) of the Act, that is, whether or not unavailability to conduct a hearing of the arbitration results in the appointed arbitrator, Mr Brownie, being unsuitable to deal with the particular dispute. Dealing with the issue 16 There is substantial authority in support of the proposition that the proper approach to construction of the words used in particular legislation is to deal with that legislation in its own terms in context. Albeit in relation to a question of construing discovery rules, the proposition was applied in National Australia Bank Limited v Idoport Pty Ltd [2000] NSWCA 8 per Mason P and Priestley JA at para 12. 17 It is not strictly essential for the purpose of determining the subject issue to seek to give a final and definitive construction to words which may be capable of the application in relation to areas and situations not presently in focus. Having said that I am nonetheless clearly of the view that the approach and construction taken by Brooking J and accepted by Ormiston J in Gascor, is likely the correct approach to the proper construction of the section. 18 It does not seem to me that the construction requiring the circumstances to be such that a satisfactory arbitration cannot be had, amounts to an unduly narrow interpretation of the words used in section 44(c) as would frustrate the achievement of the apparent objects of Parliament: cf Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 421 - 424 per McHugh JA; cited by Kirby J in Harry v Mental Health Review Tribunal (1994) 33 NSWLR 315 at 321. 19 The subject matter and universe of discourse concerns unsuitability of an arbitrator or umpire to deal with the particular dispute. How, it may be asked, could there ever be a circumstance where an arbitration before the arbitrator could proceed by way of a satisfactory arbitration and yet at the same time, it be the case that the arbitrator was for any reason unsuitable to deal with that dispute. 20 In those circumstances, the construction for which the defendants have contended is adopted and accepted as the appropriate construction.

21 This essentially determines these proceedings for the reason that it is quite plain from the matrix of fact thrown up in the evidence to which I now turn, that the plaintiffs have not established that Mr Brownie is unsuitable within the meaning of Section 44 (c) to deal with the particular dispute. It has not been shown that a satisfactory arbitration cannot be had and it has not been shown that the arbitrator is not able properly to perform his functions. No question of Mr Brownie's competence, experience or capacity to deal with the particular dispute the subject of the arbitration has been suggested. As will appear from what follows the only question is one of availability, dates, counsels' convenience and forensic tactics. The dispute resolution clause 22 Clause 21 of the sale agreement to which reference has already been moment was a dispute resolution clause. It provided as follows:

If a dispute arises in relation to this Agreement, the parties must use the following procedures to resolve the dispute:

(a) first, senior representatives of each party must meet in an attempt to negotiate and fully resolve the dispute;

(b) then, if that meeting is unsuccessful, the parties must select a mediator to assist them in mediating the dispute and seek to resolve the dispute in good faith by mediation; and

(c) if no agreement can be reached on the mediator to be appointed or the mediation fails to resolve the dispute within 20 Business Days after the date a party provides a notice of dispute to the other parties, then the parties agree to submit to binding arbitration. An arbitrator is to be selected by agreement of the parties. If the parties do not agree on an arbitrator within 5 Business Days of a party demanding an arbitration, then either party may apply to the then President of the Law Society of NSW for the appointment of an arbitrator experienced in the area of the dispute." The initial appointment of Mr Cole QC 23 It is common ground that disputes arose in relation to the sale agreement, which were in due course referred to arbitration pursuant to the dispute resolution clause and the Honourable Terence Cole, QC, was appointed arbitrator in December 2000. As I have understood counsel, clause 21(c) was at that time treated with by the parties with minimum formality. They simply agreed upon the appointment. There was no formal appointment of Mr Cole as arbitrator by written document. There is no issue presently before the Court which concerns any difficulty with what was apparently a clear and consensual arrangement. Subsequent events 24 The parties have produced an agreed chronology which will serve as a vehicle through which the Court is in a position to shortly summarise some of the background facts which the evidence discloses or which were accepted at the bar table during submission. The first conference - 4 December 2000 25 On 4 December 2000 as that draft chronology discloses, the first conference in the arbitration was held before Mr Cole. The second conference - 21 February 2001 26 On 21 February 2001 the second conference in the arbitration was held before Mr Cole. It was on that occasion when Mr Cole fixed 26 March 2001 for hearing. Apparently that fixture was over the defendant's objection, the defendant having submitted that the arbitration should not be held until the Olympic Co-ordination Authority ("the OCA") project was complete such that the plaintiffs alleged damages had crystallised. The third conference - 10 May 2001 27 On 10 May 2001 a third conference in the arbitration was held before Mr Cole who then directed that the hearing be fixed to commence on 22 October 2001. 28 On 18 May 2001 a preliminary hearing took place before Mr Cole on a jurisdiction question concerning his own position, and by interim award handed down on 6 June 2001, he determined that he had jurisdiction to hear the arbitration. The fourth conference - 24 July 2001 29 On 24 July 2001 the fourth conference in the arbitration was held before Mr Cole and on that occasion he directed that the arbitration be heard from 18 March 2002. This fixed a three-week period with a one-week break. The commencement of the hearing was deferred as the plaintiffs had not served their statements and reports in accordance with the directions given at the third conference. 30 The next event appears to have been on about 1 August 2001. Mr Cole informed the parties that he would be unable to continue to act as arbitrator having been appointed Royal Commissioner to the Federal Government's inquiry in relation to the Australian Building and Construction Industry. 31 On 5 December 2001 proceedings No. 55054 of 2001 were commenced by the plaintiffs, in the Supreme Court, to remove Mr Cole and to appoint the Honourable JMN Rolfe QC, but those proceedings in the events which happened were not litigated because the parties in due course agreed upon a substitution for Mr Cole, namely Mr Brownie. The parties agreed to his appointment on 19 December 2001, the parties on that day or the following day, apparently agreeing to the withdrawal of Mr Cole as arbitrator. I generally understand that the anterior position which had obtained with Mr Cole continued, i.e. no written agreement was signed between the parties and Mr Brownie and some changes to the fee structure which had been agreed with Mr Cole were apparently agreed. Again, it is unnecessary for the purpose of deciding this issue to travel into any of those matters. 32 On 20 December 2001 proceedings 55054 of 2001 were discontinued with leave. The fifth conference - 24 January 2002 33 24 January 2002 was apparently the occasion of the fifth conference in the arbitration but the first conference held before Mr Brownie. On that date Mr Brownie vacated the 18 March 2002 fixture. The sixth conference - 15 March 2002 34 15 March 2002 was the occasion of the sixth conference in the arbitration before Mr Brownie who then directed that the arbitration be heard from 8 July 2002. As I have understood the answer to questions I have put to counsel at the bar table, there does not appear to have been any specific statements as to that fixture in terms of whether the hearing due then to commence on 8 July 2002 would continue until it ended, but I infer, that that was the intention. On the same day, Mr Brownie directed that the defendant deliver expert evidence in relation to liability and in chief in relation to its cross-claims by 10 May 2002. The seventh conference - 22 April 2002 35 The next relevant event appears to have been that on 22 April 2002, Mr Brownie rejected an application by the defendant for the commencement of the hearing, which was then fixed to commence on 8 July, to be adjourned to early August. The eighth conference - 7 June 2002 36 On 7 June 2002 Mr Brownie directed that the arbitration be heard in two brackets, that is to say, from 15 July 2002 up to 23 July 2002 and then from 5 August 2002 up to 29 August 2002. Statements have been made from the bar table that this was consensual and that the short break between 23 July 2002 up to 5 August 2002 was to accommodate the position of Mr Gee of Queen's Counsel, who had availability problems in that time. The ninth conference - 24 June 2002 37 On 24 June 2002, the ninth conference in the arbitration was held before Mr Brownie. No changes to the dates fixed for hearing were then proposed. The amended pleadings 38 One comes then to 8 July 2002. That is an occasion on which the defendant served an amended defence to the third amended points of claim and a further amended cross-claim. The position as I have understood it from senior counsel addressing on the matter was that there had been no direction given by Mr Brownie in terms of fixing a specific time for the filing of pleadings so that as the court has been informed from the bar table, the defendant's service of an amended defence to the third amended points of claim and a further amended cross-claim was as of right, notwithstanding that the proceedings were even then on 8 July 2002, still fixed for hearing to commence only seven days later. The plaintiffs assert that the new pleadings raised for the first time an important issue going to negligence and that this was a serious matter which required to be carefully attended to. Mr Gee has submitted that the amendments were nothing like as substantial as the plaintiffs would have the Court accept. Although the defendant had in fact pleaded a new cause of action against the plaintiffs in negligence, the word "substantial" was rejected when the plaintiffs' solicitor sought in his affidavit of 25 July 2002 to depose that the amended pleadings made a number of "substantial" changes to the pleadings. The tenth conference - 9 July 2002 39 On 9 July 2002, the tenth conference was held before Mr Brownie. On that day the defendant served a report by Dr Andrew Sweeney and Dr David Royston. As I have understood it in particular the report went to the damages issue, and the plaintiffs, upon being served with that report, saw fit to require to deal with that report very carefully and were troubled by the lateness of the report and were, and remain, troubled by what they say was a failure by the defendants to comply with the original 15 March 2002 directions for service of expert evidence in relation to liability and in chief on the cross-claims by 10 May 2002. As I understand the plaintiffs' position, it is that it was hardly a compliance with that direction to, outside of the time for compliance with it under cover of an amended defence and a third amended points of claim and a further amended cross-claim, then serve yet a further report going to new issues raised by those amended pleadings. The eleventh conference - 12 July 2002 40 A very important conference apparently took place on 12 July 2002, being the eleventh conference in the arbitration. It was on that occasion when after considerable submissions, as I have understand it, Mr Brownie vacated the hearing, this time on the application of the plaintiffs. The plaintiffs' claim before Mr Brownie, was that service of the new materials meant that they needed to closely treat with the further materials and, I assume, probably to respond to them. 41 An affidavit of Mr Matthew McLennan, solicitor, has been read by Mr Gee in relation to what occurred on 12 July 2002. Mr McLennan deposes that at the beginning of the resumed conference, Mr Brownie invited Mr Gee to continue with the submissions which he had been making that morning, and in the course of his submissions Mr Gee said words to the effect,

"If the hearing is vacated, the reality is that the matter will not get on this year." 42 Mr Hodgkinson, QC, appearing today has made plain that in light of the late filing and service of the affidavit to which I have referred, the plaintiffs' position is that it neither agrees nor disagrees. It was, of course, the case that, and sometimes this awkward aspect is presented to the court, both senior counsel arguing the matter before me today were present on that occasion. The Court in these circumstances has no option but to accept what Mr McLennan has said, there being no contradictor. 43 The matter has a relevance in that the plaintiffs must be taken as having had telegraphed to them the perception of the defendant that if the plaintiffs pressed the application for the vacation of the fixture, the reality which the parties would have to face was a start in 2003. 44 The position appears to be, as I have understood it, that Mr Brownie over the next few days made plain that based on his availability difficulties, the parties should, he suggested, consider an alternative arbitrator. 45 Doing the best that counsel can to recall the circumstances, and by reference to the letter from Allens Arthur Robinson to Clayton Utz of 17 July 2002 behind tab 9 of exhibit P1, it is clear that on 15 July Mr Brownie was asked about his availability when he would return from overseas and informed Allens that he would return on 8 October 2002 and had agreed to sit as an acting judge from 4 November 2002 to hear a trial which he expected to continue until the end of term. For a series of personal reasons he said that he would not be available to hear the matter next year before June. The twelfth conference - 18 July 2002 46 18 July was the twelfth conference in the arbitration, when Mr Brownie gave directions for the exchange of evidence and service of particulars, and on that occasion made the position of his availability and dates and approach to inconveniencing counsel later in the year clear. He made it plain that he did not propose to override counsels' convenience problems as they might arise in relation to the latter portion of the year. 47 Another matter of which the court was informed during address and which I understand to be unexceptional, is that the plaintiffs were the parties which sought to have Mr Brownie continue as arbitrator for a period believing that it was important for him to continue in the position as otherwise he might being functus officio, be unable to make certain orders with respect to costs and the like. 48 On 25 July 2002 the present proceedings were commenced. 49 Returning to the question which appears to have caused these difficulties as between the parties, there have been a number of explanations from the bar table today as to the precise position which obtained, but by and large the parties, as I have understood it, at all material times had made clear that they needed in the order of about eight weeks (of four sitting days) in order to complete this arbitration from commencement of final hearing to its conclusion. The timetable, which, as I have indicated, became at a certain point in time, 15 July to 23 July, and then 5 August to 29 August, gave something like that period of time, give or take a few days. 50 The consequence of the vacation of the hearing date which had been fixed for 15 July to 23 July and then from 5 August to 29 August was that, taking into account Mr Brownie's position, effectively, although I may be out here or there, the position became that Mr Brownie would likely not be in a position to give the matter sufficient time when one takes into account the late October difficulties which the defendant's counsel particularly had. In short, if Mr Brownie had commenced the hearing on 5 August, he could apparently only give the matter something like a calendar month up to 5 September, and because of counsel difficulties in the October to November period, that would be quite insufficient to complete the hearing. 51 The matters upon which the plaintiffs rely in support of the proposition that Mr Brownie is unsuitable within the meaning of the section go to availability in terms of particular brackets of time of the relevant arbitrator. The application requires to be dealt with as at the date of the hearing of the application currently before the Court, the parties having ultimately pursued the hearing of this application one working day before 5 August. 52 Clearly it is entirely possible that in particular circumstances the occurrence of any number of events which postdate the appointment of an arbitrator, including his or her becoming unavailable to hear the dispute on or before a particular date or within particular brackets of time, may constitute the arbitrators being unsuitable, within the meaning of the subsection, to deal with the particular dispute. In determining whether or not particular circumstances fall into that capacity, the pivotal issue concerns the particular dispute, there being an obviously significant onus on a party seeking to establish that the date difficulties make the arbitrator unsuitable, within the meaning of the section, to deal with the dispute. If this were not the case the invidious situation which may arise could involve any party not content for whatever reason with the date situation, submitting that the availability problems meant that the arbitrator was relevantly unsuitable to deal with the particular dispute. Adopting the Brooking J test serves the purpose of giving a criterion against which 'availability problem' suitability questions may be conveniently dealt with in a practical fashion. 53 Here Mr Hodgkinson submitted that in relation to this particular dispute, unavailability at the present time, even for a short time, should be seen to constitute relevant unsuitability within the terms of the subsection. The submission is rejected. The evidence simply does not bear out relevant unsuitability in the circumstances. 54 What the facts, as I understand them, amount to is, it must be said, a regrettable series of events whereunder: · A number of arbitrators having been approached and two having been appointed, for sundry and disparate reasons a series of dates have been fixed for the commencement of the subject arbitration; · On the occasion when the plaintiffs applied to vacate the hearing of the arbitration fixed to commence on 15 July senior counsel for the defendant made plain that if the hearing was vacated the reality was that the matter would not get on this year; · notwithstanding the contested evidence before the court as to what was said by Mr Brownie on 12 July 2002 when the hearing dates were vacated, he does appear to have said that although he may be wrong about the matter, it appeared that the defendant had been keeping its powder dry and concealing arguments, · The court assessment is that both parties, for forensic reasons, have stood their ground in terms of refusing to accept one another's nominee as replacement arbitrator for Mr Brownie; · Presumably the plaintiffs view the defendant's conduct as out of order by reference to the submission that the hearing dates which had been fixed had to be vacated because of the defendant's suggested late and troublesome amendments and late report. · The defendant negates this proposition although it seems clear that the late pleading amendments and the late service of new reports and the late raising of the new issues are likely entirely appropriately to be laid out the defendants door; · At this moment the parties have been unable to agree upon the identity of a replacement arbitrator for Mr Brownie, QC; · Mr Hunter QC whom the plaintiffs put forward as an appropriate replacement for Mr Brownie is apparently available for the balance of this year; · Mr Cole whom the defendant puts forward as an appropriate replacement for Mr Brownie is available from the last week of February 2002; · Mr Brownie is content to step aside as arbitrator.

55 This is not an exercise concerned with adjusting merit as between the parties in relation to the compliance with interlocutory directions or concerned with dealing with the merits of their respective cases. It is simply an exercise concerned with a Court determination as to whether the proven availability difficulties which the parties face are such that Mr Brownie is shown to be unsuitable to deal with the particular dispute. They are not. They arise inter alia by reference to an accommodation to meet counsels' convenience which no party suggests was otherwise than reasonable. Mr Brownie is entirely suitable to hear the dispute. 56 Nor is it correct to suggest that the readiness of the parties or only of the plaintiffs, to proceed with the hearing over the next few weeks renders it imperative that the arbitration then take place. The arbitration commenced in early December 2000. That was one and a half years ago. Mr Brownie will be available to proceed to hear the matter next year. That can happen. The court is simply not able to bridge the gap between on the one hand, the apparent readiness of the parties or at least of the plaintiffs to proceed with the hearing over the next several weeks and on the other hand, the need to be able to hold that accommodation of Mr Brownie's availability, which will undoubtedly involve an extended hiatus, means that a satisfactory arbitration cannot be had when Mr Brownie next becomes available. It can. The fact that Mr Brownie can only commence after May next year does not mean that he becomes unsuitable to deal with this particular dispute. The issue concerns just how soon the dispute requires to be heard. Clearly any suggestion that Mr Brownie was not to be available for a number of years might enliven the notion that he had, for that reason, become unsuitable to deal with this particular dispute. But that is not the case. And as I have understood the evidence, he in any event had some four or thereabouts weeks up to early September 2002 in which, arguably, part of the arbitration could have been commenced.

57 At the end of the day the evidence seemed to me to establish that this had become a question of principle pursued by both parties. Following Ormiston J in his approach to the construction of uniform legislation does require focus upon the particular dispute but there is no basis, at least as this application was argued, for the holding that a hearing from mid next year could not take place regularly in terms of the parties being in a position to then present their respective cases and to have a proper adjudication at arbitral level of their dispute. Those are examples of the types of prejudice which might be weighed in balance in an appropriate case where it might be established for example that witnesses would be unavailable or that for some identified reason a satisfactory arbitration could not then take place. 58 An arbitrator has been appointed by consensus of all parties. That is an important consideration. The Court does not lightly interfere with such selection which is the linchpin which underpins the arbitral procedure going forward. 59 That is the current position. The regrettable circumstance that the arbitration has no date fixed for it is a fact of life. The question of the next step is one for the parties, presumably, as it would seem to me, having had the opportunity to consider these reasons for judgment, the appropriate course would be for the parties to seek further directions from Mr Brownie, QC, or to restore the matter to the court on some application. 60 For those reasons and in those circumstances the court declines to make order 1 in the summons. Costs may be the subject of argument. I certify that paragraphs 1 - 60 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on Thursday 1 August 2002 ex tempore and revised 14 August 2002

      Susan Piggott
      Associate

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