First Solar (Australia) Pty Ltd, in the matter of Lyon Infrastructure Investments Pty Ltd v Lyon Infrastructure Investments Pty Ltd

Federal Court of Australia|2021-02-18|Before: Adam P, Stewart J

Introduction 1 By interlocutory application, the plaintiff, First Solar (Australia) Pty Ltd, seeks an order in the terms of an arbitration award as follows: The First Defendant pay the Plaintiff damages plus interest in the amount of $6,016,686.70. 2 I have resolved that the plaintiff should have relief in the form of judgment in its favour in the sum awarded plus interest. In order to explain why I have reached that conclusion, it is necessary to set out some background.

Background 3 As explained by Markovic J in First Solar (Australia) Pty Ltd, in the matter of Lyon Infrastructure Investments Pty Ltd v Lyon Infrastructure Investments Pty Ltd [2018] FCA 1666 (the first judgment), by amended originating process filed on 21 December 2017 the plaintiff sought, on the one hand, relief against Lyon Infrastructure Investments Pty Ltd (the first defendant) and, on the other hand, relief against Lyon Infrastructure Investments 1 Pty Ltd (Lyon 1) (the second defendant) and Lyon Solar Pty Ltd (the third defendant). 4 In respect of Lyon, the plaintiff sought an order that its registration as a company be reinstated and that, following such reinstatement, it be wound up. 5 As against Lyon 1 and Lyon Solar, the plaintiff sought declarations that Lyon 1 and Lyon Solar hold the assets of Lyon, secured in favour of the plaintiff, on trust, or as bailee for the plaintiff and that Lyon 1 and Lyon Solar have no right, title or interest in those assets; an order that a receiver be appointed to Lyon 1 and Lyon Solar; damages for breach of trust, or, in the alternative, an account of profits; an order that Lyon 1 and Lyon Solar deliver up the assets to the plaintiff, in the alternative, to Lyon; and, damages for inducing Lyon's breach of contract: the first judgment at [2]. 6 Following an order by a registrar of this Court on 18 October 2017, Lyon was restored to the register with effect from 19 October 2017. 7 On 24 November 2017, an order was made by Markovic J to stay the proceeding between the plaintiff and Lyon pending the determination of an arbitration between them. That order is recorded as having been made by consent, although the circumstances of its making are not otherwise disclosed in the evidence. 8 On 2 November 2018, Markovic J stayed the proceeding as between the plaintiff and Lyon 1 and Lyon Solar pending the determination of the arbitration between the plaintiff and Lyon. The reasons for that stay are set out in the first judgment. 9 Thereafter, the plaintiff commenced arbitration proceedings against all three of the defendants and the three mutual directors of the defendants. Lyon 1, Lyon Solar and the directors submitted to the arbitration and confirmed their agreement to be bound by the determination of the arbitration between the plaintiff and Lyon. 10 Lyon 1 and Lyon Solar were wound up with effect from 17 October 2019. The result was that the principal proceeding as against those defendants, which was in any event stayed pending the finalisation of the arbitration, was automatically stayed by operation of s 471B of the Corporations Act 2001 (Cth). Also, on 23 October 2019 the arbitration was stayed as against those parties. The arbitration proceeded, however, against Lyon and the directors. 11 On 10 July 2020, the arbitrator, Mr Daniel Meltz, published a partial final arbitral award in Sydney. The award was partial in the sense that it set out the arbitrator's findings on the disputes between the parties but gave them the opportunity to make further submissions on final orders, interest and costs. 12 As found by the arbitrator, the agreement to arbitrate was contained in a Deed of Variation to a Loan Agreement dated 19 May 2016 between the plaintiff and Lyon. It provided for the referral of the dispute for resolution by final and binding arbitration in Sydney in accordance with the rules of the Australian Disputes Centre (ADC) and for the arbitration to be conducted by a single arbitrator appointed in accordance with the ADC Rules. 13 The claims by the plaintiff against Lyon were for repayment of a loan plus interest and for breach of a "take-or-pay agreement" in connection with the supply of solar modules. The arbitrator found that the loan agreement was valid and that the loan was due and repayable with interest. The arbitrator also found in favour of the plaintiff on the "take-or-pay agreement" claim, finding that the plaintiff was entitled to damages in the amount of US$3.25m plus interest. 14 Lyon raised a set-off claim in the arbitration. The basis for the claim was that the plaintiff engaged in misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law (ACL) in representing in a "Price Warranty" that its solar panels were competitive in the Australian renewable energy market in terms of their price, performance and the terms on which they were supplied. The arbitrator rejected the set-off claim. 15 The plaintiff's claim against the directors in the arbitration was also for misleading and deceptive conduct contrary to the ACL. The claim was rejected by the arbitrator. 16 On 31 July 2020, the arbitrator published his final arbitral award. The award is in the following terms: Lyon Infrastructure pay First Solar damages plus interest in the amount of AUD$6,016,686.70; and Each party pay their own costs. 17 On 6 August 2020, the solicitor for the three defendants in the action filed a notice of ceasing to act. He gave as the defendants' last known addresses for service the addresses of their registered offices. In the case of Lyon 1 and Lyon Solar that was the address of the liquidator. The plaintiff gave notice of its interlocutory application to the defendants at those addresses but the defendants did not oppose the relief that was sought or appear at the hearing.

Domestic, not international, arbitration 18 The first point to note about the arbitration is that it was not an international arbitration and enforcement of the award is therefore not governed by the International Arbitration Act 1974 (Cth) (IAA). In that regard, the award is not an arbitral award "made in the territory of a State other than the State where the recognition and enforcement of [the award is] sought" as referred to in Art I of the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards) adopted in 1958 by the United Nations Conference on International Commercial Arbitration, the English text of which is set out in Sch 1 to the IAA. The award is therefore not to be enforced under Pt II of the IAA. 19 Also, the arbitration was not an international commercial arbitration as referred to in Art 1 of the UNCITRAL Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law on 21 June 1985 and amended on 7 July 2006, the English text of which is set out in Sch 2 to the IAA. The award is therefore not to be enforced under Pt III of the IAA. The award is also not an award of the International Centre for Settlement of Investment Disputes under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States signed by Australia on 24 March 1975, the English text of which is set out in Sch 3 to the IAA. The award is therefore not to be enforced under Pt IV of the IAA. 20 Because the arbitration is not an arbitration to which the Model Law (as given effect by the IAA) applies and at the time of the conclusion of the arbitration agreement the parties to the arbitration agreement had their places of business in Australia, the arbitration is a domestic commercial arbitration as referred to and defined in s 1 of the Commercial Arbitration Act 2010 (NSW). Ordinarily, such an award would only be enforceable in a state court pursuant to s 35 of the Commercial Arbitration Act or one of its analogues in another state. 21 The plaintiff nevertheless invokes s 54(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) in seeking enforcement of the award in this Court. That section is relevantly in the following terms: 54 Arbitration awards (1) The Court may, upon application by a party to an award made in an arbitration (whether carried out under an order made under section 53A or otherwise) in relation to a matter in which the Court has original jurisdiction, make an order in the terms of the award. 22 Significantly, notwithstanding that the stay of the principal proceeding in this Court pending the arbitration was made by consent, no order was made pursuant to s 53A(1) of the FCA Act. That section empowers the court, but only with the consent of the parties (see s 53A(1A)), to refer the proceedings in the court, or any part of them or any matter arising out of them, to arbitration. 23 The plaintiff submits that the relief that it seeks, namely "an order in the terms of the award", is justifiable on one of two alternative bases under s 54. 24 First, the plaintiff submits that notwithstanding that there was no referral by the court under s 53A(1), the fact that the parties by consent sought a stay of the proceeding as against Lyon pending the determination of the arbitration indicates that their failure to seek an order under s 53A(1) was clearly an oversight that can now be remedied by the application of the slip rule. Secondly, the plaintiff submits that the arbitration was in any event "in relation to a matter in which the court has original jurisdiction". It is convenient to deal with each of these bases in turn.

Referral under s 53A(1) 25 I am not satisfied that there is any justification to vary the consent orders of 24 November 2017 by adding an order, ex post facto, under s 53A(1) that the proceeding or part of it be referred to arbitration. The principal reason for that is that it is not apparent that the subject matter of the arbitration was necessarily part of the proceeding, or was a matter arising out of the proceeding, that was then before the court. 26 Section 53A(1) only enables the court by order to "refer proceedings in the Court, or any part of them or any matter arising out of them" to arbitration. Whilst it may be that the plaintiff's claims in the arbitration, namely the claim for repayment of the loan and for damages for breach of the "take-or-pay agreement", formed part of the plaintiff's claim that Lyon be wound up, and in that sense formed part of the proceeding or were matters arising out of the proceeding, that is not clear on the evidence. It is even less clear that the other claims in the arbitration, being Lyon's set-off claim and the plaintiff's claims against the directors, formed part of the proceeding or arose out of the proceeding in the court. 27 It is to be noted that the referral of a proceeding or part of a proceeding to arbitration under s 53A(1) has substantial consequences beyond the recognition or enforcement of an award under s 54. Notably, under s 53AA the arbitrator in such an arbitration may apply to the court for leave to refer a question of law arising in the arbitration to the court. That is not a mechanism that is otherwise available to an arbitrator. It is therefore not lightly to be inferred that parties intended, but accidentally overlooked to seek, a referral to arbitration under s 53A(1) when they sought a stay of a proceeding in favour of an arbitration. 28 It is apparent that the agreement to arbitrate, being the Deed of Variation dated 19 May 2016, was concluded some 18 months before the plaintiff filed the originating process in the proceeding. The arbitration was conducted pursuant to that agreement, rather than pursuant to any implied or tacit referral by the Court of anything before the Court to arbitration. 29 There is therefore no basis for the plaintiff to rely on s 53A(1) to justify enforcement of the award under s 54.

A matter in which the court has original jurisdiction 30 Rule 28.14 of the Federal Court Rules 2011 (Cth) (FCR) sets out certain requirements with regard to an application for an order in terms of an arbitration award as follows: 28.14 Applications for order in terms of an award (1) A party may apply to the Court for an order in the terms of the award if: (a) the matter has not been referred to the arbitrator by the Court; but (b) the matter is a matter in which the Court has original jurisdiction. (2) A party who wants to make an application under subrule (1) must file an originating application, in accordance with Form 50. (3) The application must be accompanied by: (a) a copy of the arbitration agreement; and (b) a copy of the award; and (c) an affidavit stating: (i) the material facts demonstrating why the Court has original jurisdiction in the matter that is the subject of the award; and (ii) the extent to which the award has not been complied with, at the date the application is made; and (iii) the usual or last-known place of residence or business of the person against whom it is sought to enforce the award or, if the person is a company, the last-known registered office of the company. (4) The application may be made without notice. Note: Without notice is defined in the Dictionary. 31 Rule 28.14(1)(b) restates the requirement of s 54 that in order for the court to make an order in the terms of the award the matter that was the subject of the arbitration must be a matter within the original jurisdiction of the court. The Federal Court has original jurisdiction in respect of any matter arising under any laws made by the Parliament other than a criminal matter: Judiciary Act 1903 (Cth), s 39B. That directs attention to what is a "matter", particularly in a case such as the present where federal and non-federal "claims", seeking to use that word neutrally, are made in the same proceeding. 32 The concept of "matter" as a justiciable controversy, identifiable independently of the proceedings which are brought for its determination and encompassing all claims made within the scope of the controversy, has long been accepted: Fencott v Muller [1983] HCA 12; 152 CLR 570 at 591-592 per Gibbs CJ and 603 per Mason, Murphy, Brennan and Deane JJ. When a court which can exercise federal jurisdiction has its jurisdiction attracted in relation to a matter, that jurisdiction extends to the resolution of the whole matter between the parties: Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd [1981] HCA 7; 148 CLR 457 at 475 per Barwick CJ. 33 What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues and controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter. See Fencott v Muller at 608. 34 There will ordinarily be a single controversy and, therefore, a "matter" if all the claims arise out of "a common substratum of facts": Philip Morris at 512 per Mason J; Re Wakim; Ex parte McNally [1999] HCA 27; 198 CLR 511 at [75] per McHugh J. Further, though the facts upon which a non-federal claim arises do not wholly coincide with the facts upon which a federal claim arises, it is nevertheless possible that both may be aspects of a single matter arising under a federal law: Fencott v Muller at 607. 35 Applying those broadly stated principles to the present case, it is to be observed from the arbitrator's awards that all the claims in the arbitration arose from a common substratum of facts. In particular, Lyon's set-off claim which, it will be recalled, alleged breach by the plaintiff of s 18 of the ACL and which was hence a federal matter, was integrally part of the dispute between the plaintiff and Lyon with regard to repayment of the loan and breach of the "take-or-pay agreement". The same is true of the plaintiff's claims for breach of s 18 of the ACL against the directors of Lyon. Those claims arise under a law of the Parliament and thus invoke federal jurisdiction. 36 In those circumstances I am satisfied that the award made in the arbitration is "in relation to a matter in which the Court has original jurisdiction" as referred to in s 54(1) of the FCA Act and r 28.14(1) of the FCR.

Dispensing with certain formal requirements 37 The plaintiff acknowledges that it has not met the requirement of r 28.14(2) of filing an originating application in accordance with Form 50. Rather, it has filed an interlocutory application within the existing proceeding. Form 50 identifies the documents that should accompany the application, which are the same as those required by r 28.14(3). The plaintiff's interlocutory application satisfies all those requirements, save that it is not accompanied by a copy of the arbitration agreement. However, the relevant terms of the arbitration agreement are set out verbatim in the arbitrator's partial final arbitral award. Also, there was no dispute before the arbitrator as to the agreement to arbitrate or the arbitrator's jurisdiction. There is therefore nothing significant in the plaintiff's oversight, and no prejudice attaches to it. 38 In the circumstances, there is equally no prejudice attaching to the plaintiff not having sought relief in the terms of the arbitral award by way of originating application. 39 For those reasons, on the plaintiff's application I dispense with the requirements of r 28.14 that the application be brought by way of originating application and that it be accompanied by a copy of the arbitration agreement.

The proper form of order 40 The question arises as to the proper form of the order that I should make. That is because of the distinction between granting judgment against Lyon in a particular amount, on the one hand, and ordering Lyon to pay that amount, on the other, which was seen by the Full Court in Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. [2021] FCAFC 3 at [63]-[65] per Perram J (Allsop CJ and Moshinsky J agreeing) to have some significance, subject to further submissions and determination still to be made in that case. As pointed out on behalf of the plaintiff in this case, the significance in that case was because of the need, in that case, to distinguish between the recognition of an award and its enforcement. That need does not arise in the present case. 41 The power under s 54 of the FCA Act is expressly a power to "make an order in the terms of the award". The award requires Lyon to "pay [the plaintiff] damages plus interest in the amount of AUD$6,016,686.70". For that reason the plaintiff seeks an order in those terms, rather than, for example, "judgment in the sum of $6,016,686.70 plus interest". The plaintiff is nevertheless content to have an order in the latter form. 42 In Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd (No 2) [2011] FCA 206; 277 ALR 441, Foster J (at [13]) observed that "[c]ourts in this country and elsewhere have accepted that the appropriate way of recognising and enforcing a foreign monetary arbitral award is for the enforcing court to enter judgment or make an order for payment which reflects the terms of the award" (my emphasis). His Honour then cited a number of cases both in Australia and in England. See also Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 2) [2012] FCA 276; 201 FCR 535 at [3] and [113] per Foster J. 43 Insofar as Australian cases are concerned, it is to be noted that s 33 of the Commercial Arbitration Act 1984 (NSW) and its analogues in other states, being the Commercial Arbitration Acts that preceded the current uniform state Commercial Arbitration Acts that apply the terms of the UNCITRAL Model Law to domestic arbitration, provided that where leave to enforce an award is given "judgment may be entered in terms of the award". Under that provision, there are numerous cases where awards that were phrased in the form "that A pay B $X" were enforced in court by orders in the form of "judgment for A against B in the sum of $X" or similar, i.e., judgment for a certain sum rather than an order to pay that sum. See, for example, Xiadong Yang v S&L Consulting Pty Ltd [2008] NSWSC 1051 at [3], [10] and [15] per Hammerschlag J; FG Hemisphere Associates LLC v Democratic Republic of Congo [2010] NSWSC 1394; Cargill Australia Ltd v Oroonoka Pty Ltd [2011] NSWSC 620 at [7] and [12] per Hammerschlag J; Leveraged Equities Pty Ltd v Huxley [2010] NSWCA 179 at [16] per Allsop ACJ (Macfarlan JA and Handley AJA agreeing); Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd [2012] WASCA 50; 287 ALR 315 at [9] and [152] per Martin CJ (Buss and Murphy JJA agreeing). That approach is not, however, universal. See, for example, Hyundai Engineering & Steel Industries Co Ltd v Two Ways Constructions Pty Ltd (No 2) [2018] FCA 1551 at [24] per O'Callaghan J. 44 Insofar as English cases are concerned, I note that s 101 of the Arbitration Act 1996 (UK) employs the same language, namely that if leave to enforce an award is given then "judgment may be entered in terms of the award". Section 26(1) of the Arbitration Act 1950 (UK) also used that wording. In Continental Grain Co v Bremer Handelsgesellschaft mBH (No 2) [1984] 2 Lloyd's Rep 121, Bingham J entered judgment under the 1950 Act in a certain sum against the award debtor on an award that had awarded sums of money for damages. 45 In Norsk Hydro ASA v State Property Fund of Ukraine [2002] EWHC 2120 (Comm) at [6]-[7] and [18]-[19], Gross J held, with reference to the 1996 Act, that an order providing for enforcement of an award must follow the award allowing true "slips" and changes of name to be accommodated, but that an order naming a different party to the party named in the award was not such an order. No criticism was made of the fact that the judgment had been in the form of judgment for a sum of money whereas the award had been in the form of an order to pay. 46 It is apparent from the cases that I refer to that where it is provided that judgment may be made "in terms of the award" - and I interpolate to add that I do not consider the wording "in the terms of the award" in s 54 to signify any different meaning - it does not mean that the judgment must be in exactly the same words as the award. Rather, it means that the terms of the judgment must give effect to the award, or the "judgment or order must reflect the Award and cannot differ in any material way from the terms thereof": Traxys Europe at [72]. That that is so is borne out by consideration of the circumstance where part of an award has been paid, such as that envisaged by r 28.14(3)(c)(ii) which requires evidence of the extent to which the award has been complied with as at the date the application for an order under s 54 is made. If part of a money award has been paid there would be no justification for an order for payment of the whole amount of the award, but only for the balance. If "in the terms of the award" meant "in the actual/exact words of the award" then no order enforcing the partially paid award would be possible. That could not have been the intention. 47 It is also to be observed that in this Court "judgment" includes an "order": FCA Act, s 4; Traxys Europe at [73]. There is therefore no significance in s 54 providing for an "order" to be made in the terms of the award rather than for a "judgment" being so made. 48 One of the reasons why it is said that an order that the defendant pay a sum of money may be different in effect to a judgment against the defendant in that sum is because it may be contemptuous of the former order but not of the latter judgment for the defendant to fail to pay. There is some complexity to that debate which involves, amongst other things, consideration of the history of imprisonment for civil debt and, in some courts at least, the difference, if any, between judgment and order. It is sufficient for present purposes to note that the position is not clear. See Mahaffy v Mahaffy [2013] NSWSC 245 at [59] per Garling J, Mahaffy v Mahaffy [2018] NSWCA 42; 97 NSWLR 119 and Bellerive Homes Pty Ltd v FW Projects Pty Ltd [2019] NSWSC 193. In the latter case, a judgment in the form of "the first defendant is to pay [the first plaintiff] the sum of …" was treated as a judgment debt and it was held that civil contempt proceedings could not be brought against a debtor for failing to pay a judgment debt: at [10] and [128] per N Adams J. In Siminton v Australian Prudential Regulation Authority (No 3) [2008] FCAFC 89; 168 FCR 140 at [24] per Spender ACJ and Lander and Buchanan JJ, it was held that failure to pay a fine that was ordered to be paid as punishment for contempt could itself found a contempt, but the broader question of the possibility of contempt for failure to pay a money judgment or an order to pay money was not dealt with. It is also to be observed that in the Federal Court there can be no punishment for contempt for failing to comply with an order unless the relevant order is endorsed to that effect as required by r 41.06 of the FCR. 49 In the circumstances, my view is that the better course is to enter judgment sounding in money, rather than to order payment of a sum of money. That course avoids the debate about contempt, it is in conformity with what seems to me to be the predominant practice, and it gives the plaintiff what it needs and is entitled to. It also avoids complications that might otherwise arise if and when it comes to apply for the issue of a writ of execution.

Conclusion 50 For those reasons, there should be judgment for the plaintiff against Lyon (the first defendant) in the sum of $6,016,686.70 plus interest from the date of the award, namely 31 July 2020. The plaintiff does not seek the costs of the interlocutory application. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.

Commercial Arbitration Act 1984(NSW)s 33

Federal Court of Australia Act 1976(Cth)ss 53A(1)-(1A), 53AA, 54

Federal Court Rules 2011(Cth)rr 28.14, 41.06

olding Group Co Ltd v Koolan Iron Ore Pty Ltd [2012] WASCA 50; 287 ALR 315 Siminton v Australian Prudential Regulation Authority (No 3) [2008] FCAFC 89; 168 FCR 140 Traxys Europe SA v Balaji Coke Industry Pvt Ltd (No 2) [2012] FCA 276; 201 FCR 535 Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd (No 2) [2011] FCA 206; 277 ALR 441 Xiadong Yang v S&L Consulting Pty Ltd [2008] NSWSC 1051

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