(2) A provision that the outcome of the expert determination "will be final and binding".
51 In essence, the submission for Ipoh is that clause 21.2(a) contains an implied permission to commence proceedings once the process of expert determination in accordance with the steps set out in the following paragraphs of clause 21.2 has concluded. It follows, Ipoh submitted, that if the words "final and binding" are read at face value and unqualified, then the implicit permission in clause 21.2(a) is meaningless.
52 In essence, the submission for TPS No 2 was that the words "final and binding" mean what they say and should not be qualified by the implication of some words such as "unless a party decides otherwise". TPS No 2 submitted that the only proceedings that could be instituted, following the making of the expert determination, were proceedings to enforce the determination or proceedings to set it aside (because, for example, it did not accord with the terms of the contract or was affected by some vitiating factor).
53 The approach advocated by Ipoh involves reading in a substantial limitation on the concluding words of clause 21.2. Ipoh says, in substance, that the words "will be final and binding" should be read as "will be final and binding unless a party decides to challenge it". It may be correct to say, as Ipoh submits, that "[i]t is not uncommon for parties to agree that a determination will be final and binding in limited circumstances". However, it is usual for the circumstances to be defined in the contract, rather than to be no more than the whim of a party. Ipoh referred to Savcor at 593 [20]. In that case, expert determination was final and binding unless the decision was that one party pay the other in excess of $500,000 (excluding interest and costs); it was only if the amount of the determination exceeded that threshold that there was a right to arbitrate.
54 In my view, there is a fundamental inconsistency between the proposition that an expert determination of a dispute between the parties is final and binding on those parties, and the proposition that such an expert determination is final and binding only if the parties accept it (or if neither of them wishes to challenge it). The submission for Ipoh not only requires that words be read into clause 21.2; its subverts, in a fundamental way, the clear meaning of the existing words.
55 Ipoh submitted that similar consequences applied to the construction advocated by TPS No 2. I do not think that this is correct. The introductory words of paragraph (a) are not in terms permissive; they are prohibitive. They prohibit the institution of legal proceedings in connection with the dispute under the RSDA unless that dispute has been the subject of expert determination in accordance with clause 21.2. The clause does not thereafter provide that, once the expert determination has taken place, the parties are free to commence legal proceedings. (Indeed, one might think, by providing that the expert determination is final and binding, clause 21.2 says precisely the opposite.) The "permission" upon which Ipoh relies is, at best, implied. The implication must arise on the footing that the prohibition is not expressed to be permanent, but is of limited (although uncertain) duration. In effect, it reads the word "unless" as "until".
56 The underlying philosophy of clause 21 is clear. It is seeking to promote what might in general terms be called alternative dispute resolution. Thus, the "first stage" processes are a precondition of litigation. It is only if they are followed but fail, and if (having failed) there is no reference to expert determination, that proceedings may be commenced. Once the clause 21.1 processes fail, the parties have a choice. It they choose (or one of them chooses) the path of expert determination, that has to be followed through, and is a bar to litigation whilst it is current.
57 The outcome of the process of expert determination is expressed to be "final and binding". The whole purpose of clause 21.2(a) is to ensure that the process of expert determination can be worked through, leading to the contractually stipulated result. To the extent that clause 21.2(a) is to be read as containing not merely a prohibition (as obviously it does), but also an implied permission, the extent of that which is permitted must, in my judgment, be determined having regard to the purpose of the paragraph. If, as I think is the case, the purpose of the paragraph was to enable the expert to produce a determination, then any implicit permission to litigate once that determination is produced must recognise the stipulated character of the determination. That is so because, on a proper construction of clause 21.2(a), proceedings cannot be commenced until there exists something that answers the description "the determination of the expert"; and that determination is, as the parties have stipulated, "final and binding". A purposive approach to the construction of clause 21.2(a) setting it in context must, in my view, lead to the result that any implied permission is restricted by the agreed final and binding character of the expert determination.
58 Whichever approach one takes involves some difficulty with the drafting of clause 21.2. However, the approach for which TPS No 2 contends involves, in my view, less drastic consequences than does the approach for which Ipoh contends. More importantly, it is in my judgment more consistent with clause 21 as a whole than is the approach for which Ipoh contends.
59 There are two other considerations that, I think, support the conclusion to which I have come.
60 First, if the matter is looked at in terms of implication (see para [55] above), then the implied permission for which Ipoh contends would be inconsistent with the express provision, in clause 21.2(h)(ii), that the outcome is "final and binding". On ordinary principles, a term will not be implied that is inconsistent with an express provision of the contract.
61 Secondly, circumstances may arise where clause 21.2 provides the only means of dispute resolution: see paras [48] and [49] above. A party that has frustrated the first stage of dispute resolution under clause 21.1 (for example, by failing to make its chief executive officer available for a meeting as required by para (b)), cannot commence proceedings. The other party could, however, obtain a "final and binding" resolution of the dispute by referring it to expert determination. It would be an extraordinary outcome if a party, having frustrated the operation of clause 21.1 (so that the "first stage" barred commencement of proceedings by that party), became thereafter able to commence proceedings, notwithstanding its default, because the other party, in order to obtain a resolution of the dispute, had taken the only course available to it, namely referring the dispute to expert determination. In those circumstances (if Ipoh's submission be correct), the party in breach would obtain a benefit from the breach - namely, the right to commence litigation - that was otherwise denied to it. If, however, the words "final and binding" mean what they say then this could not arise.
62 In substance, I think, clause 21 gives the parties a choice after the first, and mandatory, stage of dispute resolution has been worked through unsuccessfully. They can choose the path of litigation, or they (or one of them) can choose the path of expert determination. But each path is final: self evidently so, in the case of litigation; and contractually so, in the case of expert determination. The scheme, so understood, seems to me to be entirely rational.
63 I therefore conclude that, where there has been an expert determination under clause 21.2, and where that expert determination is not assailed on the ground that it does not accord with the contract, or on grounds of fraud, collusion, misrepresentation etc, then that expert determination is, as the clause says, final and binding. I conclude further that it is only proceedings to enforce the determination, or to set it aside on grounds of the kind that I have mentioned, that may thereafter be commenced.
64 The first submission for Ipoh fails. I now turn to the others.
The claim against TPS No 2 in tort
65 In considering the contractual claim against TPS No 2, it has not been necessary to differentiate between it and TCA, given the matters referred to in para [3] above. However, it is by no means clear that the same can be said in relation to the claims against TPS No 2 in tort.
66 It is correct to say, as Ipoh submitted, that the claim against TPS No 2 in tort does not assume, or depend upon proof, that the wind driven rain and wind tunnel effect is, or is the result of, a breach of the RSDA. However, the claim does appear to depend upon the proposition that TPS No 2 can owe, and breach, a duty of care to Ipoh not because of its own acts or omissions but because of the acts or omissions of TCA. I say "appears to" because the amended summons adopts the convenient practice of describing "the relevant responsible entity at any time ... as the "Trustee"." However, TPS No 2 does not raise this point in support of its argument that the claim should be struck out or stayed.
67 Leaving aside the difficulty to which I have just adverted, the real question is whether the fate of the claim against TPS No 2 in tort has been decided by the Incoll determination.
68 The Incoll determination focussed on a number of contractual obligations under the RSDA, and the executive summary dealt only with those contractual matters. However, as can be seen from para [19] above, the executive summary did not in terms deal with the first matter that was referred to Incoll, namely to consider and report on "the issues known as wind driven rain and wind tunnel effect …". I have set out some of the further findings of Incoll in paras [20] and [21] above. They include the conclusion that the report "identifies an operational problem within the Retail Centre" without concluding "that the design and construction obligations have not been met".
69 It is very difficult to see how a claim in tort, for failure to warn, could be sustained. First, there is the issue, relied upon by TPS No 2, as to whether there could be a duty of care to warn of something that is not a defect. Further, having regard to the conclusions reached by Incoll, there is a more significant hurdle; namely, how could there arise a duty of care to warn of a "fault" arising "from operational expectations" and not from a defect or fault in design or construction. But I think that there is a different, and complete, answer to the proposition that the claim in tort (relating to the wind claims) should, despite the Incoll determination, proceed.
70 The reality is that the substance of the wind claims was referred to Incoll for expert determination. Incoll produced a determination saying, in effect, that neither TPS No 2 nor Multiplex was liable. Not unnaturally, attention was focussed on the contractual obligations of TPS No 2 and Multiplex. I do not accept that it was, reasonably or otherwise, open to Ipoh to reserve (for whatever reason) an alternative claim in tort based upon the very same circumstances. In my judgment, on a fair reading of the Incoll determination and its supporting documentation (including, in particular, the letter of instruction) the "dispute" that was referred to Incoll, and that was determined by Incoll, was whether TPS No 2 (or Multiplex) had any liability to Ipoh in respect of the wind claims (or, to use the longer formulation, the wind driven rain and wind tunnel effect).
71 The prohibition in clause 21.1(a) (as I have construed it) is against commencing "legal proceedings in connection with a dispute" that has been the subject of expert determination under clause 21.2, except for the limited purposes of enforcement or impeachment. The wind claims now advanced by Ipoh against TPS No 2 in tort are, in my view, claims "in connection with" the dispute that was referred to and determined by Ipoh. I do not think that the necessary element of connection is lost because, as a matter of legal technicality, the rights and obligations that were considered in their contractual context for the purposes of expert determination are now advanced, based on exactly the same facts, as the claim in tort.
72 I therefore conclude that the second submission for Ipoh fails.
Multiplicity of proceedings
73 It may very well be that Ipoh's claims against Multiplex will proceed because Multiplex has not sought to strike them out or to stay them. That is no reason for permitting the proceedings to continue (in respect of the wind claims) as against TPS No 2, in circumstances where TPS No 2 does rely on clause 21.2.
74 The multiplicity of proceedings and duplication of work and costs, to which Ipoh points, should not be inflicted on TPS No 2 against its will. The possible risk of inconsistency in findings or results does not seem to me to be a sufficient justification for depriving TPS No 2 of the benefit of its bargain and for subjecting it to duplication of work and costs.
Alternative submission for TPS No 2
75 The conclusions to which I have come on the wind claims mean that they should be struck out or permanently stayed. It is therefore unnecessary for me to express a conclusion on the alternative submission for TPS No 2 recorded in para [44] above. However, against the possibility that I am wrong in what I have said so far, I will set out in brief my conclusion on that submission as it relates to the wind claims.
76 It appears to be the case that there have not been meetings of the kind referred to in clause 21.1. If that be correct then, in any event, Ipoh should not have commenced these proceedings. I should note however that Ipoh submits that it has gone beyond what is required by clause 21.1. As I understand it, the submission was not that there had been strict, or full, compliance with the requirements of clause 21.1, but that the steps that the parties had taken (including mediation) had the same functional consequence.
77 I do not think that this is an answer. The purpose of clause 21.1 is to impose a ban on legal proceedings whilst the steps contemplated are taken; and to give any party to the dispute an opportunity thereafter to refer the matter for expert determination, rather than to proceed with litigation. If the effect of what has happened has been to deprive TPS No 2 of the opportunity to refer the dispute to expert determination, then it cannot be permissible to regard what has happened as sufficient compliance with the requirements of clause 21.1.
78 Of course, TPS No 2 says that it has referred the dispute to expert determination. It relies on steps taken after the present proceedings were commenced. But the prohibition on legal proceedings under clause 21.2(a) only "applies in the case of any dispute referred for determination under this clause". In context, the reference to "this clause" is clearly to the whole of clause 21. If TPS No 2 has referred the matter to expert determination outside the framework of clause 21, then there is no entitlement to a stay. And there can only be a valid referral for expert determination within the framework of clause 21 if the procedures of clause 21.1 have been followed and have failed to produce a result (or, as noted in para [48] above, if there has not been a meeting of chief executive officers and there has been no resolution of the dispute).
79 I would therefore have concluded that the proceedings, in so far as they relate to the wind claims, should have been stayed to enable the clause 21.1 processes to be followed. I would, however, have concluded that they should not be stayed upon the basis that, notwithstanding the apparent failure of Ipoh to comply with clause 21.1, there has nonetheless been a valid reference to expert determination under clause 21.2.
80 Having so concluded, it would have been necessary to give consideration to whether the stay should be temporary or permanent. If the stay were granted only on a temporary basis - pending the working through of the clause 21.1 processes - then TPS No 2 might be deprived of the opportunity to refer the dispute to expert determination. Clause 21.2(a) prohibits the commencement of proceedings if the relevant circumstances apply. It does not, in terms, prohibit the continuation of proceedings. Nor, I think, is there any basis for construing it as having this effect. On this analysis, the result of a temporary stay would be effectively to permit these proceedings to continue as valid if the clause 21.1 processes did not produce a resolution of the dispute. Prima facie, that would mean that Ipoh had obtained a substantial tactical benefit through the premature commencement of these proceedings in breach of clause 21.1. Those considerations would suggest that the stay should be permanent, so as to permit both parties the opportunity to consider their position if (hypothetically) the clause 21.1 procedures were followed through without producing a resolution of the dispute. In my view, anything less than a permanent stay would fail to protect the contractual right that TPS No 2 seeks to enforce.
Conclusion on the wind claims
81 TPS No 2 is entitled to an order that the wind claims against it be struck out or permanently stayed.
The remaining claims: the competing submissions
82 In relation to the remaining claims, Ipoh submitted that it had in substance complied with the requirements of clause 21.1 and, that having been done, that expert determination was not mandatory. It therefore submitted that it had been open to it to commence proceedings in relation to the unresolved defects.
83 Ipoh further submitted that, because Multiplex was not a party to the RSDA, the present proceedings could continue against Multiplex. It therefore submitted that to stay the proceedings, in relation to the remaining claims as against TPS No 2, would lead to multiplicity of proceedings. This in turn, Ipoh submitted, would create a serious risk of inconsistent findings or results and would result in duplication of effort and cost.
84 TPS No 2 submitted, additionally to the general submission noted in para [44] above, that on the proper construction of the RSDA and the building contract there was "an agreed facility to resolve all the disputes between [all] the parties", namely "a facility for tripartite expert determination."
85 TPS No 2 submitted that tripartite expert determination would have utility because the only possible remaining claim outstanding between the parties would be Ipoh's residual claim in tort against Multiplex. That claim, TPS No 2 submitted, would be decided on different principles to the basis upon which the expert would decide the unresolved disputes and would, in any event, be decided without the participation of TPS No 2.
86 Multiplex accepted that the building contract provided "a mechanism for consolidating disputes where the facts or circumstances giving rise to the dispute under the Building Contract also give rise to a dispute in respect of, amongst others, the [RSDA]."
Tripartite expert determination
87 I have set out the relevant contractual provisions, in so far as they relate to dispute resolution, in paras [14] and [15] above. I have set out the relevant contractual provisions, relating to defects, in paras [23] and [25] above.
88 It is apparent that, as between TPS No 2 and Multiplex, the determination of a dispute under the building contract could be consolidated with the determination of a dispute under the RSDA where both arise from the same facts or circumstances.
89 Ipoh submits that there is no equivalent provision for consolidation under the RSDA, and that this must be taken to have been deliberate. However, it may also be noted that there is no express provision in the RSDA entitling Ipoh to refuse to consent to consolidation. Nor is it apparent why there would be any such right, given the legal structure that was put in place for the development of (relevantly) the retail centre.
90 Ipoh further points out that the provisions relating to expert determination are not "back to back". However, I think, with one perhaps significant exception the schemes are substantially similar.
91 The exception to which I have referred relates to the way in which each clause deals with the character of the expert determination once it is made. Clause 21.2(h)(ii) provides that the determination will be "final and binding". Clause 39.6 provides that the determination "will be final and binding … unless a party gives notice to the other party of its intention to initiate proceedings in respect of the determination … ". I have already indicated that, in my view, clause 21.2(h)(ii) means what it says. However, it is at least arguable that the conclusive character for which clause 39.6 provides is conditional, the condition being, of course, that no proceedings are commenced "in respect of the determination" within the relevant time period. If this be correct, then it could be argued that the outcome of a tripartite reference might be an unconditionally binding determination as between Ipoh and TPS No 2, but a determination that (because proceedings had been commenced) was not binding as between TPS No 2 and Multiplex.
92 At one stage, Ipoh suggested that there was no mechanism to ensure that the same expert would be appointed under the two agreements. If this were the case then, clearly, it might be a substantial impediment to tripartite resolution. However, I do not think that this is correct. By clause 16.5 of the RSDA, any disagreement "in regard to defects or defect rectification in relation to the Retail Centre is to be determined under clause 21 by the Certifier acting as expert for the purposes of clause 21.2." Incoll was the Certifier. Under clause 31.4 of the building contract, any dispute "in regard to Defect or Defect Rectification in relation to the Retail Centre … [will] be determined by the Certifier, acting as an expert". The Certifier's decision was to be "final and binding". Again, Incoll was the Certifier.
93 Although clause 16 of the RSDA is headed "DEFECT LIABILITY PERIOD", that heading does not necessarily qualify or limit its contents: see clause 1.3 of the RSDA, providing that clause headings do not affect its construction. In any event, clause 16.5, in differentiating between defects and defect rectification, makes it clear that it is not limited to defects notified within the defect liability period.
94 As I have noted in para [26] above, Multiplex accepts that clause 31 of the building contract applies to all defects, and not just to defects that are notified within the defect liability period.
95 Accordingly, I do not think that it is necessary for me to express a concluded view on the character of an expert determination that is made under clause 39 of the building agreement. Where (as is the case with the remaining claims) the particular matter in dispute relates to defects, the expert determination that is required is unconditionally binding, by virtue of clause 31.4.
96 The position, therefore, is that under each of the contracts a dispute in relation to defects is to be determined by Incoll, acting as expert. Under each of the contracts, the decision of Incoll is final and binding. Under the building contract, Multiplex can be required to consent to the consolidation of the determination of the dispute with the determination of the equivalent dispute under the RSDA.
97 In my judgment, it must follow that, as TPS No 2 submits, there is substantial utility in referring the remaining claims to expert determination. The same expert will make the determination and will make it as part of the same overall process. The determination will resolve the issues as between Ipoh and TPS No 2 on the one hand, and as between TPS No 2 and Multiplex on the other. It is correct to say that the determination would not, in point of legal theory, resolve the current claim by Ipoh against Multiplex. However, and even accepting (for the purpose of argument) that there is a real likelihood that the proceedings will continue as between Ipoh and Multiplex, that does not seem to me to be a reason for depriving TPS No 2 of the opportunity to terminate its involvement in those proceedings by substituting for them the process of conclusive expert determination for which, with both Ipoh and Multiplex, it bargained.
98 Nonetheless, Ipoh submitted that the mechanism that has been put in place was not an agreed mechanism for the resolution of disputes. That is because, it submitted, it could not be compelled to consent to consolidation, and indeed it could, should it wish, withhold that consent. There was a debate between Ipoh and TPS No 2 as to whether Ipoh could be compelled to consent to consolidation. The mechanisms to which TPS No 2 pointed were implied terms that Ipoh would do all things necessary to enable TPS No 2 and Multiplex to perform their obligations under the building contract, and that Ipoh would not unreasonably withhold its consent to tripartite dispute resolution as provided for by clause 39.11 of the building contract.
99 Ipoh's response was that the well known conditions for implication of a term have not been made out. There is considerable force in Ipoh's response. However, it is not necessary to decide the point. I am prepared to assume, for the purpose of argument, that Ipoh's position, on implication of the terms, is correct.
100 If (putting the matter at its highest) Ipoh is entitled to withhold its consent to consolidation, without being required to justify that position, the result would still be that there are two disputes as to the same subject matter to be determined by the same person acting as expert. Under each of the agreements, the expert is entitled to conduct the determination as it thinks fit and, in substance, having regard to whatever information it thinks appropriate. There is no reason why the expert could not conduct two parallel determinations, taking into account, in each, the material received in the other. At most, the expert would be required to disclose to the parties in one determination any material that it was proposing to take into account that it had received in the other determination, so as to afford them the opportunity to reply. (I say "at most" referring in particular, as between TPS No 2 and Multiplex, to clause 39.5(a)(ii) of the building contract.) In reality, given that TPS No 2 and Multiplex have in effect a common position as against Ipoh in relation to the remaining claims, it is likely that TPS No 2 would in any event, regardless of the expert's approach, rely (as against Ipoh) on material emanating from Multiplex. But regardless, and whether one looks at considerations of legality or considerations of practicality, it would not matter if Ipoh withheld its consent to consolidation of the expert determination processes. If the expert were to take into account all relevant material provided by any interested party, then there would be no likelihood that the expert would produce different, let alone inconsistent, determinations of each dispute.
101 As between Ipoh and TPS No 2, an expert determination in relation to defects, under clause 16.5, is to be resolved on the lines set out in clause 21. That means, I think, the whole of clause 21 and not just clause 21.2. If there is a "disagreement … in regard to defects or defect rectification in relation to the Retail Centre" then, at first, the processes of clause 21.1 are engaged. If those processes, having been worked through, do not bring about a resolution of the dispute, then either Ipoh or TPS No 2 may refer the dispute to Incoll for expert determination in accordance with clause 21.2.
102 On the assumption that there has been no compliance with clause 21 then, as I have already said in relation to the wind claims (see paras [77] and [78] above), TPS No 2 would have been deprived of its entitlement to have the dispute proceed in accordance with the clause 21 mechanism. However, and for the reasons given in para [78] above, clause 21.2(a) would not be engaged if the requirements of clause 21.1 have not been worked through.
103 For these reasons, I think that the remaining claims against TPS No 2 should be stayed. As I have noted in para [5(2)] above, TPS No 2 claims an order that the proceedings relating to the remaining claims be stayed pending resolution in accordance with clause 21 of the RSDA. It is therefore unnecessary to consider further, in the context of the remaining claims, what I have said in para [80] above relating to the wind claims.