John Grant and Sons Limited v Trocadero Building and Investment Company Limited [1938] HCA 20

John Grant and Sons Limited v Trocadero Building and Investment Company Limited [1938] HCA 20 - HCA 1938 case summary — Zoe

[32]

is dissimilar to the clause in Scott v. Avery (1). The obvious intention of clause 42 is to refer and make machinery provision for certain matters which are declared to be referable, namely, those specified in the clause and any other matters dealt with by the contract which require to be referred to arbitration. The whole contract contem- plates that the architect should give decisions (See clauses 34, 39 and 40). The expression "dissatisfied party" in clause 42 refers to that party who is dissatisfied with the architect's decision. A dispute must be disputed in the way prescribed by the contract and must be in respect of such a matter as comes within the definition of "dispute or difference" as contemplated by clause 42 (Kirsch v. H. P. Brady Pty. Ltd. (2) ); a mere refusal to pay is not such a dispute. A progress certificate, unless challenged, is something which is ascertained and definite ; it is conclusive and creates an enforceable right to recover money in a court of law. Here the progress certificate has not been challenged and the appellant is entitled to sue upon it. It is clear from the contract that as regards a great many matters which might arise thereunder the decision of the architect was to be final. The word "thereunder " in clause 42 does not refer to the whole contract ; the certificate of the architect in respect of non-referable matters is final, and, in the event of the procedure prescribed by the contract not being followed in respect of referable matters, is final also as regards those matters (Clemence v. Clarke (3) ; Lloyd Bros. v. Milward (4) ; Chambers v. Goldthorpe (5) ; Piggott v. Townsend (6) ). Reference to arbitration is in the nature of an appeal (Robins v. Goddard (7) ). The provision as to the giving of a certificate by the architect becomes inoperative only in the event of the notification of a dispute (Dizon v. South Australian Railways Commissioner (8) ). In the absence of such a notification it was the architect's duty to give a certificate (Hickman & Co. v. Roberts (9) ).

[64]

of by the defendant " (sixth plea). Allegations of disputes are to be found also in the 10th, 11th, and 12th pleas. These pleas and the other pleas demurred to (which set out the whole contract including the arbitration clause) make it necessary to consider clause 42. I set out the relevant portions of clause 42, inserting figures for the purpose of showing the classes of disputes which fall within the clause: " Provided always that in case any dispute or difference shall arise between the proprietor or the architect on his behalf and the builder either during the progress of the works or after the determination, abandonment or breach of the contract" (1) "as to the construction of the contract, or" (2) "as to the net local cost under clause 36, or" (3) "as to any matter or thing arising thereunder (except as to matters left to the sole discretion of the architect under clauses 12 and 20, and the exercise by him under clause 19 of the right to have any work opened up), or" (4) "as to the withholding by the architect of any certificate to which the builder may claim to be entitled, or" (5) "as to the amount of any certificate, final or otherwise, the dissatisfied party shall give to the architect seven days' notice in writing that he desires the matter in dispute to be referred to arbitration and at the expiration of seven days unless the matters in dispute have been otherwise settled, such matters shall be submitted to arbitration in the following manner that is to say : - " (then follow provisions as to appoint- ment of arbitrator, &c.) The clause continues: "the award made by the said arbitrator arbitrators or umpire (as the case may be) shall be final and binding on both contractor and proprietor and neither party shall be entitled to commence or maintain any action upon any such breach or dispute until such matter shall have been referred or determined as hereinbefore provided and then only for the amount of relief to which the arbitrator arbitrators or umpire by his or their award finds either party is entitled." Provisions follow as to costs and as to serving notice of dispute or difference and of demand for arbitration.

[79]

It is contended in opposition to this view that the defendant cannot rely upon clause 42 because his pleas do not allege either that an arbitration has in fact taken place or is taking place or that the defendant was ready and willing to submit the disputes to arbitration. Attention is called to the provision in clause 42 " that the dissatisfied party shall give to the architect" notice that he desires arbitration. The plaintiff's contention is that the defendant is the party who is dissatisfied with the architect's certificate, and that therefore he alone is the party who can bring about the arbitra- tion, and that before he can rely upon clause 42 he should have taken steps to bring about arbitration or at least be in a position to show that he was ready and willing to proceed to arbitration. In my opinion this contention is not well founded. In the first place it may be observed that both parties may be dissatisfied as to a particular matter, for example, the builder might complain that the architect had certified for too small an amount and the building owner might complain that the certificate was for too large an amount. In such a case either party could plainly proceed to arbitration. Further, it may be observed that on a question of the construction of the contract (which is a referable matter) the architect cannot determine the question by a certificate, and once again either party could go to arbitration if they differed upon such a question. But further, and more generally, whenever one party declines to accede to a claim or contention of the other in relation to a matter arising under the contract there is then a dispute to which there are two disputants as parties. They can leave the matter in the condition of a continuing and persisting dispute, or, if either of them is not satisfied to leave the matter standing as an unresolved controversy, he is, in my opinion, a dissatisfied party who is entitled, by his own act, to procure a reference to arbitration. By way of illustration, I take a case in which the building proprietor disputes the correctness of the architect's certificate, alleging that it has been given for too large an amount. The builder is satisfied with the certificate, but is dissatisfied with the action of the proprietor in challenging the certificate and refusing to pay. The proprietor is dissatisfied with the amount of the certificate but does not desire to arbitrate about it because (it may be supposed) he is satisfied to leave things as

[160]

that a grievance to be redressed is what the words " the dissatisfied party" contemplate. The clause does not, I think, mean that whenever there is a difference there must be an arbitration. One alternative is expressed, viz., settlement by agreement. The clause supposes that something is done which will stand or prevail unless steps are taken by the party who objects. That dissatisfied party is required to arbitrate and not to litigate. But I think he need do neither and, in that event, he obtains no relief. The thing which stands may be a progress or other certificate of the architect and under the express provisions of the contract that carries with it a liability to pay. If the party dissatisfied with the source of that liability, viz., the certificate, does give notice, then "unless the matters in dispute have been otherwise settled, such matters shall be submitted to arbitration in the following manner." The clause proceeds to prescribe the manner. After doing so, it provides (a) that the award shall be "final and binding," and (b) that "neither party shall be entitled to commence or maintain any action upon any such breach or dispute until such matter shall have been referred or determined as hereinbefore provided." The last expres- sion appears to me to refer to the words "' submitted to arbitration in the following manner." The sequence in which the successive directions and restrictions contained in the clause are set out produces upon a reader the impression that, first, the party dissatis- fied must give notice, then, unless there be agreement in the mean- time, there shall be a submission, and the result is to be a binding award and the exclusion of the alternative, namely, litigation. The natural way of understanding these successive statements is that they ensue from and are contingent upon the action of the dissatisfied party. He has his course pointed out to him and, if he takes it, he can relieve himself of any liability otherwise flowing from an

At a glance

Court

Decision date

Before

Source

Judgment (176 paragraphs)

Cited By (1)