Kidman v Commonwealth [1925] HCA 55

Kidman v Commonwealth [1925] HCA 55 - HCA 1925 case summary — Zoe

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the matters in dispute were (a) whether the Commonwealth was entitled to refuse to accept delivery of the Braeside and the Burnside, and (b) what sums of money (if any) were due by either of the parties to the other in respect of the two contracts of 6th July 1918 and 4th August 1919 whether. by way of damages for breach or non-performance of the said contracts or return of money paid thereunder or otherwise; that the Arbitration Act 1902 (N.S.W.) should apply to proceedings in the arbitration, but that either party should be at liberty to apply to the High Court in accordance with the provisions of sec. 33a of the Judiciary Act 1903-1920 for an order directing that the award should be a rule of that Court ; that the arbitrator should have power (a) to admit such evidence as he should deem fit without having regard to the rules of evidence, and (b) to inform his mind in any way in which in his absolute discretion he might deem it most advisable so to do; and that the arbitrator should not be bound to state a case for the opinion of the Court at the request of the parties thereto. On 30th June 1920 the arbitrator made his award, by which he awarded and determined that the Commonwealth was entitled to refuse to accept delivery of the Braeside and the Burnside, and that the sum of £75,665 was due by the contractors to the Commonwealth ; and he directed that the contractors should pay such sum to the Commonwealth. He also awarded that the contractors should pay the costs of the award. On 3st May 1923 the contractors moved before the Full Court of the Supreme Court of New South Wales that the award be set aside or in the alternative that the award be remitted to the arbitrator, on a number of grounds, none of which related to the validity of either of the contracts of 6th July 1918 and 4th August 1919_or of the agreement for submission to arbitration. On Ist June 1923 the Full Court dismissed the application with costs: Kidman v. Common- wealth (1). On 8th June 1923 the Commonwealth applied on summons to the Supreme Court for leave under sec. 14 of the Arbitration Act 1902 (N.S.W.) to enforce the award in the same manner as a judgment of the Supreme Court to the same effect. The summons coming on for hearing before Ralston A.J. was by (1) (1923) 23 S.R. (N.S.W.) 329,

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Commonwealth, acting in this regard for the Commonwealth and in - its name, entered into an agreement with the appellants for the submission of the matters in dispute to "the award and final determination" of Sir Mark Sheldon. The agreement recited the making of the agreements now challenged, the notice of 2nd April 1921 and the institution of the action. It stipulated for the stay of the action and the submission to arbitration. It stated the two matters in dispute, the second of which was " what sums of money (if any) are due by either of the parties to the other in respect o the said original and further contracts whether by way of dama, for breach or non-performance of the said contracts or return money paid thereunder or otherwise." Obviously that involve both facts and law. It went on to apply the Arbitration Act 1902 of New South Wales. Par. 5 said: "The arbitrator shall hay power - (a) to admit such evidence as he deems fit without hay regard to the rules of evidence ; (b) to inform his mind in any way in which in his absolute discretion he deems it most advisable so to do." Par. 6 declared: " The arbitrator shall not be bound to state a case for the opinion of the Court at the request of the pai thereto." Consequently it is clear that (1) the submission was in the course of an action already instituted ; (2) cross-claims were made between the parties; (3) the submission was new, voluntary, and independent of any prior agreement to arbitrate; (4) the questions submitted involved the law as well as the facts of the case; (5) the decision was to be absolutely final and conclusive and without even intermediate interference by the Court. Finally, the submission was made by the Commonwealth through the Attorney-General. No misconduct of the arbitrator is suggested nor any reason for disputing his award except those already stated. The argument for the appellants rested on the want of any enforce- able obligation arising out of the two agreements of 1918 and 1919, and on the inability of any person to preclude the Court from holding those contracts invalid. It is unquestionably true that where upon facts properly before the Court a transaction is in law invalid or void or without legal effect, the Court cannot declare it lawful or treat it as binding or effective in any way. To my mind,

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claims to arbitration in the way described ? There is no confession of law. Arbitration is a well-known method of settling disputed claims. Its ordinary meaning is established. Lord Halsbury in Stewart v. Williamson (1) said: "I think it means something which is submitted to the arbitrament - to the adjudication of private persons - agreed upon by the parties, as distinguished from the ordinary Courts of law." It is no objection that the arbitrator has to determine questions of law including, it may be, the validity o the agreements. Lord Hobhouse in Charlebois' Case (2) said: "If the legality of the act is one of the points substantially in dispute that may be a fair subject of compromise in Court like any other disputed matter." If so, it follows that the reference itself, not being a surrender, but a contest in which the tribunal only is chosen and given unfettered powers of decision, is perfectly lawful. When pursued to the end, as if in Court, as a genuinely hostile confli then, there being no inherent illegality, no misconduct of the arbitrator, and no error in law appearing on the face of the award the arbitrator's decision is final and binding. Lord Dunedin, for the Judicial Committee, in Champsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. (3) said : - The law on the subject has never been more clearly stated than by Williams J. in the case of Hodgkinson v. Fernie (4): - 'The law has for many years been settled, and remains so at this day, that, where a cause or matters in difference are referred to an arbitrator, whether a lawyer or layman, he is constituted the sole and final judge of all questions both of law and of fact. . . . The only exceptions to that rule are, cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted, is now, I think, firmly established, namely, where the question of law necessarily arises on the face of the award, or upon some paper accompanying and forming part of the award. Though the propriety of this latte may very well be doubted, I think it may be considered as established. This view has been adhered to in many subsequent cases, and in particular in the House of Lords in British Westinghouse Co. v- Underground Electric Railways Co. (5)." The two elements of fact

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conduct throughout the contractors have relieved the Common- wealth of the necessity of proving the object of the contracts. or establishing their validity. The same principle applies to the fact that the contracts were signed by the Acting Prime Minister. and not by the Governor-General. No authority has been produced for such a signature; there is no evidence that the Governor-General even knew of the contract; but the contractors cannot at this stage take advantage of the deficiency in proof of facts which may justify the contracts including the signatures. They cannot take all the advantages of the contracts, and then say that the contracts are not shown by the evidence to be valid. They cannot both blow hot and blow cold. There is no principle more firmly established than that parties must take the consequences of their conduct of proceedings in litigation. The principle is well stated in The Tasmania (1). Tt was a case of collision; and at the trial it was found that one vessel was to blame; but on the appeal, for the first time, it was contended that the other vessel was also to blame _ - that she did not take early enough the step of putting her helm down and so coming to the wind. Lord Herschell said : - ' My Lords, I think that a point such as this, not taken at the trial, and presented for the first time in the Court of Appeal, ought to be most jealously scrutinized. The conduct of a cause at the trial is _ governed by, and the questions asked of the witnesses are directed 'to, the points then suggested. And it is obvious that no care is exercised in the elucidation of facts not material to them. It appears

to me that under these circumstances a Court of Appeal ought only _ to decide in favour of an appellant on a ground there put forward for the first time, if it be satisfied beyond doubt. first, that it has before it all the facts bear as would have been the case if the controversy had arisen at the trial; and next, that no satisfactory explanation could have been offered by those whose conduct is impugned if an opportunity for explanation had been afforded them when in the witness-box." Now, to apply these words to the case before us, we are not satisfied

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Judgment (119 paragraphs)