BETWEEN : LAMAC DEVELOPMENTS PTY LTD (ACN 009 337 213)

Arbitration - Appeal - Leave to appeal - Whether right of appeal to Full Court from refusal of leave to appeal - Whether Full Court could grant leave to appeal where leave refused by a single Judge

Commercial Arbitration Act 1985 (WA) s 38(4)(b)

Supreme Court Act 1935 (WA) s 58(1)(b), s 60(1)(f)

Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd (1997) 14 BCL 215

Blue Chip Pty Ltd v Concrete Constructions Group Pty Ltd (1996) 13 BCL 31

Carpaolo Nominees Pty Ltd v Marrosan Nominees Pty Ltd [1997] NTSC 1; (1997) 112 NTR 1

Kemper Reinsurance Co v Minister of Finance & Ors (2000) 1 AC 1

Lamac Developments Pty Ltd v Devaugh Pty Ltd [1999] WASC 76

Lamac Developments Pty Ltd v Devaugh Pty Ltd [1999] WASCA 280

Masawa Australasia Pty Ltd v J Corp [2000] WASC 5

Minson Nacap Pty Ltd v Aquatec-Maxcon Pty ltd [2000] VSC

Patterson & James v Public Service Board of NSW [1984] 1 NSWLR 237

Qantas Airways Ltd v Dillingham Corporation (1985) 4 NSWLR 113

Re Alcan Australia Ltd; Ex parte Federation of Industrial Manufacturing and Engineering Employees [1994] HCA 34; (1994) 181 CLR 96

Reid v Nairn (1985) 60 ALR 419

1 MALCOLM CJ: I have had the advantage of reading in draft the reasons to be published by Mathews AJ. I agree with her Honour's reasons and the orders which she proposes. My own consideration of the relevant authorities has led me to the same conclusions.

2 This appeal was heard by a bench of five Judges because the Court was being invited either to overrule or decline to follow the decision of this Court in Aintree Holdings Pty Ltd v Corderoy (1996) 16 WAR 416. The appellant and the respondent in that case were parties to an arbitration. By s 38(4)(b) of the Commercial Arbitration Act 1985 (WA) an appeal on a question of law lay to the Supreme Court "... with the leave of the Supreme Court". The appellant then sought leave to appeal against the arbitrator's award. Parker J dismissed the application. The appellant then filed a notice of appeal against the order of Parker J. The respondent then made an application to dismiss the appeal as incompetent. The Full Court, constituted by Rowland, Wallwork and Steytler JJ struck out the appeal as incompetent. It was held that there was no right of appeal to the Full Court from a decision of a Judge or Master who had refused leave to appeal to an applicant from an award of an arbitrator pursuant to s 38(4)(b) of the Act. Rowland J said at 419 that the necessary implication of a refusal of leave under the legislation was that the award was left intact and that "to that extent, the order refusing leave is a final order": Re Housing of the Working Classes Act 1890; Ex parte Stevenson [1892] 1 QB 609 at 611 per Lord Esher MR. The Master of the Rolls made it clear that if the leave of the High Court was required:

"... then they are the legal authority entrusted with the legal responsibility of deciding whether there shall be leave to appeal, and their decision is final. In either case there is no appeal to this Court. What was said in the case of Lane v Esdaile ([1891] AC 210) supports the view I am taking."

3 After referring to that passage Rowland J went on to say at 419 - 420:

"It is unnecessary for me to consider what would be the position if the order of the learned trial Judge refusing leave to appeal was an interlocutory order. Leave to appeal has not in fact been sought. Perhaps I should state that if it be thought that it was an interlocutory order, then it is arguable that the application for leave to appeal could be renewed before the Full Court pursuant to the provisions of O 63, r 8: see SCM Chemicals v Saipem Australia Pty Ltd (1991) 4 WAR 569. The true answer, however, is that, in my opinion, the order refusing leave to appeal is not an interlocutory order.

As far as I can ascertain, and the researches of counsel would indicate, this question has only been referred to in this Court on one previous occasion in Roberts v Roberts (1992) 8 WAR 170 at 173, where, Malcolm CJ said:

'In my view, that is enough to dispose of the present appeal, assuming that the appellants have a right of appeal. As to that, the court has not heard any detailed argument in relation to the right of appeal. On the face of it, there is much to be said for the view that once an application for leave to appeal has been made to the Supreme Court under s 38 of the Commercial Arbitration Act and leave has been refused by the court, there is no further right of appeal to the Full Court from the refusal of leave, unless such a right can be found in some express statutory provision. That follows from the general position which has been accepted that a right of appeal is a creature of statute. Having regard to the conclusion which I have come to on the merits, however, it is not necessary to pursue that point any further.'

Although his Honour did not find it necessary to develop the reasons for reaching that tentative conclusion, it is a conclusion with which I agree for the reasons already given.

It follows that the respondents' notice of motion to strike out the appeal as incompetent should succeed."

4 Steytler J (with whom Wallwork J agreed) at 420 agreed with the conclusion of Rowland J that there was no right of appeal from an order by a Judge or Master refusing leave to appeal from an award of an arbitrator pursuant to s 38(4)(b) of the Act.

5 Steytler J at 420 - 421 reviewed the provisions of the Commercial Arbitration Act and concluded at 421 that, while there was nothing in that Act which expressly provided for any right of appeal against a refusal of leave under s 38(4), if there was such a right it would have to be found in s 58 of the Supreme Court Act 1935. This section confers jurisdiction on the Full Court, subject as otherwise provided in that Act and the Rules of Court:

(a) applications for a new trial or re-hearing of any cause or matter, or to set aside or vary any verdict, finding or judgment found, given or made in any cause or matter tried or heard by a Judge or before a Judge and jury;

(b) appeals from a Judge and from a Master whether sitting in court or in chambers

...

(2) Any appeal, application, cause, matter or proceedings referred to in subsection (1) shall lie or may be made to, or may be brought before, the Full Court which, subject as aforesaid, shall hear and determine the same, and questions incidental thereto."

6 Steytler J, having referred to that provision, said at 422:

"There is a well accepted principle that, when the jurisdiction of an existing court is enlarged, whether by way of rights of appeal from some other tribunal or by way of the reference to it of a particular matter for hearing and determination, then, it might ordinarily be assumed, that jurisdiction is to be exercised according to its ordinary procedures including any general right of appeal from its decisions. That is because, in such a case, unless some contrary intention appears, the reference is to the court as it stands 'exercising its known authority according to the rules of procedure by which it is governed and subject to the incidents by which it is affected': see Electric Light & Power Supply Corporation Ltd v Electricity Commission (NSW) (1956) 94 CLR 555 at 559; National Telephone Co Ltd (In liq) v Postmaster General [1913] AC 546 at 552, 557, 562; Stratton v Parn [1978] HCA 5; (1977) 138 CLR 182 at 192.

However that principle has been described as being 'but an expression of the natural understanding of a provision entrusting the decision of a specific matter or matters to an existing court' and has been said to apply only in 'the absence of express words ... or of reasonably plain intendment' to the contrary: see Electric Light & Power Corporation Ltd (at 560)."

7 Steytler J went on to observe that it was necessary to determine whether there was anything in the legislation which evinced an intention to displace the "natural understanding". In this context, his Honour noted at 422 that there was nothing in s 38 in the context of the Commercial Arbitration Act to suggest there would be an appeal to the Full Court from a decision of a single Judge under s 38(5). It was at this point, however, that his Honour parted company with Rowland J in relation to the proper construction of s 38(6) of the Act. In so doing, Steytler J said at 422 - 423:

"It seems to me that s 38 does not impinge upon the issue of finality, or otherwise, of an order on an application made under s 38(4)(b) but instead does no more than ensure that, once an award is varied on an appeal under s 38(2), the award as varied is to have effect, except for the purposes of s 38 itself (this exception being expressly provided for by subs (6)), as if it were the award of the arbitrator or umpire. Nor does it seem to me that, once leave to appeal is given under s 38(4)(b) and the appeal itself is determined by a single judge of the Supreme Court, there is anything in s 38(6) which should preclude a further appeal, from the decision of the single judge, to the Full Court of that Court.

If I am right in my conclusion that s 38 does not, in terms, provide that there is no appeal from a determination under s 38(5), then this conclusion must be looked at in the light of the fact that s 60(1)(c) of the Supreme Court Act provides that no appeal shall lie to the Full Court from a decision of a judge or Master where it is provided by any Act that such decision is to be final. It would, in the light of this latter provision, have been a relatively simple matter for the framers of the Commercial Arbitration Act to have included a provision as to finality of any decision made by a judge on an application for leave to appeal if it was in fact their wish to foreclose any such right of appeal.

Against that it is, I think, true to say that the scheme of s 38 of the Act is such as to evince an intention to limit the involvement of the Supreme Court to a minimum.

That this is so is, I think, apparent from the provisions of s 38(1), from the fact that an appeal under s 38(2) is limited to one on a question of law arising out of an award and then only by consent or with the leave of the Supreme Court and from the fact that the court's right to grant leave is circumscribed by the provisions of s 38(5).

It is apparent, in particular, from s 38(4) and (5) that, where the jurisdiction of the Supreme Court to hear the appeal is founded upon the grant of leave, that, in turn, is subject to the discretionary considerations provided for by subs (5). The discretionary nature of an order granting or refusing leave does, I think, lend support to the argument, advanced on behalf of the respondent, that a refusal of leave is intended to amount to a final closing of what would, in the absence of consent, be the only door to the appellate jurisdiction of the Supreme Court."

8 Steytler J noted that the argument referred to was said to have been lent support by consideration of the kind referred to in Costain Australia Pty Ltd v F W Neilson Pty Ltd [1988] VicRp 32; [1988] VR 235. That case was concerned with the Commercial Arbitration Act 1984 (Vic), s 38(2) and (4)(b) which provided for an appeal to the Supreme Court, with the leave of that Court, on any question of law arising out of an award. At the same time, however, s 38(6) of the Act provided that:

"Where the award of an arbitrator or umpire is varied on an appeal under subsection (2), the award as varied shall have effect (except for the purposes of this section) as if it were the award of the arbitrator or umpire."

9 A judge refused an application pursuant to s 34(4)(b) for leave to appeal on a question of law arising out of an arbitral award, and also refused an application made under s 38(6) for leave to appeal to the Full Court against his earlier refusal to grant leave to appeal. The applicant then applied to the Full Court for leave to appeal against both the refusal to grant leave to appeal against the award and the refusal to grant leave to appeal to the Full Court. The Full Court held that s 38(6) had the effect that the Full Court had no jurisdiction to grant either of the applications applying what Lord Esher MR said in Re Housing of the Working Classes Act 1890; Ex parte Stevenson, supra, at 611. In addition, reference was made to an observation by Lopes LJ at 613 that:

"The object of making appeals subject to leave is to prevent unnecessary and frivolous appeals. If an appeal were allowed from the granting or refusal of leave to appeal, the result would be that, instead of checking appeals, they might be multiplied to a most mischievous extent ..."

10 Steytler J went on to point out in Aintree at 424 that Fry LJ reached the same conclusion for the same reason. Lane v Esdaile [1891] AC 210 is a decision to the same effect. That case was applied by Donaldson MR in Aden Refinery Co Ltd v Ugland Management Co [1986] 3 WLR 949; [1986] 3 All ER 47; and see Bland v Chief Supplementary Benefit Officer [1983] 1 WLR 262 at 267 per Donaldson MR.

11 In Aintree at 424 - 425 Steytler J went on to consider the application of the principle in Electric Light & Power Supply Corporation Ltd v Electricity Commission (NSW) (1956) 94 CLR 555 at 559 as follows:

"In considering the application of the principle espoused in such cases as Electric Light & Power Supply Corporation Ltd, it is, I think, important to bear in mind the distinction between a situation in which legislation provides for an unconditional right of appeal to the Supreme Court, whether limited to a question of law or not (as, eg, is the case with s 134(1) of the Equal Opportunity Act 1984 (WA), considered in City of Perth v DL (unreported, Supreme Court, WA, Full Court, Library No 960167, 27 March 1996) and one in which the right of appeal is conditional upon leave, the grant or refusal of which turns upon discretionary considerations.

The whole purpose of so conditioning a right of appeal is, as Lopes LJ has observed in Re Housing of the Working Classes Act 1890; Ex parte Stevenson (at 613), that of preventing unnecessary and frivolous appeals. That purpose would, as his Lordship also observed, largely be defeated if an appeal was to be allowed against the very grant, or refusal, of leave to appeal.

In Lane v Esdaile, also referred to by the Victorian Full Court, the House of Lords held that it had no jurisdiction to grant an application for leave to appeal after the Court of Appeal had itself refused leave to appeal in the context of O 58, r 15 of the Rules of the Supreme Court which provided that no appeal to the Court of Appeal could be made, except by special leave of that Court, in the circumstances there provided for, notwithstanding the provisions of the Appellate Jurisdiction Act 1876 which provided that 'an appeal shall lie to the House of Lords from any order or judgment of' the Court of Appeal.

Lord Halsbury LC there said (at 212) that to allow an appeal in that case

'would defeat the whole object and purview of the order or rule itself, because it is obvious that what was there intended by the legislature was that there should be in some form or another a power to stop an appeal - that there should not be an appeal unless some particular body pointed out by the statute ... should permit that an appeal should be given.'

While, in this case, the 'particular body' is the Supreme Court it does seem to me that the reference to that Court in s 38(4)(b) is intended to be one to a single judge of the court: see, in this respect, the provisions of s 41(1) of the Supreme Court Act, referred to above, and O 81D, r 10 of the Rules of the Supreme Court 1971 (WA), made pursuant to s 61 of the Commercial Arbitration Act."

12 Steytler J went on in Aintree at 425 - 426 to conclude that:

"... the question of leave to appeal has been entrusted, by s 38(4)(b) and (5) of the Commercial Arbitration Act, when read together with the provisions of the Supreme Court Act, to a single judge of the Supreme Court.

While it is true, as I have said, that the framers of the legislation could, very easily, have included a provision as to finality of the decision of the single judge to whom the application is made but did not do so, it seems to me that the better view is that, notwithstanding that omission, it sufficiently appears from the material provisions of s 38 of the Act, read in the context of the Act as a whole (and having regard for the emphasis of the Act to which I have earlier referred and the intention which, self-evidently, underpins the requirement to obtain leave), that the discretion so entrusted was not intended to be one from which there is any appeal. That is, I think, the 'natural understanding' of the legislation: see Electric Light and Power Corporation (at 560).

In D'Esterre v Austplat Minerals NL (In Liq) (1991) 4 WAR 549 (in which the Full Court of this Court expressed a preference for a construction of s 60(1)(f) of the Supreme Court Act which would lead to the consequence that there can be no appeal from the refusal of a Judge or Master to grant leave to appeal from an interlocutory order or judgment given by that judge or Master) Malcolm CJ, with whom Rowland and Walsh JJ were in agreement, referred with approval to the joint judgment of Fox and Forster JJ in Reid v Nairn (1985) 60 ALR 419 at 421, in which their Honours said (in the context of interlocutory matters) that 'an appeal from the grant or refusal of leave (before the substantive matter is dealt with) is a thoroughly undesirable addition to legal remedies'.

For myself I would have thought that an appeal from the grant or refusal of leave to appeal from the decision of an arbitrator, whether the substantive matter has or has not been dealt with, is likewise a thoroughly undesirable (and unintended) addition to legal remedies in the context of an Act which, as I have said, is designed to provide speedy, informal and comparatively inexpensive relief to litigants and which, as I have also said, is designed to minimise interference by the Supreme Court.

I should perhaps add that it does not seem to me to be open to the appellant to renew its application for leave to appeal from the award in the manner in which the Full Court of this Court has said, in SCM Chemicals Ltd v Saipem Australia Pty Ltd (1991) 4 WAR 569, might be done in the case of a refusal, by a Master, for leave to appeal against an interlocutory order made by that Master.

Once it is accepted, as I do accept, that the intention underlying s 38(4) of the Act is that the decision of a single judge of the Supreme Court on an application under that section should be final then it seems to me to matter little whether the contemplated further approach to the Supreme Court is one by way of a right of appeal or one by way of the renewal of an application for leave to appeal. Either approach (and that of renewal has not been pursued in these proceedings) is in my view intended to be excluded, regardless of whether the order refusing leave to appeal is regarded as interlocutory or final.

In any event, so far as this last point is concerned, the decision in SCM Chemicals dealt only with the renewal of an application for leave to appeal which had been made ex parte under the provisions of s 60(3) of the Supreme Court Act. The court there referred to and relied in part upon the provisions of O 63, rr 7(2) and 8 of the Rules of the Supreme Court which address only the situation in which an ex parte application has been refused by a judge or Master. Those rules have no application to the situation which prevails in this case in which, by virtue of the provisions of O 81D, r 10, a motion for leave is required, in effect, to be brought inter partes, involving the issue and service of a summons for directions addressing inter alia, such matters as the filing and serving of written submissions."

13 It is apparent from the judgments of Rowland and Steytler JJ and the agreement of Wallwork J with the reasons of Steytler J that, although there were some differences of opinion, the unanimous result was that there was no right of appeal to the Full Court from the refusal of leave to appeal by a single Judge under s 38(6) from a determination under s 38(5) because such an order was in the nature of a final order rather than an interlocutory order.

14 As Mathews AJ has pointed out, the decision of the Full Court in Aintree is inconsistent with the later unanimous decision of the Full Court of South Australia in Minister for Industrial Affairs v Civil Tech Pty Ltd [1997] SASC 6298; (1997) 69 SASR 348. Section 38 of the Commercial Arbitration Act 1986 (SA) is relevantly in identical terms to the equivalent in the Western Australian Act consistently with the uniform legislation throughout Australia. The principal judgment in that case was delivered by Lander J. Doyle CJ at 349 agreed with Lander J, saying:

"There are good reasons why this Court should follow the decision of the Full Court of another State dealing with legislation in the same terms. Lander J has referred to this, and has explained why in this case he has decided not to follow the decision of the Full Court of the Supreme Court of Western Australia which is in point in the present case. I agree that it is in this case appropriate not to follow that decision. I take that view only because there have been a number of other decisions which have assumed that the view preferred by Lander J is correct. Were it not for that I think that I would have been prepared to follow the decision of the Supreme Court of Western Australia, even though, with all respect, I prefer the reasoning of Lander J."

15 In that case the primary Judge had refused leave to appeal under s 38 against the decision of the arbitrator and refused leave to appeal to the Full Court from the earlier decision. Lander J held at 352 that the original refusal by the learned Judge to grant leave to appeal was an interlocutory order citing Costain Australia Ltd, supra.

16 By s 50(1) of the Supreme Court Act 1935 (SA) provision is made for an appeal to lie against every judgment, order or direction of a judge, except those which are final and without appeal. By s 50(3)(b) of the Act, there is no appeal without the leave of the Judge or of the Full Court from any interlocutory order or judgment except in certain cases specified in pars (i) to (vi). These are all references to examples of interlocutory decisions in the nature of final decisions. The last category in par (vi) is:

"such other cases to be prescribed by rules of court as are, in the opinion of the authority making such rules, of the nature of final decisions."

17 Rule 94.01 of the Supreme Court Rules (SA) provides that where leave is necessary to appeal to the Full Court either because of s 50(3) of the Supreme Court Act (SA) itself or otherwise, the application may be made either to the Judge at first instance or to the Full Court, but should initially be made to the primary Judge at the time judgment is delivered or, if not made at that time, by application made at some later time to the primary Judge or to the Full Court. This procedure is specifically provided for in r 94.02 as follows:

"Where an application for leave to appeal under rule 94 has been refused by the Judge, an application for a similar purpose may be made to the Full Court within fourteen days from the date of refusal or within such extended time as the Judge or the Full Court shall allow."

18 The applicant in Civil Tech sought leave to appeal to the Full Court, having been refused leave by the primary Judge. There was then an objection to the competency of the application. The respondent's contention was that once leave had been refused by the single Judge all of the applicant's rights had been exhausted.

19 Section 38(5) of the Commercial Arbitration Act (SA) is in the same terms as s 38(5) of the Commercial Arbitration Act (WA). The amendments to the South Australian Act by the Commercial Arbitration (Uniform Provisions) Amendment Act 1992 (SA) limited the circumstances in which leave to appeal against an arbitral award could be obtained. They also limited any reference to a party obtaining further leave to appeal to the Full Court or a further appeal to the Full Court.

"Ordinarily where Parliament invests a court with jurisdiction to determine a question 'it may be supposed that if the legislature does not mean to take the court as it finds it with all its incidents including the liability to appeal, it will say so': Electric Light & Power Supply Corporation Ltd v Electricity Commission (NSW) [1956] HCA 22; (1956) 94 CLR 554 at 560; Stratton v Parn [1978] HCA 5; (1978) 138 CLR 182 at 192 and Houssein v Under Secretary, Department of Industrial Relations & Technology (NSW) [1982] HCA 2; (1982) 148 CLR 88 at 95 - 96.

Indeed Parliament when it first enacted this Act did interfere with the normal procedures of the court by limiting the right of appeal from a refusal of leave and by limiting the right to appeal from a decision of a single judge given on appeal.

On the face of it s 38 in its present form does not appear to limit the ordinary appeal procedures from a refusal to grant leave or from a decision on appeal by a single judge. The section does not apparently limit or vary the ordinary appeal procedures in those circumstances. Hitherto it appears to have been assumed in this State that an appeal or at least one application for leave to appeal would lie: Leighton Contractors Pty Ltd v South Australian Superannuation Fund Investment Trust (1995) 12 BCL 38. The same assumption was made in the Court of Appeal in New South Wales in Promenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203. The Commercial Arbitration Act 1984 (NSW) was then in the form in which the South Australian Act now is: see also New South Wales v Coya (Constructions) Pty Ltd (unreported, Court of Appeal, NSW, 4 August 1995); Natoli v Walker. The Full Court of the Federal Court also has made the same assumption: Commonwealth v Rian Financial Services & Developments Pty Ltd [1992] FCA 239; (1992) 36 FCR 101."

21 It was in this context that Lander J referred to the decision of this Court in Aintree. His Honour said at 355:

"The Commercial Arbitration Act forms part of a uniform national scheme involving the same or similar legislation in all of the Australian States and Territories. An interpretation of that Act by the Full Court of any of the Australian States should be followed by the courts of the other States unless convinced that that interpretation is plainly wrong: Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 492-493; Trans Pacific Investment Corporation Pty Ltd v Rusty Rees Pty Ltd [1995] FCA 1223; (1995) 57 FCR 210 at 214; Della Patrona v Director of Public Prosecutions (Cth) (No 2) (1995) 38 NSWLR 257 at 266."

22 When Aintree was decided, s 38(5) of the Commercial Arbitration Act (WA) was still in its original form as it was when I expressed doubt about the availability of an appeal from a refusal of leave in Roberts v Roberts (1992) 8 WAR 170 at 173. The amended version was enacted by the Commercial Arbitration Amendment Act 1993 (WA) s 17 which repealed and re-enacted subss (5) and (6) in their present form. With all due respect, I agree with Lander J in Civil Tech at 357 that s 38(6) as it stood when Aintree was decided did not have the effect which Rowland J decided and I suggested, namely, that it denied the Full Court jurisdiction to hear an appeal from either a refusal to grant leave or from a decision on appeal by a single Judge. I also agree that s 28 coupled with s 38(6) did not have that result. Section 28 is subject to the limited right of appeal provided in s 38. Steytler J (with whom Wallwork J agreed) also expressly disagreed with the conclusions of Rowland J in this context.

23 In Civil Tech, Lander J then proceeded to analyse the judgment of Steytler J in Aintree. The starting point was acceptance of the principle that when the jurisdiction of an existing court is enlarged, that jurisdiction will be exercised in accordance with its ordinary procedures, including any general right of appeal from its decisions: cf Electric Light & Power Supply Corporation Ltd v Electricity Commission (NSW), supra, and the other authorities to which I have already referred. Lander J at 357 - 358 noted the reliance on those authorities and the conclusion by Steytler J that the intention of s 38 was to limit the involvement of the Supreme Court to a minimum which, coupled with the discretionary nature of the grant or refusal of leave amounted to a "final closing of what would in the absence of consent, be the only door to the appellate jurisdiction of the Supreme Court". One of the principal authorities relied upon was Costain, supra, which was decided with reference to the Commercial Arbitration Act 1984 (Vic), which included s 38(6) and (7) in the same terms as those subsections in the original version of the South Australian Act.

24 In Costain, the applicant sought leave to appeal in respect of an interim arbitral award. Leave was refused by a single Judge under s 38(4)(b). Section 38(6) provided that unless the Supreme Court gave leave, an appeal did not lie to the Full Court "from a decision of the Supreme Court to grant or refuse leave under subsection (4)(b)". Section 38(7) provided that:

"An appeal shall not lie to the Full Court of the Supreme Court from a decision of the Supreme Court on an appeal under sub-section (2) unless -

(a) the Supreme Court or the Full Court of the Supreme Court grants leave; and

(b) it is certified by the Supreme Court that the question of law to which its decision relates either is one of general public importance or is one which for some other special reason should be considered by the Full Court of the Supreme Court."

25 Leave having been refused under s 38(4)(b) of the Act, an application was made to the Full Court for leave to appeal from the same single Judge to the Full Court pursuant to s 38(6). Leave was refused. The applicant then made two applications to the Full Court, namely:

"(1) for leave to appeal against the refusal to grant leave to appeal against the interim award; and

(2) for leave to appeal against the refusal to grant leave to appeal to the Full Court."

26 These applications were dismissed as incompetent for the reason that the plain policy of s 38(6) was that a refusal of leave under s 38(4)(b) could not be the subject of appeal without the leave of the primary Judge. As Lander J said in Civil Tech at 358:

"That decision is, with respect, unquestionably right. But it has in my respectful opinion little relevance to either the Western Australian Act or the South Australian Act. Steytler J recognised that the decision was distinguishable on the legislation but believed it provided 'powerful support for the argument that the framers of the legislation did not intend that there should be any right of appeal from a refusal of leave under s 38(4)(b)'. With respect I disagree. Indeed it might be argued that the differences in the then Victorian legislation and the Western Australian legislation led to the conclusion that the Western Australian Parliament did not intend there to be any limitation on an appeal from a refusal to grant leave because otherwise it would have adopted the Victorian (South Australian) model or expressly said there was to be no appeal."

27 As to the question whether the right of appeal by way of leave "of the Supreme Court" under s 38(4)(b) referred only to a single Judge of the Court, Lander J agreed with Steytler J that the question should be answered in the affirmative. The point of departure between their Honours was on the issue whether it followed that the "natural understanding of the legislation was that the decision of the single Judge was conclusive". In other words it was not subject to appeal. In essence, Lander J disagreed at 359 for the reason that:

"... because the legislature has adopted the less expensive procedure of seeking leave from a single judge rather than the Full Court that is certainly not decisive nor, in my respectful opinion, relevant to a determination of whether the refusal of leave by a single judge or the appeal itself can be called into question by way of appeal."

28 The final point dealt with by Steytler J was of a policy nature, namely, whether it was desirable that there should be an appeal from the grant or refusal of leave to appeal from a decision of an arbitrator, whether the substantive matter had or had not been dealt with. Given the approach taken in other jurisdictions as outlined by Mathews AJ, I consider that any such reservations should be put to one side for the sake of both uniformity and comity.

29 Specifically, I agree with Mathews AJ that a distinction should not be drawn between a decision granting or refusing leave to appeal from an award, and a decision on the appeal itself. I also agree that in the context of the Act the words "Supreme Court" as used in s 38 are not defined. Section 4 defines "the Court" to mean the Supreme Court, unless the arbitration agreement provides for jurisdiction to be conferred on the District Court, in which case "the Court" means the latter court. Elsewhere in the Act "the Court" and "the Supreme Court" seem to be used to distinguish cases in which the Supreme Court has exclusive jurisdiction from cases in which the District Court might also have jurisdiction. I agree with Mathews AJ that if the respondent's submission were to be accepted, "the Supreme Court" would have a different meaning in the context of s 38 from that in other parts of the Act. No reason has advanced why this should be so. In addition, as Mathews AJ has pointed out, if the grant or refusal of leave is to be confined to a single Judge, but the determination of an appeal is not, this requires the words "Supreme Court" to be given a different meaning within the confines of s 38 itself.

30 In my view, it has not been demonstrated that in the context of this uniform scheme of legislation the usual right of appeal should not apply to the grant or refusal of leave to appeal by a single Judge. As Mathews AJ points out, the respondent then says that the decision to refuse leave to appeal under s 38(4) is an interlocutory judgment or order.

31 It is clear that an order granting leave to appeal is an interlocutory order. In Sanofi v Parke Davis Pty Ltd [1982] HCA 9; (1981) 149 CLR 147, Gibbs, Stephen and Mason JJ said:

"A final judgment is one which finally disposes of the rights of the parties: Hall v Nominal Defendant [(1966) [1966] HCA 36; 117 CLR 423, at 439-440, 443]; Licul v Corney[(1976) [1976] HCA 6; 50 ALJR 439 at 444]; Port of Melbourne Authority v Anshun Pty Ltd [No 1] [(1980) 147 CLR 35 at 38]; Carr v Finance Corporation of Australia Ltd [No 1] [(1981) 147 clr 247 AT 248, 253-254]. It was not suggested that the order of the Federal Court in the present case finally disposed of the rights of the parties under s 90 of the Patents Act: obviously it did not. What was contended by Mr Lyons on behalf of Sanofi was that the order of the Federal Court finally determined that Parke Davis had a right to appeal to the Federal Court. The order proceeded on the basis that Parke Davis had a right to apply for leave to appeal, and that it was competent to the Federal Court to grant it leave to appeal. However, it was submitted that Parke Davis had no right to seek or obtain leave to appeal, since it had not been a party to the proceedings in the Supreme Court. It was submitted that a power of appealing is a right, and not a matter of mere procedure, and that the order of the Federal Court finally disposed of that right in the present case.

There is, as Mr Handley for Parke Davis submitted, a short and conclusive answer to that contention. The Federal Court did no more than grant leave to file and serve a notice of appeal. It is always open to a court which has granted leave to appeal or special leave to appeal to rescind that grant if it later appears to the court, in the light of further information or argument, that the leave or special leave should not have been granted. That course has been taken by this Court in appropriate cases. The order of the Federal Court therefore did not finally dispose of the right of Parke Davis to appeal, or of the right of Sanofi to hold its judgment free of any possibility of appeal, because the Federal Court might, on reconsideration, rescind the grant of leave. It is irrelevant whether or not it is likely that the Federal Court would make an order rescinding the grant of leave, since it is the legal force of the judgment in question, and not its practical effect, that has to be considered in determining whether or not the judgment is a final one: see Hall v Nominal Defendant [(1966) 117 CLR at 440-441, 444-445]; Carr v Finance Corporation of Australia Ltd [No 1] [(1981) 147 CLR at 248, 256-257]. For those reasons the order of the Federal Court was interlocutory and there was no right of appeal from it to this Court. The objection to competency was accordingly upheld."

See also D'Esterre v Ausplat Minerals NL (In Liq) (1991) 4 WAR 548 at 553 per Malcolm CJ (with whom Rowland and Walsh JJ agreed).

32 This raises the question whether a distinction is to be drawn in the present context between an order granting leave to appeal which has been held to be interlocutory and an order refusing leave to appeal on the basis that the latter is final. In this context I agree with Mathews AJ that the decisions in Costain and Civil Tech, coupled with the assumptions made in the Court of Appeal of New South Wales to which her Honour has referred that an appeal was available by leave, should be followed as a matter of comity. While the usual practice is to seek leave from the primary Judge in the first instance, such leave is not a precondition to be satisfied before the jurisdiction of the Full Court to grant leave under s 60(1) of the Supreme Court Act can be invoked.

33 In Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) [2001] HCA 49; (2001) 75 ALJR 1342, a taxpayer sought leave to appeal to the Supreme Court of Victoria from a decision of the Victorian Civil and Administrative Tribunal affirming a decision of the Commissioner of State Revenue (Vic). No reasons were given. The primary Judge refused leave without giving reasons. Section 17(2) of the Supreme Court Act 1986 (Vic) provides that:

"Unless otherwise expressly provided by this or any other Act, an appeal lies to the Court of Appeal from any determination of the Trial Division constituted by a Judge."

34 Section 148(1) of the Civil and Administrative Tribunal Act 1998 (Vic) ("the Tribunal Act") provides that:

"A party to a proceeding may appeal, on a question of law, from an order of the Tribunal in the proceeding:

(a) to the Court of Appeal, if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others; or

(b) to the Trial Division of the Supreme Court in any other case:

if the Court of Appeal or the Trial Division, as the case requires, gives leave to appeal."

35 The Court of Appeal dismissed the appeal on the ground that s 148 of the Tribunal Act expressly provided, within the meaning of s 17(2) of the Supreme Court Act, that there was no appeal to the Court of Appeal from an order of the Supreme Court granting or refusing leave to appeal from an order made by a non-presidential appeal. The taxpayer appealed to the High Court by special leave on the ground that it was entitled to appeal to the Court of Appeal against the refusal of leave by the primary Judge. The High Court allowed the appeal. It was held by Gaudron, Gummow, Hayne and Callinan JJ that s 148(1) of the Tribunal Act was not an express provision of a kind contemplated by s 17(2) of the Supreme Court Act because s 148(1) of the former Act did not deal with appellate review of decisions made by the Supreme Court. The essential character of s 148 was that of a provision for the institution of proceedings in the Supreme Court by leave in which the correctness in law of the decision of the Tribunal could be challenged: Roy Morgan at [12] and [15] per Gaudron, Gummow, Hayne and Callinan JJ; and at [40] - [51] per Kirby J and, in particular, his Honour's comments on Lane v Esdaile [1891] AC 210 and the passage in the judgment of Lord Esher in In re Housing of the Working Classes Act 1890; Ex parte Stevenson, supra.

36 It was also held by the joint judgment at [14] and [21] and by Kirby J at [55] - [56] that because s 148(1) of the Tribunal Act gave a divided right of appeal to the Court of Appeal, this did not have the effect of expressly providing that there was no appeal under s 17(2) of the Supreme Court Act against a refusal of leave under s 148(1) of the Tribunal Act. The effect of s 148(1) was to make special provision for the Court of Appeal to decide whether an appeal lies against an order of the Tribunal when constituted by the President.

37 It was also held by the joint judgment at [19] and by Kirby J at [57] that there is a distinction between leave to commence proceedings against an administrative decision-maker for error of law and leave to initiate an appeal against a decision of a court. Their Honours considered that the latter kind of decision is final and may be more readily reached than a conclusion that a litigant is barred from invoking judicial review without the legitimacy of that bar being capable of consideration on appeal in the same way as any other determination of the Court would be. In other words, a decision of the latter kind, even if final, should not be regarded as conclusive in the absence of an express provision excluding an appeal.

38 Finally, following the conclusion of the argument on 19 July 2002, counsel for the applicant drew our attention to the very recent decision of the Court of Appeal of Victoria in Energy Brix Australia Corp Pty Ltd v National Logistics Co-ordinators (Morwell) Pty Ltd [2002] VSCA 113 in which it was held that there was nothing in the Supreme Court Act 1986 (Vic) or in the provisions of the Commercial Arbitration Act 1984 (Vic) which by "otherwise expressly providing" would exclude an appeal from a decision of the trial Judge to the Court of Appeal in accordance with the provisions of s 17(2) of the Supreme Court Act, as those provisions had been interpreted by the High Court in Roy Morgan Research, supra. The leading judgment was delivered by Ormiston JA, with whom Winneke P, Phillips, Buchanan and Vincent JJA agreed. Referring to the conflict between Aintree and Civil Tech, Ormiston JA commented at [20] that were it not for the subsequent decision of the High Court in Roy Morgan Research, some further analysis of the competing decisions would be required:

"... especially by reason of the rule that on uniform legislation the appeal courts of the States should ensure as far as practicable that it be uniformly interpreted, so that courts should only refuse to follow a decision of another appellate court if it can be seen to be plainly wrong. However, not only do I think that the reasoning of Lander J in the Civil Tech case should be preferred, but the clear reasoning of the High Court in Roy Morgan Research Centre must now make it well nigh impossible to raise arguments along lines which were preferred by the members of the Western Australian Full Court. It is sufficient that I say that I agree with Lander J's analysis of the two judgments given in the Western Australian decision [Rowland J and Steytler J gave the principal judgments, Wallwork J concurring in Steytler J's judgment], although counsel criticised his Honour for failing to deal with a line of authority, discussed by Rowland J in the Western Australian decision, which derived from the decision of the House of Lords in Lane v Esdaile [[1891] AC 210]. That decision, however, was firmly disapproved, at least in its general application to cases such as the present, in Roy Morgan Research Centre [See per Gaudron, Gummow, Hayne and Callinan JJ at 1345-1346 pars [14]-]17], and also their discussion of the more recent decision of the Privy Council in Kemper Reinsurance Co v Minister of Finance [2000] 1 AC 1]. It is therefore sufficient to say that nothing in the decision of the Western Australian Full Court in Aintree Holdings persuades me to take a different view of the proper meaning and intendment of s 38, nor as to the effect of s 17(2) of the Supreme Court Act, from that which I have already formed and stated."

39 I note that at [23] Ormiston J commented on the question whether an appeal lay as of right or only by leave as follows:

"This latter question raised the issue whether his Honour's decision was 'interlocutory', within the meaning of s 17A of the Supreme Court Act. There is now a vast range of authority on the meaning of that term in statutes over the years and it is sufficient to say that the answer to the question posed in this particular case is by no means easy and is not the subject of binding authority. The matter was discussed in Costain Australia Ltd v Frederick W Neilson Pty Ltd [[1988] VR 235], but there was little detailed analysis and s 38 was then quite different in the sense that subs (6) expressly required that leave be granted. Subsequently in Roy Morgan Research Centre, in relation to a not dissimilar provision, the matter was discussed in passing [at 1347 par [23]], but not for the purpose of expressing a concluded opinion, and so the matter is beset with uncertainty, a characteristic of such provisions over the years."

"In my opinion, for reasons which will appear later in this judgment, the conventional test for resolving whether leave to

appeal should be granted is here clearly satisfied in that the determination of the learned judge was attended with sufficient doubt and, moreover, substantial injustice would be caused to the appellant if the primary order were allowed to stand. [See the conventional test as laid down in cases such as Niemann v Electronics Industries Ltd [1978] VicRp 44; [1978] VR 431] In the light of that conclusion I do not believe it would be profitable to examine the present question further, for the outcome will be [the] same, namely, that this Court should consider the merits of the appeal. I would therefore grant leave to appeal, if necessary."

41 The notice of appeal in the present case assumed that there was an appeal as of right from the refusal of leave by Roberts-Smith J. Counsel for the appellant applied for leave to amend the notice of appeal to include an application for leave to appeal, in the event that it was concluded that leave was necessary. In my opinion, while there is no right of appeal from the refusal of leave by a Judge or Master under s 60(1)(f), an application for leave to appeal against an interlocutory judgment or order may be renewed before the Full Court: SCM Chemicals Ltd v Saipem Australia Pty Ltd (1991) 4 WAR 569 per Rowland J at 574; and per Nicholson and Walsh JJ at 576 - 578 and 582 - 583 approving D'Esterre v Austplat Minerals NL (supra) per Malcolm CJ at 550 - 552; and West Australian Newspapers Pty Ltd v Nationwide News Pty Ltd (1991) 4 WAR 554.

42 In the circumstances, as Mathews AJ concluded, it was appropriate to treat the appeal as an application for leave to appeal.

43 MURRAY J: In form this matter came before this Court as an appeal against a decision by Roberts-Smith J made on 9 November 2001. The effect of that decision was to dismiss the appellant's application for leave to appeal against parts of an interim award made by an arbitrator and against the arbitrator's final award on various grounds alleging errors of law arising out of the awards, to which I shall return in more detail shortly.

44 A preliminary question arises as to the competence of the appeal. The debate between the parties is discussed at length in the reasons of Mathews AJ which I have had the advantage of reading in draft and with which I agree. I need not repeat what her Honour has written in evaluating the various submissions made but I wish to endeavour to state as briefly as possible the considerations which would lead me to the view

that, putting to one side for the moment the question whether there should be an application for leave to appeal, the appeal is competent and this Court has jurisdiction to hear it.

45 For me, the question turns upon the clear provisions of the Commercial Arbitration Act 1985 (WA), s 38 and various provisions of the Supreme Court Act 1935 (WA). It is important, I agree, in interpreting s 38 of the Commercial Arbitration Act to have regard to the fact that it is a provision which takes its place in a national scheme of uniform legislation governing commercial arbitrations. I agree also that it is evident from various provisions of the Act that the policy of the legislation is to establish a framework for commercial arbitration and to confine the involvement of the courts to the resolution of legal issues but, of course, it is a trite observation that the clear words of the statute must, in the context of the resolution of this issue, be given their ordinary and natural meaning.

46 Section 38(1) provides that without prejudice to the right of appeal conferred by subs (2) "the Court" has no jurisdiction "to set aside or remit an award on the ground of error of fact or law on the face of the award." The term "the Court" is defined by the Commercial Arbitration Act, s 4(1) generally to mean the Supreme Court, but by s 4(2), where an arbitration agreement provides that the District Court shall have jurisdiction under the Act or the parties to an arbitration agreement have so agreed, then where the Act speaks of "the Court", that is to be taken to be a reference to the District Court. So the general scheme of the Act in this regard seems to me to be clear. The courts generally may not exercise powers of review which they might otherwise possess by statute or at common law, whether of a prerogative character or otherwise.

47 The only way the terms of an award by an arbitrator may be made the subject of a review by a court is under s 38(2) which provides that, subject to subs (4), "an appeal shall lie to the Supreme Court on any question of law arising out of an award." It is upon this Court that that jurisdiction is specifically conferred. Section 38(4) provides that the appeal may be brought by any party to an arbitration agreement with the consent of all others or, subject to s 40 of the Act, with the leave of the Supreme Court. The effect of s 40 is that, by agreement, the parties to an arbitration agreement may exclude the right of appeal under s 38(2).

48 By the Supreme Court Act, s 41(1), so much of the jurisdiction of this Court conferred upon it, inter alia, "by any statute in force in this State" which is not required to be exercised by the Full Court is to be exercised by a single Judge in accordance with the provisions of the Supreme Court Act and the Rules of Court. The relevant rules are to be found in the Rules of the Supreme Court, O 81D and the only matter which need be mentioned is that, consistently with the provisions of the Supreme Court Act, by O 81D r 3(2) the appeal is to be by originating motion to a Judge in court. This was the proceeding dealt with by Roberts-Smith J.

49 Section 38 provides guidance in s 38(5) as to how the discretion to grant or refuse leave should be exercised. The subsection provides:

"(5) The Supreme Court shall not grant leave under subsection (4) (b) unless it considers that --

(a) having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and

(b) there is --

(i) a manifest error of law on the face of the award; or

(ii) strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law."

Roberts-Smith J refused leave. Had his Honour exercised his discretion to grant leave, then the appeal itself would, under s 38 and s 41(1) of the Supreme Court Act, have been dealt with by a single Judge. The powers of the Supreme Court so constituted on the determination of such an appeal are set out in s 38(3). Final orders may be made or the Court's opinion as to the question of law raised may be stated and the award may be remitted to the arbitrator for further consideration. At that point, the work of the section is done: cf Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) [2001] HCA 49; (2001) 75 ALJR 1342.

50 The parties in this case agree that if leave is granted, the decision of that Judge or a different Judge on the appeal itself would be appellable to the Full Court pursuant to s 58(1)(b) of the Supreme Court Act as an appeal from a Judge sitting in court in the ordinary way. The question is whether such an appeal lies, if necessary by the leave of the Judge or the Full Court in respect of an interlocutory order under the Supreme Court Act, s 60(1)(f), against the decision of a Judge granting or refusing leave under s 38(4) of the Commercial Arbitration Act. Whether such a decision be interlocutory or final, it is still a decision of the Judge in just the same way as the final determination of the appeal.

51 To my mind, the work of s 38 is to provide for an appeal from the arbitrator to a single Judge of this Court. It says nothing about whether or not a further appeal may lie from the decision of that Judge. That question is resolved by the application of the Supreme Court Act which makes it clear that a further appeal will lie to the Full Court, with or without leave, and thus the competence of the appeal brought to this Court, subject to the question of the need for leave, if that view is right, would be established.

52 This Court was constituted by five Judges because if that view is correct, it would involve departing from the unanimous opinion expressed by this Court (Rowland, Wallwork and Steytler JJ) in Aintree Holdings Pty Ltd v Corderoy (1996) 16 WAR 416. Further, reference should be made to the earlier case of Roberts v Roberts (1992) 8 WAR 170 in which at 173 Malcolm CJ, with whom Pidgeon and Murray JJ agreed, said, without deciding the point:

"On the face of it, there is much to be said for the view that once an application for leave to appeal has been made to the Supreme Court under s 38 of the Commercial Arbitration Act and leave has been refused by the court, there is no further right of appeal to the Full Court from the refusal of leave, unless such a right can be found in some express statutory provision. That follows from the general position which has been accepted that a right of appeal is a creature of statute."

It follows from the view I have expressed that, as I am at present advised, the further right of appeal, with or without leave, to the Full Court is conferred by the Supreme Court Act, the provisions of which are not excluded from operation by any provision of the Commercial Arbitration Act.

53 This Court will not lightly depart from one of its previous decisions. It will only do so if convinced that the earlier decision was wrong or that there is some other compelling reason why the previous decision should no longer be followed: Re Calder; Ex p Cable Sands (WA) Pty Ltd (1998) 20 WAR 343 per Steytler J at 354. With respect for the contrary view, I have come to the conclusion that Aintree is wrong and should not be followed. But there is a further compelling reason why it should not be followed and that lies in the contrary decision of the Full Court of SA in Minister for Industrial Affairs v Civil Tech Pty Ltd [1997] SASC 6298; (1997) 69 SASR 348 where Lander J, with whom Doyle CJ and Bleby J agreed, came to the conclusion that on the slightly different legislation of SA there was a further avenue of appeal to the Full Court from the decision of a single Judge refusing the application for leave to appeal from the arbitrator. That right was found to stem from the Supreme Court Act 1935 (SA), s 50(1) together with the interpretation of the Commercial Arbitration Act 1986 (SA), s 38. In my opinion s 50(1) of the SA Supreme Court Act is to the same effect as s 58(1)(c) and s 60 of our Supreme Court Act, when read together.

54 The same view was reached by the Court of Appeal of Victoria in a decision given on 8 August 2002, after this appeal was argued: Energy Brix Australia Corp Pty Ltd v National Logistics Coordinators (Morwell) Pty Ltd [2002] VSCA 113, per Ormiston JA, giving the judgment of the court. Section 38 of the Commercial Arbitration Act 1984 (Vic) is identical to our section. His Honour relied on the conferral of a right of appeal by the Supreme Court Act 1986 (Vic) s 17(2), as interpreted by the High Court in Roy Morgan, from any "determination" of a Judge to the Court of Appeal "unless otherwise expressly provided by this or any other Act". To my mind the different wording of this section from the provisions of our Supreme Court Act does not provide a relevant point of distinction from this case.

55 The view to which I have come therefore has the advantage of consistency with the decisions of the SA Full Court and the Court of Appeal of Victoria in the context of the application of the uniform national legislative scheme provided by the Commercial Arbitration Acts of the various Australian jurisdictions.

56 The next question is whether the appeal lies as of right or whether the order made by Roberts-Smith J was an "interlocutory order" in respect of which leave to appeal is required under the Supreme Court Act, s 60(1)(f). Like Mathews AJ I think it was of that character because his Honour's refusal of leave to appeal was not such as to finally determine the rights of the parties in a principal, rather than subsidiary, cause pending between them, the test which is generally applied in respect of this question: Metcalf v Permanent Building Society (1993) 10 WAR 145, 149 following decisions of the High Court and a number of earlier Full Court decisions.

57 The refusal of leave under s 38(4)(b) has been held to be an interlocutory order: Civil Tech at 352, citing Costain Australia Ltd v F W Nielsen Pty Ltd [1988] VicRp 32; [1988] VR 235. The question was referred to, without deciding it, in Energy Brix. But in my opinion, the order was interlocutory because the refusal of leave is procedural in character when regard is had to its legal effect, rather than its practical effect of leaving the parties bound by the award from which it is sought to appeal: Licul v Corney [1976] HCA 6; (1976) 180 CLR 213, 219 - 220, 225. More generally, this Court has held that the grant or refusal of leave is an interlocutory order: D'Esterre v Austplat Minerals NL (1991) 4 WAR 548, 553. There is authority that the grant of leave to appeal has been held to be an interlocutory order: Sanofi v Parke Davis Pty Ltd [1982] HCA 9; (1981) 149 CLR 147, 152 - 153. Similarly, this Court has held that the grant of leave by the District Court to commence an action for damages under s 93D of the Workers' Compensation and Rehabilitation Act 1981 (WA) (as it then was) is an interlocutory order: Fairstar Pty Ltd v Milson, unreported; FCt SCt of WA; Library No 990014; 16 December 1998.

58 In case that should be the view of the Court, the appellant moved for leave to appeal. The making of an application for leave is not just a matter of form, particularly I think in this case, having regard to the evident policy of the Commercial Arbitration Act. Generally speaking, the Court will approach the question of the exercise of its discretion to grant leave to appeal from the point of view that the purpose of requiring the grant of leave is to reduce, so far as possible, appeals from interlocutory orders. Generally speaking, the question which it is sought to ventilate on the appeal needs to be of some particular importance and the decision below needs to be established to be clearly wrong or at least attended by sufficient doubt to warrant the intervention of the appellate court. In addition it needs to be the case that substantial injustice would be done by leaving the decision unreversed: Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40 per Malcolm CJ at 54 - 57.

59 In the context of this legislation, it seems to me that that requirement increases substantially the difficulty of the task of a prospective appellant from the refusal of leave to appeal from an arbitrator's award, when one considers that such leave may only be granted in the circumstances specified in the Commercial Arbitration Act, s 38(5). Not only is it necessary that the question of law raised may have a substantial impact upon the rights of the parties to the arbitration agreement, but it must be one the resolution of which may have a wider impact by adding substantially to the certainty of commercial law.

60 In Promenade Investments Pty Ltd v NSW (1992) 26 NSWLR 203 Sheller JA, with whom Meagher JA agreed, said at 222:

"A determination which adds substantially to the certainty of commercial law may be a determination of a question of the construction of a contract in standard terms rather than the construction of a one-off clause."

At 226, as to the need to demonstrate a manifest error of law on the face of the award, his Honour said that the error ought to be clearly apparent:

"There should, in my opinion, before leave is granted be powerful reasons for considering on a preliminary basis, without any prolonged adversarial argument, that there is on the face of the award an error of law."

If that did not appear, then it should be possible to demonstrate clearly by evidence that the arbitrator's award is affected by an error of law, although the error does not appear on its face. Again at 226 his Honour said that there must be demonstrable by evidence, "what might otherwise be called on the leave application a strong prima facie case ...".

61 In this case therefore it must be demonstrated that Roberts-Smith J was in error in refusing to grant leave having regard to the criteria laid down in s 38(5) and in circumstances which this Court feels would require it to intervene by the grant of further leave to appeal.

62 As to the merits of the appellant's contention that Roberts-Smith J erred in that way, I respectfully agree with all that Mathews AJ has written. As to the question of the repayment of interest, having regard to the terms of the contract, it seems to me that the matter is abundantly clear and the question will sustain little debate. In the circumstances of this case, there being no main contractor's representative appointed and therefore no payment certificate, by cl 42.1 the respondent was obliged to "pay the amount of the [appellant's] claim" but that was a provisional payment "on account only" and the clause provided:

"A payment made pursuant to this Clause shall not prejudice the right of either party to dispute under Clause 47 whether the amount so paid is the amount properly due and payable and on determination whether under Clause 47 or as otherwise agreed of the amounts so properly due and payable, the Main Contractor or Subcontractor, as the case may be, shall be liable to pay the difference between the amount of such payment and the amount so properly due and payable."

63 In this case the amount of the claim was not paid by the due date calculated under cl 42.1. Interest was therefore payable under cl 42.9, in this case at the rate of 18 per cent per annum compounded six monthly to the date when the money was paid. To my mind it is clear that the purpose of that financial penalty is to encourage timely payment. The intention is that the subcontractor is to have the use of the money claimed and any interest paid under the contract pending the final determination, by arbitration under cl 47 or the agreement of the parties, of the final amount which was properly due and payable under the contract.

64 But the interest paid, although required because of the default of the respondent in not making a timely payment of the claim, is to my mind part of the provisional payment subject to the final determination of the rights and liabilities of the parties. Therefore, when upon arbitration it was found that there had been an overpayment in the sense that a portion of the appellant's claims were found not to be justified, by cl 47.3:

"If one party has overpaid the other, whether pursuant to a Main Contractor's Representative's certificate or not and whether under a mistake of law or fact, the arbitrator may order repayment together with interest."

I agree that when the conclusion was reached that an amount had been overpaid, that conclusion applied to the interest applicable to that amount as much as to the capital sum.

65 The next point raised concerns the arbitrator's award of interest on the amount of the repayment which he judged to be required, a repayment of both principal and interest. Having regard to his power to order repayment of that which was overpaid "together with interest", there could be no complaint, and there is no complaint, that the arbitrator ordered the payment of interest in respect of the amount of the overpayment which he ordered should be repaid, but cl 47.3 provides to the arbitrator the power to award, "whatever interest the arbitrator considers reasonable." The arbitrator in this case said that as the interest originally paid by the respondent on the overpaid amount of the claim was that calculated under cl 42.9, he saw no reason to fix a different rate under cl 47.3 and therefore concluded that the amount of 18 per cent per annum compounded six-monthly was "reasonable in this instance".

66 The appellant's contention is, as I understand it, that the arbitrator erred in law because it was not open to him to reach the conclusion that he did as to what was a reasonable rate of interest. It was a discretionary judgment which the arbitrator had to make and so, in my opinion, the appellant would have to establish, within the parameters of s 38(5) of the Commercial Arbitration Act, that the arbitrator's exercise of discretion miscarried because he could not properly have come to the conclusion that to award interest at the rate he did was reasonable. Of course, the appellant has also to establish that the failure of Roberts-Smith J to be so persuaded was an error of a kind which would require the grant of leave to appeal.

67 To my mind, the appellant cannot discharge this requirement. The question is not whether the award of interest at the rate fixed on both the overpaid principal and interest was harsh or that some lesser rate might reasonably have been fixed, but whether this rate and award could not be justified as being reasonable. The respondent had been kept out of the overpaid principal and interest fixed at the rate stipulated in cl 42.9. That was now to be repaid and the evident purpose of the award of interest upon that repayment is to compensate the respondent for having been wrongly kept out of its money in the way described. If the appellant was to be compensated for late payment at the rate fixed by cl 42.9, I can see no reason why it might not be reasonable to compensate the respondent at the same rate for being kept out of its money.

68 As to the question of costs, I have nothing to add to the reasons of Mathews AJ. In my opinion, the appellant has failed to establish that the discretionary judgment of the arbitrator as to the award of costs so miscarried as to involve an error of law, or that the approach of Roberts-Smith J to this issue itself involved any error.

70 ANDERSON J: I have had the advantage of reading the reasons for judgment of Mathews AJ in draft. I entirely agree with those reasons and with the orders proposed and there is nothing I can usefully add.

71 STEYTLER J: I have had the advantage of reading the reasons for judgment of Mathews AJ. I am in complete agreement with them.

72 I would only add, for myself, that, having had the benefit of what has been said by the Full Court of the South Australian Supreme Court in

Minister for Industrial Affairs v Civil Tech Pty Ltd [1997] SASC 6298; (1997) 69 SASR 348 and, more recently, by the Victorian Court of Appeal in Energy Brix Australia Corporation Pty Ltd v National Logistics Co-ordinators (Morwell) Pty Ltd [2002] VSCA 113, I consider that, both as a matter of principle and of comity, this Court should follow the decision in Civil Tech in preference to that in Aintree Holdings Pty Ltd v Corderoy (1996) 16 WAR 416. I agree, in that respect, with all that Mathews AJ has said. There is nothing I wish to add.

73 MATHEWS AJ: The appellant seeks to appeal against orders made by Roberts-Smith J on 9 December 2001. A threshold issue has been raised as whether the Full Court has jurisdiction to hear this appeal. However, before dealing with this or any of the other issues raised on the appeal, it is apposite to describe the background of the matter. It has a long and somewhat complex history. The account which follows is as brief as circumstances permit. For reasons of clarity I shall refer to the appellant as "Lamac" and the respondent as "Devaugh".

74 Lamac is a plumbing company and Devaugh a building contractor, both based in Bunbury. In 1996 Devaugh was contracted to construct a hospital and associated facilities known as the Bunbury Health Campus. On 25 November 1996, it subcontracted the plumbing and hydraulic work to Lamac for a lump sum figure of $3,698,414. The subcontract was based on Australian Standard Subcontract Conditions AS2545/1993.

75 The subcontract provided for Devaugh to appoint a Main Contractor's Representative (MCR) to facilitate its dealings with Lamac, and a number of the clauses in the subcontract assumed the existence of an MCR. One of these was cl 42.1, which stipulated that Lamac's claims for payment under the contract were to be delivered to the MCR. The MCR was then required, within 21 days, to issue to Devaugh a payment certificate stating the payment which, in the MCR's opinion, was to be paid by Devaugh to Lamac or vice versa.

76 In fact no MCR was appointed by Devaugh during the course of the subcontract. It was not until April 1999, after all plumbing work had been completed, that an MCR was appointed. This meant that no payment certificate was ever issued by an MCR within the time specified in cl 42.1.

77 The scheme provided under cl 42.1 was such that, in the absence of a payment certificate, Devaugh was required to pay the full amount of any claim for payment made by Lamac within 35 days after receipt of the claim by the MCR. This clause is pivotal to these proceedings and will be quoted later at par [63].

78 Between 5 August 1998 and 2 February 1999 Lamac lodged 17 claims for payment with Devaugh totalling $675,147.14. None of these claims related to the price payable under the original subcontract, which had already been paid in full. These additional claims related to work said to have been carried out by Lamac under variations or additions to the contract.

79 Devaugh failed to make any payment to Lamac as sought in these claims. Lamac therefore commenced proceedings in the Supreme Court seeking recovery of the full amount claimed. On 25 June 1999 Master Bredmeyer awarded summary judgment in favour of Lamac for $737,757.13 being the amount claimed of $675,147.14 plus interest of $62,609.99. The interest was assessed according to the rate stipulated in cl 42.9 of the subcontract, namely 18 per cent compounded at six-monthly intervals.

80 Devaugh appealed to the Full Court from Master Bredmeyer's decision. On 8 December 1999 the court dismissed the appeal. Two main issues were raised by Devaugh before the Master and again on appeal. The first arose from the fact that no MCR had been appointed under the subcontract. Devaugh contended that, as Lemac's claims had never been delivered to an MRC under cl 42.1, the 35-day period specified in that provision could not commence to run, and Lemac had no entitlement to payment of its claims. The Full Court found that, as Devaugh had failed to appoint an MCR, which was a breach of the subcontract, it was to be implied that Devaugh itself would perform the functions of the MCR under cl 42.1 of the subcontract. A further issue was raised by reason of the fact that Lamac's claims were for work performed outside the main subcontract. Devaugh contended that cl 42.1 did not apply in relation to this work. This matter was also determined adversely to Devaugh. The court emphasised, however, as had Master Bredmeyer, that although Devaugh was obliged to pay the full amount of Lamac's claim, that payment was provisional only. As Malcolm CJ said at par [57]:

"The payment was provisional, subject to the final payment claim and final certificate procedures and, finally, to the dispute resolution procedure under cl 47. In the event the claims were found to be excessive Lamac would be obliged to refund any excess to Devaugh."

81 On 22 December 1999 Devaugh paid Lamac the full amount claimed, namely $675,147.14, together with interest which by then amounted to $85,031.43, further interest having accrued since Master Bredmeyer's decision on 25 June 1999.

82 A number of disputes remained outstanding between the parties. These were submitted first to mediation and later to arbitration in accordance with cl 47.3 of the subcontract.

83 On 4 July 2000, the arbitrator handed down a consent interim award which dealt with some of the matters at issue between the parties. The remaining disputes were ventilated at subsequent hearings before him and on 16 November 2000 he delivered his second interim award. This dealt with all outstanding issues other than costs. The arbitrator found that certain of the moneys previously paid by Devaugh had been overpaid and were not properly claimable by Lamac for work carried out pursuant to the contract. He ordered Lamac to repay Devaugh the amount of the overpayment together with the interest on that amount which Devaugh had paid. He ordered Lamac to pay interest on the total amount overpaid, including the interest component, at 18 per cent compounded at six-monthly intervals. It is that part of the award which relates to interest which is challenged in these proceedings.

84 On 30 November 2000, Lamac's solicitors sent to the arbitrator a notice of Lamac's intention to appeal the second interim award. Subsequently, the arbitrator directed the parties to submit written submissions with respect to the costs of the arbitration. On 12 January 2001, the arbitrator delivered his final award relating to costs. He expressed the view that Devaugh was the successful party and ordered Lamac to pay its costs.

85 Lamac then sought leave to appeal from both the second interim award and the final award pursuant to s 38 of the Commercial Arbitration Act 1985 (WA) (the Act). Lamac submitted that the arbitrator had made a clear error of law in ordering the repayment to Devaugh of all interest previously paid by it on overpaid moneys and also in ordering that Lamac pay interest at the "penalty rate" of 18 per cent on the moneys overpaid. Lamac also claimed that the arbitrator's order as to costs was erroneous in law.

86 On 2 November 2001, Roberts-Smith J refused leave to appeal from the arbitrator's award. His reasons for doing so will be discussed later.

87 On 23 November 2001, Lamac lodged a notice of appeal to the Full Court seeking that his Honour's orders be set aside and that Lamac be given leave to appeal pursuant to s 38 of the Act and that the arbitrator's award be set aside insofar as it dealt with the issues of interest and costs.

88 A preliminary issue arises as to the jurisdiction of the Full Court to deal with an appeal of this nature. In a previous judgment of the Full Court in Aintree Holdings Pty Ltd v Corderoy (1996) 16 WAR 416, it was unanimously held that an appeal does not lie to the Full Court from a decision of a single Judge refusing leave to appeal under s 38(4) of the Act. As it transpires, both the Court of Appeal of New South Wales and the Full Court of the Federal Court had previously assumed jurisdiction in appeals of this nature without discussing the issue. However, the Court in Aintree was not referred to these cases. In 1997 the South Australian Supreme Court came to consider the same issue. In Minister for Industrial Affairs v Civil Tech Pty Ltd [1997] SASC 6298; (1997) 69 SASR 348, the Full Court unanimously granted leave to appeal from a single Judge's refusal of leave to appeal under s 38 of the Act. The Court declined to follow Aintree, saying that it was plainly wrong. It is therefore necessary in this case to determine whether we should follow Aintree in the light of the decision in Civil Tech.

89 If we decide, contrary to Aintree, that the Full Court does have jurisdiction to hear an appeal from a single Judge's refusal of leave under s 38(4) of the Act, a further question arises as to whether the initial refusal of leave was a final or an interlocutory order. Devaugh's counsel submits that it was an interlocutory order, and that leave to appeal from it should have been sought from the primary Judge. That course not having been taken, it is submitted that this Court cannot now deal with the matter.

90 The first of these issues raises significant matters of principle relating to the construction of s 38 and the need for uniformity in the application of national legislation. An appropriate starting point in examining this issue is s 28 of the Act which emphasises the binding and final nature of an arbitrator's award:

"28. Unless a contrary intention is expressed in the arbitration agreement, the award made by the arbitrator or umpire shall, subject to this Act, be final and binding on the parties to the agreement."

91 Section 28 must be read subject to s 38, which confers a right to appeal to the Supreme Court in limited circumstances. That section provides as follows:

"38. (1) Without prejudice to the right of appeal conferred by subsection (2), the Court shall not have jurisdiction to set aside or remit an award on the ground of error of fact or law, on the face of the award.

(2) Subject to subsection (4), an appeal shall lie to the Supreme Court on any question of law arising out of an award.

(3) On the determination of an appeal under subsection (2), the Supreme Court may by order --

(a) confirm, vary or set aside the award; or

(b) remit the award, together with the Supreme Court's opinion on the question of law which was the subject of the appeal, to the arbitrator or umpire for reconsideration or, where a new arbitrator or umpire has been appointed, to that arbitrator or umpire for consideration,

and where the award is remitted under paragraph (b) the arbitrator or umpire shall, unless the order otherwise directs, make the award within 3 months after the date of the order.

(4) An appeal under subsection (2) may be brought by any of the parties to an arbitration agreement --

(a) with the consent of all the other parties to the arbitration agreement; or

(b) subject to section 40, with the leave of the Supreme Court.

(5) The Supreme Court shall not grant leave under subsection (4) (b) unless it considers that --

(a) having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and

(b) there is --

(i) a manifest error of law on the face of the award; or

(ii) strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law.

(6) The Supreme Court may make any leave which it grants under subsection (4) (b) subject to the applicant complying with any conditions it considers appropriate.

(7) Where the award of an arbitrator or umpire is varied on an appeal under subsection (2), the award as varied shall have effect (except for the purposes of this section) as if it were the award of the arbitrator or umpire."

92 The first matter to be noted is that s 38 is not now in the same form as it was when Aintree was decided. In 1997 the Act was amended in a number of respects. As relevant here, subss (5) and (6) of s 38 were amended and a new subs (7) was inserted. The effect of these amendments was to introduce the restrictions now contained in subs (5)(b) of the Act. Previously, the only restriction on granting leave under subs (4)(b) was that now contained in subs (5)(a), namely that the determination of the question of law concerned could substantially affect the rights of a party to the arbitration agreement.

93 The court in Aintree consisted of Rowland, Wallwork and Steytler JJ. The court was unanimously of the view that no appeal lay to the Full Court from a single Judge's refusal of leave to appeal against an arbitrator's award. Rowland J based his conclusion on the then s 38(6) of the Act (now s 38(7)) which, he suggested, indicated that the primary Judge's finding under s 38 should be final and not subject to appeal. Steytler J, with whom Wallwork J agreed, reached the same conclusion but for different reasons. Indeed, his Honour expressly disagreed with the reasoning of Rowland J. Steytler J acknowledged the well-accepted principle that, when parliament invests a court with jurisdiction to determine an issue, it will ordinarily be assumed that the jurisdiction includes all its incidents including the right to appeal: Electric Light & Power Supply Corporation Ltd v Electricity Commission (NSW) (1956) 94 CLR 555. Steytler J considered that there was nothing in s 38 of the Act which expressly excluded an appeal to the Full Court from the determination of a single Judge under s 38(4) and (5). However, he had regard to the scheme of the commercial arbitration legislation which placed considerable emphasis upon the provision of "informal, comparatively inexpensive and speedy relief to parties to arbitration agreements." It was the clear policy of the Act to reduce curial involvement to a minimum. This policy was evident within the scheme of s 38 itself. Moreover, the jurisdiction of the Supreme Court to grant or refuse leave to appeal from an arbitrator's award was subject to the discretionary considerations provided for by s 38(5). His Honour continued (page 423):

"The discretionary nature of an order granting or refusing leave does, I think, lend support to the argument, advanced on behalf of the respondent, that a refusal of leave is intended to amount to a final closing of what would, in the absence of consent, be the only door to the appellate jurisdiction of the Supreme Court."

94 The only other judgment which has expressly addressed this question is that of the Full Court of the South Australian Supreme Court in Civil Tech. Section 38 of the South Australian Act, as considered by the court in Civil Tech, was identical to the current s 38 in the Western Australian Act and was therefore different from the provisions considered in Aintree.

95 The primary judgment in Civil Tech was given by Lander J, with whom Doyle CJ and Bleby J agreed. In essence, Lander J considered that there was nothing in the terms of s 38 to derogate from the assumption that, when legislation grants access to the curial process by conferring jurisdiction on a court to deal with a particular matter, it will be taken to grant access to all incidents of that jurisdiction including its appellate structures.

96 Lander J referred to a number of cases in which appellate courts had assumed, albeit without argument on the matter, that an appeal lay from the decision of a single Judge to grant or refuse leave under s 38(4). They were: the decisions of the Federal Court in Commonwealth v Rian Financial Services and Development Pty Ltd [1992] FCA 239; (1992) 36 FCR 101; the Court of Appeal of New South Wales in Promenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203; Natoli v Walker, unreported; NSWCA 40351/93; 26 May 1994; New South Wales v Coya (Construction) Pty Ltd, (unreported; CA, 4 August 1995); and the Full Court of South Australia in Leighton Contractors Pty Ltd v South Australian Superannuation Fund Investment Trust (1995) 12 BCL 38. In discussing Aintree, His Honour acknowledged the need for comity between intermediate appellate courts in relation to national legislation. However, he was unable to find anything within the terms of s 38 which suggested that the grant or refusal of leave under s 38(4) should be decided only by a single Judge. Indeed, he considered that the section suggested otherwise, in that one of the preconditions for the granting of leave (absent a manifest error of law on the face of the award) is that the determination of the question might add substantially to the certainty of the commercial law. Lander J commented that the certainty of the commercial law would be better served by allowing access to intermediate Courts of Appeal and, if necessary, to the High Court. He concluded that the decision in Aintree was plainly wrong and should not be followed.

97 It is because of the nature of this issue that a Full Court of five Judges has been convened to hear this case. The appellant, not surprisingly, submits that this Court should reconsider the stand taken in Aintree and follow the decision in Civil Tech. Mr Edmonds SC, who appears for the respondent, urges that, notwithstanding the comments of Lander J in Civil Tech, the decision in Aintree was correct and should be followed.

98 A Full Court of this Court, even if comprised of five Judges, will not lightly depart from one of its previous decisions. It will do so only when it is convinced that the earlier decision was wrong or when there is some other compelling reason why the previous decision should no longer be followed: Re Warden Calder; ex parte Cable Sands (WA) Pty Ltd (1998) 20 WAR 343 per Steytler J at 354.

99 The appellant suggests that compelling reason for overruling Aintree is to be found in the desirability of national uniformity in this area of the law. The Western Australian Commercial Arbitration Act is part of a uniform national legislative scheme involving all states and territories. It is therefore strongly desirable that there be uniformity in the construction and application of the legislation between those jurisdictions. In this respect, it is to be noted that s 38 in its present form appears to be identical in all jurisdictions.

100 Jurisdiction to review the decision of a single Judge granting or refusing leave to appeal under s 38(4) has been assumed to exist by the New South Wales Court of Appeal, the Full Court of the Federal Court and the Full Court of the South Australian Supreme Court. Certainly there was no discussion of the issue in any case other than Civil Tech. Nevertheless, from a practical point of view, the decision in Aintree would appear to place the Western Australian Supreme Court out of step with those other jurisdictions. Lamac's counsel submits that this alone constitutes sufficient ground to overrule Aintree, given the desirability of uniformity in this area of the law.

101 Devaugh's counsel relies upon two separate but linked arguments in refutation of this proposition and in support of a submission that no relevant issue of uniformity arises as a result of the conflict between Aintree and Civil Tech. Mr Edmonds concedes that uniformity is desirable in relation to the construction and interpretation of substantive provisions of the various Commercial Arbitration Acts, given their national application. On this basis, he accepts that the decision of the New South Wales Court of Appeal in Promenade Investments, elucidating s 38(5), so far as it specifies the criteria for the grant of leave to appeal, should be followed in all jurisdictions. However, he submits that a decision as to whether an appeal lies from a leave decision under s 38(4) is in a different category. This is because the access to appellate structures in any given jurisdiction will depend, not upon the terms of the Commercial Arbitration Act, but rather upon local legislation, particularly the applicable Supreme Court Acts and Rules. To illustrate this proposition, and in support of his second argument, Mr Edmonds referred us to s 101 of the Supreme Court Act 1970 (NSW). Subsection 101(1) provides for a general right to appeal to the Court of Appeal from judgments or orders of the Court and from other specified decisions or determinations. Subsection 101(2) goes on to provide that an appeal shall not lie to the Court of Appeal except by leave of that Court, from a number of specified judgments and orders. Par 101(2)(i) refers to a "judgment, order or determination in proceedings in the Court under the Commercial Arbitration Act 1984." Any doubt that this included appeals under s 38(4) would be put to rest by Part 72A Rule 6 of the Rules of Court, which makes specific provision for appeals under that subsection.

102 Mr Edmonds relies upon the New South Wales legislation as undermining the assumption which, he says, was made by the Court in Civil Tech, namely that when the New South Wales Court of Appeal assumed jurisdiction in appeals from leave decisions under s 38(4), it did so because of the terms of the Commercial Arbitration Act. In fact the Court was bound to do so because of the provisions of the New South Wales Supreme Court Act.

103 Two observations can be made in relation to this submission. The first is this. An analysis of both Aintree and Civil Tech makes it clear that the outcome of the substantive jurisdictional issue inevitably turns on the construction to be placed on s 38, and particularly s 38(5). The mere fact that in some jurisdictions the issue might be regulated by other State legislation, so that recourse to s 38 is unnecessary, does not derogate from the general proposition that, where possible, the provisions of commercial arbitration legislation should receive uniform interpretation across jurisdictions. The second point relates to the terms of the New South Wales legislation. It is undeniably correct that the New South Wales Court of Appeal has assumed jurisdiction in these cases, not because of any assumption as to the construction of s 38, but because of the terms of the local legislation. On the other hand, the manner in which the New South Wales Supreme Court Act deals with this matter does not give great comfort to Devaugh's arguments on the jurisdictional issue. For s 101(2) is a restrictive provision. It imposes a leave requirement on appeals from judgments or orders which, it is to be assumed, would otherwise be appellable without leave. In other words, the legislation appears to assume the pre-existence of a right of appeal from a leave decision under s 38(4) of the Act, and then proceeds to place a leave requirement on it.

104 In my view, nothing which has been put before us derogates from the desirability of uniformity in relation to the availability of appellate review under s 38, insofar as that matter rests upon the construction of the Commercial Arbitration Act.

105 What follows from this proposition is simply this. At present this Court appears to be out of step with other jurisdictions which have, tacitly or otherwise, dealt with this issue. Unless Aintree is overruled, this unsatisfactory situation is likely to continue indefinitely. There is much to be said for the proposition that this alone would provide sufficient ground for overruling Aintree. However, Devaugh's counsel submits that Aintree was clearly right and that Civil Tech was wrong, these being the only cases which have given the issue any real consideration. He says, with some force, that it is more important that the law be right than that it be uniform. Accordingly, it is appropriate to revisit the issues discussed in both these cases.

106 In urging that we should prefer Aintree to Civil Tech, Devaugh's counsel relies strongly on the policy considerations underlying the commercial arbitration legislation, together with the terms of s 38(5) itself. He submits that single Judges can readily determine issues such as whether there has been a "manifest error of law on the face of the award" without the need for appellate intervention. He points out that the requirements set out in s 38(5) constitute a necessary basis for obtaining leave to appeal but not necessarily a sufficient one. The Judge hearing the matter retains an overriding discretion as to whether leave should be granted in any particular case.

107 Mr Edmonds took us to several criticisms made by appellate Judges, particularly in New South Wales, about the extent of curial involvement in commercial arbitration cases. Adverse comment has been made on a number of occasions as to the extent of protracted and expensive litigation following arbitral awards, notwithstanding the obvious intention of the commercial arbitration legislation to promote speedy and economic resolution of commercial disputes. We were particularly referred to the comments of Kirby P in Natoli. His Honour, in that case, having referred to the extensive litigation following an arbitrator's award, made the following observations:

"I state these facts at the outset because they represent the apparent defeat of the policy adopted by Parliament when it enacted the Commercial Arbitration (Amendment) Act 1990 (the Act). As will be explained, that Act amended s38 of the Commercial Arbitration Act 1984 to confine most narrowly the cases in which appeals to the Supreme Court from an award of an arbitrator would be permitted. The policy behind the amendments, as explained in Promenade Investments Pty Ltd v State of New South Wales (1991) 26 NSWLR 203 (CA), 221ff was to promote the finality of arbitral awards even at the price of denying a party its usual entitlement to the determination of the dispute by a court of law, ie the precise assignment of the parties' legal rights after a detailed scrutiny of the relevant facts and application of the relevant law."

108 On the basis of this and other similar comments, Mr Edmonds ventured to suggest that other State or Territory courts, if given the option, would much prefer to follow Aintree than Civil Tech.

109 It is, of course, not open for the New South Wales courts to follow Aintree, as the matter is regulated by the Supreme Court Act (NSW). In any event, it is apparent that Kirby P's comments in Natoli, and other similar comments were expressing frustration at the failure of the strict criteria now contained in s 38(5) to confine the flow of cases into the judicial system in the manner which had been hoped. These comments certainly highlight the policy underlying the commercial arbitration legislation, of reducing curial involvement to a minimum. However, I do not understand them to be suggesting that the grant or refusal of leave to appeal under s 38(4) should be the exclusive domain of single Judges and immune from appellate review. In further response to this submission, I would point out that in the one case which did consider this issue after Aintree, namely Civil Tech, the court expressly declined to follow the reasoning in Aintree.

110 In discussing the substance of this issue, it is appropriate to emphasise the following three propositions. None of them is in dispute:

First, the clear policy of the Commercial Arbitration Act is to achieve speedy economic and informal relief to parties to arbitration agreements. Curial involvement is to be kept to a minimum.

Second, in the normal course of events, when legislation refers the determination of a matter to a court, it will normally be taken to include all incidents of the court's jurisdiction including the right of appeal.

Third, there is nothing in s 38 which explicitly restricts an appeal from the grant or refusal of leave under subs (4).

111 These propositions were accepted in Aintree. The majority of the Court in that case considered that there was an implicit exclusion of appellate review to be inferred from the terms of s 38. The matter primarily relied upon in reaching this conclusion was the extent of the judicial discretion conferred by the then s 38(5).

112 Since Aintree, s 38 has been amended. Additional criteria have been introduced into subs (5) which are to be met before leave will be granted. A judicial discretion remains, but it is much more circumscribed than previously.

113 Both parties rely on these subsequent amendments as supporting their respective arguments. Mr Curthoys, who appeared for Lamac before us, submitted that the significant reduction in judicial discretion brought about by these amendments served correspondingly to reduce the weight of the principal matter relied upon in Aintree for concluding that the primary Judge's finding under s 38(5) should not be subject to appeal.

114 Devaugh's counsel, on the other hand, submitted that the amendment of s 38 after Aintree supported the respondent's case. For, when the amendments were introduced, no attempt was made to redefine the words "Supreme Court" in subss (4) or (5) so as to include the court's appellate jurisdiction. This being the case, he submitted that the legislature must have intended that the words should continue to have the same meaning as defined in Aintree. This presumption was expressed by the High Court in Re Alcan Australia Ltd; Ex parte Federation of Industrial Manufacturing and Engineering Employees [1994] HCA 34; (1994) 181 CLR 96 at 106 in the following terms:

"There is abundant authority for the proposition that where the Parliament repeats words which have been judicially construed, it is taken to have intended the words to bear the meaning already 'judicially attributed to (them)', although the validity of that proposition has been questioned."

115 The court went on to say that the strength of the presumption in that case was considerably enhanced by the legislative history of the Act under consideration.

116 It is clear that the weight to be attached to this presumption will vary according to the circumstances of the particular case. In the present case, the amendments to s 38 of the Western Australian Act were designed to bring that section into conformity with the same provisions in other states and territories. This being the case, it is very difficult to place any great significance on the proposition urged by Mr Edmonds.

117 The respondent does not suggest that, once leave has been granted under s 38(4), a Judge's determination on the consequent appeal should itself be immune from further appeal. It is only the decision to grant or refuse leave to appeal from an arbitrator's award which the respondent says should finally resolve the issue. To this extent Mr Edmonds says that the reasoning of Lander J in Civil Tech involved a misconception as to the effect of Aintree. Once leave to appeal has been granted and the appeal determined, a right to appeal exists so that all relevant issues can then be ventilated at appellate level. There was therefore no basis, he submitted, for the concern expressed by Lander J in Civil Tech that an adoption of the Aintree approach would preclude significant issues from being determined at appellate level.

118 I understand the respondent's submissions on this matter. However, I find it very difficult to discern why a distinction should be drawn, as the respondent seeks to do, between a decision granting or refusing leave to appeal from an award, and a decision on the appeal itself. In analysing this submission, it is apposite to consider the criteria specified in s 38(5), which constitute the minimum basis for obtaining leave to appeal under subs (4). Amongst other requirements, leave will not be granted unless there is either a manifest error of law on the face of the award, or strong evidence that the arbitrator made an error of law. If a Judge finds that there is a manifest error of law on the face of an award and that the other conditions for the granting of leave have been met, including discretionary considerations, then the consequent appeal will be virtually bound to succeed. Similarly, if a Judge found that there was strong evidence that an arbitrator had made an error of law, assuming that the other preconditions for leave had been made out, it is highly likely that the appeal itself would succeed, particularly as the issues relevant to the appeal are, as Mr Edmonds pointed out, almost invariably ventilated during the leave proceedings. It follows that a party who is unsuccessful in resisting a leave application will almost inevitably be unsuccessful in the appeal itself. In a real sense, the substantial issues will already have been ventilated and determined during the leave proceedings. In my view, it would be quite unfair to preclude a party in this situation from arguing on appeal that leave should not have been granted in the first place, given that the granting of leave would in many cases have been determinative of the issues in the appeal. Nor can there be any distinction in principle between the grant and the refusal of leave so far as appellate review is concerned. Indeed, Mr Edmonds does not suggest that there should be.

119 The words "Supreme Court" as used in s 38 are not defined in the Act. Section 4 defines "the Court" to mean the Supreme Court unless an arbitration agreement provides for jurisdiction to be given to the District Court, in which event "the Court" means that court. Thereafter, and throughout the Act, the words "the Court" and "the Supreme Court" are used, apparently to distinguish situations where only the Supreme Court is to have jurisdiction from those where the District Court might also have jurisdiction if that is provided in the arbitration agreement. If the respondent's submission were to be accepted, it would mean that the words "the Supreme Court" in s 38 would have a different meaning from that which attaches to the same words in other parts of the Act. One would need compelling grounds to conclude that this was intended by the legislature. And the complications go even further. For if, as the respondent suggests, the grant or refusal of leave to appeal is to be confined to a single Judge, but the determination of an appeal is not, then the same words "the Supreme Court" will bear a different meaning even within the provisions of s 38.

120 In my view, there is no basis for finding that the grant or refusal of leave to appeal from an arbitrator's award should not be subject to the usual rights of appeal available in the Court. It follows that, both as a matter of principle and of comity, I consider that this Court should follow the decision in Civil Tech in preference to the decision in Aintree.

121 This finding as to jurisdiction is not, however, the end of the matter. For the respondent submits that the primary Judge's decision refusing leave to appeal under s 38(4) was an interlocutory judgment. Appeals from such judgments can only be brought by leave, which is generally sought from the primary Judge. This step not having been taken, Devaugh's counsel submits that the appeal is incompetent.

122 I shall deal with this issue relatively briefly. An appropriate starting point is s 58 of the Supreme Court Act 1935 (WA). This section provides that, subject to the Act and Rules, the Full Court is deemed to have jurisdiction to hear and determine a number of specified appeals and causes including, under subs (1)(b), appeals from a Judge of the court whether sitting in court or in chambers. Section 60(1)(f) provides that no appeal shall lie to the Full Court from any interlocutory order or judgment made by a Judge or Master "without the leave of the Judge or the Master or of the Full Court." A number of exceptions are specified which do not apply here.

123 Devaugh's counsel submits, as indicated, that Roberts-Smith J's refusal of leave to appeal from the arbitrator's award was an interlocutory judgment and that leave was required under s 60 of the Supreme Court Act. In the normal course of events, it was submitted, leave to appeal to the Full Court should be sought from the primary Judge. If leave is refused, no appeal lies from that decision although it remains open for a party to renew an application for leave before the Full Court: Casella v Bradshaw Judd & Collins Pty Ltd, unreported; FCt SCt of WA; 22 October 1997.

124 The primary issue to be determined under this head is whether Roberts-Smith J's decision refusing leave to appeal under s 38(4) was a final or an interlocutory judgment. A final judgment is one which finally disposes of the rights of the parties: Sanofi v Parke Davis Pty Ltd [1982] HCA 9; (1981) 149 CLR 147 at 152. Lamac's counsel submits that the primary Judge's refusal of leave under s 38(4) was a final judgment. It had the result that the parties were bound by the arbitrator's award and that no further recourse was available to them outside the appeal structure of the court.

125 At first sight this argument appears to be a persuasive one. The refusal of leave to appeal under s 38(4) is a far cry from procedural orders made in pre-hearing disputes pending the final determination of cases before the Court. However, as the New South Wales Court of Appeal made clear in Gosford City Council v Timbs, unreported; NSWCA 31; 21 July 2000, the question of whether an order is final rather than interlocutory is not to be determined by reference to the practical consequences of the order, but rather to the nature of the order itself, and in particular whether it finally determines the rights of the parties inter se.

126 There is clear authority that an order granting leave to appeal, whether from an interlocutory or a final judgment, is itself an interlocutory order. The court in Sanofi, supra, Gibbs CJ, Stephen and Mason JJ said as follows at 153:

"It is always open to a court which has granted leave or special leave to appeal to rescind its order if it later appears that the leave or special leave should not have been granted."

127 Just as leave to appeal, once granted, can always be revoked, so it will always remain open to parties to renew applications for leave, notwithstanding a previous refusal, in the event of changed circumstances. There is no reason in principle why leave to appeal under s 38(4) is in any different category. Indeed, there is persuasive authority to the effect that decisions refusing leave to appeal under that section are interlocutory rather than final. That was certainly the opinion of the South Australian Supreme Court in Civil Tech, which in this respect followed the findings of the Full Court of the Victorian Supreme Court in Costain Australia Ltd v F W Nielsen Pty Ltd [1988] VicRp 32; [1988] VR 235.

128 It follows, in my view, that the determination of a single Judge granting or refusing leave to appeal under s 38(4) is an interlocutory judgment. It is appellable only by leave. Leave may, however, be granted either by the primary Judge or by the Full Court, in accordance with the terms of s 60(1)(f). The respondent submits that the normal practice is for leave to be sought from the primary Judge, which did not happen in this case. But the seeking of such leave is not a pre-condition to the Full Court's jurisdiction to itself hear a leave application, as s 60(1)(f) makes clear.

129 These proceedings were instituted by the lodgement of a notice of appeal, on the apparent assumption that appeal lay as of right from Roberts-Smith J's refusal of leave to appeal from the arbitrator's award. At the hearing before us, Mr Curthoys sought to amend the relief sought so as to include an application for leave to appeal in the event that leave was found to be necessary.

130 Leave to appeal from an interlocutory judgment will generally be granted if the court is satisfied that the judgment was clearly wrong and that substantial injustice would be done if the judgment were to remain unreversed. This adds yet another hurdle to be surmounted by a party who seeks leave to appeal from a single Judge's refusal of leave under s 38(4). The Court will first need to consider the primary Judge's findings as to why the applicant failed to meet the criteria provided by s 38(5). These criteria are already extremely circumscribed. It is only if the court considers that the primary Judge's findings on that matter were clearly wrong and that it would constitute a miscarriage of justice for the judgment to remain unreversed that this Court will grant leave to appeal.

131 It has not been suggested by the respondent that any prejudice flows from the appellant's belated application to convert what was initially sought to be an appeal as of right into an application for leave to appeal. In my view, it is appropriate therefore to treat the present proceedings as an application for leave to appeal pursuant to s 60(1)(f) of the Supreme Court Act. If leave is granted, we can then proceed to deal with the merits of the appeal on the material before us. While there is no appeal from the refusal of leave by a Judge or Master under s 60(1)(f), an application for leave to appeal may be renewed before the Full Court: SCM Chemicals Ltd v Saipem Australia Pty Ltd (1991) 4 WAR 569 per Rowland J at 574; and per Nicholson and Walsh JJ at 576 - 578 and 582 - 583; approving D'Esterre v Austplat Minerals NL (1991) 4 WAR 548 per Malcolm CJ at 550 - 552; and see West Australian Newspapers Pty Ltd v Nationwide News Pty Ltd (1991) 4 WAR 554.

The Requirements of s 38(5)

132 There is one further matter I should discuss before turning to the substantive issues which have been raised in this case. That is the meaning which should be attributed to the criteria set out in s 38(5)(b). A number of cases have addressed this issue over the years. One of the clearest and most succinct expositions was that enunciated by Sheller JA in Promenade Investments, supra. His Honour, when discussing the amendments to s 38 which led to the insertion of subs (5)(b), said at 222:

"The added requirements of manifest error of law on the face of the award or strong evidence that the arbitrator made an error of law and that the determination of the question may add substantially to the certainty of commercial law suggest that the draftsman was seeking to constrain the exercise of court control over arbitral awards in the manner described by the House of Lords in The Nema. A manifest error of law on the face of the award may be an error which would be apparent to the judge upon a mere perusal of the reasoned award itself without the benefit of adversarial argument. A determination which adds substantially to the certainty of commercial law may be a determination of a question of the construction of a contract in standard terms rather than the construction of a one-off clause. In such a situation, strong evidence that the arbitrator made an error of law may equate with a strong prima facie case that the arbitrator had been wrong in his construction."

133 This finally brings me to a discussion of those parts of the arbitrator's award which were sought to be impugned before the primary Judge.

134 As indicated earlier, there were two aspects of the arbitrator's award which Lamac sought to challenge in the proceedings before Roberts-Smith J. The first, which arose from the second interim award, related to interest on amounts overpaid by Devaugh. The second, which arose from the final award, related to the arbitrator's order that Lamac pay the costs of the arbitration. Before discussing these matters, it is relevant to quote the terms of the subcontract which were relevant to these issues.

135 Clause 42.1 of the subcontract related to payment claims to be made by Lamac. That clause, as relevant here, provided as follows:

"42.1 Payment Claims, Certificates, Calculations and Time for Payment

At the times for payment claims stated in the Annexure and upon issue of a Certificate of Substantial Completion and within the time prescribed by Clause 42.7, the Subcontractor shall deliver to the Main Contractor's Representative claims for payment supported by evidence of the amount due to the Subcontractor and such information as the Main Contractor's Representative may reasonably require. Claims for payment shall include the value of work carried out by the Subcontractor in the performance of the Subcontract to that time together with all amounts then due to the Subcontractor arising out of or in connection with the Subcontract or for any alleged breach thereof.

Within 21 days after receipt of a claim for payment, the Main Contractor's Representative shall issue to the Main Contractor and to the Subcontractor a payment certificate stating the payment which, in the opinion of the Main Contractor's Representative, is to be made by the Main Contractor to the Subcontractor or by the Subcontractor to the Main Contractor.

...

If the Subcontractor fails to make a claim for payment under Clause 42.1, the Main Contractor's Representative may nevertheless issue a payment certificate.

Subject to the provisions of the Subcontract, within 35 days after receipt by the Main Contractor's Representative of a claim for payment or within 14 days of issue by the Main Contractor's Representative of the Main Contractor's Representative's payment certificate, whichever is the earlier, the Main Contractor shall pay to the Subcontractor or the Subcontractor shall pay to the Main Contractor, as the case may be, an amount not less than the amount shown in the Certificate as due to the Subcontractor or to the Main Contractor as the case may be, or if no payment certificate has been issued, the Main Contractor shall pay the amount of the Subcontractor's claim. A payment made pursuant to this Clause shall not prejudice the right of either party to dispute under Clause 47 whether the amount so paid is the amount properly due and payable and on determination (whether under Clause 47 (or as otherwise agreed) of the amount so properly due and payable, the Main Contractor or Subcontractor, as the case may be, shall be liable to pay the difference between the amount of such payment and the amount so properly due and payable.

Payment of moneys shall not be evidence of the value of work or an admission of liability or evidence that work has been executed satisfactorily but shall be a payment on account only, except as provided by Clause 42.8."

136 Clause 42.6 related to the effect of payment certificates. It was in the following form:

The issue of a payment certificate or a Certificate of Substantial Completion shall not constitute approval of any work or other matter nor shall it prejudice any claim by the Main Contractor or the Subcontractor."

137 Clause 42.9, which is central to the issues raised in this case, related to interest on overdue payments. It provided as follows:

If any moneys due to either party remain unpaid after the date upon which or the expiration of the period within which they should have been paid then interest shall be payable thereon from but excluding the date upon which, or the expiration of the period within which they should have been paid, to and including the date upon which the moneys are paid. The rate of interest shall be the rate stated in the Annexure and if no rate is stated the rate shall be 18 percent per annum. Interest shall be compounded at six monthly intervals."

138 Finally, cl 47 provided for the resolution of disputes between the parties. Clause 47.3, relating to arbitration, was in the following terms:

Arbitration shall be effected by a single arbitrator who shall be nominated by the person named in the Annexure, or if no person is named, by the Chairperson for the time being of the Chapter of the Institute of Arbitrators Australia in the State or Territory named in the Annexure. Such arbitration shall be held in the State or Territory stated in the Annexure.

Unless the parties agree in writing, any person agreed upon by the parties to resolve the dispute pursuant to Clause 47.2 shall not be appointed as an arbitrator, nor may that person be called as a witness by either party in any proceedings.

Notwithstanding Clause 42.9, the arbitrator may award whatever interest the arbitrator considers reasonable.

If one party has overpaid the other, whether pursuant to a Main Contractor's Representative's certificate or not and whether under a mistake of law or fact, the arbitrator may order repayment together with interest."

139 In his second interim award, the arbitrator found that $431,501.78 of the $675,147.14 paid by Devaugh to Lamac on 22 December 1999 had been overpaid and was not properly claimable by Lamac for work carried out pursuant to the subcontract. No complaint is presently levelled at this aspect of the arbitrator's award. Indeed, by the time of the second interim award, a significant portion of the overpayment had already been repaid by Lamac to Devaugh. Lamac's complaint is that the arbitrator made an error of law in the manner in which he dealt with interest on the overpayment. In this respect, the arbitrator's orders relating to interest can conveniently be divided into two.

140 First, the arbitrator calculated that Lamac's original claim of $675,147.14 had been overpaid to the extent of 63.1 per cent. Devaugh had paid interest of $85,031.43 on the full amount claimed. The arbitrator concluded that Devaugh was entitled to be repaid the same proportion (63.1 per cent) of its interest payment. On this basis the arbitrator calculated the amount of interest to be repaid by Lamac to be $54,343.59.

141 Secondly, the arbitrator ordered that Lamac pay interest on the total amount overpaid by Devaugh, including the interest component, from the date of Devaugh's payment up to the date of the second interim award, namely 16 November 2000. He specified an interest rate of 18 per cent compounded at six-monthly intervals.

142 Lamac submits that the arbitrator made a clear error of law in making each of these orders. The issues raised in relation to each of them are essentially different and I shall discuss them separately.

143 In his second interim award, the arbitrator posed a number of questions which he proceeded to answer and then appended his reasons. Question 6 was in the following terms:

"Has the claimant (Lamac) been overpaid and by how much and is the respondent (Devaugh) due the return of interest or part thereof, in relation to the payment of $675,147.14 plus interest of $85,031.43?"

144 The arbitrator answered this question in the affirmative. He gave the following reasons:

"The claim was in fact in error because the Claimant was not entitled to all the money claimed so Lamac were in fact in default.

To attempt to keep interest on monies that were not due is not contractually correct.

The Claimant was not kept out of all their money, because they were not owed all of it.

I have read the judgement of the Supreme Court 1999 WASCA 280, which deals with the appeal by Devaugh against the judgement by Master Bredmeyer on 25th June, 1999, in which Devaugh were ordered to pay Lamac the sum of $675147.14 plus interest of $62609.99.

The decision of the appeal was delivered on 8th December, 1999, by which time the interest had amounted to $85031.43, calculated at the rate of 18% per annum, compounded at 6 monthly intervals.

The claimant has repaid the sum of $179218.46 on 4th July, 2000 as a result of the agreements reached at mediation. The Claimant also repaid a further sum of $145,987.32 on 15th August, 2000 as a result of a reduction of claims made in Folder F and an amount of $400.40 as a result of back charges. This makes a total repayment of $325606.18.

At 57 on page 22 of the Supreme Court Judgement, Malcolm CJ says in the last sentence, 'In the event the claims were found to be excessive Lamac would be obliged to refund any excess to Devaugh.'

In my view, if Lamac are obliged to refund part of the principal they must also be obliged to refund part of the interest.

As the original interest was calculated at 18% per annum as set in Cl.42.9. I see no reason to alter that percentage figure for the purpose of calculating refund amounts of interest and under Cl. 47.3 I consider the amount of 18% per annum compounded at 6 monthly intervals to be reasonable in this instance.

I do not agree with counsel for the Claimants submission, that the Arbitrator is being asked to overturn a decision on interest, of the Full Court. Rather my understanding of the judgement is that the interest was calculated on the amount claimed for the time outstanding. If the amount claimed was excessive then the interest would also be excessive.

The total amount of the over payment is $431501.78 as shown in the following calculations."

145 It is unnecessary to reproduce the arbitrator's calculations relating to interest here. For the purpose of Lamac's first ground, we are concerned only with the $54,343.49 which the arbitrator calculated to be the interest Devaugh had paid to Lamac on moneys overpaid by it (see par 67).

146 In order to fully appreciate the issues raised under this ground, it is helpful to repeat a little of the factual background. Lamac, it will be remembered, made a number of claims on Devaugh totalling $675,147.14. It commenced proceedings in the Supreme Court to recover this amount. Both Master Bredmeyer and the Full Court found that, in the absence of an MCR, Devaugh was required to pay the full amount claimed. However, the court emphasised the provisional nature of the payment. Because Devaugh had not made payment within the time stipulated in cl 42.1 of the subcontract, Devaugh was required to pay interest on the total amount claimed at the rate specified in cl 42.9 of the contract, at least up to the date of Master Bredmeyer's decision on 25 June 1999. Thereafter interest was paid at the rate of 6 per cent in accordance with normal Supreme Court rates.

147 Lamac's case is simply this. Had Devaugh not been in default under cl 42.9, it would have paid no interest on the amounts claimed by Lamac. It was therefore Devaugh's conduct which gave rise to the interest payment, not the conduct of Lamac. Lamac, as both Master Bredmeyer and the Full Court found, was entitled to receive the full amount claimed in accordance with the terms of the contract. Certainly Devaugh's payment was a provisional one pending final resolution of the matter. As it eventuated, part of the money was not properly claimable by Lamac and therefore needed to be repaid to Devaugh. But Lamac itself was never in default under the contract. To this extent the arbitrator's statement that Lamac was "in default" in his answer to question 6 constituted, Mr Curthoys submitted, a manifest error of law. The interest component on the overpaid amount was, according to this submission, not itself an overpayment. It was an additional amount which Devaugh was required to pay by reason only of its own default under the contract. Lamac, which had not been in default, should not be required to repay it.

148 It can be seen that Lamac's claim to retain the interest paid by Devaugh is essentially based on its categorisation of that payment as not being an overpayment and not being provisional. Mr Curthoys conceded that the overpayments made by Devaugh, on which the interest was based, were plainly provisional. However he submitted that the interest itself did not bear that nature, nor was it an overpayment, as it arose solely from Devaugh's default under the contract.

149 There are powerful arguments against this proposition. As Mr Edmonds pointed out, the categorisation suggested by Lamac is based on a false assumption. For it presupposes that the full amount claimed by Lamac against Devaugh was in fact "due" to Lamac under cl 42.9 of the contract. Lamac was certainly entitled under the contract to enforce payment of its claims, albeit that they were provisional claims only. This entitlement was upheld by the Full Court. But the Court emphasised the provisional nature of both the claims and the payment. As it transpired, a significant proportion of the amount claimed by Lamac was not properly claimable for work performed under the contract. It was therefore not "due" to Lamac under cl 42.9. Lamac was no more entitled to retain the interest on this amount than it was entitled to retain the amount itself.

150 This argument is, in my view, clearly correct. It would be artificial in the extreme to categorise the principal sum paid by Devaugh as an overpayment, but to give some other character to the interest which was paid upon it. Neither principal nor interest would ever have been paid had Lamac not overstated its claim in the first place. It is clear, in my view, that the payment of both components was a provisional one. It was dependent upon Lamac ultimately substantiating its claim. Had it done so, it would have been entitled to keep both principal and interest. However, it failed to do so and both components were liable to be repaid to Devaugh.

151 This conclusion accords not only with the terms of the contract, but is also consistent with principle and fairness. The essential purpose of interest is to compensate its recipient for being kept out of pocket of funds to which it is entitled. In this case, Lamac was never out of pocket for the amount to which this interest related, for it was not properly claimable for work done under the contract. It would in my view constitute a significant windfall to Lamac and be most unfair to Devaugh, if Lamac were to be permitted to retain interest on money to which it had no proper claim in the first place.

152 These matters were all ventilated before Roberts-Smith J. His Honour's findings are encapsulated in the following passage from his judgment:

"I see no reason why an amount of interest which was paid on a principal amount which itself was an overpayment, should not be regarded as an overpayment. The total payment (the excessive part of the principal plus interest on that) was more than that to which Lamac was entitled. So regarded, the whole was an 'overpayment'."

153 It will be clear from all I have said that I am in complete agreement with his Honour's approach. In my view, both the arbitrator and Roberts-Smith J were correct in the decisions they made on this issue. I would not grant leave to appeal on this ground.

The Rate of Interest Awarded by the Arbitrator

154 Lamac's second complaint as to interest is directed to the arbitrator's order that Lamac pay interest on the amount overpaid by Devaugh (including the interest component of $54,343.59) at the rate of 18 per cent, compounded at six-monthly intervals.

155 The total amount overpaid by Devaugh, according to the arbitrator's finding, was $431,501.78. Some of this had already been repaid by Lamac before the second interim award. The arbitrator calculated interest on the amount outstanding at the rate of 18 per cent per annum compounded at six-monthly intervals. Thus calculated, the interest amounted to $98,857.39. Further, the arbitrator ordered that Lamac pay $14,679.63 being interest at the same rate on the $54,343.49 which was the overpaid interest.

156 Lamac submitted in relation to these orders that the arbitrator made a clear error in setting the interest rate at the "default" rate specified in cl 42.9 of the contract.

157 I should start this discussion by referring to a matter of law which was raised before his Honour, but which was not directly adverted to before us. Nevertheless it is, in my view, a matter which should be raised, if only to be put to rest again. It arises from the terms of s 31 of the Commercial Arbitration Act. That section, as relevant here, provides:

"31. Interest up to making of award

(1) Unless a contrary intention is expressed in the arbitration agreement, but subject to subsection (4), where the arbitrator or umpire determines to make an award for the payment of money (whether on a claim for a liquidated or an unliquidated amount), the arbitrator or umpire shall have power to include in the sum for which the award is made interest at such rate as the arbitrator or umpire may direct (being a rate not exceeding the rate at which interest is payable on a judgment debt of the Supreme Court) on the whole or any part of the money for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

(2) ...

(3) ...

(4) This section does not --

(a) authorize the awarding of interest upon interest."

158 The effect of s 31(4) is to preclude an award of compound interest. It may also, in this case, preclude the accruing of interest on that part of Devaugh's overpayment which consisted of interest. Roberts-Smith J considered this section, and concluded that the restriction in subs (4) could be excluded by the expression of a contrary intention contained in an arbitration agreement. Devaugh had submitted to his Honour that cl 47.3, which enables the arbitrator to award such interest as he "considers reasonable", exhibits such a contrary intention. In my view, there is much to support this submission, given that the only interest rate specified in any provision of the contract is the compound rate set out in cl 42.9. Roberts-Smith J did not make a concluded finding on this matter. He said that there was "an argument that cl 47.3 does not authorise an award of compound interest." However, he went on to say that the different calculation which would result if this conclusion were correct would not be sufficiently substantial to meet the requirement of s 38(5)(a). There was therefore no basis for granting leave to appeal under s 38(4) of the Act on this account.

159 I agree with his Honour's findings on this matter. Accordingly, s 31 can be put to one side. It can be assumed for present purposes that there was no statutory impediment to the arbitrator's award of interest at a compound rate, nor to his ordering that interest be paid on that part of Devaugh's overpayment which itself constituted interest.

160 Lamac's principal submission under this second head of interest is that the arbitrator made a manifest error of law when he described Lamac as being "in fact in default" in his answer to question 6. The arbitrator then proceeded, according to this submission, to use this untenable finding as a basis for ordering that Lamac was to pay interest at the "default" rate of 18 per cent specified in cl 42.9. In fact, as Mr Curthoys emphasised, Lamac was not in default. Having submitted its claims for payment under cl 42.1 of the subcontract, it was entitled, in the absence of an MCR, to payment of the full amount claimed. Certainly it was a provisional payment, as the Full Court stressed in its judgment. As it later transpired, a substantial portion of it needed to be and was in fact repaid. But it by no means followed that Lamac was in any way in default under the contract. Accordingly, Mr Curthoys submits that the arbitrator should have ordered that Lamac pay interest on the overdue amount at the normal rate of 6 per cent.

161 In response, Mr Edmonds pointed out that the arbitrator, being a non-lawyer, cannot be expected to use legal terms such as "in default" in their technical legal sense. In any event, the words "default" or "default rate" do not appear in cl 42.9. It was Lamac's counsel who used these words in an endeavour to forge a link between the arbitrator's comments as to Lamac being "in default" and his subsequent awarding of interest at 18 per cent.

162 It is relevant here to repeat that portion of the arbitrator's reasons which Lamac seeks to impugn. What the arbitrator said was:

"The claim was in fact in error because the Claimant was not entitled to all the money claimed so Lamac were in fact in default."

163 Roberts-Smith J declined to accede to Lamac's submission that this passage exhibited an error of law. He said:

"I would not understand the arbitrator's reasons that way. In the context of the question posed by him, I would be inclined to understand the arbitrator as saying simply that Lamac was at fault in claiming the amount it did because it was not in fact entitled to that amount. At the very least the arbitrator's reasons can be read that way. The statement made does not reflect an error of law at all."

164 I agree with his Honour's analysis of this portion of the arbitrator's award. It cannot be said, in my view, that there was a manifest error of law on the face of the award which led to the arbitrator awarding interest at the rate specified in cl 42.9 of the subcontract.

165 However this does not end the matter. For Lamac submits in the alternative that there was strong evidence that the arbitrator made an error of law in awarding interest at this rate, so as to fall within s 38(5)(b)(ii) of the Act.

166 It will be recalled that cl 47.3 of the subcontract provided, inter alia:

"Notwithstanding cl.42.9, the arbitrator may award whatever interest the arbitrator considers reasonable."

167 In his answer to question 6, the arbitrator referred to the fact that Devaugh had paid interest at 18 per cent per annum pursuant to cl 42.9. He proceeded:

"I see no reason to alter that percentage figure for the purpose of calculating refund amounts of interest and under cl 47.3 I consider the amount of 18% per annum compounded at 6 monthly intervals to be reasonable in this instance."

As to this (to repeat Lamac's submission), Mr Curthoys says that Devaugh was in default under the contract whereas Lamac was not. Therefore it was not reasonable to impose the same high rate of interest upon Lamac.

168 The ultimate question is whether the rate of interest ordered by the arbitrator under cl 43.7 was "reasonable". This is, of course, a discretionary assessment and one which is notoriously difficult to upset on appeal: House v The King [1936] HCA 40; (1936) 55 CLR 499. As McHugh JA said in Warley Proprietary Ltd v Adco Constructions Pty Ltd (1982) 8 BCL 300 at 312:

"Where a discretionary judgment is involved, the same body of evidence may reasonably lead different persons to opposite conclusions. Consequently, appellate courts have imposed upon themselves the rule that they will not interfere with a discretionary judgment unless it is the product of error (fact or law) or is plainly wrong."

169 In this case, the reasonableness or otherwise of the high rate of interest awarded by the arbitrator to a large extent depended on how one categorised Lamac's action in making excessive claims under the contract in the first place. If the initial claims were made in good faith and on reasonable grounds, then there is much to be said for the proposition that the interest rate ordered by the arbitrator was excessive. However, if Lamac had been reckless or worse in making its initial claims, then there was strong ground for awarding interest at the high rate stipulated in cl 42.9. After all, Devaugh, which had been kept out of its money in the meantime, had itself paid interest at that rate.

170 The one person who was in a position to make an informed assessment as to the reasonableness of Lamac's initial claims was the arbitrator. It would appear from the terms in which he answered question 6 that he considered that there was some fault on the part of Lamac in making those claims. Whether this be correct or not, it was an assessment which only the arbitrator could make. It is not possible to say, in my view, that he was wrong in making it. There is therefore no "strong evidence" that he made an error of law in determining that it was reasonable that Lamac pay interest at the compound rate of 18 per cent.

171 In my view, Lamac has failed to surmount the hurdle created by s 38(5) in seeking leave to appeal from the arbitrator's decision, insofar as it relates to interest payable by Lamac to Devaugh. Roberts-Smith J was therefore correct in refusing leave to appeal on this ground. No basis has been shown upon which the Full Court should grant leave to appeal from his judgment on this issue.

172 The arbitrator's final award dated 12 January 2001 dealt solely with the issue of costs. Lamac was ordered to pay all Devaugh's costs of the arbitration and mediation with the exception of certain costs relating to the mediation. Paragraphs 1 and 2 of the award were in the following terms:

"1. The general rule for award of costs in any matter is that the successful party shall receive its costs unless there are special circumstances that may indicate otherwise. Where money passes the successful party may generally be defined as the party in whose favour the net balance falls or in another form: The successful party is generally the one who is to receive money regardless of the amount of any claim or counterclaim made during the Arbitration.

2. Both parties claim to be the successful party and although the legal representative for the Claimant put forward a detailed submission as to why they must be considered the successful party I am not convinced other than the Respondent being successful in the ultimate consideration."

173 In the Reasons which accompanied the award, the arbitrator said as follows:

"Which party was successful?

Both parties in their written submissions made much of the settled practice that costs will always be awarded to the successful party unless there are special circumstances that indicate grounds to decide otherwise.

The Claimant submits categorically that it is the successful party and should receive all its cost.

The Respondent also categorically submits that it was the successful party and should receive all its costs.

The flow of money has been from the Claimant to the Respondent and my award states that the Respondent is the successful party.

The Claimant asserts it was successful based upon the assertion by Devaugh that no money was due to Lamac and it was necessary for Lamac to proceed with Arbitration in order to recover monies due.

As a result of the mediation the parties agreed on the value of all claims by the claimant as set out in the first interim award at $343,935, which resulted in the Claimant paying to the Respondent an amount of $179,218.46

The Claimant also repaid an amount of $145,987.32 on 15th August, 2000, as a result of revaluation of Folder F.

As a result of the second interim award the Respondent has been successful in being entitled to recover a further $121,182 not including interest.

It would then seem that as a result of the arbitration process, which was initiated by Devaugh Pty. Ltd., even though they are referred to as the Respondent (the order was changed during the Arbitration process by agreement.) They have managed to recover or are entitled to recover an amount of $446,451.

I agree with the Claimants submission that they have been found to be entitled to the sum of $366,011. However, the respondent has already paid $675,147. to the Claimant by order of the Supreme Court of W.A. for claims, that from the result of the Arbitration, were found to be approximately 50% in excess of what was due, plus together with counter claims have resulted in the Respondent being due the amount of $446,451 plus interest. If Devaugh had not instigated Arbitration proceedings I consider that they would not have recovered or been found to be entitled to recover the amount of $446,451 plus interest.

As was pointed by counsel for the Claimant in Schere v Counting Instruments Ltd (1986) 1 WLR 621 in the Court of Appeal (Eng.)

'------the normal rule is that costs follow the event. That the party who turns out to have unjustifiably given another party cause to have recourse to the courts to obtain his rights is required to recompense that other party in costs.'

For the reasons above I consider that Devaugh Pty. Ltd. must be considered the successful party."

174 I do not propose to discuss this issue in any great detail. Orders as to costs are essentially discretionary. It would require a glaring error or omission for an arbitrator's costs order to fall within the terms of s 38(5) so as to attract leave to appeal. In my view, no such error has been displayed here.

175 Lamac's submission on this issue is the same as it was before the arbitrator, namely, that it was Devaugh, not Lamac, which was ultimately the losing party in the proceedings before the arbitrator.

176 That Lamac was in fact the successful party to the arbitration arises, so it is suggested, from the provisional nature of Lamac's claims, as enforced by the Supreme Court, and of Devaugh's payments under them. Mr Curthoys pointed out that it was Lamac which bore the onus of proving to the arbitrator that any moneys were owing to it under the contract. Had it failed to discharge this onus, then the full amount of $675,147.14 would have been repayable to Devaugh. In the event, Lamac succeeded in establishing its entitlement to $366,011. This was a significant success, Mr Curthoys submitted, given that Devaugh had initially disputed Lamac's entitlement to all but a small portion of its claim.

177 In response to this submission, Mr Edmonds referred us first to s 34 of the Act which provides that costs are in the discretion of the arbitrator. As emphasised in Warley, the court will not interfere with an arbitrator's discretionary assessment unless it is plainly wrong. The factual situation in this case was that Lamac's initial claim from Devaugh amounted to approximately $845,000. Of this, Lamac eventually substantiated an entitlement to approximately $366,000. This meant that Lamac was required to repay Devaugh the sum of $446,451. There was every basis, therefore, upon which the arbitrator was entitled to find that Devaugh was the successful party in the arbitration.

178 All these issues were raised before Roberts-Smith J. His Honour discussed the matter in his judgment in the following terms:

"The arbitrator began with an accurate statement of principle that the general rule is that the successful party shall receive its costs unless there are special circumstances to indicate otherwise (Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [66], [67] - [68], [134]). He also applied the common rule that a successful party is to be identified as that to whom there is a final flow of money (Badge Constructions Pty Ltd v Penbury Coast Pty Ltd [1999] SASC 6; Keywest Construction Group Pty Ltd v Footscray Holdings Pty Ltd, unreported; SCt of WA (Anderson J); Library No 930078; 23 February 1993).

His appended reasons were directed to the question of identifying which party was successful. He correctly recognised there had been numerous claims and counterclaims.

Lamac's argument that it was necessary for it to proceed with arbitration originally because of Devaugh's claim that no further money was payable to Lamac so that Lamac had to proceed in order to recover moneys due, is true, but is only one of a range of relevant considerations, and it is one to which the arbitrator expressly had regard. It therefore cannot be said that the exercise of his discretion miscarried because he failed to take it into account.

It was likewise open to the arbitrator to conclude that if Devaugh had not instituted arbitration proceedings, it would not have been found entitled to receive $446,451 plus interest. There were various factors and considerations which had to be taken into account; the arbitrator seems to have considered them. Beyond that point, it becomes a question of relative weighting. I accept Devaugh's submission that a failure to give sufficient weight to the success of one party on issues on which the party was successful in the context of a determination of costs, will not amount to a manifest error of law (Crewford Pty Ltd v Transit Australia Pty Ltd, unreported; SCt of Qld; 5600/98; 23 March 1999 [13]).

What the applicant seeks to complain of here is not the arbitrator's failure to recognise the proper legal principles, but rather the manner of his application of those principles to the circumstances of the case. In short, the complaint is about the exercise of his discretion. That would not normally give rise to a question of law (Miles v Palm Bridge Pty Ltd [2001] WASC 42 (under appeal)).

I do not discern in the award, nor the arbitrator's reasons, an incorrect statement of legal principle. In my view, no error of law is apparent. That being so, leave to appeal must be refused."

179 In my view, his Honour's approach to this issue was correct. It follows that Lamac has been unable to surmount either the barrier imposed by s 38(5)(b) of the Act or the further barrier, arising from the interlocutory nature of Roberts-Smith J's judgment, of showing that his Honour was clearly wrong.

180 In my view, Lamac has established no ground for granting leave to appeal from Roberts-Smith J's judgment. I would refuse leave to appeal and order that Lamac pay the respondent's costs.