SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

[2017] ACTSC 318

1. That the Interim Arbitral Award given in Arbitration proceedings with the designation IAMA # 5073 delivered on 20 August 2016 be registered as a judgment in favour of the plaintiff in the sum of $217,454.34 including interest.

ARBITRATION - COMMERICAL ARBITRATION - Registration of interim arbitral award - no point of principle

Commercial Arbitration Act 1986 (ACT) ss 33, 38, 42, 48

Court Procedures Rules 2006 (ACT) rr 1901, 3254, 3260

Armacel Pty Ltd v Smurfit Stone Container Corporation [2008] FCA 592; 248 ALR 573

Cadoroll Pty Limited & Others v Mauntill Pty Limited [2000] ACTSC 79

Carl Zeiss Stiftung and Others v Rayner and Others [No 2] [1967] 1 AC 853

Cockatoo Dockyard Pty Ltd v Commonwealth of Australia (No 3) (1994) 35 NSWLR

Dale v Western Australia [2011] FCAFC 46; 191 FCR 521

Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100

Kuligowski v Metrobus [2004] HCA 34; 220 CLR 363

Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 434; 263 ALR 556

Mi v Li [2017] ACTSC 54

Notaras & Anor v St George Bank Ltd & Ors [2005] ACTSC 5; 157 ACTR 1

Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589

Wagdy Hanna and Associates Pty Ltd v National Library of Australia [2012] ACTSC 126

1. The plaintiff in these proceedings seeks to register an Interim Arbitral Award with the designation IAMA # 5073 given in arbitration proceedings and delivered on 20 August 2016 in the sum of $205,121.75 (Award) as a judgment of the Court in favour of the plaintiff. The plaintiff further seeks an order that the defendant pay pre-judgement interest on the sum of the Award.

2. The arbitration proceedings that led to the Award arose out of an agreement between the plaintiff and defendant, concerning the construction of a residential dwelling in Franklin.

3. The defendant has already unsuccessfully sought to set aside the Award in this Court by way of an appeal under the Commercial Arbitration Act 1986 (ACT) (Act): see Mi v Li [2017] ACTSC 54 (Mi v Li).

4. The defendant now resists the application for enforcement, primarily because he says that the plaintiff is not the contractual party to the agreement. He contends that the agreement was assigned by the plaintiff to Kai Design and Construction Pty Ltd. The defendant has filed an application (on 15 September 2017) seeking a declaration to that effect and further seeks security for costs.

5. The defendant makes five additional arguments, either in response to the plaintiff's enforcement application or in support of his application filed on 15 September 2017:

(a) The Award was an interim award, has not been finalised and is not a final order.

(b) There was a Calderbank offer made on 15 March 2015, which offered a sum greater than the Award.

(c) Registration of the Award cannot be granted unless the Court is fully satisfied that the party making the originating application is the right party.

(d) The Award does not specify who is the entity to receive payment.

(e) The Award is the result of fraud, misrepresentation, misconduct and concealment and must be set aside.

6. The applicable legislation is the Commercial Arbitration Act 1986 (ACT) (Act). On 1 July 2017, the Commercial Arbitration Act 2017 (ACT) (2017 Act) commenced. However, pursuant to the transitional provisions in Part 20, and in particular, s 201 of the 2017 Act, commercial arbitrations commenced (and in this case concluded) before 1 July 2017 continue to be conducted in accordance with the Act.

7. Those transitional provisions also impact upon the Court Procedures Rules 2006 (ACT) (Rules), with the applicable form of the Rules also being those operating before the commencement of the 2017 Act.

8. The source of the Court's power to make the orders sought is s 33 of the Act. It provides for an award made under an arbitration agreement to be enforced with the leave of the court, in the same manner as a judgment or order of the court to the same effect. Where leave is given, judgment may be entered in terms of the award.

9. Rule 3260 then governs the procedure for making such an application to the Court. Rule 3260(1)(a) of the Rules carries only two requirements: an affidavit supporting the application that states the extent to which the award has not been complied with at the date the application is made; and the usual or last-known home or business address of the person against whom enforcement is sought.

10. Although notice is not required of the application (r 3260(1)(b) of the Rules), the defendant has received notice by way of personal service of the application and he appeared at the hearing.

11. Due to the nature of the submissions made by the defendant, regard must be had to Part 5 of the Act, which provides a statutory scheme for judicial review of awards. Section 38 provides (relevantly):

(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, amend 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) ... 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 1 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 amended on an appeal under subsection (2), the award as amended shall have effect (except for this section) as if it were the award of the arbitrator or umpire.

(a) there has been misconduct on the part of an arbitrator or umpire or an arbitrator or umpire has misconducted the proceedings; or

(b) the arbitration or award has been improperly procured;

the court may, on the application of a party to the arbitration agreement, set the award aside either wholly or in part.

(2) Where the arbitrator or umpire has misconducted the proceedings by making an award partly in respect of a matter not referred to arbitration under the arbitration agreement, the court may set aside that part of the award if it can do so without materially affecting the remaining part of the award.

(3) Where an application is made under this section to set aside an award, the court may order that any money made payable by the award shall be paid into court or otherwise secured pending the determination of the application.

13. Rule 3254 of the Rules prescribes a 28-day time limit for judicial review of an award.

14. Section 48 of the Act permits the Court to extend the time for taking any proceeding in or in relation to an arbitration. However, relevant to this case, under s 48(3) of the Act, the order extending time shall not be made unless the court is satisfied that in the circumstances of the case undue hardship would otherwise be caused.

15. The question of security for costs is separate and ought be addressed first. The purpose of requiring a party to pay security for costs is generally to provide a measure of protection to a defendant if there is a risk that a plaintiff may not be able to pay any adverse costs order in the event the defendant succeeds in defending the claim. However, there are many factors that feed into the Court's discretion under r 1901 of the Rules and in this case, there was simply no basis for making any such order.

16. First, the application was only made at the final hearing, after any costs had already been incurred. Second, even if an application had been made at an earlier stage, because the procedure under s 33 of the Act is a straightforward enforcement procedure, the nature of the proceedings did not warrant any security being provided. Third, the plaintiff is an individual, but even putting to one side any general reluctance to order security against such a party, there was no evidence before the Court of the plaintiff's potential impecuniosity such as to enliven a concern that security might even be required. Fourth, as the defendant was self-represented, it is difficult to see what the legal costs apparently requiring security were. There was no evidence of any legal costs having been incurred by the defendant at all. For at least those reasons, that part of the defendant's application is refused.

17. As to the substantive issue of whether the Court ought grant leave to enforce the Award, in Cockatoo Dockyard Pty Ltd v Commonwealth of Australia (No 3) (1994) 35 NSWLR 689, Rolfe J said at 694:

In my opinion s 33 of the Act does not provide another method whereby a party may call in question the award of an arbitrator and, although perhaps under another guise, provide the Court with a power to reverse what the arbitrator has done.

In my opinion s 33 is not a dispute resolving provision referring a matter the subject of arbitral proceedings to the Court. It provides a summary procedure whereby awards may be enforced "in the same manner as a judgment or order of the Court to the same effect", and allows judgment to be entered in terms of the award. In the context of the Act that cannot, in my opinion, mean the Court is given power under s 33 to reconsider whether the award should have been made and, if for some reason it concludes it should not, to refuse to enforce the award.

It is necessary for a party resisting an order under s 33 to establish a reason why the award should not be enforced. A reason may be that the Court considers the award is arguably vitiated by appealable error, or by other circumstances making it susceptible of being set aside in accordance with a provision of the Act. In other words it may well be an appropriate exercise of the Court's discretion not to grant leave if an application for leave to appeal is on foot or if an application has been made to set aside to award, for example, on the ground of misconduct. However unless an attempt is being made to have the award set aside I have difficulty envisaging other circumstances in which the discretion can be exercised. Certainly I do not regard s 33 as a "back door" method of appealing against an award in so far as it constitutes a decision by the arbitrator how he should exercise his discretion. The discretion given does not include, in my opinion, an ability to re-visit the way in which the arbitrator exercised his discretion where, otherwise, his discretion is not subject to attack in accordance with the Act. A contrary conclusion would, I believe, be totally at odds with the obvious intention and philosophy of the Act.

19. Cockatoo Dockyard was cited with approval by Miles CJ in Cadoroll Pty Limited & Others v Mauntill Pty Limited [2000] ACTSC 79 at [33]- [34].

20. The plaintiff's evidence comprised an affidavit sworn by him on 31 May 2017, and an affidavit of his solicitor sworn 2 August 2017. They establish the fact of the arbitration proceedings, the Award and non-compliance with the Award. The usual or last-known business address of the defendant has also been set out in the plaintiff's affidavit.

21. As the plaintiff has complied with the requirements of r 3260, the Court is empowered to make the orders sought.

22. The defendant relied upon an affidavit affirmed by him, to which I have had regard insofar as it develops the defendant's submissions. However, it is unnecessary to refer further to its factual contents because the arguments raised by the defendant may disposed of at law, rather than on the basis of any facts.

23. In short, none of the defendant's arguments have any merit for the following reasons.

24. First, the defendant has already invoked his right of appeal under the Act, resulting in the judgment of Mi v Li. The parties here are the same as those in Mi v Li. The Award the subject of these proceedings is the same award that was under challenge in Mi v Li. This is plainly a case where the doctrine of Anshun estoppel applies. Such a doctrine prevents a party to litigation in which a final judgment was given (or that party's privy) from raising in subsequent litigation an issue or cause of action which was, or which should have been, raised in the first proceedings: see, generally, Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 at 597-603 per Gibbs CJ, Mason and Aickin JJ, referred to in Notaras & Anor v St George Bank Ltd & Ors [2005] ACTSC 5; 157 ACTR 1 at [8].

25. The doctrine applies to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time: Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100; (per Wigram V-C at 115), cited in Wagdy Hanna and Associates Pty Ltd v National Library of Australia [2012] ACTSC 126 per Refshauge ACJ at [270].

26. The test is based on the reasonableness or otherwise of the conduct of a litigant in earlier proceedings: Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 434; 263 ALR 556 at [60].

27. Here, there is no reason why legal arguments about the nature of the parties to the arbitration agreement, the nature of the Award or any improper conduct by the plaintiff could not have been agitated in the previous proceedings. There is certainly no satisfactory (or indeed, any) explanation as to why the Court ought entertain a second appeal. To the extent that the issues sought to be agitated here are any different to those determined by Mossop J in Mi v Li, it was unreasonable for the defendant to fail to raise them in those proceedings. The defendant is estopped from pursuing any of the remaining arguments now.

28. Second, it seems to me that on a fair reading of Mi v Li, the key issues sought to be raised by the defendant now have in fact already been ventilated and determined, without error being found. Whether there was any assignment by the plaintiff to a company has now been agitated in different ways in two different forums. It is apparent from the reasons of the arbitrator (paragraphs [E9]-[E31]), which was in evidence before me, that the arbitrator expressly considered in detail whether there had been any assignment of contractual rights in the manner alleged by the defendant in these proceedings. The arbitrator effectively found, based on the documentary material before him, that notwithstanding the building contract listed the registered business name of 'Kai Design and Construction' as the contractor, the plaintiff as the legal entity trading under that business name was the contracting builder. The arbitrator rejected the contention that there had been any assignment (see in particular paragraphs [E22]-[E24]). The key reason for such a finding was that the defendant had never provided written consent to such assignment, which was required under the contractual agreement between the parties.

29. Further, in Mi v Li, Mossop J considered arguments relating to the arbitrator's treatment of the defendant's submissions on the point at [47]-[50] (emphasis added):

47. First, Mr Mi submitted that at [E24] of the award the arbitrator concluded that Mr Li was the builder under the contract. At [M6] of the award the arbitrator said that Mr Li was at all times the person who had contractual responsibility regardless of who he may have arranged to carry out the work. Mr Mi submitted that the arbitrator refused to address the most important question "who is the builder?". He referred to the Appointment of Builder & Application for Commencement Notice form signed by Mr Li on 11 September 2012 and the Building Commencement Notice dated 19 September 2012. Those documents which were brought into existence long after the contract was entered into identify the building licence holder as "Zheng Kai Li - Kai Design and Constructions P/L". He also contended that the findings in the award were contrary to the decision in Kai Design & Construction Pty Ltd v Mi [2016] ACTSC 269 at [31].

48. I am not satisfied that there is any failure on the part of the arbitrator to address the relevant issue. He clearly found that Mr Li was the builder under the contract. Mr Mi contended (contrary to the position he had adopted earlier in the proceedings) that the contract had been assigned to the Company. The manner in which forms such as the Appointment of Builder & Application for Commencement Notice and the Building Commencement Notice might have been completed were of some but not great relevance to that issue. The arbitrator assessed the assignment contentions of Mr Mi in some detail at [E9] to [E31].

49. The earlier decision of this Court referred to by Mr Mi was a decision given, prior to the making of the award, on an application by Mr Li seeking orders relating to the payment of the arbitrator's fees and freezing orders in relation to Mr Mi and his wife. It is not apparent how the arbitrator's conclusions were inconsistent with what I said in my earlier decision. However, in any event, the passage in the earlier decision referred to in Mr Mi's submissions was merely a summary of the issues in contention before the arbitrator. It did not purport to finally determine any issue. Therefore even if there was an inconsistency it would not provide a basis for demonstrating that there had been misconduct on the part of the arbitrator.

50. For these reasons I do not consider that the arbitrator failed to consider Mr Mi's submissions or that the arbitrator misconducted the proceedings or himself.

30. The defendant thus faces a factual finding against assignment by the arbitrator, for which there plainly was evidence, and the finding by this Court constituted by Mossop J that there had been no error in the reasoning process in the terms complained of by the defendant (and recalling the limited scope of review available to the defendant under s 38 of the Act). The defendant's submissions in these proceedings amount to no more than re-agitating an issue that has been determined against him.

31. As to any fraud, misrepresentation, misconduct and concealment, those arguments also appear to have been already dealt with in detail in Mi v Li. It appears to me that a res judicata arises. The requirements for the doctrine of res judicata to apply are (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised: Carl Zeiss Stiftung and Others v Rayner and Others [No 2] [1967] 1 AC 853 at 935, cited in Kuligowski v Metrobus [2004] HCA 34; 220 CLR 363 at [21]. See also Armacel Pty Ltd v Smurfit Stone Container Corporation [2008] FCA 592; 248 ALR 573 at [56]; Dale v Western Australia [2011] FCAFC 46; 191 FCR 521 at [69].

32. It is clear that the parties are the same and that Mossop J in Mi v Li made a final decision. As to whether the same question has been decided, Mossop J identified three groups of allegations that his Honour determined at [18]:

18. The submissions of the plaintiff in support of his claim for relief were organised into three groups of allegations:

(a) the allegation that the arbitration had been improperly procured or the award had been improperly procured (s 42(1)(b));

(b) the allegation that the arbitrator had misconducted had the proceedings or had misconducted himself (s 42(1)(a));

(c) the allegation that there was a manifest error of law on the face of the award (s 38(5)(b)(i)).

33. Mossop J then proceeded to deal comprehensively with the detail of those questions, which included allegations of fraud or misconduct at [20]-[82]. As far as I have been able to discern, the defendant's submissions (including those set out in the defendant's affidavit) raise the same questions that Mossop J addressed. To the extent that the arguments before this Court traverse beyond the findings made, such arguments would nevertheless be covered by my first finding that the defendant is estopped from bringing them in accordance with the principles articulated in Anshun.

34. Third, any separate judicial review proceedings are out of time, given that more than a year has passed since the Award was delivered, with the reasons for the Award also provided on that date. This is well beyond the 28-day time limit stipulated in r 3254 of the Rules. I am not satisfied that in the circumstances of this case, any undue hardship would otherwise be caused (particularly because the defendant has already availed himself of the judicial review provisions under the Act) and accordingly, under s 48(3) of the Act, there is no power to extend time.

35. The remaining arguments of the defendant may be disposed of fairly succinctly. It follows from the reasons above that the arbitrator's finding as to the plaintiff having the right, as the builder, to claim the amount owing cannot be challenged now. Accordingly, the Court is fully satisfied that the party bringing the originating application is the right party.

36. With regard to the submission that there was an earlier offer of settlement (made in March 2015), although a settlement offer might be relevant to any question of the costs of a proceedings, it cannot impact upon the substantive relief sought. Further, the nature of these proceedings is to enable the enforcement of an outstanding amount in accordance with the terms of the Award. It is difficult to see how any offer of settlement made before the date of the Award could touch upon the relief sought in these proceedings, after the amount payable has been determined and remains unpaid. In any event, the offer that was in evidence dated 13 March 2015 was for an amount substantially less than what the plaintiff achieved in the arbitration.

37. As to the submission that the Award was an interim award, has not been finalised and is not a final order, it is accepted by the plaintiff that the question of the costs of the arbitration remains outstanding. However, that does not assist the defendant. The Dictionary to the Act defines 'award' to include a final or interim award. Section 33 thus applies equally to interim awards.

38. The final submission of the defendant is that the Award does not specify who is the entity to receive payment. It is true that the Award stated 'I award the amount payable by the Respondent to the Claimant is $205,121.75' and that there were two claimants, being Kai Design and Construction Pty Ltd (ACN 157 850 336) as the First Claimant and the plaintiff (trading as Kai Design and Construction) as the Second Claimant. However, it is plain from the reasons of the arbitrator that the entity to which the arbitrator was referring was the plaintiff.

39. For these reasons, the defendant does not have any right under the Act to bring the application filed 15 September 2017. The summary procedure cannot be used as a 'back door' procedure to enable a further challenge the Award and it is appropriate that the Court grant the relief sought by the plaintiff.

40. The total amount that should be registered as a judgment of the court is $205,121.75. The plaintiff is entitled to pre-judgment interest from 21 August 2016 to date. Accepting the calculations of the plaintiff in his submissions as to the applicable rates, the total judgment amount including interest is $217,454.34

41. On the question of costs, as the plaintiff has been successful, the usual consequence that costs follow the event appears appropriate.

1. That the Interim Arbitral Award given in Arbitration proceedings with the designation IAMA # 5073 delivered on 20 August 2016 be registered as a judgment in favour of the plaintiff in the sum of $217,454.34 including interest.

I certify that the preceding forty-two [42] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam.