Multiplex Constructions Pty Limited v Suscindy Management Pty Limited

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION - COMMERCIAL LIST

Wednesday 17 May 2000 - ex tempore Revised 26 June 2000

050029/00 - MULTIPLEX CONSTRUCTIONS PTY LIMITED v SUSCINDY MANAGEMENT PTY LIMITED

JUDGMENT - On interlocutory application 1 HIS HONOUR: There is before the Court a notice of motion filed on 8 May 2000 in which Multiplex Constructions Pty Limited ["Multiplex"] claims inter alia an order restraining Suscindy Management Pty Limited ["Suscindy"] until further order from taking any further step in an arbitration before Mr T.M. McDougall. 2 It is necessary to recite certain of the earlier history. 3 Suscindy entered into an agreement dated 15 March 1989 with Multiplex to supply labour to fix steel reinforcement material to a commercial building project known as the Piccadilly Plaza project in New South Wales. In September 1987 Multiplex had entered into a contract with the proprietor for the construction of the plaza. 4 On 17 September 1990 Multiplex gave Suscindy a notice of non-performance and delay. 5 On 3 June 1991 Multiplex gave Suscindy a letter notifying default under clause 7 of the subcontract. 6 On 6 June 1991 Multiplex purported to terminate the subcontract in writing by accepting Suscindy's repudiation said to consist of words and/or conduct to the effect that Suscindy was not going to perform its subcontract if Multiplex did not pay Suscindy more money. 7 Evidence is before the Court on the interlocutory application that the action by Multiplex in this regard caused financial problems for Suscindy until July 1999. [Para 10, affidavit of Mr Pavela made on 11 May 2000] 8 On 24 June 1991 a notice of dispute was served by Suscindy. 9 On 24 December 1992 a letter of demand was sent by Suscindy to Multiplex for payment of $810,386.88 within seven days. Notice was given that if the money was not paid a notice of dispute would be issued and arbitration proceedings commenced. 10 On 20 January 1993 Suscindy issued a notice of dispute. 11 On 23 September 1993 the first preliminary conference established a timetable. The timetable involved the following steps:

Particularised points of claim by 8 October 1993.

Request for particulars of points of claim by 22 October 1993.

Answers to request for particulars of points of claim by 5 November 1993.

Particularised points of defence and counter-claim by 3 December 1993.

Request for particulars of points of defence and counter-claim by 17 December 1993.

Answers to request for particulars of points of defence and counter-claim by 14 January 1994.

Reply to defence and defence of counter-claim by 28 January 1994.

Rejoinder and reply to defence of counter-claim by 11 February 1994.

Lists of documents by files or bundles by 11 February 1994.

Inspection from 11 February to 25 February 1994.

Evidence-in-chief in statement form from principal witnesses for the claimant by 18 March 1994.

Evidence-in-chief in statement form from the principal witnesses for the respondent on the counter-claim by 18 March 1994.

Evidence-in-chief in statement form from the principal witnesses for the respondent on the defence by 8 April 1994.

Evidence-in-chief in statement form from the principal witnesses for the claimant in reply by 8 April 1994.

Experts' reports to be exchanged on or before 8 April 1994.

Conference of experts to be held not later than 15 April 1994 and an agreed statement of areas of agreement and disagreement by 22 April 1994.

Copies of agreed bundles of relevant documents to be delivered to the arbitrator by 14 June 1994.

Agreed statement of issues to be delivered to arbitrator by 14 June 1994.

Hearing to commence 20 June 1994 and run for five weeks until 22 July 1994.

Written submissions by 19 August 1994. 12 Each party was directed to deposit the sum of $25,000 as security for costs of the award. 13 On 22 October 1993 a letter was sent from Dunhill Madden Butler, solicitors for Multiplex, to Watkins Tapsell & Nolan, then solicitors for Suscindy, requesting particulars of points of claim. On 9 November 1993 a letter was sent by Watkins Tapsell to Dunhill Madden with particulars of points of claim. On 18 November 1993 a letter was sent by Dunhill Madden to Watkins Tapsell requesting further particular points of claim. 14 On 25 November 1993 a letter was sent by Watkins Tapsell to Dunhill Madden in response to the further request for particulars. On 29 November 1993 a letter was sent by Dunhill Madden to Watkins Tapsell again requesting further particulars of the points of claim. On 2 December 1993 Dunhills wrote to Watkins Tapsell again requesting further particulars of the points of claim. On 3 December 1993 amended points of claim were prepared and I assume served, being Suscindy's points of claim. On 8 December 1993 Watkins Tapsell wrote to Dunhill Madden in response to the further request by Dunhill Madden for particulars. 15 On 7 January 1994 a statement of issues and points of defence and cross claim was filed and/or served by Multiplex. 16 On 14 January 1994 a letter from Watkins Tapsell was sent to Dunhill Madden requesting particulars of points of defence and cross claim. On 28 January 1994 Suscindy applied to have the question of liability severed from that of quantum and to be heard first. On 8 February 1994 there was a further preliminary conference to hear submissions on Suscindy's application to have the question of liability severed from that of quantum and to be heard first. 17 On 14 February 1994 the arbitrator declined Suscindy's application to have the question of liability severed from that of quantum and to be heard first. On 15 February 1994 there were furnished answers to the request for particulars by Multiplex. On 22 February 1994 there was a letter from Dunhills to Watkins Tapsell enclosing Multiplex list of documents. On 9 March 1994 Watkins Tapsell ceased to act for Suscindy and Beston & Co commenced acting. 18 On 4 April 1994 a letter was sent by the arbitrator to the parties expressing concern at whether the allocated hearing dates would be met. As at that time the hearing dates fixed were 20 June 1994 for a five day period. The letter also noted that Suscindy's reply to the defence and defence to the counter-claim had not yet been delivered. On the assumption that that step could be achieved by 18 April 1994, it set out a future timetable adopting the same intervals between each step that had originally been allowed but taking 18 April as its starting point. 19 On 13 April 1994 Multiplex and Suscindy wrote to the arbitrator and agreed that the best course was for the then fixed hearing dates of 20 June 1994 up to 20 July 1994 to be vacated but for the parties to otherwise progress the timetable set out in the arbitrator's letter of 4 April 1994 and for a further preliminary conference to be held in June/July 1994. 20 On 14 April 1994 the arbitrator directed that the period originally set for the hearing be vacated and that a further preliminary conference be held in the week commencing 4 July 1994. He further directed that "in the meantime the parties are to proceed with the timetable as set out in my letter of 4 April last, taking as its starting point the date at which Beston & Co are able to deliver the reply and defence to counter-claim". 21 On 6 July 1994 a further preliminary conference took place and an application was pursued by Multiplex for the arbitrator to make an award dismissing the claims based on want of prosecution. If that application was successful a further agreed timetable was proposed to be implemented which would oblige the parties to act as follows: 1. Lists of documents to be exchanged on or before 22 July 1994.

2. Discovery to be given on 25 July 1994 up to 8 August 1994.

3. Reply to defence and defence to counter-claim to be delivered on or before 5 August 1994. 4. Reply to defence to counter-claim to be delivered on or before 19 August 1994. 5. Statements of evidence-in-chief for the claim and for the counter-claim to be delivered by 9 September 1994. 6. Reply statements relating to the claim and counter-claim to be delivered by 7 October 1994. 7. Experts reports for each party to be exchanged by 9 September 1994. 8. Experts' conference to be held on 7 October 1994. 9. Joint report of experts setting out areas of agreement and disagreement to be delivered by 21 October 1994. 10. Further preliminary conference to discuss any outstanding matters and to fix the hearing dates to be held on 28 October 1994. 22 Certain of those steps were then carried out in time and certain were not. For example, the reply to defence and defence to counter-claim was in fact delivered on or about 5 August 1994. 23 On 12 July 1994 the arbitrator rejected the application for an award dismissing the claims for want of prosecution and directed that the timetable agreed on 6 July 1994 be implemented. 24 On 5 August 1994 the reply to defence and defence to cross-claim was produced and I presume served by Suscindy. 25 On 18 August 1994 there was a request by Multiplex for particulars of Suscindy's defence and defence to cross-claim. 26 On 13 March 1995 a letter from the arbitrator to the parties directed that a timetable agreed between them be followed which required statements of evidence-in-chief for the claim by 26 April 1995; reply to statements in chief relating to the claim and counter claim by 25 May 1995; experts' reports to be exchanged by mid May 1995 and an experts' conference to be held in mid to late June 1995; hearing of the reference to be in July 1995. 27 On the evidence, in April 1995 and later in June 1995 there were settlement meetings between the parties with no agreement being reached. [Affidavit Mr Pavela 11 May 2000, paras 11 and 12] 28 At some time in this general period apparently the arbitrator fractured his hip and was unable to arbitrate for some period. It is not altogether crystal clear as to what date this occurred on but it appears to have occurred at some stage in or about early 1996 or possibly a little prior to that. 29 On 4 April 1996 the parties exchanged their primary witness statements. Multiplex served a number of statements and Suscindy served a number of statements. The evidence before the Court on the interlocutory application being affidavit of Mr McManis, the solicitor for Suscindy, is to the effect that by 4 April 1996 a statement of claim, defence, particulars of cross-claim, reply to defence, defence to cross-claim and witness statements had been exchanged. 30 On 24 April 1996 Dunhills wrote to Beston & Co requesting particulars in relation to Suscindy's statements in order to enable Multiplex to prepare statements in reply. 31 On 18 June 1996 Dunhills wrote to Beston & Co seeking answers to particulars which had been requested on 24 April 1996. 32 On 17 July 1996 Dunhills wrote to Beston & Co and demanded answers to particulars within seven days. These were the particulars which had been requested on 24 April 1996. 33 On 18 July 1996 Mr Beston telephoned Dunhills advising that he was seeking instructions in relation to the particulars. 34 On 3 October 1996 Dunhills wrote to Beston & Co and demanded answers to their particulars within seven days being the particulars requested on 24 April 1996, now having been requested several times. 35 An important meeting took place on 20 December 1996. This was a meeting attended by Mr Pavela at the offices of Dunhills. A number of persons were present including a director of Suscindy and a representative of Multiplex and the solicitor from Suscindy and a barrister engaged on behalf of Suscindy. At the conclusion of that meeting it was agreed to convene a further meeting between the two quantum experts of Suscindy and Multiplex. [Para 13 affidavit of Mr Pavela made on 11 May 2000; para 5 affidavit of Mr McManis of 11 May 2000.] 36 On 24 December 1996 Dunhills wrote to Beston & Co and recommended that the parties experts meet to discuss the quantum issue. 37 On 24 January 1997 the arbitrator wrote to both parties in response to a query from Beston & Co about the mechanics of issuing a subpoena in an arbitration and in that letter the arbitrator noted that no date had been set for hearing. 38 On 31 January 1997 Beston & Co wrote to Dunhills and agreed that the parties should arrange for their respective experts to meet. 39 On 13 March 1997 Beston & Co telephoned Dunhills and confirmed that they held instructions to arrange a meeting between the parties' experts. An important meeting took place on 20 May 1997 which was a without prejudice meeting between the parties' experts in an attempt to narrow the issues in dispute. Evidence given in relation to that meeting was given by Mr Pavela in his affidavit of 11 May 2000 at para 14. That evidence given on information and belief was that after the meeting further information would be required to be collected for the Suscindy expert. He understood that the meeting of experts was adjourned to be reconvened at a later time. It was his evidence that at this point in time the financial difficulties brought about by non-payment of monies due to Suscindy from Multiplex in relation to the claim became critical. Evidence was also given in relation to this meeting by Mr McManis in his affidavit of 11 May at para 6. His evidence was that the meeting took place "in an attempt to resolve some of the issues between the parties and in the hope of shortening the arbitration". It was adjourned to be reconvened at a later date. 40 Mr Austin also gave evidence in relation to this meeting. Mr Austin is the administration manager for Multiplex Constructions. His evidence in para 3 of his affidavit of 8 May was that the meeting took place between the expert for the plaintiff, namely Mr Zakos, and the defendant's expert, namely Mr Hunter. His evidence was that he recalled that his purpose for the meeting was the desire to have Mr Zakos demonstrate to Mr Hunter that there were substantial errors in the preparation of Mr Hunter's report. His recollection was that at this time both he and Mr Zakos held the view that Mr Hunter's calculations involved 'double counting' which when taken into account reduced the quantum of the defendant's claim to the extent that the defendant owed the plaintiff money when the claim was computed on a quantum meruit basis. He hoped that when this was explained by Mr Zakos to Mr Hunter the defendant's would realise there was no merit in continuing to pursue the claim. His evidence was that he recalled receiving a verbal report on the meeting which he thought was from Mr Zakos to the effect that the meeting had gone as expected. By that he understood that the deficiencies in Mr Hunter's report had been clearly explained to Mr Hunter and had not been rebutted. His evidence was that based on the outcome of the meeting and the significant period of time which elapsed after May 1997 without the defendant doing anything further he eventually formed the view that the defendants had given up on the arbitration because they realised their claim held no merit and that there was no prospect of a positive outcome for them once the cross-claim was considered. His evidence was that one of the consequences of forming that view was that he did not instruct the solicitors for the plaintiff to pursue the plaintiff's counter-claim. His evidence was that he was then of the view that Multiplex would not pursue its claims and would "call it quits". He was extremely surprised he said when he saw correspondence from the solicitors for the defendant at the end of 1999 attempting to revive the arbitration. 41 On 7 July 1997 Mr McManis consulted with an expert, his client, Mr Inatey of counsel. [Affidavit Mr McManis 11 May para 8.] 42 On 25 September 1997 the arbitrator wrote to both parties saying that he had heard nothing about the matter since his letter of 24 January 1997 and noting the extreme length of time the arbitration had been on foot and requesting the parties to advise him as a matter of urgency of the present state of the proceedings and if it was intended to proceed. 43 On 1 October 1997 Beston & Co wrote back to the arbitrator responding to his letter and advising that they were in the process of reconstructing and recalculating their claim on the basis that it would either expedite settlement of the matter or if the matter proceeded to arbitration that it would expedite the length of such an arbitration. They said that they anticipated that this would take at least one month and they would hope that within six weeks the matter would be prepared. Shortly after this, namely on about 7 October 1997, the solicitor change from Dunhills to Minter Ellison took place and Dunhills transferred its files to Minter Ellison which were archived. Those files were later sought to be accessed in October 1999 in the events to be recited as follows. 44 There was then a substantial delay. Nothing effectively occurred at all during the year 1998 or during the year 1999 until 16 July 1999 when Beston Macken McManis wrote to the arbitrator requesting him to advise when he would be in a position to hear the reference. On 1 August 1999 Mr McManis was advised that Mr Hunter would not be preparing a further report but that Ernst and Young would be engaged to quantify the claims. [McManis affidavit 11 May para 12] 45 On 16 August 1999 the arbitrator wrote requesting the parties to confer on a timetable. 46 On 2 September 1999 Suscindy's solicitors wrote to Multiplex's solicitors requesting them to advise on conference dates with the arbitrator. 47 On 15 September 1999 Minter Ellison wrote to Suscindy's solicitors advising that Multiplex was considering its position but that their preliminary view was that the arbitration had been abandoned by consensus. 48 On 17 September 1999 Suscindy's solicitors wrote to Multiplex's solicitors suggesting that the parties collaborate on a timetable. 49 On 14 October 1999 Suscindy's solicitors wrote to Minter Ellison denying the arbitration had been abandoned. 50 On 20 October 1999 Minter Ellison wrote to Suscindy's solicitors seeking an undertaking that Suscindy would not pursue the arbitration in the absence of which Multiplex would commence proceedings to restrain or terminate the arbitration. 51 On 29 October 1999 Suscindy's solicitors wrote to Minter Ellison again denying that the arbitration had been abandoned. 52 On 2 November 1999 a facsimile was sent from Minter Ellison to Suscindy's solicitors requesting clarification of certain statements and copies of documents referred to in the Suscindy solicitors' letter of 29 October 1999. 53 On 11 November 1999 Suscindy's solicitors wrote to Multiplex's solicitors providing the particulars requested by Dunhills on 24 April 1996. 54 On 22 November 1999 the arbitrator wrote in response to a letter of 10 November 1999 from Suscindy's solicitors requesting advice of next available hearing dates and advised that he was available on 4 January 2000 for five weeks and otherwise after 1 May 2000. 55 The further chronology appears on a close examination of exhibit JCB2 to the affidavit of Mr Beston sworn on 5 May 2000. That chronology includes detail of some of the letters to which I have referred including the letter from Minter Ellison of 20 October 1999 and the letter from Beston Macken McManis of 29 October 1999. It also includes the detail of the letter of 4 April 1996 from Dunhills to Beston & Co and the letter from Minter Ellison to Beston Macken of 2 November 1999. Significantly the exhibit includes a letter from Minter Ellison to the arbitrator of 14 December 1999 advising that it is Multiplex's view that the arbitration had been abandoned by mutual agreement. It states inter alia, "We hold instructions to bring an application in the Supreme Court for orders that Suscindy be permanently restrained from reviving the arbitration or in the alternative that Suscindy's inordinate and inexcusable delay provide grounds for the arbitration to be terminated pursuant to s 46(2)(a) of the Commercial Arbitration Act (1984)...in the circumstances our client does not concede that you have any further power or authority in relation to the matter. However as a matter of courtesy we will keep you informed of developments." 56 That letter was copied to Beston McManis by Minter Ellison on 15 December 1989. 57 On 16 February 2000 the arbitrator wrote to the parties indicating his availability to commence hearing the matter on 1 May in an earlier letter and advising that his commitments had changed somewhat. As of that time his first available date if the matter was to go ahead would be 3 July next. This would be subject to further requests which he may receive to act as an arbitrator in the near future. 58 On 3 March the arbitrator wrote to the parties referring to his earlier letter and suggesting that he has been asked to confirm that he could commence the hearing on 3 July and that he would be available for a hearing estimated at six to eight weeks. He confirmed that he had noted those dates and would be available. 59 On 7 March 2000 Beston Macken wrote to Minter Ellison advising that the matter had been set down for hearing for six to eight weeks as from 3 July 2000. 60 It is common ground that whilst the arbitrator had indicated an ability to hear the case on and from that day the present position is that if the application by Multiplex to have an interlocutory injunction restrain the ongoing arbitration be successful, the arbitration cannot go on. On the other hand if the application is dismissed it will be a matter for the arbitrator in all of the circumstances and depending upon the materials and arguments which the parties put before him, to determine what precise bracket or brackets of dates the arbitration should go on. 61 It was in those circumstances that the summons in these proceedings was filed on 10 March 2000. There was some delay in service of the summons and questions such as whether or not the defendant's solicitors had instructions to accept service were mooted. 62 The matter has now been before the Court on a few occasions in terms of directions. 63 It is particularly important to bear in mind in relation to the present interlocutory hearing the evidence of Mr Austin, the administration manager for Multiplex, reference to which I have made. As I have said, at the 20 May 1997 without prejudice meeting Mr Austin deposes that he recalled receiving a report on the meeting which he believed was from Mr Zakos to the effect that the meeting had gone as expected. By this he understood that the deficiencies in Mr Hunter's report had been clearly explained to Mr Hunter and had not been rebutted. 64 Mr Austin, as I have said, further deposes that based on the outcome of the meeting and the significant period of time which expired after May 1997 without the defendant doing anything further he eventually formed the view that the defendant's had given up on the arbitration "because they realised their claim held no merit and there was no prospect of a positive outcome for them once the cross-claim was considered". I have already referred to his views expressed in terms of not instructing the solicitors for Multiplex to pursue the counter-claim and his surprise at seeing the late 1999 correspondence attempting to revive the arbitration. 65 It is further, as I have indicated, important to take into account the evidence given by Mr Pavela, the general manager of Suscindy. That evidence was that he at no time overtly communicated [the word "represented" is used in para 16 of his affidavit but the relevant sentence was admitted only on the basis that this was to be read as "overtly communicated"] to any person that it was or is Suscindy's intention to abandon the claim. His evidence was that at all material times Multiplex had been a cross-claimant in the proceedings and as far as he was aware no indication had ever been given to him that Multiplex intended to abandon the cross-claim or the arbitration. [Statement May 2000] 66 The proceedings being interlocutory in nature there are clearly two questions which are raised. The first is as to the existence and strength of the prima facie case sought to be pursued by Multiplex. The authorities use words such as serious case and a variety of other terms. The second is as to the balance of convenience in all of the circumstances. [See Hungry Jacks Pty Ltd v Burger King Australia Pty Ltd (1999) 30 ACSR 551at paragraphs 187 and following] 67 As to the first of these issues the plaintiffs in the summons sought to rely upon two separate grounds. The first was that the parties had abandoned the arbitration. The second sought to rely upon the provisions of s46 of the Commercial Arbitration Act seeking an order terminating the arbitration proceedings. 68 In the way in which the interlocutory motion has now been argued Mr Cotman SC for Multiplex made plain that the statutory cause of action was not now relied upon. Mr Cotman did not press irretrievable prejudice or prejudice in the way in which one might normally understand that such a matter might be pressed in terms of the balance of convenience. He did however refer to the materials before the Court in terms of the particular problems which Multiplex appears to have encountered in locating materials and witnesses for the purpose only of seeking to have the Court infer from the way in which Multiplex or its solicitors had dealt with that material, that this was perfectly consistent with abandonment. 69 In short, the only matter which the plaintiffs have sought to raise in terms of the relevant causes of action where a prima facie case is to be weighed in the balance is as to the claim that the parties have abandoned the arbitration. 70 As I have said, the second consideration is of course the balance of convenience in all the circumstances. In terms of prima facie case it is necessary to refer albeit briefly to the principles. 71 That a contract can be terminated by an abandonment is not in issue as one is reminded by the judgment of Hope JA in Air Great Lakes Pty Limited v K S Easter Pty Limited (1985) 2 NSWLR 324. 72 In Summer v The Commonwealth (1918) 25 CLR 144 Isaacs J held that the contract the subject of the proceedings before him had been mutually abandoned by the conduct of the parties. The contract was for the supply of blocks of marble. Each party adopted a different view as to what the seller was bound to do in performance of the contract. After months of disputation the purchaser purported to give a notice of cancellation of the contract, which Isaacs J held to be ineffective. Having so concluded his Honour said: "...But after that the plaintiff took no step towards performing his contract, which originally was to have been completed in four months. He seems to have maintained his determination not to proceed on the defendant's basis, and to have acquiesced in considering his obligation at an end. The Department also considered it at an end, because they procured the marble from Walker and it has been used in London... Whatever the terms of a contract may be, it is possible for the parties so to conduct themselves as mutually to abandon or abrogate it... In my opinion that is the legal position here. Informally, but effectively the parties have so acted in relation to each other as to abandon or abrogate the contract." 73 As Hope JA points out in Air Great Lakes, a similar principle was applied by the High Court in DTR Nominees Pty Limited v Mona Homes Pty Limited (1978) 138 CLR 423. In that case a contract for the sale of land involving a subdivision required that the vendor should proceed with all dispatch to have "the relevant plan of subdivision" lodged for registration as a deposited plan. After a considerable time had passed, the purchaser purported to rescind and later the vendor purported to accept the repudiation alleged to be constituted by the purchaser's recision. In their joint judgment, Stephen, Mason and Jacobs JJ said at 434: "Thus the contract in the present case was still on foot on and after 25 July 1974. Neither party had effectively rescinded. But there can be no doubt that by 5 December 1974, when these proceedings were commenced, neither party, whatever may have been their reasons, regarded the contract as being still on foot. Neither party intended that the contract should be further performed. In these circumstances the parties must be regarded as having so conducted themselves as to abandon or abrogate the contract." 74 In Fitzgerald v Masters (1956) 95 CLR 420 the respondent had entered into a contract in 1927 to buy a half interest in his cousin's farm and within the following few months had paid more than half the purchase price. Although the respondent lived on the farm for some years, he left it in 1932 and from then until 1948 neither party took any further action under the contract. In that year the respondent's solicitors wrote to the vendor seeking clarification of the position of the parties under the contract and in 1953 after the death of the vendor, the respondent commenced an action against the vendor's executors seeking specific performance of the contract. Dixon CJ and Fullagar J accepted at 432 that in cases such as Pearl Mill Co. v Ivy Tannery Co. (1919) 1 KB 78 "the contract has been discharged by agreement, each party being entitled to assume from a long continued ignoring of the contract on both sides that [in the words of Rowlatt J] the matter is off altogether"... 75 In my view it is clear [see Greig and Davis 'The Law of Contract' Law Book Company 1987 at page 1190] that although the Courts have sometimes offered little in the way of an analysis of the formation of a contract of termination, in each case it is the conduct alone of the parties which leads to the conclusion that such a contract has been formed. 76 A close examination took place through Mr Cotman SC and in a shorter fashion due to the Court's alleviating him from the need to continue to address, from Mr Rudge SC, in relation to a number of English authorities where the issue of abandonment of arbitration proceedings has received extensive and vigorous consideration. I take these English authorities to establish the following propositions. 1. The Court has no inherent power to enjoin arbitration proceedings for want of a prosecution. Bremer Vulkan v South India Shipping Corporation Limited (1981) AC 909. 2. However, the Courts can enjoin arbitration proceedings in circumstances if it appears that the parties have, by mutual assent, created a contract of abandonment of the previous contract. Andre et Compagnie v Marine Trans Ocean ("Splendid Sun") (1981) 1 QB 694 at 696. 3. But courts cannot enjoin arbitration proceedings on the grounds that the inactivity of the arbitration proceedings constitutes a repudiation of the contract of arbitration or on the grounds that inactivity of the arbitration proceedings constitutes a frustration of the contract. Paal Wilson v Blumenthal (the Hannah Blumenthal) (1982) 3 WLR 1149. 4. However, mere delay and inactivity of parties to an arbitral set of proceedings can be such as to constitute an offer and acceptance necessary to create a contract of abandonment: (the Hannah Blumenthal) supra. 5. To the extent that the decision of the United Kingdom Court of Appeal in Allied Marine Transport Vale (1985) 1 WLR 925 suggests that silence is not sufficient to establish mutual abandonment, this has not been followed and is not correct: Excom v Guan ("Golden Bear") (1987) 1 Lloyd's Reports 330 at 339 per Staughton J. 6. To establish a contract of abandonment it is necessary to show: (a) A clear inference to be drawn from the inactivity of one party was that the party [in this case Suscindy] did not wish to or intend to proceed with the arbitration and offered to abandon it.

(b) The clear inference to be drawn from the lack of activity by the other party,[in this case Multiplex] is the acceptance of this offer to abandon the arbitration.

(c) That this inference represented, or at least did not conflict with the second party's, [in this case Multiplex's] understanding of the position. Tankrederei Ahrenkeil ("Multibank Holsatia") (1988) 2 Lloyd's Reports 486 at 493. 7. However, the Courts should be slow to infer a contract of abandonment without more than silence or activity: [the"Golden Bear" supra]. 77 The English authorities were accepted and acted upon by Wright J in Oxford Clothing Co. v Tasmanian Government (1994) 4 Tasmanian Reports 1. In particular I accept that the English principles on contracts and abandonment are not materially different from the Australian position. 78 The question before the Court on the plaintiff's prima facie case is whether informally but effectively, the parties have so acted in relation to each other as to abandon or abrogate the contract. Is one in a position in relation to the evidence to infer that the dealings between the parties, importantly taking into account the lapse of time earlier referred to, justified each party in assuming that the matter was off altogether? [Pearl Mill (1919) 1 KB 78 at 82] 79 To my mind the critical period of time for special focus is the period between either May 1997 or late September/early October 1997 on the one hand and 16 July 1999 on the other hand. This is certainly a very long period being either approximately twenty-one or approximately twenty-five months. 80 The point as it seems to me is that on the evidence adduced on the interlocutory hearing the two quantum experts had attended a conference in an attempt to resolve some of the issues between the parties. Mr Austin had held the view that the then Suscindy expert, Mr Hunter, had involved a double counting in his calculations and hoped that Multiplex would be able to show this to Mr Hunter so that Suscindy would realise "there was no merit in continuing to pursue their claim". Mr Austin understood from the report which he received from the Multiplex expert "that the meeting had gone as expected". By this he understood that the deficiencies in Mr Hunter's report had been clearly explained to Mr Hunter and had not been rebutted. Although para 5 of Mr Austin's affidavit was allowed on the interlocutory application it leaves a lot to be desired in terms, it seems to me, of precision as to precisely what was the report to Mr Austin and in what terms, by the Multiplex expert. Multiplex relies upon Mr Austin's affidavit as the basis upon which he is said to have eventually formed the view that Suscindy had given up on the arbitration, upon the outcome of the meeting and upon the fact of a significant period of time having elapsed after the meeting without Suscindy doing anything further. 81 To my mind there remains a real question as to whether it can be said that the period of time which had elapsed and/or the report given to Mr Austin by the Multiplex expert, permitted the proper inference to be drawn by Multiplex that the matter was off altogether. The point and the important point is that the arbitration had travelled a considerable distance by mid May 1997. It had travelled that distance at a snail's pace. Over a year prior to that date, namely by 4 April 1996, the arbitration had already achieved through the interlocutory procedures the exchange of statement of claim, defence, cross-claim, reply to defence, defence to cross-claim and numerous particulars as well as detailed witness statements having been exchanged. 82 To my mind the proper approach to the facts proven on the interlocutory application is to view the parties as having for one reason or another moved in such a leisurely pace for so many years as to make it incumbent upon the parties to show something more precise in terms of matters other than passage of time, or if passage of time alone be relied upon, to show a passage of time of a different order, to justify an inference of abandonment. 83 This suggests that in terms of adjudicating the strength of the prima facie case here, the abandonment case is not strong. The prospect of drawing an inference of abandonment is simply not strong. Of course, ultimately that view is taken on the materials before the Court on the interlocutory application. 84 As to balance of convenience I am satisfied that the balance of convenience now favours the arbitral proceedings going ahead. Some claims are made in the affidavit material by Multiplex of difficulties which have arisen in relation to its records being lost. As I earlier indicated, Mr Cotman no longer relies upon that evidence in support of the proposition going to balance of convenience but only seeks to do so in terms of the Court, on his submission, being in a position to see that the Multiplex approach and that of its solicitors was consistent with abandonment. 85 Had that matter been required to be taken into account in any particular way on balance of convenience, I presently do not see that those difficulties can be sheeted home to the conduct of Suscindy. It was always possible that the arbitration would proceed and caution on the part of Multiplex and its solicitors was always necessary in terms of preserving the position so that the proceedings could be properly presented when and if the arbitration would go on. To my mind the position was quite different to that which might have obtained but for pleadings having been exchanged and expert's statements having been substantially exchanged and the parties having gone in progressing the arbitration to the very considerable extent that they have gone, as the chronology will indicate, up to the relevant point in time. 86 To my mind a further and significant factor to be taken into account on the interlocutory application concerns the delay by Multiplex in approaching the Court to seek the relief now pressed. As long ago as 20 October 1999 Multiplex by its solicitors were writing to Suscindy by its solicitors, confirming that Multiplex legal advisers' preliminary view was that the arbitration had been abandoned by mutual agreement and could not be resurrected. This position was negated by the Suscindy legal advisers in their correspondence of 19 October 1999 in the clearest possible terms. Multiplex by 14 December 1999 had firmed up their position and were writing to the arbitrator advising of the view of Multiplex that the arbitration had been abandoned by mutual agreement and indicating that their instructions were to approach the Supreme Court for orders. Yet the first time when any interlocutory application was pursued was by the notice of motion filed on 8 May 2000 following directions hearings of previous weeks in which it was the Court which made plain to Multiplex's counsel, the significance of no interlocutory relief having yet been pressed. As at that time Multiplex was not in a position to seek final relief and yet the arbitration had been fixed to commence in July for several weeks. The matter was simply proceeding from directions hearing to directions hearing upon the basis of the plaintiff asking in the pleadings for no more than final relief notwithstanding the looming arbitration and notwithstanding the plaintiffs not being ready to have a final hearing. 87 In my view this factor of delay alone should be given special consideration it being quite clear, as is well known to seasoned legal practitioners and as can be seen from the numerous authorities on the topic, that any interlocutory application requires to be very speedily brought forward. A delay of the order of four months or more is in my view entirely inappropriate in circumstances in which arbitral proceedings requiring very detailed work by both parties are rapidly approaching their hearing and in circumstances in which Multiplex must have been aware, it seems to me, that Suscindy was continuing to prepare for the arbitration. 88 Returning for a moment to the principles, I indicated that to establish a contract of abandonment it was necessary to show three matters. The first was the need for a clear inference to be drawn from the inactivity of one party (in this case Suscindy) was that it did not wish to or intend to proceed with the arbitration and offered to abandon it. To my mind that inference cannot be drawn here or cannot necessarily be clearly drawn here. 89 The second matter to be shown was that the clear inference to be drawn from the lack of activity by the other party (here Multiplex) was the acceptance of this offer to abandon this arbitration. Here again it does not seem to me that this inference can necessarily be drawn or can clearly be drawn from the facts proven. 90 Finally I indicated that the third matter was that it was necessary to show that this inference represented or at least did not conflict with the second party's (here Multiplex's) understanding as to the position. That matter does not really necessarily arise on the facts before the Court. 91 I refer also to the aspect of balance of convenience which involves the fact that if the injunction be refused there is a spectre that the parties will have to prepare for and there will have to be heard over many weeks a complex arbitration and that at the end of the day, following the arbitrator's report, the Multiplex party, unless withdrawing its proceedings for final relief, will be seeking to have the Court declare that there had been an abandonment before the arbitration commenced. To my mind, whilst of course that is a significant factor to be taken into account, when one weighs that factor in all of the circumstances against the other factors to be taken into account, namely: (a) the entitlement of Suscindy to regularly pursue its rights before an arbitrator, (b) the amount of time and effort expended up to this point in time by both parties over many years in terms of preparation of pleadings and expert materials (c) the, to my mind, extremely slender prospects of the plaintiff's success on a final basis on the abandonment case, and (d) the plaintiff's failure to seek to pursue the statutory cause of action,

the balance of convenience firmly comes down on the side of the Court exercising its discretion by refusing to order the interlocutory injunction relief. 92 The parties as I understand it are content that in the light of these reasons it is, only all other things being equal, that the arbitrator would or may commence hearing the arbitration on 3 July. Both Mr Cotman and Mr Rudge accepted, as I understood it, that it would be a matter for the arbitrator to decide as to when he ought commence the subject arbitration. Mr Cotman was anxious to record for the purposes of the transcript that should the arbitration proceed, Suscindy's case would not be reformulated or reframed. Mr Rudge accepted that that was the case. Mr Cotman was also anxious to ensure that it be accepted that Suscindy would not adduce expert evidence in addition to Mr Hunter's report. As to that Mr Rudge made plain that this was not correct. Mr Rudge made plain during the course of the interlocutory application that he simply did not presently know exactly what materials the claimant in the arbitration would and would not rely upon. He did make plain that there was no doubt but that the claimant would not be relying on the Ernst & Young report. He also made plain that the claimant, as I understood him, does propose to rely upon the material referred to in Mr Hunter's report. He indicated that it may or may not be that Mr Hunter would be used. He indicated that it may or may not be that the material referred to in Mr Hunter's report might be relied upon under the aegis of a report from some other expert to Mr Hunter. The point being, as I understood Mr Rudge clearly making plain, that the claimant in the arbitration would be pursuing the quantum meruit case. It would prove the cost to Suscindy of the work and deduct the amount claimed. In those circumstances, it is common ground between both senior counsel, and the arbitrator on reading these reasons should accept and understand, that it is a matter for the arbitrator to decide what particular date or dates these proceedings should commence on. It is a matter for the arbitrator to decide in terms of fairness and the like, in the usual way, what to his perception a regular and just approach to the actual hearing of the arbitration should be. This Court on this interlocutory application in relation to these proceedings has only decided that in terms of the prima facie case and balance of convenience, the Court's discretion is against the granting of the injunction which had been sought.

I certify that paragraphs 1 - 92 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 17 May 2000 and revised on 26 June 2000

  Susan Piggott
  Associate
  26 June 2000

Last Modified: 09/26/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.