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[2001] VSC 148
respondent. The appeal from the Master’s decision was dismissed; the plaintiff’s application for leave to appeal from the arbitrators’ orders and its 30 April 2001 summons were dismissed; the plaintiff was...
Nascon challenged the arbitrators’ authority to hear a building-contract dispute, but applied for leave to appeal under a statute that did not provide that appeal route. The relevant provision identified by the Court was section 38 of the Commercial Arbitration Act 1984 (Vic). Following Leung, Beach J held that the arbitrators’ jurisdiction ruling did not substantially affect the parties’ rights because the merits remained to be decided. He also found that the later agreement did not alter the original arbitration clause. The proposed amendment was therefore pointless, and the appeal and application for leave were dismissed.
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Nascon Constructions (Aust) Pty Ltd and Cordukes Ltd were involved in a building project at Shepparton Market Place Shopping Centre. The judgment says that they entered a building contract on 27 March 1998, under which Cordukes agreed to carry out building works at the centre [2]. The contract included an arbitration clause, identified in the judgment as clause 13.1 [60]. Disputes later arose about the contracted work [5].
3 cited instruments linked from this judgment.
Cordukes referred the disputes to arbitration on 6 September 2000, relying on clause 13.01 [8]. Nascon challenged the arbitrators’ jurisdiction when the matter came before them on 9 November 2000 [11]. On 20 December 2000, the arbitrators determined that they had jurisdiction to hear the disputes [14]. The arbitrators intended to proceed unless the Court prevented them from doing so [17].
Nascon then filed an originating motion seeking leave to appeal from the arbitrators’ orders. The motion relied on the Victorian Civil and Administrative Tribunal Act 1998 [20]. The Master dismissed the proceeding. As recorded in the Master’s order, the Master considered that service did not comply with the Service and Execution of Process Act, that amendment might be permitted to invoke the Commercial Arbitration Act, but that such an application for leave would be hopeless, and that the proceeding should be dismissed under Rule 23.01 [27].
On appeal, Beach J considered both the statutory basis for the motion and whether the proposed amendment could assist Nascon. He concluded that the VCAT Act did not provide a route to seek leave to appeal an arbitrator’s decision [31]. The judgment identifies section 38 of the Commercial Arbitration Act 1984 (Vic) as the relevant route for an appeal on a question of law [34]. Beach J accepted the Master’s assessment that the proposed application was hopeless, found no error in the Master’s decision, dismissed the appeal, refused leave to appeal from the arbitrators’ orders, and dismissed a separate summons [72], [75], [78], [81].
The Court also ordered Nascon to pay Cordukes’s costs of the appeal and summons. The order specified that the defendant’s costs for 20 April 2001 were to be on an indemnity basis [81].
The first problem was the legal basis stated in Nascon’s originating motion. The Court said there was “no power” under the Victorian Civil and Administrative Tribunal Act 1998 to seek leave to appeal an arbitrator’s decision [31]. It consequently considered that the originating motion did not disclose a cause of action on its face and could be dismissed under Rule 23.01 of the Supreme Court (General Civil Procedure) Rules 1996 [38].
The judgment set out section 38 of the Commercial Arbitration Act 1984 (Vic). Subsection (2) provided for an appeal to the Supreme Court on a question of law arising out of an award. Subsection (4) required either consent of the other parties or leave of the Court. Subsection (5), as reproduced in the judgment, imposed further requirements: the legal question had to be capable of substantially affecting one or more parties’ rights, and there had to be a manifest error of law on the face of the award or strong evidence of an error of law with the specified potential to add substantially to commercial-law certainty [34].
The next question was whether Nascon could overcome the statutory threshold by amending its motion to invoke section 38. The Master had concluded that amendment would serve no purpose because the leave application was hopeless [41]. Beach J examined the decision in Leung v Hungry Jack’s Pty Ltd, where Hedigan J had refused leave to appeal from an arbitrator’s ruling on jurisdiction [44], [47], [50]. Beach J expressly stated that he considered the decision in Leung “undoubtedly correct” [57].
The principle Beach J applied was that a jurisdiction ruling did not, on the reasoning adopted in Leung, substantially affect the parties’ rights within section 38(5)(a) when the arbitrator had not yet decided those rights. In practical terms, a ruling that the arbitration could proceed was distinct from a determination of which party was right on the underlying contractual dispute. The merits remained for the arbitrators. Beach J therefore treated the facts as “on all fours” with Leung [72].
Nascon also argued that a later agreement made the case different. The later agreement, dated 9 June 1999 in the judgment, involved Nascon, Cordukes, Nascon (Australia) Pty Ltd and Woolshep Nominees Pty Ltd [63]. Nascon argued that only Cordukes’s obligations concerning repair, rectification or replacement of defects during the defects period remained under the original contract [66]. Beach J said he could find no clause in the later agreement affecting the arbitration clause in the original contract [69]. He accordingly rejected the proposed distinction from Leung [72].
Having found that the statutory route pleaded was wrong and that amendment would not produce a viable leave application, Beach J concluded that the Master had made no error in dismissing the proceeding under Rule 23.01 [72]. The appeal was a rehearing of Nascon’s application for leave, but Beach J refused the application [75].
The judgment did not purport to create a new general rule about every arbitral jurisdiction decision. Its reasoning applied the text of section 38 of the Commercial Arbitration Act 1984 (Vic) and followed the approach in Leung to the particular application before it.
Before the decision, Leung had already addressed whether a party could obtain leave to appeal an arbitrator’s ruling that the arbitrator had jurisdiction. Beach J described Leung as directly relevant and endorsed its reasoning [44], [53], [57]. The important statutory feature, as the judgment presented it, was the requirement that the legal question could substantially affect a party’s rights [34]. The distinction drawn in Leung was between deciding whether an arbitration could proceed and deciding the parties’ underlying rights in the dispute.
After applying that approach, Beach J rejected Nascon’s attempt to distinguish Leung based on the later agreement. His reading of that agreement disclosed no provision changing the original arbitration clause [69]. The Court therefore treated Nascon’s position as falling within the reasoning already applied in Leung, rather than identifying a new exception.
The judgment also makes a procedural point about selecting the statutory source of an application. It expressly says that the VCAT Act did not confer the power Nascon invoked, while identifying the Commercial Arbitration Act as the relevant legislation [31], [34]. In this case, the mismatch meant the motion did not disclose a cause of action on its face [38]. The decision’s effect in the proceeding was to uphold dismissal of the incorrectly framed motion and refuse the proposed statutory amendment as futile.
The extract does not set out a broader account of the law before or after 2001, nor does it identify legislative amendments after the decision. Any account of later statutory changes or current law would require sources beyond this judgment.
At [31], Beach J stated: “There is no power given to a party to seek leave to appeal from the decision of an arbitrator under the Victorian Civil and Administrative Act 1998.” In plain English, Nascon had relied on a statute that the Court said did not authorise this kind of appeal application.
At [34], the judgment reproduced section 38 of the Commercial Arbitration Act. It described an appeal on a question of law and the conditions for leave, including that the legal question could substantially affect a party’s rights. In plain English, identifying an error of law would not, by itself, satisfy the statutory leave test as stated in the judgment. The statutory requirements also included the effect on rights and one of the specified forms of legal error or its commercial-law significance.
At [57], Beach J said the decision in Leung was “undoubtedly correct”. This is the clearest indication that he adopted, rather than merely mentioned, the earlier reasoning. The passage that follows records Nascon’s argument that the facts differed and says that deciding that point required a closer examination of the facts.
At [69], Beach J said he could find no clause in the later agreement that affected the arbitration clause in the original contract. In plain English, the later document did not, in his reading, remove or change the contractual basis for arbitration.
At [72], Beach J concluded that the facts were “on all fours” with Leung and that allowing an amendment would be pointless. In plain English, he considered that changing the form of Nascon’s application could not overcome the substantive problem with obtaining leave.
At [75], Beach J stated that the appeal before him was a rehearing of the application for leave, then refused leave and said he gave no further reasons, referring to Leighton Contractors Pty Ltd v Kilpatrick Green Pty Ltd. The judgment does not explain further the reasoning in Leighton, so its role here should be stated narrowly: Beach J referred to it when explaining why he gave no additional reasons for refusing leave.
The decision is most directly relevant to a procedural situation in which a party to an arbitration seeks to appeal an arbitrator’s ruling that the arbitrator has jurisdiction, before the underlying contractual rights have been determined. The Court applied Leung on the basis that a jurisdiction finding did not substantially affect the parties’ rights for section 38(5)(a) in the circumstances described [53], [57], [72].
It is also relevant where an application for leave is brought under a statute that does not provide the asserted appeal power. Nascon’s motion invoked the VCAT Act, while the Court identified section 38 of the Commercial Arbitration Act as the relevant statutory route [20], [31], [34]. The Court treated that defect as sufficient for the motion not to disclose a cause of action on its face [38].
The decision also bears on an argument that a later agreement displaced an earlier arbitration clause. Here, the Court examined the later agreement and found no clause affecting the arbitration clause in the original contract [63], [69]. That conclusion depended on Beach J’s reading of the document described in the judgment. The decision does not establish that every later agreement leaves an earlier arbitration clause intact.
The case does not resolve what the result would be where a jurisdiction ruling itself determines a substantive contractual right, where the later agreement expressly addresses arbitration, or where a party seeks relief on a different statutory basis. Those possibilities are not decided in the supplied judgment.
The supplied judgment does not identify any later decisions applying, distinguishing, approving or disapproving Nascon. It would therefore be unsupported to describe how later courts have treated this decision or to make claims about its present standing.
The treatment of earlier authorities within Nascon is clear but limited. Beach J approved the reasoning in Leung and treated the present facts as materially the same for the leave issue [57], [72]. He also referred to Leighton Contractors when declining to give further reasons for refusing leave [75]. The judgment provides no detailed analysis of Leighton’s substantive rule, so no broader account of that case’s effect can be drawn from this text alone.
For legal research purposes, the available source supports describing Nascon as an application of Leung in a dispute over an arbitrator’s jurisdiction ruling and a proposed appeal under section 38. It does not supply a later-case history.
The judgment leaves unanswered how section 38(5)(a) would apply where an arbitrator’s jurisdiction ruling has an immediate effect on a party’s substantive rights, rather than leaving those rights to be determined in the arbitration. Beach J adopted Leung’s distinction between jurisdiction and the later determination of rights, but the extract does not consider alternative fact patterns [53], [57].
It also does not set out the full text or detailed interpretation of Rule 23.01. The Court stated that the originating motion disclosed no cause of action on its face and could be dismissed under that rule [38], and upheld the Master’s use of it [72]. The judgment does not explore the rule’s operation in other procedural settings.
The Court’s assessment that amendment was pointless arose from its conclusions about the leave threshold and its reading of the later agreement [69], [72]. It does not discuss the general limits on amendment of originating process, or circumstances in which amendment might be permitted despite a defect in the original statutory basis.
Finally, the text contains inconsistent dates for the original contract. Paragraph [2] gives 27 March 1998; [60] also refers to 27 March 1998; [63] refers to 4 March 1998; and [69] refers to 27 March 1999. The supplied judgment does not resolve those inconsistencies. The reasoning about the arbitration clause is apparent, but the precise date references should not be silently reconciled.
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"RELIEF OR REMEDY SOUGHT The Applicant seeks the following orders under the Victorian Civil and Administrative Tribunal Act 1998: 1. The Applicant have leave to appeal from the orders made on 21 December 2000 by Robert Thyer and John Permewan Arbitrators in an arbitration between the Applicant and the Respondent. 2. Such other orders as the Court deems appropriate. 3. The Respondent pay the Applicant's costs of the Application."
"1. The Master held that: (i) the service of the documents in this proceeding did not comply with the service and execution of Process Act rendering that service liable to be set aside; (ii) there was a discretion to permit the Applicant to amend the originating motion to seek Relief under the Commercial Arbitration Act and otherwise to make it conform with form 5C but because an application for leave to appeal the ruling of the arbitrators that they had jurisdiction was absolutely hopeless (see Leung v. Hungry Jacks Pty. Ltd. (1999) VSC 477) there was no point exercising the discretion by granting leave; (iii) the proceeding should be dismissed under Rule 23.01 of Supreme Court (General Civil Procedure) Rules 1996."
"38. Judicial review of awards (1) Without prejudice to the right of appeal conferred by sub-section (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 sub-section (4), an appeal shall lie to the Supreme Court on any question of law arising out of an award. ... (4) An appeal under sub-section (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 sub-section (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."
"... Determination of the question or questions concerning jurisdiction does not to my mind fall within s.38(5)(a) because the rights of the applicant are not affected within the meaning of that sub-section by a decision that there was jurisdiction in the arbitrator to proceed to determine what the rights in the circumstances of the applicant and the respondent respectively are. Put another way, a finding of jurisdiction does not substantially affect the rights of the applicant or the respondent, notwithstanding that if there is no jurisdiction there could be no consideration of their respective rights. Nevertheless there has been no adjudication about their rights, as I would interpret the meaning of 'rights' within that sub-section to be. It would follow that if there has been no determination regarding the rights of a party to the agreement there could not be grounded any appeal against the determination of rights. These matters are yet to be determined by the arbitrator."
1. The appeal from the decision of Master Evans on 29 March 2001 is dismissed.
2. The application of the plaintiff for leave to appeal from the orders of Robert Thyer and John Permewan made on 21 December 2000 in an arbitration between the plaintiff and the defendant is dismissed.
3. The plaintiff's summons filed in the Court on 30 April 2001 is dismissed.
4. I order that the plaintiff pay the defendant's costs of the appeal. and the summons, such costs to include any costs reserved. Insofar as the costs of 20 April 2001 are concerned the defendant's costs of that day are to be on an indemnity basis.
[1] (1999) VSC 477 (29 November 1999)
Nascon Constructions (Aust) Pty Ltd
Cordukes Ltd [2001] VSC 148
The appeal from the Master’s decision was dismissed; the plaintiff’s application for leave to appeal from the arbitrators’ orders and its 30 April 2001 summons were dismissed; the plaintiff was ordered to pay the defendant’s costs of the appeal and summons, including indemnity costs for 20 April 2001.