Northbuild Construction P/L v Discovery Beach Project P/L

[2] The applicant's response was to bring this application for correction of the award under s 30 of the Act. Section 30 provides:

"30. Power to correct award. Where an award made under an arbitration agreement contains -

(b) an error arising from an accidental slip or omission; or

(c) a material miscalculation of figures or a material mistake in the description of any person, thing or matter referred to in the award; or

the arbitrator or umpire may correct the award or the Court, on the application of a party to the agreement, may make an order correcting the award."

[3] Mr Dunning for the applicant places at the centre of his argument the findings contained in the following passages from the reasons given in this matter on 3 March:

"[17] Elsewhere in the award, as the above discussion shows, the arbitrator has found that moneys are due and owing and that the deductions made in respect of the subject variation orders were unlawful. There is an express finding that the applicant is entitled to payment of the amounts deducted by the variation orders and that such deduction has been made "without agreement or determination by expert determination or litigation".[1]

[18] Having regard to the foregoing, it is difficult to escape the conclusion that the arbitrator intended to make an award for the payment of money and understood that he was doing so. The language of his ruling (b) however falls short of that objective. There is an obvious distinction between an order not to make deductions from payments and an order to make payments without deduction. It is unfortunate also that the arbitrator did not specify the sum or sums implicitly found to be payable in his award and that he has included the qualifying words "until such time ..." at the end of paragraph (b). Those words refer to future conduct and are incompatible with the view that paragraph (b), properly construed, is a simple money order.

[22] Application of the above principles does not permit the conclusion that judgment against the respondent in favour of the applicant in the sum of $1,234,488 would constitute the entering of judgment "in terms of the award". As I have pointed out, that is not the effect of the wording of paragraph (b). My tentative view is that the arbitrator intended to order that the amounts deducted from the applicant's claim on account of the subject variation orders be paid. My impression is that the qualifying words at the foot of paragraph (b) were included as a result of an accidental slip on the arbitrator's part. He had already found that the moneys were due and owing and that there had been no agreement or determination in respect of them."

[4] He submitted by reference to the authorities discussed later, that the power under s 30 to correct an award was broad in its scope and provided adequate justification for the order now sought.

[5] Mr Hastie, for the respondent, argued that there was nothing to show that the arbitrator's award did not reflect his actual intentions. He pointed out that the arbitrator did not make an order in money terms although specifically asked to do so by the applicant in its statement of contentions and submissions in support of them. He further submitted that the arbitration was concerned with a broader range of matters than just the validity of variation orders and that other contentions in respect of the variation orders have yet to be dealt with. In those circumstances, it was submitted that it would have been wrong of the arbitrator to make any order, the effect of which might ultimately be changed in the final award. In those circumstances, so the argument goes, it should not be concluded that the award did not reflect the arbitrator's intentions.

Did the arbitrator intend to order the payment of money?

[6] A difficulty with the latter part of Mr Hastie's submission is that the respondent endeavoured to persuade the arbitrator not to make an interim award on the grounds that the issues between the parties would not be fully resolved and that an interim award may result in the applicant being overpaid. The arbitrator, however, proceeded to make the interim award finding, as is pointed out in the reasons of 3 March, that the applicant was entitled to payment of the amounts deducted in respect of the subject variation orders and that such moneys had become due and owing on specified dates. The arbitrator concluded, in effect, that the possibility of overpayment was a necessary consequence of the application of clause 8.1 of the August 2004 agreement which denied set offs or deductions for amounts otherwise payable by the respondent to the applicant unless the applicant agreed or the deduction was authorised by the resolution of a dispute in respect of the matter by expert determination or litigation.

[7] The submission also does less than justice to the arbitrator's treatment of the applicant's claim for interest. As is mentioned in the 3 March reasons, the discussion of interest in paragraphs 86 to 89, inclusive, proceeds on the assumption that the arbitrator is dealing with an award for the payment of money. He concludes his discussion by stating in paragraph 9:

"I therefore reserve any award of interest in accordance with the provisions of 31(1) and 32(1) of the Act."

[8] Paragraphs c) and d) of what the arbitrator describes as his "rule" state:

"c) the question of award of interest, pursuant to Section 31 of the Act, calculated from the due date for payment of the amount deducted in respect of each of the variation Orders to the date of this award is reserved; and

d) the question of award of interest, pursuant to Section 32 of the Act, on and from the date of this award is reserved."

[9] The due dates for payment are stipulated elsewhere in the arbitrator's reasons.

[10] Sections 31 and 32 confer power on arbitrators to award interest where there is no contrary intention expressed in the arbitration agreement and where there is an award for the payment of money. The arbitrator addressed sections 31 and 32 and found, by necessary implication, that he had the power to award interest. If the arbitrator had not considered that he was making an award for the payment of money, the discussion in these paragraphs would be peculiar indeed.

[11] For ease of reference, it is desirable to set out again paragraphs a) and b) of the award. They provide:

"a) on the proper interpretation of Clause 8.1 of the Interim Agreement dated 19 August 2004, DBP is not entitled unilaterally to set-off or deduct an amount from any amount payable to Northbuild, whether or not a Variation Order has been issued, unless the amount of the set-off or deduction has either been agreed between the parties or determined by expert determination, arbitration or litigation; and

b) Discovery Beach Project Pty Ltd make no deduction from payments to Northbuild Construction Pty Ltd with respect to each of the following Variation Orders (VO's); VO71, VO72, VO73, VO74, VO75, VO76, VO77, VO78, VO79, VO83, VO84, VO85, VO86, VO87 and VO 89 until such time as the amount of any deduction is either agreed between the parties or determined by expert determination, arbitration or litigation;"

[12] If paragraph b) was intended to be merely declaratory, it would add little, if anything, to paragraph a). It may therefore be assumed that it has a different purpose and, indeed, it is expressed in more positive terms requiring, as it does, the respondent to "make no deduction from payments". The absence of any statement or intimation by the arbitrator to the effect that he was declining to order the payment of moneys for the reasons urged on him by the respondent or for any other reason also assists the applicant. To my mind, it would be curious if the arbitrator, being requested by a party to find that moneys were owing and to order their payment, found the moneys to be due and owing but declined to order their payment without explaining why. Close scrutiny of the arbitrator's reasons gives no indication that the arbitrator contemplated denying the applicant a remedy in respect of the moneys owing to it.

[13] The logical inference to be drawn from the wording of paragraph b), read with the other matters in the award to which I have referred, is that the arbitrator, although intending to make an award for the payment of money, failed to give effect to that intention in the wording of the award.

[14] Having regard to the foregoing, should it be concluded that the award contains "an error arising from an accidental slip or omission"? The following discussion of the scope of the power conferred by the slip rule in the Rules of the Supreme Court (UK) in the reasons of the Court in R v Cripps[2] provides a useful exposition of the meaning of the words "accidental slip or omission":

"In the case of the High Court, the slip rule power is contained in RSC, Ord 20, r 11:

'Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the court on motion or summons without an appeal.'

It is surprisingly wide in its scope. Its primary purpose is akin to rectification, namely to allow the court to amend a formal order which by accident or error does not reflect the actual decision of the judge: Preston Banking Co v William Allsup & Sons [1895] 1 Ch 141. But it also authorises the court to make an order which it failed to make as a result of the accidental omission of counsel to ask for it: In re Earl of Inchcape [1942] Ch 394, approved by the Judicial Committee of the Privy Council in Tak Ming Co v Yee Sang Metal Supplies Co [1973] 1 WLR 300, 304. It even authorises the court to vary an order which accurately reflects the oral decision of the court, if it is clear that the court inadvertently failed to express the decision which it intended: Adam & Harvey Ltd v International Maritime Supplies Co Ltd [1967] 1 WLR 445."

[15] Later in the reasons, in addressing the exercise of the power under the slip rule in the case of ambiguity it was observed:[3]

"For our part we would accept that if a court has reached a decision which is ambiguously expressed either in the reasoned judgment or in the formal order giving effect to the decision, the ambiguity of expression can be removed in the exercise of slip rule powers. But the exercise must be limited to correcting ambiguity in expression of an unambiguous decision. An ambiguous decision is no decision at all and any attempt to turn it into an unambiguous decision is at least a variation and probably a new decision."

[16] In considering the scope of the slip rule embodied in O 29 r 11 of the High Court Rules, Toohey J, in Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd [No 2],[4] after referring to authority holding that the rule extended to authorise rectification of an omission resulting from the inadvertence of a party's legal representative, said:

"In many cases the slip rule or its equivalent is invoked when, through error or oversight, a judgment or order fails to express correctly the intention of the court at the time when the judgment or order was announced.

But it is clear that this power of correction extends to cases where a matter, through inadvertence, was not dealt with at the hearing. In that case the purpose of correction is not to give expression to the intention of the court at the time the judgment or order was pronounced: Coppins v Helmers & Brambles Constructions Pty. Ltd (1969) 2 NSWR 279."

[17] Applying the slip rule, Toohey J varied an order to include an order for costs which had not been sought by the successful party's legal representative when judgment was delivered.

[18] For the reasons given above, I find that the arbitrator accidentally omitted to include in the award an order that the respondent pay the applicant the disputed moneys. The amount of those moneys was clearly stated in the material before the arbitrator and there was no relevant dispute as to quantum. The principles expressed in the above authorities demonstrate that there is adequate power under s 30 of the Act to correct the award to make provision for an order for the payment of the sum claimed.

[19] Mr Hastie submits, correctly, that there is a discretion to refuse an order under s 33 if something has intervened which would render it inexpedient or inequitable that the order be made.[5] In this case he submits that it would be inequitable to enter judgment for the amount claimed given that "if the quantity surveyor had had an opportunity to examine and apply the interim award in Certificate No 2, the effect of the interim award would have been to reduce the amount payable by the claimant to the principal to $165,998.70".

[20] As was observed in the reasons of 3 March, a submission similar in its broad effect to this was agitated before the arbitrator and rejected by him on the grounds that the parties, by their agreement, had expressly stipulated the circumstances in which the respondent would be able to reduce progress payments. It does not seem to me to be just in the circumstances to deprive the applicant of the benefit of the August 2004 agreement and of the award.

[21] Subject to any arguments the parties may wish to advance, it will be ordered that:

(a) The interim award made on 18 February 2005, a copy of which is Ex PJB-06 to the affidavit of Paul Joseph Boddington filed herein on 23 February 2005 be corrected by inserting the following paragraph bb) after paragraph b) on page 1 thereof -

"Discovery Beach Project Pty Ltd pay Northbuild Constructions Pty Ltd the sum of $1,234,488."

(b) The applicant have leave to enforce such interim award

(c) Judgment be entered against the respondent in favour of the applicant in the sum of $1,234,488.

[22] Having regard to the applicant's failure on its initial application it seems appropriate that there be no order for costs.

[2] [1984] 1 QB 686 at 695.

[4] S. 86/130 [1988] HCA 2 (10 February 1988) at 152.

[5] L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) [1982] HCA 59; (1982) 151 CLR 590.