Plaintiff v Defendant

Plaintiff v Defendant - [2012] VSC 249 - VSC 2012 case summary — Zoe

[36]

the parties shall agree on an Independent Expert to determine the Dispute, either by appointing a person from the Accelerated Dispute Panel, appointing the Independent Reviewer to act as Independent Expert or by appointing some other person as agreed by the parties.

(b) (Fail to agree on Independent Expert): If the parties fail to agree on the Independent Expert within the time referred to in paragraph (a), then an Independent Expert will be nominated by the Minister (or the Minister's nominee) from the appropriate discipline on the Accelerated Dispute Panel.

(c) (Panel updates): The parties may review and update the Accelerated Dispute Panel at any time but not more than once in every Quarter after the Date of this Agreement.

(d) (Tripartite agreement): The Independent Expert must execute an agreement with the parties which is substantially in the form of the Independent Expert Agreement within 10 Business Days of the agreement on the Independent Expert referred to in paragraph (a) or on appointment pursuant paragraph (b).

(e) (Referral): If the Independent Expert so agreed or nominated:

(i) does not execute a tripartite agreement with the parties which is substantially in the form of the Independent Expert Agreement in accordance with paragraph (d), then the Dispute will be referred to arbitration pursuant to Clause 53; or

(ii) has executed an agreement in accordance with paragraph (d), then the Dispute is referred to that Independent Expert for determination.

(f) (Basis for determination): The Independent Expert will make the determination based upon:

(i) the submissions provided by the party that issued the Notice of Dispute, which were delivered with that Notice of Dispute;

(ii) submissions provided by the respondent to the Notice of Dispute which, unless the Independent Expert extends the time for delivery, must be delivered within 5 Business Days of the Independent Expert signing the tripartite agreement referred to in paragraph (d); and

(iii) any further information provided by the parties in accordance with this Clause 52.

(g) (Further information): If the Independent Expert decides that further information is required the Independent Expert may call for further submissions, documents or information from either or both parties.

(h) (Conference): After the Dispute has been referred to him or her, the Independent Expert may call and conduct a conference, or any number of conferences, as the Independent Expert sees fit, between the parties but will give the parties reasonable notice of the matters to be addressed at any such conference.

(i) (Representation): The parties may be legally represented at any such conference.

(j) (Privacy): All conferences will be held in private except to the extent that representatives of the Key Subcontractors will be permitted to attend on reasonable notice, where the Dispute impacts upon the Works or the Services (as the case may be).

(k) (Site visit): The Independent Expert may, if he or she considers it necessary, visit the Site, the Designated Commercial Areas or the Facility (as the case may be), and the parties will facilitate the Independent Expert's access to any of those areas.

(l) (Timing): The Independent Expert shall make his or her determination in relation to the Dispute:

(i) within 10 Business Days of the last of the steps set out in subparagraphs (a) to (k); or

(ii) within 30 Business Days of receipt of the respondent's submissions in accordance with paragraph (f)(ii),

whichever is the earliest. If the Independent Expert fails to make a determination within this time either party may refer the Dispute to arbitration in accordance with Clause 53.

(m) (Not arbitrator): The Independent Expert will act as an expert and not an arbitrator and may make a decision from his or her own knowledge and expertise.

(n) (Final and binding): To the extent permitted by Law, the determination of the Independent Expert will be final and binding on the parties, unless:

(i) the value of the determination is greater than $15 million; and

(ii) a party gives written notice to the other party within 15 Business Days of the determination referring the matter to arbitration under Clause 53.

(o) (Mistake): Where the Independent Expert's determination contains:

(i) a clerical mistake or an error arising from an accident slip or omission;

(ii) a material miscalculation of figures or a material mistake in the description of any person, thing or matter; or

(iii) a defect of form,

the Independent Expert may correct the determination by written notice to the parties.

(p) (Costs): The cost of the Independent Expert will be borne equally by each of the parties to the Dispute unless the determination is made against the party who issued the Notice of Dispute, in which case the Independent Expert may determine that that party will bear all or a greater proportion of the Independent Expert's costs in respect of that matter.

(q) (No liability): The Independent Expert will not be liable to the parties arising out of, or in any way in connection with the expert determination process, except in the case of fraud.

(r) (Change Compensation Principles): Any dispute in relation to a matter to which the Change Compensation Principles are said to apply in this Agreement may be referred by either party for resolution by an Independent Expert and in making a determination, the Independent Expert must be instructed to have regard to the Change Compensation Principles.

[37]

53.1 Arbitrator

(a) All Disputes referred to arbitration in accordance with Clauses 50 to 52 shall be finally determined in accordance with this Clause 53:

(i) before an arbitrator to be agreed between the parties within 5 Business Days of the Dispute being referred to arbitration; or

(ii) failing agreement within that period, an arbitrator nominated by the Australian Centre for International Commercial Arbitration (ACICA).

(b) The arbitrator will have power to grant all legal, equitable and statutory remedies and to open up, review and substitute any determination of an Independent Expert under Clause 52 which has been referred to arbitration.

53.2 Arbitration

(a) (ACICA Rules): Arbitration pursuant to this Clause 53 will be conducted in accordance with the rules of ACICA (ACICA Rules) current at the time of the reference to arbitration and as otherwise set out in this Clause 53.

(b) (Seat): The seat of the arbitration will be Melbourne in Victoria.

(c) (Not court): Nothing in this Clause 53 or the ACICA Rules is intended to or shall modify or vary the rights of appeal in the Commercial Arbitration Act 1984 (Vic).

(d) (Conduct of arbitration): The parties agree that:

(i) they have entered into an arbitration agreement under this Clause 53 for the purposes of achieving a just, quick and cheap resolution of any Dispute or difference;

(ii) subject to Clause 53.2(f), any arbitration conducted pursuant to this Clause 53 will not mimic court proceedings of the seat of the arbitration and the practices of those courts will not regulate the conduct of the proceedings before the arbitrator; and

(iii) in conducting the arbitration, the arbitrator must take into account the matters set out in subparagraphs (i) and (ii).

(e) (Evidence in writing): All evidence in chief will be in writing unless otherwise ordered by the arbitrator.

(f) (Discovery): Discovery will be governed by the substantive and procedural rules and practices adopted by the Federal Court of Australia at the time of arbitration.

(g) (Oral hearing): The oral hearing will be conducted as follows:

(i) the oral hearing will take place in Melbourne, Victoria and all outstanding issues must be addressed at the oral hearing;

(ii) the date and duration of the oral hearing will be fixed by the arbitrator at the first preliminary conference. The arbitrator must have regard to the principles set out in paragraph (d) when determining the duration of the oral hearing;

(iii) oral evidence in chief at the hearing will be permitted only with the permission of the arbitrator for a good cause;

(iv) the oral hearing will be conducted on a stop clock basis with the effect that the time available to the parties will be split equally between the parties so that each party will have the same time to conduct its case unless, in the opinion of the arbitrator, such a split would breach the rules of natural justice or is otherwise unfair to one of the parties;

(v) not less than 20 Business Days prior to the date fixed for the oral hearing, each party will give written notice of those witnesses (both factual and expert) of the other party that it wishes to attend the hearing for cross examination; and

(vi) in exceptional circumstances, the arbitrator may amend the date of hearing and extend the time for the oral hearing set under subparagraph (ii).

(h) (Experts): Unless otherwise ordered, each party may only rely upon on expert witness in respect of any recognised area of specialisation.

(i) (Costs): Any determinations made by the arbitrator under this Clause 53 shall include a determination relating to the costs of the reference and the award, including the fees and expenses of the arbitrator.

53.3 Proportionate Liability

Notwithstanding anything else, to the extent permissible by Law, the arbitrator appointed pursuant to this Clause 53, or the Independent Expert appointed pursuant to Clause 52 (as the case may be) will have no power to apply or to have regard to the provision of any proportional liability legislation which might, in the absence of this provision, have applied to any Dispute referred to arbitration or expert determination pursuant to this Agreement.

...

26.16 Extension of time disputes

Subject to Clause 26.10, any dispute about an extension of time claim or acceleration under this Clause 26, including a determination or rejection of an extension by the Project Director (or the period of time of any such extension) under Clause 26.9 may be referred by either party for resolution by an Independent Expert in accordance with the Accelerated Dispute Resolution Procedures, and in making a determination, the Independent Expert must be instructed to have regard to the Change Compensation Principles and this Clause 26."

[77]

"(a) Clause 50.1 makes it clear that any dispute arising out of the Project Agreement will be resolved in accordance with clauses 50 to 53;

(b) Clause 52 is enlivened, to the exclusion of clause 51, where the Agreement expressly provides that a Dispute shall be referred for expert determination;

(c) It is not a prerequisite of clause 52(a)(i) that the referring clause employ the words 'shall be referred for [expert determination]'. If that had been a prerequisite, it could have been clearly stated. What is important is the effect of the referring clause, specifically that, if enlivened, it makes mandatory the referral of the dispute for expert determination;

(d) The first part of clause 26.16, applying the ordinary meaning to the words used, entitles either party to refer any dispute about an EOT claim for expert determination. If such referral is not the exclusive means of resolution (as submitted in paragraph 25(a) above) then the only interpretation of the words used in the clause consistent with their ordinary meaning is that they confer on each party an entitlement to have the dispute referred to an Independent Expert. The entitlement arises in respect of 'any dispute' and either party 'may' refer it.

(e) If either party exercises its entitlement to refer the dispute to an Independent Expert, then the dispute must be resolved in accordance with the Accelerated Dispute Resolution Procedures. Consistent with the referral of the Dispute to an Independent Expert thereafter being mandatory, the language used in the balance of clause 26.16 (which requires the Independent Expert to be instructed to have regard to the Change Compensation Principles) assumes that an expert determination will follow in the event that either party exercises its election to have the dispute referred to an Independent Expert. That is, the reference to the expert determination is not premised on an agreement by the other party that the dispute be so referred;

(f) Had it been intended by the parties that a dispute about an extension of time claim could only be referred to expert determination by agreement between the parties, such a requirement could easily have been expressed in clause 26.16. It was not;

(g) It would be perverse if, having provided for either party to have the option of referring the dispute for expert determination, one party could proceed under the provisions of clause 51 and thereby deprive the other of the opportunity to avail itself of the option provided under clause 26.16. 'Disputes are not readily resolved ... by procedures which can be set at nought if one party elects to pursue some other course of action.'[50] The possibility of such an outcome compels a construction of clause 26.16 which commits the parties to expert determination where at least one of them so elects".

[101]

"[2] ... The fact that [cl] 13 contemplates that the disputes of the parties might be resolved by means other than arbitration does not, in my opinion, lead to the conclusion that their agreement was not 'an arbitration agreement' within the meaning of the Act; nor to the conclusion that the Court's discretion to stay proceedings pursuant to s 53(1) of the Act is ousted.

[3] Clauses 13.03 and 13.04, when read with each other, and in the context of the agreement, suggest to me that arbitration of disputes was the parties' preferred method of dispute resolution and the one which they intended would be adopted in the event that either party elected to refer a dispute to arbitration in compliance with those clauses. In my view, it was the parties' intention that a dispute would only be resolved by litigation if both parties were in agreement that such was the method to be adopted with respect to a particular dispute. Such an agreement would, no doubt, be inferred where one party, following negotiations, gave notice referring the dispute to litigation and the other party thereafter accepted that as the preferred method of resolution.

[4] It was the appellant's contention in this Court that the agreement was not an 'arbitration agreement' because cl 13.03 disclosed an intention that disputes were to be resolved, at the option of the parties, either by arbitration or litigation and there was no intention therefore to 'refer disputes to arbitration'. This contention rests on the proposition that cl 13.03 means that, once one party has given a notice referring a dispute to litigation, the other party loses whatever right he might have had to refer the matter to arbitration. I do not agree with this contention. There is nothing in the clause which suggests, in terms, that the right of the other party to refer the dispute to arbitration is lost. Rather, it seems to me that the clause re-affirms the right of the parties to litigate their dispute before the Court, if that is what they wish. However, the combined effect of cll 13.03 and 13.04 is, in my view, to give primacy to arbitration as the preferred method of dispute resolution agreed between the parties. This is because, whether or not one party has given notice of an intention to refer the dispute to litigation, there is nothing in the clause which prevents the other party from giving his own notice to refer the same dispute to arbitration and, if he does so, and complies with the provisions of cl 13.04, the consequence is, demonstrably, that from the time of the giving of the notice, the dispute (if not settled) is 'referred to arbitration'. I can see no reason to read into cl 13.03 the implication contended for by the appellant. Such a construction only promotes the unseemly 'jostling for position' which occurred in this case.

[5] Nor do I agree with the contention made by the appellant that, if its construction of cl 13.03 is not accepted, then the clause has 'no work to do'. In the first place, it enables the party giving the notice to signal to the other party that the 'negotiation phase' of the dispute provided for in cl 13.02 is at an end; and secondly, if the party giving the notice elects for 'litigation', it provides the other party with the opportunity to consider whether that method of resolution is to be preferred to arbitration. If, upon the receipt of the notice, he accepts it and joins in the subsequent curial proceedings, he will have (as I have noted) signalled his assent to that method of resolution and prejudiced his right to apply for a stay of those proceedings (s 53(2) Commercial Arbitration Act). Otherwise, as I see it, the contract contemplates that he may elect, in compliance with cll 13.03 and 13.04, to refer the matter to arbitration and, if he does so, the Court's powers under s 53(1) of the Act are enlivened. ..."

[114]

[133] In my opinion the matters raised by Mr Loewenstein are matters which the parties contemplated. They put in place the procedure and if it involves a question of law as to construction of the agreement, the gathering of evidence without regard to rules or procedures, a determination in which the expert may rely upon his own experience and knowledge and without hearing the parties or any valuation experts on their behalf, the parties are bound by it.

[134] They put it in place, it binds them.

[135] In regard to the question of the discretion I have not overlooked the observations made in the recent English case of Cott UK Ltd v F E Barber Ltd, supra. The learned judge relied upon a number of factors which resulted in the exercise of his discretion refusing the stay.

[136] I would beg to differ with respect to some of the matters which the learned judge took into account. The matters in question concern the fact that there were no rules governing the form of dispute resolution, that the valuer had no experience with respect to the issues raised and that there were no rules or principles laid down pursuant to which the expert was to approach or determine the dispute.

[137] However, I do respectfully agree that the fact that there were issues concerning a number of legal questions, whether there was a breach of any of the terms of the agreement and whether there was an entitlement to damages are matters which may be of some importance in deciding against the grant of a stay on the basis that it could not have been the common intention of the parties to refer disputes of mixed facts and law to an untrained and inexperienced person. These are questions which are more appropriate to a court proceeding. But in the end it is a question of what the term of the contract provides and the nature of the dispute.

[138] These latter considerations may be relevant to an issue whether the parties intended the dispute to be resolved by arbitration rather than by an expert despite what the words of the agreement provided.

[139] Here it is a straightforward valuation exercise following on from a stock take in which the parties disagree as to the value and quality of certain stock."

At a glance

Court

Decision date

Before

Source

Judgment (269 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (16)