Plaintiff v Firstnamed Defendant Secondnamed Defendant Thirdnamed Defendant Fourthnamed Defendant

Plaintiff v Firstnamed Defendant Secondnamed Defendant Thirdnamed Defendant Fourthnamed Defendant - [2010] VSC 123 - VSC 2010 case summary — Zoe

[31]

"The argument of the Commonwealth gains some support from the majority opinion in the South Australian Superannuation Fund case. However, with every respect, I consider that Rolfe J was correct to decline to follow that decision. There was contrary authority in this State: see Imperial Leatherware Co Pty Ltd v Macri & Marcellino Pty Ltd (1991) 22 NSWLR 653 at 666f. Similarly, Smith J in the Supreme Court of Victoria has declined to follow it: see Nauru Phosphate Royalties Trust v Matthew Hall Mechanical and Electrical Engineers Pty Ltd [1994] VicRp 67; [1994] 2 VR 386 at 398; see also the decision of Acting Master Hawkins in the Supreme Court of Western Australia in Cuedale Corporation Pty Ltd (t/as Statewide Constructions) v State Energy Commission of Western Australia (Supreme Court of Western Australia, Master Hawkins, 14 December 1992, unreported).

The reasons given by Rolfe J in his earlier decision in the current litigation (3 November 1994) are compelling. With his Honour, I would say that it would be extraordinary if the Act were so to control and limit appeals against final awards but to provide such a ready entitlement to secure a review of interlocutory orders made in an arbitration. To suggest this is to ignore the context in which s 47 of the Act appears. To the extent that the decisions of Cole J in Aerospatiale Holdings Australia Pty Ltd v Elspan International Ltd (1992) 28 NSWLR 321 and in Leighton Contractors Pty Ltd v NGI Investments Pty Ltd (Cole J, 25 August 1992, unreported) suggest otherwise, I would not agree.

Section 47 is intended to empower the Court, in cases properly before it, to make interlocutory orders to the extent that it is not elsewhere specifically provided for in other sections of the Act. Mr Jacobs draws attention to Pt 72A, r 4 of the Supreme Court Rules 1970: see M Jacobs, Commercial Arbitration, Law and Practice Sydney, Law Book Co (1990) at 2177. He describes the section as "indeed troublesome": see ibid (at 11,665). He points out that to permit s 47 a large meaning would "allow unwarranted interference in the arbitral process at an inappropriate stage, and thus do violence to the spirit of intent of the model uniform legislation". I have no difficulty in confining s 47 of the Act as Rolfe J proposed. ... To decide otherwise would be to defy the structure and apparent purpose of the Act. It would be to fall into the error, which courts are now enjoined to avoid, of construing a section in isolation and forgetting that it is intended to operate in a context and to achieve the consistent and sensible operation of the Act as a whole."

[33]

"[8] ... On its face, as the learned judge observed, the section does not confer any appellate jurisdiction on the court. Nor would its terms seem designed to give jurisdiction to the court to make incidental rulings as to the admissibility of evidence during the trial of issues in a reference to arbitration, as such rulings scarcely seem to be "interlocutory orders" within the meaning of s 47. None the less, the ruling or order here sought, which would relate to the production for inspection of certain of the appellant's documents, ought to be characterised as an "interlocutory" order for the purpose of the section, if the section was intended to grant jurisdiction to that end.

[9] Section 47, in my opinion, could not support or justify any of the orders sought from the court. Certainly it ought not to be construed as providing a means of appeal or review of an arbitrator's decisions. I would, with respect, not accept the opinion to the contrary expressed by the majority[8] in South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd[9] to the effect that the Act[10] is intended to give wide powers of intervention to the court at the interlocutory stages of arbitrations and that otherwise the section would have no purpose. In that respect I would prefer the reasoning of the other member of the court,[11] and would agree with the criticism appearing in and adopted by reference in the judgment of Kirby P (with whom Priestley JA concurred) in Commonwealth v Cockatoo Dockyard Pty Ltd.[12] In short, the section is intended only to invest ancillary jurisdiction in the court so as to enable it to act in aid of the arbitration by making interlocutory orders of a kind which are beyond the powers of the arbitrator, whether the latter are given by the Act or by the parties' agreement. Effectively it gives an auxiliary jurisdiction analogous to the kind which formed part of the jurisdiction of the Court of Chancery, though not confined to the powers then exercised. As was pointed out in the several judgments to which Kirby P referred, the section would enable the court to make orders for injunctive relief,[13] the appointment of a receiver, interim protection of property, security for costs and for various kinds of relief against or involving third parties.

[10] As likewise has been held in relation to the inherent jurisdiction of the court,[14] the assumption behind the judgments just referred to is an implication from the terms of the Act that the court has only limited powers to interfere in an arbitration. In particular, short of finding misconduct and the like pursuant to ss 42 and 44, the court's powers to review decisions, at least in the form of awards, is circumscribed significantly by ss 38 and 40. The only other general power given to the court by the Act to consider matters of substance in an arbitration is the very limited power to determine questions of law pursuant to s 39 which requires at the least the consent of the arbitrator or all other parties. These limitations, as well as the widely expressed powers given to arbitrators under sections such as ss 14, 19, 22 and 37, point strongly against the conclusion that provisions such as s 47 give the court some general right to supervise or otherwise interfere in the interlocutory stages or during the hearing of an arbitration."

[35]

"I prefer, however, the analysis of Rogers J expressed in Imperial Leatherware Co Pty Ltd v Macri and Marcellino Pty Ltd (1991) 22 NSWLR 653, at 666. Rogers J said: 'With the greatest possible respect I can see nothing in the "spirit of the Act" which supports that view. So far as the letter of the Act is concerned, it gives the parties the greatest possible freedom in the conduct of arbitrations. Even the requirements of s 22 may be relaxed. The laws of evidence need not be followed (s 19). The sole requirement in the "letter and spirit" of the Act is the call of natural justice which, whilst requiring that each party have a proper opportunity of putting its own case, and meeting the case for the other party, does not regard adherence to court procedures as necessary.'

In view of the fact that the uniform legislation was intended to significantly curtail the opportunity for appeal and abolished the right to state a case in the course of an arbitration, it does not follow to my mind that ss. 43 and 47 were intended to set up a special supervisory jurisdiction for dealing with procedural error - whether for complex arbitrations or simple ones. It should be remembered that a problem with the previous legislation was the case stated procedure. It could be used to disrupt arbitration proceedings to the point at times of being a serious abuse of the arbitral procedure: Imperial Leatherware, at 660. It would be surprising if, at the time of abolishing that right, it was intended to introduce a procedure for the close monitoring of procedural decisions of arbitrators, a procedure providing even greater opportunities for abuse.

The other significant matter that influenced the majority of the Full Court of South Australia was its opinion that s. 47 would be deprived of any substantial effect unless it authorised intervention by the courts in the procedure of arbitrations.

The Full Court had not had referred to it, it would seem, several judgments referred to by Rogers J., at 666-7, and the cases there cited, which demonstrated that s. 47 had been held to be available to make orders such as orders for security for costs, orders staying arbitrations and Mareva injunctions. The section plainly has a significant role to play elsewhere."

[40]

"Ordinarily, where it is suggested that the jurisdiction of a superior court of

general jurisdiction is excluded, the party making that contention must be able to demonstrate that relevant jurisdiction exists in some other court: see, eg, Board v Board [1919] AC 956 at 962f; Re Totalisator Administration Board of Queensland (1988) 80 ALR 73 at 75. No such jurisdiction was suggested here.

It is upon this point that the Court reaches the central question which must be answered to determine the issue of its power. Rolfe J concluded that it was inherent in the language and purpose of the Act that Parliament had established a code to regulate arbitrations. Parties agreeing to submit their disputes to arbitration were bound by that code. The decisions of this Court in Promenade Investments and Natoli had required that the code be strictly adhered to and interference by the Court limited to the rare cases envisaged by the legislation. In such circumstances the Court was bound to adhere to the principle of restraint and acknowledge that its jurisdiction had been ousted by a clearly expressed parliamentary intention to that end.

Support for this approach is found in a number of English decisions which deny the inherent power of the courts to intervene in the proceedings of commercial arbitration. Specifically, on the subject matter of interlocutory orders, Steyn J in the English High Court held that there was no inherent jurisdiction left to intervene at an interlocutory stage which did not otherwise fall to be dealt with as misconduct by the arbitrator: see Biakh & Biali v Hyundai Corporation Ltd [1988] 1 Lloyds Rep 187 at 189; Jacobs (at 2179). The theory behind this approach is that arbitrators must be given a free hand in commercial matters; that they must have a specially large jurisdiction in procedural determinations; that nothing else will avoid the pitfalls of cost and delay which are, notoriously, the features of litigation in the courts; that if a significant error occurs it will remain to be challenged at the end of the arbitration if it can get through the gateway of s 38 of the Act; and if the error amounts to "misconduct" then the parties may, if they choose, seek the drastic remedy provided by s 43 of the Act.

I acknowledge the great force of these considerations. They are compatible with my own thinking expressed in Natoli. They commanded the assent of Rolfe J in this case. They are eloquently summarised by Bollen J in his dissenting opinion in the South Australian Superannuation case. They also find support from the majority speeches in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd [1981] AC 909 at 987; cf at 938, 997f.

Where a matter is within the scope of an arbitration, I would unhesitatingly give effect to the foregoing consideration and exclude the availability of the inherent power of the Supreme Court or the power expressly elaborated by s 23 of the Supreme Court Act. But I find unacceptable the proposition that the Court is incapable of providing relief, and has lost its powers altogether, simply because parties have entered into a private contract by which they have submitted a dispute to arbitration."

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