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[1995] HCA 36
High Court of Australia
1995-10-11
Brennan CJ, Gummow JJ, McHugh JJ, Thomas J
Original judgment source is linked above.
High Court of Australia Brennan CJ Toohey, Gaudron, McHugh and Gummow JJ PMT Partners Pty Ltd (In Liq) v Australian National Parks & Wildlife Service [1995] HCA 36
11 October 1995 Brennan CJ, Gaudron and McHugh JJ.
The parties to this appeal, PMT Partners Pty Ltd (now in liquidation) and the Australian National Parks and Wildlife Service, entered into a standard form contract in common use in the construction industry throughout Australia [1] . The contract was for the construction of roads and a car park in the Uluru National Park. It is convenient to refer to the parties, respectively, as "the Contractor" and "the Principal", those being the terms by which they described themselves in their contract. A dispute arose under the contract and a question now arises as to the procedures available for its resolution.
Specific provision was made in the contract, in a clause which has been the subject of much litigation [2] , namely, cl 45, with respect to procedures for the settlement of disputes. It will later be necessary to refer to that clause in some detail. For the moment, it is sufficient to note that, by cl 45(a), the Contractor is required, as a first step, to give written notice to the Director of Operations, Department of Transport and Works (referred to in the contract and hereafter as "the Superintendent") within fourteen days of any dispute arising, and that subsequent steps may be taken with the effect that the dispute is referred to arbitration. The dispute which gives rise to this appeal arose sometime in 1991 [3] , but the written notice required by cl 45(a) was not received until 19 June 1992.
In February 1994, on the application of the Contractor, an order was made by Thomas J of the Supreme Court of the Northern Territory under s 48 of the Commercial Arbitration Act 1985 NT (the Act) extending time for the giving of notice under cl 45(a) of the contract until 19 June 1992. The Principal appealed successfully to the Court of Appeal and the order was set aside, it being held, in effect, that in the circumstances there was no power to make the order sought. It was, thus, unnecessary for the Court of Appeal to deal with other grounds of appeal going to the question whether, as a matter of discretion, the order should have been made. The Contractor now appeals to this Court.
Clause 45, which is headed "Settlement of Disputes", first provides that the Contractor shall at all times continue with the work, if it has not been completed, and comply with all directions given in accordance with the contract by the Principal or by the Superintendent. There then follow the terms with which this appeal is concerned:
All disputes or differences arising out of the Contract or concerning the performance or the non-performance by either party of his obligations under the Contract whether raised before or after the execution of the work under the Contract shall be decided as follows -
(a) The Contractor shall, not later than fourteen days after the dispute or difference arises, submit the matter at issue in writing, specifying with detailed particulars the matter at issue, to the Superintendent for decision and the Superintendent shall, as soon as practicable thereafter, give his decision to the Contractor.
(b) If the Contractor is dissatisfied with the decision given by the Superintendent, he may, not later than fourteen days after the decision of the Superintendent is given to him, submit the matter at issue in writing, specifying with detailed particulars the matter at issue, to the Principal for decision and the Principal shall, as soon as practicable thereafter, give his decision to the Contractor in writing.
If the Contractor is dissatisfied with the decision given by the Principal pursuant to the last preceding paragraph, he may, not later than twenty-eight days after the decision of the Principal is given to him, give notice in writing to the Principal requiring that the matter at issue be referred to arbitration and specifying with detailed particulars the matter at issue, and thereupon the matter at issue shall be determined by arbitration. If, however, the Contractor does not, within the said period of twenty-eight days, give such a notice to the Principal requiring that the matter at issue be referred to arbitration, the decision given by the Principal pursuant to the last preceding paragraph shall not be subject to arbitration.
Where a notice is given by the Contractor to the Principal pursuant to the last preceding paragraph requiring that the matter at issue be referred to arbitration no proceedings in respect of that matter at issue shall be instituted by either the Principal or the Contractor in any court unless and until the arbitrator has made his award in respect of that matter at issue.
Clause 45 next provides as to how and where arbitration is to be effected and then specifies that "[a] reference to arbitration shall be deemed to be a reference to arbitration within the meaning of the laws relating to arbitration in force in the [Northern Territory]". It also provides, in the final paragraph, as to the payment of moneys to the Contractor in the event of arbitration in the following terms:
Moneys that are or become due and payable by the Principal in respect of work carried out under the Contract shall not be withheld because of arbitration proceedings but the Principal may, at his discretion, and pending the award of the arbitrator withhold payment of moneys in respect of any matter that is the subject of arbitration proceedings.
Section 48 of the Act and other relevant legislative provisions
The Act makes comprehensive provision with respect to the appointment of arbitrators and umpires and the conduct of arbitration proceedings. It also confers various powers on the Supreme Court with respect to arbitration agreements and proceedings, including, by s 48, a power to extend time "for doing an act or taking a proceeding in or in relation to an arbitration" and, by s 53, a power to stay court proceedings in respect of matters "agreed to be referred to arbitration".
(1) Subject to subsection (3), the Court [4] shall have power, on the application of a party to an arbitration agreement or an arbitrator or umpire, to extend the time appointed by or under this Act or fixed by the agreement or by an order under this section for doing an act or taking a proceeding in or in relation to an arbitration.
(2) The Court may make an order under this section although an application for the making of the order was not made until after the expiration of the time appointed or fixed for doing the act or taking the proceeding.
(3) An order shall not be made under this section extending the time within which arbitration proceedings may be commenced unless -
(a) the Court is satisfied that undue hardship would otherwise be caused; and
(b) the making of the order would not contravene the provision of an Act limiting the time for the commencement of arbitration proceedings.
Subject to a limitation and to conditions which are not presently relevant, s 53(1) enables proceedings to be stayed "[i]f a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement".
"Arbitration agreement" is defined in s 4 of the Act to mean, unless the contrary intention appears, "an agreement in writing to refer present or future disputes to arbitration".
The Court of Appeal (Martin CJ, Mildren J and Gray AJ) approached cl 45, as did Thomas J at first instance, on the basis that it lays down a first step to be taken before a claim can be pursued, namely, the giving of fourteen days' notice to the Superintendent, but leaves it open to the Contractor to elect to pursue the claim in the courts or by arbitration unless and until notice is given requiring arbitration. In that context, it was held by Mildren J and Gray AJ that "it is only when, and if, the [C]ontractor chooses to give notice to the [P]rincipal requiring the dispute to be referred to arbitration that the [C]ontractor has taken a step "in or in relation to an arbitration" " within the meaning of s 48(1) of the Act. Martin CJ, who agreed with the judgment of Mildren J and Gray AJ, also expressed the view that, as the dispute might be resolved at any stage of the processes set out in sub-cll 45(a) and 45(b) [5] and as the option of proceeding to arbitration only arose once those processes were exhausted, "[t]he time limits set under [those sub-clauses] are not "in relation to an arbitration" but in relation to the other procedures by which disputes or differences might be decided".
The Court of Appeal also held that "the provisions of subparagraphs (a) and (b) [of cl 45] do not constitute an arbitration agreement within the definition thereof in s 4 of the Act". Moreover, the Court of Appeal expressed the view that there is a "very real question whether the second part of clause 45 amounts to an arbitration agreement as defined in s 4 of the Act".
The Court of Appeal's doubts as to whether the second part of cl 45 constitutes an arbitration agreement seem to proceed from the view that the definition of arbitration agreement in s 4 of the Act requires that both parties be bound, then and there, to refer their disputes to arbitration. In this regard it was said that "[a]n agreement which gives one of the parties an option to submit a dispute to arbitration does not readily answer the description of an arbitration agreement as defined". As well, reference was made to an observation by Underwood J of the Tasmanian Supreme Court in Minister for Main Roads (Tas) v Leighton Contractors Pty Ltd [6] suggesting that a provision in identical terms to cl 45 might not amount to a submission to arbitration as defined in s 3 of the Arbitration Act 1892 Tas because arbitration "will only occur if the contractor gives notice in the prescribed manner".
The notion that the definition of arbitration agreement in s 4 is not satisfied unless both parties are bound, then and there, to refer their disputes to arbitration has two distinct aspects. The first is that the parties must have agreed upon arbitration to the exclusion of all other methods of dispute resolution. The second is a requirement of mutuality, in the sense that both parties must have the right to refer disputes to arbitration.
The notion that, for there to be an arbitration agreement, the parties must have agreed upon arbitration to the exclusion of other methods of dispute resolution can be traced to the decision of Menhennitt J in Hammond v Wolt [7] . That case concerned an arbitration clause allowing that "either party may give to the other notice of dispute" and providing that, if notice was given and other steps were taken as required by the contract, an arbitrator would then be appointed and his or her "Award or Assessment" would be final and binding [8] . No notice had been given before proceedings commenced and, consistent with the decisions of this Court in John Grant & Sons Ltd v Trocadero Building & Investment Co Ltd [9] and Plucis v Fryer [10] , his Honour construed the clause as not precluding pursuit of the claim in question in the courts. His Honour went on to hold that an agreement allowing for arbitration or assessment at the election of the person appointed as "arbitrator" was not a submission [11] to arbitration within the meaning of s 5 of the Arbitration Act 1958 Vict because he or she need not arbitrate the dispute or any part of it. As well, his Honour held that it was not an "agreement to submit [to arbitration]" because "the word "to" [in that expression] requires that the parties have agreed that the differences are to be submitted, not that, at the option of one or other of them, they may be" [12] .
The view in Hammond v Wolt that, for there to be an arbitration agreement, the parties must have agreed that their disputes are to be referred to arbitration, not merely that they may be so referred, has since been adopted, although not uniformly, with respect to the definition of arbitration agreement in s 4 of the Act and its counterparts in other jurisdictions [13] . Recently, however, there has been a tendency to describe a clause of the kind considered in Hammond v Wolt as conferring a "right of election" rather than "an option" [14] . The Hammond v Wolt view leads to the conclusion reached by the Court of Appeal in this case, namely, that where there is a clause which confers a right of election, no arbitration agreement comes into existence until an election is made to have the matter arbitrated.
As earlier indicated, the approach taken in Hammond v Wolt has not always been followed [15] . It has been the subject of criticism, most recently by the Court of Appeal of the New South Wales Supreme Court in ABB Power Plants Ltd v Electricity Commission (NSW) [16] . Criticism of the approach taken in Hammond v Wolt has tended to focus on the textual consideration that "arbitration agreement" is defined as an "agreement to refer present or future disputes to arbitration", not as "an agreement referring disputes to arbitration" (our emphasis) [17] . As well, it has been noted [18] that the power to stay proceedings under s 53 of the Act is, as one might expect, exercisable only with respect to "a matter agreed to be referred to arbitration", an expression which is apt to describe the situation that occurs when a right of election has been exercised or other preconditions satisfied and which is syntactically and conceptually quite different from that found in the definition of "arbitration agreement" which merely requires that the parties have agreed "to refer present or future disputes to arbitration". Additionally, attention has been directed to the United Kingdom decision of Pittalis v Sherefettin , in particular to a statement by Fox LJ that "an agreement to arbitrate in future if a party so elects can correctly be described as an agreement to refer a future dispute to arbitration" [19] . However, it should be noted that the clause considered in that case was one that required arbitration if the matter in issue was to be contested, not one conferring a right to elect between arbitration and litigation.
The requirement for mutuality has been suggested in a number of Australian cases [20] , often by reference to the statement of Menhennitt J in Hammond v Wolt set out above [21] . However, a fair reading of the decision in that case indicates that his Honour was concerned to emphasise that the parties should be bound to have their dispute arbitrated, rather than that there should be mutuality in the sense of both parties having the right to require arbitration.
Apparently, the need for mutuality was accepted for a time in the United Kingdom [22] , but was later rejected in Pittalis v Sherefettin [23] . Whatever the position in the United Kingdom, there is no decision in this country to the effect that, as a matter of general law, there can only be an arbitration agreement if there are mutual or bilateral rights of reference. And even if there were such a decision, it is another question entirely whether the requirement finds expression in the definition of arbitration agreement in s 4 of the Act.
It is of fundamental importance that statutory definitions are construed according to their natural and ordinary meaning unless some other course is clearly required. It is also of fundamental importance that limitations and qualifications are not read into a statutory definition unless clearly required by its terms or its context [24] , as for example if it is necessary to give effect to the evident purpose of the Act [25] . The words "agreement to refer present or future disputes to arbitration" in s 4 of the Act are, in their natural and ordinary meaning, quite wide enough to encompass agreements by which the parties are bound to have their dispute arbitrated if an election is made or some event occurs or some condition is satisfied, even if only one party has the right to elect or is in a position to control the event or satisfy the condition. To some extent, that meaning is confirmed by s 53(1) which, as already indicated, confers a power exercisable on the application of a party to an arbitration agreement with respect to "a matter agreed to be referred to arbitration". However and more important, there is nothing in the Act which requires that the natural and ordinary meaning of the words used in the definition be qualified in any way. And when it is given its natural and ordinary meaning, the definition is clearly satisfied by cl 45, even if, as was held by the Court of Appeal, cl 45 does not preclude the Contractor from pursuing its claim in the courts.
Once it is accepted that cl 45 is or contains an arbitration agreement, it follows that the Contractor is a party to an arbitration agreement and, thus, entitled to apply for an extension of time under s 48 of the Act. It matters not for the purposes of that entitlement whether sub-cll (a) and (b) are, themselves, an arbitration agreement or, even, part of an arbitration agreement. All that matters is whether the step required by cl 45(a) is, in terms of s 48, "an act or a proceeding in or in relation to an arbitration".
The nature of the arbitration agreement effected by cl 45
It is convenient, before turning to the question whether the step required by cl 45(a) is "an act in or in relation to an arbitration", to consider whether, as was held by the Court of Appeal, cl 45 confers a right on the Contractor to elect to have its claims determined either in the courts or by arbitration. That construction was not challenged in this Court. However, the proper construction of cl 45 is a matter on which courts have differed [26] and, also, one which was squarely raised in argument. Moreover it is directly relevant to the question whether the notice required by cl 45(a) is "an act in or in relation to an arbitration".
It may be accepted that contracts will only be construed as limiting the rights of the parties to pursue their remedies in the courts if it clearly appears that that is what was agreed. However, when it is provided, as it is in cl 45, that "[a]ll disputes or differences shall be decided" in accordance with specified procedures, the starting point must be that the parties are to be taken to have provided exclusively and exhaustively as to the procedures to be followed, unless something makes it plain that that is not the case. That is not simply because, in a context dealing with rights and obligations, the word "shall" ordinarily involves a mandatory aspect. There is also the important consideration that cl 45 is concerned with dispute resolution. Disputes are not readily resolved if there are parallel proceedings permitting of different outcomes. Nor are they readily resolved by procedures which can be set at nought if one party elects to pursue some other course of action. As with statutes, there are difficulties in construing contracts by application of the principle expressed in the maxim expressio unius est exclusio alterius [27] . However, the subject matter with which cl 45 is concerned compels an approach which treats that clause as requiring the parties to have their disputes decided in accordance with the procedures specified - and only in accordance with those procedures, unless there is something which clearly indicates to the contrary.
The argument in favour of construing cl 45 as permitting the Contractor to choose between having its claims determined in the courts or by arbitration is based, substantially, on the difference between the language in sub-cl (a), which directs that "[t]he Contractor shall submit the matter at issue to the Superintendent" and that found in sub-clause (b) and the following paragraph allowing, respectively, that "he may submit the matter to the Principal for decision" and that "he may give notice requiring that the matter be referred to arbitration". As well, the argument draws attention to the absence of any prohibition on the bringing of proceedings in the courts, other than that which is expressed to operate "[w]here a notice is given by the Contractor to the Principal requiring that the matter at issue be referred to arbitration".
The change in language from "shall" in cl 45(a) to "may" in cl 45(b) and the paragraph following provides no reason for thinking that cl 45 does not provide an exclusive regime for the resolution of disputes. Rather, the provisions, if read in their entirety, confirm the view that disputes are to be determined in accordance with and only in accordance with the procedures: if the Contractor wishes to raise a dispute he must - "shall" - give notice to the Superintendent who has power to decide the matter; however, once the Superintendent has decided the matter, the Contractor may accept the decision or, if dissatisfied, "may submit the matter at issue to the Principal for decision"; so, too, the Contractor may accept the decision of the Principal or, if dissatisfied, "may give notice requiring that the matter at issue be referred to arbitration".
Similarly, the absence of a prohibition on the bringing of proceedings in the courts except "[w]here a notice is given requiring that the matter at issue be referred to arbitration" provides no reason for treating the clause as conferring on the Contractor the right to elect between pursuing its claim in the courts or by arbitration. To the extent to which a decision by the Superintendent or the Principal is in favour of the Contractor, the Contractor, if it accepts the decision, may sue to secure the benefit of it. The provision limiting access to the courts "[w]here a notice is given requiring that the matter at issue be referred to arbitration", prevents the Contractor from proceeding in the courts to secure the benefit of so much of the Principal's decision, if any, as is in its favour and, also, proceeding by way of arbitration to contest that part with which it is dissatisfied. It also prevents the Principal from pursuing any claim it might have in parallel court proceedings. The express limitation on access to the courts ensures that the dispute is dealt with in its entirety by arbitration, and also ensures that the final paragraph of cl 45 has full effect, with it being at the discretion of the Principal whether or not to "withhold payment of moneys in respect of any matter that is the subject of arbitration proceedings".
The Court of Appeal erred in construing cl 45 as permitting the Contractor to elect between proceeding in the courts and by way of arbitration prior to the giving of notice requiring arbitration. Rather, it should have held that cl 45 provides exclusively as to the procedures to be followed in the event of a dispute to which it applies.
The meaning of " in or in relation to " in s 48 of the Act
Inevitably, the closeness of the relationship required by the expression "in or in relation to" in s 48 of the Act - indeed, in any instrument - must be ascertained by reference to the nature and purpose of the provision in question and the context in which it appears. The nature and purpose of s 48 is clear. It is a provision conferring power on a court to relieve against agreed time limits which might otherwise prevent or interfere with the fair and proper processes of arbitration. Its remedial nature and the consideration that a provision conferring a power to be exercised judicially should be construed as liberally as its terms and context permit [28] tend in favour of treating the expression "in or in relation to" in s 48 as being wide enough to encompass the taking of a step, such as that directed by cl 45(a), which is a condition precedent to arbitration, even if arbitration is not the inevitable consequence of that step. And that is so, in our view, even if the agreement is one that allows a party to elect between proceeding in the courts and proceeding to arbitration.
The Court of Appeal considered that s 48(3), which conditions the court's power to extend "the time within which arbitration proceedings may be commenced", indicates that "a step initiating arbitration proceedings is the outer limit of what is encompassed by the expression "relating to an arbitration" in s 48(1)". There is force in this view if, as was suggested in argument, a contrary interpretation would permit of an order extending time for some preliminary step even though, in the circumstances, an order could not be made extending the time within which arbitration proceedings might be commenced.
As already indicated, the power conferred by s 48 is one that must be exercised judicially. That means, among other things, that it must not be exercised arbitrarily, capriciously or to frustrate the legislative intent. Rather, it must be exercised in the interests of justice and within the confines of "the purposes for which it was entrusted" [29] . Accordingly, if the power is such as to permit of an order extending time for a step which is preliminary to the commencement of arbitration, it would not properly be exercised to extend time for that step if, in the circumstances, an order could not be made extending the time within which arbitration proceedings might be commenced. That being so, sub-s (3) does not, in our view, provide any basis for reading "in or in relation to" as requiring a more direct or immediate connection than that which would ordinarily be suggested by the nature and purpose of s 48(1) of the Act. Nor is there any other matter which detracts from that approach. Thus, s 48(1) extends to a step which is a condition precedent to arbitration even where there is a right to elect between proceeding in the courts and proceeding by way of arbitration. Certainly, it extends to the step required by cl 45(a).
The appeal should be allowed, the order of the Court of Appeal set aside and the matter remitted to that Court for its consideration of the remaining grounds of appeal.
PMT Partners Pty Ltd (PMT), the appellant, contracted with the Australian National Parks and Wildlife Service (the Service), the respondent, to carry out road and carpark construction work in Uluru National Park on 15 August 1990. In late 1991, certain work was rejected by the respondent as defective and there was a direction to the appellant that it be reconstructed. Differences arose between the parties as to the justification for this rejection, and the cost of consequential delays and the extra work involved. It is the nature of the mechanism for the resolution of these differences, provided by the contract between the parties, which is the subject of the present appeal. We turn now to the terms of this contract.
The contract governing the construction work was the standard form contract NPWC Edition 3 (1981) (the contract). The Court was informed that this is a common contract, widely used for construction projects throughout Australia. The relevant provision of the contract is cl 45. This is headed "Settlement of Disputes". Clause 2 states that clause headings shall not be used in the interpretation or construction of the contract.
All disputes or differences arising out of the Contract or concerning the performance or the non-performance by either party of his obligations under the Contract whether raised before or after the execution of the work under the Contract shall be decided as follows -
(a) The Contractor shall, not later than fourteen days after the dispute or difference arises, submit the matter at issue in writing, specifying with detailed particulars the matter at issue, to the Superintendent for decision and the Superintendent shall, as soon as practicable thereafter, give his decision to the Contractor.
(b) (b) If the Contractor is dissatisfied with the decision given by the Superintendent, he may, not later than fourteen days after the decision of the Superintendent is given to him, submit the matter at issue in writing, specifying with detailed particulars the matter at issue, to the Principal for decision and the Principal shall, as soon as practicable thereafter, give his decision to the Contractor in writing.
If the Contractor is dissatisfied with the decision given by the Principal pursuant to the last preceding paragraph, he may, not later than twenty-eight days after the decision of the Principal is given to him, give notice in writing to the Principal requiring that the matter at issue be referred to arbitration and specifying with detailed particulars the matter at issue, and thereupon the matter at issue shall be determined by arbitration. If, however, the Contractor does not, within the said period of twenty-eight days, give such a notice to the Principal requiring that the matter at issue be referred to arbitration, the decision given by the Principal pursuant to the last preceding paragraph shall not be subject to arbitration.
Where a notice is given by the Contractor to the Principal pursuant to the last preceding paragraph requiring that the matter at issue be referred to arbitration no proceedings in respect of that matter at issue shall be instituted by either the Principal or the Contractor in any court unless and until the arbitrator has made his award in respect of that matter at issue.
A reference to arbitration under this clause shall be deemed to be a reference to arbitration within the meaning of the laws relating to arbitration in force in the State or Territory named in the Annexure hereto and the arbitration proceedings shall be conducted in that State or Territory. The arbitrator shall have all the powers conferred by those laws and it shall be competent for him to enter upon the reference without any further or more formal submission than is contained in this clause.
The term "the Contractor" is defined in cl 2 as meaning the person who as a party to the contract is bound to execute the work under the contract in accordance with the contract. The term "the Superintendent" is defined in the same clause as meaning the person named in the Annexure to the contract as the Superintendent or other person from time to time appointed in writing by the Principal to be the Superintendent for the purposes of the contract, and notified as such in writing to the Contractor by the Principal. In the present case, the appellant, PMT, is the Contractor and the Director of the Service, the respondent, is the Principal.
In this case, the appellant made a submission under par (a) which the Superintendent rejected as having been made outside the time stipulated. The appellant then applied to the Supreme Court of the Northern Territory on 3 December 1993 pursuant to s 48 of the Commercial Arbitration Act 1985 NT (the Act). The appellant sought an extension of the time provided by cl 45(a) for the submission of the dispute to the Superintendent.
(1) Subject to subsection (3), the Court shall have power, on the application of a party to an arbitration agreement or an arbitrator or umpire, to extend the time appointed by or under this Act or fixed by the agreement or by an order under this section for doing an act or taking a proceeding in or in relation to an arbitration.
(2) The Court may make an order under this section although an application for the making of the order was not made until after the expiration of the time appointed or fixed for doing the act or taking the proceeding.
(3) An order shall not be made under this section extending the time within which arbitration proceedings may be commenced unless -
(a) the Court is satisfied that undue hardship would otherwise be caused; and
(b) the making of the order would not contravene the provision of an Act limiting the time for the commencement of arbitration proceedings.
The section is a provision which performs a double function of qualifying or modifying the contractual rights of the parties to an arbitration agreement and conferring power upon the Court to achieve the result by order made upon application to it by a party to the agreement [30] . Further, it is inappropriate to read a provision conferring jurisdiction or granting powers to a court by making implications or imposing limitations not found in the words used [31] . This may be so even if what is involved is the displacement of a general precept of the common law where this result accords with the evident purpose of the statute [32] .
The power of the Court conferred by s 48 is to be exercised on the application of a "party" to an "arbitration agreement". These terms are defined in s 4. A "party" includes a person claiming through or under a party to the arbitration agreement. The term "arbitration agreement" is defined as meaning "an agreement in writing to refer present or future disputes to arbitration".
On 4 February 1994, the trial judge, Thomas J, granted the relief sought. An appeal to the Northern Territory Court of Appeal was successful. The success of the appeal was based on the narrow ground that Thomas J had erred in law in finding that s 48 of the Act applied to cl 45(a) and (b) of the contract. There are other grounds of appeal with which the Court of Appeal has not yet dealt. Accordingly, if the present appeal is successful, the matter will have to be returned to the Court of Appeal for consideration of those outstanding issues.
The present appeal is concerned with the Court's power under s 48 of the Act to grant an extension of time. That power is shaped, in sub-s (1), by alternative requirements. First, there must be an "application of a party to an arbitration agreement or an arbitrator or umpire". Secondly, where, as is the case here, no arbitrator or umpire has yet been appointed, the Court's power can only be enlivened by the application of a party to an "arbitration agreement". That term, as we have indicated, means "an agreement in writing to refer present or future disputes to arbitration". Whether by reason of the presence in the contract of cl 45 it may properly be characterised, either in whole or in part, as an arbitration agreement is the first issue which falls to be determined. The second issue concerns the scope of the Court's power under s 48(1) to extend time "for doing an act or taking a proceeding in or in relation to an arbitration". It must be determined whether the procedures laid down in cl 45(a) and (b) of the contract are proceedings in or in relation to an arbitration.
In the Court of Appeal, Martin CJ agreed with the joint judgment of Mildren J and Gray AJ. In their judgment, Mildren J and Gray AJ held that cl 45 did not take away any rights or bar conduct for a failure to comply with either cl 45(a) or (b) and that the only party which could refer the dispute in the first place was the Contractor. Their conclusions are reflected in the following passage:
In our opinion, it is only when, and if, the contractor chooses to give notice to the principal requiring the dispute to be referred to arbitration that "the matter at issue shall be determined by arbitration" and that the contractor has taken a step "in or in relation to an arbitration".
For the same reasons it is in our view clear that the provisions of subparagraphs (a) and (b) do not constitute an arbitration agreement within the definition thereof in s 4 of the Act.
These conclusions, which the respondent supports, correctly condition the power under s 48 of the Act to extend time on the existence of an "arbitration agreement" and acts or proceedings "in or in relation to an arbitration". However, in our view, the Court of Appeal has unduly restricted the class of contract which satisfies those conditions. The Court of Appeal imported requirements of "exclusivity" and "obligation" into the definition of arbitration agreement. "Exclusivity" is imported in the sense that the contract must identify arbitration as the sole and exclusive method of dispute resolution. "Obligation" is imported in the sense that the contract must oblige reference of disputes to arbitration rather than allowing an election for arbitration. What one might, somewhat loosely, call the optional nature of some arbitration clauses was held also to mean that acts or proceedings prior to the exercise of an option to arbitrate were not "in or in relation to" an arbitration.
The position reached by the Court of Appeal may briefly be compared with that which obtains in the United Kingdom. Section 27 of the Arbitration Act 1889 UK defined "submission" as "a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not". Section 32 of the Arbitration Act 1950 UK (the 1950 Act) defines "arbitration agreement" in similar terms. In the second edition of their work The Law and Practice of Commercial Arbitration in England, Lord Mustill and Mr Boyd state [33] :
Commercial contracts occasionally give a unilateral right of arbitration. Sometimes they provide that claims by one party are to be the subject of arbitration, whereas claims by the other are not. In other cases, one party has an option to call for arbitration, whilst the other party does not. Such clauses are recognised by the Court as binding. As authority for the proposition in the last sentence, reference is made to the decision of the Court of Appeal in Pittalis v Sherefettin [34] . It will be necessary to refer further to this decision later in these reasons. Pittalis also is relied upon as authority for the statement in Halsbury [35] that "[t]he agreement may confer the right to require arbitration on only one party." 1. (1989), p 121. 2. [1986] QB 868. 3. Halsbury's Laws of England, 4th ed Reissue, 1991, vol 2, p 335.
In our view, to condition the power of the Court to extend time as was done by the Court of Appeal is not justified by the terms of the Act. To do so would unduly restrict the class of contracts over which the power to extend time existed, and would impede rather than advance the scope and purpose of the legislation.
The Act is one of a number of statutes which follow broadly an agreed common form in the States and Territories [36] .
The legislation is to be considered in the light of the pre-existing common law. In Dobbs v National Bank of Australasia Ltd [37] , Rich, Dixon, Evatt and McTiernan JJ said:
A clear distinction has always been maintained between negative restrictions upon the right to invoke the jurisdiction of the Courts and positive provisions giving efficacy to the award of an arbitrator when made or to some analogous definition or ascertainment of private rights upon which otherwise the Courts might have been required to adjudicate. It has never been the policy of the law to discourage the latter. The former have always been invalid. 1. (1935) 53 CLR 643 at 652.
One evident object of the Act is to encourage resolution by arbitration of disputes. But the legislation has a system of checks and balances. Thus, it provides for review of awards by the Court in respect of questions of law (s 38) and the determination of preliminary points of law by the Court (s 39); in certain circumstances, the rights to approach the Court under ss 38 and 39 may be excluded (ss 40, 41). The Court may stay proceedings brought in respect of a matter agreed to be referred to arbitration (s 53). On the other hand, a " Scott v Avery [38] clause" does not, in the circumstances described in s 55, operate to prevent the institution of legal proceedings on the matter in dispute and is to be construed as an agreement to refer the matter to arbitration.
Further, s 53, while providing for an application to the Court to stay proceedings which have been instituted in the Court in respect of a matter agreed to be referred to arbitration, provides that, notwithstanding any rule of law to the contrary, a party to an arbitration agreement shall not be entitled to recover damages from another party to the agreement by reason that the other party has taken proceedings in a court in respect of a matter agreed to be referred to arbitration by the parties' arbitration agreement.
The respondent's primary submission is that the Court of Appeal was correct in holding that cl 45 of the contract was not an "arbitration agreement" as defined by the Act. Under the terms of s 48, there must be an application by "a party to an arbitration agreement" in order to enliven the jurisdiction of the Court to grant an extension of time.
In support of this primary submission, the respondent first contends that cl 45 is not, as the respondent submits it must be to answer the definition of arbitration agreement in s 4, a "code" for settlement of disputes by arbitration. Clause 45 is said not to be an arbitration agreement because it does not exclude the ability of the parties to litigate in the courts.
The submission is based on a two-stage process of reasoning. The first, relying on expressions employed in the contract and a stream of authority, is to show that cl 45 preserves the existing right to sue at law. The second stage is to say that this preservation of a right to sue at law takes the contract outside the definition of arbitration agreement in the Act.
The respondent seeks to derive textual support for its proposition that the right to litigate is preserved by the terms of cl 45 from the use of the word "shall" in cl 45(a), as distinct from the word "may" in cl 45(b) and what follows. It is submitted that the use of the word "may" in par (b) indicates a choice from three options for the Contractor upon a decision by the Superintendent under par (a). The Contractor may (1) submit the dispute to the Principal; or (2) accept the Superintendent's decision; or (3) have resort to the ordinary processes of the Court under the contract. If that first choice is made and an issue is referred to the Principal but the Contractor remains dissatisfied, the Contractor then "may" require a reference to arbitration. The respondent argues that at this stage the Contractor may also elect to do nothing, or to commence proceedings in the Court. This reading is said to be supported by the express exclusion of litigation once notice is given requiring that the dispute be submitted to arbitration. By some application of the maxim expressio unius est exclusio alterius, this latter exclusion is said to indicate the possibility of recourse to the courts at the earlier stages of pars (a) and (b). However, the maxim must always be applied with care, for it is not of universal application and applies only where the intention it expresses is discoverable upon the face of the instrument [39] .
The respondent also seeks comfort in a line of authority which it submits holds that provisions such as pars (a) and (b) do not exclude the ability of the parties to litigate disputes in the courts [40] .
In substance, the respondent founds its submission upon the principle that access to the courts should not be precluded by contract unless there are clear words to that effect, coupled with the proposition that a clause limiting such access will be strictly construed. We have expressed our view as to the relevant scope and purpose of the Act as it applies to the contract. The statute advances the object of non-curial resolution of disputes. Subject to any special considerations attending the exercise of the judicial power of the Commonwealth (which do not arise here), the nub of the matter was expressed by Windeyer J in Felton v Mulligan . His Honour said [41] :
But the grandiloquent phrases of the eighteenth century condemning ousting of the jurisdiction of courts cannot be accepted in this second half of the twentieth century as pronouncement of a universal rule. 1. Felton (1971) 124 CLR 367 at 385
Neither the textual arguments, nor the authorities, should be accepted as resolving the issue. The authorities are of limited assistance for a number of reasons. Some cases concern clauses which were differently expressed [42] . Some cases are concerned not with the court's power to extend time, but rather with the court's power to stay proceedings [43] . There is also a line of contrary authority [44] .
The respondent's submission faces significant textual hurdles within the clause itself. Support for the view that cl 45 makes exhaustive provision for the means of settlement of disputes is provided in the passage in cl 45 immediately preceding par (a):
All disputes or differences arising out of the Contract or concerning the performance or the non-performance by either party of his obligations under the Contract whether raised before or after the execution of the work under the Contract shall be decided as follows (emphasis added), and by the contrasting phrase immediately following par (b): If the Contractor is dissatisfied with the decision given by the Principal he may give notice in writing.
The natural meaning of the words "shall be decided" is that the means appearing thereafter are the only means as to which the parties are agreed. In this regard, we respectfully agree with the remarks of Handley and Sheller JJA in ABB Power Plants Ltd v Electricity Commission (NSW) [45] .
In that case, the issue before the New South Wales Court of Appeal was whether cl 46 of the General Conditions of Contract AS2124-1986 contained an arbitration agreement within the definition in s 4(1) of the New South Wales legislation, the Commercial Arbitration Act 1984. This is in the same terms as the definition in the Northern Territory statute. Clause 46 dealt with settlement of disputes between the contractor and the principal. Although differently expressed to cl 45 of the contract with which this litigation is concerned, cl 46 presented a similar juxtaposition of the words "shall" and "may". Handley JA said [46] :
It has long been established that contractual or statutory provisions prescribing in positive terms a procedure to be followed necessarily imply that the same matter will not be dealt with under a different procedure. In R v Wallis [47] Dixon J said: "This accords with the general principles of interpretation embodied in the maxim expressum facit cessare tacitum and in the proposition that an enactment in affirmative words appointing a course to be followed usually may be understood as importing a negative, namely, that the same matter is not to be done according to some other course." In that passage in Wallis [48] , Dixon J continued: This applies especially when the power or duty affirmatively conferred or imposed is qualified by some condition, limitation or direction. In ABB Power Plants, Sheller JA said [49] : If the words "all disputes or differences arising out of the contract shall be determined" in accordance with the steps then formulated are to be given effect, in accordance with their language, the parties had agreed to refer such disputes to arbitration. 1. ABB Power Plants (1995) 35 NSWLR 596 at 599. 2. (1949) 78 CLR 529 at 550. 3. See also Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7, 20-21; Saraswati v The Queen (1991) 172 CLR 1 at 23-25 Downey v Trans Waste Pty Ltd (1991) 172 CLR 167 at 171-172, 180-182. 4. ABB Power Plants (1995) 35 NSWLR 596 at 601.
The use of the word "decision" no fewer than six times in pars (a) and (b), combined with the failure to make any express reference to the continuing availability of curial process, lends support to the construction that steps specified in cl 45 are the only steps to be taken to decide any dispute or difference identified by the opening words of the clause.
The better view is that, once cl 45 is engaged by the Contractor submitting the matter at issue in writing to the Superintendent under sub-cl (a), the resolution of that issue by curial means is precluded by the contract.
The answer to the first proposition of the respondent forecloses the second proposition which assumes that, upon the true construction of cl 45, a right to sue at law is preserved by contract.
The respondent advanced a separate but related contention in support of its primary submission. It is that, if the effect of the contract is to confer an election to proceed to arbitration, then, until that election has been made, there is no agreement to refer the dispute to arbitration within the meaning of the definition of "arbitration agreement". It is said that an agreement which provides a right of election to proceed by way of arbitration or litigation does not constitute an arbitration agreement. The submission treats the definition of arbitration agreement as if it read "an agreement in writing that the parties must refer present or future disputes to arbitration".
The present proposition is related to the respondent's second proposition mentioned above but is distinct from it because it is independent of the availability of litigation as an option. The present proposition depends merely on there being no obligation to arbitrate until exercise of an election to do so.
This case is concerned with a clause which confers a right of election upon one party, the Contractor. However, the submission would embrace provisions which conferred such a right upon either or both parties.
Without finally dealing with the point, the Court of Appeal in the present case held:
An agreement which gives one of the parties an option to submit a dispute to arbitration does not readily answer the description of an arbitration agreement as defined.
However, in our view, the terms of the definition of arbitration agreement in s 4 of the Act extend to an agreement whereby the parties are obliged if an election is made, particular event occurs, step is taken or condition is satisfied (whether by either or both parties) to have their dispute referred to arbitration. This result is within the ordinary and natural meaning of the terms of the definition and there is no sufficient reason to cut down that meaning.
Once again, case law provides limited assistance. No authority deals directly with the interrelationship of s 48 of the Act and cl 45 of the contract. There are numerous authorities in which various clauses of this nature have been held to constitute an arbitration agreement [50] . On the other side there are those cases which have denied the existence of an arbitration agreement [51] . Detailed analysis of the authorities would be unproductive.
The conflicting views are represented in the judgments of the New South Wales Court of Appeal in ABB Power Plants. As we have said, the question in that case was whether cl 46 of the General Conditions of Contract AS2124-1986 contained an arbitration agreement as defined by s 4(1) of the Commercial Arbitration Act 1984 NSW, which is in identical terms to the Northern Territory statute. The appellant contractor instituted an action in the Supreme Court claiming large sums for debt and damages under a contract with the respondent to construct works at the Liddell Power Station. The respondent had successfully applied to Giles J for a stay of proceedings under s 53(1) of the New South Wales Act. The appeal from that order was dismissed by all three members of the Court of Appeal.
The respondent relied upon various statements made in the judgments of Handley and Sheller JJA. For example, Sheller JA said [52] :
In a clause such as that under consideration in Hammond v Wolt [53] the parties agreed that, in the event of dispute as to any matter arising under the agreement, one might, if it so wished, refer the dispute to arbitration. Importantly the contract did not oblige either party to do so. In one sense, as Giles J has pointed out, if in fact one of the parties referred the dispute to arbitration the other party was bound to this procedure by force of the contract. Even so to say that the parties have agreed to refer the dispute to arbitration at the time the agreement is made is not, in my opinion, accurate. What the parties have agreed, in the example given, is that either one may if it so decides and by taking the appropriate steps refer the dispute to arbitration. 1. ABB Power Plants (1995) 35 NSWLR 596 at 609. 2. [1975] VR 108.
Representative of the opposite position is the judgment of Cole JA. His Honour said [54] :
I am unable to agree that the fact that one party is given the contractual right to elect to have an unsatisfied claim resolved by arbitration does mean there is no arbitration agreement within the meaning of s 4. The clause conferring that right is "an agreement in writing to refer present or future disputes to arbitration". Such a clause is part of an agreement binding upon the parties, the provisions and operations of which are enlivened by an election.
In so far as Australian National Parks & Wildlife Service [55] holds that cl 45 NPW3 does not, prior to an election to refer a dispute for resolution by arbitration, constitute an arbitration agreement within the meaning of s 4, I respectfully disagree.
In our view, the reasoning of Cole JA is to be preferred. This was described by the respondent as "simplistic", as if that were necessarily pejorative. Simplistic it may be, but it accords with the scheme of the legislation and the weight of logic. His Honour said [56] :
If the parties have agreed by a clause such as cl 22.1 that, upon one party electing, the dispute in consequence will be arbitrated, they have agreed to refer such a dispute to arbitration. That falls within the definition of s 4. The expression "agreement in writing to refer present and future disputes to arbitration" is not limited to existing or mutually accepted references: it includes references which flow in the future in consequence of an election, conferred by the contract on a party, by that party. 1. ABB Power Plants (1995) 35 NSWLR 596 at 620.
Support was drawn for this proposition from the decision of the English Court of Appeal in Pittalis v Sherefettin [57] . In that case a lease provided that, after a particular date and for the remainder of the term, the rent should be whichever was the higher of a stipulated amount and the open market rental value of the property. The open market rental value was either a sum to be notified by the lessors, or agreed between the lessors and lessee in writing, or " at the election of the lessee by notice in writing to the lessor not later than three months after the lessors' notification in writing it shall be determined by an independent surveyor" (emphasis added). The lessee refused to pay the notified increased rent or make an election within time. However, he served an application for an extension of time under s 27 of the 1950 Act. That section provided relevantly that:
[w]here the terms of an agreement to refer future disputes to arbitration provide that any claims to which the agreement applies shall be barred unless notice to appoint an arbitrator is given or an arbitrator is appointed or some other step to commence arbitration proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies, the High Court may extend the time for such period as it thinks proper. 1. [1986] QB 868.
The expression in the lease in Pittalis "at the election of the lessee" fulfils an analogous function to the word "may" when used in the relevant passage in cl 45 of the contract with which this litigation is concerned, namely:
If the Contractor is dissatisfied with the decision given by the Principal pursuant to the last preceding paragraph, he may, not later than twenty-eight days after the decision of the Principal is given to him, give notice in writing to the Principal requiring that the matter at issue be referred to arbitration. (Emphasis added.)
But an agreement to arbitrate in future if a party so elects can, in my opinion, correctly be described as an agreement to refer a future dispute to arbitration; if there is an election, both parties are bound. Looking at the matter at the point of time when the lease was made, there was an agreement to refer a future dispute to arbitration, and not the less so because the reference was upon a contingency (ie election). 1. Pittalis [1986] QB 868 at 874
We have referred earlier in these reasons to the acceptance of Pittalis in authoritative United Kingdom texts. Additional support is provided in Russell on the Law of Arbitration [59] . In discussing the definition of arbitration agreement in the 1950 Act, the learned authors comment [60] :
This statutory definition, at least as regards future disputes, can surely mean no more than that there is provision for compulsory arbitration; it cannot mean that it is guaranteed that there will be arbitration, for under the most ordinary clause there will only be an arbitration of such disputes if several contingencies are satisfied; certain facts must arise; the aggrieved party must elect to choose them as constituting a dispute, and even then he may sue and the other party may fail to obtain a stay. The need for a yet further contingency to be satisfied, namely, that A opts to treat a certain dispute as arbitrable would not seem to affect the question of whether the agreement falls within the definition. If that is right the mere fact that an agreement to submit future disputes is dependent on A's unilateral choice would not appear to deny the agreement the necessary character of an arbitration agreement. 1. 20th ed (1982), pp 38-43. 2. Russell , 20th ed (1982), p 41.
In this case, PMT and the Service agreed in cl 45 that their disputes "shall be decided" by arbitration but, before a dispute could be referred to arbitration, there were some other steps which had to be taken, as provided in pars (a) and (b). That does not mean that there is no arbitration agreement within the meaning of the definition in s 4 of the Act.
The circumstance that cl 45 created what it described as "an option" in the appellant, as Contractor, to go to arbitration was said by the respondent to go, not only to the existence of an arbitration agreement in the statutory sense, but also to the issue of whether acts or proceedings prior to the exercise of that "option" could be "in or in relation to" an arbitration.
The submission is that a line must be drawn between, on the one hand, times fixed for doing acts which do relate to the commencement of an arbitration and, on the other hand, times fixed for doing other acts which, although they necessarily precede any arbitration which takes place, do not necessarily lead to its commencement. In cl 45, it is argued, this line is drawn at the stage of the Contractor electing to give notice requiring that "the matter at issue shall be determined by arbitration". The respondent submits that this is the first point in the process which can properly be described as a step "in or in relation to" an arbitration.
It is apparent that the dispute may be settled or taken to Court at any stage prior to the contractor giving notice requiring an arbitration. Thus it is, in our view, impossible to say that steps taken in relation to subparagraphs (a) and (b) are "in or in relation to an arbitration", merely because such steps need to be taken before an arbitration can be required by the contractor.
The Court noted that "[t]he English equivalent of s 48 is s 27 of the Arbitration Act 1950 UK ". That section has already been reproduced. The relevant general words in that section which condition the power of the court to extend time are "some other step to commence arbitration proceedings". The Court of Appeal then referred to various English decisions construing that section [61] . The Court of Appeal acknowledged that s 48 is undoubtedly wider "in some respects" [62] than s 27 and said:
In a comparison between the two sections in the present context, the question is whether taking "a step to commence arbitration proceedings" is distinguishable from "doing an act in or in relation to an arbitration".
It is clear that the former expression does not embrace a step to be taken within an arbitration But otherwise, we can detect no ground of distinction. In our opinion, to be an act in relation to an arbitration, the act must be shown to be more than an act which may or may not turn out to be a step towards an arbitration. The expression "in relation to" is doubtless very wide but the essential component is that there must be two subject matters which are to some extent connected. [63]
This reasoning led the Court of Appeal to the conclusion that: "it cannot be said that the act required by cl 45(a) or (b) is an act in relation to an arbitration."
In so far as this conclusion is based on English cases, it must be recognised that the wording of s 27 is very different. This significantly reduces the authoritative value of the English cases. Reference to the parliamentary materials in various jurisdictions which adopted this model legislation provides little assistance in determining precisely why these different words were used [64] .
The Northern Territory Court of Appeal identified the "essential component" of the expression "in relation to" as being that there must be two subject matters which are to some extent connected. With respect, it is hard to see how a reference to the Superintendent under par (a) and a reference to the Principal under par (b) are not "to some extent connected" with any arbitration which may ensue. The mere non-existence of the last event at the time of the first event does not prevent the first event from being "in relation to" the later event. The case of Newbury v Smith [65] provides some authority for this proposition. In that case, Gray J said:
The premise that an event which occurs before an election begins cannot be "in relation to" that election is wrong. It is obviously possible to do an act "in relation to" an event, before that event takes place. Acts preparatory to an event will usually be regarded as being performed "in relation to" that event. Even such a thing as the purchase of a ticket for a football match could be regarded as an act performed "in relation to" that football match, although the match has not yet begun. It was contended on behalf of the defendant that a proposed event may never take place; it may be postponed or cancelled, for whatever reason. This is true, but it does not mean that the event must have begun before any act can be said to be "in relation to" the event. The postponement of a football match does not make the prior purchase of a ticket for it any less "in relation to" the football match than it would have been if the football match had proceeded. 1. (1991) 29 FCR 246 at 252-253.
The contrary proposition, which must have been adopted by the Court of Appeal, is based on the notion that the steps in pars (a) and (b) do not necessarily lead to arbitration, unless they are followed by an election by the Contractor to arbitrate. Since there may be no arbitration, the argument runs, there can, at the stage of steps (a) and (b), be nothing "in or in relation to" an arbitration. This argument should be rejected. What one might call the potential non-existence of arbitration is the very thing with which s 48 is designed to deal. If, for example, the time limit were exceeded for the Contractor to give notice requiring arbitration, then, if that time limit were a bar, there would be no arbitration. Yet, it can hardly be doubted that s 48 would catch an application to extend this time as "in relation to" an arbitration.
The Court of Appeal was also persuaded by the operation of s 48(3) of the Act as an aid to the interpretation of s 48(1). It will be remembered that s 48(1) is expressed to be "[s]ubject to subsection (3)". Sub-section (3) provides as follows:
An order shall not be made under this section extending the time within which arbitration proceedings may be commenced unless -
(a) the Court is satisfied that undue hardship would otherwise be caused; and
(b) the making of the order would not contravene the provision of an Act limiting the time for the commencement of arbitration proceedings.
The Court of Appeal held that: The fact that its operation is confined to an order "extending the time within which arbitration proceedings may be commenced" suggests that a step initiating arbitration proceedings is the outer limit of what is encompassed by the expression "relating to an arbitration" in s 48(1).
The better construction is that sub-s (3) prescribes restrictions in relation to a particular matter, namely, extending the time within which arbitration proceedings may be commenced, but does not otherwise prescribe criteria. This suggests that the power in sub-s (1) goes to matters other than merely the time for commencement of arbitration.
Sub-section (3) is cast in such a fashion as to distinguish it from sub-s (1) and indicates that it was designed to impose extra restrictions on the power of a court to extend time only in some of the circumstances in which sub-s (1) gives the court that power. It may be asked why sub-s (3) would single out an order of a particular description if sub-s (1) did not contemplate that there may be other orders made under the section. The point is that the doing of an act or the taking of a proceeding, in the terms of sub-s (1), covers a wider range of matters than the time for commencement of proceedings dealt with in the language of sub-s (3). The restrictions of sub-s (3) do not apply when a court comes to exercise its power under sub-s (1) to extend time for compliance with pars (a) and (b) of cl 45 of the contract.
There is another reason why this view is to be preferred. The apparent object of the section is to mitigate the severity of harsh time limits. It confers on the court a remedial power. This may have a particular importance in contracts where the agreement is in a preprinted form accepted by the Contractor with no practical opportunity to negotiate the detail.
As it has been put, the issue on the appeal is whether acts or proceedings under pars (a) and (b) of cl 45 are "acts or proceedings in or in relation to an arbitration". It is perhaps revealing to ask the question in reverse. Can it be said with any conviction that these matters are not, at least, "in relation to" an arbitration? The section is a logical universe of only two possibilities - it either is or is not in relation to an arbitration.
It is apparent that the words "in or in relation to" are particularly wide. We have already referred to the idea that, as a facultative provision, there is no apparent call to read down the words used, or to give them any constricted operation. Cases concerning the interpretation of this phrase in other statutory contexts are of limited assistance. However, the cases do show that the words are prima facie broad and designed to catch things which have sufficient nexus to the subject. The question of sufficiency of nexus is, of course, dependent on the statutory context. Some examples will bear this out.
In Perlman v Perlman [66] , Gibbs CJ considered the meaning of the words "in relation to" in the Family Law Act 1975 Cth:
The words "in relation to" import the existence of a connection or association between the two proceedings, or in other words that the proceedings in question must bear an appropriate relationship to completed proceedings of the requisite kind. 1. (1984) 155 CLR 474 at 484.
Another recent example is O'Grady v Northern Queensland Co Ltd [67] . In that case, the question for this Court was whether the Supreme Court of Queensland was deprived of the jurisdiction to grant the relief on the counter-claim by s 80(4) of the Mining Act 1968 Q. Section 80 provided:
(1) a Wardens Court shall have jurisdiction to hear and determine all actions, suits and proceedings arising in relation to mining or to any mining tenement.
Without limiting the generality of the foregoing jurisdiction of a Wardens Court such a court shall have jurisdiction to hear and determine actions, suits and proceedings with respect to the following matters:
(g) any matter arising between miners in relation to mining
By a majority, the Court held that the counterclaim was not an action, suit or proceeding arising in relation to mining or a mining tenement. All members of the Court recognised the breadth of the term "in relation to". A difference of opinion occurred concerning the qualifying effect of the word "arising". Toohey and Gaudron JJ said [68] : Although "in relation to" is an expression of broad import, in context with "arising" it presupposes a direct connection between a presently existing action, suit or proceeding and mining or a mining tenement, not merely an incidental connection. Dawson J, who agreed with Toohey and Gaudron JJ, said [69] : The words "in relation to", read out of context, are wide enough to cover every conceivable connection. But those words should not be read out of context, which in this case is provided by the Mining Act 1968 Q. What is required is a relevant relationship, having regard to the scope of the Act. Where jurisdiction is dependent upon a relation with some matter or thing, something more than a coincidental or mere connection - something in the nature of a relevant relationship - is necessary. In his dissenting judgment, McHugh J recognised that [70] : [t]he prepositional phrase "in relation to" is indefinite. But, subject to any contrary indication derived from its context or drafting history, it requires no more than a relationship, whether direct or indirect, between two subject matters. 1. (1990) 169 CLR 356. 2. O'Grady (1990) 169 CLR 356 at 374 3. O'Grady (1990) 169 CLR 356 at 367 4. O'Grady (1990) 169 CLR 356 at 376see also at 365, per Brennan J.
The connection which is required by the phrase "in relation to" is a question of degree. There must be some "association" which is "relevant" or "appropriate". The question of the relevance or appropriateness of the connection is a question which cannot be divorced from the particular statutory context.
It was conceded by the respondent, consistently with authority [71] , and as recognised in the Court of Appeal, that the earlier stages outlined in cl 45 of the contract of reference to the Superintendent under par (a), and reference to the Principal under par (b), are conditions precedent to a reference to arbitration taking place. They are necessary stops on the route to an arbitration. There is no justification to read down the phrase "in relation to" so as to exclude acts or proceedings which are preliminary to, but necessary for, reference to arbitration.
The appeal should be allowed, with costs. However, because the Court of Appeal only considered ground 3 in the notice of appeal to it dated 2 March 1994, it is appropriate to remit the matter to that Court for the consideration of the remaining grounds of that notice of appeal.
PMT Partners Pty Ltd (In Liq)
Australian National Parks & Wildlife Service
(1991) 104 FLR 358
(1938) 60 CLR 1
(1967) 126 CLR 17
(1987) 22 IR 52
(1990) 2 WAR 207
(1995) 35 NSWLR 596
(1992) 27 NSWLR 592
(1994) 181 CLR 404
(1981) 148 CLR 121
(1984) 154 CLR 505
(1982) 148 CLR 88
(1992) 175 CLR 564
(1988) 165 CLR 268
(1992) 174 CLR 178
(1947) 74 CLR 492
(1989) 168 CLR 210
(1945) 70 CLR 141
(1935) 53 CLR 643
(1971) 124 CLR 367
(1991) 25 NSWLR 54
(1949) 78 CLR 529
(1932) 47 CLR 1
(1991) 172 CLR 1
(1991) 172 CLR 167
(1984) 59 ALR 206
(1987) 14 FCR 193
(1992) 11 WAR 40
(1991) 29 FCR 246
(1984) 155 CLR 474
(1990) 169 CLR 356