Sea Containers Ltd v ICT Pty Ltd

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40123/02 SC 55007/02

1 HIS HONOUR: This is an application by notice of motion which was filed on 22 February 2002, the time for service of which was abridged to late that day. It now primarily seeks orders that the summons for leave to appeal be expedited; that the summons for leave be heard concurrently with the appeal; that orders made by Gzell J on 22 February 2002 be stayed pending determination of the summons for leave to appeal and if leave is granted, pending determination of the appeal, that the requirements for an appeal book be dispensed with; and an order in relation to costs. 2 The applications arise out of a decision of Gzell J delivered on 22 February 2002 disqualifying three arbitrators. 3 The arbitration arises out of a contract entered into in 1988 and 1989. Dispute broke out about 11 years ago. 4 In 1998 the arbitrators were appointed. On 21 February 2000 the arbitration was fixed to commence on 9 October 2000 for four weeks. It did not proceed on that day. 5 On 15 November 2000 the arbitration was fixed to commence on 21 May 2001 for four weeks. On 11 May 2001 that date was vacated. On 4 December 2001 the arbitrators requested the parties to nominate further dates. On 22 January 2002 the arbitrators fixed an initial hearing of two weeks to commence on 12 February 2002. On 5 February 2002 the solicitors for the opponent alleged misconduct on the part of the arbitrators and requested their resignations. 6 On 11 February 2002 proceedings for removal of the arbitrators were commenced by summons. That summons came before the Court on 12 February 2002 and was stood over to 2 pm. On 13 February 2002 Gzell J heard the summons, and on the same day the arbitrators stood over the arbitration to commence on 15 February 2002. An opening began and continued until 21 February. It was to continue on 22 February but did not because on that day Gzell J made the orders under challenge, and in particular ordered that the arbitrators be removed as arbitrators in relation to the arbitration under the four ship building contracts between the parties. Before they were removed the arbitrators had fixed the date of the resumed hearing as 8 April 2002. 7 The parties agreed that it was appropriate for the leave application to be heard concurrently with the appeal, as indeed it plainly is. 8 Mr A W Street SC who appeared for the claimant submitted that the hearing would take about three hours. Mr D J Fagan SC who appeared for the opponent submitted that it would take one day plus. That latter estimate is highly pessimistic. In my opinion everyone involved should proceed on the basis that the duration of the argument will not exceed one day. 9 The first important question is whether the hearing should be expedited. Mr Street said that it should be. Mr Fagan agreed except for two matters. 10 One of these matters was a plea that the appeal be heard on a date suitable for his client's counsel before Gzell J, namely Mr Brereton SC. Mr Fagan said, however, that Mr Brereton had little available time in March and accepted that counsel's availability was not a decisive factor in determining what date expedited appeals should be heard on. 11 The other matter to which Mr Fagan referred turned on a claim made by Mr Fagan as to the circumstances on which the date of 8 April 2002 was fixed. He said that he, the counsel in the arbitration, was not available for any week after the week commencing on that day. The selection of that date created a need for new counsel to be briefed with the highly technical evidence in the case. If that submission were given full weight it would follow the Court of Appeal should assume that the arbitration could not resume on 8 April; that in turn would mean that no date for its resumption could be fixed until either the old arbitrators were restored or new arbitrators were appointed. 12 In my opinion expedition is called for, and expedition of a very high order. First, the dispute between the parties has dragged on for an unconscionably long time. Secondly, the allegations made against the arbitrators are serious. It follows that Gzell J's findings are also serious. If they are wrong, they should be corrected quickly. If they are right, the parties should know this so that new arbitrators can be appointed and can take up their duties as fast as possible. 13 In my opinion it is not incorrect to proceed with the time frame which Mr Street advocates, namely, a resumed date of 8 April 2002. Whether or not any criticism can be made about the method by which that date was chosen, there is no formal process before this Court involving criticism of the arbitrators for having selected that date, and the Equity Division was evidently not asked to consider the correctness of the process by which that date was selected. 14 The urgency of resolving the issues is such that the Court will endeavour to have the case decided by the end of March. 15 The other main question is whether Gzell J's order for removal should be stayed. Mr Street contended that if the order for removal were not stayed, or if the appeal were not heard within a few days, there was a risk that the arbitrators would accept other work and become unavailable to continue even if the claimant were successful in the appeal. He said that there were directions in relation to pleading amendments and in relation to evidence in reply which the arbitrators had not made on 22 February 2002 as expected, and it was necessary that the stay be removed so that they could attend to these matters. 16 It must be said at this point that while there are reasonable prospects of a leave application and the appeal being heard and decided in March, the prospects of that happening in the next few days are very slight. 17 As a result of that state of affairs Mr Street's application in effect boils down to an application for a stay. 18 Mr Fagan on the other hand said the better course was to leave the existing order in place and for the Court to accept an undertaking from his client not to make any move to appoint replacement arbitrators. This was said to be so particularly in view of the injustice alleged by Mr Fagan in relation to the fixing of the 8 April date. 19 I am unable to see that the grant of a stay will advance the interests of Mr Street's client in the manner claimed. Even if there is a stay the findings in Gzell J's reasons for judgment stand. In the light of those findings it is hard to imagine that the arbitrators - even if the order is stayed - will proceed to make any directions to assist the parties to get ready for the resumed hearing on 8 April until the appeal is heard in view of the fact that the findings may stand and may not be reversed by this Court. 20 Equally, even if there is no stay, it is hard to believe that the arbitrators will disable themselves from hearing the arbitration if they know the appeal is to be heard and decided in March. It would not seem to be possible for them to disable themselves permanently; and since the arbitrators have only very recently fixed the April dates, the prospects of their time being quickly taken up by other duties does not seem high. Indeed that prospect appears to be no different whether a stay is granted or not, because even though the Court offers no estimate of the claimant's prospects of success, the parties in the arbitration must operate on the assumption that there is a logical possibility that the appeal will be allowed. 21 In the circumstances - the most important of which is the assumption that the appeal will be heard and decided in March - a stay should be refused on the ground thatit has not been shown to have sufficient utility. 22 This means that it has not been necessary to deal with Mr Fagan's argument that the 8 April date was unjustly fixed. My reluctance to consider that question is supported by the reasons given earlier. Nor has it been necessary to estimate whether or not Mr Street's case on the appeal is an arguable one, and if arguable with what degree of strength. 23 Since much of the above reasoning depends on the assumption that the hearing in this Court can be completed and a decision given by the end of March, it is desirable to reserve liberty to apply in the event that that assumption turns out to be ill-founded. That liberty can be availed of if any other development makes it appropriate to do so. 24 I make the following orders:

1. Summons for leave to appeal be expedited. 2. Summons for leave to appeal be heard and determined concurrently with the appeal in so far as leave to appeal is granted. 3. An order that the usual requirements for the Appeal Books be dispensed with, and a direction that the contents of the White Folder together with any other material admitted by Gzell J stand as the Appeal Books.
2. I direct: (a) the claimant to file and serve any additional written submissions on or before 26 February 2002; (b) the opponent to file and serve written submissions on or before 28 February 2002; and (c) the claimant to file and serve written submissions in reply on or before 4 March 2002. 5. It is noted that the dates which appear in Order 4 may have to be varied if the matter is fixed to be heard in the next few days. 6. Liberty to apply on 24 hours' notice. 7. Costs of this notice of motion are to be costs in the Summons. 25 The Registrar will be in touch with the parties concerning a hearing date. Obviously if the hearing date is relatively late you may wish to avail yourself of the liberty to apply.

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