41 SCL's Points of Claim in the Arbitration (see TB 11) gave, as particulars of the claim that compliance with the IMO Code was an express term of the contract, clause 1.03 (and its analogues for the other contracts). No mention was made of the Specification. Indeed it seems to have been ICT which relied on that part of the Specification emphasised in [38] above in submissions to refute SCL's contentions (see para 7.13 TB 524). The Board dealt with this at paras 7.13-7.16 TB 524. In my view, there was no manifest error in the Board's rejection of SCL's contention that clause 1.03 imposed a contractual obligation for the vessel to meet IMO requirements; the contrary view would be more difficult to justify. The Specification, had it been relied on by SCL, may have strengthened SCL's argument on how clause 1.03 should be construed but it would, with such assistance, be an arguable point, not one the rejection of which would point to manifest error of law or strong evidence of error of law. Nor is the commercial certainty requirement satisfied.
42 Even if SCL were successful on this point, it would have to overcome the design point. Section 38(5)(a) would therefore be an obstacle and the Riva Settlement would also present a difficulty in this regard.
The equitable defence issue
43 There was in place a bank guarantee for AUD$477,850 given by ICT in favour of SCL in respect of Vessel 028 which was called on by SCL. In its claims SCL did not give credit to ICT for the receipt of those funds.
44 At the commencement of the hearing of the arbitration ICT sought to amend its defence to raise by way of defence the payment of the $477,850, not only in respect of SCL's claim in respect of Vessel 028 but also in respect of SCL's other claims. SCL resisted the amendment asserting that there had been no notice of dispute given to SCL and no referral to arbitration. SCL also asserted that it was too late for the dispute to be referred, that the claim to return of the funds was statute barred and that SCL was prejudiced by the amendment because had it known of the claim it would have added further claims against ICT beyond those which it had advanced in the arbitrations.
45 The Board granted ICT leave to amend. In the light of the majority's findings it was unnecessary in delivering the Interim Award for it to consider the defence of set off but Mr Dubler did refer to the point as it was relevant to his conclusion that even if "workmanship" included design, SCL would recover nothing against ICT. As I have noted, his view was that the $477,850 was well in excess of the amounts that he and the Board would have allowed, but for the design point. The ICT submissions calculate, based on the Board's analysis of specific claims, the total of those amounts at £36,000, although there was no concession by SCL as to the correctness of that figure or the means by which it was derived. I do not need to decide whether the figure is correct or not.
46 Mr Street attacked the decision to grant leave as a manifest error or alternatively one for which there was strong evidence of error (and an important point for commercial certainty).
47 Mr Street (and Mr Fagan) accepted that AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 set out the appropriate principles for equitable set off, namely that a defendant will be permitted to raise a cross demand by way of equitable set off or equitable defence where it would be unjust or inequitable for the plaintiff to proceed with its claim without making allowance for the cross demand, but SCL argued that the Board had no jurisdiction to entertain the defence because it was statute barred and was not the subject of a notice to refer to arbitration. As part of this point it was SCL's position that because ICT had not raised the receipt of the funds via the bank guarantee, SCL had not raised other additional claims it had against ICT. A further argument of SCL was that there was insufficient connection between Vessel 028 and the other vessels within the test laid down in AWA v Exicom and D Galambos & Son Pty Ltd v McIntyre (1974) 5 ACTR 10 which was referred to and followed in AWA v Exicom.
48 Mr Street argued that since the juristic basis of an equitable set off had been an injunction to restrain a plaintiff at law seeking to continue with his action without giving verdict for the amount of his cross demand (see AWA v Exicom at 710) a statute barred claim could never found equitable set off because equity would not lend its hand in relation to a stale debt.
49 This approach does not accord with the views of Moffitt P in Commonwealth Trading Bank of Australia v Sidney Raper Pty Ltd [1975] 2 NSWLR 227 at 238, the English Court of Appeal in Henriksens Rederi A/S v T H Z Rolimpex - The Brede [1974] QB 233; [1973] 3 All ER 589, or of Rogers CJ Comm Div in Australian Mutual Provident Society v Specialist Funding Consultants (1991) 24 NSWLR 326. Rogers CJ held that a s 82 Trade Practices Act 1974 (Cth) claim which was statute barred was available against the plaintiff's claim.
50 So far as the absence of notice of referral is concerned, there appears to be no support for SCL's contention that such is required in relation to a defence of the kind in question here. There is authority for the view that where the claim is within the arbitration clause, all defences must be available as matter of general principle: see Abdullah M Fahem & Co v Mareb Yemen Insurance Co & Tomen (UK) Ltd [1997] 2 Lloyd's Rep 738 at 742; Mustill & Boyd, Commercial Arbitration, 2nd ed, 1989, p 131. The approach taken by the Board was open to it and in my view was clearly correct.
51 The Board's reasoning on allowing the amendment is found at TB 459-471. I can discern no error, obvious or otherwise, in the approach taken by the Board and in my view it was a result entirely open to the Board to reach.
52 It follows that I can see no manifest error nor even strong evidence of error. I do not think s 38(5)(b)(ii) is satisfied either.
53 Further, given the views I have expressed on the earlier points, the outcome on this point would not have any substantial effect on the overall outcome so that s 38(5)(a) is not satisfied.
The delay issue
54 In the written submissions of 22 February 2006 relied on by SCL it was put that:
"A court concerned with a challenge to a delayed decision may need to look with special care at any finding of fact challenged in case it was not justified by the evidence or was the result of oversight or forgetfulness ( Elspan International Ltd v Eurocopter International Pacific Ltd & Anor [1999] NSWCA 418 at [6] per Sheller JA and see also CSR Ltd v Della Maddalena [2006] HCA 1 (2 February 2006))."
55 This proposition (which was not challenged by ICT) was expanded upon considerably by Mr Street in oral submissions. The 19 months of delay was, he said, exorbitant and amounted to a "serious fundamental denial of procedural fairness". He was critical of the absence of detailed consideration of the evidence and cross examination of witnesses in a hearing lasting 31 days; the serious factual issues should have been the subject of detailed analysis, he submitted. Mr Street submitted that it was important in arbitrations, particularly commercial international arbitrations, for decisions of arbitrators to be handed down promptly and that this Court should not lend its imprimatur to such extensive delay, but rather should signal the Court's rejection of such delay.
56 Mr Street contended that delay here constituted procedural unfairness, and that procedural unfairness constitutes a manifest error of law on the face of the record, requiring leave to appeal from the Interim Award (and consequently the Award dealing with costs), leading, if leave was granted, to the quashing of the Awards and the matter being remitted to the Board. Mr Street made it clear that following remission his client would then be seeking the Board to disqualify itself and a fresh arbitration process would need to be commenced.
57 In support of SCL's contention that procedural unfairness constituted an error of law, Mr Street relied, inter alia, on Escobar v Spindaleri (1986) 7 NSWLR 51 and Plaintiff S157/2002 v Commonwealth of Australia (2003) 211 CLR 476; 195 ALR 24; [2003] HCA 2 at [25], [62]. It appears to have been accepted by the parties in Escobar that this is correct (at 57B) and Glass JA at 59A expressed agreement with that conclusion. I proceed upon the basis that procedural unfairness can constitute an error of law.
58 Mr Street relies on NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 77; Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 140 FCR 17; 209 ALR 568; [2004] FCAFC 189 at [69]-[83] and Elspan International Ltd v Eurocopter International Pacific Ltd [1999] NSWSC 555, the latter two cases dealing with "misconduct" in an arbitration.
59 The NSW Court of Appeal, NSW Court of Criminal Appeal and the High Court have had to consider the issue of delay in the context of a lengthy delay in judgment by a trial judge: Moylan v Nutrasweet Co [2000] NSWCA 337; Hadid v Redpath (2001) 35 MVR 152; [2001] NSWCA 416; Krivoshev v Royal Society for the Prevention of Cruelty to Animals Inc [2005] NSWCA 76; Monie v Commonwealth of Australia [2005] NSWCA 25; R v Maxwell (1998) 217 ALR 452 and by an administrative tribunal: NAIS v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 77.
60 As Kirby J remarked in NAIS, whilst there are differences in the case of delay in a court subject to appeal and in a tribunal subject only to judicial review, there are common principles:
"Ultimately, in either case, if the court, on appeal or review, concludes that the delayed decision is unsafe or involves material unfairness or injustice to the losing party, an affront to the common hypothesis of decision-making is established": at [60].