Strzelecki Holdings Pty Ltd v Androm Pty Ltd as Trustee for the K N Buckingham Family Trust t/a Buckingham Re�development Company [2005] WADC 33

Strzelecki Holdings Pty Ltd v Androm Pty Ltd as Trustee for the K N Buckingham Family Trust t/a Buckingham Re�development Company [2005] WADC 33 - WADC 2005 case summary — Zoe

[14]

47.1 Notice of Dispute

"If a dispute between the Contractor and the Principal arises out of or in connection with the Contract, including a dispute concerning a direction given by the Superintendent, then either party shall deliver by hand or send by certified mail to the other party and to the Superintendent a notice of dispute in writing adequately identifying and providing details of the dispute.

Notwithstanding the existence of a dispute, the Principal and the Contractor shall continue to perform the Contract, and subject to Clause 44, the Contractor shall continue with the work under the Contract and the Principal and the Contractor shall continue to comply with Clause 42.1.

A claim in tort, under statute or for restitution based on unjust enrichment or for rectification or frustration, may be included in an arbitration.

47.2 Further Steps Required Before Proceedings

Alternative 1

Within 14 days after service of a notice of dispute, the parties shall confer at least once, and at the option of either party and provided the Superintendent so agrees, in the presence of the Superintendent, to attempt to resolve the dispute and failing resolution of the dispute to explore and if possible agree of methods of resolving the dispute by other means. At any such conference each party shall be represented by a person having authority to agree to a resolution of the dispute.

In the event that the dispute cannot be so resolved or if at any time either party considers that the other party is not making reasonable efforts to resolve the dispute, either party may by notice in writing delivered by hand or sent by certified mail to the other party refer such dispute to arbitration or litigation.

Alternative 2

A party served with a notice of dispute may give a written response to the notice to the other party and the Superintendent within 28 days of the receipt of the notice.

Within 42 days of the service on the Superintendent of a notice of dispute or within 14 days of the receipt by the Superintendent of the written response, whichever is the earlier, the Superintendent shall give to each party the Superintendent's written decision on the dispute, together with reasons for the decision.

If either party is dissatisfied with the decision of the Superintendent, or if the Superintendent fails to give a written decision on the dispute within the time required under Clause 47.2 the parties shall, within 14 days of the date of receipt of the decision, or within 14 days of the date upon which the decision should have been given by the Superintendent confer at least once to attempt to resolve the dispute and failing resolution of the dispute to explore and if possible agree on methods of resolving the dispute by other means. At any such conference, each party shall be represented by a person having authority to agree to a resolution of the dispute.

In the event that the dispute cannot be so resolved or if at any time after the Superintendent has given a decision to either party considers that the other party is not making reasonable efforts to resolve the dispute, either party may, by notice in writing delivered by hand or sent by certified mail to the other party, refer such dispute to arbitration or litigation."

[26]

10 The correspondence then proceeded by way of letter dated 2 December 2004 from the plaintiff's solicitors and a responsive letter dated 3 December 2004 from the defendant's solicitors. The meeting did not take place although it appears the plaintiff's representatives were present on site at the time and date they had nominated. The next step taken by the plaintiff's solicitors was the issue of the writ and a letter enclosing it dated 9 December 2004 by way of service. From this scenario I draw the following conclusion.

11 The dispute which existed between the parties arose from the defendant's claim to payment and the plaintiffs withholding of that payment apparently on the basis of the need for remedial work to the premises. In my view both of the notices of dispute reflect different facets to the same issue namely and to what extent the plaintiff was entitled to set-off monies due under the contract against the anticipated costs of remedial work to the premises. It is clear on the materials that the defendant intended to proceed by way of arbitration and that this litigation stands as an obstacle to the factual disposal of all issues in dispute between the parties at an arbitration.

12 The defendant has referred me to the case of Mulgrave Central Mill Company Ltd v Haggleunds Drives Pty Ltd [2001] QCA 471; [2002] 2 QD R 514. That case and the case of Manningham City Council v Dura (Australia) Constructions Pty Ltd [1999] VSCA 158 involved interpretation of clauses very similar, in fact nearly identical, to the clauses in question in this case. In each of those instances the Court found that those clauses constituted arbitration agreements within the meaning of the Commercial Arbitration Acts in force in those states. In my view those decision are authority for the proposition that the clause before me is an arbitration agreement within the meaning of the Commercial Arbitration 1985 which appears to be on all fours with the equivalent legislation in those states.

13 The power to order a stay of proceedings pursuant to the Act is discretionary. As a general principle the right to arbitrate is not a race such as that if one party gets in first with litigation the entitlement of the other to arbitrate is necessarily defeated. In both Manningham City Council and Mulgrave Central Mill Company the defendant was the party which issued the notice and the plaintiff the party which instituted proceedings thereby preventing the defendant from pursuing the arbitration.

14 In my view that is the position in the present case. The defendant initiated the matter and the plaintiff merely responded. It is clear from the letter written by the plaintiff's lawyers dated 22 October 2004 that the plaintiff's notice was purely responsive to that issued by the defendant. In reaching that conclusion I rely on the third paragraph of the letter which is in the following terms:

[28]

15 In my view those comments justify me in characterising the plaintiff's notice of dispute as being responsive to that issued by the defendant and effectively a step taken by the plaintiff to put forward its position in the dispute resolution procedure initiated by the defendant.

16 The situation prevailing in this case looks very similar to that prevailing in both Mulgrave and Manningham City Council in that the defendant has been shut out of an arbitration which it intended to proceed by the actions of the plaintiff.

17 In my view the correspondence between the parties makes it clear that the point of issue between the plaintiff and defendant as to the meeting was its location the plaintiff insisting that the meeting take place at Dolphin Quay and the defendant stating otherwise.

18 Is it open for a party to insist on a particular site being the place at which a meeting for the purposes of the contract should take place? The object of the meeting is to confer. The meeting is not stated to be some kind forensic exercise in which evidence is to be taken. The meeting is intended to be an occasion when the parties are able to be express their views and achieve a settlement of their claims if that is possible. I am unable to agree that task would have as a necessary component the fact that the meeting take place at Dolphin Quay in Mandurah. I also note that it was the intention of the parties to be assisted by various other at the meeting and necessarily the expense of attending Mandurah would be greater than in Perth. The defendant expressed a willingness to either conduct the meeting at its premises in Perth or the plaintiff's premises in Perth which ever it might choose. In summary therefore I take the view that the defendant took steps intended by it to lead to an arbitration of the differences between it and the plaintiff in the event they could not be resolved at a meeting. That process was delayed by the absence of the plaintiff's directors and the defendant gave latitude to the plaintiff to allow the directors to return and to properly instruct their solicitors. Thereafter the plaintiff chose to impose as an absolute term that the meeting take place in a place of its choosing and chose to regard the failure of the defendant to accede to that as evidence of the defendant not making reasonable efforts to resolve the disputes. I do not agree. In my view the plaintiff should not be entitled by its actions and the precipitate issuing of the writ be able to shut out the defendant from its right to arbitrate. Additionally, in my view even if the meeting had taken place without a resolution of the differences between the parties the balance would still lie in favour of the defendant. The clause does not create a scenario where it is the quick and the dead but the thrust of the provision is to provide recourse to arbitration should a party wish to avail themselves of it. In my view the balance should lean in favour of arbitration rather than against it. In that respect in reaching that conclusion I rely on the words of Winneke P in Manningham City Council opposite at page 24 where he state:

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Judgment (30 paragraphs)

Strzelecki Holdings Pty Ltd v Androm Pty Ltd as Trustee for the K N Buckingham Family Trust t/a Buckingham Re�development Company [2005] WADC 33 (28 February 2005)

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Legislation Cited (1)

Cases Cited (1)