"Nevertheless, whilst we respectfully disagree with the appropriateness of the Arbitrator's directions in his letter of 24 November, we confirm, subject to our letter of 29 November, our acceptance of those directions. We will deal with all matters in our further submissions which we hope will be lodged with the Arbitrator by 11 December."

Accordingly, whatever rights Sydney Water may have had in relation to what had transpired were, at least arguably, waived.

On 12 December 1995 Phillips Fox furnished further written submissions and, on 15 December 1995, the Arbitrator wrote to the parties and their legal representatives asking that no more submissions be made in respect of the arbitration and stating:-

"The volume of material sent to me requires a concerted effort on my part to review all submissions. Depending upon the outcome of that review, I may or may not get back to the parties before issuing my Draft Award.

I will be in touch again as soon as that review has been finalised."

On 15 December 1995 Doyles wrote to the Arbitrator stating:-

"Our client has agreed not to reply to Sydney Water's submissions in the interests of expediting the final Award. However, our client does note that there are a number of errors of fact contained in Sydney Water's submissions and we would respectfully request that the Arbitrator review our client's evidence and submissions for the correct facts.

We consider that the Arbitrator has given Sydney Water more than a reasonable opportunity to put its case. Therefore we await the Award." (My emphasis.)

This, prima facie, was an extraordinary letter in that having asserted that Sydney Water's submissions contained a number of errors of fact it failed to address them, and it made bald assertions, rather than submissions on matters the Arbitrator had to decide. However it does not seem to have brought about any response.

Early in 1996 the solicitors were seeking a determination from the Arbitrator and, on 12 March 1996, a letter was written to him by Doyles, with the consent of Phillips Fox, asking if he could indicate "when we might expect your determination".

On 13 March 1996 Phillips Fox wrote to the Arbitrator referring to his letter of 15 December 1996, referring to his statement that he would communicate as soon as he had finalised his review of the submissions, and asking if he would advise when Phillips Fox could expect either a request for further oral or written submissions or a decision.

On 16 April 1996 Doyles wrote to the Arbitrator asking him to advise when the Award might be available and, on 15 May 1996, Phillips Fox wrote to him seeking the release of certain subpoenaed documents, which request was agreed in, as I understand it, by Doyles.

On 6 June 1996 Ms Robertson of ACDC wrote to the Arbitrator in response to a request from an officer of Aqua Clear about the outcome of the arbitration, and asked him when it was expected his Award would issue.

On 17 June 1996 there was further correspondence about the release of documents on subpoena.

On 4 July 1996 Doyles advised Phillips Fox that ACDC had been advised that the Arbitrator was awaiting a reply to correspondence he had sent to the solicitors, which apparently had not been received by either of them. A request was made that he furnish a copy and, on 8 July 1996, Doyles wrote to him requesting a copy of his letter "together with any Draft Award which may be properly provided at this time".

On 10 July 1996 the Arbitrator wrote to the parties and their solicitors advising of a previous enquiry in relation to relevant interest rates. He noted that that "query has apparently not been received" and continued:-

"I therefore issue again my formal written request for advice on appropriate interest rates on monies outstanding and would ask that I receive a response within seven days to enable finalisation of this matter as soon as possible.

If I do not receive a response within seven days of the date of this letter, I will proceed on the basis that the Arbitrator shall determine appropriate interest rates and issue the Interim Award to allow the parties to be heard on the question of costs of the arbitration."

The Arbitrator did not enclose a copy of his original request but a request dated 10 July 1996.

On 16 July 1996 Doyles wrote to the Arbitrator submitting it would be a waste of Aqua Clear's money if extensive argument were to occur on the matter of interest when that amount may not be significant, and requesting the issue of an Interim Award with a provisional interest rate to be determined by the Arbitrator "having regard to normal commercial practice".

On 17 July 1996 the solicitors for Sydney Water wrote to the Arbitrator expressing their concern that they had not received any previous enquiry and asking the Arbitrator to provide "a copy or supply other details of your previous request for information on interest rates". The letter also contained a submission as to the appropriate interest rates.

On 20 September 1996 the Arbitrator wrote to the ACDC stating that his Draft Award "is currently with the parties' legal advisers for their representations in respect of costs". The letter also said that the Draft Award "was finalised by me earlier this year".

On 27 September 1996 Phillips Fox wrote to the Arbitrator, referred to that letter and continued:-

"Your letter refers to a Draft Award which you finalised earlier this year and says that the Draft Award is currently with the parties' legal advisers for their representations in respect of costs.

We are perplexed by your statements as we have not received either a copy of your Draft Award or any communication from you in this regard, let alone replies to our letters of 13 March 1996 and 17 July 1996 (copies of which are attached).

With respect, this presents an unfortunate situation and we feel that the parties should be favoured (through their solicitors) with an explanation by you forthwith.

We reserve our client's rights arising from the situation."

On 23 September 1996 the Arbitrator wrote to the Institute of Arbitrators stating that he had advised the parties that his costs totalled $37,835, asking for that body to arrange for this amount to be paid to him as soon as possible, and stating that a direction as to the funds remaining with it would be issued in the near future.

On 2 October 1996 Doyles wrote to the Arbitrator referring to the letter from Phillips Fox of 27 September 1996 and asking him to advise when his Draft Award would be available, when further submissions would be required and when a final Award would be available.

On 3 October 1996 Phillips Fox wrote to the Arbitrator referring to their letters of 13 March, 17 July and 27 September 1996 to which they had received no replies. The letter continued:-

"In the absence of any response, we have been instructed by our client to seek certain orders in the Supreme Court relating to the conduct of the arbitration proceedings.

We enclose by way of service a sealed copy of the Summons filed in the Construction List of the Supreme Court of New South Wales on 2 October 1996 which is returnable before the Court on 18 October 1996 at 9.30am.

Whilst you are not named as a party to the proceedings, if you wish to make submissions to the Court, you may seek to be joined as a party."

On the same day the Arbitrator wrote to Doyles, with a copy to Phillips Fox, stating:-

"Thank you for your letter dated 2 October 1996. I have received a Phillips Fox letter dated 27 September 1996 and will respond to Ms Jack separately (copy to you for information attached).

I understood that my Draft Award had been issued on 3 September for submissions from the parties on costs (copy of covering letter of that date attached for your information). As I have indicated to Ms Jack, my office has no proof of posting on that date and if it were not posted on that date both you and the parties have my profound apologies for a breakdown in communications at this end.

Under the circumstances, I would ask for your submissions on costs to be forwarded to me by close of business Monday, 14 October if possible.

My final Award should issue within seven days of the parties' submissions."

There was attached a letter from the Arbitrator of 3 September 1996 enclosing a copy of the Draft Award.

As I have indicated these proceedings were commenced by way of a Summons filed on 2 October 1996, which was amended on 18 October 1996.

The Summons seeks a declaration that there has been misconduct within the meaning of s.44(a) of the Act by the Arbitrator; further, or alternatively, a declaration that he is incompetent or unsuitable to deal with the arbitration within the meaning of s.44(c); an order pursuant to s.44 that he be removed; an order pursuant to s.42 that the Interim Award of 3 October 1996 be set aside; alternatively an order that leave be granted to the plaintiff to appeal to the Court on questions of law arising out of the Award; an order to the effect that pending the hearing of these proceedings the Arbitrator not proceed further with the arbitration; and consequential relief.

The Nature of the Dispute sets forth discursively the history of the matter which, relevantly for present purposes, Aqua Clear admits, save to the extent of the allegation in paragraph 54 that the Award involves the deficiency specified in paragraph C3 of the Amended Summons, which Aqua Clear denies.

Under the heading "Issues Likely to Arise" it is stated:-

"1. Whether the Arbitrator's conduct is such so as to render him incompetent or unsuitable to deal with the arbitration within the meaning of s.44(c) of the Act.

2. Whether there has been any misconduct on the part of the Arbitrator or the Arbitrator has misconducted the Arbitration.

3. Whether the Arbitrator produced a Draft Award in early 1996, or at all prior to the commencement of these proceedings.

4. Whether the Arbitrator issued a request for the parties' legal representatives to make submissions as to interest prior to his request dated 10 July 1996.

5. Whether the Arbitrator issued a request to the parties' legal representatives to make submissions as to costs prior to the commencement of these proceedings.

6. Whether the Arbitrator misstated the true position when he stated that:

(a) he had sent a Draft Award to the parties' legal representatives;

(b) prior to 10 July 1996 he had requested submissions as to interest from the parties' legal representatives;

(c) he had requested representations as to costs from the parties' legal representations.

7. Whether the Arbitrator should be removed pursuant to s.44 of the Act.

8. Whether the Award should be set aside wholly or in part.

9. Whether leave to appeal should be granted on any question of law arising out of the Award."

In its Reply Aqua Clear denies that the issues identified in paragraphs 1, 2, 7, 8 and 9 arise, and denies "on the grounds of relevance" the issues specified in paragraphs 3 to 6.

Under the heading "Summary of Contentions" it is complained that the Arbitrator has been responsible for gross delay in the provision of an Award to the parties, and has made incorrect assertions to Ms Robertson of ACDC by stating in essence that:-

"(a) he had provided a Draft Award to the parties' legal representatives;

(b) prior to 10 July 1996, he had required submissions as to the interest from the parties' legal representatives; and

(c) he has requested representations as to costs from the parties' legal representatives."

This picks up the assertions in paragraph 6 under the heading "Issues Likely to Arise", and

The Summary of Contentions sets forth in paragraph 3 the errors of law perceived by Sydney Water. Firstly, it is asserted that the Arbitrator failed to have regard to the issue of jurisdiction and, in particular, whether the matters or any of them which he has purported to decide involved a dispute or disputes arising out of or in connection with the contract and has purported to deal with matters outside his jurisdiction. Aqua Clear's response is that this allegation has been the subject of a judgment in rem "in these proceedings" by me on 7 July 1995. Reference is made to pps.20-21 of that judgment.

Secondly, Sydney Water asserts that the Arbitrator took into account material irrelevant to issues in the arbitration and failed to make any rulings as to the relevance and admissibility of such material. Aqua Clear denies this allegation.

Thirdly, it is asserted by Sydney Water that in respect of the claim of breach of contract the Arbitrator failed to have any regard to the issues pleaded and, in particular, whether the individual terms pleaded were part of the contract, and that he found at p.63 of the Interim Award that there was no breach of contract and at p.76 purported to award damages. Aqua Clear denies this and asserts that the damages awarded for Claim 7 at p.73 "did not relate to breaches of contract".

Fourthly, Sydney Water complains that in respect of the claim alleging misleading conduct the Arbitrator purported to find that "by not following documented policy procedures" certain representations were made by Sydney Water when no allegation to that effect was or could properly have been pleaded; and failed to address the issue whether any such representation constituted engagement, in trade or commerce, by Sydney Water in conduct that was misleading or deceptive or likely to mislead or deceive.

Aqua Clear, in relation to the first allegation, denies it and asserts that the finding by the Arbitrator was one of fact and, as to the second allegation, denies it and asserts that the Arbitrator made a finding of misleading conduct "sufficient to address that allegation". Reference is made to p.73 of the Interim Award.

Fifthly, Sydney Water asserts that in respect to the claim of negligence the Arbitrator failed to make any findings as to any duty of care, and made such findings as he did make on material which he had purported to "set aside". Aqua Clear's response to the first allegation is that the reference to paragraph 7 of the Points of Claim and the finding of negligence impliedly accepts that there was a breach of the duty of care pleaded by it and, as to the second allegation, it is denied. Aqua Clear further asserts that even if the allegations are correct the Court in its discretion would not set aside the Interim Award as the amount of damages awarded under that heading was $1.

Sixthly, Sydney Water asserts that in respect of the claim of defamation the Arbitrator:-

"(i) failed to make any findings as to any of the imputations alleged;

(ii) failed to deal with the issue of publication;

(iii) apparently found no defamation (p.65) yet purported to award damages (p.73);

(iv) found that Aqua Clear suffered 'loss and damage but to a minor degree only' yet failed to deal with the defence based on s.13 of the Defamation Act; and

(v) failed to deal at all with the defence of qualified privilege."

Aqua Clear's response is that by reference to the Points of Claim it is clear that the Arbitrator dealt with the allegations contained in paragraphs 44, 48, 51 and 55 and that in so finding the Arbitrator has rejected the defences raised in the Points of Defence, including those raised under ss.13 and 22 of the Defamation Act. It is further asserted that even if the allegations of Sydney Water are correct the Court will not, in its discretion, set aside the Interim Award as the amount of damages was $1, nor should leave to appeal be granted.

Seventhly, Sydney Water asserts that "generally the Arbitrator has failed to address the issues in the Arbitration and purported to embark upon some general enquiry (see in particular Chapters 7, 9 and 10 of the Award)". This is denied by Aqua Clear, which contends that Chapters 7, 9 and 10 involve findings of fact by the Arbitrator.

Paragraph 4 asserts that the parties cannot have confidence that the Arbitrator has the capacity to conclude the arbitration judicially or competently; paragraph 5 asserts that there has been misconduct on his part within the meaning of ss.42 and 44 of the Act; paragraph 6 asserts that he has demonstrated an incompetence or unsuitability within the meaning of s.44(c) of the Act to properly determine the matters before him; and paragraph 7 asserts that Sydney Water should be granted leave to appeal in respect of the matters referred to in paragraph 3.

"The defendant says there are no manifest errors of law in (sic) the face of the Award as alleged in paragraph C3. The defendant contends that no appeals from the Award should be permitted by the Court and alternatively, reserves the right to make such appeals as it may be advised. So far as the tendering and contractual practices of the Plaintiff are concerned, the practices and procedures of the plaintiff are matters within its own control and management in accordance with the Water Board (Corporatisation) Act 1994 and are not a matter for regulation by this Honourable Court.

The defendant contends that the application should be dismissed with costs."

The evidence before me on behalf of Sydney Water comprised the affidavits of Ms Jack, sworn 18 and 30 October and 15 November 1996, and two volumes of documents entitled "Exhibit 1" to her affidavit of 30 October 1996. The evidence on behalf of Aqua Clear is the affidavit of Mr Peter Andrew Hamilton Learmonth sworn 23 October 1996. No objection was taken to any of this material and the deponents were not cross-examined.

On the hearing Sydney Water was represented by Mr P.R. Callaghan of Senior Counsel and Mr D.M. Loewenstein of Counsel and Aqua Clear was represented by Mr A.J.J. Thompson of Counsel.

Before considering the Award and the submissions it is necessary to refer at this stage briefly to portion of the pleadings, which were before the Arbitrator. On 30 August 1995 Aqua Clear filed its Points of Claim. These were supplemented by various schedules. On 11 September 1995 Sydney Water filed its Points of Defence and in paragraphs A1 and A2 thereof stated:-

"A1. The Principal says that the allegations and claims made in the Points of Claim are outside the jurisdiction of this arbitration in that they do not arise out of or in connection with the Contract and/or in that they have not been referred to this Arbitration of the Contract, and that they may not be heard and decided in this Arbitration except to the extent that the Arbitrator should hold that he has no jurisdiction in respect of them.

A2. Without in any way derogating from the contentions made in paragraph A1, and without in any way submitting to the jurisdiction of this arbitration, and only if those contentions not be upheld, the Principal pleads to the Statement of Claim as follows."

The word "No" before "jurisdiction" in the last sentence of paragraph A1 caused me some difficulty initially. However, I have read the pleading as meaning that the Arbitrator should not hear and decide certain issues, save to the extent of deciding that he did not have jurisdiction to do so.

On 15 September 1995 Aqua Clear filed its Reply and under the heading "Objection to Jurisdiction" it stated:-

"A1. The Contractor denies the allegations and claims made in paragraph A1 and states that the allegations and claims in the Points of Claim are within the jurisdiction of this Arbitration as they:-

(a) Arise out of or in connection with the Contract;

(b) Are within the terms of the Notice of Dispute dated 26 April 1994;

(c) are within the terms of the Contractor's letter to the Principal dated 20 February 1994;

(d) are within the terms of the Contractor's submissions dated 11 November 1994;

(e) are within the terms of the Points of Claim dated 10 November 1994; and

(f) are within the terms of the Agreement between the Contractor and the Principal dated 18 February 1995.

A2. The Contractor denies the purported reservation of rights in paragraph A2 and states that, as the Contractor's claim falls within Clause 46.2 of the General Conditions of Contract and this Arbitration arises under that clause, the Principal cannot elect not to submit to the jurisdiction of this Arbitration and the Principal is estopped and by his further participations will be estopped from denying the jurisdiction of the Arbitrator."

The Reply is additional to the matters of defence to which I have referred.

Whether The Arbitrator Has Been Guilty Of The Misconduct Pleaded

I have set forth at p.22 hereof the terms of paragraph 2 of the Summary of Contentions with which it is convenient to deal before considering paragraph 1.

The first issue is whether the Arbitrator made an incorrect assertion to Ms Robertson of ACDC by stating that prior to 10 July 1996 he had required submissions as to interest from the parties' legal representatives. The issue arises in this way. On 15 December 1995, as I have recorded, the Arbitrator advised the parties he wanted no more submissions; that he would review all submissions; and that depending upon the outcome of the review he may or may not "get back to the parties before issuing" his Draft Award. He said he would be in touch "again" as soon as that review had been finalised.

The letter of 3 July 1996 from Phillips Fox to Doyles stated that Ms Robertson "was chasing up" the Arbitrator and:-

"Miss Robertson advised that Mr Farmer had informed her that he drafted the report in January and had been waiting on a response to his letter regarding interest. Miss Robertson also informed us that she made enquiry of Aqua Clear and had been advised that he had not received such a letter."

It seems to be common ground that no party received such a letter.

At this point the evidence does not rise above an assertion by Phillips Fox that they had been advised by Ms Robertson that she had been advised by the Arbitrator that he had drafted the report as stated and was awaiting a response regarding interest. No evidence from Ms Robertson of this conversation with the Arbitrator was tendered. However, on 12 March 1996 Doyles wrote to the Arbitrator, referred to his letter of 15 December 1995, and expressly asked that in view of the time that had elapsed when his determination might be expected. On the following day Phillips Fox wrote again referring to whether the Arbitrator had finalised his review of the submissions and seeking certain information. It is not suggested these letters were not received by the Arbitrator and it seems inconceivable that if he had drafted his report in January he had not requested information in respect of interest, which letter seeking that information was not received by the solicitors for either of the parties, prior to mid March 1996. If that be so it is difficult to understand why the Arbitrator did not respond to those letters stating that the Interim Award would be produced when he had a reply to the letter in respect of interest. Alternatively, if he was awaiting information about interest, but had not written to the parties in relation to it, it seems to me inconceivable that these letters would not have caused him to write immediately about that matter. On 16 April 1996 Doyles wrote again to the Arbitrator asking when the Interim Award would be available. The remarks I have made apply equally to the lack of response to this letter.

On 6 June 1996 Ms Robertson wrote to the Arbitrator about the issuing of the Award and it seems that it is this letter which led to the information being conveyed to Phillips Fox, which is referred to in their letter of 3 July 1996. On 4 July 1996 Doyles wrote to Ms Robertson requesting her to ask the Arbitrator to "re-send" the letter to which he was awaiting a reply. This was followed up on 8 July 1996 by a further letter from Doyles to the Arbitrator and the reply of 10 July 1996 from the Arbitrator to which was annexed, as I have noted, a letter of 10 July 1996 requesting information as to interest. As I have said the Arbitrator did not send a copy of the original letter.

On the material to which I have referred Sydney Water submits that I should draw the inference that the Arbitrator had not made any request in relation to interest calculations prior to 10 July 1996 and that, in so far as he asserted to Ms Robertson that he had, he was not being truthful. The matters, which it is said support this inference, are firstly that no such letter was received by either party from the Arbitrator. As there is no suggestion that either party changed the address to which the Arbitrator wrote the failure to receive any such letter is very strange. Secondly, the Arbitrator was asked in mid March and mid April 1996 when his Interim Award could be expected. As I have said if he was waiting upon further information, or if he contemplated that he would require it, it is inconceivable that he did not respond to this correspondence saying so. Thirdly, the letter he enclosed with his letter of 10 July 1995 was not an earlier letter, but rather one of the same date. In the normal course of things one would anticipate that if the Arbitrator had written an earlier letter he would have kept a copy of it and been able to provide that to the parties. There is further support for this because he was able to supply a copy, or what purported to be a copy, of his letter of 3 September 1996. Fourthly, it is very strange if the Interim Award in draft form was completed in January 1996 that it was not dealt with earlier, particularly as it seems that payment of the fees awaited its issue.

The matters to which I have referred provide a powerful basis for the inference for which Sydney Water contends. However, as against that I must have regard to the basic allegation of what the Arbitrator is alleged to have said to Ms Robertson. I must do so in the context that the Arbitrator was not a party to these proceedings and, further, there was no direct evidence from Ms Robertson as to what he is alleged to have said to her. In making these observations I am not to be taken as casting any adverse reflection upon the letter sent by Phillips Fox to Doyles. Indeed there is no reason advanced, so far as I can see, why it would not have set out the position as they understood it. However, it remains that it is hearsay as against the Arbitrator and in the various communications there may have been room for confusion.

The allegation against the Arbitrator is a very serious one. It is one of actual and not technical misconduct and if it is to be established it must be established within the civil onus of proof to a high degree of probability. The allegation is denied by Aqua Clear, which for present purposes represents the Arbitrator. However, if I am to have regard to what is said to have been said to Ms Robertson, I must also have regard to the statement by the Arbitrator in his letter of 10 July 1996, which supports his version. In all these circumstances and whilst I can understand Sydney Water's basis for disquiet, I am not satisfied that the allegation has been made out.

Sequentially the next matter of complaint is that the Arbitrator made an incorrect assertion to Ms Robertson that he had provided a Draft Award to the parties' legal representatives. This allegation arises out of the letter of 20 September 1996 to her. Once again it appears that neither party received the Draft Award which, for the reasons I have given earlier, is strange. Once again there is an assertion by the Arbitrator that the Draft Award had been sent. And, in his letter of 3 October 1996, he re-affirmed that it was his understanding that this had occurred on 3 September 1996. He frankly enough conceded it may not have happened. However on 23 September 1996, i.e. before he was advised that the Draft Award had not been received by the parties, he had sent his letter of that date to the Institute of Arbitrators Australia to facilitate payment of his fees.

The inference in relation to finding that the Draft Award was not sent as the Arbitrator asserted is not strong and I reject it.

Even if I had come to the conclusion that the Arbitrator had not been frank with Ms Robertson a further issue would have arisen whether that amounted to misconduct sufficient in all the circumstances to justify his removal.

That leaves the question as to whether the Arbitrator was responsible for gross delay in the provision of an Award. In view of the fact that I have not made the findings sought in paragraph 2 of the Summary of Contentions I do not think it is open to me to make a finding to this effect.

In the written submissions Sydney Water added the further allegations that in respect of the four causes of action pleaded the Arbitrator failed to deal with the issues, had regard to irrelevant material, and, in effect, dealt with the arbitration as though it were an enquiry into Sydney Water's tender evaluation processes generally. It was submitted that these shortcomings constituted misconduct warranting his removal and the setting aside of the Award. These matters, as I have sought to indicate, were added to the matters with which I have dealt and it seems to me more appropriate to come back to them after I have considered the Award.

The next topic of Sydney Water's submissions is concerned with the question of jurisdiction. In the Interim Award the Arbitrator traced the history of the dispute in relation to jurisdiction. However whilst this indicates that he was fully aware of the issue, at least prior to his embarking upon the main hearing, he does not again refer to it in the course of the Interim Award. This poses certain difficulties. Firstly, it is not correct to say, as Aqua Clear asserted, that the question of jurisdiction had been decided by me and, in any event the Arbitrator did not say that it had been. What I had decided, and I hope made quite clear in my reasons of 7 July 1995, was that it was a matter for the Arbitrator to determine whether the dispute, whether it related to the reputation claim or any other claim made, was one arising out of or in connection with the contract. I referred to the relevant principles, as I understand them, which would enable such a decision to be made once findings of fact were made. The difficulty is that the Arbitrator has made no express findings that any of the conduct could be so characterised.

Because of the form of the Interim Award and the criticisms made of it, it is necessary to refer to it in greater detail than perhaps I otherwise would. The Arbitrator commenced with a section headed "Background" in which he traced the history of the contractual dealings between the parties and the arbitral and curial proceedings. He dealt with the various rulings as to jurisdiction and noted on several occasions in Clause 1.6 that he had held he had jurisdiction and that applications to the Court to seek to establish he did not were unsuccessful. It is not clear to me whether the Arbitrator took the view that he had jurisdiction and did not have to refer again to that aspect of the matter, or whether the decision on jurisdiction is incorporated in the Interim Award, although sub silentio. My judgment of 7 July 1995 made clear that it would be necessary for the Arbitrator to determine the facts and whether the dispute, formulated in various ways, arose out of or in connection with the contract. Unless it did the Arbitrator did not have jurisdiction and the issue as to whether he did or did not was one for his decision and was at the forefront of the pleadings and the submissions. The Interim Award does not disclose the way in which the Arbitrator decided that the facts he found arose out of or in connection with the contract or whether he had any regard to the defences and reply raised by Aqua Clear. Accordingly, in this regard, the Arbitrator has not exposed the reasoning process, which led him to the conclusion that Aqua Clear is entitled to succeed on various of the claims it made. In those circumstances the Arbitrator has not complied with his obligation to give reasons pursuant to s.29 of the Act by revealing a reasoning process sufficient to enable the parties and the Court to see how he arrived at the conclusion that the various claims in dispute arose out of or in connection with the contract such that he could decide them. The reasons must at least reach the criterion to which I have referred: Soulemezis v Dudley (Holdings) Pty Limited (1987) 10 NSWLR 247 and R.P. Robson Construction Pty Limited v D & M Williams (1990) 6 BCL 219, even though some allowance will be made for their method of articulation: Menna v H.D. Building Pty Limited (unreported: Smart J: 1 December 1986) and R.P. Robson.

In this regard it is to be remembered that the pleadings were not delivered until after my judgment of 7 July 1995 and, as I have indicated, the pleadings raised squarely the question of jurisdiction.

In Section 2 the Arbitrator dealt with Aqua Clear's claims under various headings and by reference to the Points of Claim. Under the heading "General" he referred to paragraphs 9 and 10 of the Points of Claim, which he set out verbatim. Paragraph 9 alleged that the Principal and the Superintendent made comments relating to Aqua Clear's performance of the contract "which are wrong and misleading" and the particulars identified oral comments made by Mr Steve Barker on behalf of Sydney Water to Mr Graeme Lewis in a telephone conversation on or about 14 February 1994.

Paragraph 10 alleged that Sydney Water failed to give proper or adequate consideration to subsequent tenders submitted by Aqua Clear to it for similar projects and set out in Schedule 1 particulars of the subsequent tenders.

Sydney Water denied each of these allegations. It is also to be noted that the Points of Claim did not allege any damage flowing from them.

The next heading adopted by the Arbitrator, following the Points of Claim, was "Breach of Contract". Paragraph 11 of the Points of Claim set forth a number of terms of the contract and, in my opinion, it is important to consider them.

Firstly, it was alleged in paragraph 11(a) that it was a term of the contract that the Principal would ensure there was a Superintendent and Superintendent's Representative and that they "would act honestly and fairly and would arrive at a reasonable measure or value of work, quantities or time". Particulars alleged the term was express and contained in General Conditions 23 and 24. Sydney Water, in its Points of Defence, asserted that that paragraph did not accurately set out the terms and effect of General Conditions 23 and 24.

In paragraph 11(b) it was alleged that it was a further term of the contract that Sydney Water, through its Superintendent and his representative:-

".. would honestly, fairly and reasonably make determinations and issue variations as required to achieve the purposes of the Contract."

The term was said to be express and contained in General Conditions 23 and 40, which Sydney Water denied.

In paragraph 11(c) it was pleaded that it was a further term of the Contract that Sydney Water:-

".. was obliged not to breach its Contract so as to injure the reputation of" Aqua Clear.

The term was asserted to be implied by law and from the commercial nature and purpose of the contract. Sydney Water denied the allegation.

In paragraph 11(d) it was asserted that it was a term of the contract that Sydney Water "would do all such things as were necessary on its part to enable the Contractor to have the benefit of the contract", the term allegedly being implied by law. Sydney Water denied this allegation.

In paragraph 11(e) it was asserted that it was a further term of the contract that Sydney Water:-

".. would ensure that in the exercise of the functions of the Superintendent under the Contract the Superintendent and Superintendent's representative would in all respects act reasonably and perform any delegated functions with due care, skill and diligence."

This was said to be implied by law and was denied by Sydney Water.

In paragraph 11(f) it was asserted that it was a further term of the contract that Sydney Water:-

".. would provide all necessary labour and materials to maintain, service and properly operate the Works in good working order during the defects liability period, other than the servicing allowed by the Contractor."

The particulars alleged this was implied from paragraph 24 of Sydney Water's letter dated 4 February 1995 and "as a matter of law and commonsense, being obviously necessary to give business efficacy to the contract". Sydney Water denied these allegations.

Accordingly there were issues before the Arbitrator as to the terms of the contract. But he made no findings as to whether the disputed terms of the contract in fact existed, although as things transpired in certain respects this may not have mattered. I say that because, as will appear, he found that a number of the alleged breaches had not occurred.

Under the heading "Breach of Contract" the Arbitrator set out the breaches alleged in paragraphs 13, 14 and 15 of the Points of Claim. The breach alleged in paragraph 13 was that the Superintendent and his representative failed to issue determinations and variations necessary to achieve the purpose of the contract, which appears to be an allegation of the breach of the term appearing in paragraph 11(b). In paragraph 14 a breach of the term pleaded in paragraph 11(b) is asserted, the breach being the failure to issue the determinations or variations as particularised in paragraph 13. In paragraph 15 there is alleged to be a breach of the term said to be implied in paragraph 11(f) of which particulars were furnished. It was then pleaded in paragraph 16 that as a result of the breaches alleged in paragraphs 14 and 15:-

"The Works failed to operate satisfactorily and the reputation of the Contractor suffered as the failure was wrongly attributed to the Contractor by the Principal, the Superintendent, and the Superintendent's Representative, and servants and agents of the Principal and others connected with the Sewage Treatment Plant at West Hornsby."

Each of the allegations in paragraphs 13 to 16 inclusive were denied.

As I understand it the Arbitrator did not deal with paragraph 16 of the Points of Claim at that point. After he noted paragraphs 13, 14 and 15 he went to paragraph 17, which alleged that in breach of the contract, and particularly the terms pleaded in paragraphs 11(a) to (e), Sydney Water failed to ensure that, in the exercise of the functions of the Superintendent and his representative, they acted properly:-

".. in performing their functions arising out of and associated with the Contract, in that the Superintendent and the Superintendent's Representative issued or allowed to be issued or distributed without correction reports and comments to other parties in the construction industry, both employees of the Principal and others."

Under the heading "Particulars" the reports are said to be those set out in Schedule 3 and they are alleged to be:-

(d) not produced with reasonable skill, care or diligence.

(e) did not incorporate reasonable measures or values of work, quantities or time to the extent that measures were incorporated in the untrue or unfair statements; and

(f) prevented Aqua Clear from having the benefit of the contract in that the reports falsely damaged the reputation of Aqua Clear in circumstances where the contract enabled it to improve its existing reputation for producing good quality works in a timely manner.

Paragraph 18, to which the Arbitrator made reference, alleged that as a consequence of these breaches of contract, which could not incorporate the complaints made in paragraphs 9 and 10 as these do not allege breach of contract, Aqua Clear suffered damage to its reputation and business, lost opportunity to win further work with Sydney Water and other clients, was not awarded subsequent contracts, and was subjected to unreasonable administration of other contracts as set out in Schedule 4.

It will thus be seen that the claim made under breach of contract required the Arbitrator to determine the terms of the contract, whether there had been breaches thereof and whether, in consequence of any such breaches, Aqua Clear suffered damage as alleged.

Before dealing with the next matter of complaint I propose to track through the Award in relation to breach of contract. The Arbitrator noted in Clause 2.2 that damages were sought for breach of contract together with interest and he referred to paragraph 19 of the Points of Claim.

In Part 11 of the Interim Award the Arbitrator set out his specific findings. He dealt firstly with paragraphs 9 and 10 and, in relation to the allegations in paragraph 9, he found that Sydney Water and its Superintendent had not made comments relating to the performance of the relevant contract "which are wrong and misleading".

In relation to the allegation in paragraph 10 he held that Sydney Water:-

".. has acted improperly and given inadequate consideration to subsequent tenders submitted by the Contractor to the Principal for similar projects. Such improper actions and inadequate consideration arose from Water Board's own internal procedures rather than actions by the Contractor."

He did not state, at this point, what led to the conclusions that Sydney Water had acted improperly or not given adequate consideration to subsequent tenders, although earlier in the Interim Award he appears to have considered that. I shall return to this point.

The Arbitrator then dealt with the breaches alleged in paragraphs 13, 14 and 15 and, in each respect, he found, although he had not found that there were contractual terms to the effect pleaded, that there had been no breach. Perhaps, in those circumstances, it does not matter that he did not find whether there were such terms as Aqua Clear makes no complaint.

It is necessary to note, in this context, that the pleading in paragraph 16 asserted that the breaches set out in paragraphs 14 and 15, which the Arbitrator found not to have occurred, was a specific basis for alleging that the reputation of Aqua Clear suffered. The Arbitrator, at this point, made no finding on that. Indeed in the way in which it was pleaded and having regard to his finding of no breach, it is difficult to see how Aqua Clear could have succeeded on that point.

The Arbitrator turned to the allegations in paragraph 17 and found expressly that the Superintendent and his representatives did not issue reports which were dishonest, unfair and unreasonable; which were not produced with reasonable skill, care or diligence; which did not incorporate reasonable measures or values of work, quantities or times; and which prevented Aqua Clear from having the benefit of the contract.

The overwhelming inference from these findings is that the Arbitrator did not find, as was alleged in paragraph 17, that reports of the type referred to therein were issued. Certainly he did not find that the reports as particularised were issued. He then set out paragraph 18 and under the heading "Arbitrator's Findings" he stated:-

"As a result of the improper actions and inadequate consideration by the Principal of subsequent tenders submitted by the Contractor (Claim 2), the Contractor has suffered some damage to its reputation in business and lost opportunity to win further work with the Principal by not being awarded subsequent contracts.

I do not find on the evidence presented to me that the Contractor lost opportunity to win further work with other clients nor was it subject to unreasonable administration of other contracts as set out in Schedule 4 to the Points of Claim.

I do not find any breaches of contract in respect of the Claims 3, 4, 5 or 6."

The result of this is that the Arbitrator found, notwithstanding that he had not determined the disputed terms of the contract, that there had been no breaches of contract as pleaded. The claim for damages with which he was concerned was based on breach of contract. What the Arbitrator did was to find that the allegation in paragraph 10 of the Points of Claim had been established, but that finding was not one asserted in the Points of Claim to have arisen from any breach of contract or to have given rise to any damages. Further the Arbitrator failed to state why he found the actions were "improper", in the sense of falling below some legally required standard; why he found the consideration was "inadequate", in the same sense; and by what process of reasoning he arrived at the conclusion that in consequence thereof Aqua Clear had "suffered some damage to its reputation" and "lost opportunity to win further work", such that it was entitled to recover damages. Finally, and of critical importance, was the failure by the Arbitrator to find how any such damages arose out of or in connection with the contract. The significance of these failures becomes clear when one goes to the heading at page 66 of the Interim Award "Award on Specific Claims". Under the sub-heading "Breach of Contract" the Arbitrator noted the claim for damages and interest in paragraph 19 and in respect of what he describes as Claim 2, which is the assertion contained in paragraph 10 and which is not a claim for breach of contract, he awarded damages in "the nominal amount of $1". He did this because he found that whilst Sydney Water's actions were "technically at fault", whatever that may mean, "the substantive cause of the damage to the Contractor's reputation in business has been its own performance and modus operandi in the way it completes its contracts and carries out its business". In other words, as I understand it, the Arbitrator held that Aqua Clear was only entitled to nominal damages. These would be appropriate to a breach of contract but, in this respect, that was not alleged. As I have indicated the Arbitrator did not say what he meant by "technically at fault" nor how he reasoned to this conclusion.

He then turned to what he described as Claim 7, which is the allegation contained in paragraph 18 of the Points of Claim. He dealt with this on the basis of "the lost opportunity to win further work with the Principal by not being awarded subsequent contracts", and he said he took into account "that the matter of the cost of attending to preparation is considered separately later in this Award".

At this point the Arbitrator seems to have overlooked that paragraph 18 alleged damages for breach of contract and there was no allegation of breach of contract, at least which he had found, relating to this item. Accordingly the Arbitrator had found no relevant breach of contract, which would sustain the lost opportunity claim, and he had made no finding as to how any breach of contract, assuming there was one, arose out of or in connection with the relevant contract.

None-the-less he proceeded to look at other tenders and set out the way in which he calculated a loss of $16,750, notwithstanding that he found, p.66, that even if Sydney Water's assessments were irregular, a re-assessment of tenders for five specific contracts indicated to him that the conclusions reached by Sydney Water to exclude or not appoint Aqua Clear "would have remained unchanged". There seems to be an inconsistency in this approach.

In my view the Arbitrator's conclusion that damages should be awarded under this heading was totally flawed by his failure to find a breach of contract, which would support the claim for damages, and further by his failure to give reasons for the conclusion to which he came that there was any entitlement to such damages and that such entitlement arose out of or in connection with the contract.

The next heading in the Points of Claim and the Interim Award is "Misleading Conduct". This is a claim for damages, pursuant to the Fair Trading Act, alleging that in or about January 1994 Aqua Clear submitted a tender for Contract 7927; that prior to May 1994 Sydney Water engaged a consultant to evaluate the tenders for that contract; and that in or about February 1994 Sydney Water, by its agent, represented to the consultant, in effect, that Aqua Clear was unfit to perform the contract and had mismanaged Contract 7881 in various ways.

In paragraph 25 it was pleaded that during the currency of Contract 7881 and subsequent to the completion of the Works:-

".. the Principal, the Superintendent or the Superintendent's Representative or its agents or representatives made or circulated false and adverse reports concerning the Contractor and its performance of Contract 7881."

These are the reports set forth in Schedule 3 to the Points of Claim and the particulars alleged:-

"The reports are misleading in that they include the imputations, unfair statements and untrue statements, all of which are false and were published as hereinafter set out."

The Arbitrator had already found that there had not been reports issued which were unfair and untrue as pleaded previously.

In paragraph 26 it was pleaded that during the currency of Contract 7881 and following the completion of the Work Sydney Water represented to Aqua Clear that no adverse statements had been made by it or its Superintendent that would affect Aqua Clear's future commercial relations with Sydney Water; and that Aqua Clear could submit tenders for further projects with Sydney Water, which would be fairly and properly considered. The particulars of these allegations were Sydney Water's failure to advise Aqua Clear of the exclusion of its tenders, which continued from 1 October 1992 to 11 July 1994.

It is then alleged that the representations referred to in paragraphs 24, 25 and 26 were made in trade and commerce and, in paragraph 28, that by making them Sydney Water engaged in misleading and deceptive conduct. The matter is pleaded in various ways and it is asserted, in paragraph 30 of the Points of Claim, that as a result of the representations the consultant produced a report for Contract 7927, as a result of which Aqua Clear was excluded from tenders considered for that contract and, in paragraph 31:-

"As a result of the representations of the Principal, the Contractor's reputation was damaged."

There is an allegation that induced by the representations Aqua Clear continued to expend time and money in submitting tenders for projects, and that as a result of Sydney Water's actions described in paragraphs 25, 29, 30 and 32 Aqua Clear suffered loss and damage in its business reputation; was not awarded Contract 7927; and has suffered unreasonable administration by Sydney Water on other projects. In these circumstances damages are claimed. The Points of Defence denied these allegations.

The Arbitrator set forth these allegations in paragraphs 8 and 9 on page 7 of the Interim Award quite shortly and, at page 63, he repeated paragraph 8 at page 7, which stated:-

"During the currency of Contract No 7881, and subsequent to the completion of the Works, the Principal, the Superintendent or its Representative, made and circulated false and adverse reports concerning the Contractor and its performance of Contract No 7881 (Item 25, Ibid)."

His finding, at page 64 of the Interim Award, states:-

"The Principal, Superintendent and Superintendent's Representative did not make or circulate false and adverse reports concerning the Contractor and its performance of Contract No 7881."

The Arbitrator then referred to paragraph 9 at page 64, and stated:-

"During the currency of Contract No 7881, and following the completion of the Works, the Principal represented to the Contractor, that:

(a) No adverse assessments had been made by the Principal or the Superintendent during the currency of Contract No 7881 that would affect the Contractor's future commercial relations with the Principal;

(b) The Contractor could submit tenders for further projects with the Principal and the Contractor's tenders would be fairly and properly considered.

The Principal's failure to advise the Contractor of the exclusion of its tenders continued from 1 October 1992 to 11 July 1994 (Item 26, Ibid)."

"The Principal did not represent to the Contractor that no adverse assessments had been made by the Principal or the Superintendent during the currency of Contract 7881 that would affect the Contractor's future commercial relationships with the Principal.

By not following documented policy procedures, the Principal did however impliedly represent to the Contractor that the Contractor could submit tenders for further projects with the Principal, and that the Contractor's tenders would be fairly and properly considered.

The Principal's failure to advise the Contractor of the exclusion of its tenders did continue from approximately October 1992 to approximately July 1994."

There is, at the least, some inconsistency between the first and second paragraphs I have quoted.

Commencing at page 69 the Arbitrator awarded damages pursuant to s.68 of the Fair Trading Act for what he described as Sydney Water's "misleading conduct in representing to Aqua Clear that its tenders would be fairly and properly considered". He found damages on the basis that if Sydney Water had formed a view that was adverse to Aqua Clear, it should have told Aqua Clear to avoid its wasting time and money, in preparing and submitting further tenders. But this was not the representation the Arbitration found to have been made impliedly. On this basis the Arbitrator assessed damages in the sum of $58,475. This was by far the largest component of damages which Aqua Clear recovered.

A number of complaints are made about this finding. Before considering these I note that the Arbitrator did not award damages for the failure to be awarded the tender for Contract 7927 under this heading, nor did he award damages on the basis that the tenders were not accepted.

The Arbitrator based his finding under this heading on the fact that Sydney Water "By not following documented policy procedures" made the implied representation. There are several problems with this approach. Firstly, it was not pleaded by Aqua Clear that the representation was made "By not following documented policy procedures". In these circumstances I do not see how Aqua Clear could be permitted to succeed on an allegation of misleading or deceptive conduct when it placed no reliance on this circumstance. The Arbitrator did not attempt to explain his reasoning. Secondly, Sydney Water complained that there was no finding that in awarding Contract 7881, documented policy procedures were not followed or, if they were not followed, how this misled or deceived Aqua Clear. In the result there was no finding of any inducement arising from this conduct. Thirdly, it was submitted, as is the fact, that the Arbitrator had not made a finding as to how this dispute arose out of or in connection with Contract 7881 such as to give him jurisdiction. Indeed, quite apart from the absence of reasons on this vital topic, another part of the report indicates that because of dissatisfaction with the performance of Aqua Clear it would not have been awarded Contract 7927. The reasonable inference is that it would not have been awarded further contracts. Finally the representation appears to have been one by silence, with all the difficulties that provokes, and the Arbitrator gave no reasons in relation to his finding that there was such a representation with the consequences he found.

The Arbitrator commenced the portion of his Interim Award headed "Tender Evaluations" at page 35. This is the matter to which I said I would return at p.37 hereof. At page 52, he found that:-

"1. Tender evaluations generally, and in particular, the Contract No 7927 were not carried out in accordance with then current government and Water Board policy.

2. Notwithstanding the non-compliances with government and Water Board policies, Aqua Clear would not have been awarded Contract No 7927 because of a genuine belief by both Water Board and Sinclair Knight Merz Tender Evaluators that Aqua Clear could not or would not fulfil their contractual obligations in the timely manner required by the Contract.

3. The belief by Water Board and Sinclair Knight Merz Tender Evaluators that Aqua Clear could not or would not fulfil their contractual obligations, was a reasonable and justifiable belief to hold on the facts available to them.

4. More generally, there appears no auditing process to ensure that Board's and government tender evaluation procedures are being followed.

5. While the Board represented to tenderers generally that it was complying with its own and government Code of Tendering procedures, it was not ensuring that its actions (and those of its officers) matched these representations."

In relation to these findings the Arbitrator has not furnished reasons to establish how the alleged breaches by Sydney Water were relevant to any issue raised on the pleadings or arose out of or in connection with the contract. In my opinion it is very difficult to see how the failure to follow policy in relation to other tenders can be said to arise out of or in connection with Contract 7881, the more particularly in the light of a finding that in respect of that contract Sydney Water did not make or circulate false or adverse reports concerning Aqua Clear and its performance of the contract.

The claim in negligence was formulated by a repetition of paragraphs 1 to 10 of the Points of Claim and in paragraph 36 thus:-

"The Superintendent and the Superintendent's Representative and therefore vicariously the Principal owed the Contractor a duty of care to:-

(a) Exercise reasonable care and skill in performing their obligations under the Contract;

(b) Act in a fair, honest and reasonable manner in performing their functions under the Contract;

(c) Ensure that any reports concerning the Contractor were honest, accurate, fair and objective."

Sydney Water denied there was any such duty of care.

Paragraph 37 alleged a number of breaches of the duty of care, all of which Sydney Water denied. The Arbitrator summarised the claim as:-

"The Superintendent's Representative, and therefore vicariously the Principal, negligently failed to warn the Contractor of unfavourable comments concerning the Contractor's performance, the consequence of those unfavourable comments, and to provide the Contractor with the opportunity to respond."

Those were some only of the breaches alleged by Aqua Clear.

The Arbitrator found, commencing at page 64 of the Interim Award, that Sydney Water failed to warn Aqua Clear of unfavourable comments concerning its performance, of the consequences of those unfavourable comments and to provide it with an opportunity to respond. He continued:-

"The Water Board, as a government agency, is the party responsible for convening a meeting between the Contractor and the person(s) who prepared the unfavourable comments concerning the Contractor's performance so the Contractor has the opportunity to respond on any adverse comment.

Sydney Water was negligent in failing to convene such a meeting, failing to inform the Contractor of specific adverse reports and failing to give the Contractor the opportunity to respond to those adverse performance reports. The result of this negligence was a basic denial of natural justice."

I do not see how these conclusions arise out of what was pleaded in relation to the negligence claim.

At page 70 the Arbitrator made an award in what he described as "the nominal sum of $1". He held the amount to be further to the damages otherwise awarded and to be nominal "because damages have already been assessed for the consequences of the Board's negligence".

I have a number of difficulties with this finding. Negligence involves a breach of duty of care owed by the defendant to the plaintiff by an act or omission, which is the proximate cause of foreseeable damage to the plaintiff. Further, it is clearly established that negligence will only be found if damage has been suffered. The Arbitrator makes no finding that if Sydney Water had taken the steps, which he considered it should have taken, any explanation by Aqua Clear would have had any particular result. He does not find, for example, that Aqua Clear would have been awarded work for which it tendered, but which was not awarded to it. Indeed such a finding would have been at odds with various other findings he made. I refer, inter alia, to the findings at page 52 of the Interim Award, which I have set out fully.

Further, the Arbitrator's comment that he had already assessed damages for the consequence of Sydney Water's negligence was clearly wrong. He had awarded damages, albeit nominal, for the failure to give proper or adequate consideration to subsequent tenders; in respect of Aqua Clear's lost opportunity to win further work; and for the misleading conduct. Under this heading the Arbitrator was bound to consider what, if any, damages had been suffered and, having done that, to ensure there was no doubling up with other damages awarded. He was, in all probability, obliged to find that had Aqua Clear been given the opportunity to respond its response would have been so convincing that Sydney Water would have granted it further work from which it would have made a profit. He would then have had to set off, in all probability, the effect of other projects in which Aqua Clear engaged because its work force was not deployed in carrying out Sydney Water's work. The task of assessing damages would have been difficult, but the Arbitrator did not overcome the difficulty by the words he used. Indeed he proffered no acceptable reasons for his conclusion as to damages. Finally, and critically, the Arbitrator made no finding as to how the negligence he found arose out of or in connection with the contract.

The next claim was for defamation, it being alleged that a number of defamatory statements were made of and concerning Aqua Clear by reason whereof it has been brought into ridicule and contempt and has been gravely injured in its business reputation and has suffered economic loss and will continue to suffer loss and damage.

Commencing at page 7 of the Interim Award the Arbitrator identified the reports upon which reliance was sought to be placed and, at page 8, the claim for damages. He found, at page 65, that the reports did not bring Aqua Clear into ridicule and contempt and:-

"They do however injure Aqua Clear's business reputation and to suffer economic loss and to continue to suffer loss and damage, but to a minor degree only. The substantive cause of injury to Aqua Clear's business reputation and its economic loss is Aqua Clear's own performance and modus operandi in the way it completes its contracts and carries out its business."

In relation to the claim of defamation Sydney Water raised a number of defences. It denied the imputations alleged and any publication by it and that any publication "was of and concerning" Aqua Clear. It relied upon a defence of qualified privilege at common law and pursuant to s.22 of the Defamation Act 1974 in respect of which it provided detailed particulars, which ran to a number of pages. It pleaded that by virtue of the qualified privilege its conduct in such circumstances was such that Aqua Clear "was not likely to suffer harm". It alleged in its submissions that additionally the Arbitrator was bound to have regard to s.13 of the Defamation Act 1974.

So far as his reasons disclose the Arbitrator considered none of these submissions which, on the issue of defamation, were serious submissions on which Sydney Water was entitled to findings. The fact that he only made an award of "the nominal sum of $1", (Interim Award p.70), because:-

"Aqua Clear's economic loss has been previously assessed"

is not to the point. The clear inference is that if his earlier findings are not sustainable he would have awarded damages in a far greater amount under this heading.

He does not deal with the defences raised, nor does the Arbitrator attempt to deal with how the defamation arose out of or in connection with the contract, such that it was a matter in respect of which he had jurisdiction to award damages.

In the result the Arbitrator awarded Aqua Clear $17,750 for lost opportunity to win further work by not being awarded subsequent contracts. I have referred already to the difficulties with this. In addition to the difficulties to which I referred there is the further difficulty that the finding at page 62 is inherently contradictory of the finding the Arbitrator made in relation to the ability of Aqua Clear to carry out the work and the justification for Sydney Water and its evaluators to hold that Aqua Clear could not or would fulfil its contractual obligations. I think the word "would" should be followed by "not".

The next substantial amount awarded was $58,475 in respect of Sydney Water's misleading conduct to Aqua Clear in representing that tenders "would be fairly and properly considered". I have dealt already with this. There was a also a claim for variation for computer software in the sum of $4,950, which amount did not seem to be challenged by Sydney Water.

The Arbitrator was obliged by s.29 of the Act to give reasons. This task involves an arbitrator providing reasons from which can be seen the way in which he came to the conclusions he expressed, and whether he was in error on any question of law arising out of the Interim Award. As Giles J said in R.P. Robson Constructions Pty Limited v D & M Williams (1990) 6 BCL 219 at p.222:-

"The reasons should, however, be sufficient to indicate to the parties why the arbitrator reached the conclusion or conclusions which he did as the foundation of his award: to adopt a phrase from Soulemezis v Dudley (Holdings) Pty Ltd at 273, to apprise the parties of the broad outline and constituent facts of the reasoning on which he has acted. Further, the reasons should be sufficient to enable the court to see whether there has been any error of law."

At p.223, in relation to the facts of the case before him, his Honour said:-

"What does not appear, in my view, even with reference to the submissions, is what facts the arbitrator found constituting, in his view, repudiation of the contract by the builder, what occurred (if anything) by way of acceptance of that repudiation so as to bring the contract to an end and entitle the proprietor to the damages awarded, and exposure, not necessarily elaborately but sufficiently to enable an understanding thereof, of the arbitrator's reasoning (including the part played therein by the provisions of the contract), leading him to so categorise the conduct. In my view in this respect the arbitrator failed to include in the award a statement of the reasons for making it."

It is clear that it is not necessary for the Arbitrator to deal with every submission. However, where there is a failure to deal with a submission worthy of serious consideration and seriously advanced the proper inference is, in the event of a failure to refer to it, that it was overlooked inadvertently. The matter is dealt with conveniently in Dennis Willcox Pty Limited v Federal Commissioner of Taxation (1988) 79 ALR 267 at pp.276-7. The Full Court of the Federal Court was there concerned with the provisions of s.43(2) of the Administrative Appeals Tribunal Act 1975, which required that Tribunal to give reasons in writing for its decision and that the reasons should include its findings on material questions of fact. In considering a certain submission Jenkinson J, with whom Woodward and Foster JJ agreed, said:-

"But this submission concerning the ascertainment of profit was worthy of serious consideration and was seriously advanced to the tribunal. It ought, therefore, to be inferred that the submission was inadvertently overlooked by the tribunal either when the reference was being decided or when the reasons for a decision were being committed to writing (cf Sullivan v Department of Transport (1978) 20 ALR 323 at 353). In either event there has been, in my opinion, an error of law by the tribunal, so that the power of this Court which s.44(1) of the ... Act ... confers to decide the appeal 'on a question of law' is available. The failure of the tribunal to carry out the duty to consider and determine each question of law and fact relevant to the determination of the reference to it of the respondent's decision, or the failure to carry out the duty imposed by s.43(2) of that Act, as the case may be, has brought about a miscarriage of justice by preventing this Court from affording the parties a determination whether the tribunal's decision was vitiated by error of law: see Pettitt v Dunkley [1971] 1 NSWLR 376."

In Kalwy v Secretary, Department of Social Security (No 2) [1993] FCA 644; 32 ALD 451 at 458 Beazley J said:-

"A failure to consider a submission worthy of serious consideration constitutes an error of law: Dennis Willcox v FCT ..."

In Dornan & Ors v Riordan & Ors (1990) 95 ALR 451 at 455 the Full Court of the Federal Court quoted with approval the following passage from the judgment of Wilcox J in Our Town FM Pty Limited v Australian Broadcasting Tribunal [1987] FCA 301; (1987) 77 ALR 577 at pp.593-4 in relation to the legislation before him:-

"There are, of course, limits upon the extent of the obligation arising out of s.25B. It is not necessary that the report deal with every matter which was, or which might have been raised, in the proceedings. It is enough that the findings and reasons deal with the substantial issues upon which the decision turned: see Tatmar [1983] 3 NSWLR at 385-6 and Bisley Investment Corp v Australian Broadcasting Tribunal (1982) 40 ALR at 245. In Ansett Transport Industries (Operations) Pty Ltd v Wraith [1983] FCA 179; (1983) 48 ALR 500 at 507, Woodward J described the obligation under s.13 of the Administrative Decisions (Judicial Review) Act in these terms:

'The passages from judgments which are conveniently brought together in Re Palmer and Minister for the Capital Territory (1978) 23 ALR 196 at 206-7, serve to confirm my view that s.13(1) of the Judicial Review Act requires the decision maker to explain his decision in a way which will enable a person aggrieved to say, in effect: "even though I may not agree with it, I now understand why the decision went against me. I am now in a position to decide whether that decision has involved an unwarranted finding of fact, or an error of law, which is worth challenging".

This requires that the decision maker should set out his understanding of the relevant law, any findings of fact on which his conclusions depend (especially if those facts have been in dispute), and the reasoning processes which led him to these conclusions. He should do so in clear and unambiguous language, not in a vague generalities or the formal language of legislation.' "

I do not think there can have been any doubt that there was an obligation on the Arbitrator to deal with the question of jurisdiction, which was squarely raised at all points and, relevantly for present purposes, on the pleadings and in the submissions advanced to him. In my reasons of 7 July 1995 I reinforced the position of the Arbitrator, as I understood it. At p.20 I said:-

"As I understand it the Arbitrator was saying he would have to consider each part of the defamation claim to determine whether it could be said that it arose out of or in connection with the contract."

I have referred to certain other observations I made.

In the light of all these statements, which I assume the Arbitrator read because he referred in the Interim Award to my judgment and to the issue of jurisdiction, I do not see how the Arbitrator could have approached the various claims without referring to the way in which he held there was jurisdiction on the facts as found by him. In addition there were conflicting positions raised on the pleadings.

This complaint was the central thrust of Sydney Water's submissions. It was sought to be answered by Aqua Clear by referring to what I said at pp.20-21 of my judgment. After quoting a passage commencing "I have suggested this submission is misconceived .." and concluding "Therefore the Arbitrator will receive such evidence on the defamation claims as he thinks fit and, having done so, he will decide the dispute committed to his decision by submission to arbitration", the submission was made:-

"It is clear from the dismissal of the Summons that the Court supported the Arbitrator's finding that he had jurisdiction to hear the defamation claim. The Arbitrator obviously concluded he had jurisdiction and determined the question after hearing the evidence."

The passage from my judgement, which was quoted, included the sentence:-

"If he" (the Arbitrator) "answered that" (whether he was able to hear any such claim) "in the affirmative the further question will arise, in the context of the arbitration, whether any, and if so which, facts sought to be adduced in evidence are relevant to the claim made by the defendant as arising out of or in connection with the contract."

The quoted passage from my judgment does not support the submission. The further submission on behalf of Aqua Clear, as I understand it, is that I should infer that the Arbitrator concluded that he did have jurisdiction. I think I probably should infer that he came to this ultimate conclusion. But that simply begs the question. The Arbitrator was not relieved of the obligation of disclosing to the parties how he did so. In my view this was a sufficiently serious issue, indeed one may be forgiven for saying an issue of criticality, as to require reasons to be given.

Aqua Clear further submitted that the raising of the question of jurisdiction in the Points of Defence "does not mean that the Arbitrator had to deal specifically with that allegation". The submissions continued:-

"If the Arbitrator saw fit to ignore it in accordance with 'legal principle' then he was entitled to do so if he was satisfied that he was entitled to rely upon the judgment of Mr Justice Rolfe for that purpose. It is not incumbent upon an arbitrator to deal with each and every point raised by parties in arbitration proceedings and give reasons in respect of each and every point."

Reference is then made to Soulemezis and Tatmar.

Whilst the submission is true in certain circumstances, I do not consider it is applicable to various serious submissions which were raised in the present case. In particular it does not apply to the jurisdiction issues, which will necessitate precise findings of fact and reasoning to the necessary legal conclusions. This will apply in respect of all the claims, save the last one for variations for computer software, whereby the Arbitrator found Aqua Clear was entitled to succeed. Further the Arbitrator did not say that he relied on my judgment as conferring jurisdiction on him and, having regard to its terms, I do not see how he could have. But if he did rely on it, he should have said so. That may have disclosed error for the reasons to which I have referred.

The next problem to which consideration has to be given is that the two documents entitled "Tender Evaluator's Accreditation Training Course Accreditation Manual" and "Capital Project Procurement Manual" were not admitted into evidence. I have dealt with this at some length.

In the Amended Summons Sydney Water asserted that the Arbitrator had based the findings he made on material he had "set aside", being the material to which I have just referred. Reference is made to Chapters 6 and 7 of the Award. The Arbitrator dealt, in Chapter 6, with the Contractor Performance Appraisal Report by Mr Gregory Watson dated 30 April 1994 and, in paragraph 6.1 under the heading "Relevant Policy", he said:-

"Government policy (as outlined in the NSW Governments Capital Project Procurement Manual in the section Contractor Management Contractor Performance Reporting October 1993), and as adopted by the Water Board, requires the completion by an appropriate Water Board officer of the Contractor Performance Report (CPR) at the completion of any contract as a means of obtaining a measure of the contractor's performance under that contract.

The officer, in carrying out the performance review must ensure the report is objective and accurate to the extent that it can be relied upon by the agency to make accountable decisions related to registration, re-grading of the tenderers, or selection of a tenderer. (Page 4 Contractor Management Performance Reporting, October 1993)."

The Interim Award then continued that the policy required compliance with certain matters including that where a Contractor Performance Report about the performance of the contractor is unsatisfactory it will be reviewed, and the review must include an opportunity for the contractor to comment and must be in accordance with the procedure the Arbitrator then set forth. That procedure involves the convening of a meeting between the contractor, the person who prepared the report and the person who reviewed it; discussion with the contractor about the report; the opportunity being given to the contractor to comment on the report; the adjustment of the report at the discretion of the party issuing it; the minuting of matters raised at the conference; and if upon completion of those steps the contractor's performance is considered unsatisfactory:-

".. then the contractor must be given the option of seeking a review by senior agency management, who are both independent and removed from the project concerned."

The Arbitrator referred to various criteria listed in Section 3 "of the policy document" and he set out portions of Section 4 thereof.

He then carried out a consideration of the Contractor Performance Appraisal and commented upon that. At paragraph 6.4 he made his own comments, which were critical of both Aqua Clear and Sydney Water.

In Chapter 7 he turned to "Tender Evaluations" and came to the conclusions in paragraph 7.8, which I have quoted.

It was submitted on behalf of Sydney Water that the reference in Chapter 6 to the New South Wales Government's Capital Project Procurement Manual was a reference to a document, which was not only not in evidence before the Arbitrator, but which the Arbitrator had said expressly would be "set aside". In these circumstances the simple submission was made that in relation to Chapter 6, which has very real significance when one notes the findings of negligence made against Sydney Water at page 65, the Arbitrator relied on material which was not before him. In response to that Aqua Clear submitted that there is no factual basis for the assertion that the Arbitrator's comments were based on that document, which I reject. The Arbitrator set forth the procedures laid down by that document with great detail at pages 26 and 27 after making express reference to it and he then relied on the failure to comply with them. Aqua Clear's submissions continued that the Arbitrator's comments in paragraph 6.4 "reflect conclusions he had reached having regard to the evidence which had been placed before him". That may be so, but it does not answer the assertions made in relation to the use made of the document, which was expressly not in evidence, and the fact that considerations of those matters form the basis for the findings of negligence.

Nextly Aqua Clear relied upon the fact that the Arbitrator was determining the matter on the basis that s.22(2) of the Act applied. In terms I do not consider that section is appropriate in the present circumstances and even if it were thought to be relevant the difficulty is that the Arbitrator had said that he would not rely on that material. Accordingly, even if s.22(2) were applicable, I do not consider that the Arbitrator could then, without notice to the parties and the opportunity for them to address him being given, rely upon material, which he had agreed would not be before him.

Counsel for Aqua Clear conceded, initially, that if the Arbitrator had regard to the manual, and if there was no other evidence available from which he could have gleaned the information set forth in Chapter 6, that would constitute a manifest error of law on the face of the Award because the manual was not in evidence in circumstances where he had advised the parties in writing that it would not be in evidence before him. There was no other evidence before him. However the concession was withdrawn, although in my view it was properly

made initially and the Arbitrator has clearly had regard to material which was not before him.

In relation to breach of contract it was submitted by Aqua Clear that it is clear that in awarding damages the Arbitrator was dealing with paragraph 18 of the Points of Claim under the heading "Lost Opportunity to Win Further Work", and that this finding is reflected at page 73 under the heading "Claim Seven". The submission continued:-

"On this basis it can be seen that the submission that the Arbitrator depended on paragraph 10 of the Points of Claim is incorrect."

I disagree with this submission entirely. At page 63 of the Award the Arbitrator's finding picks up the words of paragraph 10, which is not pleaded as amounting to a breach of contract, and then, apparently because there was not an appreciation that paragraph 10 was not alleged to be a breach of contract, merges paragraph 10 with the allegations of damage set forth in paragraph 18. The submission made on behalf of Aqua Clear merely reinforces the view to which I have come that the Arbitrator must, in his reasons, identify the terms of the contract he finds to be proved and the breaches thereof. As matters presently stand the Arbitrator has found no breach of contract but, by inserting paragraph 10 into the breaches of contract, which the pleader did not do, he has come up with an award of damages. It has been submitted by Aqua Clear that as the amount of damages was only $1 I should, in the exercise of my discretion, eliminate that head of damage from the Award if I am otherwise of the view that the Arbitrator erred.

In relation to misleading conduct Sydney Water does not dispute that "documented policy procedures" were properly before the Arbitrator. I think in relation to this claim that the Arbitrator has failed to disclose the reasoning process to which I have referred.

Nextly the submissions of Aqua Clear deal with the finding of negligence. In my view the Interim Award suffers from the deficiencies in reasoning on this topic to which I have referred. It was submitted by Aqua Clear that the finding of a duty of care was open to the Arbitrator. That is not immediately obvious. None-the-less he has simply failed to state by what process of reasoning he came to that conclusion. Once again as the amount awarded was only $1 it was submitted that, in the exercise of discretion, the award should not be set aside, but that I should exclude the damage of $1.00. However, as I have sought to point out, the award of so low an amount indicates in itself a failure to appreciate the concept of a claim in negligence.

In relation to defamation Aqua Clear makes the bald assertion that the Arbitrator has rejected the defences raised in the Points of Claim, including those raised under the Defamation Act ss.13 and 22. It may be that that is what happened. However the obligation of the Arbitrator was to say why, particularly having regard to the structure of the Interim Award in this regard, that was done. Once again recourse is made to the small amount of the damages awarded as a matter to be taken into account in the exercise of discretion and it is suggested that this amount should be excluded from the Interim Award. On the other hand, of course, Sydney Water relies upon this as one of its defences.

The submissions on behalf of Aqua Clear continued that I should, in the exercise of the Court's discretion, not accede to the declarations and orders sought in the Amended Summons having regard to the history of the matter and to the fact that Aqua Clear has already expended $220,000 on the proceedings, which amount does not include its share of the Arbitrator's costs of approximately $38,000. The submissions conclude:-

"The matter should now be finalised and the Interim Award should be confirmed to bring these proceedings to a conclusion."

Reference is made to the decision of the Court of Appeal in Natoli v Walker (Court of Appeal - 26 May 1994 - unreported).

I appreciate the force of these submissions. The Interim Award, excluding interest, is for an amount in the order of $70,000. The proceedings have gone on for a very lengthy period. The parties have been before this Court and the Arbitrator on a number of occasions. If it were possible to bring the proceedings to a conclusion I would do so. However, I consider that the Interim Award is so bereft of reasoning on critical points and in terms I have sought to set out that it is not possible to confirm it. Nor is it possible to excise amounts awarded without setting aside portions of the Interim Award.

I am not satisfied, for the reasons I have given, that the Arbitrator was guilty of the actual misconduct alleged. If the failure to give reasons and to consider submissions is to be characterised as "misconduct" it seems to me it would be technical, rather than actual, misconduct. However, I have some doubt as to whether the failure to give reasons as required by s.29, or to deal with substantial and serious submissions, amounts to technical misconduct. It is a failure to consider properly the material in the sense of not exposing the reasoning process and, in the course of doing so, indicating to the parties the way in which substantial and serious submissions have been determined so that the parties and the Court can consider whether the Award is infected with relevant error, namely manifest error on its face.

If reasons are not given and such submissions are not addressed the question arises as to the type of error into which the Arbitrator has fallen. It has generally been suggested it is an error of law and the authorities to which I have referred support this. Additional authorities suggest this is the correct categorisation of the error: Warley Pty Limited v Adco Constructions Pty Limited [1992] BCL 300 and Chadwick Industries Pty Limited v Costain Australia Limited (Smart J - 15 February 1988 - unreported).

Mr Jacobs suggests in his work "Commercial Arbitration - Law and Practice" Volume 1B, paragraph 28.130, that a distinction must be drawn between a misconstruction of the legal effect of s.29, which in his view would "clearly" amount to an error of law, and the giving of insufficient reasons, which would not, in his view, amount to such an error as it would be the method "deliberately adopted" by the Arbitrator. I do not see why that could not be an error of law flowing from the Arbitrator's misunderstanding or wrong construction of s.29. On the other hand Mr Jacobs points to the power to remit under s.43, which may be the appropriate way to overcome such an error.

Giles J seems to have come to that view, notwithstanding what he said in R.P. Robson, in Sabemo Pty Limited v Malaysia Hotel (Aust) Pty Limited (4 June 1992 - unreported). His Honour said he preferred the view, contrary to what he had said previously, that the failure to give reasons should not be categorised as an error of law, there being no need to do so as s.43 allowed reasons to be sought from the Arbitrator, which his Honour considered "should be forthrightly recognised" as the remedy for such a failure. The policy underlying his Honour's remarks can hardly be doubted. As I understand it his Honour was saying in Sabemo that the proper approach to the error of law, at least usually, is to remit it pursuant to s.43, rather than exercise the power under s.38.

In Friend & Booker Pty Limited v Eurobodalla Shire Council (Court of Appeal - 24 November 1993 - unreported) it was held there was a manifest error of law in that the Arbitrator failed to find the facts necessary in law to support his conclusions. The Court of Appeal remitted the matter to him for reconsideration in the light of its opinion. This decision, and that in Sabemo, is consistent with the often stated view that a matter should only be removed from an arbitrator as a last resort.

The question would be a somewhat arid one were it not for the fact that if the error is one of law, as I believe it is and in any event I am bound by authority to hold that it is, it is the starting point to seek leave to appeal. The applicant must, of course, pass a number of other tests before leave will be granted, including satisfying the Court that it should grant leave to appeal, in the exercise of its discretion, rather than remit the matter to the Arbitrator to perform the task committed to him properly. It seems to me that it would be a very rare case, and I have great difficulty in envisaging one, where the latter course would not be taken. In the instant case, subject only to a consideration as to whether the Arbitrator should be removed and how I should exercise my discretion, I would propose that the Interim Award be remitted to the Arbitrator for him to provide reasons conformably with this judgment. I shall also have to consider the use by the Arbitrator of the material which was not before him.

I decline to remove the Arbitrator pursuant to s.42 essentially for the reasons I have given. I have been asked to remove him pursuant to s.44(c) on the grounds of incompetence and/or unsuitability. I am not satisfied that he has demonstrated either incompetence or unsuitability which, on the findings I have made, must flow from a failure to give reasons and deal with serious submissions. The latter failure is part and parcel of the failure to provide reasons and, as the Act makes express provision for remission to allow reasons to be given, that failure, of itself, does not warrant removal. Nor is there anything on the face of the Interim Award to establish incompetence and/or unsuitability, unless one has regard to the failure, notwithstanding that in the instant case that failure was quite extensive. However, as I have sought to explain, it would be strange if this should lead to removal when the express power to remit is provided by s.43.

Many of the issues posed for the Arbitrator's consideration are complex, but I cannot say, as matters stand, that he has demonstrated an inability to come to grips with them. Indeed he has expressed conclusions on the points. Where he has erred is in failing to demonstrate by his reasons how he came to his conclusions and whether, having regard to the jurisdictional questions, he was entitled to come to those conclusions.

Section 43 gives a discretion as to whether I should remit. I have set out the reasons Aqua Clear has advanced for its submission that in the exercise of my discretion I should not do so. I have re-read the judgment of Mahoney JA in Natoli v Walker and the dissent of Meagher JA. I have concluded that notwithstanding the relatively small amount in issue, particularly when compared to the costs involved, the proper exercise of discretion is to remit the matter. Sydney Water is labouring under the very real disability that it does not know why it is liable for approximately $72,000 out of approximately $77,000 awarded. It is entitled to know that. Also interest must be calculated on the amount due. Sydney Water is further entitled to know why its actions constituted misleading and deceptive conduct, negligence and defamation conformably with the issues raised before the Arbitrator and left for his determination. Finally the question of the imposition of the very heavy costs burden may well be influenced strongly by the amount to which Sydney Water is found to be ultimately liable. I say this because there seems to be no dispute that it is liable for the sum of approximately $5,000 in respect of software. An award for $77,000 may attract a very different costs' order than one for $5,000.

I have noted that because only "nominal damages" were awarded for various of the claims Aqua Clear was content, albeit I think on the basis that the Award was not remitted, to have those findings and amounts excised from the Interim Award. It may be that for the sake of economy in time and further submissions it is still of this view and I will give it the opportunity to consider the matter in the light of these reasons. If it remains of that view I will return the matter to the Arbitrator with a direction that he bring in an Award in favour of Sydney Water on those claims. However, I would only do that with the consent of the parties. I also think the remission should not cover the award of $4,950, in any event, as there has been no challenge to the Arbitrator's finding in that regard.

Finally, I must consider the effect on the negligence claim of the reliance by the Arbitrator of the material, which was not in evidence before him, namely the manual. It was common ground that it was not in evidence. However that fact does not appear on the face of the Interim Award. The first question is, therefore, whether one can find relevant error of law on the face of the award by reference to extraneous material. Varying approaches have been suggested. In my opinion the Court is entitled to have regard to material not contained in the award to decide whether there is relevant error. The present case offers a good example. A document is referred to by the Arbitrator and reliance is placed on it by him. Prima facie one would assume that the Arbitrator was referring to a document which was in evidence. It would be a nonsense, in my respectful opinion, to say that the Court could not have regard to the undisputed fact that the document was not in evidence. Other illustrations of the need to have regard to matters outside the award come readily to mind e.g. an absence of evidence or a finding made in respect of a matter not in issue. The purpose and policy for providing reasons was stated by Giles J in R.P. Robson. It would be defeated in many instances if regard could not be had to the true factual situation.

Reliance upon material not in evidence is an error of law. In my opinion it is so clear an error as to be manifest. Once it is known that the document was not in evidence the reliance on it, which appears on the face of the Interim Award demonstrates that it is a manifest error of law on the face of the Interim Award.

However, the amount involved is very small and the findings on negligence are to be referred back to the Arbitrator so that he can state reasons in relation to a number of other aspects. In these circumstances I decline, at this stage, in the exercise of my discretion, to grant leave to appeal on this point. The matter can be raised again, if need be, after the Arbitrator has furnished his further Interim Award.

I propose that the matter should be remitted to the Arbitrator pursuant to s.43 to enable him to bring in a further Interim Award giving reasons and dealing with serious and substantial submissions conformably with this judgment. The Arbitrator may consider that this will require further submissions and hearings before him, but the way in which he conducts the arbitration must remain a matter for him.

So far as the present proceedings before me are concerned Sydney Water has been substantially successful and, in my view, Aqua Clear should pay Sydney Water's costs of these proceedings.

Subject to any request that I should direct the Arbitrator to bring in an Interim Award in favour of Sydney Water on the claims arising from paragraph 10 of the Points of Claim, negligence and defamation the orders I propose are:-

(a) The final Interim Award of the Arbitrator issued in August 1996 be remitted to him pursuant to s.43 of the Act so that he may provide reasons for such conclusions as he ultimately reaches; and

(b) The defendant pay the plaintiff's costs of proceedings 55047 of 1996.

I stand the matter over to 9.30 am on Thursday, 19 December 1996 for the making of final orders.