ARBITRATION – CONDUCT OF ARBITRAL PROCEEDINGS – PROCEDURE AND
EVIDENCE – GENERALLY – where the first respondent
is the registered
owner in fee simple of parcels of cane farming land leased from the Crown
Source
Original judgment source is linked above.
Catchwords
ARBITRATION – CONDUCT OF ARBITRAL PROCEEDINGS – PROCEDURE ANDEVIDENCE – GENERALLY – where the first respondentis the registeredowner in fee simple of parcels of cane farming land leased from the Crown– where, pursuant to a writtenlease, the first respondent leased the landto the applicant – where a dispute arose in which the first respondentallegedfinancial losses suffered by reason of the applicant having breachedcovenants in the lease – where the first respondent referredthe disputeto arbitration – where during the conduct of the arbitration, an issuearose as to whether some of the claimedfinancial losses were losses suffered bythe first respondent or his related entity, the second respondent – wherethe firstrespondent applied to join the second respondent as a party to thearbitration – where the arbitrator allowed the joinder –where theapplicant has applied under s 16(9) of the Commercial Arbitration Act 2013
(Qld) for the Court to decide whether the arbitrator has jurisdiction to
hear and determine the second respondent’s claim –
where a hearing
de novo is the standard of review to be applied on the hearing of an
application made under s 16(9) – where the critical question is whether
the second respondent is a party to the lease or to be regarded as a party in
the
sense that it is claiming through or under the first respondent for loss
suffered by reason of breaches of the lease – where
the Court should not
travel into the merits of the case beyond determining whether the argument is
sufficiently weak not to be sustainable
– whether the arbitrator has
jurisdiction to hear and determine the second respondent’s claims –
whether curial
intervention is necessary to prevent the arbitration from
foundering by reason of the wrongful inclusion of the second respondent
Commercial Arbitration Act 2013 (Qld), s 1AC, s 7(1), s 16(9), s
34(2)(a)(iii)
CBI Constructors Pty Ltd v Chevron Australia Pty Ltd
(2024) 419 ALR 126, cited
Coppée Lavalin SA/NV v Ken-Ren
Chemicals and Fertilizers Ltd (in liquidation) [1995] AC 38 at 53,
cited
CPB Contractors Pty Ltd v DEAL S.R.L [2021] NSWSC 820,
cited
Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170
(2017) 257 FCR 442,
cited
Lin Tiger Plastering Pty Ltd v Platinum Construction (Vic) Pty
Ltd [2018] VSC 221, cited
Rinehart v Hancock Prospecting Pty Ltd
[2019] HCA 13
(2019) 267 CLR 514, cited
Tanning Research Laboratories Inc v
O’Brien (1990) 169 CLR 332, cited
United Mexican States v Cargill, Inc (2012) 107 OR (3d) 528,
cited
Judgment (115 paragraphs)
[1]
ARBITRATION - CONDUCT OF ARBITRAL PROCEEDINGS - PROCEDURE AND EVIDENCE - GENERALLY - where the first respondent is the registered owner in fee simple of parcels of cane farming land leased from the Crown - where, pursuant to a written lease, the first respondent leased the land to the applicant - where a dispute arose in which the first respondent alleged financial losses suffered by reason of the applicant having breached covenants in the lease - where the first respondent referred the dispute to arbitration - where during the conduct of the arbitration, an issue arose as to whether some of the claimed financial losses were losses suffered by the first respondent or his related entity, the second respondent - where the first respondent applied to join the second respondent as a party to the arbitration - where the arbitrator allowed the joinder - where the applicant has applied under s 16(9) of the Commercial Arbitration Act 2013 (Qld) for the Court to decide whether the arbitrator has jurisdiction to hear and determine the second respondent's claim - where a hearing de novo is the standard of review to be applied on the hearing of an application made under s 16(9) - where the critical question is whether the second respondent is a party to the lease or to be regarded as a party in the sense that it is claiming through or under the first respondent for loss suffered by reason of breaches of the lease - where the Court should not travel into the merits of the case beyond determining whether the argument is sufficiently weak not to be sustainable - whether the arbitrator has jurisdiction to hear and determine the second respondent's claims - whether curial intervention is necessary to prevent the arbitration from foundering by reason of the wrongful inclusion of the second respondent
An application about a preliminary question in an arbitration
[12]
[1] Since 25 February 2015, the first respondent ("Mr Pratt") has been the registered owner in fee simple of parcels of cane farming land leased from the Crown, known as Farm 1772 and Farm 1776 and described as Lot 12 on SP 204660 and part of Lot 12 on SP 217125 ("the Land"). Pursuant to a written lease ("the 2019 Lease") executed by Mr Pratt, as "the Lessor", on 21 August 2019 and by the applicant ("TGF"), as "the Lessee", on 23 July 2019, Mr Pratt leased the Land to TGF. The 2019 Lease contained an arbitration clause. A dispute arose in which Mr Pratt alleged financial losses suffered by reason of TGF having breached covenants in the 2019 Lease. In or about May 2024, Mr Pratt referred that dispute to arbitration. An arbitrator was appointed. The conduct of the arbitration is subject to the Commercial Arbitration Act 2013 (Qld) ("the Act"). During the conduct of the arbitration, an issue arose as to whether some of the claimed financial losses were losses suffered by Mr Pratt or his related entity, the second respondent ("Janella"), which is the trustee of the William Pratt Family Trust. Mr Pratt is a director of Janella and a beneficiary of that trust. Mr Pratt applied to join Janella as a party to the arbitration. The arbitrator allowed the joinder.
[2] TGF has applied under s 16(9) of the Act for the Court to decide whether the arbitrator has jurisdiction to hear and determine Janella's claim.
[13]
[3] Mr Pratt, not Janella, is the party described by the 2019 Lease as "the Lessor". Mr Pratt, not Janella, is the registered owner of the Land. Janella is not mentioned in the 2019 Lease.
[4] The arbitration clause is contained in cl 18 of the 2019 Lease.
[5] Clause 18 provides as follows:
[14]
18.1 If any dispute or difference arises as to the construction or application of this Lease or as to the rights or liabilities of either party in relation to any matter or thing herein specified or otherwise arising under the terms of this Lease then:
[15]
18.1.1 The matter will be referred to a single arbitrator if the parties can agree upon such appointment.
[16]
18.1.2 If not, to two (2) arbitrators, one to be appointed by the Lessor and the other by the Lessee and if necessary to an umpire to be appointed by the arbitrators.
[17]
18.1.3 Such arbitrator or arbitrators or umpire will determine the matter in dispute and his or their decision will be final.
[18]
18.1.4 Such arbitration is deemed a submission to arbitration within the meaning of [the Act].
[19]
18.2 If either party fails to appoint an arbitrator within seven (7) days after receiving notice in writing of the appointment by the other party, then:
[20]
18.2.1 The arbitrator appointed by the party nominating him will proceed to hear and determine the matter in dispute as if he were a sole arbitrator appointed by both parties and his decision shall be final and binding.
[21]
18.2.2 The provisions of this clause will not apply to the exercise by the Lessor of any right or remedy conferred upon him under this Lease or otherwise by law upon the occurrence of any default on the part of the Lessee to perform and observe any of the Lease terms."
[22]
[6] There is no dispute that cl 18 is an arbitration clause.
[7] The other material clauses of the 2019 Lease may be outlined as follows:
[23]
(a) Clause 7 deals with the right to terminate the 2019 Lease. The clause identifies defaults by the Lessee, such as unpaid rent, entering into liquidation or abandoning the Land. In the event a default remained unremedied within a reasonable time after service of a notice to remedy, the Lessor was entitled to terminate the 2019 Lease. In the event of such termination, cl 7.2 empowered the Lessor to lawfully enter the Land and to use the Land for its own purpose. By cl 7.3, the Lessee appointed the Lessor as its true and lawful attorney for the purpose of securing a surrender of the 2019 Lease.
(b) Clause 12 acknowledged that the Lessor was the owner of the Land which was leased from the Crown.
(c) Clause 14 conferred an option to renew which, if exercised by the Lessee, obliged the Lessor to execute a further lease in favour of the Lessee.
(d) Clause 16 dealt with GST. It was agreed that the rent and all amounts agreed to be paid by the Lessee to the Lessor were exclusive of GST. In respect of any liability of the Lessor for GST under the 2019 Lease and the renewal or extension of the 2019 Lease, including for rent, rates or any consideration for any taxable supply, the Lessee covenanted to pay to the Lessor, at the same time as any payment was made involving the Lessor in GST liability, the additional amount of GST together with the payment to which it related.
(e) By cl 19, the Lessee appointed the Lessor to be the true and lawful attorney of the Lessee upon the happening of any event entitling the Lessor to re-enter the Land or to otherwise determine the 2019 Lease.
(f) Clause 21 dealt with notices under the 2019 Lease. Notices were required to be addressed "as shown in Annexure 'A'". Annexure 'A' identified "the Lessor" as Mr Pratt and "the Lessee" as TGF.
(g) By cl 22.1, the terms "Lessor" and "Lessee" included the executors, administrators and lawful assigns or other lawful successors of such party.
(h) By cl 2.2, the Lessee could not assign its interests in the 2019 Lease or otherwise part with the possession of the Land without the written consent of the Lessor which consent was not to be unreasonably withheld.
(i) By cl 2.15, the Lessee indemnified the Lessor against all damages and expenses incurred by the Lessor in consequence of any breach of the terms or provisions of the 2019 Lease by the Lessee.
[24]
[8] In consideration of the Lessor entering into the 2019 Lease, the directors of TGF, Andrew Auld and Christine Auld, provided personal guarantees to the Lessor that they would be jointly and severally liable to the Lessor for the due payment of all monies to be paid by the Lessee under the 2019 Lease and for due performance and observance by the Lessee of all covenants, terms and conditions of the 2019 Lease on the part of the Lessee to be performed and observed.
[9] On 7 May 2024, Mr Pratt sent a letter to TGF ("the 7 May letter").
[10] The 7 May letter was styled as a notice under cls 18.1 and 21.1 of the 2019 Lease.
[11] The following matters may be noted:
[25]
(a) The 7 May letter began with these statements:
[26]
"I refer to the lease between myself, William Robert Pratt (Lessor) and Tailing Gully Farming Pty Ltd (ACN 092 654 898) as trustee for the Auld Family Trust (TGF and Lessee) commencing 01 January 2019 and counter executed on 21 August 2019 (the Lease).
[27]
Pursuant to clause 18.1 of the Lease, I allege a dispute has arisen as to the construction or application of the Lease and as to the rights and liabilities arising under the terms of the Lease (the Dispute)."
[28]
(b) The 7 May letter described TGF as being in breach of a number of provisions of the lease which included breaches of covenants, terms or conditions relating to payments, the proper use of the Land, maintaining a crop equivalent in area and tonnage in accordance with best local practice, failing to leave the required crop equivalent in area and tonnage, growing and ploughing in green manure crops to maintain fertility of an area of the Land, the removal of irrigation equipment that was to remain on the Land and become the property of the Lessor, the disconnection of electricity to pumps for a dam and water scheme, and the misapplication of treatments and poisons.
(c) After having described the alleged breaches of the 2019 Lease, the 7 May letter made this statement:
[29]
"As a result of the above breaches, I have suffered significant loss and damage including but not limited to:
[30]
(a) No-payment of outstanding invoices to reimburse for rates, outgoings, dam water usage and supply of irrigation water;
(b) Rectification of fields including but not limited to:
(i) Fertiliser costs;
(ii) Mill mud costs;
(iii) Chemical Spray costs;
(iv) Labour costs for spraying and maintenance;
(v) Dozer levelling costs; and
(vi) Laser levelling costs;
(c) Costs of replacing irrigation equipment;
(d) Costs of reconnection to the Kelsey Creek Water Scheme;
(e) Costs of reconnection of energy supply to dam pumps;
(f) Planting Costs to reinstate crops;
(g) Interest and financing costs to incur the above expenses on TGF's behalf; and
(h) Reduced crop yields."
(d) Pursuant to cls 18.1.1 and 18.1.2, the 7 May letter referred "the Dispute" to arbitration.
[31]
[12] The arbitrator was then appointed.
[13] Over the next few months, pursuant to directions made by the arbitrator:
[32]
(a) on 3 September 2024, Mr Pratt delivered his statement of facts, issues and contentions ("Mr Pratt's initial pleading");
(b) on 26 September 2024, TGF delivered its statement of facts, issues and contentions ("TGF's pleading");
(c) on 8 October 2024, Mr Pratt delivered his reply ("Mr Pratt's reply pleading").
[33]
[14] Paragraph 28 of Mr Pratt's initial pleading alleged, in terms, that Mr Pratt had suffered loss and damage by virtue of the breaches of the 2019 Lease. Broadly described, the losses were unpaid invoices issued to TGF under the 2019 Lease representing unpaid rates, unpaid water charges and water scheme supply charges, rectification costs representing the cost of works required to repair and repatriate the land, interest on an overdraft credit facility pursuant to which the work was performed and the cost to Mr Pratt of the lost opportunity to generate crop yields that would have been recovered at the end of the 2023 season for Farm 1772 and Farm 1776 but for TGF's breaches of the lease. The sum of those claims totalled approximately $611,000.
[15] Paragraph 60 of TGF's pleading materially alleged, under a heading "General comments":
[34]
"To the extent the losses are suffered by [Janella], it is not a party to the 2019 lease or this proceeding. No facts, matters or circumstances are pleaded by which [Mr Pratt] is entitled to recover costs incurred by another entity. The costs are not recoverable by [Mr Pratt]."
[35]
[16] Paragraph 59 of Mr Pratt's reply pleading denied paragraph 60 of TGF's pleading as "untrue" and further alleged "there is a lease between [Mr Pratt] and [Janella], dated 1 June 2015".
[17] On 12 November 2024, Mr Pratt's lawyers sent an email to TGF's lawyers ("the 12 November letter") which raised the prospect of Janella being joined to the arbitration. The 12 November letter stated that the joinder could occur by agreement and asserted that "[t]he issue of the relevant party which has suffered damage is alive". Reference was made to paragraph 60 of TGF's pleading and to paragraph 59 of Mr Pratt's reply pleading.
[18] On 13 November 2024, TGF's lawyers sent a letter in response to the 12 November letter. That letter materially stated:
[36]
Most, if not all, of the alleged losses in respect of which your client seeks an arbitral award are alleged losses suffered by [Janella], not Mr Pratt;
[Janella] is neither a party to the arbitration or the arbitral agreement under which the arbitration has been convened.
[37]
On our reading of clause 18 of the [2019 Lease], the arbitrator does not have the jurisdiction to determine the rights (if any) of [Janella] to compensation, the arbitrator's power only being in respect of a dispute or difference as to the rights or liabilities of the parties to the arbitral agreement.
[38]
Further, we note that rectification of the [2019 Lease] is also sought which is a remedy in our view also not falling within the arbitrator's powers.
[39]
If the arbitrator does not have the jurisdiction to make an arbitral award in favour of [Janella], or grant rectification in the manner sought in your client's SFIC, then it seems to us that this entire arbitration is otiose. It has resulted (and will continue to result) in our client incurring substantial costs, all of which are, if the above is correct, effectively wasted.
[40]
Does not consent to joining [Janella] to the arbitration;
Requires the issue of the arbitrator's jurisdiction to be determined as a preliminary issue;
Does not agree to incur any further costs responding to your clients' material until that preliminary issue is determined and will seek to have the directions requiring same vacated."
[41]
[19] On 13 November 2024, the arbitrator made directions. The directions required Mr Pratt to provide the arbitrator and TGF with an application raising any jurisdiction issue together with supporting material by 4.00 pm on 20 November 2024. There were further directions for the provision of material by TGF and by the parties of their written outline of submissions. The application was to be heard on 28 November 2024.
[20] On 22 November 2024, Mr Pratt provided his application raising the jurisdiction issue and his signed statement. The application sought to join Janella to the arbitration "as a party acting through or under [Mr Pratt]".[1] The application sought a preliminary ruling that it was within jurisdiction for the arbitrator to award loss and damage "to [Mr Pratt]" as "silent agent or trustee of Janella (or in circumstances where Janella was the undisclosed principal of [Mr Pratt])", as "assignee of any chose in action to recover such loss and damage by Janella to [Mr Pratt] ... or 'otherwise'".
[21] The material parts of Mr Pratt's statement may be set out as follows:
[42]
(a) On 25 February 2015, he purchased the Land from his parents and, at that point, Janella had "immediately" taken control of all the farming operations on the Crystalbrook aggregation with the exception of Farm 1772 and Farm 1776 which were still then under a sublease to Andrew Auld. Mr Pratt entered a lease between himself and Janella on 4 June 2015 "to formalise the arrangement of Janella (as Trustee) operating the business on the land (notwithstanding that it had already been doing so for some months)". That lease ("the 2015 Lease") was for the period 1 June 2015 to 31 May 2020. When the 2015 Lease expired on 31 May 2020, there was no formal extension documented but Janella "stayed on as tenant and continues to operate the business and account to me for rent". The 2015 Lease "spanned the periods between the sublease [to Andrew Auld] ending and the lease to TGF beginning".
(b) The 2019 Lease was one entered "by me and ... TGF".[2] The leased area consisted of "Trickle Paddock, Tailing Gully and a water allocation as previously leased in the sublease. This was while the whole of the Crystalbrook aggregation (including Farm 1772 and 1776) were leased to Janella". Mr Pratt described Janella as "the invoicing entity for the duration of the [2019 Lease]". Once the 2019 Lease was in place Janella "started invoicing TGF (in place of Andrew)".
(c) When the 2019 Lease was entered, Mr Pratt "did not consider changing the entity from my personal capacity to that of Janella which held the lease from me to Janella for that period". He stated that "[e]verybody in the family knew that I owned the [Land] but conducted my business through Janella (as Trustee)". He then stated that despite "not entering into either lease with Janella (as Trustee) it was common knowledge that Janella was the business enterprise I used to conduct my farming business".
(d) Janella always received the cane income paid each year and the expenses of the farming operations were met by Janella as trustee. Janella had borne all the expenses incurred in rectifying the Land after it had been abandoned by TGF. Janella owns all the assets necessary to conduct the cane farm business.
(e) From Mr Pratt's point of view, he owned the Land and on accounting and legal advice, had operated the cane farming business on the Land through Janella, including leasing the whole of the Land (including the parts leased to TGF) to Janella as trustee;
[43]
[22] On 28 November 2024, after the provision of written submissions, the application was heard by the arbitrator. At the 28 November hearing, the arbitrator made a direction that, by 6 December 2024, Mr Pratt provide the arbitrator and TGF with "a document in the form of a pleading, setting out the basis by which it is alleged that [Janella] has a claim against TGF or can otherwise claim through or under [Mr Pratt], such that it is a party as that term is defined in the [Act]". Further directions were made for the provision of further submissions.
[23] On 6 December 2024, Mr Pratt and Janella provided an amended statement of facts, issues and contentions ("the December pleading").
[24] The December pleading described "[t]he claims of [Mr Pratt] and [Janella] in its capacity as Trustee for the William Pratt Family Trust in the Arbitration" and the facts on which those claims relied.
[25] The material parts of the December pleading may be set out as follows:
[44]
(a) Under the heading "Agency/Estoppel", the following paragraphs appear:
[45]
"39. As and from about 2003, the parties knew that Janella operated all cane growing businesses upon the lands that were owned by [Mr Pratt] and that [Mr Pratt] did not (personally) operate any businesses himself.
[46]
Further, at all times since [Mr Pratt] leased Farms 1772 and 1776 to Andrew and Christine pursuant to the 2013 Auld Lease, and through the duration of the [2019 Lease], all invoices issued to:
Andrew and Christine pursuant to the 2013 Auld Lease; and
[TGF] pursuant to the 2013 Tailing Lease;
[47]
issued by Janella as trustee of the Trust to these parties (and never [Mr Pratt] personally); and
[48]
paid by these parties to Janella as trustee of the Trust.
[49]
Further, at no time did [Mr Pratt] provide any direction or instruction to Andrew and Christine (under the 2013 Auld Lease) or [TGF] (under the [2019 Lease] that rental and other payments due under these leases were to be paid on his direction to Janella rather than [Mr Pratt] and these parties (being [Mr Pratt] and Christine and later [TGF]) always made such payments on this basis without being expressly required or directed to do so by [Mr Pratt].
In the circumstances ...
[Mr Pratt] had actual and ostensible authority to act as agent on behalf of Janella as Trustee;
[Mr Pratt] entered into the [2019 Lease] as agent for Janella as Trustee of the Trust and not in his own right;
Janella as Trustee and [TGF] subsequently ratified [Mr Pratt's] entry into the [2019 Lease] as agent for Janella by way of the conduct described at paragraphs 40 to 41 above;
as such, Janella was [Mr Pratt's] principal in respect of the [2019 Lease] such that Janella is the lessor under this lease and is entitled to enforce all rights and obligations pursuant to the Lease as against [TGF].
[50]
The relationship of agency between [Mr Pratt] (as agent) and Janella (as principal) arose by implication in the circumstances described above at paragraphs 39 to 42. The agency relationship also arose by virtue of Janella's ratification of [Mr Pratt's] entry into the [2019 Lease] (as agent on behalf of Janella) by issuing invoices to [TGF] under that lease and receiving payment and not asserting any entitlement to possession of the land the subject of the lease for the duration of the lease.
[51]
Further or alternatively, in the circumstances described above at paragraphs 39 to 42 the parties adopted an assumption as to the terms of the legal relationship between Janella and [TGF] in respect of the [2019 Lease] in that the parties adopted an assumption that Janella was in fact the lessor under the [2019 Lease] ("the Assumption") and:
the parties have conducted their relationship through the duration of the [2019 Lease] on the basis of that mutual Assumption;
in the circumstances described above at paragraphs 39 to 42 each of the parties knew or intended that the other would act on the basis of the Assumption;
departure from the Assumption would occasion a detriment to Janella being its inability to recover the loss and damage described below herein.
Further alternatively, by way of the matters described above at paragraphs 39 to 42:
[TGF] represented to, or induced an assumption on the part of [Mr Pratt] and Janella that there was a legal relationship between [TGF] and Janella in respect of the [2019 Lease] and this would be binding;
Janella acted to its detriment on that representation or assumption;
to permit [TGF] to depart from that representation or assumption would be unconscionable; and
in the premises [TGF] is estopped from denying that it account to Janella in respect of its breach(es) of the [2019 Lease]."
[52]
(b) The prayer for relief was in the following terms:
[53]
damages for breach of contract in such sum as determined by the Arbitrator;
further or alternatively, clause 8.1 of the [2019 Lease] is to be rectified to require [TGF] to leave upon the land at the expiration of the lease crops equivalent in area and tonnage as those provided to it at the commencement ... or alternatively:
as was provided to Andrew and [Christine] (by [TGF] at the commencement of the 2013 Auld Lease; or
as was provided to [TGF] (by Andrew and Christine) at the commencement of the [2019 Lease]; and
damages for breach of contract in failing to do so;
further or alternatively, a declaration that [TGF] is estopped from denying liability to Janella (as landlord) pursuant to the [2019 Lease] and accounting to it in respect of all obligations under that Lease including for loss and damage arising to Janella by virtue of [TGF's] breaches of the [2019 Lease];
further or alternatively, equitable compensation in a sum to be determined by the court representing the sum incurred, and losses sustained, by Janella consequent upon [TGF's] breach of the [2019 Lease];
Interest;
Costs;
Such other order as the Arbitrator deems fit."
[54]
[26] On 24 December 2024, the arbitrator made his decision and joined Janella as a party to the arbitration. He reasoned as follows:
[55]
"Although Janella is not part of the arbitration agreement as it was not a party to the [2019 Lease], it is in my view a 'party' in the Arbitration as that term is broadly interpreted in the [Act]. It is not necessary for me to determine the exact legal relationship that existed. Rather it is sufficient for me to be satisfied that Janella has a claim through or under [Mr Pratt]. However that claim may be phrased in legal terms, the fact that TGF made all payments to Janella and [Mr Pratt] accepted those payments as being a fulfillment of its obligations under the [2019 Lease] in my view gives Janella sufficient standing to be a party to the Arbitration as it has a claim by or through [Mr Pratt].
[56]
The inclusion of Janella as a party in the Arbitration is necessary because of the subject matter in controversy, rather than the formal nature of the claim or the precise legal character of the entity involved."
[57]
[27] It is uncontroversial that in the arbitration Mr Pratt seeks an award which is based upon claimed breaches by TGF of the 2019 Lease. It is also uncontroversial that the overwhelming majority of losses claimed to have been suffered by Mr Pratt in the arbitration are in fact losses suffered by Janella. Only a small amount of the losses claimed in the arbitration, approximately some $6,000, is loss allegedly suffered by Mr Pratt. That analysis as to which entity has suffered loss is consistent with the taxation records of Mr Pratt, Janella and the Trust of which Janella is the trustee.
[58]
[28] The paramount object of the Act is to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense.[3] The Act aims to achieve that paramount object by enabling parties to agree about how their commercial disputes are to be resolved.[4] The Act must be interpreted, and the functions of an arbitral tribunal must be exercised, so that (as far as practicable) the paramount object of the Act is achieved.[5]
[29] The source of the arbitral tribunal's jurisdiction to resolve a dispute, and its mandate, competence or authority to act, is the arbitration agreement.[6] By s 7(1), an "arbitration agreement" is defined as "an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not". One aspect of facilitating the fair and final resolution of commercial disputes by an impartial arbitral tribunal without unnecessary delay or expense is the principle of kompetenz-kompetenz which is to the effect that arbitrators may rule on the question of whether they have jurisdiction, including any objection with respect to the existence or validity of the arbitration agreement.[7] That principle is reflected in s 16 of the Act. Section 16 appears in Part 4 of the Act which is headed "Jurisdiction of arbitral tribunal". Section 16 materially provides as follows:
[59]
"Competence of arbitral tribunal to rule on its jurisdiction (cf Model Law Art 16)
[60]
(1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement.
[61]
(4) A plea that the arbitral tribunal does not have jurisdiction must be raised not later than the submission of the statement of defence.
[62]
(6) A plea that the arbitral tribunal is exceeding the scope of its authority must be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
[63]
(8) The arbitral tribunal may rule on a plea referred to in subsection (4) or (6) either as a preliminary question or in an award on the merits.
[64]
(9) If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within 30 days after having received notice of that ruling, the Court to decide the matter."
[65]
[30] Section 34 appears in Part 7 of the Act which is headed "Recourse against award". Section 34 is concerned with applications to set aside an award. Section 34(2)(a)(iii) materially provides that an arbitral award may be set aside by the Court only if the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration.
[31] In CBI Constructors Pty Ltd v Chevron Australia Pty Ltd,[8] the High Court considered an arbitration agreement which provided, similarly to cl 18 of the 2019 Lease, that any dispute would be "exclusively and finally settled" by arbitration and any award would be "final and binding". The joint judgment considered the relationship between provisions equivalent to ss 16 and 34(2)(a)(iii) of the Act and relevantly said:[9]
[66]
"Sections 16 and 34(2)(a)(iii) are directed to the same question - whether an arbitral tribunal has exceeded its authority. Section 16 addresses it as a preliminary question and recognises that an arbitral tribunal may continue the proceedings and make an award while that preliminary question is before the courts. Section 34(2)(a)(iii) addresses the question after a binding award (whether it be interim or final) has been made. The fact that, in the face of an objection to the jurisdiction of the arbitral tribunal, the tribunal continues the arbitral proceedings under s 16 or determines the substantive issues as part of a final award subject to a set aside application under s 34(2)(a)(iii) cannot alter the fundamental proposition that an arbitral tribunal cannot expand its own jurisdiction. The order in which the challenge to the jurisdiction of an arbitral tribunal is considered and determined by the tribunal - whether as a preliminary question or as part of a substantive hearing which considers the substance of the issue as part of an award - cannot be used by the tribunal to expand its own jurisdiction."
"Articles 16 and 34 of the Model Law strike an appropriate balance between ensuring the integrity of the arbitral process and the policy of 'minimal curial intervention', which is commonly accepted in international practice and underlies the Model Law. Courts are circumspect in their approach to determining whether an error alleged under Art 34(2)(a)(iii) falls within the scope of that provision. The question is whether an arbitral tribunal has exceeded its jurisdiction or, put another way, has travelled beyond the parties' submission to arbitration. That question is narrow. And when an issue of jurisdiction is identified, courts 'carefully limit the issue they address to ensure that they do not, advertently or inadvertently, stray into the merits of the question that was decided by the tribunal'. Curial intervention is, however, sometimes necessary."
[69]
[33] The joint judgment[11] noted that in a domestic commercial arbitration the principle of party autonomy is foundational.[12] The jurisdiction of the arbitral tribunal is based on the parties' agreement and, subject to jurisdiction conferred by statute, "depends on the content and extent of the parties' voluntary consent and agreement to submit their commercial dispute to arbitration".[13] In the present case, there is no issue that cl 18 constitutes a valid and binding arbitration agreement. The issue as to jurisdiction is premised on the basis that the arbitration agreement is valid, and the arbitrator has been validly appointed. The issue is whether Janella is to be regarded as "a party to an arbitration agreement" within the meaning of that expression as it appears in the Act.
[34] By s 2, a "party" means "a party to an arbitration agreement" and includes "any person claiming through or under a party to the arbitration agreement".
[35] A leading authority as to the meaning of "through or under" as it appears in the definition of a "party" is Tanning Research Laboratories Inc v O'Brien.[14] There a company to an arbitration agreement had been placed into liquidation. The liquidator rejected a proof of debt by the appellant. The rejection of the proof of debt was based on a ground of defence available to the company. The appellant commenced proceedings seeking to review the liquidator's decision and the liquidator applied to stay those proceedings under the relevant provision in the applicable arbitration legislation. The primary issue concerned whether the liquidator might be regarded as a party to the arbitration agreement on the basis that the liquidator was a person claiming through or under a party to the arbitration agreement, being the company.
"... a person who claims through or under a party may be either a person seeking to enforce or a person seeking to resist the enforcement of an alleged contractual right. The subject of the claim may be either a cause of action or a ground of defence. Next, the prepositions 'through' and 'under' convey the notion of a derivative cause of action or ground of defence derived from the party. In other words, an essential element of the cause of action or defence must be or must have been vested in or exercisable by the party before the person claiming through or under the party can rely on the cause of action or ground of defence. A liquidator may be a person claiming through or under a company because the causes of action or grounds of defence on which he relies are vested in or exercisable by the company; a trustee in bankruptcy may be such a person because the causes of action or grounds of defence on which he relies were vested in or exercisable by the bankrupt.
[71]
A liquidator who defends his rejection of a proof of debt on the ground that, under the general law, the liability to which the proof relates is not enforceable against the company takes his stand on a ground which is available to the company. A liquidator who resists a claim made by a creditor against the assets available for distribution on the ground that there is no liability under the general law thus stands in the same position vis-à-vis the creditor as does the company. If the creditor and the company are bound by an international arbitration agreement applicable to the claim, there is no reason why the claim should not be determined as between the creditor and the liquidator in the same way as it would have been determined had no winding up been commenced ... But it is otherwise if the liquidator supports his rejection of the proof of debt in reliance on a ground which allows him, and him alone, to go behind the judgment, account stated, covenant or estoppel on which the company's liability is founded. The entitlement of a liquidator to go behind a judgment, account stated, covenant or estoppel is unaffected, either substantially or procedurally, by the existence of an international arbitration agreement binding on the company. To stay proceedings which involve only matters outside the scope of an international arbitration agreement would be to frustrate the provisions for winding up. Thus the application of s. 7(2) to proceedings for the reversal of a liquidator's rejection of a proof of debt must depend on the ground or grounds on which the liquidator seeks to support his rejection of the proof of debt."
"To ascertain whether s. 7(2) operates in respect of proceedings pending in a court it is necessary to first identify the subject matter of the controversy which falls for determination in those proceedings. Only when that has been done is it possible to identify whether the proceedings 'involve the determination of a matter ... capable of settlement by arbitration' ... That process of identification is also necessary to ascertain whether, if a party to the proceedings is not a party to the arbitration agreement, he or she is a person 'claiming through or under a party'."
[74]
[38] More recently in Rinehart v Hancock Prospecting Pty Ltd,[17] the High Court considered whether third parties who were assignees but who were not parties to an agreement containing an arbitration clause could seek to stay court proceedings because they were claiming "through or under" the arbitration agreement. In that litigation, the claimants alleged that the third-party assignees had knowingly received an assignment of mining tenements in breach of equitable and other obligations owed to the claimants by the assignors. It was contended that the third-party assignees were constructive trustees of the tenements for the claimants. The third-party assignees contended that the assignors received the mining tenements without any breach of trust and sought to stay the proceedings under s 8(1) of the Commercial Arbitration Act 2010 (NSW), pending an arbitration between the claimants and the assignors under deeds entered into between them in which the third parties were not named. The joint judgment relevantly said:[18]
[75]
"The third party companies admit that they took the tenements as assignees ... The controversy is as to whether [the assignors] were beneficially entitled to the mining tenements and so free to assign the mining tenements to the third party companies without breach of trust. The first and potentially determinative issue is, therefore, whether [the assignors] were beneficially entitled to the mining tenements. That is a discrete matter of controversy capable of settlement by arbitration under the arbitration agreement and, as between the [claimant] and [the assignors], has been referred to arbitration in accordance with the [arbitration agreement]."
"... the assignee takes its stand upon a ground which is available to the assignor and stands in the same position vis-à-vis the claimant as the assignor. Accordingly, since the assignor and the claimant are bound by an arbitration agreement applicable to the claim of breach of trust, there is no good reason why this claim should not be determined as between the claimant and the assignee in the same way as it will be determined between the claimant and the assignor. To exclude from the scope of the arbitration agreement binding on the assignor matters between the other party to that agreement and the assignee would give the arbitration agreement an uncertain operation."
[78]
[40] There was no issue that a hearing de novo was the standard of review to be applied on the hearing of an application made under s 16(9) of the Act.[20] The same standard applies to an application under s 34(2)(a)(iii) of the Act.[21]
[41] In CBI Constructors,[22] the joint judgment referred to the decision of the Court of Appeal for Ontario in United Mexican States v Cargill, Inc.[23] In that case, in the context of considering the standard of review of an award, Feldman JA made the following observations:[24]
[79]
"It is important, however, to remember that the fact that the standard of review on jurisdictional questions is correctness does not give the courts a broad scope for intervention in the decisions of international arbitral tribunals. To the contrary, courts are expected to intervene only in rare circumstances where there is a true question of jurisdiction.
[80]
In the domestic law context, courts are warned to ensure that they take a narrow view of what constitutes a question of jurisdiction and to resist broadening the scope of the issue to effectively decide the merits of the case. This point was emphasized by Lebel J. in Dunsmuir, the leading case on standard of review in the administrative law context, in his discussion at para. 59:
[81]
'These questions [of jurisdiction] will be narrow. We reiterate the caution of Dickson J. in [Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp.,[1979] 2 S.C.R. 227, [1979] S.C.J. No. 45] that reviewing judges must not brand as jurisdictional issues that are doubtfully so.'
[82]
This latter approach is magnified in the international arbitration context. Courts ae warned to limit themselves in the strictest terms to intervene only rarely in decisions made by consensual, expert, international arbitration tribunals, including on issues of jurisdiction. In my view, the principle underlying the concept of a 'powerful presumption' is that courts will intervene rarely because their intervention is limited to true jurisdictional errors. To the extent that the phrase 'powerful presumption' may suggest that a reviewing court should presume that the tribunal was correct in determining the scope of its jurisdiction, the phrase is misleading. If courts were to defer to the decision of the tribunal on issues of true jurisdiction, that would effectively nullify the purpose and intent of the review authority of the court under art. 34(2)(a)(iii).
[83]
Therefore, courts are to be circumspect in their approach to determining whether an error alleged under ar. 34(2)(a)(iii) properly falls within that provision and is a true question of jurisdiction. They are obliged to take a narrow view of the extent of any such question. And when they do identify such an issue, they are to carefully limit the issue they address to ensure that they do not, advertently or inadvertently, stray into the merits of the question that was decided by the tribunal.
[84]
One challenge for a reviewing court is to navigate the tension between the discouragement to courts to intervene on the one hand, and on the other, the court's statutory mandate to review for jurisdictional excess, ensuring that the tribunal correctly identified the limits of its decision-making authority. Ultimately, when deciding its own jurisdiction, the tribunal has to be correct."
[85]
"The role of the reviewing court is to identify and narrowly define any true question of jurisdiction. The onus is on the party that challenges the award. Where the court is satisfied that there is an identified true question of jurisdiction, the tribunal had to be correct in its assumption of jurisdiction to decide the particular question it accepted and it is up to the court to determine whether it was. In assessing whether the tribunal exceeded the scope of the terms of jurisdiction, the court is to avoid a review of the merits."
[86]
[43] Another authority referred to by the joint judgment in CBI Constructors,[25] was Coppée Lavalin SA/NV v Ken-Ren Chemicals and Fertilizers Ltd (in liquidation),[26] where Lord Mustill relevantly said:
[87]
"On the one hand the concept of arbitration is a consensual process, reinforced by the ideal of transnationalism, leans always against the involvement of the mechanisms of state through the medium of a municipal court. On the other side there is the plain fact, palatable or not, that it is only a court possessing coercive powers which can rescue the arbitration if it is in danger of foundering, and that the only court which possesses these powers is the municipal court of an individual state."
[88]
[44] Section 7(2) of the International Arbitration Act1974 (Cth) provides that, in respect of a pending proceeding in a court instituted by a party to an arbitration agreement, a court is required to impose a stay where the proceedings involved the determination of a matter that in pursuance of the arbitration agreement was capable of settlement by arbitration. That statutory provision has been considered by a number of authorities. In Hancock Prospecting Pty Ltd v Rinehart,[27] the Full Federal Court observed that how a judge deals with an application under s 7 "will depend significantly upon the issues and the context". The Court added:
[89]
"... it is difficult to see how the Court can exercise its power under s [7] without forming a view as to the meaning of the arbitration agreement. Further, it may be that if there is question of law otherwise affecting the answer to the question of jurisdiction, especially one that is confined, which might be dispositive, it might be less than useful for the Court not to deal with it".
[90]
[45] Later the Court said " [o]f course, if there is no sustainable argument that a matter or dispute can be characterised as falling within the agreement, it should not be referred to arbitration".[28] In CPB Contractors Pty Ltd v DEAL S.R.L,[29] Rees J referred to the Full Court's judgment in Hancock Prospecting and said that the enquiry "should not travel into the merits of the case beyond determining whether the argument is sufficiently weak not to be sustainable". To travel into the merits beyond that determination would be to usurp the role of the arbitrator.[30] Her Honour favoured an approach under s 7 which involved taking "a broad view characterising the dispute to assess whether it is the subject of the arbitration agreement, rather than engage substantially in the merits of the case".[31] Her Honour then referred to a statement by the Full Court in Hancock Prospecting to the effect that "[t]he proper answer to this question will depend on the nature of the attack and all the circumstances".[32] In my consideration, the type of approach contemplated in Hancock Prospecting and CPB Contractors is similar to the approach to be applied in an application under s 16(9) of the Act.
[46] The application did not proceed by way of pleadings. During the hearing, the parties attempted to agree upon what were the real issues in dispute on the application.
[47] From TGF's perspective, the real issue was whether Janella was to be regarded as a party to the 2019 Lease or as a person who was claiming through or under Mr Pratt in respect of the 2019 Lease. From the respondents' perspective, the real issues were these: Was the court required to determine the allegations made at paragraph 42 of the December pleading ("the agency allegations") or should those allegations be left to the arbitrator to determine? Was Janella claiming "through or under" Mr Pratt within the meaning of that phrase as it appears in s 2 of the Act? Did the arbitrator have jurisdiction to hear and determine any claim by Janella under the arbitration agreement?
[48] TGF submitted that the legal basis for Janella's claim has never been clearly articulated. Having regard to the language of cl 18, TGF submitted that the type of dispute objectively intended to be referred to arbitration was a dispute concerning the construction or application of the 2019 Lease or rights and liabilities of the parties specified in the 2019 Lease or arising under its terms. TGF submitted that, having regard to the uncontroversial facts including the plain language of the 2019 Lease and the fact that Mr Pratt was indisputably the owner of the Land, Mr Pratt and Janella had failed to advance any understandable basis for a contention that Janella was to be regarded as a party to the 2019 Lease or as a person who was claiming through or under Mr Pratt in respect of the 2019 Lease.
[49] To properly understand TGF's submission that Janella's claim had never been clearly articulated, it is necessary to have regard to the evolution of the claims made by Janella in the arbitration and on this application.
[50] Mr Pratt's initial pleading made no mention of agency or estoppel. It alleged that Mr Pratt and TGF had entered into the 2019 Lease and that Mr Pratt had suffered loss and damage by virtue of TGF's breaches of the 2019 Lease. In the event that the arbitrator made an award in favour of Mr Pratt against TGF, Mr Pratt sought a further award against Andrew and Christine Auld, in the same terms and in the same amount, pursuant to their guarantee.
[93]
"What I think, legally, the case will ultimately have to be at the arbitration for the leasing structure to make sense ... is it's going to have to be a sublease, in effect."
[94]
[56] Hence, the respondents reached the position of contending that the 2019 Lease would need to be construed as a sublease in which, rather than a lessor/lessee relationship, there was created a sublessor/sublessee relationship in which Janella was to be regarded as the sublessor. In the context of advancing that submission the respondents' postulated that rectification "might be another issue which will have to be articulated".[41]
[57] The present application is brought against the background of a significant number of uncontroversial facts. The critical question as to jurisdiction is clearly defined and narrow. The critical question is whether Janella is a party to the 2019 Lease or to be regarded as a party in the sense that it is claiming through or under Mr Pratt for loss suffered by reason of breaches of the 2019 Lease. That question falls to be considered in the following context. Mr Pratt is the registered owner of the Land. The 2019 Lease is a written lease. There is one document which contains or evidences the 2019 Lease. Mr Pratt is referred to as the Lessor. Janella is not the owner of the Land. Janella is not referred to in the 2019 Lease. There are no words contained in the 2019 Lease to the effect that Mr Pratt entered the 2019 Lease as agent for and on behalf of Janella. The 2019 Lease was never assigned by Mr Pratt to Janella. Having regard to the nature of the issue as to jurisdiction and the context in which it has arisen, I have considered it appropriate for the Court to resolve the issue of jurisdiction. I am satisfied that the Court can resolve the issue of jurisdiction by not travelling into the merits of the case, beyond deciding whether the arguments in favour of jurisdiction are sufficiently weak as to be not sustainable.
[58] The source of the arbitrator's jurisdiction to resolve the dispute and its mandate or authority to act is the arbitration agreement as contained in cl 18 of 2019 Lease. The critical language of cl 18 is "[i]f any dispute or difference arises as to the construction or application of [the 2019 Lease] or as to the rights or liabilities of either party in relation to any matter or thing herein specified or otherwise arising under the terms of this Lease". I accept TGF's submission that, properly construed, the type of dispute objectively intended to be referred to arbitration by cl 18 was a dispute concerning the construction or application of the 2019 Lease or rights and liabilities of the parties specified in the 2019 Lease or arising under its terms.
[59] The respondents' contentions were based on agency and estoppel. I accept TGF's submissions that the legal basis for Janella's claims have never been clearly or coherently articulated. That state of affairs is reflected in the arbitrator's reasoning which did not identify the legal relationship that existed between the parties or the subject matter of the dispute.
[97]
[65] The orders are as follows:
It is declared that the second respondent is not a party to the arbitration agreement contained in cl 18 of the written lease executed by the first respondent, as "the Lessor", on 21 August 2019 and by the applicant, as "the Lessee", on 23 July 2019.
It is declared that the second respondent is not "a party" to the arbitration agreement referred to in order 1 within the meaning of that term as defined by s 2 of the Act.
The decision of the arbitrator made on 24 December 2024 by which he determined that he had jurisdiction to hear and determine any claim made by the second respondent and joined the second respondent to the arbitration is set aside pursuant to s 16(9) of the Act.
The respondents pay the applicant's costs of the application filed 23 January 2025, on the standard basis.
[42] Respondents' Supplementary Outline of Argument, [6].
Parties
Applicant/Plaintiff:
Tailing Gully Farming Pty Ltd
Respondent/Defendant:
Pratt [2025] QSC 353
Legislation Cited (2)
Arbitration Act 2013
Arbitration Act 2010
Cases Cited (4)
(2024) 419 ALR 126
(2017) 257 FCR 442
(2019) 267 CLR 514
(1990) 169 CLR 332
(j) By cl 2.15.2, the Lessee agreed to indemnify and keep indemnified the Lessor from and against all actions and costs that the Lessor might incur or become liable for arising out of or in respect of any act, matter, thing or omission done, performed or made by the Lessee or the Lessee's employees, agents, contractors, licensees, invitees or sublessees in the working, management or control of the Land.
(f) Mr Pratt did not understand the precise legal or accounting basis for doing any of this other than it was "good generally for legal and tax reasons". When he had said in an earlier statement that "the losses were mine", this had reflected his understanding that it was his farming operation. He accepted that "the correct legal characterisation that could be given to this arrangement may be different", but at the end of the day he said, "I consider the faming business to be mine ... notwithstanding how it is legally held".
[51] The December pleading relevantly alleged that Mr Pratt, possessed of actual and ostensible authority, entered the 2019 Lease as agent for Janella such that Janella was the Lessor under the 2019 Lease. Alternatively, the December pleading alleged estoppels based on a common assumption that Janella was the Lessor or a representation by TGF which caused Janella to assume that there was a legal relationship between TGF and Janella in respect of the 2019 Lease. The relief sought in respect of the estoppels was relevantly a "declaration that [TGF] is estopped from denying liability to Janella (as landlord) pursuant to the 2019 Lease".
[52] In their primary outline of argument on this application, Mr Pratt and Janella identified Janella's "position" as being that Mr Pratt entered into the 2019 Lease with TGF as Janella's agent. It was submitted that there was "support" for that allegation in that upon acquiring the Crystalbrook aggregation, Mr Pratt leased it to Janella and thereafter all farming and other operations on the Land, including the invoicing to TGF in receipt of payment from TGF under the 2019 Lease had been conducted by Janella and not Mr Pratt. According to that submission, Mr Pratt had entered into the 2019 Lease as agent for Janella, meaning that Janella was a party to that lease and did not need to make a claim through or under Mr Pratt. The estoppel claim was not mentioned in the respondents' primary outline of argument.
[53] In oral submissions on this application, the respondents clarified that the respective claims of Mr Pratt and of Janella in the arbitration were necessarily advanced in the alternative. That submission was based on the concession that there could "only be one Lessor".[33] It was also conceded that there was only one relevant document upon which any claim in the arbitration could be based, namely the 2019 Lease.[34] During oral submissions, the respondents withdrew any suggestion that the agency was an undisclosed agency.[35]
[54] In their oral submissions, the respondents contended that the arbitrator had not made a decision one way or the other about the agency issue.[36] It was ultimately submitted that the "whole issue as to whether or not Janella is the principal of Mr Pratt is something which should be determined by the arbitrator because it goes to a merits point".[37] The question as to whether Janella was the principal, and Mr Pratt its agent, was said to concern "something within jurisdiction that goes to the capacity of a litigant to advance a claim".[38] It was also submitted that there was enough factual overlap between Mr Pratt's claims and Janella's claims as to warrant both claims being included within the arbitration.
[55] In their oral submissions, the respondents frankly conceded that "we know indisputably that Mr Pratt is the owner of the Land" and "we know that there's a written lease where Mr Pratt and the applicant are parties on the face of that document".[39] The respondents ultimately made this submission:[40]
[60] As to the agency contentions, the respondents sought to characterise Janella as a party entitled to enforce the terms of the 2019 Lease on the basis that Mr Pratt had entered the 2019 Lease with actual or ostensible authority to bind Janella to the 2019 Lease as "the Lessor" or "the Landlord". The fundamental problem with that submission is that it is uncontroversial that Janella was not the owner of the Land. As Janella was not the owner of the Land, Mr Pratt can have had no actual or ostensible authority to represent that Janella was "the Lessor". Mr Pratt had no actual or ostensible authority to bind Janella to the 2019 Lease which defined "the Lessor" in terms as being Mr Pratt and the owner of the Land. Mr Pratt's statement made several matters perfectly plain. He, not Janella, entered the 2019 Lease. He did not enter the 2019 Lease on behalf of Janella.
[61] In oral argument, the respondents changed their contention about agency to one which sought to characterise the 2019 Lease as a "sublease" under which Janella was a sublessor and TGF was a sublessee. The submission that Mr Pratt entered the 2019 Lease as the Lessor with actual or ostensible authority to bind Janella as a sublessee to the terms of the 2019 Lease is sufficiently weak as to be not sustainable. The terms of the 2019 Lease carefully defined "the Lessor" as Mr Pratt or his executors, administrators and lawful assigns or other lawful successors. The expression "Lessor" is not defined to include one of Mr Pratt's lessees. Other clauses of the 2019 Lease contained acknowledgements that Mr Pratt was the Lessor. TGF assumed obligations to compensate Mr Pratt for any GST liability including for payments, such as rates, which were typical of payments made by an owner of the Land. To seek to characterise the 2019 Lease as a sublease necessarily required the instrument to be rectified and rectified in ways which would require extensive amendments. The nature and extent of the required amendments was not articulated by the respondents. The legal basis for any case of rectification was not articulated. Nor was a case for rectification supported in any way by the pleadings or Mr Pratt's statement. Mr Pratt relevantly said in his statement that when the 2019 Lease was entered he "did not consider changing the entity from my personal capacity to that of Janella".
[62] As to the estoppel claims, they were not seriously advanced in writing other than in written submissions filed with leave after the hearing. They were also not substantively dealt with in oral argument. The estoppel claims as they were able to be articulated, are sufficiently weak as to be not sustainable. Ultimately, the respondents sought to rely upon an estoppel "to prevent the Applicant from denying [that Janella] is the Lessor under the [2019 Lease]".[42] There is no basis for a contention that the parties proceeded upon a common assumption that Janella was "the Lessor" under the 2019 Lease. The terms of the 2019 Lease are plainly inconsistent with, and contradict, that assumption. Further, there is no basis in the material for a contention that TGF ever represented to Mr Pratt that it regarded Janella as the Lessor under the 2019 Lease such as to cause Mr Pratt to assume to his detriment that Janella was the Lessor. The mere payment of rent to Janella is not determinative. These payments were at Mr Pratt's direction. Further, Mr Pratt's statement made perfectly plain that he acted in the way that he did because he had always considered the farming business to be his own "notwithstanding how it is legally held" and not because of any assumption made by him in consequence of any representation by TGF.
[63] The arbitration agreement contemplated a dispute concerning the construction or application of the 2019 Lease or rights and liabilities of the parties specified in the 2019 Lease or arising under its terms. Mr Pratt has failed to articulate a coherent or maintainable basis for contending that Janella is either a party to the arbitration agreement or an entity claiming through or under him in respect of the dispute submitted to arbitration, being claims to an award for damages caused by breaches of terms of the 2019 Lease. The doctrine of privity of contract applies and Janella as a stranger to the 2019 Lease cannot seek to recover damages by reason of its breach. In the context of the uncontroversial facts, this conclusion can be drawn without straying into the merits of any issue beyond determining that the respondents' arguments are sufficiently weak as to be unsustainable.
[64] The arbitrator has no jurisdiction to hear and determine Janella's claims as outlined in the December pleading or in the written or oral submissions made to this Court. This is a case where curial intervention is necessary to prevent the arbitration from foundering by reason of the wrongful inclusion of Janella.