The Heart Research Institute Limited and Anor v Psiron Limited - [2002] NSWSC 646 - NSWSC 2002 case summary — Zoe

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The Heart Research Institute Limited and Anor v Psiron Limited

[2002] NSWSC 646

Supreme Court of NSW|2002-07-25|Before: Einstein J, Gillard J

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Court

Supreme Court of NSW

Decision date

2002-07-25

Before

Einstein J, Gillard J

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Judgment (68 paragraphs)

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CITATION : The Heart Research Institute Limited and Anor v Psiron Limited [2002] NSWSC 646 FILE NUMBER(S) : SC 50031/02 HEARING DATE(S) : 24/07/2002 JUDGMENT DATE : 25 July 2002

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The Heart Research Institute Limited (First Plaintiff) PARTIES : The Heart Research Developments Pty Limited (Second Plaintiff) Psiron Limited (Defendant) JUDGMENT OF : Einstein J

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COUNSEL : Mr S Finch SC (Plaintiffs) Mr RJ Webb (Defendant) Clayton Utz (Plaintiffs) SOLICITORS : Russell & Company and Coudert Bros (Defendant) CATCHWORDS : Contract - Dispute resolution - Suit seeking specific performance of dispute resolution clause - Expert determination procedure - Whether expert determination mandatory - Whether clause ousts jurisdiction of the Court - Whether clause void for public policy - Whether clause void for uncertainty - Effect of uncertainty in agreement to submit dispute to expert determination - Specific performance of agreement to submit to expert determination of curial proceeding - Principles relating to exercise of discretion to grant specific performance - Consideration of matters which may affect the exercise of the discretion to adjourn or stay Court proceedings so as to allow alternative dispute resolution agreement to be engaged and followed. Commercial Arbitration Act 1984 (NSW) LEGISLATION CITED : Supreme Court Act 1970 (NSW) Supreme Court Rules 1970 (NSW) Trade Practices Act 1974 (Cth) Aiton Australia Pty Ltd v Transfield Pty Ltd (1999) 153 FLR 236 Aztec Mining Co Limited v Leighton Contractors Pty Limited (1990) 1 ADRJ 104 Badgin Nominees Pty Limited v Oneida Limited [1998] VSC 188, Gillard J (unreported) Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd (1993) AC 334 Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643 Elizabeth Bay Developments Pty. Limited v Boral Building Services Pty. Limited (1995) 35 NSWLR 709 Fermentation Industries (Aust) Pty Ltd v Burns Philp & Co Ltd NSWSC, 12 February 1998 (unreported), Fletcher Construction Australia Limited v MPN Group Pty Limited NSWSC, 14 July 1997 (unreported) Goldspar Australia Pty. Limited v City of Sydney [2001] NSWCA 246 CASES CITED : Government Insurance Office of NSW v Atkinson-Leighton Joint Venture (1979) 146 CLR 206 Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194 IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466 Kanivah Holdings Pty Ltd v Holdsworth Properties Pty Ltd [2001] NSWSC 405, 21 May (unreported) Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 Metropolitan Tunnel and Public Works Limited v London Electric Railway Co [1926] Ch 371 Morrow v Chinadotcom [2001] NSWSC 209 Patrick Stevedores Operations No. 2 Pty Limited & Ors v Maritime Union of Australia & Ors (1998) 195 CLR 1 Public Authorities Superannuation Board v Southern International Developments Corporation Pty Limited, NSWSC, 19 October 1987 (unreported) Savcor Pty Limited v New South Wales (2001) 52 NSWLR 587 State of New South Wales & 3 Ors v Banabelle Electrical Pty Limited, [2002] NSWSC 178 Triarno Pty Limited v Triden Contractors Limited NSWSC, 22 July 1992 (unreported) DECISION : Agreement fails for lack of certainty.

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(f) The Parties agree to accept the determination of the expert as final and binding. The expert is not to be the same person as the mediator." The facts 7 The parties were directed to endeavour to reach agreement upon a Statement of Agreed Facts. The plaintiffs' version which was generally agreed subject to some reservations by the defendant which do not have any real significance in the way in which the matter was finally argued, serves to provide the foundation for the matters dealt with in the judgment. That version which is set out below has been slightly adjusted following the submissions in relation to the draft Agreed Facts and I have added some short notes of explanation on one or two occasions. The Statement is set out below: · On 12 February 2001 the Defendant gave written notice to the First Plaintiff terminating the Diagnostic Project. · Pursuant to the Agreement the said notice of termination of the Diagnostic Project became effective on 12 February 2002. · On 19 April 2001 the Defendant confirmed in writing termination of Diagnostic Project and Therapeutic Project (sic). · On 15 May 2001 the First Plaintiff gave written notice to the Defendant terminating the Agreement with respect to the Therapeutic Project such termination becoming effective from 30 May 2001. · In late June 2001 negotiations took place between the Plaintiffs and the Defendant. · Disputes have arisen between the Plaintiffs and the Defendant concerning the performance of the parties' obligations pursuant to the Agreement and the termination of the Agreement so far as the Diagnostic Project and the Therapeutic Project are concerned ("the Disputes"). · On 17 August 2001 the Plaintiffs served a Notice of Disputes on the Defendant. · On 5 September 2001 the Plaintiffs served a further Notice of Disputes on the Defendant. No Notices of Disputes have been served by the Defendant on the Plaintiffs. · On 6 September 2001 the Plaintiffs wrote to the Australia Commercial Dispute Centre ("ACDC") purportedly referring the disputes with the Defendant for mediation and enclosing a cheque for the filing fee. · On 10 October 2001 a mediation of the Disputes took place. The said mediation did not result in a resolution of the Disputes. · On 2 November 2001 the Plaintiffs gave written notice submitting the Disputes to expert determination by the ACDC stewards to clause 18 (e) of the Agreement. · Clause 18(e) of the Agreement incorporates by reference the ACDC Guidelines for expert determination. · The Defendant failed to pay the registration fee required by the ACDC with respect to the expert determination as specified in the ACDC Guidelines. This was admitted on the pleadings.

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(c) if not, whether the clauses are unenforceable by reason of their uncertainty. (d) whether, in the event they are not void and are enforceable the remedy of specific enforcement of the clauses is available. 10 It was common ground that although the defence did not squarely treat with the uncertainty issue there was no prejudice to the Plaintiffs in permitting this matter to be litigated and it is to be regarded as if it had been pleaded. Issues (a) and (b) 11 It is convenient in the first instance to deal with the first two matters and in the course of that analysis to cover a number of questions of principle. In what follows the detailed and carefully drafted submissions of the plaintiff are generally adopted as of substance. 12 It can be seen that clause 18.1 of the Agreement is explicit as to the procedures to be adopted by the parties in relation to disputes falling within the clause. The clause: · operates in relation to any dispute which "arises out of or relates to this agreement, or the breach, termination, validity or subject matter thereof, or as to any claim in tort, in equity or pursuant to any domestic international statute or law" - clause 18.1; · involves a mandatory obligation to give written notice to other parties of the fact that a dispute has arisen and specifying the nature of the dispute - clause 18.1(a); · involves a "good faith" obligation to first negotiate and, subsequently, to attempt to settle the dispute by mediation - clause 18.1 (b), (c) and (d); · mandates that, in the event that the dispute has not been settled as a result of those processes, the dispute be submitted to Expert Determination to be "conducted in accordance with the ACDC Expert Determination Guidelines which set out the procedures to be adopted, the process of selection of the expert and the costs involved and which terms are deemed incorporated" - clause 18.1(e); and · expressly provides that the parties agree to accept the determination of the Expert as final and binding - clause 18.1(f). 13 The ACDC Guidelines are clearly quite detailed and cover numerous aspects of the proposed Expert Determination. These include: · the selection of an Expert to conduct the Expert Determination including the identification by the ACDC of potential appropriately qualified Experts, the provision of information as to the backgrounds of the appropriate Experts, the review of this information by the parties and their advisers, the provision by each party of its order of preference for the proposed Experts, the elimination of any potential conflicts of interest or perception of bias and a procedure for resolving any disagreement as to the choice of Expert - section 2; · ensuring the neutrality of the Expert - section 3; · requiring the parties to sign what is described as "an Expert Determination Appointment Agreement which sets out the terms of the Expert Determination" and which is said to be "consistent with the these Guidelines" - section 4; · the process to be undertaken by the Expert in obtaining information about the disputes, meeting with the parties and the provision of procedural directions where necessary - section 5; · the provision by the parties of statements of issues - section 6; · representation of the parties - section 7; · the powers of the Expert and the manner in which the Expert may conduct the Expert Determination (even including provisions for the operation of the "slip" rule) - section 8; · a statement, that the determination of the Expert is final and binding - preamble and in section 8(b); · a statement that the Expert is not obliged to give reasons for his or her determination - section 8(b); and · confidentiality, releases for the Expert and payment of the Expert's fees - sections 9, 10 and 11. 14 The procedures provided by clause 18.1, especially in expressly incorporating the terms of the ACDC Mediation Guidelines and the ACDC Expert Guidelines, are fairly detailed and precise, and take account of every issue that could possibly arise in the course of resolving a dispute. 15 By reason of their significance to this judgment the Expert Guidelines are reproduced hereunder:

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Fees (a) The parties agree to equally share all costs relating to the assistance provided ACDC including room hire, ACDC's registration fee of $350 (covering the first 2.5 hours of administration), any further administration fees of $120 per hour (after the first 2.5 hours covered by the registration fee), and the Expert's fee (of which 10% is payable to ACDC) for all the time expended by the ACDC and the Expert in the conduct of, or in connection with, the Expert Determination, and any other disbursements. (b) Upon the parties agreeing to the Expert Determination, the parties shall forward to ACDC their half share or other such proportion as agreed between the parties of the deposit being ACDC's estimate of the Expert's and ACDC's fees for the conclusion of the Expert Determination. (c) Each party shall bear its own costs of the Expert Determination. Expert Determination and Ouster of Jurisdiction 16 As the plaintiffs point out, in practice, Expert Determination is a process where an independent Expert decides an issue or issues between the parties. The disputants agree beforehand whether or not they will be bound by the decisions of the Expert. Expert Determination provides an informal, speedy and effective way of resolving disputes, particularly disputes which are of a specific technical character or specialised kind. 17 Unlike arbitration, Expert Determination is not governed by legislation, the adoption of Expert Determination is a consensual process by which the parties agree to take defined steps in resolving disputes. I accept that Expert Determination clauses have become commonplace, particularly in the construction industry, and frequently incorporate terms by reference to standards such as the rules laid down by the Institute of Arbitrators and Mediators of Australia, the Institute of Engineers Australia or model agreements such as that proposed by Sir Laurence Street in 1992. Although the precise terms of these rules and guidelines may vary, they have in common that they provide a contractual process by which Expert Determination is conducted. 18 The contractual basis of Expert Determination was confirmed by Rolfe J in Fletcher Construction Australia Limited v MPN Group Pty Limited NSWSC, 14 July 1997 (unreported). As in the present dispute, the defendant in Fletcher Construction claimed that the Expert Determination clause in question was invalid and unenforceable because it amounted to a "bare faced attempt to oust the jurisdiction of the Courts" (at 10). The plaintiff relied upon the terms of the agreement between the parties and asserted that the defendant should be held to the bargain it made with respect to the resolution of disputes (at 9). 19 In Fletcher Construction, Rolfe J concluded that the Expert Determination clause in question:

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"does not purport to oust the jurisdiction of the Court. It is an agreement between the parties that the specified disputes shall be determined by an expert. There is nothing unusual about such a provision and parties are held to their bargain if they agree to such a clause. Nor is there anything unusual about the clause providing that the expert's decision shall be "final and binding" or "conclusive", and provisions such as that do not oust the jurisdiction of the Court. The effect of the clause is to make the decision of the expert final and binding provided the matters referred to him are ones which the agreement contemplates." (at 18) 20 Relying on the High Court authority of Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643, Rolfe J held that there is a distinction between agreeing not to invoke the jurisdiction of the Courts and agreeing that some matters on which the Courts might otherwise be required to adjudicate should be determined by a third party. The latter agreement leaves the enforcement of the rights of the parties under the contract, including the dispute resolution clause, to the Courts and consequently does not oust the jurisdiction of the Court. There is no ouster because such an agreement is merely limiting the matters for consideration by the Court to the question of whether the agreed Expert has acted within the scope of the agreement between the parties. Thus, provided that the Expert acts within the scope of the dispute resolution clause, the Court will enforce his or her decision as final and binding (at 15). 21 As the plaintiffs point out, similar conclusions were reached by the Supreme Court of Victoria in Badgin Nominees Pty Limited v Oneida Limited [1998] VSC 188, Gillard J (unreported). Considering whether proceedings should be stayed until the dispute had been considered by an Expert, Gillard J further emphasised the contractual basis of Expert Determination. His Honour referred to the judgment of Scrutton LJ in Metropolitan Tunnel and Public Works Limited v London Electric Railway Co [1926] Ch 371 where it was stated that "a guiding principle on one side and a very natural and proper one, is that parties who have made a contract should keep it". Hence his Honour concluded that, "It was their common intention that the dispute resolution procedure be applied in the event of a dispute. It is their contract; and it should be enforced." (para 31 - 32) and, further:

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"There are many reasons why they may take such a course. They may prefer to have a relatively informal process which they may think is likely to be cheaper and quicker and the decision of an independent consultant who is likely to be familiar with the problems...It is not for the Court to re-write their contract." (at 10) 25 His Honour was prepared to extend the matters which may be considered by Expert Determination to issues of liability and quantum. The arguments that the role of an Expert under such agreements should be limited to those "usually dealt with by experts, for example, questions of value, questions of the work to be done prior to practical completion, quality of work and, presumably, extensions of time" (at 7) were rejected. 26 A positive approach to Expert Determination can also be implied from the decisions in Government Insurance Office of NSW v Atkinson-Leighton Joint Venture (1979) 146 CLR 206 and IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466, both cases dealing with the construction of arbitration clauses. Each of these cases indicates an acknowledgement of the commercial utility of alternate dispute resolution processes and a willingness on the part of courts to construe dispute resolution clauses in an expansive manner. In Government Insurance the High Court held that, even though an arbitration clause contained no express reference to the awarding of interest, the scope of the power was sufficient to imply a power in the arbitrator to award interest in accordance with the relevant Supreme Court Act. 27 Similarly, in IBM the NSW Court of Appeal confirmed the power of an arbitrator to make awards and orders of the kind contemplated by the Trade Practices Act 1974 (Cth), notwithstanding that the Commercial Arbitration Act (NSW) expressed that it was "the Court" which may grant such relief (at 481). Following Government Insurance, Kirby P asserted that such clauses are "not to be narrowly construed" (at 477) citing a change in the attitude to arbitration clauses in Australia and other countries:

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(d) by clause 10 the parties release the ACDC and the expert from any tortious claim they might have in respect of the expert determination. This right is an important right which the parties would otherwise have see Goldspar Australia Pty. Limited v City of Sydney [2001] NSWCA 246. · It follows that the agreement to submit to expert determination, if otherwise valid, is unenforceable. Dealing with this issue 41 It is important to bear in mind that none of the plaintiff's claims to relief concern the terms of the form of Expert Determination Agreement in fact submitted by Ms Champion. Notwithstanding that the plaintiff's Contentions include claims that, as is clear from the evidence, the defendant failed to execute that document, and although the plaintiffs do, by reason of all of the matters pleaded in the Contentions paragraphs 3- 24, rely inter alia upon that failure, the issues raised on the preliminary question are capable of being dealt with without any reference at all to that particular document. The document does however serve as a convenient vehicle for an examination of the certainty issues. 42 The approach taken by Mr Finch SC who appeared for the plaintiffs was to accept that the critical issue was whether the agreement which the parties had entered into was sufficiently certain to be enforced. He accepted that the exercise involved whether or not the terms of an Expert Determination Appointment Agreement as referred to in the Guidelines, could be sufficiently identified. If not the plaintiffs were not entitled to relief as sought. 43 The approach was to take the Court extremely carefully through the Expert Determination Appointment Agreement which had been proffered by Ms Champion and in relation to each of the recitals and paragraphs, to engage in a very close comparison between this document and the Guidelines. The proposition for which the plaintiffs contended was that this was a search for consistency. The proposition was that it was not necessary for the proffered agreement to be word for word identical to paragraphs in the Guidelines but that it would be sufficient to find that the provisions of the proffered agreement were precisely reflective of the same concepts as were to be found in the Guidelines. It was put that the necessary consistency would be seen to be present if, for example, the Guidelines included a generic power and the proffered agreement included a provision which fell within that generic power. If, on the other hand, one found provisions in the proffered agreement which could be categorised as extensions of what had been provided for in the Guidelines, by falling outside the generic consistency test it would be appropriate for the Court to apply a blue pencil approach by deleting such provisions. The Court could then order specific performance in terms of the execution of so much of the proffered Appointment Agreement as survived this set of tests. 44 Without travelling exhaustively through a repetition of this careful analysis it may be convenient to give one only example. Clause 11 (c) of the proffered agreement provided:

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require to be construed. At first sight that sentence may seem to the reader to suggest that at the time when the Guidelines were prepared there was in fact an available form of Appointment Agreement to which reference was being made. As the evidence discloses and as the parties accept, this was obviously not the case. In those circumstances the proper construction of the sentence is to treated as if the word " are " is to be replaced by the words " are to be ", so that the sentence would read: "The terms of the Appointment Agreement are to be consistent with these guidelines". 48 That being the case it is clear beyond doubt that the parties intended that a stage in the relevant procedure would require the parties to negotiate about and to endeavour to settle the terms of an Expert Determination Appointment Agreement. And it does not seem to me that it is in any fashion now appropriate for the Court to endeavour to second-guess what that negotiation may have produced. Not that Mr Finch suggested any such thing. His proposition was that the Court would require to tether its analysis and comparison so as: · to allow only those sentences in the proffered agreement as, upon examination, were seen to be completely consistent with the Guidelines or could be subsumed under the rubric of a generic power or agreement. · to apply the blue pencil test by way of disallowing all other sentences. 49 The alternative approach taken by Mr Finch was to submit that as the Guidelines themselves, on examination, included, a clear set of workable provisions to govern the Expert Determination, the parties and presumably the Expert, could be required to sign the Guidelines so that there could then be an acceptance that the Guidelines themselves amounted to the Expert Determination Appointment Agreement for which provision had been made in the Guidelines. 50 The submission was presented in some detail, the gravamen of the submission relying upon the following propositions: · That the parties intended that the terms of the Appointment Agreement would be negotiated and would be consistent with the guidelines; · That in the absence of the parties being in a position to successfully negotiate the terms of the Appointment Agreement, they could be compelled to accept the terms of such an agreement, providing that those terms included, and included only, terms which were consistent with the Guidelines. 51 In submissions Mr Finch put the matter as follows:

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True it is that you can. We acknowledge the force of what His Honour says and don't quibble with it because, with respect, the reasoning is free of defect. There, of course, are - it is possible to postulate a number of possibilities all consistent with the generic terms, but we say in the absence of agreement about that which is allowed, there is mandated at minimum an agreement which is in the same terms or the terms sufficiently changed to constitute an agreement." 52 The submission is misconceived and requires to be rejected. It fails to cope with and to give proper effect to the parties' obvious intent as reflected by the wording of paragraph 4 of the Guidelines that they be permitted to attempt to negotiate the terms of the Appointment Agreement. It fails also to cope with and to give proper effect to the clear intent that the Expert to be appointed and who was to sign the Appointment Agreement as a party, be also permitted to suggest his or her own suggested terms. Finally and most importantly it fails to cope with the proposition, the subject of the judgment of Giles J. in Elizabeth Bay, that notwithstanding that it would be possible to prepare an agreement consistent with the guidelines, there would be an infinite combination of provisions which would not be inconsistent with the guidelines, and that for this reason, the agreement of the parties must fail for lack of certainty in the process to be followed. 53 The argument also exposed significant problems, as it seemed to me, in relation to several areas of real difficulty involved in the proposed application of the "consistency" test. The Appointment Agreement which was proffered by Ms Champion provided inter alia that the Expert Determination may be terminated by a party giving written or oral notice to each party to the Expert Determination and the Expert. Whilst this may be consistent with the common law approach to agreements determinable at will, it is difficult to see why the proposed provision would likely have been intended by the parties. Indeed this proposed provision seems to me to be antithetical to the whole endeavour to ensure that the Expert Determination process would lead to a resultant determination. And there was also a provision that the Expert Determination might be terminated by the Expert giving written or oral notification to the parties if, after consultation with them, the expert formed the view that the expert would be unable for whatever reason, to complete the Expert Determination. This led to a close inquiry as to what types of reason the parties may have been content to include in such an agreement permitting the expert to terminate the Expert Determination. Likewise questions would arise in relation to the proposed Appointment Agreement proffered by Ms Champion, where a term included provision that every aspect of every communication within the Expert Determination was to be 'without prejudice'. These and other matters make entirely unpalatable and inappropriate, the notion that it would be a simple matter for the Court to apply the so-called "consistency" test. 54 In the result and for the above reasons it is clear that in the absence of identification in the Guidelines, presumably by reference, of precisely which terms were to be included in the Expert Determination Appointment Agreement, the parties agreement fails for relevant uncertainty. It may seem surprising that in the light of the Judgment in Elizabeth Bay delivered in early 1995, the ACDC has apparently not seen fit to amend its procedures, so as to cope with the necessity to ensure that the parties are committed, with precision, to the terms of the relevant Appointment Agreement which they are said to be contractually obliged to execute. 55 It was also the case that there were some limited areas in respect of which the Guidelines themselves, if signed, have a capacity to confuse. Clause 2 (a) for example speaks of ACDC sending career details of qualified experts "upon agreement to seek an expert determination". The plaintiffs case is that there had already been reached the agreement to seek the expert determination so that even if the Guidelines were signed, this subclause would require to be so understood. Likewise in relation to clause 11 (b), the language would have to be read somewhat differently because of the particular circumstances. Whilst these are relatively minor matters, it may be thought, for attention, they do throw up the type of difficulties which arise when an artificial approach is taken to what was obviously otherwise intended. 56 For those reasons the plaintiffs claims to relief in the form earlier identified must fail. It is however common ground that, reserving the question of costs of the separate question for submission, the appropriate orders are to permit the plaintiffs to further amend the Amended Summons so as to plead the issues on their merits and so as effectively to submit the relevant disputes and their claims for the adjudication of this Court. Specific Performance 57 Detailed submissions were also addressed by both parties in relation to whether specific performance should be ordered in the event that clause 18 (e) and (f) would be held to be enforceable in principle. Whilst that matter does not now require to fall for determination it seems reasonable in deference to these submissions and against the possibility that the matter may go on appeal, to treat with the general subject matter as a matter of principle. 58 The defendant's further submissions included the following: · "If, contrary to the foregoing, clause 18(e) and (f) are enforceable in principle, the court will not order specific performance at the suit of HRI. See Hooper Bailey at 210; Aiton at 244; Banabelle para 29. · The rule enunciated in those cases is applicable in respect of the subject clause for expert determination having regard to the need for co-operation between the parties in agreeing upon the terms of a suitable expert determination agreement. · Further, as a matter of discretion, the court ought not order any specific performance of clause 18(e) having regard to: (a) the complexity of the disputes between the parties as disclosed by the cross claim;

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"Equity will not order specific performance of a dispute resolution clause, notwithstanding that it may satisfy the legal requirements necessary for the court to determine that clause is enforceable. This is because supervision of performance pursuant to the clause would be untenable - see Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194 at 210. The court may, however, effectively achieve enforcement of the clause by default, by ordering that proceedings commenced in respect of a dispute subject to the clause be stayed or adjourned until such time as the process referred to in the clause is completed". (para 29) 61 In Hooper Bailie, which has already been mentioned in some detail, Giles J ordered a stay in the proceedings pending the completion of a conciliation process between the parties. 62 As the plaintiffs point out, in reaching this decision Giles J deals with the issue of specific performance of an implied term. The plaintiff in that case contended that there was an implied term in the conciliation agreement between the parties that the parties "would take all reasonable steps to endeavour to resolve the conciliation issues under the chairmanship of Mr Eric Schick, by discussion, consideration and agreement" (at 202G). It is with reference to this implied term that Giles J states "[i]t was, I think, common ground that equity would not order specific performance of the implied term for which Hooper Bailie contended, because supervision of performance would be impossible" (at 210E). 63 As already stated, the holding was that an agreement to resolve a dispute by alternative processes is enforceable in principle, provided that the conduct required of the parties for participation in the process is sufficiently certain (discussed at 209D-E). Giles J continued that such agreements may be indirectly enforced by the stay or adjournment of any other proceeding initiated in conflict with the agreed alternative dispute processes. The court's power to make such orders derives both from its inherent jurisdiction to prevent abuse of its process and from its statutory jurisdiction to make interlocutory orders in relation to arbitration proceedings under the Commercial Arbitration Act 1984, s 47 (discussed at 210E-211E). 64 Giles J further considered that:

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"What is significant is the acceptance by the House of Lords that the concept of 'constant supervision by the court' by itself is no longer an effective or useful criterion for refusing a decree of specific performance. Rather, Lord Hoffman placed stress on other propositions. First, a person who is subject to a mandatory order attended by contempt sanction... ought to know with precision what is required; and, second, the possibility of 'repeated applications for rulings on compliance' with orders requiring a party 'to carry on an activity... over a more or less extended period of time' should be discouraged." (at 46 - 47) 74 I accept as correct the plaintiffs' submission that it follows from the above cases, including Co-Operative Insurance and Patrick Stevedores, that the Court may order specific performance of a contractual provision where it will not be necessary to constantly supervise the order. 75 As the plaintiff submits, when a Court considers ordering specific performance of a dispute resolution clause the question then becomes, would such an order create the possibility of repeated applications for rulings coming before the Court? If a dispute resolution clause was drafted with sufficient clarity and certainty, there should be no need to seek regular directions from the Court on the execution of the order. 76 The plaintiffs strongly contend that the defendant in this case been obstructionist and, on one view, has done all within its power to avoid complying with its contractual obligations in relation to the Expert Determination in that it is said to have: · failed to pay the ACDC filing fee for the mediation; · failed to pay the ACDC filing fee for the Expert Determination; · failed to reply to certain correspondence from the ACDC; · failed to express a view on an appropriate Expert, · necessitating the appointment of the Expert by the ACDC; · refused to execute the Expert Determination Agreement as required by the ACDC Expert Guidelines; and · belatedly raised (including in its Cross-Claim in these proceedings) matters which have not been the subject of formal dispute notification under clause 18.1(a) of the Agreement. 77 It was accepted during argument that it was not necessary for the Court in determining the separate question to make any findings in relation to these claims of the plaintiff. 78 HRI is a charity and is, I accept, unable to afford protracted litigation and the attendant costs. Consequently, Expert Determination should, but regrettably here does not, offer a speedy and cost effective means of resolving disputes, an alternative that was chosen in this case. 79 Had the subject Agreement not been vitiated for uncertainty, the indirect mechanism of giving effect to the alternative dispute resolution clause discussed in Hooper Bailie, Aiton and Banabelle, namely the grant of a stay or adjournment of the proceedings pending the completion of the alternative dispute resolution process, would not have been needed as the Court would likely have been in a position to grant specific performance. The process contemplated by the clause is likely to have been entirely appropriate to the subject matter of the Agreement, namely medical research into cardiovascular disease and the creation of possibly patentable processes. An Expert who can combine a knowledge of intellectual property law issues with an understanding of research processes may well be ideally placed to resolve the disputes. 80 As the plaintiffs correctly point, out the comments of the House of Lords in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd (1993) AC 334 per Lord Mustill at 353 are appropriate to be borne in mind in litigation raising these issues where enforceable agreements not lacking the requisite certainty, are entered into:

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"The overriding purpose of these rules, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in such proceedings." 82 Indeed, the aims of case management, for example such as ensuring that the parties are on an equal footing; saving expense; dealing with cases in ways which are proportionate to the amount involved, the importance, the complexity, and the financial position of each party; ensuring that it is dealt with expeditiously and fairly; and allotting to it an appropriate share of the Court's resources, can seemingly be promulgated through a positive approach to alternative dispute resolution. 83 On a public policy level the rationale behind supporting alternative dispute resolution includes: · harnessing the influence of the Courts to encourage the use of alternative dispute resolution as a way of overcoming the reluctance of litigants and lawyers; · making procedures more simple, and closer to normal business activities; · decreasing or better focusing paperwork; · simplifying the work done in preparing disputes for the resolution process; · facilitating the resolution of disputes by allowing parties to choose an arbitrator or mediator with special knowledge or expertise; · improving efficiency by finding earlier or more convenient dates for alternative dispute resolution than is permitted by the court listing process; · reducing costs; and · achieving results which do not necessarily demand that one side wins and one looses. 84 In recent years dispute resolution legislation and trends in resolving commercial disputes by alternative means have developed common themes and objectives including better case management, increased speed and reduced expense, party autonomy and greater involvement by the parties themselves. As the High Court has recognised, concepts of public policy are not fixed but change according to developments in society: Stevens v Keogh (1946) 72 CLR 1 at 28. 85 Both the Federal Government and the Government of New South Wales have in recent years publicly encouraged disputants to consider dispute resolution procedures other than judicial and arbitral proceedings, as reflected in the 1993 report of the Standing Committee on Legal and Constitutional Affairs, "The Cost of Justice: Foundations of Reform". By advocating such alternatives, those governments seek to reduce court delays and expense to disputants of dispute resolution. Indeed, as Robert Hunt notes in "The Law Relating to Expert Determination" (2002) 18 BCL 2, "[t]he increasing cost of litigation and arbitration up to the late 1980s has led to a significant increase in the use of ADR" (at 2). 86 More specifically, the increasing use of Expert Determination in lieu of arbitration or litigation in commercial disputes confirms, as Hunt suggests, "that the users of dispute resolution services have created a demand for an additional adjudicative process called expert determination as an alternative to litigation or arbitration" (at 14). Principally, as Hunt continues, "[p]roponents of these processes saw them as offering the prospect of less formal processes (often with no lawyers involved) with substantial savings in time and legal costs" (at 2). Indeed, on a practical level, Expert Determination has apparently been attractive, largely because it is less expensive and speedier, avoids the rigours of the application of the rules of evidence and procedure and offers a finality which avoids delays, potential re-hearings and appeals, which is particularly suitable especially where an expert knowledge of the subject is required or where the parties may have a continuing relationship. Short Minutes 87 Short minutes are to be brought in. Costs may then be argued.

The Heart Research Institute Limited and Anor v Psiron Limited

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