MP Park Lane Pty Ltd (formerly known as EBD Park Lane Pty Ltd) Atf the MP Park Lane Trust (formerly known as EBD Park Lane Trust) - Defendant/Cross Claimant
Representation: Counsel:
IM Jackman SC with L Gor - Plaintiff/Cross Defendant
M Dempsey SC with D Hughes - Defendant/Cross Claimant
[2]
Solicitors:
Colin Biggers & Paisley - Plaintiff/Cross Defendant
Jones Day - Defendant/Cross Claimant
File Number(s): 2020/112948
[3]
INTRODUCTION
HIS HONOUR: This controversy concerns the construction of an expert determination clause (Cl 21) in a written Project Delivery Agreement (the Agreement) under which the plaintiff Housing Trust (or THT) appointed the defendant [1] (or Developer) to undertake the development of approximately two hectares of land at 91A Byamee Street, Dapto, NSW, which is south of Wollongong.
The project involved building a seniors' apartment building of not fewer than 31 apartments for THT (THT Building), and, separately, building apartments and low density housing to be sold to allow the Developer to make a commercial return. In total, there were to be between 140 and 160 dwellings. The Agreement was varied on 16 August 2016 and 10 April 2018 in respects which do not have any impact on the controversy.
Clause 21 provides:
21 Dispute resolution
21.1 Dispute
Any dispute in connection with this agreement must be dealt with by this clause 21.
21.2 Notification of dispute
If a party believes that there is a dispute in connection with this agreement (Dispute) then:
(1) that party must give notice (Dispute Notice) in writing to the other party stating that there is a dispute; and
(2) the notice must outline
(a) what the party believes the dispute to be;
(b) what the party wants to achieve; and
(c) what the party believes will settle the dispute.
21.3 Consultation between the Representatives
(1) Within ten (10) business days of a Dispute Notice the appointed representatives of the parties must meet in order to resolve the Dispute.
(2) If the representatives of the parties cannot resolve the Dispute within fourteen (14) days of the date of the relevant Dispute Notice is served then the following provisions of this clause 21 apply.
21.4 Referral to expert
If the parties cannot resolve the Dispute, then the Dispute may be submitted by either party to an expert agreed between the parties.
21.5 Failure to agree
(1) If the parties cannot agree on an expert within 10 Business Days then either party may request the President of the appropriate institute or association to appoint a member of that institute or association as the expert.
(2) If the parties cannot agree on which institute or association is appropriate in the circumstances (within the same 10 Business Days), either party may refer the selection of the institute or association to the President of the Bar Association of New South Wales to select the most appropriate institute or association.
21.6 Appointment as expert not arbitrator
The person agreed on or appointed is to act as an expert and not as an arbitrator.
21.7 Written submissions on dispute
(1) Both parties may, within 20 Business Days of the date of appointment of the expert, make written submissions to the expert on the matter the subject of the dispute.
(2) If a party makes a written submission to the expert, it must give a copy of the submission to the other party at the same time as it gives the submission to the expert.
21.8 Effect of expert's decision
(1) The expert's decision is final and binding on the parties.
(2) The cost of the expert's decision is to be borne by the parties:
(a) in the shares as the expert determined; or
(b) in the absence of such a determination, equally between the parties.
21.9 Continue to perform
Despite the existence of a dispute, each party must continue to perform its obligations under this agreement (including obligations to pay monies).
The Agreement specified 'Critical Dates' as:
1. obtain Development Consent - 31 December 2018
2. issue a Construction Certificate for earthworks - March 2019
3. start Civil Construction - April 2019
4. end Civil Construction - November 2019
5. start Construction of the THT Building - December 2019.
By late 2018, the parties had fallen into dispute. They were arguing, amongst others, about whether the Developer would be able to achieve the Critical Dates and about whether there were in fact Critical Dates. One particular area of dispute was whether a judgment delivered by the Land and Environment Court on 7 May 2019 approving a concept masterplan constituted obtaining development consent. [2]
On 11 September 2019, THT wrote to the Developer stating that it was terminating the Agreement for nine specified actual and anticipatory breaches, including failure to meet Critical Dates.
On 25 October 2019, the Developer, through its solicitors, wrote to THT that it intended to serve a Dispute Notice pursuant to Cl 21 (the Dispute Notice).
On 10 March 2020, the Developer did so. The Dispute Notice responds to each of the nine grounds relied on by THT. It has annexed to it a significant body of documentation.
The Dispute Notice states that THT had no right to terminate the Agreement and that the purported termination was invalid, wrongful, and a repudiation of the Agreement. The Dispute Notice goes on to say that by it, the Developer accepts the repudiation and terminates the Agreement. The Dispute Notice claims damages, including loss of bargain damages, currently assessed in the sum of $16,004,494 and, in the alternative, claims as damages the costs incurred by it in performance of its obligations under the Agreement to date currently assessed in the sum of $1,537,960.72. Finally, in the alternative to its claim for damages for breach of contract, it claims damages for other relief in accordance with the Australian Consumer Law arising from misleading and deceptive conduct and unconscionable conduct.
On 21 April 2020, the Developer, through its solicitors, wrote to the President of the NSW Bar Association, requesting him to select the appropriate institution or association to appoint an expert to carry out an expert determination of the dispute. The President responded that it appeared to him the better course was to await the outcome of these proceedings.
It is common cause that the Agreement is no longer on foot. It is not common cause who terminated it.
The issue to be decided is whether, in the events that have happened, resolution of the dispute between the parties is governed by Cl 21. THT says it is not; the Developer says it is. The answer turns on the proper construction of Cl 21.
What is comprehended by the dispute is not in issue. THT does not argue that if the dispute is susceptible to Cl 21, the Dispute Notice is not otherwise effective to enliven the machinery of Cl 21. It is not suggested that a dispute, including whether the Developer terminated and whether it should receive money, has not been crystallised.
[4]
THE RELIEF CLAIMED
By Amended Summons filed on 18 May 2020, and accompanying Amended Commercial List Statement, THT seeks declarations that, on its proper construction, Cl 21:
1. does not survive termination of the Agreement such that it cannot be used to deal with any disputes concerning termination or repudiation of the Agreement and any loss or damage arising therefrom;
2. does not confer jurisdiction upon an expert to determine a dispute concerning the termination or repudiation of the Agreement and any loss or damage arising therefrom;
3. is so uncertain as to be void and/or unenforceable and is therefore liable to be severed, or is otherwise void; and
4. does not require any expert referral process commenced under it to be determined as a condition precedent to a party commencing proceedings in the courts of New South Wales concerning the termination or repudiation of the Agreement and any loss or damage arising therefrom.
THT also seeks a declaration that the Dispute Notice is of no force or effect and an injunction restraining the Developer from taking any step under Cl 21 in respect of any dispute concerning the termination or repudiation of the Agreement and any loss or damage arising therefrom.
By Cross-Claim Cross Summons and Amended Commercial List Cross-Claim Statement, the Developer seeks a declaration that the Dispute Notice was and is valid and a declaration that the letter to the President of the NSW Bar Association dated 21 April 2020 was and is a valid referral under Cl 21.5(2).
[5]
SALIENT FEATURES OF THE AGREEMENT
The Agreement is a detailed document plainly intended to legislate comprehensively for a substantial project.
Clause 7 required the Developer to procure a Draft Project Master Plan, to be subject to THT's review.
Clause 8 made provision for the Developer to prepare a Project Master Plan Application to be submitted to the relevant Authority for approval. Clauses 8.3 and 8.4 provided:
8.3 Rejecting the Project Masterplan Application
Within fifteen (15) business days of receiving it, THT may reject the Project Masterplan Application if it reasonably considers that it:
(1) is (subject to any enhancements) not consistent with the Draft Project Masterplan; or
(2) does not comply with the requirements of Law or otherwise of this agreement.
8.4 Consequences of rejecting the Project Masterplan Application
(1) If THT refuses to consent to the Project Masterplan Application, it must notify the Developer of its reasons for that refusal.
(2) Upon receipt by the Developer of any notice referred to in paragraph (1), the Developer must either:
(a) amend the Project Masterplan Application taking THT's reasons into account, and re-submit the amended Project Masterplan Application to THT for consent pursuant to clause 8.2; or
(b) promptly advise THT that it disagrees with THT's reasons, in which case the matter must be referred for dispute resolution under this agreement.
Clause 9 required the Developer to procure the design of draft plans for the THT Building.
Clause 10 required the Developer to prepare a Building Application to be submitted to THT. Clauses 10.3 and 10.4 provided:
10.3 Rejecting the THT Building Application
Within fifteen (15) business days of receiving it, THT may reject the THT Building Application if it:
(1) is (subject to any enhancements) not consistent with the Draft THT Building Plans; or
(2) does not comply with the requirements of Law or otherwise of this agreement.
10.4 Consequences of rejecting the THT Building Application
(1) If THT refuses to consent to the THT Building Application, it must notify the Developer of its reasons for that refusal.
(2) Upon receipt by the Developer of any notice referred to in paragraph (1), the Developer must either:
(a) amend the THT Building Application taking THT's reasons into account, and resubmit the amended THT Building Application to THT for consent pursuant to clause 10.2; or
(b) promptly advise THT that it disagrees with THT's reasons, in which case the matter must be referred for dispute resolution under this agreement.
Clause 11 provided for the Developer to engage contractors to construct the THT Building.
Clause 12 provided for Practical Completion and Handover of the THT Building. Clause 12.2 provided for Rectification of Defects - Pre-Handover, and for THT to provide the Developer for a list of items it considered to be defects. Clauses 12.2(5) and (7) provided:
12.2 Rectification of Defects - Pre Handover
…
(5) If Developer does not agree with any items on the THT's list, the parties will be in dispute about these items and the dispute will be resolved through the dispute resolution procedures set out in this agreement.
…
(7) Prior to Handover the Developer must rectify all Defects in the THT Building that are agreed to be Defects and also those items that are determined to be Defects through the dispute resolution procedures. The Developer will provide THT with written notice once it considers that it has rectified those Defects.
Clause 12.6 provided for Rectification of Defects - Post-Handover, and for THT to provide a list of items it considered to be defects. Clauses 12.6(4) and (7) provided:
12.6 Rectification of Defects - Post Handover
…
(4) If the Developer does not agree with any items on THT's list, the parties will be in dispute about these items and the dispute will be resolved through the dispute resolution procedures.
…
(7) If THT claims there are Defects that have been previously notified to the Developer in accordance with this clause and as at the expiry of the Defects Liability Period they have not been rectified, the Developer and THT will, both parties acting reasonably, seek to agree a final list of previously notified and unrectified Defects and the value of those Defects. If the parties are unable to agree on this list of Defects and the value of these Defects, then the parties will be a dispute and the dispute will be resolved through the dispute resolution process.
Clause 13 provided for the design, construction and sale of the balance of the development.
Clause 14.5 provided:
14.5 Critical Dates
(1) The Developer must achieve the Critical Dates.
(2) Any failure by the Developer to meet a Critical Date is a material breach of this agreement.
Clause 14.6 provided:
14.6 Liquidated Damages
(1) If the Developer fails to achieve Practical Completion of the THT Building by or before forty two (42) months from the date of this agreement (PC Date), then the Developer must pay THT an amount of $1,500.00 each day from the PC Date until the date of Practical Completion of the THT Building.
(2) The parties acknowledge and agree that:
(a) the amount of liquidated damages referred to in paragraph (1) is a genuine estimate of the actual damage that will be suffered by THT as a result of a delay in Practical Completion of the THT Building; and
(b) if THT claims liquidated damages under paragraph (1) it is not entitled to any further monetary compensation on account of the relevant delay in Practical Completion of the THT Building.
Clause 15.6 provided:
15.6 Failure to achieve Critical Date
If the Developer fails to achieve a Critical Date, then THT may terminate this agreement.
Clause 23 provided:
23 THT's Step in Rights
23.1 THT may step in
If a Developer Default occurs and is unremedied, THT may exercise its Step in Rights in accordance with this clause 23.
23.2 Step in Notice
THT may exercise its Step in Rights by issuing a notice to that effect to the Developer (Step in Notice).
23.3 The Developer must cease
Immediately upon receipt of a Step in Notice, the Developer must:
(1) cease conducting the Project;
(2) cease exercising any rights under this agreement with respect to the Project Land;
(3) vacate the Project Land; and
(4) do all other things necessary to allow THT to take possession of the Project Land, and anything else required to continue with the Project.
23.4 THT may complete
If THT exercises its Step in Rights, THT may undertake and complete the Project at its discretion.
Clause 30.1 provided:
30.1 Changes to Project Documents
Despite any other provision of this agreement, if at any time THT and the Developer:
(1) agree in writing to vary this agreement; or
(2) the resolution of any Dispute between the parties has the effect of varying the obligations of the parties in a way that is inconsistent with this agreement,
then this agreement will be varied accordingly.
Clause 30.9 provided:
30.9 Governing law
The law in force in the State of New South Wales governs this agreement. The parties:
(1) submit to the exclusive jurisdiction of the courts of New South Wales and any courts that may hear appeal from those courts in respect of any proceedings in connection with this agreement; and
(2) may not seek to have any proceedings removed from the jurisdiction of New South Wales on the grounds of forum non conveniens.
[6]
THE CASE
Mr I M Jackman SC, with Mr L Gor, appeared for THT. Mr M Dempsey SC, with Mr D Hughes, appeared for the Developer. The Court had the benefit of written submissions, which were refined, and in some respects narrowed, during oral argument.
First, THT argues that Cl 21 should be construed so as to operate in respect only of discrete subject matter disputes which are, 'apt to be resolved by an expert appointed from an appropriate professional institute or association and not to a wide-ranging dispute of mixed fact and law concerning the termination of a multi-million dollar and multi-stage contract for the planning, construction and sale of apartment buildings and low-density housing', which it says is not appropriate to be so resolved.
Second, THT argues that whilst the words 'in connection with this agreement' in Cl 21.1 have a wide operation, read within the context of Cl 21 and the Agreement as a whole, Cl 21 is confined to disputes in connection with the performance of the Agreement and does not cover, for example, disputes 'in connection with its frustration, termination or repudiation'.
Third, THT argues that if Cl 21 otherwise covers the dispute, it fails to operate because it is void for uncertainty.
THT puts the following as matters supporting its narrow construction:
1. Clauses 8.4, 10.2, 12.2, and 12.6 expressly provide for the reference to an expert of specified disputes. This, it argues, indicates that the parties contemplated a specific type of dispute only was to be covered by Cl 21;
2. the time frame for providing written submissions to the expert is short, no other process or procedure is prescribed prior to the expert's determination, and there is no provision for swearing oaths, service of lay or expert evidence, cross-examination of lay or expert witnesses, document production by the opposite party or third parties, or reply submissions;
3. there is a single expert only, which, THT argues, indicates that the process will be of a kind to be determined in an informal way by reference to the specific technical knowledge or the learning of the expert, and not to the present type of complex dispute involving questions of mixed fact and law;
4. that the expert is not required to act judicially and the absence of practice and procedure means that factual disputes cannot be resolved;
5. the expert's determination is final and binding, thereby largely insulating it from challenge;
6. the provision is silent as to the expert's power to award damages or interest; and
7. the existence of the step-in right provided in Cl 23 indicates that fundamental contractual defaults are not the contemplated subject matter of Cl 21.
THT identifies the following as 'textual indicators' that Cl 21 does not survive termination of the Agreement:
1. despite the existence of a dispute, Cl 21.9 requires each party to continue to perform its obligations under the Agreement including obligations to pay monies. This, THT argues, gives rise to the implication that Cl 21 only applies whilst the Agreement is on foot;
2. the reference in Cl 30.9 (the governing law and submission to jurisdiction clause) to 'any proceedings in connection with this agreement' can only sensibly be read as a reference to disputes and differences between the parties. Clause 30.9 has no field of operation if Cl 21 covers any disputes between the parties;
3. Clause 30.1(2) provides that if the resolution of any Dispute between the parties has the effect of varying the obligations of the parties in a way that is inconsistent with the Agreement then the Agreement will be varied accordingly. This provision has no field of operation once the Agreement has been terminated;
4. the expert determination process is truncated. There is no requirement for a written or reasoned decision. Expeditious and informal dispute resolution is calculated to enable the parties to continue to perform. These factors point to Cl 21 being operative during the currency of the Agreement; and
5. Clause 21 does not state that it survives termination.
In correspondence prior to 21 April 2020, the NSW Bar Association indicated that the President would not nominate an appropriate institute or association. This, it seems, was to be the subject of a submission by THT that the machinery of Cl 21 failed for uncertainty given that it provides no alternative machinery. However, this is not the position now taken by the President and the submission was not pressed.
The submissions on uncertainty are limited to that:
1. the process under Cl 21 is unworkable because of the absence of procedural rules required to enable the expert to investigate disputed questions of fact and law, the absence of any procedural safeguards, the absence of any mechanism for the provision of lay and expert evidence or for testing it, and the absence of any requirement for written reasons; and
2. Clauses 21 and 30.9 are competing and overlapping and the lack of clarity as to which applies also renders Cl 21 uncertain.
[7]
REASONING
THT fails and the Developer succeeds.
The dispute generated by THT's termination letter of 11 September 2019 and the responding Dispute Notice is to be resolved by expert determination under Cl 21.
Clause 21 must be construed according to orthodox canons of construction for commercial agreements. Different canons do not apply because Cl 21 is an alternative dispute resolution or expert determination provision: Rinehart v Welker (2012) 95 NSWLR 221 at 246 and following; Inghams Enterprises Pty Ltd v Hannigan [2020] NSWCA 82 (Inghams) at [54], [64]-[65] and [119].
The meaning of Cl 21 is to be determined objectively by reference to its text, context and purpose, the question being what a reasonable person would have understood them to mean.
The exercise requires attention to be paid to the language used by the parties, the commercial circumstances which the document addresses, the purpose of the transaction, and the objects that it was intended to secure. The whole of the instrument has to be considered. Preference is given to a construction supplying a congruent operation to the various components of the whole and which does not make commercial nonsense or work commercial inconvenience: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 350-352; Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522 at [29]; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 151 at 160; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 657; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 (Mount Bruce) at [46]-[47].
A pertinent example of construing to avoid working commercial inconvenience is the settled technique that the construction of a dispute resolution clause is approached liberally and not narrowly: Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways (1996) 39 NSWLR 160; Comandate Marine Corporation v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45; Inghams at [59] and following. This is not to depart from the meaning of the words chosen by the parties but to give a coherent business purpose through an assumption that parties are unlikely to have intended multiple venues or occasions for the resolution of their disputes unless they say so: Lipman Pty Ltd v Emergency Services Superannuation Board [2011] NSWCA 163 at [8].
As was pointed out in Mount Bruce at [49], the task of identifying the commercial purpose or objects of the contract is facilitated by an understanding of the genesis of the transaction, the background, the context, and the market in which the parties are operating. It may be necessary in determining the proper construction, where there is a constructional choice, to have recourse to events, circumstances, and things external to the contract.
In my opinion, Cl 21.1 does not give rise to any relevant constructional choice.
On its plain meaning, if there is a dispute and it is in connection with the Agreement, it must be dealt with under Cl 21. These are the only two qualifiers, apart from the general law necessity for the dispute to be capable of being resolved by a contract to which the law will give effect, which is not an issue here.
The word 'any' is of the widest import: Inghams at [84] and the authorities cited there.
THT accepted (as it had to) that, on the plain meaning of the words, the dispute in this case qualifies.
THT was driven to looking for implications from other provisions in the Agreement and general commercial considerations said to point in the direction that the parties did not intend the words they chose to mean what they plainly say.
I do not think that there are any such implications to be found in the Agreement or that general commercial considerations support the conclusion that the parties did not mean what they said. To the contrary, I think read as a whole, the Agreement supports the operation of Cl 21 according to its tenor as do the commercial objects which Cl 21 itself, in the context of the Agreement as a whole, was intended to secure.
Clause 21 provides a mechanism for the speedy resolution of any dispute in connection with the Agreement, irrespective of its complexity. This procedure is intended to be quick and to avoid complexity and undue expense. This is a reason to give it full effect, not, as THT's submissions suggest, to cut it down.
The presence in the Agreement of Cls 8.4, 10.2, 12.2, and 12.6 do not give rise to any implication that Cl 21 is to be read down. They provide for a shortcut to Cl 21 by deeming a dispute within it to have arisen in specified circumstances.
THT placed reliance on what was said in Lighter Quay Residents' Society Inc v Waterfront Properties [2013] NZHC 2678 (Lighter Quay), that expert determination clauses may be narrowly construed, particularly where the agreement contains a potentially competing jurisdiction clause. Ellis J considered that this emerged from the decision of the English Court of Appeal in Barclays Bank PLC v Nylon Capital LLP [2012] 1 All ER (Comm) 912 (Nylon Capital). In the context of the canons of construction which apply in this jurisdiction, I take this to mean no more than that the presence of such a clause will be part of the context to which reference is to be had in construing the clause under consideration.
Lighter Quay does not assist THT. The so-called competing jurisdiction clause in Lighter Quay (quoted in [20] of that judgment) differs materially from Cl 30.9(1) of the Agreement. The clause there contained a non-exclusive submission to jurisdiction of the New Zealand courts 'for determining any dispute concerning this agreement or the transactions contemplated by this agreement' (emphasis added). Clause 30.9(1) is an exclusive submission to jurisdiction in respect of any proceedings in connection with the Agreement. An expert determination clause does not oust the jurisdiction of the court, which always keeps ultimate supervision of the ambit of the expert's authority under a contractual provision. Frequently, the Court has to consider whether the proceedings brought in the face of expert determination must be stayed: see e.g. Dance With Mr D Limited v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332 at [53]. Clause 30.9(1) is not an alternative avenue to the resolution of disputes in connection with the Agreement.
Nylon Capital likewise does not assist THT. There, the expert determination provision expressly applied only to specifically described disputes: see Nylon Capital at [18]. The English Court of Appeal observed at [28] that the parties had agreed to two types of dispute resolution procedures for disputes which might arise under the agreement. They had chosen two alternative forms of dispute resolution. That is not this case.
THT's argument requires there to be read into the provision words such as 'appropriate for determination by an expert', which words are simply not there. This apart from the obvious demarcation difficulty that would arise in this case if such words were there.
The submission that, 'for example', disputes in connection with frustration, termination or repudiation are excluded introduces an arbitrary and blurred line of distinction.
Some cases have endeavoured to catalogue differences between the characteristics of arbitration and those of expert determination: see e.g. Strategic Publishing Group Pty Ltd v John Fairfax Publications Pty Ltd [2003] NSWSC 1134 at [22]-[23]; Zeke Services v Traffic Technologies [2005] QSC 135; Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd [2008] QCA 160 at [118]; Lighter Quay at [50]-[51]. The view has been expressed that a characteristic of expert determination is that there will ordinarily be a dispute of a kind which can be determined in an informal way by reference to the specific technical knowledge or learning of the expert. In Nylon Capital at [28], Thomas LJ expressed the view that in contradistinction to arbitration, expert determination clauses generally presuppose that the parties intended certain types of dispute to be resolved by expert determination and other types by the Court (or if there is an arbitration provision, by arbitrators). I do not consider that this approach reflects orthodox canons of construction which apply in this jurisdiction.
What the parties intend is to be determined from the words they choose read in the context in which they chose them.
It is to be borne in mind that expert determination is simply a private contractual mechanism to which parties agree. The determination does no more than create binding contractual rights and obligations. It has no statutory backing as a process. It does not resolve the dispute by the exercise of judicial, quasi-judicial, administrative, statutory, or other power or jurisdiction: Lainson Holdings Pty Ltd v Duffy Kennedy Pty Ltd [2019] NSWSC 576 at [59]. Agreement to expert determination does not bring with it an assumed expectation that procedures which are the hallmark of judicial or quasi-judicial proceedings will apply.
In my view, it is contrary to the orthodox approach to construction to make an a priori presumption or generalisation:
1. as to the type of disputes parties will agree should be covered by an expert determination provision;
2. that parties did not intend any dispute to be resolved quickly and informally without procedures reminiscent of judicial or quasi-judicial proceedings if it is complex and involves disputes of fact or questions of mixed fact and law;
3. that commercial parties intend certain types of disputes to be dealt with procedurally in one way and other types of disputes to be dealt with procedurally in another;
4. that parties intended multiple venues or occasions for their disputes even though they never said so; and
5. that a single person selected by them to be the expert is not considered by them to be competent to resolve the dispute, including by adopting an appropriate procedure to achieve resolution.
Regularly, significant and complex commercial transactions which come before the Commercial List and the Technology and Construction List contain provisions that all disputes in connection with the transaction are to be resolved by expert determination.
It is possible, as was mentioned during submissions, that the President of the Bar Association will, under Cl 21.5(2), select the Bar Association as the most appropriate institute or association. Notoriously, members of that Association include barristers and retired judges well qualified to carry out an expert determination covering any discipline and requiring resolution of issues of fact or ones of mixed fact and law: see Downer Engineering Power Pty Ltd v P & H Minepro Australasia Pty Ltd [2007] NSWCA 318 at [79].
Part of the parties' bargain is that, absent consensus, the selection of an appropriate expert is left to a third party.
That the expert's determination will be final and binding, thereby largely insulating it from challenge, is not a basis to conclude that any particular dispute is excluded from it. To the contrary, a commercial object of Cl 21 is to limit challenges. All disputes, not only some, resolved by the process are final and binding.
Clause 21 does not prescribe or limit the nature of the expert's decision. There is no implication that money or interest 'awards' are outside the expert's determination. Clause 21 makes it clear that the determination may vary the Agreement. The determination will not be a judgment or a judicial or quasi-judicial pronouncement. It will have only contractual effect.
The existence of the step-in right in Cl 23 brings with it no implication that Cl 21 is narrow. A dispute in connection with the exercise of the step-in right would be a dispute in connection with the Agreement as much as any other that is susceptible to Cl 21.
I do not accept the submission that Cl 21 does not operate if the Agreement is terminated. It contains no such implication. A dispute after termination or about termination of the Agreement is one in connection with it. If the parties had intended to have multiple venues for the resolution of their disputes and that termination of the Agreement would be the demarcation line between those venues, they could and would have said so. Such a demarcation line lacks commercial rationality and would work commercial inconvenience. The parties would not have the benefit of the speedy and informal process to which they agreed.
The suggested demarcation does not cater for a dispute where an issue is whether the Agreement has been terminated. If such a dispute is not covered, a party could effectively halt the process by making an assertion of termination: see Ferris v Plaister (1994) 34 NSWLR 474 at 490B-D. If such a dispute is covered and the dispute is resolved in favour of termination, then retrospectively, the clause would have had no operation.
Neither Cl 21.9 (which requires the parties, despite the existence of a dispute, to continue to perform their obligations under the Agreement) nor Cl 30.1(2) (which provides that if the resolution of any Dispute has the effect of varying the obligations of the parties in a way that in inconsistent with the Agreement, then the Agreement will be varied accordingly) supports the contention that Cl 21 has no work to do after the Agreement has terminated.
As to Cl 21.9, if there is a dispute about whether the Agreement has terminated, it plainly has a field of operation. If it is common cause that the Agreement has terminated and there are no extant obligations under it, there is nothing to which Cl 21.9 applies. This says nothing about the ambit of Cl 21.1.
Clause 30.1(2) only operates to vary extant obligations inconsistent with the Agreement. If obligations are no longer extant because of termination, the expert determination will not have the effect of varying them. A determination will not necessarily vary the terms of the Agreement. If the Agreement has terminated, the determination may bring into existence new contractual rights and obligations. This clause, too, says nothing about the ambit of Cl 21.1.
I do not accept the submission that Cl 21 is void for vagueness. The absence of express procedural rules, mechanisms and safeguards beyond those which the parties agreed does not make the clause unworkable. The parties have left it to the expert to proceed how the expert considers fit. As discussed earlier, there is no overlap or competition between Cl 21 and Cl 30.9.
A somewhat passing reference was made to Raskin v Mediterranean Olives Estate [2017] VSC 94, in which Hargrave J found an expert determination clause void for uncertainty because it made provision for agricultural disputes go to a horticultural expert, disputes relating to management of the project or the legal interpretation to go to an independent lawyer, and for accounting disputes to go to an independent accountant, without providing a machinery to prevent overlap. His Honour considered this notionally allowed parallel expert referrals which might conflict or have different outcomes and that there was an absence of essential matters to make the clause sufficiently certain to be enforceable. That is not this case.
The parties should be held to their bargain.
[8]
CONCLUSION
The summons is dismissed.
The Court:
1. declares that the Dispute Notice given by the defendant/cross claimant to the plaintiff/cross defendant on 25 October 2019 is a valid Dispute Notice within the meaning of Clause 21.2 of the Project Delivery Agreement entered into on 26 November 2015 as amended;
2. declares that the letter dated 21 April 2020 from the defendant/cross claimant to the President of the NSW Bar Association was and is a valid referral under Clause 21.5(2) of the said Agreement;
3. provisionally orders that the plaintiff/cross defendant is to pay the costs of the proceedings of the defendant/cross claimant. This order will solidify 10 days after this judgment unless a party notifies the other party and my Associate in writing that some other order is sought and specifies what order sought and why. If such notice is given, the provisional order will not take effect and arrangements will be made for the determination of any issue as to costs.
[9]
Endnotes
The defendant was previously called EBD Park Lane Pty Ltd.
MP Park Lane Pty Ltd v Wollongong City Council [2019] NSWLEC 1197.
[10]
Amendments
18 June 2020 - Deleted word "here" end of para 57
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Decision last updated: 18 June 2020