WFA v Hobart City Council

WFA PTY LTD (FORMERLY WATERFURNACE AUSTRALIA PTY LIMITED) V HOBART CITY COUNCIL

LAW OF CONTRACT-ARBITRATION CLAUSE-WHETHER CLAUSE VOID-WHETHER ENFORCING CLAUSE CONSITUTED BREACH OF NATURAL JUSTICE-ABUSE OF PROCESS

Facts: A clause in a written contract contained details of arbitration procedures to follow should a dispute arise. This included a timetable for delivery of pleadings and other documents. Arbitration became necessary between the parties. Prior to its commencement, the arbitrator made two variations to the timetable. These were in accordance with the arbitration clause, and were consented to by the parties. After the arbitration had begun, and after the evidence had concluded, the appellants sought an extension of time to prepare and submit additional documents. This was refused by the arbitrator. An award was made in favour of the respondents. The appellants sought to have the award set aside. This claim was dismissed by the trial judge. The appellants appeal against this decision, arguing the refusal to allow an extension of time constitutes a breach of natural justice.

Held: Meagher JA:. The purpose of arbitration is to help parties resolve their differences quickly and cost effectively. All the arbitrator did was to refuse another deviation from the timetable. This does not constitute a breach of natural justice.

Powell JA: The respondents submitted that these proceedings constitute an abuse of process. They argued they should be dismissed because of the number of other proceedings initiated by the appellants. If not dismissed, the respondents submit the proceedings should be transferred under the Jurisdiction of Courts (Cross-Vesting) Act 1987 to the Supreme Court of Tasmania, where the respondents have commenced proceedings to enforce the award. Given the number of proceedings brought by the appellants, even if these proceedings had not been dismissed below, they should now be dismissed as constituting an abuse of process.

Fitzgerald JA: When the timetable was being altered, neither party disputed the arbitrator's authority to do so. The appellants have since argued the arbitration clause breached a party's right to natural justice, as it did not permit the arbitrator to receive any documents after a certain time. Assuming the refusal to admit supplementary information did constitute a breach of natural justice, the arbitrator could still note that some of the appellant's supplementary materials raised matters which had not been answered by the respondents, and give this factor appropriate weight when making his decision. This has been done, so the requirements of natural justice have been met. ORDERS

1. Appeal dismissed with costs.- THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

28 March 2000 WFA PTY LTD (FORMERLY WATERFURNACE AUSTRALIA PTY LIMITED) JUDGMENT

1 MEAGHER JA: This is an appeal from Hunter J, who dismissed a claim of the present appellant Waterfurnace Australia Pty Limited to set aside an award made on 3 March 1998 by an arbitrator, Mr Graham Easton, in an arbitration between the appellant and the respondent. 2 The arbitration clause is contained in a written contract between the parties. That clause is clause 47.3 of the agreement. It is so important in the present case, and so unusual, that I think it should be set out in full. It is in the following form: "47.3 Arbitration

If the dispute involves a claim for an amount of $50,000.00 or more or an extension of time of 14 days or more and either party is dissatisfied with the decision of the nominated person under Clause 47.2 then the dissatisfied party ("the Claimant") shall within 7 days of receipt of the nominated person's decision giva (sic) notice to the other party ("the Respondent") referring the dispute to arbitration in accordance with the terms of this Clause 47.3.

The dispute shall be arbitrated by a single arbitrator ("the Arbitrator") agreed to by the parties, or, if the parties are unable to agree upon an arbitrator within 7 days of the service of notice under the preceding paragraph, the nominee of the person named in Annexure Part

For the purposes of the following paragraphs of this Clause 47.3, a reference to a number of days shall be construed as a reference to that number of days from but not including the date of appointment of the Arbitrator.

Within 7 days each party shall lodge with the Arbitrator security for the Arbitrator's fee for arbitrating the dispute in the sum of $5,000.00 or such greater sum as the Arbitrator may determine.

Within 7 days the Claimant shall submit a written statement of the Claimant's claims to the Respondent.

Within 14 days the Respondent shall submit a written defence to the claims and a written statement of the Respondent's counterclaims, if any, to the Claimant.

Within 21 days the Claimant shall submit a written reply to the defence and a written defence to the counterclaims of the Respondent.

Within 28 days the Respondent shall submit written reply to the defence to the counterclaims to the Respondent.

Within 28 days both the Claimant and the Respondent shall provide a copy of these submissions to the Arbitrator and shall provide all arguments and supporting information (which either party wishes to put to the Arbitrator) to the Arbitrator and to the other party.

Within 35 days each party shall submit its best offer of settlement. Each offer shall be of an amount in dollars (even if only $1.00) which the party offers to pay or to accept from the other party in full settlement of all of the claims and counterclaims, but excluding the costs of arbitration.

Within 42 the Arbitrator shall deliver an award. The award shall be for the amount of one or other of the offers referred to in the preceding paragraph. The Arbitrator shall select the offer which the Arbitrator considers to be the more just and fair. The Arbitrator shall not give any reasons for the award.

Upon delivery of the award the Arbitrator shall be entitled to the Arbitrator's fee. The whole of the Arbitrator' s fee shall be paid by the party against whom the award is made. If the fee is not paid within 49 days the Arbitrator apply the security to the payment of the fee.

When the Arbitrator's fee has been paid, the Arbitrator shall release any remaining security to the party entitled to it.

Each party shall bear its own costs of the arbitration." 3 In the arbitration, the present appellant was the "Claimant" and the present respondent was the "Respondent". Mr Easton was the Arbitrator. 4 The arbitrator set out a timetable for the delivery of pleadings, and other documents, between the parties.(No oral evidence was taken, or indeed permissible). The timetable complied with Clause 47.3. On more than one occasion the time table was varied by the arbitrator with the consent of both parties. 5 The arbitration concluded with an award of the arbitrator on 3 March 1998. The arbitrator found for the respondent in the amount claimed by the respondent (his role, of course, was limited to the choice of one sum out of two, even if he agreed with neither). There were no reasons given, because he was forbidden to give reasons. 6 What has caused the present dispute is the refusal of the arbitrator to receive certain documentary evidence which the appellant sought to tender to him on 11 February 1998. By this stage, the appellant had submitted a written statement of it is claims to the respondent, the respondent had submitted it is written defence to the appellant, and the appellant had submitted it is reply to the respondent. All submissions as to any counterclaims had also been completed. Then, all the above documents, together with "supporting information", was tendered by the respondent to the arbitrator. 7 The appellant claims that some of the "supporting information" took it by surprise. It sought an extension of time from the arbitrator in order to counter this "supporting information". He refused its request. 8 This court has no idea what the documentation was which allegedly caught the appellant by surprise. Nor did Hunter J. Nor, apparently, did counsel who appeared before us. Nor do we have any idea what "evidence in rebuttal" of this "surprise" evidence the appellant asked to lead but was precluded from doing so. 9 In these circumstances, I find certain remarks of his Honour a little perplexing. One is: "I have no doubt that, in the absence of the procedure agreed to by the parties in the arbitration agreement in the contract, it would have been incumbent upon the arbitrator to have granted time to the plaintiff, in the interests of natural justice, to afford it the opportunity sought by it in its application to him.

The other is: "Had the plaintiff been given the opportunity of further time to consider that material it would have been in a position to have presented further material than that which it had previously provided to the arbitrator, in accordance with clause 47 as amended by the agreement, and that material would have been favourable to the plaintiff." 10 I do not know on what factual basis these remarks proceed. Certainly there was a concession of counsel for the respondent that the evidence that the appellant was constrained from leading was relevant to the issues being arbitrated. But the attack on the arbitrator by the appellant was that he denied natural justice to the appellant. All he did was deny another deviation from an agreed timetable. I know of no authority which holds that an arbitrator must admit all relevant evidence even if it be tendered outside the agreed timetable. Arbitrations are intended to be swift, and timetables are the means by which that swiftness is achieved. I can see no basis for impugning the decision of the arbitrator, arrived at were for reasons were never enunciated. 11 One further curiosity deserves notice. There is also litigation concerning this arbitrator in the Supreme Court of Tasmania and the Supreme Court of South Australia. I can not understand this proliferation of litigation. Nor, I must say (although I am perhaps alone in this) can I understand how this Court gained jurisdiction in this matter.

Accordingly I would advise that the appeal be dismissed with costs.

12 POWELL JA: I have had the opportunity of reading in draft the Judgments which have been prepared by each of Meagher JA and Fitzgerald JA. I agree with their Honours' conclusion that the Appellant has failed to demonstrate that the Arbitrator denied to it the benefit of procedural fairness, it following that the appeal should be dismissed with costs. 13 However, in the light of two matters to which each of their Honours has referred, I wish to add some brief additional comments. 14 Although in the "Defendant's Contentions" which formed part of the Statement (RAB 4) filed on its behalf in the proceedings, the Respondent submitted, first, that the proceedings were an abuse of process as they sought substantially the same, or similar, relief to that sought by the Appellant in proceedings in the Supreme Court of Tasmania to which I will shortly refer; and, second that the proceedings, if not dismissed, should, pursuant to the provisions of s.5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987, be transferred to the Supreme Court of Tasmania where in addition to the proceedings which had been commenced by the Appellant in the Supreme Court of Tasmania, the Respondent had also commenced proceedings in that Court to enforce the award; in the Written Submissions (Blue AB 10), which were filed on its behalf in relation to the hearing before Hunter J, the Respondent did not dispute, but rather asserted, that this Court had jurisdiction in the matter upon the basis that the award made by the Arbitrator was made in New South Wales, a submission for which reliance was placed upon the decision of the House of Lords in Hiscox v. Outhwaite [1992] 1 AC 562. Since the decision of the House of Lords in Hiscox v. Outhwaite was that, for the purposes of s.5(2)(f), (5) of the Arbitration Act 1975 (UK) - an Act which was passed to give effect to the obligations of the United Kingdom under the New York Convention as to the enforcement of "Convention awards" - the place of signature was the place where an award "was made", I would take leave to doubt that, in other cases, the fact of signature is sufficient to confer on the courts of the place where an award has been signed jurisdiction to entertain applications either to enforce, or to set aside, the award in question. 15 In this case, the probability is that the relevant contract was executed in Tasmania; as is apparent, the principal was at all times located in Tasmania; the works the subject of the contract were to be carried out in Tasmania; and clause 1 - Construction of Contract - of the General Conditions of Contract relating to the works provided that "the law governing the contract, its interpretation and any agreement to arbitrate is the law of (Tasmania) …"; s.33 of the Commercial Arbitration Act 1986 (Tas) at all relevant times provided that an award made under an arbitration agreement might with the leave of the Supreme Court be enforced in the same manner as a judgment or order of the Court to the same effect and where leave was given, judgment might be entered in terms of the award, while s.42 of the same Act provided (inter alia) that where there had been misconduct on the part of an arbitrator the Supreme Court might on the application of a party to the agreement set the award aside either wholly or in part. 16 As I have already noted, the Respondent in its Statement submitted (inter alia) that the proceedings constituted an abuse of process and that, if for no other reason, the proceedings should be dismissed. The basis for this submission is sufficiently revealed by the following Chronology:

1998 March 3 Award by Arbitrator March 3 Demand by Respondent for payment of amount of Award. March 13 Respondent commences proceedings No. M56/98 in Supreme Court of Tasmania seeking to enforce Award March 13 Appellant commences proceedings No. 360/98 in Supreme Court of South Australia seeking to recover under contract ? Appellant files application No. 497 of 1998 in Supreme Court of South Australia seeking an order that statutory demand served by Respondent be set aside. April 9 Appellant commences proceedings No. M80/98 in the Supreme Court of Tasmania seeking an order that the Award be set aside. April 15 Respondent files application in Supreme Court of South Australia seeking to have proceedings No. 360/98 dismissed. April 16 Appellant commences proceedings 55017/98 in this Court. May 4 Appellant files Amended Claim in proceedings 360/98 in the Supreme Court of South Australia joining additional defendants. May 8 Respondent files Notice of Motion in proceedings 55017/98 seeking to have proceedings dismissed as an abuse of process. May 22 Appellant files Notice of Motion in proceedings 55017/98 seeking an order that the time for commencing the proceedings be extended to 16 April 1998. June 5 Hearing before Hunter J. Motion to extend time for commencing proceedings dismissed. Proceedings dismissed. June 5 Proceedings M80/98 in Supreme Court of Tasmania dismissed by consent. August 17 Appellant files Application for leave to appeal. August 18 Proceedings M56/98 in Supreme Court of Tasmania adjourned sine die pending outcome of proceedings 55017/98. October 13 Hearing in Supreme Court of South Australia of Respondent's application to dismiss proceedings No. 360/98. October 14 Proceedings 360/98 in the Supreme Court of South Australia dismissed by Kelly J. 17 Given this extraordinary record of proceedings brought by the Appellant, it is my view that, even if the proceedings had not been dismissed by Hunter J upon the grounds recorded by him in his Judgment, they ought to have been dismissed as constituting an abuse of process. 18 FITZGERALD JA: I agree with Meagher JA that this appeal should be dismissed with costs, and share His Honour's concern at the number of proceedings which have been brought in relation to the material award in the Supreme Courts of three different States, and his reservations about this Court's involvement. 19 The relevant arbitration clause is set out in His Honour's judgment. After the arbitrator was appointed, there were directions hearings and variations to the timetable set out in the arbitration clause, some by consent. At the time, neither party disputed the arbitrator's power to give further appropriate directions. 20 The proper law of the parties' contract is the law of Tasmania. Section 14 of the Commercial Arbitration Act 1986 of that state provides: "4. Subject to this Act and to the arbitration agreement, the arbitrator … may conduct proceedings under that agreement in such manner as the arbitrator … thinks fit." 21 One element of the appellant's argument was that the arbitration clause excluded the power which the arbitrator would otherwise have under section 14 to receive further material from a party after the arbitrator had been provided with a copy of the parties' submissions and "all arguments and supporting information" under the ninth paragraph of the arbitration clause. It was submitted that, in so providing, the arbitration clause excluded a party's right to natural justice and was contrary to public policy and void. 22 Even assuming that, on its proper construction, the arbitration clause did impliedly exclude the arbitrator's power to receive further material and that such an (implied) restriction would be contrary to natural justice and public policy and void, only that part of the arbitration clause would fail, and the arbitrator would have had the necessary power under section 14 of the Tasmanian Commercial Arbitration Act, if not otherwise. 23 The appellant's principal argument was that the arbitrator denied the appellant natural justice because he refused to receive additional material. That submission was founded upon comments by the trial judge which are (set out in paragraph 9 of Meager JA's reasons for judgment), which were apparently based upon a conclusion, at least to some extent facilitated by a concession by the respondent, that the "arguments and supporting information" which the respondent submitted to the arbitrator had not previously been communicated to the appellant, and were therefore unanswered in its "arguments and supporting information". However, the respondent's "arguments and supporting information" were not suggested to be outside the issues defined by the "pleadings". 24 It is not clear whether the trial judge considered that, had the arbitration been a court proceeding, it would have been appropriate to permit evidence in reply. Certainly, the appellant's entitlement, if any, could not be placed any higher. I will assume, without deciding, that denying such an entitlement is, or might be, a breach of natural justice. 25 The appellant's submission was the arbitrator regarded himself as bound by the arbitration clause to refuse it the opportunity to put "arguments and supporting information" in reply. However that misstates the position. 26 The arbitrator was undoubtedly influenced by the arbitration clause and correctly so. It was plainly aimed at a summary and expeditious determination of the parties' dispute. Even assuming that the appellant is otherwise correct, the dictates of natural justice did not leave only one course open to the arbitrator. It was open to him to proceed on the basis of the "arguments and supporting information" which the parties had placed before him and to take into account that some of the appellant's material raised new matter which had not been answered by the respondent when determining what (if any) weight should be given to that material. 27 A perusal of the arbitrator's reasons indicates that that is the course which he followed. In my opinion, that course was consistent with both the parties' agreement, as recorded in the arbitration clause, and the requirements of natural justice. 28 Accordingly, I am of the opinion that the appeal fails.

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