Winter v Somers [2000] TASSC 33

Commercial Arbitration Act 1986 (Tas), s53(1).

Australian Coal and Shale Employees' Federation v The Commonwealth [1953] HCA 25; (1953) 94 CLR 621, applied.

Judgment Number: [2000] TASSC 33

1 By a building agreement dated 21 July 1998 the appellants agreed to build a dwelling for the respondents. The appellants instituted proceedings against the respondents in the Magistrates Court, civil division, claiming $11,067.17 as the balance amount due and payable to them pursuant to the building agreement.

2 The respondents successfully applied to the Magistrates Court for an order staying the appellants' proceedings. This is an appeal from that order. Such an order may be made pursuant to the Commercial Arbitration Act 1986, s53(1) ("the Act") which provides:

"53(1) If a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to subsection (2), apply to that court to stay the proceedings and that court, if satisfied -

(a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and

(b) that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration -

may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit."

3 The relevant provisions in the building agreement are in cl 26 and 27. They are as follows:

(a) In the event of any dispute or difference between the parties to this agreement arising under this agreement, either party shall commence the dispute resolution procedure provided for by this Clause by giving written notice to the other party with whom the dispute exists.

(b) If the dispute is not resolved within ten days of such notice, the parties agree to deal with the dispute through the means set out in Clause (c).

(e) If the dispute is not settled within a reasonable time either party may terminate the dispute resolution procedure provided for by this Clause and will give written notice to the other party the dispute is to be arbitrated under Clause 27 or referred to the Courts.

(a) Should any dispute or difference arise between the Owner and the builder either during the progress of the Works or after the determination, abandonment or breach of the contract, as to the construction of this contract or as to any matter or thing of whatsoever nature arising thereunder or in connection therewith and only upon failure to determine the dispute or difference in accordance with the procedure agreed under Clause 26 then such dispute or difference shall be dealt with by arbitration (in accordance with the provisions of the Commercial Arbitration Act 1994).

(b) Either party may give to the other notice in writing of the dispute or difference."

4 These provisions are expressed in mandatory terms. Clause 26(a) requires that in the event of a dispute or difference arising under the agreement "either party shall commence their dispute resolution procedure". Clause 27(a) requires that if any dispute or difference arises as to any matter or thing of whatsoever nature in connection with the agreement upon and only upon the failure of the dispute resolution procedure to determine the dispute, "such dispute or difference shall be dealt with by arbitration". The material before the learned magistrate established that the claim the appellants are pursuing against the respondents is a claim which comes wholly within cl 26 and 27 of the building agreement. Clause 27 constitutes an arbitration agreement for the purposes of the Act, s4, which defines an arbitration agreement as an agreement in writing to refer present or future disputes to arbitration. It is of no consequence that a precondition to the reference to arbitration is compliance with the dispute resolution procedure provided for in cl 26; Manningham City Council v Dura (Australia) Constructions Pty Ltd [1999] VSCA 158.

5 In support of their application, the respondents filed an affidavit in which they, inter alia, averred that they were willing and able to attend an arbitration of the dispute, but had received no notice to attend the same. This evidence was not challenged before the learned magistrate. He observed that it seemed to him that it would be a lot quicker and cheaper if the matter proceeded by way of an arbitration rather than through the court. Counsel for the appellants submits that this consideration is irrelevant. I do not accept that this is so. Subject to the express requirements of the Act, s53(1)(a) and (b), the learned magistrate had a wide discretion. The cost to the parties of the alternative courses for resolving their dispute was a relevant consideration. It was so considered in Denton v Legge (1895) 72 LT 626. After making the observation to which I have referred, about the expense of proceeding by way of an arbitration, the learned magistrate said that the matter ought properly be disposed of by arbitration and granted the requested stay.

6 Counsel for the appellants submits that the learned magistrate failed to give proper and adequate reasons for his decision. Whilst the reasons expressed by the learned magistrate for the exercise of his discretion are sparse, this Court is not left in the position that it is in any doubt about the factual basis for the learned magistrate's decision or his reasoning process. What was said in the course of counsel's submissions to the learned magistrate, coupled with the learned magistrate's brief comments when making the order are adequate; Pettitt v Dunkley (1971) 1 NSWLR 376 at 382 and Sun Alliance Insurance Ltd v Massoud [1989] VicRp 2; [1989] VR 8 at 18. In the course of counsel's submissions, the learned magistrate was expressly referred to in the Act, s53(1)(a) and (b). It is clearly implicit from his decision that he was satisfied:

* that there was no sufficient reason why the matter should not be referred to arbitration in accordance with the building agreement; and

* that the respondents before me (the applicants before the learned magistrate) were at the time when the proceedings were commenced, and still remained, ready and willing to do all things necessary for the proper conduct of the arbitration.

7 As the learned magistrate was exercising a discretion, it is for the appellants to show that the exercise miscarried; House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505. In Australian Coal and Shale Employees' Federation v The Commonwealth [1953] HCA 25; (1953) 94 CLR 621 at 627, Kitto J said:

"... the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that the decision should therefore be affirmed unless the court of appeal is satisfied that it clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts."

8 The appellants have not discharged the onus which they bear. I am not satisfied that the learned magistrate erred in exercising the discretion as he did. On the material before him there was no reason not to stay the proceedings and thereby require the parties to proceed in accordance with their agreement, as embodied in cl 26 and 27 of the building agreement. Prima facie, parties should stick to their bargain; Tasmanian Pulp & Forest Holdings Ltd v Woodhall Pty Ltd [1971] Tas SR 330. The appeal is dismissed.