Alvaro v Temple

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: ALVARO -v- TEMPLE [2012] WASC 98

CORAM: SIMMONDS J

HEARD: 21 MARCH 2011

DELIVERED : 27 MARCH 2012

FILE NO/S: ARB 17 of 2009

BETWEEN: ROCCO DOMENIC ALVARO
Applicant
AND
MARK WILLIAM ALEXANDER TEMPLE
ANDREA ELLEN TEMPLE
First Respondents
ADRIAN BOWMAN GOOLD
Second Respondent

Catchwords:

Arbitration - Leave to appeal and appeal - Whether errors in law or misconduct of proceedings or both in making or not making certain findings - Whether error in law or misconduct of proceedings or both in making certain determinations - Whether question of law could substantially affect the rights of parties - Whether manifest error of law on the face of the award - Whether arbitrator incompetent or unsuitable to deal with dispute

Legislation:

Commercial Arbitration Act 1985 (WA), s 33, s 38, s 42, s 43, s 44

Result:

Leave to appeal granted
Appeal dismissed

Category: B

Representation:

Counsel:

Applicant:     Mr D J Garnsworthy
First Respondents         :     Mr R D Shaw
Second Respondent       :     No appearance

Solicitors:

Applicant:     In person
First Respondents         :     Lavan Legal
Second Respondent       :     No appearance

Case(s) referred to in judgment(s):

Alvaro v Temple [2009] WASC 205
Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321
D & M (Australia) Pty Ltd v Crouch Developments Pty Ltd [2010] WASC 130
D & M (Australia) Pty Ltd v Crouch Developments Pty Ltd [2011] WASCA 109
Doran Constructions Pty Ltd v Health Administration Corporation of New South Wales [1994] 12 BCL 59
Friend and Brooker Pty Ltd v Council of the Shire of Eurobodalla [1993] NSWCA 103
Gebauer Nominees Pty Ltd v Cole [No 2] [2008] WASCA 41
Gold City Developments Pty Ltd v Portpride Pty Ltd [2010] WASC 148
Korin v McInnes [1990] VR 723
New Generation Enterprises Pty Ltd v WA Planning Commission [2007] WASCA 89
Nouvelle Homes Pty Ltd v G & M Smargiassi [2008] WASC 127
Oil Basins Ltd v BHP Billiton Ltd [2007] VSCA 255; (2007) 18 VR 346
Peter Schwartz (Overseas) Pty Ltd v Morton [2003] VSC 144
Promenade Investments Pty Ltd v New South Wales (1991) 26 NSWLR 203
Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251
Villani v Delstrat Pty Ltd [2002] WASC 112
Vodafone Pty Ltd v Supercall Pty Ltd [2003] NSWSC 302

SIMMONDS J:

Introduction

This is an application by amended notice of originating motion of 23 August 2010 (the amended notice of originating motion) for leave to appeal and to appeal against an amended interim award of an arbitrator (the amended interim award). The application for leave is under Commercial Arbitration Act 1985 (WA) s 38(4)(b). The applicant seeks an order to set aside or vary the amended interim award under s 38(3)(a) or s 42(1)(a). The applicant also seeks the removal of the arbitrator under s 44(a) or s 44(c). The applicant in the alternative to the order to set aside or vary the amended interim award and for the removal of the arbitrator seeks remittal of the award to the arbitrator for reconsideration under s 38(3)(b).
The amended interim award followed the decision on an application for leave to appeal and appeal against an interim award (the interim award) by the same arbitrator (the Arbitrator) as subsequently made the amended interim award. That decision on the interim award was Alvaro v Temple [2009] WASC 205 (Murphy J). The decision was that the interim award should be set aside in part under Commercial Arbitration Act s 42 and as set aside remitted to the Arbitrator under s 43 for further consideration in the respects indicated in the decision. The decision was also that the application for leave, and the appeal, in Alvaro should be allowed as to the complaints that the Arbitrator had failed to give reasons in respect of the matters identified; and the interim award should be remitted under s 38(3)(b) for reconsideration as to the provision of reasons for those matters, to the extent necessary after the setting aside referred to.
I begin these reasons by describing the background in further detail to the extent needed to introduce the grounds of appeal.

Background

The following matters appeared not to be in contest before me. Much of it is taken from Alvaro.
The applicant in the appeal (the Builder) and the first respondents (the Owners) were parties to a 'cost plus' building contract made on or about 30 April 2004 (the Contract). The Contract was for the construction of residential premises, and included the standard terms from the Housing Industry Association Ltd 'Cost Plus Contract'.
Between 4 ‑ 8 August 2008 there was an arbitration under the Commercial Arbitration Act. The Owners were the claimants in the arbitration, while the Builder was the respondent.
On 31 October 2008 the Arbitrator published the interim award. In it, the Arbitrator identified the matters for determination and recorded his determinations as indicated in Alvaro [8] ‑ [9]:
The Arbitrator, in the interim award, after making a finding as to the documents constituting the Contract, identified eight matters for determination as follows:
1.Whether the Contract was validly terminated by the Owners.
2.The amount owing to the Builder, or the amount owing to the Owners, for work done as at the date of termination.
3.Rectification costs of stairs and plumbing, claimed by the Owners.
4.Loss of rent, claimed by the Owners.
5.Infringement of copyright, claimed by the Builder.
6.Interest payable, claimed by each party on their respective principal claims.
7.The Builder's claim for his 'cost plus fee' on the value of the works remaining to be completed as at the date of termination:
8.Costs (to be determined in the Final Award).
The Arbitrator recorded the following determinations:
1.the Contract was validly terminated by the Owners (item 1);
2.(a)the amount which had fallen due to the Builder by the Owners prior to termination of the Contract was $49,520 (item 2.2);
2.(b)the Owners, as at the date of termination, had paid directly to the Builder the sum of $63,440.50 (item 2.3);
2.(c)the Owners were entitled to $13,920.50, being the difference between the sum paid as at the date of termination ($63,440.50), and the sum due ($49,520);
3.the Owners were entitled to $11,000 to rectify defects to the stairs, and were entitled to $750 for correcting incorrectly installed plumbing waste pipes (items 3.1 and 3.2);
4.(a)the Owners were not entitled to claim for loss of rent; however
4.(b)the Owners suffered loss due to:
(i)serious breaches of contract as listed in item 1.2 of the interim award;
(ii)the caveat which the Builder had lodged over the property;
and that such matters would be the subject of further submissions for determination in the Final Award (item 4);
5.the Builder's claim for copyright infringement should be disallowed (item 5);
6.interest due to the Owners should be deferred to the Final Award (item 6.5);
7.the Builder's claim for 'cost plus fee' on uncompleted works, plus interest, should be disallowed (item 7);
8.costs would be determined in the Final Award (items 8 and 10.4).
The interim award was organised under headings numbered as the determinations were numbered, with additional headings 9.0 'Summary' and 10.0 'Matters to be determined in Final Award'.
By further re‑amended notice of motion dated 9 June 2009 the Builder sought leave to appeal, and to appeal, against the interim award under Commercial Arbitration Act s 38(4)(b). He further or alternatively sought orders to set aside the interim award under s 42(1)(a). He also sought removal of the Arbitrator under s 44(a) or s 44(c) or both.
Alvaro, published on 29 July 2009, was the decision on that further re‑amended notice of motion.
The conclusion in Alvaro was as follows:
In my opinion:
(a)The interim award should be set aside in part under s 42:
(i)in relation to the items in it which refer to or depend upon a finding as to the amount paid by the Owners to the Builder prior to termination of the Contract (items 2.3, 2.4 and 2.5 (insofar as it refers to item 2.3), 6.3, 6.4, 9.1 and the last line in item 9 after item 9.3, and 10.1); and
(ii)in relation to the findings that the Owners have suffered losses due to breaches of Contract or by reason of the lodgement of a caveat and the proposal to deal with those matters and loss of rent in the Final Award (part of items 4.2, 4.3, 4.4, 4.6, 4.7 and 10.2).
(b)The interim award, as set aside in the respects referred to in (a), should be remitted under s 43 of the Act to the Arbitrator for further consideration as to the amounts paid by the Owners to the Builder prior to the termination of the Contract and to make final findings in relation to the amount, if any, due by the Builder to the Owners, or the Owners to the Builder, in consequence.
(c)The application for leave to appeal, and the appeal, should be allowed in respect of the complaints that the Arbitrator failed to give reasons in respect of the matters the subject of the first five grounds of the motion, and the interim award should be remitted under s 38(3)(b) for the purpose of reconsideration as to the provision of reasons in respect of such matters to the extent necessary after the setting aside referred to above. In this regard I have in mind that remitter for reasons in relation to the first ground of the motion is unlikely to be necessary given that I have found that the interim award should be set aside insofar as it deals with the payments made prior to termination [91].
I note that the failure of the Arbitrator to give reasons in the respects indicated was not for the most part explored in any detail in the reasons in Alvaro. That appears to have been in part at least because:
The Owners accept that in making the findings referred to in grounds 1 ‑ 5, the Arbitrator failed, on the face of the interim award to provide proper or adequate reasons, and that the failures constitute manifest errors of law on the face of the interim award for the purposes of s 38(5)(b)(i) of [the Commercial Arbitration Act] [27].
The relevant matters were these.
The first matter, the subject of the first of the five grounds of the motion, was the finding (in interim award [2.3]) that the payments by the Owners to the Builder totalled $63,440.50. However, this was a finding which was to be set aside ([91](a)), and the remitter as to this matter was 'unlikely to be necessary' ([91](c)).
The second matter, the subject of the second of the five grounds of the motion, was the finding (in the recitals to the interim award, 'Schedule of contract documents') that a document 'Annexure B Progress Payment Schedule' (Annexure B) was not part of the Contract.
The third matter, the subject of the third of the five grounds of the motion, was the finding (in interim award [1.5]) that the Owners were entitled to terminate the Contract.
The fourth matter, the subject of the fourth of the five grounds of the motion, was the finding (in interim award [3.1]) that the Builder was liable for the stairs being constructed other than in compliance with the Building Code of Australia.
The fifth matter, the subject of the fifth of the five grounds of the motion, was the finding (in interim award [2.2]) that the moneys payable by the Owners to the Builder were $49,520.
On 20 October 2009 the Arbitrator published the amended interim award. It embodies amendments to the interim award in [1.0] 'Validity of contract determination by the Owners'; [2.0] 'Amount owing to the builder at termination or amount owing to the Owners, including stairs and plumbing costs'; [3.1] 'Rectification of stairs'; [4.0] 'Loss of rent claimed by Proprietors $83,160.00'; [6.0] 'Interest'; [7.0] 'Builder's Cost Plus Fee and Interest $64,289.78'; [9.0] 'Annexure B, Progress Payment Schedule'; [10.0], being former [9.0] 'Summary'; and [11.0], being former [10.0] 'Matters to be determined in Final Award'.
It appears to me that the amendments in [7.0] are simply consequential on those in [1.0]; and the amendments in [10.0] are simply consequential on those in [2.0].

The present proceedings

These proceedings were initially brought by the Builder by notice of originating motion for leave to appeal against the amended interim award and for the interim amended award to be set aside on the grounds of misconduct. This notice of motion was dated and filed 10 November 2009.
By chambers summons dated and filed 3 June 2010 the Owners applied for enforcement of the interim amended award.
The terms of orders made by Acting Master Chapman on 1 July 2010 were in material part that the Builder had leave on or before 22 July 2010 to file and serve on the Owners an amended notice of originating motion for leave to appeal and that the application for leave to appeal and the appeal against the amended interim award were to be heard with the application for enforcement of the amended interim award.
By orders made on 24 August 2010 Hall J granted leave to the Builder to file and serve the amended notice of originating motion and adjourned the appeal to 15 September 2010. Among other orders Hall J made on 24 August 2010 was one for the Builder to pay into court by the close of business 27 August 2010 the sum there stipulated (the stipulated sum) pursuant to Commercial Arbitration Act s 42(3) (the order of 24 August 2010 to pay the stipulated sum). Commercial Arbitration Act s 42(3) states in material part that on an application under s 42 to set aside an award the court may order the sum payable by the award to be paid into court.
By orders made 7 September 2010 (the orders of 7 September 2010) Hall J ordered the hearing of 15 September 2010 to be vacated and the hearing stayed pending payment of the stipulated sum into court. Among other orders Hall J made on 7 September 2010 were two. One was for the Builder by 14 September 2010 to file and serve an affidavit explaining the failure to comply with the order of 24 August 2010 to pay the stipulated sum and addressing the question of when the stipulated sum could be paid: failing the filing of such affidavit the appeal was to be dismissed (the order of 7 September 2010 for dismissal of the appeal). The other order (the consequential order) was that in the event the appeal was so dismissed, among other things leave was granted to the Owners to enforce the amended interim award pursuant to Commercial Arbitration Act s 33 and judgment would be entered for the Owners in terms that the Builder pay them the stipulated sum.
In the event on 14 September 2010 an affidavit of the Builder sworn that day was filed. In that affidavit the Builder deposed as to why he had failed to comply with the order to pay the stipulated sum of 24 August 2010 and deposed he would be 'able' to make payment of the stipulated sum into court ('in about 4 weeks').
On 15 October 2010 the court accepted the Builder's payment of the stipulated sum into court.
I consider that as a result of the events I have described as following the orders of 7 September 2010 the order of 7 September 2010 for dismissal of the appeal and the consequential order did not come into effect.
In the event submissions in writing and made orally at the hearing before me were only addressed to the application for leave to appeal and to the appeal. I will return to the application for enforcement of the amended interim award at the end of these reasons.

Grounds of the appeal

There were six grounds, which I set out with what were the common understandings of the parties of the parts of the amended interim award and other matters to which those grounds related.
Ground 1 is:
1.The arbitrator erred in law in finding that the first respondents paid the appellant $73,354.50 exclusive of payments made direct to subcontractors, when it was the first respondents' undisputed evidence that of this sum they paid:
1.1$5,000 to N & R Bricklayers; and
1.2$5,914 to Cilento Homes.
It was common ground that this related to [2.3] in the amended interim award, replacing interim award [2.3], on the total of the amounts paid by the Owners to the Builder, excluding payments made direct to subcontractors. The only difference from interim award [2.3] was the inclusion in amended interim award [2.3] of an amount corresponding to the sum of the two amounts in grounds 1.1 and 1.2. I should note that the total shown in amended interim award [2.3] is $74,354.50, $1,000 more than the total stated in ground 1. Nothing appears to turn on this difference.
Grounds 2 and 3 should be read together, and are:
2The arbitrator erred in law and misconducted the proceedings in failing to:
2.1consider the items claimed by the appellant in his Scott Schedule;
2.2identify which of the items he accepted or rejected; and
2.3give reasons for his decision in respect of each such item.
3Alternatively to paragraph 2, the arbitrator erred in law and misconducted the proceedings by failing to give proper or adequate reasons for his conclusion that the amount owing by the first respondents to the appellant was $49,520 (para 2.3 of the amended interim award).
Particulars of paragraph 3
The second respondent:
(a)accepted Mr Faigan's evidence that the total amount owing by the first respondents to the appellant was $59,157 inclusive of GST, subject to adjustments;
(b)found that the amount owing was $49,520; and
(c)failed to give any reasons for his adjustment.
It was common ground that these two grounds related to [2.2] of the amended interim award, replacing [2.2] in the interim award, on the amounts owing by the Owners to the Builder. The only amendment to [2.2] of the interim award was the addition of a statement, immediately before the amended interim award's listing of entries and above the heading 'The Claimant's figures are amended as follows'. That statement was 'I accept the evidence of Mr Faigen with the following adjustments'.
It was further common ground that the reference in ground 2.1 to 'his Scott Schedule' was to the itemisation of costs, incurred by the Builder, by his expert. That itemisation was in evidence in the arbitration and was in the appellant's bundle of documents for these proceedings dated 23 August 2010 (the appellant's bundle). The reference in [2.2] of the amended interim award to 'the evidence of Mr Faigen' was to the acceptance or rejection of those items by the Owners' expert. The evidence of the acceptance or rejection was shown in that schedule, although there was also at least one written report by Mr Faigen including a variation of it relating to the same matters, a report and variation also in evidence at the arbitration which were also in the appellant's bundle. In addition Mr Faigen had given oral evidence at the arbitration. However, I did not have any transcript of the arbitration or other evidence of the oral evidence given there.
Grounds 4 and 5 should be read together, and are:
4.The arbitrator erred in law and misconducted the proceedings by failing to make any finding as to whether, when and how the first respondents:
4.1issued a notice of default, being a necessary prerequisite for them to terminate the contract pursuant to clause 15(b); and
4.2terminated the contract.
5The arbitrator erred in law and misconducted the proceedings by misdirecting himself that all of the events described in paragraph 1 of the amended interim award would have entitled the respondents to issue a notice of default, being a necessary prerequisite to [sic] for them to terminate the contract pursuant to clause 15(b).
It was common ground these related to [1.0] in the amended interim award, replacing [1.0] in the interim award. The only amendments to [1.0] in the interim award were of three kinds. One was the addition in the amended interim award of new items [1.5] ‑ [1.10], each describing findings by the Arbitrator of events which allowed the Owners to terminate the Contract, two of which ([1.5] and [1.7]) added a reference to particular clauses in the Contract: these events were apparently in addition to the events described by the Arbitrator in [1.3] and [1.4] in the amended interim award, which are identical to [1.3] and [1.4] in the interim award. Another kind of amendment was the addition of a new [1.11] in the amended interim award. The third kind of amendment was the modification of what was [1.5] in the interim award and became [1.12] in the amended interim award.

Amended interim award [1.11] reads:
1.11On February 27, 2006, the claimants wrote to the respondent and stated they now terminate the contract. The respondent replied on February 27 stating that the claimants were in default re non payment of progress claims and that no further work would be done on the project until payment is received. The claimants replied on March 1, 2006 denying the validity of annexure B (progress payment schedule).
Interim award [1.5] reads:
1.5I therefore determine that the Cost Plus Contract between the Parties was validly determined by the Owners.
Amended interim award [1.12] reads:
1.12I therefore determine that the afore mentioned events allowed the Owners to terminate the Contract between the Parties as per clause 17(a)(i) of the Cost Plus Contract.
The reference in [1.12] in the amended interim contract to Contract cl 17(a)(i) is to the following:
17.EVENTS ALLOWING OWNER TO TERMINATE
(a)The Owner may, in addition to any other rights under this Contract, terminate this Contract in any of the following events:
(i)any breach of this Contract by the Builder;
The reference in ground 5 to cl 15(b) of the Contract is to the following:
15.EARLY TERMINATION
…
(b)Neither party shall be at liberty to terminate this Contract or exercise or enforce any other right or remedy in relation hereto whether pursuant to this contract or at law or in equity without first giving to the other party a notice in writing specifying the complaint(s). If the Builder gives to the Owner such notice of default the Builder shall be entitled to suspend the Works until the complaint(s) in that notice have been remedied. If after FIVE (5) days of service of such notice, the other party fails to remedy the complaint(s), then the party giving such notice may terminate this Contract forthwith.
The sixth and final ground is:
6By reason of:
6.1grounds 1 to 5; and
6.2the second respondent's failure to comprehend and comply with the directions given by Justice Murphy in Alvaro v Temple [2009] WASC 205,
the arbitrator misconducted the proceedings and is manifestly incompetent or unsuitable to deal with the dispute.
I turn now to the general principles applicable to the consideration of these grounds. There appears to be no dispute or question as to those principles, except as I will indicate.

The applicable principles generally

It will be noted that all but grounds 1 and 6 assert both error of law and misconduct of the proceedings in the respect or respects the ground identifies.
Ground 1 asserts error of law in the respects ground 1 identifies; while ground 6 asserts misconduct of the proceedings, and the manifest incompetence or unsuitability of the Arbitrator to deal with the dispute, in the respects ground 6 identifies. However, it will be seen that by the terms of ground 6.1 there is an allegation the Arbitrator misconducted the proceedings by reason of ground 1, among other grounds.
Under the Commercial Arbitration Act and the authorities, as will become apparent, error of law, misconduct of the proceedings and incompetence or unsuitability to deal with the dispute are distinct bases on which a court may intervene in an arbitration.
Accordingly I deal with the applicable principles under each heading separately, beginning with error of law.

Error of law

For my purposes, I adopt as a most useful statement of the background to and terms of the principally relevant provisions of the Commercial Arbitration Act the following, from D & M (Australia) Pty Ltd v Crouch Developments Pty Ltd [2010] WASC 130 [37] ‑ [39] (Blaxell J) (D & M (Australia) WASC), leave to appeal refused and appeals dismissed sub nomD & M (Australia) Pty Ltd v Crouch Developments Pty Ltd [2011] WASCA 109, without comment on the matters I draw from D & M (Australia) WASC in these reasons:
The Commercial Arbitration Act 1985 (WA) is part of uniform legislation throughout Australia which regulates arbitrations. The clear policy of the Act is to achieve speedy, economic and informal relief to parties to arbitration agreements, with only limited scope for intervention by the courts: (New Generation Enterprises Pty Ltd v WA Planning Commission [2007] WASCA 89; Lamac Developments Pty Ltd v Devaugh [2003] 27 WAR 287 [110]). This policy is reflected in s 38(1) which provides that the court has no jurisdiction to set aside or remit an award on the ground of error of fact or law, other than on an appeal under s 38(2).
The right of appeal under s 38(2) is restricted to any question of law arising out of an award. This right is further limited by s 38(4) which provides that an appeal can only be brought with the consent of all other parties or, alternatively, with the leave of the Supreme Court. Section 38(5) goes on to provide that:
'The Supreme Court shall not grant leave under subsection (4)(b) unless it considers that -
(a)having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and
(b)there is -
(i)a manifest error of law on the face of the award; or
(ii)strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law.'
Accordingly, this court's discretion to grant leave only arises when an appellant meets the threshold requirements of s 38(5)(a) combined with either of s 38(5)(b)(i) or s 38(5)(b)(ii). When the discretion does arise, it is unfettered, and is to be exercised after considering all of the circumstances of the case (Qantas Airways Ltd v Joseland (1986) 6 NSWLR 327, 333; Forsayth NL v Australasian Gold Mines NL (Unreported, WASC, Library No 920420, 18 August 1992) (Ipp J); Thiess Contractors Pty Ltd v Water Corporation (Unreported, WASC, Library No 970561, 22 October 1997) (Parker J).
Commercial Arbitration Act s 38(3) provides for the following powers on the determination of an appeal on an error of law:
(3)On the determination of an appeal under subsection (2), the Supreme Court may by order -
(a)confirm, vary or set aside the award; or
(b)remit the award, together with the Supreme Court's opinion on the question of law which was the subject of the appeal, to the arbitrator or umpire for reconsideration or, where a new arbitrator or umpire has been appointed, to that arbitrator or umpire for consideration,
and where the award is remitted under paragraph (b) the arbitrator or umpire shall, unless the order otherwise directs, make the award within 3 months after the date of the order.
On the first of the two threshold requirements in Commercial Arbitration Act s 38(5)(a) for the enlivening of the discretion to grant leave to appeal, that the determination of the questions of law concerned could substantially affect the rights of one or more parties to the arbitration agreement, I note what was said in respect of that requirement in Gold City Developments Pty Ltd v Portpride Pty Ltd [2010] WASC 148 [29] (Mazza J). His Honour there stated that that requirement meant that the question of law:
[M]ust be a matter of practical importance and not a minor or technical point: Pioneer Shipping Ltd v BTP Tioxide Ltd [1980] 1 QB 547, 564 (Denning MR).
I also note Vodafone Pty Ltd v Supercall Pty Ltd [2003] NSWSC 302 [57] ‑ [61] (Nicholas J). I take from that authority that the application of that requirement is not confined to cases where the nature of the effect is monetary, but includes questions of the construction of a provision of the contract. On that authority, and in the absence of any other that was cited to me or that I could find, I would take it also that a question of whether the contract had been effectually terminated would be one which could substantially affect the rights of the parties.
It is not suggested here that in respect of the second threshold requirement that the second alternative, in Commercial Arbitration Act s 38(5)(b)(ii), is relevant.
Thus, the remaining threshold requirement in this case is the first alternative, s 38(5)(b)(i), the requirement that there be a 'manifest error of law on the face of the award'.
As to the element for the error of law to be 'manifest', I note D & M Australia WASC [41], referring to Promenade Investments Pty Ltd v New South Wales (1991) 26 NSWLR 203 and New Generation Enterprises Pty Ltd v WA Planning Commission [2007] WASCA 89:
For an error of law to be 'manifest' it must be more than arguable. There must be powerful reasons for concluding on a preliminary basis, without any prolonged adversarial argument, that there is on the face of the award an error of law (Promenade Investments, 226; New Generation Enterprises [4]).
As to the element that the manifest error of law be 'on the face of the award', I note Alvaro [37]:
Insofar as s 38(5)(b)(i) requires that the error be 'on the face of the award', the error is not to be discovered by looking behind the back of the award. However, materials referred to in the reasons of the award may be considered if they are incorporated into it, or referred to in the award insofar as, without reading them, it is not possible to understand what has been decided. See New Generation v WAPC [49]; Anaconda Operations Pty Ltd v Fluor Australia Pty Ltd [2003] VSC 275 [49]. Errors of law on the face of the award may be contrasted, therefore, with arbitral misconduct, the evidence for which is generally found by reference to material extraneous to the award itself: Athens Cape Naviera SA v Deutsche Dampfschiffahrtsgesellschaft 'Hansa' Aktiengesellschaft (The 'Barenbels') [1985] 1 Lloyd's Rep 528, 532; Promenade Investments, 222 ‑ 223.
As to what is and is not an 'error of law', I note, relevantly to the grounds of appeal in this case, Alvaro [39], [41] ‑ [44] referring to Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251, Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, Friend and Brooker Pty Ltd v Council of the Shire of Eurobodalla [1993] NSWCA 103, and Oil Basins Ltd v BHP Billiton Ltd [2007] VSCA 255; (2007) 18 VR 346, among other authorities:
A finding of fact by an arbitrator which is perverse, or contrary to the overwhelming weight of the evidence, is not an error of law, provided there is some evidence upon which the arbitrator could so find: Warley Pty Ltd v Adco Constructions Pty Ltd (1988) 8 BCL 300, 304, 311 ‑ 312 (Warley v Adco Appeal Decision); Update Constructions v Rozelle (259).
…
The question of whether there is any evidence of a particular fact is a question of law: ABT v Bond (355). The making of a finding of fact in the absence of any evidence at all is an error of law: ABT v Bond (355 ‑ 356); Ukrainian Association of Western Australia in Perth (Inc) v Squire Constructions Pty Ltd [2004] WASC 4 [11] …
A failure to find facts necessary in law to support the conclusion reached by the arbitrator has also been held to be an error of law: Friend and Brooker Pty Ltd v Council of the Shire of Eurobodalla [1993] NSWCA 103; GRD Kirfield Ltd v First Trade Consulting Pty Ltd [2004] WASC 158 [34]; Oil Basins Ltd v BHP Billiton Ltd [2007] VSCA 255; (2007) 18 VR 346 [65]. An error of law of that kind would ordinarily result in the matter being remitted to the arbitrator for further consideration: Friend and Brooker v Shire of Eurobodalla; Sydney Water Corporation Ltd v Aqua Clear Technology Pty Ltd [1996] NSWSC 640.
A failure by an arbitrator to give a statement of proper or adequate reasons in the award has been treated as an error of law: Warley Pty Ltd v Adco Constructions Pty Ltd (1988) 5 BCL 141, 146 (Smart J); Warley v Adco Appeal Decision (309); Sydney Water Corporation v Aqua Clear (Rolfe J); Oil Basins v BHP Billiton [63]; Re Poyser & Mills' Arbitration [1964] 2 QB 467, 478; RP Robson Constructions Pty Ltd v Williams (1989) 6 BCL 219, 220 (Giles J); (in Sabemo Pty Ltd v Malaysia Hotel (Australia) Pty Ltd (Unreported, NSWSC, 4 June 1992) Giles J expressed a contrary view to his view in RP Robson Construction v Williams on this matter).
However, providing the arbitrator is acting within jurisdiction, errors of law in the award in themselves, even gross errors of law, made in determining the substantive issues in the arbitration, are not misconduct: Forsayth NL v Australasian Gold Mines NL (1992) 7 WAR 549, 560, as approved in Gebauer Nominees Pty Ltd v Cole [No 2] [2008] WASCA 41 [62].
I turn now to misconduct.

Misconduct

Commercial Arbitration Act s 42 in material part provides:
(1)Where -
(a)there has been misconduct on the part of an arbitrator or umpire or an arbitrator or umpire has misconducted the proceedings;
…
the Court may, on the application of a party to the arbitration agreement, set the award aside either wholly or in part.
I adopt as a most useful general statement for my purposes of the basis for the court's intervention in relation to an award on the basis of misconduct of the arbitration proceedings D & M (Australia) WASC [85] ‑ [86]:
Section 42(1)(a) confers a discretion on the court to set aside an award (either wholly or in part) where there is misconduct by the arbitrator. Section 4 defines 'misconduct' as including 'corruption, fraud, partiality, bias and a breach of the rules of natural justice'. This is not an exhaustive definition and 'misconduct' in its technical sense can extend to any procedural irregularity which has or may have unjustly prejudiced a party (Melbourne Harbour Trust v Hancock (1927) 39 CLR 570, 588; Doran Constructions Pty Ltd v Health Administration Corp (1994) 12 BCL 59, 62).
In this regard, the parties are entitled to expect that arbitration will be conducted without mishap or [misunderstanding], and that subject to the wide discretion enjoyed by the arbitrator, the procedure adopted will be fair and appropriate (King v Thomas McKenna Ltd [1991] 2 QB 480, 491). Accordingly, 'misconduct' does not amount to much more than a mishandling of the arbitration as is likely to amount to some substantial miscarriage of justice (Doran Constructions, 63; Oil Basins [76]).
The reference to Doran Constructions is to Doran Constructions Pty Ltd v Health Administration Corporation of New South Wales [1994] 12 BCL 59.
I note, relevantly to the grounds appeal in these proceedings, D & M (Australia) WASC [87] ‑ [90]:
It is fundamental to the conception of fairness that a party should not be bound by an arbitrator's decision without being informed of the basis on which it is made (Oil Basins [56]). There is also the statutory requirement in s 29(1) that the arbitrator provide a statement of reasons for the award. This requires a statement of the relevant facts together with an explanation why each issue of fact was resolved in the way it was. It is also necessary that the arbitrator state his or her conclusion on each question of law (or of mixed law and fact) and explain how that conclusion was reached (Oil Basins [51]).
The extent to which an arbitrator must go in meeting these requirements will depend on the nature of the decision and on the particular circumstances of the case. If the dispute involves simple issues of fact a rudimentary identification of the issues, evidence and reasoning might be all that is required (Oil Basins [57]). The arbitrator's reasoning must nevertheless address the central contentions advanced by the parties, and deal with every 'submission worthy of serious consideration' (Peter Schwarz (Overseas) Pty Ltd v Morton [2003] VSC 144 [34]).
In a more complex arbitration involving an intellectual exchange with detailed submissions and analysis, the arbitrator's reasons should provide an intelligible explanation of why one set of evidence has been preferred over the other; why substantial submissions have been accepted or rejected; and ultimately, why one case is preferred over the other (Oil Basins [57]). Any failure by an arbitrator to deal with relevant evidence or substantial submissions is a mishandling of the arbitration which can amount to 'misconduct' within the meaning of s 42 (Oil Basins [76]).
However, the court should not approach the work of commercial arbitrators with a view to finding fault. Arbitration is to be encouraged, and arbitrators are largely free to express their reasons as they see fit. Nor should the court demand a higher standard of reasoning from legally trained arbitrators than from arbitrators who are not so trained. It is the nature of the particular dispute which sets the required standard for reasons, not the nature of the arbitrator (Oil Basins [59]).
I turn now to the power to set aside an award for misconduct by an arbitrator and the power to remove an arbitrator for misconduct, incompetence or unsuitability to deal with the dispute.

Misconduct, manifest incompetence or unsuitability to deal with the dispute

Commercial Arbitration Act s 44(a) and (c) provide:
44. Removal of arbitrator or umpire
Where the Court is satisfied that -
(a)there has been misconduct on the part of an arbitrator or umpire or an arbitrator or umpire has misconducted the proceedings;
…; or
(c)an arbitrator or umpire is incompetent or unsuitable to deal with the particular dispute,
the Court may, on the application of a party to the arbitration agreement, remove the arbitrator or umpire.
I note on removal the following, from Gebauer Nominees Pty Ltd v Cole [No 2] [2008] WASCA 41 [60]:
There can be no doubt that the power to remove an arbitrator for misconduct is a drastic remedy and not one to be exercised lightly. The value of arbitration as a method of resolving disputes, and the willingness of disputants to commit the necessary time and money to the arbitration process, would be seriously undermined if the courts were too ready to intervene to remove an arbitrator.
I further note on removal Alvaro [52] ‑ [53], quoting further paragraphs from Gebauer Nominees v Cole [No 2]:
In Gebauer Nominees v Cole [No 2] the Court of Appeal said at [63] and [65], in relation to s 42 and s 44 of the Act:
'… We respectfully agree with the view of the learned authors (Mustill & Boyd) of the Law & Practice of Commercial Arbitration in England (2nd ed, 1989), where they say:
"The fact that the court is given a wide power to remove the arbitrator in cases of misconduct does not mean that the power will be freely exercised. An arbitrator may commit errors - even serious errors - in the course of the reference, and yet remain perfectly able to carry the arbitration to a successful conclusion once his mistakes have been pointed out. Justice requires that in such a case the arbitrator should be left in office, rather than that the parties should suffer the delay and expense of beginning arbitration afresh (530)."
In our view, an arbitrator will be removed by reason of an error made in the course of an arbitration proceeding only where the error indicates some impropriety, partiality or general lack of capacity on the part of the arbitrator, so that "a reasonable person would no longer have confidence in the … arbitrator's ability to come to a fair and balanced conclusion on the issues if remitted": see Lovell Partnerships (Northern) Ltd v AW Construction Plc (1996) 81 BLR 83.'
Generally, a matter should only be removed from an arbitrator as a last resort, as opposed to having it remitted to him or her, although ultimately the proper relief will depend upon the nature and degree of misconduct and all the circumstances of the case: Sydney Water Corporation v Aqua Clear; Oil Basins v BHP Billiton [76] ‑ [80].
However, it was suggested to me, by counsel for both parties as I understand it, that, notwithstanding the reference to Gebauer Nominees v Cole [No 2] [65] in Alvaro, the position in that paragraph only applies to an error in the course of proceedings, which derives support from the reading of that paragraph in Nouvelle Homes Pty Ltd v G & M Smargiassi [2008] WASC 127 [150] (Beech J). For cases like that before me, the parties appeared to agree that the proper test may be that from Korin v McInnes [1990] VR 723, 727 (Brooking J):
Where, as I say, is the line to be drawn between competence and incompetence and between suitability and unsuitability, unless it is by asking whether a satisfactory arbitration can be had, or whether the arbitrator is able properly to perform his functions (which tests I regard as one and the same)? Can a person be said to be competent or suitable in this sense yet be removed because there is someone who is more competent or more suitable? Is the court to exercise a wide and undefined discretion to ensure that an arbitrator who is in some sense inferior does not determine a dispute? It seems to me that one cannot, in applying s 44, take the Orwellian farmyard approach and say that, while a given arbitrator is competent and suitable in the sense that he can do a satisfactory job, other possible arbitrators are more competent or more suitable. In other words, it seems to me that the test to be applied under para (c) is the same as that which would be applied on an application under the section formerly in force or on an application for an injunction to restrain an arbitrator from acting where incompetence or unsuitability was set up. Can the arbitrator properly perform his functions, so that a satisfactory arbitration can be had? Of course it is for the applicant to prove that he cannot.
This test appears, at least arguably, to be more stringent than a test based on a reasonable loss of confidence: see Korin (729).

To the extent my conclusions require me to do so, I will apply both tests here.
I turn now to the application of the relevant principles to the grounds of appeal.

Ground 1: error in finding as to amount paid by the Owners to the Builder

The sum of the two amounts the subject of this ground, if it is determined it has been erroneously included as contended by the Builder, would decrease the amount paid by the Owners to the Builder by $10,914 and, if no other changes were made, reduce the amount due to the Owners by the Builder from $24,834.50 ([2.5] of the amended interim award) to $13,920.50. In my view this would mean the determination of the claimed question of law could substantially affect the rights of the Builder within the meaning of Commercial Arbitration Act s 38(5)(a), on the authorities I have referred to in that regard.
However, as to the other threshold requirement, of the claimed error being a 'manifest error of law on the face of the award' (Commercial Arbitration Act s 38(5)(b)(i)), has such an error been shown?
For this purpose I note that the amended interim award [2.3] lists the amounts as among those 'taken from Mr Temple's witness statement'. This permits me to consider that document as, without it, I am not able to understand what was decided: Alvaro [37].
It was not in contest that 'Mr Temple's witness statement' referred to the undated witness statement of Mark William Alexander Temple included in the appellant's bundle. The relevant part of Mr Temple's witness statement was [85] ‑ [86]:
85Work performed by Felici and Nino were included in the $13,220 that I owed in respect of work performed. At the meeting, I agreed to pay Felici and Nino direct. I gave:
85.1Felici, cheque No. 356262 in the sum of $5,914. A copy of the cheque stub is Document 30 in the joint book of documents.
85.2Nino, cheque No. 356263 (made out to N & R Bricklaying) in the sum of $5,000. A copy of the cheque stub is Document 31 in the joint book of documents.
85.3Mr Alvaro, cheque No. 356265 in the sum of $2,306, being the balance owed. A copy of the cheque stub is Document 32 in the joint book of documents.
86I asked Mr Alvaro for a receipt. Mr Alvaro then gave me a receipt for the sum of $13,220. A copy of the receipt is Document 33 in the joint book of documents.
It will be noted there is a tension between the two paragraphs for the purposes of the present ground. If the only evidence were in the form of [85], it might be successfully contended that there was an error of law in the sense in Alvaro [41]. However, [86], in my view, precludes a finding of such an error of law, as indicated in Alvaro [39].
It follows I would not uphold ground 1 in any respect.
It also follows, for the purposes of ground 6, that there is no basis in error of the sort alleged in ground 1 for a determination that the Arbitrator misconducted the proceedings.

Grounds 2 and 3: findings as to amounts owing by the Builder to the Owners

Counsel for the Owners appeared to put to me that the determinations of the questions of law alleged in these grounds could not substantially affect the Builder's rights within Commercial Arbitration Act s 38(5)(a). I am unable to agree. There is a difference of $53,387.71 between 'the [Builder's] spreadsheet, which shows the sum owing by the Owners as $102,387.71', itself the difference between the '[t]otal of building work, building fees and design fees' of $138,621.71 and 'paid by Temple to Alvaro' of $36,234.00; and the figure of the '[Builder's] total cost of works, design fees, Margin & GST' of $49,520.00 ([2.2] of the amended interim award). As will shortly be explained, the latter sum is the total of the adjusted figures listed in [2.2]. If there was a failure to give proper reasons for the decision to choose those adjusted figures, the (unexplained) difference of $53,387.71 would 'substantially affect the rights' of the Builder.
Turning to the matter of manifest error of law on the face of the award, I consider it necessary to distinguish between grounds 2 and 3.
In respect of ground 2, I consider that the statement in the amended interim award [2.2], after referring to 'the [Owners'] revised figures based on the [Builder's] spreadsheet', which as I have explained was at least a reference to the Scott schedule with the itemised acceptance or rejection of those figures by Mr Faigen, being the statement 'I accept the evidence of Mr Faigen with the following adjustments', was a sufficient statement of the Arbitrator's reasons for his decision in respect of the Builder's claims in the Scott schedule. See D & M (Australia) WASC [100], where the following appears:
The arbitrator was entitled to accept such evidence as he considered to be credible and reliable. In par 26.2 of his reasons he accepted the evidence of particular witnesses, and then made findings which were a summary of all of that evidence. In my view, this was a sufficient statement of the reasons why each particular issue of fact the subject of that evidence was resolved in the way it was.
Of course, in this case the Arbitrator made 'adjustments' to the evidence of Mr Faigen. The Arbitrator did not simply make findings which were a summary or adoption of that evidence. That takes me to ground 3.
I consider that, while it is not readily apparent from the Scott schedule how the amount of $59,157, inclusive of GST, referred to in ground 3 particular (a), is arrived at, no objection to the reasons is taken on that account. An objection is of course taken to the lack of an explanation of how the Arbitrator arrived at $49,520 as the adjusted amount. However, in that regard I note the terms of the itemisation in amended interim award [2.2] of the amounts which add up to the latter amount, under the heading 'The Claimant's figures are amended as follows':
Builder's costs as supported by invoices  21,898.00
Reference Alvaro document No. 34 Workers
Compensation insurance. It is an allowable cost
under contract clause 8(c)  650.00
Margin as per Attachment A  7,519.00
Margin on W/C insurance  81.25     7,600.00
Agreed Variation Costs  18,612.00
GST on Builder's margin of $7600     760.00
Respondent's total cost of works, design fees,
Margin & GST  $49,520.00
It is true that the relationship between those figures and the itemised amounts in the Scott schedule is not readily apparent. Nor was it apparent in what way 'Attachment A' assisted.
However, it was not put to me that that relationship could not derived from the inspection of the Scott schedule; indeed counsel for the Owners indicated without any reply a way in which that derivation could be arrived at. Nor was it put to me there was no Attachment A, or that any such document was incapable of supporting the margin referred to.
I note for the purposes of evaluating the sufficiency of the Arbitrator's statement of his reasons as I have indicated D & M (Australia) WASC [90], above.
I conclude then that I have not been shown a manifest error of law on the face of the amended interim award of the kind alleged in ground 2 or of the kind alleged in ground 3.
Furthermore, I consider that I have not been shown 'misconduct'. For that purpose, I note Alvaro [47], referring to Villani v Delstrat Pty Ltd [2002] WASC 112 and Peter Schwartz (Overseas) Pty Ltd v Morton [2003] VSC 144, among other authorities:
A failure to deal with issues raised, or submissions seriously advanced, including where such a failure is to be inferred from a failure to give reasons in relation to those matters, has been treated as technical misconduct: Villani v Delstrat [40] - [43]; Partalo v Newtime Homes Pty Ltd [2009] WASC 130 [16]; and Oil Basins v BHP Billiton [78]. See also Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430, 443 - 444 generally as to the potential for inferences to be drawn from the failure to give reasons. A failure to give adequate or proper reasons which is not manifest on the face of the award cannot attract the operation of s 38(5)(b)(i). If on proper analysis the substance of the complaint is that the arbitrator failed to deal with the requisite issues, or submissions seriously advanced, including where such a failure is properly to be inferred from a failure to give reasons in that regard, the complaint is, in my view, more appropriately characterised as misconduct for the purposes of s 42, rather than an error of law capable of redress by s 38: cf Peter Schwarz v Morton [21], [23], [29]. There may be cases where the circumstances are such that fine distinctions may need to be drawn in the process of characterisation.
It seems to me that my analysis above in respect of grounds 2 and 3 indicates why it is not possible to draw from the Arbitrator's reasons the inference that he has failed to deal with the requisite issues or submissions seriously advanced. I accept that the requisite issues included whether or not the Builder's evidence as to his cost of works, design fees, margin and GST should be accepted; and the Scott schedule indicated submissions seriously advanced, that the items in that schedule claimed by the Builder should be accepted. However, my analysis indicates why I consider the Arbitrator dealt with those issues, by reference to those submissions.

Grounds 4 and 5: whether, how and when the Owners terminated, and the grounds

Grounds 4 and 5 are clearly related. However, ground 4 focuses on a notice of default and termination, while ground 5 focuses on the grounds for termination. Accordingly I deal with them separately.
Ground 4 is an allegation of error in law and misconduct of the proceedings in the arbitration by the failure to make findings as to whether, when and how the Owners issued a notice of default of the Contract pursuant to its cl 15(b); and as to the termination of the contract.
I accept that if the Arbitrator did not make any finding as to whether, when and how the Builder terminated the Contract in accordance with the requirement in the Contract, cl 15(b), this would have a substantial effect on the rights of the parties. I refer to my earlier analysis of this matter.
I further accept that the failure to make such findings would be a manifest error on the face of the award. However, I consider he did not make such an error.
I have previously quoted Contract cl 15(b) and cl 17(a)(i).
Amended interim award [1.1] indicates that the Arbitrator was aware of cl 17(a)(i), its relation to cl 15(b) and that the latter called for a notice of default, as follows:
1.0 Validity of contract determination by the Owners
1.1Clause 17(a)(i) permits the Owner to terminate the Contract caused by any breach of the Contract by the Builder. Clause 15(b) requires the Owners to provide the Builder with a notice of default which was served on September 21, 2007 by the Owners' Solicitors, Lavan Legal (Claimants' book of documents 64).
Interim award [1.1] of the interim award was in identical terms. The reference there to the letter served on 21 September 2007 was noted as being in error in Alvaro [84] as follows:
In relation to the matters in [11] above, I am not satisfied that by referring to the notice of dispute dated 21 September 2007 as the relevant notice concerning termination, the Arbitrator has gone outside the pleaded issues or made a finding which he was not asked to make. Read as a whole, it seems to me that by items 1.1, 1.2, 1.3, 1.4, 1.5 and 4.1 of the interim award, the Arbitrator found that the Owners had validly determined the contract for breach although, as the Owners' counsel accepts, the reasons could be clearer. Bearing in mind that the Owners had alleged termination by letter dated 27 February 2006, and that they had tendered the termination letter in evidence, I am unpersuaded that the Arbitrator's reference to the letter of 21 September 2007 is anything more than an inadvertent reference to the wrong letter. In other words, I am not persuaded, on the balance of probabilities, that the apparent error justifies the conclusion that the Arbitrator decided issues beyond the pleadings in this respect. Also, although it is not necessary to dispose of this aspect of the application, I would observe that generally, it would, I think, be premature to set aside an award on the basis of a complaint which points to an apparent misdescription of a matter or thing, absent evidence that the apparent error had been pointed out to the Arbitrator and the Arbitrator had been given the opportunity to consider whether he or she had mistakenly described the matter or thing and to correct any mistake under s 30 of the Act.
The amended interim award adds a new [1.11], previously quoted, which refers to the letter of 27 February 2006, being a letter of that date from the Owners to the Builder (the letter of 27 February 2006), and should be read with [1.12], also previously quoted.
I consider I am able to refer to the letter of 27 February 2006 (see Alvaro [37]). That letter, in the appellant's bundle, reads:
Dear Mr Alvaro
Re: Proposed Residence at lot 8/12 Boyd Crescent, Hamilton Hill
You have not responded to our letter hand delivered to you on Friday 17^thFebruary 2006. You have not addressed any of the complaints specified in that letter and as such, we now terminate the contract.
Please inform Cockburn Shire that you are no longer the builder and remove all your equipment from site.
It will be seen that there is a reference to 'our letter hand delivered to you on Friday 17^th February 2006' in which there are 'complaints specified'. However, I do not have a copy of the letter of 17 February 2006.
At the same time, I note amended interim award [1.2] ‑ [1.4], which are carried over unchanged from interim award [1.2] ‑ [1.4], and amended interim award [1.5] ‑ [1.10], which as previously indicated are new:
1.2Serious breaches claimed:
1.2.1Failure of Builder to provide proper accounting as required in contract clause 10(b).
1.2.2Serious delay to the building works.
1.2.3Failure by Builder to pay trades.
1.2.4Refusal to carry out further work upon being notified of defects to stairs and plumbing pre-set in concrete floor.
1.2.5Failure to supervise the works causing stairs not to be constructed as per plan.
1.3At the Hearing, it was found that numerous items of work had been charged for more than once; some as many as three times. This is a further outcome why the Owners had a valid reason to determine the contract.
1.4The Owners gave a number of notices to the Builder of default, asking that the breaches be remedied. The Builder's response was to the effect that there was nothing wrong.
1.5A term of the contract was the respondent would comply with all statutory requirements [clause 5(a)]. The contract was breached when the Builder failed to take out a building license for the works. The City of Cockburn issued a demolition order to demolish the work done which was carried out.
1.6The building license was issued on May 4, 2005; over one year from the date the contract was signed.
1.7A term of the contract was that the respondent would carry out the building works in a proper and workmanlike manner and in accordance with the drawings and specifications [clause 1(a)]. The contract was breached when a concrete staircase was not constructed as per plan. Refer to Award item 3.0.
1.8Respondent refused to render progress claims in any form which could identify the value of the works carried out.
1.9The respondent failed to proceed with the works.
1.10The respondent failed to bring the works to practical completion by the due date as per contract which computes to September 4, 2005, which is 70 weeks from date of contract. (Schedule of particulars item 9).
I consider that those items, read with new [1.11] and the Arbitrator's recognition of the requirement, in amended interim award [1.1], for a notice of default under Contract cl 15(b), indicate that the Arbitrator had found the Owners had issued a notice or notices of default as required by cl 15(b) and had terminated the Contract. There was at least a notice of default in the letter 'hand delivered' on 17 February 2006 (see his reference to a 'served' notice in [1.1], albeit by reference to the wrong date); and the termination was by the letter of 27 February 2006.
I further consider that the Arbitrator found that the notice of default delivered on 17 February 2006 relied at least on the '[s]erious breaches claimed' ([1.2]), although there were others which also 'allowed the Owners to terminate the Contract' ([1.12] read with [1.3] ‑ [1.10]).
Counsel for the Owners drew my attention to a series of letters in the appellant's bundle, dated 17 January, 8 February and 10 February 2006. One of these (that of 8 February 2006) appears to relate to matters listed in amended interim award [1.3]; but the other two letters did not relate to any of the items in [1.0]. However, in view of the Arbitrator's reference to the letter 'hand delivered' on 17 February 2006, I leave these letters aside.
The matter of the Arbitrator's findings as to which notice or notices of default related to which events could undoubtedly have been clearer. However, I consider the matter is sufficiently clear in respect of the notice of default delivered on 17 February 2006 and the termination by the letter of 27 February 2006.
I consider then that the Arbitrator did not make a manifest error of law on the face of the record as alleged in ground 4.
Further, in view of my analysis I do not consider there is any basis as alleged by ground 4 for concluding there was misconduct in the proceedings.
Turning to ground 5, I take this ground to be an allegation of manifest error of law on the face of the amended interim award and misconduct of the proceedings in the arbitrator misdirecting himself that all of the events 'mentioned' ([1.12]) in [1.0] of the amended interim award allowed the Owners under cl 17(a)(i) to issue a notice of default pursuant to cl 15(b) (emphasis added). Thus I took this ground to be an allegation of such error and such misconduct in the Arbitrator determining that all of these events were breaches of contract by the Builder.
I consider the Arbitrator did determine that all of the events described in amended interim award [1.0] (see [1.2], [1.3] and [1.5] ‑ [1.10]) were breaches of the contract (see [1.12]).
To determine whether or not I have been shown that the Arbitrator's determination in that respect was a manifest error on the face of the amended interim award, I am of the view I must consider whether or not I was shown there are powerful reasons for the conclusion, on a preliminary basis, without any prolonged adversarial argument, that any of those events did not constitute a breach of the contract: see D & M (Australia) WASC [41]. I consider this matter of breach to be one of whether it is not possible to identify a term or terms of the contract of which the event in question might be a breach, on the proper construction of the term or terms. I accept that such a matter would be a question of law.
I consider I can refer to the terms of the contract because of the terms of the amended interim award [1.12]: see Alvaro [37].
The Arbitrator in [1.2] ‑ [1.10] refers to a number of provisions of the contract: see [1.2.1], [1.5], [1.7] and [1.10]. I consider that, for those references, the terms in question are ones for which each of the events in question might be a breach.
That leaves [1.2.2] ‑ [1.2.5], [1.3], [1.6], [1.8] ‑ [1.9]. I consider that on the face of the matter identifications of the following clauses in respect of each for the purposes of cl 17(a)(i) might readily be made:
Item  Contract
[1.2.2]  cl 11
[1.2.5]  cl 1(a)
[1.3]  cl 10
[1.6]  cl 11(a) read with cl 11(a)(iv)
[1.9]  See [1.2.2] of amended interim award
The remaining items, [1.2.3], [1.2.4] and [1.8], are ones in respect of which in my view no such ready identification can be made. In respect of those items it is not altogether clear to me that an identification of a clause or clauses of the contract might not be made, if the Arbitrator had described the event in question in more detail. The present ground is not one of a lack of adequate reasons. However, for the purposes of these reasons I accept without determining that there has been a showing that it is not possible to identify a term or terms of the contract of which the event in question might be a breach, on the proper construction of the term or terms.

At the same time, as indicated for the items other than those just listed, I have not been shown there was manifest error of law on the face of the amended interim award in the Arbitrator's determination those events allowed the Owners to terminate the contract under cl 17(a), subject of course to compliance with cl 15(b). As indicated for ground 4, I have not been shown that the Arbitrator did not find whether, when and how the Owners exercised the right to terminate in accordance with cl 15(b) in respect of at least some of those breaches.
Accordingly, I am unable to conclude the determination of the question of law whether the Owners also had a right to terminate in the events in [1.2.3], [1.2.4] and [1.2.8] could substantially affect the rights of one or more parties to the contract. See Commercial Arbitration Act s 38(5)(a). That is because of the right to terminate duly exercised in respect of some at least of the other matters which the Arbitrator determined gave rise to that right.
Turning to the question of misconduct, I note again my acceptance without deciding that there were manifest errors of law on the face of the amended interim award in the respects identified for [1.2.3], [1.2.4] and [1.8]. However, such errors are not themselves misconduct: Gebauer Nominees v Cole [No 2] [62], referred to in Alvaro [44] and returned to below.
Accordingly, I would not uphold ground 4 or ground 5.

Ground 6: misconduct and failure to comprehend and comply with Alvaro

I have already indicated that I have not been shown any misconduct under grounds 1 ‑ 5.
As to the alleged failure by the Arbitrator to comprehend and comply with the directions in Alvaro, in the written submissions for the Builder the particular respects relied upon were Alvaro [11], [84], [88] and [91](c).
Alvaro [11] and [84] went to the error, previously referred to, in the Arbitrator's reference to the letter of 21 September 2007 as a notice of default or termination. While correction of that reference in amended interim award [1.1] would have been desirable, I consider the matter is sufficiently dealt with in new [1.11], as indicated above.
Alvaro [88] went to the Owners' acceptance of the need for 'better' reasons for the Arbitrator's determination there had been a valid termination of the Contract. In my view amended interim award [1.4] ‑ [1.12] are such reasons.
Alvaro [91](c), read with [27], went to the Owners' acceptance that in making the findings in the first through to the fifth grounds for the application in that case the Arbitrator failed on the face of the interim award to provide proper or adequate reasons; that that failure constituted manifest error of law on the face of the award (see Commercial Arbitration Act s 38(5)(b)); and that the questions of law concerned could substantially affect the rights of the Builder (see Commercial Arbitration Act s 38(5)(a)).
I consider that each of the matters the subject of the first through to the fifth grounds of the application in Alvaro was addressed by changes in the amended interim award. I also consider that the changes indicated the Arbitrator comprehended and constituted compliance with the relevant directions in Alvaro or at least in view of those changes the contrary has not been shown.
The address in the amended interim award for the matter the subject of the first ground (the finding as to payments by the Owners to the Builder) is in [2.3] and [2.4]. The changes to the interim award represented by [2.3] and [2.4] appear to me to reflect an understanding of and to constitute compliance with the directions emerging from Alvaro [91](c) read with [18], [76] ‑ [77].
The address in the amended interim award for the matter the subject of the second ground (the finding that Annexure B was not a part of the contract) is in [9.0]. The change to the interim award represented by [9.0] appear to me to reflect an understanding of and to constitute compliance with the direction emerging from Alvaro [91](c) read with [19] and [78] ‑ [80].
The address in the amended interim award for the matter the subject of the third ground (the finding that the Owners were entitled to terminate the Contract) is in [1.4] ‑ [1.11], read with [1.12]. I have previously addressed those provisions in some detail. In my view they reflect an understanding of and constitute compliance with the directions emerging from [91](c) read with [11], [20] and [84].
The address in the amended interim award for the matter the subject of the fourth ground (the finding that the Builder was liable for stairs being constructed other than in compliance with the Building Code of Australia) is in [3.1] stating the Arbitrator's preference for the evidence of two named persons, as to non-compliance with specified regulations in the Building Code. It is difficult to determine from the one reference to the fourth ground in Alvaro, being [21] read with [91](c), what matters the Arbitrator had failed to explain in the interim award. On my reading of amended interim award [3.1] I have not been shown that it does not reflect an understanding of or does not constitute compliance with Alvaro [21] read with [91](c).
The address in the amended interim award for the matter the subject of the fifth ground (the finding as to moneys payable by the Owners to the Builder) is in [2.2], which I considered in relation to grounds 2 and 3, above. On the basis of the analysis there, I consider that the change reflects an understanding of and constitutes compliance with the directions emerging from Alvaro [91](c) read with [22].
These conclusions in my view mean that the Builder has not shown me that the Arbitrator had shown any failure to comprehend and comply with the directions given in Alvaro.
Thus, there was no basis on that account for concluding the Arbitrator had misconducted the proceedings or was manifestly incompetent or unsuitable to deal with the dispute.
I should add, as to my acceptance without deciding that the Arbitrator had made manifest errors in law on the face of the award in the respects identified for the purposes of ground 5, that in my view such errors would not be sufficient to indicate any general lack of capacity to arbitrate the dispute such that a reasonable person would no longer have confidence in the ability of the Arbitrator to come to a fair and balanced conclusion on the issues remaining to be dealt with in this arbitration. I note for the purpose Gebauer Nominees v Cole [No 2] [62] referred to in Alvaro [44]:
But what is clear is that an error of law, even a serious error of law, does not of itself amount to misconduct: Moran v Lloyd's [1983] QB 542, Forsayth NL v Australasian Gold Mines NL (No 1) (1992) 7 WAR 549, 560 - 561. In that connection, it is important to recognise that while parties to arbitration, like parties to litigation, are entitled to expect that the arbitration will be conducted without mishap or misunderstanding, and that the procedure adopted will be fair and appropriate, they are not entitled to expect of an arbitrator, any more than of a judge, that he or she will necessarily and in all circumstances arrive at the 'right' answer as a matter of fact or law: King v Thomas McKenna Ltd [1991] 2 QB 480, 491.
Alternatively, applying the arguably more stringent test in Korin, I do not consider I should infer from those errors that the Arbitrator could not properly perform his remaining functions.
I reach both conclusions recognising, as counsel for the Builder pressed on me, that the amended interim award might be viewed as the Arbitrator's second attempt to provide a proper determination in relation to the issues in the arbitration, in particular the validity of the termination of the Contract by the Owners. However, I do not consider that fact sufficient to elevate the errors to ones of a kind that would lead to the satisfaction of the test from Gebauer Nominees v Cole [No 2] or Korin (727). That is because in my view account should also be taken of the fact that the Arbitrator had not been shown to have made a manifest error of law on the face of the amended interim award in respect of the more numerous other matters of the same kind, that is, concerning possible breach of the terms of the Contract.
It follows I would not uphold ground 6.

Conclusion and orders

I have concluded that I would not uphold any of the grounds of appeal. While I would grant leave to appeal on all of them, I would dismiss the appeal.
I will hear from the parties as to the terms of the orders I should make.
I will also hear from the parties as to the Owners' application to enforce the amended interim award. I previously noted that I had no oral or written submissions as to that application from either party.

[2012] WASC 98

27/03/12