Alvaro v Temple - [2009] WASC 205

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: ALVARO -v- TEMPLE [2009] WASC 205

CORAM: MURPHY J

HEARD: 30 APRIL & 9 JUNE 2009

DELIVERED : 29 JULY 2009

FILE NO/S: ARB 9 of 2008

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

Catchwords:

Arbitration - Leave to appeal - Misconduct - Failure to give reasons - Remitter - Setting aside - Scope and application of s 43 of the Commercial Arbitration Act 1985 (WA) - Relationship between s 38, s 42 and s 43 of the Commercial Arbitration Act 1985

Legislation:

Commercial Arbitration Act 1985 (WA), s 4, s 29, s 30, s 38, s 42, s 43, s 44

Result:

Interim award set aside in part
Application for leave to appeal and appeal allowed
Remitted to arbitrator for reconsideration including provision of reasons

Category: B

Representation:

Counsel:

Applicant:     Mr B G Grubb
First Respondents         :     Mr S D Pentony
Second Respondent      :     No appearance

Solicitors:

Applicant:     Metaxas & Hager
First Respondents         :     Lavan Legal
Second Respondent      :     No appearance

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

AC Robertson Pty Ltd (in liq) v Costa Brava Investments Pty Ltd [1962] NSWR 768
Anaconda Operations Pty Ltd v Fluor Australia Pty Ltd [2003] VSC 275
Athens Cape Naviera SA v Deutsche Dampfschiffahrtsgesellschaft 'Hansa' Aktiengesellschaft (The 'Barenbels') [1985] 1 Lloyd's Rep 528
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Australian Gaslight Co v Valuer‑General (1940) 40 SR (NSW) 126
Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430
Bovis Lend Lease Pty Ltd v WGE Pty Ltd [2002] NSWSC 939
Commonwealth of Australia v Cockatoo Dockyard Pty Ltd (1995) 36 NSWLR 662
Cooper & Oxley Construction Co Pty Ltd v Shire of Swan (Unreported, WASC, Library No 920405, 29 July 1992)
Fletamentos Maritimos SA v Effjohn International B V (No 2) [1997] 2 Lloyd's Rep 302
Forsayth NL v Australasian Gold Mines NL (1992) 7 WAR 549
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
Graham Evans & Co Pty Ltd v SPF Formwork Pty Ltd (1991) 8 BCL 147
GRD Kirfield Ltd v First Trade Consulting Pty Ltd [2004] WASC 158
Hashman v Downie (1996) 39 NSWLR 169
Imperial Leatherware Co Pty Ltd v Macri & Marcellino Pty Ltd (1991) 22 NSWLR 653
Interbulk Ltd v Aiden Shipping Co Ltd (The 'Vimeira' (No 1)) [1985] 2 Lloyd's Rep 410
K/S A/S Biakh & Biali v Hyundai Corporation [1988] 1 Lloyd's Rep 187
King v Thomas McKenna Ltd [1991] 2 QB 480
Mark Blake Builders Pty Ltd v Davis (Unreported, NSWSC, 14 November 1994)
Masawa Australasia Pty Ltd v J Corp Pty Ltd [2000] WASC 5
Minister for Industrial Affairs v Civil Tech Pty Ltd [2003] SASC 40; (2003) 84 SASR 559
Mond v Berger (2004) 10 VR 534
New Generation Enterprises Pty Ltd v Western Australian 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
Partalo v Newtime Homes Pty Ltd [2009] WASC 130
Peter Schwarz (Overseas) Pty Ltd v Morton [2003] VSC 144
Promenade Investments Pty Ltd v State of New South Wales (1992) 26 NSWLR 203
R v District Court of Sydney; Ex parte White (1966) 116 CLR 644
Re McMaster Constructions Pty Ltd [1992] 1 Qd R 628
Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 198 ALR 59
Re Poyser & Mills' Arbitration [1964] 2 QB 467
Re Scibilia & Lejo Holdings Pty Ltd Arbitration [1985] 1 Qd R 94
Riverlea Corporation Pty Ltd v Bocol Constructions Pty Ltd [2007] WASC 317
Roads Corporation v Dacakis [1995] 2 VR 508
Rocci v Diploma Construction Pty Ltd [2001] WASC 256
RP Robson Constructions Pty Ltd v Williams (1989) 6 BCL 219
Sabemo Pty Ltd v Malaysia Hotel (Australia) Pty Ltd (Unreported, NSWSC, 4 June 1992)
Shirley Sloan Pty Ltd v Merril Holdings Pty Ltd t/as Airen Constructions [2000] WASC 99
State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170
Sydney Water Corporation Ltd v Aqua Clear Technology Pty Ltd [1996] NSWSC 640
UDR Equipment Pty Ltd v Afkos Industries Pty Ltd [2000] WASC 57; (2000) 22 WAR 221
Ukrainian Association of Western Australia in Perth (Inc) v Squire Constructions Pty Ltd [2004] WASC 4
Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251
Villani v Delstrat Pty Ltd [2002] WASC 112
Warley Pty Ltd v Adco Constructions Pty Ltd (1988) 5 BCL 141
Warley Pty Ltd v Adco Constructions Pty Ltd (1988) 8 BCL 300

MURPHY J:

Introduction

The applicant seeks leave to appeal, and to appeal, against the interim award of an arbitrator under s 38(4)(b) of the Commercial Arbitration Act 1985 (WA) (the Act), further or alternatively, the applicant seeks orders to set aside the interim award pursuant to s 42(1)(a) of the Act. The applicant also seeks the removal of the arbitrator pursuant to s 44(a) and/or s 44(c) of the Act.
The background to the application is as follows. The applicant in this matter (the Builder) was the respondent to an arbitration conducted under the Act. The first respondents in this matter (the Owners) were the claimants in the arbitration. The second respondent in this matter was the arbitrator (the Arbitrator). There has been no appearance by the Arbitrator in these proceedings although in correspondence he indicated that he will abide the outcome.
The arbitration involved a consideration of the nature, terms and application of a 'cost‑plus' building contract between the Builder and the Owners made on or about 30 April 2004 (the Contract). It was common ground in the arbitration that the Contract included the Housing Industry Association Ltd 'Cost Plus Contract' standard terms (HIA Standard Terms). The Contract related to the construction of residential premises in Hamilton Hill.
There were pleadings in the arbitration, although they were relatively rudimentary. In the Points of Claim, the Owners claimed that they had terminated the Contract by accepting a repudiation of the contract by the Builder, by reason of the Builder's alleged breaches of the contract. They claimed principal sums totalling $184,660.50 comprising:
(1)a claim that they had 'overpaid' the Builder a sum of $90,560.50 calculated by reference to the amount they allegedly paid prior to termination, less the amount allegedly due to the Builder prior to termination, taking into account a deduction for alleged defects.
(2)a claim for loss of rent of $94,100.
The Builder alleged that the Contract was partly oral and partly written and, to the extent that it was written, it included in addition to the HIA Standard Terms, a document described as 'Annexure B Progress Payment Schedule' (Annexure B). He alleged that he had been 'underpaid' and claimed by way of counterclaim certain declarations and orders for payment of damages. The Builder also alleged that the Owners were liable for certain design fees in relation to design work, and also sought damages for an alleged breach of copyright in relation to certain drawings.
In the Reply, the Owners joined issue and alleged, inter alia, that the Builder had failed to provide 'accounting' of the money properly due to them under the Contract.

The arbitration

An arbitration was held on 4 ‑ 8 August 2008. A site inspection was also held on 4 August 2008. The Arbitrator published an interim award on 31 October 2008.

The interim award

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).
By way of overview of the Builder's criticism of the interim award, it is convenient to record at the outset that, in addition to allegations of certain failures to provide reasons, the Builder in this application focuses his submissions in particular on the following matters which he says arise in respect of the interim award.
The first is in relation to the findings as to the termination of the Contract. The Arbitrator, at items 1.1 and 4.1 of the interim award, found that the Contract had been terminated by the Owners, for breach, by service of notice of default dated 21 September 2007. However:
(a)The notice of 21 September 2007 was a notice of dispute for the purposes of referring the dispute to arbitration under cl 18 of the HIA Standard Terms, and was not a notice of default or termination;
(b)The Owners' pleaded case was that the Contract had been terminated on 27 February 2006, and not 21 September 2007;
(c)The Owners' evidence was that a letter of termination had been sent to the Builder dated 27 February 2006. The Owner did not adduce evidence of termination on 21 September 2007.
Secondly, as noted earlier, in the interim award the Arbitrator found that an amount of $13,920.50 was due to the Owners by finding the amount due to the Builder under the Contract prior to termination ($49,520), and finding the amounts paid to the Builder prior to the termination ($63,440.50), and deducting the former from the latter. However, in relation to his determination of the amounts paid by the Owners prior to termination:
(a)he then said (item 2.4):
If the sum of $63,758.50 is not correct it may be corrected in the Final Award.
(b)he also said (item 10.1) that a matter to be determined in the Final Award was the 'correct amount paid by [the Owners] to [the Builder]'.
This observation by the Arbitrator was made notwithstanding that:
(a)he found the amounts paid by the Owners totalled $63,440.50, and not $63,758.50; and
(b)he provided no explanation as to how and in what circumstances he might 'correct' that figure in the Final Award.
Thirdly, the Arbitrator, at item 4.2, found that the Owners were not entitled to loss of rent because they intended to live on the property and not use it as an investment. However, he later stated, in item 10.2, that the Owners 'loss of rent claim' would be determined in the Final Award.
Fourthly, the Arbitrator found, at item 4.2, that the Owners suffered loss 'due to the serious breaches of contract as listed in Award item 1.2' and said, at item 4.7, this matter would be the subject for determination in a Final Award. However, the Owners had not, in their pleadings, claimed damages for loss due to any breaches, save insofar as they claimed for loss of rent, which claim the Arbitrator had rejected.
Fifthly, the Arbitrator found, at item 4.6, that the Owners had suffered loss due to a caveat lodged by the Builder over the property and said, at item 4.7, that this matter would be the subject of further submissions for determination in a Final Award. However, again, the Owners had not, in their pleadings, claimed damages for this 'loss'.

The Builder's notice of motion and the issues

The Builder, by his further reamended notice of motion dated 9 June 2009, alleged that the Arbitrator made five manifest errors of law on the face of the award within the meaning of s 38 of the Act. The Builder also alleged certain misconduct within the meaning of s 42(1)(a) of the Act. In the course of the hearing, counsel for the Builder refined the grounds in argument and counsel for the Owners made certain concessions. As a result, the Builder and the Owners came to a more precise definition of the issues, as set out below.
The first alleged ground of error is that the Arbitrator, in finding that payments by the Owners to the Builder totalled $63,440.50:
(a)did so without providing any or any sufficient reasons for so finding; and
(b)to the extent that the Arbitrator said a figure of $63,758.50 may be corrected in the Final Award, the Arbitrator failed, contrary to his obligations, to make a finding on the evidence as adduced.
The second alleged ground of error is that the Arbitrator erred in finding that Annexure B was not part of the Contract insofar as:
(a)the Builder's evidence was that Annexure B was part of the Contract and the Arbitrator failed to give sufficient reasons for rejecting that evidence, if he did; and
(b)the Arbitrator made his finding on the basis that Annexure B was not signed by the parties, was not noted in the HIA Standard Terms, and was contrary to cl 10(b)(i) of the HIA Standard Terms, when none of these bases were capable of providing a proper foundation for the finding.
The third alleged ground of error is that the Arbitrator erred in law in finding that the Owners were entitled to terminate the Contract, without providing any or any sufficient reasons for the finding.
The fourth alleged ground of error is that the Arbitrator erred in finding that the Builder was liable for the stairs being constructed other than in compliance with the Building Code of Australia insofar as:
(a)he failed to provide any or any sufficient reasons for so finding;
(b)the finding was against the weight of the evidence.
The fifth alleged ground of error is that the Arbitrator failed to provide any or any sufficient reasons for his findings as to the moneys payable by the Owners to the Builder, which were claimed by the Builder at $102,387.71, and allowed by the Arbitrator at $49,520.
The sixth ground alleges that the Arbitrator misconducted the proceedings, or is incompetent or unsuitable within the meaning of s 44(a) and s 44(c) of the Act, on the basis of the errors alleged in grounds 1 ‑ 5, and the matters alleged in grounds 7 and 9.
The seventh ground alleges misconduct by the Arbitrator within the meaning of s 42(1)(a) of the Act in making findings which were outside those identified by the pleadings, or alternatively, where he was not asked to make such findings, in relation to the termination of the Contract, and the Owners' claims for damages.
The eighth ground was abandoned (ts 37).
The ninth ground alleges misconduct by the Arbitrator within the meaning of s 42(1)(a) of the Act, in that he failed to decide the pleaded issues for determination in three respects. The first is in relation to the Builder's points of defence and counterclaim that there were oral terms of the Contract. The second is in relation to oral terms of the Contract which the Builder says the Owners had alleged in their Points of Claim. The third is in relation to the declarations sought in par 23 of the Builder's defence and counterclaim.
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 Act. They also accept that the questions of law concerned could substantially affect the rights of the Builder for the purposes of s 38(5)(a) of the Act. They do not accept that there was misconduct by the Arbitrator.
The Owners' primary contention is, however, that the errors of law and the alleged misconduct (if established) by the Arbitrator are insufficiently grave to warrant his removal, and that the better course is to remit the interim award to the Arbitrator, under s 38(3)(b) or s 43 of the Act, for further consideration and clarification.
The Builder's primary contention is that the errors and misconduct alleged are so fundamental 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. The Builder's counsel disavowed any allegation of partiality or want of probity by the Arbitrator.

The legislative provisions

Section 38 of the Act provides relevantly:
(1)Without prejudice to the right of appeal conferred by subsection (2), the Court shall not have jurisdiction to set aside or remit an award on the ground of error of fact or law, on the face of the award.
(2)Subject to subsection (4), an appeal shall lie to the Supreme Court on any question of law arising out of an award.
(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.
(4)An appeal under subsection (2) may be brought by any of the parties to an arbitration agreement -
…
(b)subject to section 40, with the leave of the Supreme Court.
(5)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.
…
Section 42 provides relevantly:
(1)Where -
(a)there has been misconduct on the part of an arbitrator or umpire or an arbitrator or umpire has misconducted the proceedings; or
(b)the arbitration or award has been improperly procured,
the Court may, on the application of a party to the arbitration agreement, set the award aside either wholly or in part.
(2)Where the arbitrator or umpire has misconducted the proceedings by making an award partly in respect of a matter not referred to arbitration pursuant to the arbitration agreement, the Court may set aside that part of the award if it can do so without materially affecting the remaining part of the award.

Section 43 provides:
Subject to section 38(1), the Court may remit any matter referred to arbitration by an arbitration agreement together with any directions it thinks proper to the arbitrator or umpire for reconsideration or, where a new arbitrator or umpire has been appointed, to that arbitrator or umpire for consideration.
Section 44 provides:
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;
(b)undue influence has been exercised in relation to an arbitrator or umpire; 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.
Section 4 of the Act defines 'misconduct' as:
misconduct includes corruption, fraud, partiality, bias and a breach of the rules of natural justice;
Section 29 of the Act provides:
(1)Unless otherwise agreed in writing by the parties to the arbitration agreement, the arbitrator or umpire shall -
(a)make the award in writing;
(b)sign the award; and
(c)include in the award a statement of the reasons for making the award.
(2)Where an arbitrator or umpire makes an award otherwise than in writing, the arbitrator or umpire shall, upon request by a party within 7 days after the making of the award, give to the party a statement in writing signed by the arbitrator or umpire of the date, the terms of the award and the reasons for making the award.
Section 30 of the Act provides:
Where an award made under an arbitration agreement contains -
(a)a clerical mistake;
(b)an error arising from an accidental slip or omission;
(c)a material miscalculation of figures or a material mistake in the description of any person, thing or matter referred to in the award; or
(d)a defect of form,
the arbitrator or umpire may correct the award or the Court, on the application of a party to the agreement, may make an order correcting the award.

Errors of law

In New Generation Enterprises Pty Ltd v Western Australian Planning Commission [2007] WASCA 89 [3] ‑ [6], Steytler P set out principles relevant to s 38(5) which I will respectfully adopt, but not repeat. 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 Pty Ltd v State of New South Wales (1992) 26 NSWLR 203, 222 ‑ 223.
Distinctions between errors of law and errors of fact will depend on the purpose intended to be served by the drawing of such distinctions: Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; (2003) 198 ALR 59 [58]. In considering the scope and content of the phrase 'error of law' in s 38 of the Act, it is important, in my view, to recall that s 38 of the Act is designed to limit the intervention of the courts in arbitration: UDR Equipment Pty Ltd v Afkos Industries Pty Ltd [2000] WASC 57; (2000) 22 WAR 221 [47] ‑ [50] (Steytler J); Masawa Australasia Pty Ltd v J Corp Pty Ltd [2000] WASC 5 (Parker J); New Generation v WAPC [6], [44]; Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251, 259.
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).
There is no error of law if the process of reasoning by which a fact is derived is demonstrably unsound: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 355 (ABT v Bond); R v District Court of Sydney; Ex parte White (1966) 116 CLR 644, 654. However, a want of logic in drawing an inference may sound a warning note and put one on inquiry as to whether there is indeed any basis for the inference: Roads Corporation v Dacakis [1995] 2 VR 508, 520.
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]. Where a finding of fact is made by drawing an inference based on other agreed or found facts, it is a question of law whether the agreed or found facts are capable of supporting the finding. A fact is capable of supporting a finding by inference if the inference is reasonably open in the sense that there is some basis upon which the inference may be drawn. See ABT v Bond (356); Australian Gaslight Co v Valuer‑General (1940) 40 SR (NSW) 126, 138; New Generation v WAPC [3].
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].

Arbitral misconduct

In Shirley Sloan Pty Ltd v Merril Holdings Pty Ltd t/as Airen Constructions [2000] WASC 99 [27] ‑ [28], Steytler J set out principles relevant to the concept of misconduct within the meaning of s 42 of the Act. I will gratefully adopt but not repeat those principles. Steytler J emphasised that the discretion to set an award aside, under s 42, will most likely not be exercised unless the misconduct has created, or may create, unfair prejudice.
It is the duty of the arbitrator to consider and deal with all matters the subject of the reference: Villani v Delstrat Pty Ltd [2002] WASC 112 [40]; Peter Schwarz (Overseas) Pty Ltd v Morton [2003] VSC 144 [31] and [34]. Where the arbitrator proceeds on the basis that some issues are to be resolved first and be dealt with by an interim award, the interim award must nevertheless deal with those issues fully: Mond v Berger (2004) 10 VR 534 [321].
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.
Where the arbitrator mistakenly purports to answer questions beyond the agreed scope of the reference, or otherwise acts in excess of jurisdiction, that will constitute technical misconduct: Forsayth v Australasian Gold Mines (558 ‑ 559); Rocci v Diploma Construction Pty Ltd [2001] WASC 256 [40] ‑ [41]; Cooper & Oxley Construction Co Pty Ltd v Shire of Swan (Unreported, WASC, Library No 920405, 29 July 1992) (Ipp J); Re McMaster Constructions Pty Ltd [1992] 1 Qd R 628.
Making an award for a greater sum than claimed, or making an award for a greater sum than claimed under a specific heading of the claim, also constitutes technical misconduct: Graham Evans & Co Pty Ltd v SPF Formwork Pty Ltd (1991) 8 BCL 147, 155 (Brownie J).
Where, however, a party alleges that there has been misconduct by an arbitrator in determining a matter which did not properly fall within the issues for determination, the party must positively establish that the issue was not required to be dealt with by the arbitrator. Particularly where there is doubt as to the comprehensiveness of the pleadings, it may be necessary for the party so alleging to prove not only that the issue was not pleaded, but also that it was not in fact an issue which was in contest at the hearing of the arbitration: see AC Robertson Pty Ltd (in liq) v Costa Brava Investments Pty Ltd [1962] NSWR 768, 775, 778 ‑ 779.
Parties cannot use s 42 or s 43 to bypass the obstacles placed in their way by s 38 of the Act: Nouvelle Homes Pty Ltd v G & M Smargiassi [2008] WASC 127 [137]; Forsayth v Australasian Gold Mines (559); Peter Schwarz v Morton [50]. Similarly, a party cannot use s 42 to appeal against adverse determinations of fact by asserting those determinations were not dealt with in the reasons: Peter Schwarz v Morton [50].

Removal and s 44

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].

Remitter and s 43

Historically, the purposes for which a remitter provision such as s 43 was available included the remedying of misconduct, and enabling a party to seek to adduce fresh evidence discovered after the making of the award: Mustill M J and Boyd S C, Commercial Arbitration (2^nd ed, 1989), 549, 561, 563.
In Cooper & Oxley v Shire of Swan, Ipp J utilised the power of remitter under s 43 in relation to technical misconduct by an arbitrator. There were two bases of misconduct. The first was that the arbitrator had intentionally avoided the inclusion of reasons in his award, contrary to s 29. The second was that he misconceived his duty and acted in excess of power.
In Sabemo v Malaysia Hotel (Australia), Giles J rejected his earlier view in RP Robson Constructions that the failure to give reasons may be characterised as an error of law for the purposes of s 38. Giles J also considered the scope and application of s 43 of the Act. In doing so, his Honour rejected the submission that there was no power to order remittal under s 43 unless there were first a successful appeal under s 38. He said:
But the proprietor submitted that there was nonetheless no power to remit the matter pursuant to s 43 of the Act. In its submission there could not be a remission pursuant to s 43 unless it was first found that there was an error of law arising out of the award, leave to appeal in respect of that error was granted under s 38 of the Act, and the appeal was upheld.
I am unable to agree. A successful appeal may be the occasion for remission, but it is not the only occasion. Remission may follow the setting aside of an award for misconduct pursuant to s 42 of the Act, or it may be ordered in other circumstances as what has been described as the ultimate safety net. Remission pursuant to s 43 should not be used as a backdoor method of circumventing the restrictions on a court's power to intervene in arbitral proceedings but does that not mean that there can be no remission in the absence of a successful application for leave to appeal and success in the appeal …
I prefer the view, contrary to that upon which I have earlier acted, that a failure to give reasons should not be categorised as an error of law for the purposes of the Act. There is no need to so categorise it where s 43 is available to obtain reasons from the arbitrator, and I suggest that it should be forthrightly recognised that the remedy for a failure to give reasons is to remit the award so that reasons can be given. However, in the present case it does not matter. If it be correct to take the approach via an error of law, the error could be described as a manifest error of law on the face of the award and the requirements for leave to appeal would be satisfied. Nothing more would remain to be said on the appeal itself and the result would be a remission following the upholding of the appeal. If, on the other hand, the proper remedy lies in s 43, a remission may be made directly pursuant to that section.
On the other hand, in Commonwealth of Australia v Cockatoo Dockyard Pty Ltd (1995) 36 NSWLR 662, Kirby P said, speaking of s 43:
The reference to s 38(1) is not present in the equivalent English provision. It ties s 43 back to a section which is designed strictly to limit judicial review of arbitral awards. It makes the provision of the relief envisaged by s 43 subject to the limitations contained in s 38. Reading the two sections together as the opening words of s 43 require, it is plain that the purpose of s 43 is to enlarge the powers which the Court may exercise when, in conformity to s 38, it decides to intervene. But that limits the intervention, relevantly, to correction of arbitral awards.
It is unnecessary to consider whether such an approach is incompatible with what Giles J decided in Sabemo Pty Ltd v Malaysia Hotel (Australia) Pty Ltd (Giles J, 4 June 1992, unreported). In that case an award had been made. In this case, indubitably, it had not. I regard the Commonwealth's argument to the contrary as hopeless. The 'award' of the kind contemplated by the Act is the final step in the arbitration. It is certainly not a mere procedural order on the way to the 'award'.
In order to have a 'matter' to remit, the Supreme Court must have that 'matter' properly before it. It is not necessary in this case to determine the scope of such a 'matter': cf South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1990) 55 SASR 327 at 343, per Bollen J. It is enough to say that, in this case, because s 43 effectively incorporates s 38, and because that section refers only to process following an award, there was no 'matter' of that character before the Court which could occasion the exercise of the s 43 power. Certainly, s 43 of the Act is not a power at large to remit to the arbitrator, with directions or otherwise, a proceeding which is brought in the Supreme Court. Such a proceeding is only given its legitimacy by the proper invocation of the jurisdiction of the Supreme Court. The opening words of s 43 make it plain that it is an adjunct to the disposal of proceedings in the Supreme Court concerning an award (672 ‑ 673).
The case of the Commonwealth of Australia v Cockatoo Dockyard concerned the court's powers to review, or to entertain an appeal against, an interlocutory decision of an arbitrator. I agree with Rolfe J's observations in Hashman v Downie (1996) 39 NSWLR 169, 180 ‑ 181, to the effect that Kirby P's observations on the scope of s 43 are to be read specifically in that context. I also respectfully agree with Kirby P in Commonwealth of Australia v Cockatoo Dockyard and with Rogers CJ Comm D in Imperial Leatherware Co Pty Ltd v Macri & Marcellino Pty Ltd (1991) 22 NSWLR 653 that s 43 cannot be used to interfere with interlocutory decisions of arbitrators prior to the making of an award. See also to similar effect, K/S A/S Biakh & Biali v Hyundai Corporation [1988] 1 Lloyd's Rep 187, 189; Fletamentos Maritimos SA v Effjohn International B V (No 2) [1997] 2 Lloyd's Rep 302, 306 in relation to the former broadly equivalent English legislative provision.
Hashman v Downie involved an application to the court to remit the matter to an arbitrator after an award had been delivered on the basis that fresh evidence was sought to be adduced. There was clearly no error of law involved.
In Hashman v Downie, Rolfe J said:
The present claim for a remitter does not arise from any assertion of error. It seems to me that such an assertion is necessary to bring into play the opening words of s 43 because they deny jurisdiction to the Court to remit an award on the ground of error of fact or law on the face of the award, but without prejudice to the right of appeal conferred by subs (2). In the absence of any suggestion of error, but to avoid injustice, it seems to me that the Court may remit (181).
Perry J in Minister for Industrial Affairs v Civil Tech Pty Ltd [2003] SASC 40; (2003) 84 SASR 559 said in relation to s 43:
I would prefer to construe the power to remit under s 43 as a power at large which may be invoked whenever it seems desirable and appropriate to do so, provided that the power is not used so as to circumvent the restrictions on the right of appeal under s 38. If, for example, there is an assertion of an error of law, this could not be pursued pursuant to a remittal under s 43. If it is to be pursued at all, it could only be dealt with under s 38 [22].

His Honour also said (at [23] and [29]) that he regarded this approach as consistent with that of Giles J in Sabemo v Malaysia Hotel (Australia) and Rolfe J in Hashman v Downie.
After a review of these and other authorities, in Bovis Lend Lease Pty Ltd v WGE Pty Ltd [2002] NSWSC 939, Einstein J said:
As I read the authorities to which I have referred, the interests of justice are untrammelled in the exercise of the Court's discretion insofar as s 43 is sought to be relied upon as the foundation for a remitter order. However of crucial significance, even where s 43 only is in focus, is the obvious necessity that a s 43 remitter be grounded upon some fundamental injustice generally in the sense explained and already referred to by Lord Donaldson [31].
The reference to 'Lord Donaldson' is a reference to Lord Donaldson's judgment in King v Thomas McKenna Ltd [1991] 2 QB 480, the relevant passage from which appears at [11] in Einstein J's reasons:
The reference to M F King was a reference to a judgment of Lord Donaldson in King v Thomas McKenna Ltd (1991) 2 QB 480 where his Lordship said at 489 of the United Kingdom equivalent of s 43, citing from his own judgment in the Montan (1985) 1 WLR 625 at 632:
'S22 empowers the Court to remit an award to an arbitrator for reconsideration. It provides the ultimate safety net whereby injustice can be prevented but it is subject to the consideration that it cannot be used merely to enable the arbitrator to correct errors of judgment, whether on fact or law, or to have second thoughts, even if they would be better thoughts. In the instant case the arbitrator has accidentally made a major error which if uncorrected would lead to the charterers paying the owners, when it is the owners who should be paying the charterers. No Court could lend the power of the State to the enforcement of such award and no Court could stand by when it has power to correct such an accidental error, and I stress the word "accidental".'
McKechnie J in Riverlea Corporation Pty Ltd v Bocol Constructions Pty Ltd [2007] WASC 317, having referred to the wider approach expressed in cases such as Minister v Civil Tech, said at [85] ‑ [87] that he preferred the more restrictive approach of Kirby P in Commonwealth of Australia v Cockatoo Dockyard. He also went on to refer without disapproval, to the observations of Einstein J in Bovis v WGE.
It seems that the cases on s 43 remitter are not in total accord. My own views on the scope and application of s 43, on its proper construction and having regard to the policy of the Act, may be summarised as follows:
(a)Section 43 may not be used where the substance of the complaint, properly characterised, is a complaint that the arbitrator has erred in fact or in law on the face of the award. Section 43, by its opening words, is subservient to s 38(1) in that regard;
(b)Section 43 is, subject to par (d) below, sufficiently broad to apply to misconduct within the meaning of s 42 of the Act. Whether an order setting aside under s 42 should be coupled with an order under s 43, or under s 44, will depend upon the nature and degree of the misconduct and all the circumstances of the case;
(c)Generally speaking, when the misconduct involves a failure to deal with all the issues, or submissions seriously advanced, including where such a failure is properly inferred from the absence of reasons in that regard, a remitter under s 43 is likely to be the more appropriate course rather than removal under s 44. Generally, a matter should only be removed from an arbitrator as a last resort;
(d)Section 43 applies with respect to awards, and may not be used to review interlocutory decisions or directions of an arbitrator prior to delivery of an award, even if the decision or direction involves misconduct within the meaning of the Act;
(e)Section 43 should not generally be used to correct mistakes, slips, omissions or defects of the kind capable of correction under s 30;
(f)Subject to the matters in (a) ‑ (e) above, s 43 otherwise operates so as to prevent injustice in the sense explained by Lord Donaldson in King v Thomas McKenna.

Effect of setting aside and remitter

Once an arbitrator has published the award he or she is functus officio, subject to the operation of the 'slip rule' (s 30 of the Act), and the extent to which the arbitrator's jurisdiction is revived by court order: Commercial Arbitration (405). If the award is an interim award, the arbitrator still, however, has authority to deal with the matters left over, although he or she is functus officio as regards matters dealt with in the interim award: Commercial Arbitration (405).
An order for setting aside or remitter revives the jurisdiction of the original arbitrator to the extent that the order, on its proper construction, so provides: Interbulk Ltd v Aiden Shipping Co Ltd (The 'Vimeira' (No 1)) [1985] 2 Lloyd's Rep 410.
There is Australian authority to the effect that if an award is ordered to be wholly set aside, then absent any other indication in the order, the award is deprived of all legal effect, the arbitrator reverts to his status immediately before the award was determined, the arbitrator is no longer functus officio, and the arbitrator thus remains seized of the reference: Re Scibilia & Lejo Holdings Pty Ltd Arbitration [1985] 1 Qd R 94, 97, 102. In England, the cases seem to have assumed that an order setting aside the award not only avoids the award, but also desseizes the arbitrator of the reference: Commercial Arbitration (565).
No doubt, if there is any concern about the effect of setting aside on its own, and if it is intended that the matter be returned to the original arbitrator to be dealt with, it may be prudent, in addition, to order remitter expressly.
An order for remitter covering all matters dealt with by the original award results in the original award falling away: Commercial Arbitration (566).
Where an award is set aside in part, the arbitrator does not regain jurisdiction so far as it was not set aside: Mark Blake Builders Pty Ltd v Davis (Unreported, NSWSC, 14 November 1994) (Giles J).
If the award is bad in part, but the court cannot remedy the defect by partial setting‑aside, because the award is not severable, remission may be granted of the whole, so that the arbitrator can make a further award, leaving out of account the objectionable part: Commercial Arbitration (564).
Where only some matters have been remitted to the arbitrator for further consideration, it does not appear settled as to whether those parts of the award not remitted are capable of enforcement pending delivery of the further award: see Merkin R, Arbitration Law (2004) [20.37].

Application of principles

I have already noted that the Owners accept that the Arbitrator failed, on the face of the award, to give adequate or proper reasons in respect of the findings the subject of the first five grounds of the motion, that there is error of law on the face of the interim award within the meaning of s 38(5)(b)(i) of the Act in that regard, and that the errors of law could substantially affect the rights of the Builder. Errors of this kind would ordinarily lead to remitter for the provision of further reasons. The Builder, however, relies upon additional complaints to which I now turn.
In relation to the second aspect of the first ground, counsel for the Builder emphasises the points referred to in [12] and [13] of these reasons. The first is that the figure of $63,758.50 to which the Arbitrator refers in item 2.4 of the interim award, and which in that item purports to be the total amount paid by the Owners to the Builder, is different from the figure in item 2.3 in which he records the sum of $63,440.50 as being the total amount paid by the Owners to the Builder. Counsel for the Owners, on the other hand, submits that the figure of $63,758.50 may be a minor arithmetical error in that that figure is $318 more than the figure of $63,440.50 in item 2.3, and the Arbitrator in item 2.3 separately listed a figure of $318 which he may then have inadvertently added back to the figure of $63,440.50 to produce the sum of $63,758.50 in item 2.4. Whether that be the correct explanation or not, the error seems to me not to be a serious one. It is, I think, also subsumed by the second point made by counsel for the Builder.
The second, and more important, point relied upon by counsel for the Builder is that item 2.4 reflects a misconception that the Arbitrator can 'correct', in the Final Award, the amount that he has found, in the interim award, to have been paid under the Contract prior to termination. I agree that the Arbitrator has evidently misconceived the need for finality by making, in effect, a provisional finding on the evidence. The Arbitrator has thereby been guilty of technical misconduct. It is appropriate accordingly, to set aside those parts of the award concerning the findings as to the amounts paid prior to termination. Yet, even serious errors constituting misconduct or misconceptions of duty will not necessarily justify the removal of an arbitrator, particularly in the absence of impropriety or partiality. The issue here involves the largely mechanical task of ascertaining how much in fact the Owners have paid to the Builder. In my opinion, this failure by the Arbitrator, neither alone nor in combination with the other matters, is sufficiently grave to warrant his removal. I am not satisfied that a reasonable person would no longer have confidence in the Arbitrator's ability to come to a fair and balanced conclusion on that issue if it were remitted. It is important to note that the Arbitrator has dealt with other issues concerning the Builder's claims for drawing fees, and copyright infringement, without any alleged error or misconduct.
The second ground contains an additional complaint that the reasons of the Arbitrator, insofar as they were disclosed, could not provide any proper foundation for the finding that Annexure B was not part of the Contract. In relation to that matter, the question of whether the parties have reached an agreement or consensus upon certain terms is, in my view, a question of fact. The question of whether the terms agreed are, in the circumstances, legally capable of constituting a binding contract is, in my view, a question of law: cf Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 548. Accordingly, insofar as the second part of the second ground alleges that the Arbitrator failed to find that the parties had reached agreement on the terms of Annexure B, that raises an error of fact, in my view, and not an error of law. In any event, the Builder has not satisfied me that the matters identified by the Arbitrator as constituting the basis for the finding are incapable of providing a proper foundation for the finding. The HIA Standard Terms appear complete and comprehensive on their face. The typed schedule forming part of the HIA Standard Terms was obviously completed by the parties, dated 30 April 2004 and signed. Item 7 of the schedule relates to progress claims, to which cl 10 of the HIA Standard Terms expressly refers. There is no provision for further or additional schedules or agreements of the kind recorded in Annexure B. Annexure B on the other hand is unsigned, apparently enclosed with a letter from the Builder dated 1 May 2004 and is described in the letter as a 'schedule of estimated costs and summary of progress payment schedule'. Where the parties have executed a document which appears to represent a written contract between the parties, that is capable of providing an evidentiary foundation for the conclusion that their agreement is wholly recorded in the document: State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170, 191 ‑ 192.
In developing his argument the Builder's counsel submitted that the effect of Annexure B was that the Builder had a legal entitlement to be paid the amounts stipulated in it upon the dates and the happening of the events to which it refers. I am not persuaded that any such alleged entitlement would be consistent with the detailed regime for progress payments contained in cl 10 of the HIA Standard Terms. Whilst the Arbitrator referred only to cl 10(b)(i) in that regard, cl 10(b)(i) is to be read as part of the overall scheme for the determination of the Builder's entitlements to progress claims set out in cl 10(b), read with cl 10(a).
Clause 10(b) of the HIA Standard Terms provides, relevantly:
(b)Such Progress Claims are subject to the following conditions:
(i)the Progress Claim shall identify all Costs incurred by the Builder up to and including the date of that progress claim together with the Builder's fee as specified in Item 5 of the Schedule;
(ii)payments shall be payable by the Owner within FIVE (5) days of receipt of any Progress Claim;
(iii)if the Owner shall not within FIVE (5) days of receipt of any Progress Claim notify the Builder of their disagreement with any of the items therein specifying full details of the Owner's disagreement the Owner shall be deemed to have accepted and approved of that Progress Claim as true and correct;
(iv)if any dispute arises as to any item in a Progress Claim the Owner shall pay to the Builder the undisputed portion of that Progress Claim within the period specified in sub‑clause 10(b) and the balance shall if not agreed and paid by the date of the next Progress Claim be resolved in accordance with Clause 18; and
(v)if any dispute arises as to any items in a Progress Claim which dispute remains unresolved at the date of the next Progress Claim the Builder may suspend the Works until the dispute is resolved or for any shorter period he may decide without prejudice to either party's rights in accordance with this Contract.
The fourth ground contains the additional allegation that the Arbitrator's finding was against the weight of the evidence. This does not raise an error of law.
The sixth ground in effect states that the alleged errors and misconduct warrant removal under s 44(a) or (c) of the Act. Accordingly, the success of this ground ultimately depends upon the nature of my findings in respect of the other grounds.
The matters raised by the Builder in the seventh ground are those identified in [11] and [14] ‑ [16] above.
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.
In relation to the matters identified in [14] ‑ [16] above, I am satisfied that the Arbitrator's recorded intention to determine the loss of rent in the Final Award, when he found no proper claim for rent, and his findings that the Owners have suffered losses due to breaches of contract and in respect of the lodgement of the caveat, and his proposal to deal with these matters further in a Final Award, constitute misconduct for the purposes of s 42 of the Act. As to the last two matters, the Owners did not plead any general claims for damages, and the Arbitrator does not record, when setting out in the interim award the parties' claims (item A), that the Owners had claimed damages. Nor does the Arbitrator record that a claim for damages was a matter to be determined in the arbitration ('matters to be determined' page 3 of the interim award). Further, there was no submission by the Owners' counsel that claims for damages did form part of the issues to be determined for the purposes of the interim award. Although with some hesitation (see [50] above), I am satisfied on balance that the Arbitrator has purported to determine issues beyond those he was required to determine. His findings, and proposals to deal with the matters further in a Final Award, may however, be set aside and, in my view, it is unnecessary to remove him.
The ninth ground alleges that the Arbitrator failed to decide the pleaded issues in the three respects alleged. I am not satisfied that this is so. It seems to me that, in a context where oral terms had been pleaded, when the Arbitrator found (at page 2 of the interim award) that the Contract comprises the documents to which he referred and found, in effect, that the HIA Standard Terms applied 'without any amendments', he was rejecting pleas to the effect that the Contract was partly oral. Nor do I accept that it is clear that the Owners pleaded that the Contract was partly oral. Paragraph 4 of the Points of Claim pleaded that the Contract was 'wholly in writing', but then also pleaded certain 'statements' made by the Builder to the Owners, which allegedly formed part of the Contract. Despite the apparent ambiguity in the pleading, I am unable to infer that the Owners were positively propounding a partly oral contract at the arbitration. In any event, if the Owners were propounding a partly oral contract, any omission by the Arbitrator to deal with that issue would affect the Owners, not the Builder, and the Owners make no complaint that an issue they had raised in that regard had not been dealt with.
In relation to par 23 of the Builder's defence and counterclaim, by that pleading the Builder sought declarations to the effect that:
(a)the Owners had invalidly attempted to terminate the Contract;
(b)the Contract had terminated 'as a result of the [Owners'] actions and conduct (alternatively in accordance with the [Contract])';
(c)the Builder was entitled to damages as a result of the Owners' actions and conduct;
(d)alternatively the Builder was entitled to terminate the Contract and claim all costs in accordance with it.
In my opinion, in substance, the Arbitrator dealt with these matters by his finding that the Contract was validly terminated by the Owners. As I have said, it is accepted by the Owners that the Arbitrator should provide better reasons in relation to the termination.
For the foregoing reasons, in my opinion, this is a matter where removal of the arbitrator is not warranted, and remitter is the appropriate course. In light of the concession made by the Owners, in relation to the failure to give reasons, remitter in that regard is appropriately made under s 38(3)(b). It is not necessary to decide, for the purposes of these proceedings, whether the view of Giles J in Sabemo v Malaysia Hotel (Australia), that a failure to give adequate reasons ought not be characterised as relevantly an error of law, should be preferred to the line of cases (see [43] above) holding to the contrary. Even if the view of Giles J in Sabemo v Malaysia Hotel (Australia) were adopted in relation to the failure to give reasons, the result in this case would still be remitter, albeit under s 43 rather than s 38(3)(b).

Other discretionary considerations confirm the conclusion that remitter is appropriate. In this regard, it is significant that the Contract was entered into over five years ago, the works appear to have been undertaken three to four years ago, there has been an inspection by the Arbitrator, a five day hearing, and there are parts of the interim award in respect of which no complaints are made.

Conclusion

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.
I will nevertheless hear the parties further on the precise formulation of the orders in accordance with these reasons, and costs.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: ALVARO -v- TEMPLE [2009] WASC 205 (S)