Aquaclear Technology P/L v Cameron & Brister & Co No. Scciv-01-487

AQUACLEAR TECHNOLOGY PTY LTD v CAMERON
& BRISTER & CO PTY LTD
[2001] SASC 186

PRIOR J: The plaintiff and second defendant are parties to an agreement pursuant to which the second defendant Brister agreed to carry out certain works as Aquaclear’s sub-contractor. The works were brought to substantial completion in April 2000. In June of that year, Brister made a claim against Aquaclear for $147810. The claim was for the supply of additional work and materials. Aquaclear made a cross claim for $125063.
Between March and August 2000, the parties corresponded, seeking to negotiate a settlement between them. On 23 August, Aquaclear made an offer of settlement. Brister replied the same day, making a counter-offer. Brister’s letter also stated that if the counter-offer was not accepted “by close of business on 29 August 2000”, it would invoke cl 47.3 of the contract and proceed to arbitration.
On 30 August 2000, Brister wrote to the Chairman of the South Australian Chapter, Institute of Arbitrators and Mediators. It gave details of the dispute between the parties, attached some documentation and sought the appointment “of an arbitrator to resolve the dispute”.
On 1 September 2000, the Chairman nominated the first defendant, Ms Cameron, as the arbitrator.
On 28 February 2001, Ms Cameron determined that Brister’s letter of 23 August was a valid notice of dispute and that she was validly nominated to arbitrate the alleged dispute.
In these proceedings, Aquaclear seeks a declaration that Brister’s letter of 23 August was not a valid notice of dispute for the purposes of cl 47.1 of the contract. The court is also asked to declare that the first defendant has not been appointed to arbitrate the alleged dispute between the parties pursuant to the terms of the contract. In the alternative, Aquaclear seeks an order removing Cameron from her appointment on the ground that she is unsuitable to deal with the particular dispute. Section 44 of the Commercial Arbitration Act, 1986 authorises this Court, if satisfied that an arbitrator is incompetent or unsuitable to deal with a particular dispute, to remove the arbitrator.
Clause 47.1 provides:
“If a dispute between the Subcontractor and the Main Contractor arises out of or in connection with the Subcontract, including a dispute concerning a direction given by the Main Contractor’s Representative, then either party shall deliver by hand or send by certified mail to the other party and to the Main Contractor’s Representative a notice of dispute in writing adequately identifying and providing details of the dispute.”
Clause 47.2 of the contract requires the parties to confer at least once within 14 days after service of a notice of dispute. If a dispute cannot be resolved at any such conference or, “if at any time either party considers that the other party is not making reasonable efforts to resolve the dispute, either party may by notice in writing …. to the other party refer such dispute to arbitration or litigation.”
Aquaclear says that not only did the parties fail to confer as cl 47.2 required, but Brister did not refer the dispute to arbitration by giving such a notice. Aquaclear says such a notice can only follow a decision by Brister, arrived at after a conference. I do not think that construction is correct. A conference may resolve a dispute but the language of cl 47.2 makes plain that the notice can occur before or after any conference. The only condition attaching to the giving of such a notice is that a party then “considers that the other party is not making reasonable efforts to resolve the dispute.” Brister’s letter of 23 August supports a proper inference that it then considered Aquaclear was not making reasonable efforts to resolve the dispute.
Both parties assert that this Court has jurisdiction to determine whether there has been a sufficient notice of dispute. The second defendant says it is either pursuant to the inherent jurisdiction of the court or in virtue of s 39 of the Commercial Arbitration Act 1986[1]. I agree with that submission. I do not agree with the submission made by the plaintiff that the power arises in virtue of s 47 of the Act[2]. I do not accept that this Court is being asked to make interlocutory orders “for the purposes of and in relation to arbitration proceedings”. That is the only basis upon which s 47 could be invoked.
[1]Whitfords Beach v Gadson (1991) 6 WAR 537; Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (FC, SCWA, 9 September 1997, unreported)
[2] SASFIT v Leighton (1990) 55 SASR 527
There is authority consistent with the view maintained by the plaintiff, that the clause contemplates and requires a single notice, itself “adequately identifying and providing details of the dispute”. In Cairns-Mulgrave Water Supply Board v Watts Construction Division Pty Ltd[3], Connolly J considered a clause in a contract which provided that if a party required to have a dispute referred to arbitration that party had to give to the other
“notice in writing to that effect, and … with such notice, furnish to the other …. detailed particulars in writing of each such dispute or question which it decides to have so referred under distinct and separate headings and specifying the amount, if any, claimed by him under each head.”
[3] (1988) 4 BCL 332
An indistinguishable clause had been considered in another Queensland case, Sundell v Queensland Housing Commission (No 1)[4]. In that case a letter was said, “not by any stretch of imagination (to) be regarded as a document which furnished full detailed particulars of each claim, dispute or question under distinct and separate headings and specifying the amount claimed under each head.”[5] Connolly J regarded that decision as authority for the proposition that a notice, which does no more than identify the dispute cannot be regarded as satisfying the particular clause common to both cases. However, Connolly J said that it was “unnecessary and indeed undesirable to attempt to define the exact requirements of”[6] the clause. However, His Honour did say that where a clause is designed to apprise both the principal and the arbitrator of the exact matter which is referred to arbitration, every consideration favoured “the clearest definition of the dispute”[7]. On that approach, His Honour rejected any assertion that the demands of the relevant clause were sufficiently discharged by referring the dispute or question to arbitration and ignoring the requirement of full detailed particulars under distinct and separate headings.
[4] (1955) St R Qd 12
[5]Cairns-Mulgrave Water Supply Board v Watts Construction Division Pty Ltd (1988) 4 BCL 332 at 335
[6]Cairns-Mulgrave Water Supply Board v Watts Construction Division Pty Ltd (1988) 4 BCL 332 at 335
[7] Cairns-Mulgrave Water Supply Board v Watts Construction Division Pty Ltd (1988) 4 BCL 332
In contrast to the approach in those decisions, the Full Court of Queensland considered matters a little more sympathetically and, perhaps, realistically in Yendex Pty Ltd v Prince Constructions Pty Ltd[8]. The case involved a contract with a clause requiring a notice in writing to state that it was a notice under provisions of a particular clause and that it should specify the default, refusal or neglect on the part of a sub-contractor upon which the notice was based. The court said that the contractual provision “required a notice which conveyed to a “commercial builder” what was said to be amiss so that (the builder) could turn his mind to it”. The court spoke of the need for a notice to be unequivocal “in order to convey what was amiss”[9].
[8] (1989) 5 BCL 74
[9] Yendex Pty Ltd v Prince Constructions Pty Ltd (1989) 5 BCL 74 at 75
It must be acknowledged that the letter could have said more. Connolly J might well uphold the plaintiff’s protest. Others would insist upon a practical rather than strict construction[10]. I think the letter did, in the circumstances of this case, satisfy the demand in cl 47.1, of “adequately identifying and providing details of the dispute”. The letter referred to “Claims No1 to No 13” and a claim from Aquaclear. The plaintiff has never claimed that it did not know what they referred to. It had the correspondence between the parties, incorporated by reference and particularised to the arbitrator. Those who needed to know were not left in any doubt as to the dispute sought to be resolved pursuant to cl 47. It could also be said that the requirements in both cl 47.1 and cl 47.2 are not mandatory but merely directory. Certainly, on any view, the spirit and intent of the clauses were given effect to. Doing that suffices. The declaration sought with respect to the letter of 23 August must therefore be refused.
[10] Kirby J in Pan Foods v ANZ Bank (2000) ALJR 791 [24]; (2000) 170 ALR 579
It should also be made plain that the conduct of the parties would also warrant a refusal to declare the process invalid for want of form if the letter did not satisfy the demands of cl 47.1. Any strict view of what the clause requires is capable of waiver by the parties. The conduct of the plaintiff constituted a waiver of any condition in the two clauses. Before Brister’s letter of 23 August the parties were aware of the dispute or differences between them. They had conferred. To deny here the power to request the nomination of an arbitrator without absolute compliance with the strictest interpretation of both cl 47.1 and cl 47.2 would be to create injustice and absurdity and deny commercial realism to the parties and the situation as they both then knew it. The short timetable set before invoking cl 47.3 was not unfair in this case. Aquaclear did not take up the reasonable opportunity to insist upon strict adherence to its present view of the necessary process. It waived any such compliance by its failure to act before 30 August.
The challenge to the validity of Ms Cameron’s appointment calls for particular consideration of the complaint that no conference occurred. Clause 47.2 provides that “within 14 days after service of a notice of dispute, the parties shall confer at least once … to explore and if possible agree on methods of resolving the dispute by other means”. The clause goes on to say that:
“In the event that the dispute cannot be so resolved or if at any time either party considers that the other party is not making reasonable efforts to resolve the dispute, either party may by notice in writing delivered by hand or sent by certified mail to the other party, refer such dispute to arbitration or litigation.”
I maintain the view that the evidence here makes plain that Brister considered that by 23 August Aquaclear was not making reasonable efforts to resolve the dispute, as a result of which the power to refer the dispute to arbitration arose, being effected by the action taken in consequence of Brister’s letter of 30 August. That apart, I agree with the submission put on behalf of Brister that any necessary compliance with the obligation to confer within fourteen days was waived by Aquaclear. The evidence is that on 23 October 2000 Aquaclear confirmed to Brister that, at a meeting on 16 October 2000, it was agreed that that meeting “satisfied the requirements of cl 47.2”. Nothing put with respect to cl 47.2 satisfies me that any of the relief now sought should be granted.
In its pleadings, Aquaclear sought removal of Ms Cameron on the ground that she was “unsuitable to deal with the particular dispute”[11]. The Statement of Claim asserts that the matter involves complex questions and is of a size and complexity requiring an experienced Grade 1 arbitrator. Ms Cameron, though properly nominated pursuant to the agreement between the parties, is a Grade 3 arbitrator who has not yet conducted an arbitration as an arbitrator. Reliance is placed upon the grading system of the Institute of Arbitrators and Mediators. In submissions, the plaintiff’s counsel referred to documents in evidence to support a submission that, besides the issues raised by the pleadings, it was apparent that the first defendant was seeking advice from the Institute and acting in a manner inappropriate with respect to deciding the question of the validity of her appointment. None of the material before me satisfies me that there is any justification for this Court exercising the special power conferred by s 44. Nothing in the contract between the parties called for nomination by the Institute in accordance with its grading procedures. No submission was put to the Institute seeking a nomination giving effect to the application of that grading system in the nomination of an arbitrator. Absent a contractual requirement for compliance with internal rules of the Institute the nomination was properly made. The appointment was valid. I do not accept that the material before me establishes incompetence in the nominated arbitrator or that she is unsuitable to deal with the dispute. Nor does it establish that the arbitrator was seeking advice or acting improperly.
[11] Commercial Arbitration Act 1986, s 44(c)
The proceedings are therefore dismissed.
JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT
1.Whitfords Beach v Gadson (1991) 6 WAR 537; Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (FC, SCWA, 9 September 1997, unreported)
2.     SASFIT v Leighton (1990) 55 SASR 527
3.     (1988) 4 BCL 332
4. (1955) St R Qd 12
5.Cairns-Mulgrave Water Supply Board v Watts Construction Division Pty Ltd (1988) 4 BCL 332 at 335
6.Cairns-Mulgrave Water Supply Board v Watts Construction Division Pty Ltd (1988) 4 BCL 332 at 335
7.Cairns-Mulgrave Water Supply Board v Watts Construction Division Pty Ltd (1988) 4 BCL 332
8.     (1989) 5 BCL 74
9.     Yendex Pty Ltd v Prince Constructions Pty Ltd (1989) 5 BCL 74 at 75
10.     Kirby J in Pan Foods v ANZ Bank (2000) ALJR 791 [24]; (2000) 170 ALR 579
11.     Commercial Arbitration Act 1986, s 44(c)

[2001] SASC 186

7 June 2001