Armour Fire Protection Pty Ltd v Cox Constructions Pty Ltd

[2005] SASC 37

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

ARMOUR FIRE PROTECTION PTY LTD v COX CONSTRUCTIONS PTY LTD

Reasons for Decision of The Honourable Justice Anderson

4 February 2005

PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA

ARBITRATION - CONDUCT OF ARBITRATION PROCEEDINGS

The plaintiff brought proceedings purportedly pursuant to s39 of the Commercial Arbitration Act 1986 (SA) - s39 enables the Supreme Court to determine any question of law arising in the course of an arbitration, but requires either the consent of all parties or the consent of the Arbitrator - dispute as to whether the Arbitrator consented - the defendant brought an application to have the proceedings dismissed on the basis that in the absence of consent by the Arbitrator the court has no jurisdiction to hear the plaintiff's application - held: the Arbitrator did not consent, the court is without jurisdiction and the proceedings are dismissed.

Commercial Arbitration Act 1986 (SA) ss 38, 39, referred to.

ARMOUR FIRE PROTECTION PTY LTD v COX CONSTRUCTIONS PTY LTD
[2005] SASC 37

Civil

1. Anderson J           In this matter the plaintiff, Armour, has brought proceedings purportedly pursuant to s39 of the Commercial Arbitration Act 1986 (SA) (“the Act”).  The defendant, Cox, has brought an application for specific directions to dismiss the action brought by the plaintiff.

2. The issues arise from an arbitration being conducted by Mr Sarah who has made a decision to disqualify himself on the basis of bias.  Mr Sarah disqualified himself because he had earlier made adverse findings on credit about a witness in another related arbitration.  That witness would also be a key witness during the hearing of the current arbitration and hence Mr Sarah’s decision to disqualify himself.

3. Armour seeks to use s39 of the Act to effectively review the decision of the Arbitrator to disqualify himself.  Section 39 says:

   “39.(1) Subject to subsection (2) and section 40, on an application to the Supreme Court made by any of the parties to an arbitration agreement –

   (a) with the consent of an arbitrator who has entered on the reference or, if an umpire has entered on the reference, with the consent of an umpire;

   or

   (b) with the consent of all other parties,

   the Supreme Court shall have jurisdiction to determine any question of law arising in the course of the arbitration.”

4. This court therefore has jurisdiction only with the consent of the Arbitrator or the consent of all parties.  Cox has not consented and argues that neither has the Arbitrator.  Armour argues that the Arbitrator has in fact consented even though he has subsequently said in correspondence that he has not consented.

5. If there is no jurisdiction, because the necessary consents have not been obtained under s39, then Cox should succeed in its application to dismiss the action.

6. There are two letters written by the Arbitrator which are exhibited to affidavits before me, namely, one of 25 November 2004, and one of 1 December 2004, which make it clear that the Arbitrator is not giving his consent. 

7. The Arbitrator says that he had thought at an earlier stage that Armour was intending to appeal to this court against his decision to disqualify himself pursuant to s38 of the Act.  That was not correct, however, because it was always the intention of Armour to have determined as a preliminary point the question of whether the Arbitrator was correct in disqualifying himself.

8. Armour argues that there was a consent which was to be discerned from the correspondence written by it to the Arbitrator, and his response, or lack of it, to that correspondence.  It seems to me that the correspondence illustrates that Armour and the Arbitrator were probably at cross-purposes, and in any event the subsequent letters written by the Arbitrator make it quite clear that he is not consenting at the present time.

9. Cox pointed out, with some justification, that it is hard to envisage that the Arbitrator could consent to Armour’s proposed action because he had never been asked to consent.

10. Armour also argues that the two letters I have referred to in November and December 2004 were written after the action was commenced, and are irrelevant in deciding whether there was a consent given by the Arbitrator prior to the commencement of the action.   I do not agree with this submission.   It seems to me that if anybody, including an Arbitrator, is required to give consent to commence an action it must be very precisely spelt out by a specific request for consent and an unequivocal response indicating consent.  The matter then could not be open to conjecture.  In this case the lack of consent was put beyond any doubt by those two letters written by the Arbitrator.

11. Armour, in its submission to me, argued that in deciding the question under s39 and the question of whether Cox would be entitled to have the action dismissed, it was relevant to take into account that Armour could attempt in the alternative to bring an appeal pursuant to the provisions of s38 of the Act.  In my view, Armour may have problems under s38 in any event.  Under s38(2) an appeal only lies to this court “on any question of law arising out of an award.”  It is hard to see at this point of time how it could be argued that the decision of an Arbitrator to disqualify himself was a question of law arising out of an award.

12. However, I think it is unnecessary for me to go into the merits or otherwise of any such proposal because the matter should be decided on the s39 issue.  On that issue I find that the Arbitrator has not consented, and that the court is without jurisdiction.  Consequently Cox is entitled to have the action dismissed. 

13. I order therefore that Action No 1198 of 2004 be dismissed for want of jurisdiction.