Arnwell Pty Ltd v Teilaboot Pty Ltd
[2010] VSC 123
•12 April 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
No. 1633 of 2010
| ARNWELL PTY LTD | Plaintiff |
| v | |
| TEILABOOT PTY LTD (ACN 006 474 415) MESLEN NOMINEES PTY LTD (ACN 005 790 698) GIBINS PTY LTD (ACN 108 927 037) E. WILLIAM GILLARD QC | Firstnamed Defendant Secondnamed Defendant Thirdnamed Defendant Fourthnamed Defendant |
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JUDGE: | CROFT J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 March 2010 | |
DATE OF JUDGMENT: | 12 April 2010 | |
CASE MAY BE CITED AS: | Arnwell Pty Ltd v Teilaboot Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 123 | |
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COMMERCIAL ARBITRATION — Domestic arbitration — Application to restrain arbitral proceedings from recommencing — s 47 of the Commercial Arbitration Act 1984 (Vic) —Court’s inherent power to prevent injustice — Commonwealth of Australia v Cockatoo Dockyard Pty Ltd (1995) 36 NSWLR 662 — State of Victoria v Seal Rocks Victoria (Australia) Pty Ltd (2001) 3 VR 1 — Whether the Court can intervene in procedural matters
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Cawthorn SC Mr M H Whitten | Moray & Agnew |
| For the Defendants | Mr S Anderson SC Mr J D S Barber | Mr John Dimitropoulos |
HIS HONOUR:
Background
This matter came before the Court as an urgent application which was made on 29 March 2010 with a view to preventing arbitration proceedings re-commencing the following day, 30 March 2010.
The arbitration the subject of this application is a private arbitration between the plaintiff and the first, second and third defendants under an Arbitration Agreement, dated 9 December 2009, which they entered into, collectively as the parties, with The Honourable E.W. Gillard QC as arbitrator (“the Arbitration Agreement”). For convenience the learned arbitrator is referred to as “the Arbitrator”.
The genesis of the Arbitration Agreement appears from the recitals to that agreement. The parties executed an agreement dated 28 September 2009 (“the September Agreement”) whereby they agreed to mediate the division of various parcels of identified property (see recital A) and, in the event that the mediation failed to resolve all issues identified in the 28 September 2009 agreement, to arbitrate in respect of the remainder of the issues unresolved.
The parties entered into an Agreement for Partition and Division of Property dated 16 October 2009 (“the October Agreement”) and agreed to divide the identified property as provided for in that agreement.
Recital D of the Arbitration Agreement states that “the parties wish to engage the Arbitrator in respect of the matters identified in clause 3 of the September Agreement and otherwise refer to clause 3 of the October Agreement”. Clause 3 of the September Agreement provides as follows:
“3. The Arbitrator is to determine upon the following points
i.The Division of the Land between the parties in the above proportions or as close as possible to the said above proportions or in any other proportion that the parties may mutually agree upon.
ii.For the purposes of (i) above the Arbitrator is to take into account the existence of an approved 3 lot subdivision and at his discretion based upon a 5 lot or 10 lot Subdivision based on Plan of Subdivision No 620736Q (1 lot), and PS620738L (1 or 3 lots) and PS620737N (1 or 6 lots) in order to give effect to the Division.
iii.Any Financial Adjustment(s) between the parties as may be deemed appropriate by the Arbitrator to achieve equality for the purpose of the Division.
iv.In determining the Division and the Financial Adjustments the Arbitrator shall be entitled to consider all existing valuations obtained by the parties as at the date of Arbitration.
v.The Trading and other debts of Gibins as at the date of Arbitration and what constitutes same.
vi.Any other outstanding issues between the parties as may be referred to him by the parties or any one of them.”
Clause 3 of the October Agreement provides:
“Payment for Equality and Adjustments for Improved Value of Land Taken by Each Partner
3.For the purpose of clause 3 (iii) of the September Agreement the parties agree that the question to be determined by the Arbitrator shall be ‘what if any financial adjustments need to be made between the parties in order to achieve equality given the agreed partition and division of the Property between the Partners.’”
Additionally, it is noted that clause 4 of the September Agreement provides that “The Arbitrator shall determine as soon as possible and in priority to the others the point referred to in i – iv above.”
The arbitration hearing reached its second day on 15 March 2010. At the conclusion of the day’s sitting, the Arbitrator dealt with procedural matters, having made it clear that he was not available to sit beyond the Thursday before Easter, 1 April 2010. In concluding, the Arbitrator said:
“ARBITRATOR: … I’ll adjourn the further hearing of the arbitration to 30 March 2010. Now, another thing that has got to be emphasised, you must get an outline of the evidence in very soon after those particulars are given, otherwise again this is just going to limp along. So please give a lot of thought to what you’re doing, make sure that you do give the other side sufficient time to consider the outlines of evidence so that we can try and finalise this, at least the hearing, before Easter so you’ve got Tuesday, Wednesday, Thursday before Easter.
MR ANDERSON: Sir, we’d ask that there be a direction that any further outlines of evidence be filed by 5pm or 4pm on the Thursday.
ARBITRATOR: Yes, all right. (2) That the parties file with the arbitrator and serve any outlines of evidence by 5pm on Thursday, 25 March 2010. That’s vital. (3) Adjourn the further hearing to 10am on 30 March 2010. I do leave it to the parties to inform the Liberty Group of the requirement for the courtroom. Any other matters?
MR JONES: No.
ARBITRATOR: We’ll now adjourn until that date. …”
Following the arbitration hearing on 15 March 2010, issues arose with the plaintiff’s former instructing solicitors concerning instructions provided to them and their communications with representatives of the plaintiff. Shortly prior to 22 March 2010, the plaintiff determined to appoint new solicitors to conduct the arbitration and, on that date, the plaintiff’s present solicitors received instructions from the plaintiff to assume conduct of the arbitration in place of the solicitors who had previously acted. The plaintiff’s evidence is also that, because of an issue concerning the nature of instructions provided by the plaintiff to its former legal advisers, it became apparent that it was necessary for its now present solicitors to retain new counsel. Consequently, Mr Cawthorn SC was first retained on Wednesday 23 March 2010 and Mr Whitten of counsel was unable to be retained until late afternoon on 24 March 2010. The plaintiff’s evidence is also to the effect that delays occurred as a result of the need to hand over “voluminous files and papers” and other materials by its former solicitors to its now present solicitors.
The evidence was that Mr Bill Papastergiadis of the plaintiff’s solicitors telephoned Mr John Dimitropoulos of the solicitors acting for the second and third defendants on 24 March 2010 to request consent to a short adjournment of the arbitration scheduled for resumption on 30 March 2010. Mr Dimitropoulos advised Mr Papastergiadis that he did not have instructions but would come back to him. It appears that there was no response from Mr Dimitropoulos by 25 March 2010, at which time the plaintiff’s solicitors wrote to the Arbitrator and requested that a directions conference be fixed either in person or by way of a telephone conference between the Arbitrator and counsel. The letter foreshadowed an application for a short adjournment of the proposed hearing scheduled for 30 March 2010 given the circumstances. The Arbitrator’s response was by email dated 26 March 2010, in which the Arbitrator said:
“I refer to your letter dated 25 March 2010. This arbitration has limped along. The last hearing date was 15 March 2010.
The parties have had more than ample time to prepare the few issues left. I am not prepared to have a Directions’ hearing.
The Arbitration must continue next Tuesday. It must be finalized before Easter. I leave for overseas on 15 April. I warned the parties it must be heard prior to Easter on 15 March. The issues left are few and not complex.”
The plaintiffs sought the intervention of the Court, on various bases, to secure an adjournment of the arbitration hearing to 6 April 2010, being the Tuesday immediately following the Easter holiday period.
Application
The plaintiff sought assistance from the Court under s 47 of the Commercial Arbitration Act 1984 (“the Act”) and also the Court’s inherent jurisdiction to prevent injustice, further or alternatively, under sub-ss 38(3) and (4)(b) and also ss 42 and 43 of the Act.
The plaintiff did not, during the course of the hearing of the application, rely directly upon the provisions of the Act other than s 47. This was principally because it was conceded that the order or direction of the Arbitrator with respect to the resumption of the arbitration hearing given on 15 March 2010, and in the email dated 26 March 2010, was probably not an “award” for the purposes of the Act. In any event, I find that the order or direction was not an “award” or “interim award” for the purposes of the Act. It was procedural in nature and did not determine any part of the substance of the dispute as is required for it to be considered an “award”.[1] Consequently, the relevant relief sought was as set out in paragraphs 3 and 4 of its Summons on Originating Motion dated 29 March 2010, as follows:
“3.An order that pursuant to s 47 of the Commercial Arbitration Act 1984 (“Act”), alternatively, the court’s inherent jurisdiction to prevent injustice, the Fourth Defendant (“Arbitrator”) be restrained from proceeding further with the arbitration hearing between the Plaintiff as claimant and the First to Third Defendants hereto as respondents (“arbitration hearing”) until 6 April 2010.
4.Further or alternatively, pursuant to s 47 of the Act, the further hearing of the arbitration hearing be adjourned to a date not before 6 April 2010.”
[1]Mond v Berger (2004) 10 VR 534.
These paragraphs also replicate paragraphs 3 and 4 of the Originating Motion of the same date.
Scope of s 47
Section 47 of the Act is, on its face, a broad provision, in the following terms:
“47. General power of the Court to make interlocutory orders
The Court shall have the same power of making interlocutory orders for the purposes of and in relation to arbitration proceedings as it has for the purposes of and in relation to proceedings in the Court.”
The provisions of s 47 must, however, be viewed in the context of the Act as a whole, particularly s 14, which provides:
“14. Procedure of arbitrator or umpire
Subject to this Act and to the arbitration agreement, the arbitrator or umpire may conduct proceedings under that agreement in such manner as the arbitrator or umpire thinks fit.”
In terms of context, regard should also be had to the restrictions on the judicial review of awards under sub-s 38(5) of the Act and the specific powers conferred in ss 42, 43 and 44, which provide power to the Court to set aside an award, to remit a matter for reconsideration by the arbitrator or to remove the arbitrator, respectively. As the authorities indicate, the provisions of the Act are intended to facilitate and support arbitration and as a departure from the previous regime of extensive Court supervision, which, for example, under the Arbitration Act 1958, saw arbitration significantly constrained by being rendered slow, costly and generally unattractive as a result of the case stated procedure with extensive recourse to the Court.
The scope and operation of s 47 of the Act has been considered in a number of cases, but those of principal importance now are the decision of the New South Wales Court of Appeal in Commonwealth of Australia v Cockatoo Dockyard Pty Ltd[2] and the decision of the Victorian Court of Appeal in State of Victoria v Seal Rocks Victoria (Australia) Pty Ltd.[3]
[2](1995) 36 NSWLR 662.
[3](2001) 3 VR 1.
The principal judgment of the Court of Appeal in Commonwealth v Cockatoo Dockyard Pty Ltd was delivered by Kirby P (with whom Priestley JA concurred in relevant respects). The Court of Appeal found that Rolfe J had held correctly that s 47 of the Act does not sustain appeals against interlocutory decisions of arbitrators.[4] Kirby P continued:[5]
“The argument of the Commonwealth gains some support from the majority opinion in the South Australian Superannuation Fund case. However, with every respect, I consider that Rolfe J was correct to decline to follow that decision. There was contrary authority in this State: see Imperial Leatherware Co Pty Ltd v Macri & Marcellino Pty Ltd (1991) 22 NSWLR 653 at 666f. Similarly, Smith J in the Supreme Court of Victoria has declined to follow it: see Nauru Phosphate Royalties Trust v Matthew Hall Mechanical and Electrical Engineers Pty Ltd [1994] 2 VR 386 at 398; see also the decision of Acting Master Hawkins in the Supreme Court of Western Australia in Cuedale Corporation Pty Ltd (t/as Statewide Constructions) v State Energy Commission of Western Australia (Supreme Court of Western Australia, Master Hawkins, 14 December 1992, unreported).
The reasons given by Rolfe J in his earlier decision in the current litigation (3 November 1994) are compelling. With his Honour, I would say that it would be extraordinary if the Act were so to control and limit appeals against final awards but to provide such a ready entitlement to secure a review of interlocutory orders made in an arbitration. To suggest this is to ignore the context in which s 47 of the Act appears. To the extent that the decisions of Cole J in Aerospatiale Holdings Australia Pty Ltd v Elspan International Ltd (1992) 28 NSWLR 321 and in Leighton Contractors Pty Ltd v NGI Investments Pty Ltd (Cole J, 25 August 1992, unreported) suggest otherwise, I would not agree.
Section 47 is intended to empower the Court, in cases properly before it, to make interlocutory orders to the extent that it is not elsewhere specifically provided for in other sections of the Act. Mr Jacobs draws attention to Pt 72A, r 4 of the Supreme Court Rules 1970: see M Jacobs, Commercial Arbitration, Law and Practice Sydney, Law Book Co (1990) at 2177. He describes the section as “indeed troublesome”: see ibid (at 11,665). He points out that to permit s 47 a large meaning would “allow unwarranted interference in the arbitral process at an inappropriate stage, and thus do violence to the spirit of intent of the model uniform legislation”. I have no difficulty in confining s 47 of the Act as Rolfe J proposed. ... To decide otherwise would be to defy the structure and apparent purpose of the Act. It would be to fall into the error, which courts are now enjoined to avoid, of construing a section in isolation and forgetting that it is intended to operate in a context and to achieve the consistent and sensible operation of the Act as a whole.”
[4]The judgment of Rolfe J is reported at (1994) 35 NSWLR 704. It is also noted that s 47 of the Commercial Arbitration Act 1984 (NSW) is in identical terms to s 47 of the Act. Although there are some variations between the, so-called, uniform Commercial Arbitration Acts in force in the Australian States and Territories, the provisions are substantially the same in New South Wales and Victoria. Certainly, these Acts provide the same legislative context for the purposes of interpreting the provisions of s 47.
[5](1995) 36 NSWLR 662 at 671.
The operation of s 47 and the state of authorities was also considered by Ormiston JA in the Victorian Court of Appeal in State of Victoria v Seal Rocks Victoria (Australia) Pty Ltd.[6] In relation to the extent of the jurisdiction under s 47, Ormiston JA said:[7]
“[8] … On its face, as the learned judge observed, the section does not confer any appellate jurisdiction on the court. Nor would its terms seem designed to give jurisdiction to the court to make incidental rulings as to the admissibility of evidence during the trial of issues in a reference to arbitration, as such rulings scarcely seem to be “interlocutory orders” within the meaning of s 47. None the less, the ruling or order here sought, which would relate to the production for inspection of certain of the appellant's documents, ought to be characterised as an “interlocutory” order for the purpose of the section, if the section was intended to grant jurisdiction to that end.
[9] Section 47, in my opinion, could not support or justify any of the orders sought from the court. Certainly it ought not to be construed as providing a means of appeal or review of an arbitrator's decisions. I would, with respect, not accept the opinion to the contrary expressed by the majority[8] in South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd[9] to the effect that the Act[10] is intended to give wide powers of intervention to the court at the interlocutory stages of arbitrations and that otherwise the section would have no purpose. In that respect I would prefer the reasoning of the other member of the court,[11] and would agree with the criticism appearing in and adopted by reference in the judgment of Kirby P (with whom Priestley JA concurred) in Commonwealth v Cockatoo Dockyard Pty Ltd.[12] In short, the section is intended only to invest ancillary jurisdiction in the court so as to enable it to act in aid of the arbitration by making interlocutory orders of a kind which are beyond the powers of the arbitrator, whether the latter are given by the Act or by the parties’ agreement. Effectively it gives an auxiliary jurisdiction analogous to the kind which formed part of the jurisdiction of the Court of Chancery, though not confined to the powers then exercised. As was pointed out in the several judgments to which Kirby P referred, the section would enable the court to make orders for injunctive relief,[13] the appointment of a receiver, interim protection of property, security for costs and for various kinds of relief against or involving third parties.
[10] As likewise has been held in relation to the inherent jurisdiction of the court,[14] the assumption behind the judgments just referred to is an implication from the terms of the Act that the court has only limited powers to interfere in an arbitration. In particular, short of finding misconduct and the like pursuant to ss 42 and 44, the court's powers to review decisions, at least in the form of awards, is circumscribed significantly by ss 38 and 40. The only other general power given to the court by the Act to consider matters of substance in an arbitration is the very limited power to determine questions of law pursuant to s 39 which requires at the least the consent of the arbitrator or all other parties. These limitations, as well as the widely expressed powers given to arbitrators under sections such as ss 14, 19, 22 and 37, point strongly against the conclusion that provisions such as s 47 give the court some general right to supervise or otherwise interfere in the interlocutory stages or during the hearing of an arbitration.”
[6](2001) 3 VR 1.
[7](2001) 3 VR 1 at 4 and 5.
[8]White and Mohr JJ.
[9](1990) 55 SASR 327 at 329ff.
[10]The South Australian statute at the time was somewhat differently expressed, but it was not contended that the differences were relevant for this purpose.
[11]Bollen J (dissenting).
[12](1995) 36 NSWLR 662 esp at 671-2. The NSW statute is not materially different.
[13]Except as incidental to an award ordering specific performance under s 24.
[14]See below at [12]ff.
In Nauru Phosphate Royalties Trust v Matthew Hall Mechanical and Electrical Engineers Pty Ltd & Anor,[15] Smith J declined to follow the views of the majority of the Full Court of South Australia in South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd.[16] Having noted that the Full Court “considered that the policy of the Act was to significantly reduce the scope for interference with the award of the arbitrator but to permit much stricter supervision of the arbitral procedure”, Smith J said:[17]
“I prefer, however, the analysis of Rogers J expressed in Imperial Leatherware Co Pty Ltd v Macri and Marcellino Pty Ltd (1991) 22 NSWLR 653, at 666. Rogers J said: ‘With the greatest possible respect I can see nothing in the “spirit of the Act” which supports that view. So far as the letter of the Act is concerned, it gives the parties the greatest possible freedom in the conduct of arbitrations. Even the requirements of s 22 may be relaxed. The laws of evidence need not be followed (s 19). The sole requirement in the “letter and spirit” of the Act is the call of natural justice which, whilst requiring that each party have a proper opportunity of putting its own case, and meeting the case for the other party, does not regard adherence to court procedures as necessary.’
In view of the fact that the uniform legislation was intended to significantly curtail the opportunity for appeal and abolished the right to state a case in the course of an arbitration, it does not follow to my mind that ss. 43 and 47 were intended to set up a special supervisory jurisdiction for dealing with procedural error - whether for complex arbitrations or simple ones. It should be remembered that a problem with the previous legislation was the case stated procedure. It could be used to disrupt arbitration proceedings to the point at times of being a serious abuse of the arbitral procedure: Imperial Leatherware, at 660. It would be surprising if, at the time of abolishing that right, it was intended to introduce a procedure for the close monitoring of procedural decisions of arbitrators, a procedure providing even greater opportunities for abuse.
The other significant matter that influenced the majority of the Full Court of South Australia was its opinion that s. 47 would be deprived of any substantial effect unless it authorised intervention by the courts in the procedure of arbitrations.
The Full Court had not had referred to it, it would seem, several judgments referred to by Rogers J., at 666-7, and the cases there cited, which demonstrated that s. 47 had been held to be available to make orders such as orders for security for costs, orders staying arbitrations and Mareva injunctions. The section plainly has a significant role to play elsewhere.”
[15][1994] 2 VR 386.
[16](1990) 55 SASR 327.
[17][1994] 2 VR 386 at 408.
The extent of the significant role that s 47 may play, apart from a supervisory jurisdiction with respect to interlocutory decisions of arbitrators, was also considered by Rolfe J in Commonwealth v Cockatoo Dockyard Pty Ltd,[18] where the view was expressed that its provisions were “intended to grant, although in more general terms, power to make the type of orders provided for in s 12(6) of the Arbitration Act 1950 (UK), to the extent those matters are not dealt with specifically in other sections”. In my view, these provisions of the 1950 English legislation do provide a helpful, but not restrictive, outline of the extent of operation of s 47, which indicates the potentially very useful work its provisions may have in assisting the arbitration process, rather than being treated as imposing an additional layer of Court supervision directed to the type of matters specifically conferred on arbitrators under s 14 of the Act. Sub-section 12(6) of the Arbitration Act 1950 (UK) provides as follows:
[18](1994) 35 NSWLR 704 at 712.
“(6) The High Court shall have, for the purpose of and in relation to a reference, the same power of making orders in respect of-
(a) security for costs;
(b) discovery of documents and interrogatories;
(c) the giving of evidence by affidavit;
(d) examination on oath of any witness before an officer of the High Court or any other person, and the issue of a commission or request for the examination of a witness out of the jurisdiction;
(e) the preservation, interim custody or sale of any goods which are the subject matter of the reference;
(f) securing the amount in dispute in the reference;
(g) the detention, preservation or inspection of any property or thing which is the subject of the reference or as to which any question may arise therein, and authorising for any of the purposes aforesaid any persons to enter upon or into any land or building in the possession of any party to the reference, or authorising any samples to be taken or any observation to be made or experiment to be tried which may be necessary or expedient for the purpose of obtaining full information or evidence; and
(h) interim injunctions or the appointment of a receiver;
…“[19]
[19]See Russell on the Law of Arbitration (A. Walton and M. Vitoria, Eds; 20th ed; 1982).
Inherent jurisdiction
The plaintiff also relied, for the purposes of this application, on the inherent jurisdiction of the Court to prevent injustice as a basis for its intervention in the present circumstances.
Ormiston JA, in State of Victoria v Seal Rocks Pty Ltd, considered the question whether the inherent jurisdiction of the Court had been excluded by the operation of the Act in the context of a claim by the State of Victoria that a number of documents which were produced to the arbitrator ought not to be admitted in evidence on the ground of public interest immunity. Public interest questions had also arisen in Commonwealth v Cockatoo Dockyard Pty Ltd where the Commonwealth objected to the release of information which it said would interfere in its governmental rights and duties in various respects. Kirby P, whilst accepting that the New South Wales equivalent of the Act establishes a comprehensive regime regulating arbitrations, expressed caution in concluding on that basis that the inherent power of the Supreme Court had necessarily been excluded:[20]
[20]Commonwealth v Cockatoo Dockyard Pty Ltd (1995) 36 NSWLR 662 at 674-5.
“Ordinarily, where it is suggested that the jurisdiction of a superior court of
general jurisdiction is excluded, the party making that contention must be able to demonstrate that relevant jurisdiction exists in some other court: see, eg, Board v Board [1919] AC 956 at 962f; Re Totalisator Administration Board of Queensland (1988) 80 ALR 73 at 75. No such jurisdiction was suggested here.It is upon this point that the Court reaches the central question which must be answered to determine the issue of its power. Rolfe J concluded that it was inherent in the language and purpose of the Act that Parliament had established a code to regulate arbitrations. Parties agreeing to submit their disputes to arbitration were bound by that code. The decisions of this Court in Promenade Investments and Natoli had required that the code be strictly adhered to and interference by the Court limited to the rare cases envisaged by the legislation. In such circumstances the Court was bound to adhere to the principle of restraint and acknowledge that its jurisdiction had been ousted by a clearly expressed parliamentary intention to that end.
Support for this approach is found in a number of English decisions which deny the inherent power of the courts to intervene in the proceedings of commercial arbitration. Specifically, on the subject matter of interlocutory orders, Steyn J in the English High Court held that there was no inherent jurisdiction left to intervene at an interlocutory stage which did not otherwise fall to be dealt with as misconduct by the arbitrator: see Biakh & Biali v Hyundai Corporation Ltd [1988] 1 Lloyds Rep 187 at 189; Jacobs (at 2179). The theory behind this approach is that arbitrators must be given a free hand in commercial matters; that they must have a specially large jurisdiction in procedural determinations; that nothing else will avoid the pitfalls of cost and delay which are, notoriously, the features of litigation in the courts; that if a significant error occurs it will remain to be challenged at the end of the arbitration if it can get through the gateway of s 38 of the Act; and if the error amounts to “misconduct” then the parties may, if they choose, seek the drastic remedy provided by s 43 of the Act.
I acknowledge the great force of these considerations. They are compatible with my own thinking expressed in Natoli. They commanded the assent of Rolfe J in this case. They are eloquently summarised by Bollen J in his dissenting opinion in the South Australian Superannuation case. They also find support from the majority speeches in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd [1981] AC 909 at 987; cf at 938, 997f.
Where a matter is within the scope of an arbitration, I would unhesitatingly give effect to the foregoing consideration and exclude the availability of the inherent power of the Supreme Court or the power expressly elaborated by s 23 of the Supreme Court Act. But I find unacceptable the proposition that the Court is incapable of providing relief, and has lost its powers altogether, simply because parties have entered into a private contract by which they have submitted a dispute to arbitration.”
Ormiston JA expressed similar caution in the context of issues raised in State of Victoria v Seal Rocks Pty Ltd.[21]
[21](2001) 3 VR 1 at 5-7, particularly paragraphs 12, 13 and 19.
In the event inherent jurisdiction were found to subsist it would, in my view, be exercised only in the most unusual circumstances having regard to the comprehensive provisions of the Act.
Present circumstances
The interlocutory ruling or order the subject of the present application is in marked contrast to the types of interlocutory orders or rulings the subject of the authorities which have been considered, particularly those the subject of Commonwealth v Cockatoo Dockyard Pty Ltd[22] and State of Victoria v Seal Rocks Pty Ltd.[23] The present order or ruling is clearly procedural and, in my view, a matter clearly within the ambit of the powers conferred on an arbitrator under s 14 of the Act. In my opinion, this would make it even more difficult for an applicant to argue for jurisdiction of the Court under s 47 or, if that jurisdiction existed, for its exercise in the present circumstances. For all the reasons enunciated in the authorities considered, it is clear that arbitration processes would be inhibited severely if the Court were to intervene and attempt to “second guess” the orders or rulings the subject of the present application.
[22](1994) 35 NSWLR 704.
[23](2001) 3 VR 1.
The plaintiff submitted that the Arbitrator ought to have responded to its request for an adjournment with arrangements for a directions hearing where the plaintiff could advance its arguments. As has been noted, the Arbitrator’s response was by email only. Nevertheless, this email followed two days of arbitration hearing and directions on procedural matters and resumption of that arbitration hearing following a clear statement by the Arbitrator as to his availability. In my opinion, it is a matter of discretion for the Arbitrator who is seized of all the issues in the arbitration and the procedural and other steps and submissions which have been made to him and it is not for the Court to attempt to step into the Arbitrator’s shoes in circumstances like the present.
If the Arbitrator proves to be wrong in his application of rules of procedural fairness, then the Court has power to consider, subsequently, whether the proceedings have involved misconduct on the part of the Arbitrator for the purposes of s 42 on the basis that there has been a denial of the rules of natural justice. The difference between an application under s 42 and the present circumstances is that the s 42 provisions confer a power to set aside an arbitral award. In these circumstances, the Court will be in a position to make an assessment of the effect of any claimed procedural misconduct with a view of the arbitration proceedings as a whole and the Arbitrator’s award. That is not the position in the present circumstances.
Reference was also made in the plaintiff’s submissions to paragraph 5(a) of the Arbitration Agreement, which provides as follows:
“5 Substantive and procedural matters
(a) The Arbitration shall be conducted:
(i)as though it were a civil trial in the Supreme Court of Victoria in strict accordance with the procedural and substantive laws of Victoria; and
(ii)pursuant to the Commercial Arbitration Act 1984 (Vic).”
Particular reference was made to sub-paragraph 5(a)(i) on the basis that a judge in the circumstances of the Arbitrator would, on application by a party for an adjournment, necessarily hear that party.
Consequently, it was said, the Arbitrator’s conduct was, as I infer, both a breach of the Arbitration Agreement and, as a result, some breach of the rules of natural justice on the basis that the parties to the Arbitration Agreement had, in effect, defined them. In my opinion, however, this result does not follow from the provisions of paragraph 5(a)(i). In my opinion, these provisions, in the context of the Arbitration Agreement, indicate the type of procedure which the parties require for the conduct of the arbitration which are intended to guide the Arbitrator in terms of the exercise of his powers under s 14 of the Act. It does not follow, in my view, that general provisions of this nature should be interpreted as imposing a requirement that the Arbitrator slavishly adhere to the minutiae of civil litigation procedure. For example, these provisions did not indicate that the Arbitrator is required to apply the Supreme Court (General Civil Procedure) Rules 2005, so there is clearly some discretion and latitude left for the Arbitrator in exercising powers under s 14 of the Act. Accordingly, it follows that these provisions of the Arbitration Agreement are not sufficiently prescriptive to require that the Arbitrator convene a directions hearing to accommodate the plaintiff’s request for an adjournment.
Conclusions and orders
It follows from the authorities which have been considered that there is no jurisdiction in the Court under s 47 of the Act to entertain the application now brought by the plaintiff.
Nevertheless, even if the position were otherwise, I am of the opinion that it would not be appropriate in the circumstances of the present application to grant the orders sought having regard to the nature of the interlocutory order or ruling of the Arbitrator which is challenged. As has been noted, it is not an order or ruling of the substantive type considered in Commonwealth v Cockatoo Dockyard Pty Ltd[24] or State of Victoria v Seal Rocks Victoria (Australia) Pty Ltd,[25] it is very much a procedural matter and a procedural order or ruling made in the context of and in the course of the conclusion of two days of arbitration hearing. I have no reason to doubt the veracity of the Arbitrator’s reasons for refusing an adjournment or that those reasons were not properly considered, due weight having been given to the matters remaining in issue in the arbitration and the likely complexity and extent of the further hearing.
[24](1995) 36 NSWLR 662.
[25](2001) 3 VR 1.
It also follows that in the event that the Court does retain inherent jurisdiction in relevant respects in spite of the comprehensive provisions of the Act, there is no basis for exercising this jurisdiction any more than there would be to exercise any jurisdiction under s 47 of the Act, assuming it existed. Consequently, it is not necessary to determine the issues raised with respect to inherent jurisdiction.
In view of the urgency of the application, I made orders that the plaintiff’s application be dismissed with an order for costs in favour of the first, second and third defendants. The fourth defendant, the Arbitrator, did not appear and did not take any part in the proceedings and, accordingly, is not a party to any of the orders. By agreement of the parties, a copy of my reasons has been provided directly without the necessity for a further hearing.
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