Ascension Capital Pty Ltd v Bowen Basin Sun Farm Pty Ltd (Ruling)
[2024] VCC 1366
•6 September 2024
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
ARBITRATION LIST
Case No. CI-24-03078
| ASCENSION CAPITAL PTY LTD (ABN 60 640 543 111) | Plaintiff |
| v | |
| BOWEN BASIN SUN FARM PTY LTD (ACN 620 093 503) | Defendant |
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JUDGE: | Her Honour Judge Brimer | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 26 August 2024 | |
DATE OF RULING: | 6 September 2024 | |
CASE MAY BE CITED AS: | Ascension Capital Pty Ltd v Bowen Basin Sun Farm Pty Ltd (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 1366 | |
RULING
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Subject:ARBITRATION
Catchwords: Application for stay of proceeding under Commercial Arbitration Act 2011 (Vic) s 8(1) – whether arbitration agreement inoperative for the purposes of s 8(1) Commercial Arbitration Act 2011 (Vic) – where both parties issued termination notices – where the plaintiff proposed to the defendant to discuss matters raised in a termination notice in a professional manner pursuant to a dispute resolution clause – where the defendant refused to enter into a dispute resolution process regarding the plaintiff’s contract termination – whether plaintiff’s proposal was an invitation to arbitrate – whether conduct of the defendant amounted to a waiver of right to enforce the arbitration agreement or repudiation of the arbitration agreement – not satisfied that the defendant’s conduct constituted a deliberate, intentional and unequivocal abandonment of the right to enforce the arbitration agreement – not satisfied that the defendant’s conduct evinced an intention to no longer be bound by the arbitration agreement or that it would convey to a reasonable person in the plaintiff’s position a renunciation of the arbitration agreement
Legislation Cited: Commercial Arbitration Act 2011 (Vic)
Cases Cited:ACD Tridon v Tridon Australia [2002] NSWSC 896; Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97; Commonwealth v Verwayen (1990) 170 CLR 394; CPB Contractors Pty Ltd v Celsus Pty Ltd [2017] FCA 1620; Downing v Al Tameer Establishment [2002] 2 All ER (Comm) 545 [2017] 3 SLR 267; La Donna Pty Ltd v Wolford AG [2005] VSC 359; Zhang v Shanghai Wool & Jute Textile Co Ltd (2006) 201 FLR 178
Ruling: For the Defendant
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | N M Elias | Danaher Moulton |
| For the Defendant | T K Jeffrie | Ashurst Australia |
HER HONOUR:
Introduction
1On 29 May 2024, the Plaintiff, an advisory firm (Ascension) issued proceedings against the Defendant, a renewable energy project developer (Bowen) claiming Bowen engaged in misleading or deceptive conduct.[1]
[1] Alternatively, a quantum meruit claim.
2The claim relates to the provision of transaction advisory services by Ascension pursuant to an agreement with Bowen entered into on 26 January 2023 (Mandate Agreement). Services were provided in relation to the sale of a solar farm and battery storage project located in Dysart, Queensland (the Project).
3On 12 July 2024, Bowen filed and served a notice of conditional appearance.
4By summons dated 29 July 2024, Bowen seeks orders that the proceeding be stayed and the parties referred to arbitration under section 8 (1) of the Commercial Arbitration Act 2011 (Vic) (CAA).
5Section 8 (1) of the CAA is as follows:
“8 Arbitration agreement and substantive claim before court (cf Model Law Art 8)
(1)A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party’s first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.”
6In summary:
(a) Bowen relies on clause 15.2 of the Mandate Agreement in which the parties agreed disputes would be submitted to arbitration; and
(b) Ascension contends that Bowen waived or repudiated its right to enforce clause 15.2, such that the arbitration agreement is “inoperative” for the purposes of section 8(1) of the CAA.
Conclusion
7For the reasons set out below, I am not satisfied that Bowen waived its right to enforce clause 15.2 or repudiated the arbitration agreement, such that the arbitration agreement is “inoperative” for the purposes of section 8(1) of the CAA.
Background
8The three directors of Bowen at the relevant time in 2023 were Douglas Smith, William Evans and Benjamin Barnett. Mr Evans was also a director of one of Bowen’s shareholders, Prove Dysart Pty Ltd (Prove). Prove was a prospective bidder for the Project in the sale process.
9The sole director and shareholder of Ascension is Anwar Banwait.
10Clause 9 of the Mandate Agreement provides that it could be terminated without cause in writing by Bowen with 30 days’ notice, or by Ascension with 60 days’ notice. There is no issue that the parties could otherwise terminate the Mandate Agreement with cause.
11The Mandate Agreement includes a “Dispute Process” clause as follows:
“15. DISPUTE PROCESS
15.1 This Mandate Agreement shall be governed by the laws of Victoria. The parties shall seek to resolve any dispute arising from or in relation to the Mandate Agreement amicably.
15.2 If the dispute cannot be resolved amicably, the dispute or difference whatsoever arising out of or in connection with this Mandate Agreement shall be submitted for arbitration. The place of arbitration shall be Melbourne, Australia.
15.3 The dispute, the arbitration proceedings and the arbitral award shall be confidential and involved persons from both parties shall be pledged to secrecy. A separate confidentiality agreement shall be entered into by the parties prior to the commencement of the arbitration proceedings.”
12By July 2023, issues in relation to the sale process had arisen and remained unresolved. Ascension expressed concerns about the appropriate management of the sale process by Bowen. Bowen expressed concerns about whether Ascension was acting according to Bowen’s instructions and about a conflict of interest issue in respect of Mr Evans, given his position as a director of a prospective bidder.[2]
[2]On 23 May 2023, the Board (comprising Mr Barnett and Mr Smith) resolved that Mr Evans had a conflict of interest and that he be excluded from receiving details of any negotiations between Bowen and bidders (other than Prove).
13Mr Banwait deposed to a number of background matters including that between 15 June 2023 and 3 August 2023, he had approximately 35 telephone conversations with Mr Evans, Mr Smith and Mr Barnett in relation to issues with the sale process.
14Further:
(a) In around mid-July 2023, Mr Banwait had a telephone discussion with Mr Evans in which he asked Mr Evans whether they could use the process set out in clause 15 of the Mandate Agreement to sort the issues out. Mr Evans said words to the effect that given the level of internal dissonance between the directors at Bowen, he did not think the directors would agree to following the dispute resolution process set out in the Mandate Agreement;[3]
(b) On 20 July 2023, Mr Banwait called an “all hands” meeting with the directors of Bowen, and prepared and circulated a Divestment Strategy document for discussion at that meeting. Mr Smith and Mr Barnett did not attend the meeting;
(c) On 31 July 2023, Mr Banwait sent a text message to Mr Evans:
“Hi Will,
Can we have a chat about Ascension terminating it’s [sic] mandate with [Bowen] with cause? Given our relationship I can hold off, but let’s discuss.”
[3] Mr Evans’s hearsay response is included for context.
(d) On or about 2 August 2023, Mr Evans and Mr Banwait again spoke on the phone. Mr Banwait said words to the effect that in circumstances where it appeared that Mr Smith and Mr Barnett were not willing to engage in the dispute resolution process under the Mandate Agreement, and they were not otherwise able to resolve the issues in dispute, he believed he needed to terminate the Mandate Agreement.
15On 3 August 2023 at 8.18am, Mr Banwait sent an email to Mr Smith:[4]
“Pls refer to the Termination Notice attached.
An invoice for Ascension’s services will follow shortly.
As outlined above in this notice Advisor is a creditor of the business.”
[4] Also sent to Mr Barnett and Mr Evans.
16The termination notice attached to the email sent by Mr Banwait (Ascension Termination Notice) stated that:
“Ascension Capital (the “Advisor”) believes it is necessary to terminate its Mandate Agreement (“the Agreement”) with Bowen Basin Sun Farm (the “Company”) with Cause pursuant to Clause 9.2 of the Agreement. Provision of its Services will cease in 60 days from the date of this letter, failing a request to enter a dispute resolution request pursuant to Clause 15 of the Agreement…” (emphasis added)
17The Ascension Termination Notice set out alleged breaches of the Mandate Agreement by Bowen and concluded:
“The contractual termination notice period of 60 days should be sufficient to close the transaction in the required timeline if the issues summarised in this notice are addressed professionally.”
18On the same day at 11.15am, Mr Smith sent an email to Mr Banwait (copying in Mr Evans, Mr Barnett and others) relevantly stating that:
“…Every single premise you attach is unfounded, incorrect, refuted and rejected…
…We have been holding your Termination Notice on file for 2 months now and the Directors have ratified it this morning. William Evans was excluded from this decision due to his ongoing Conflict of Interest…
…The Company will honour its obligation to pay $5,000 costs and no more. Please send invoice asap.
The Shareholders will now also be adding Ascension as a party to the legal suit for value destruction against Prove.”
19Attached to the email was a letter from Bowen which notified Ascension that Bowen was exercising its right to terminate the Mandate Agreement (Bowen Termination Notice):
“…In accordance with clauses 9.2 and 9.3 of the Contract, we are exercising our right to terminate with cause for the following material breaches of your obligations under the Contract, with immediate effect…” (emphasis added)
20Later on the same day, at 3.46pm, Mr Banwait sent an email to Mr Barnett (copying in Mr Evans but not Mr Smith) which referred to the Ascension Termination Notice and stated:
“…All points in Ascension’s Termination Notice stand…
…Should [Bowen] wish to discuss in a professional manner we can proceed via Clause 15 (Dispute Resolution) which will take place in Melbourne per Clause 15.2. Ascension will also have its legal counsel present...” (the Proposal)
21Mr Barnett forwarded the Proposal to Mr Smith at 4.19pm and stated:
“Best that Ascension not compromise the sale by talking about stuff they are not aware of the detail on. Will just result in us suing them.”
22On 7 August 2023 at 2.30pm, Mr Smith sent an email to Mr Banwait which commenced:
“…The letter issued on the 3rd of August was a formal communication from the Company, approved by the majority of Directors. The Company will not be entering a Dispute Resolution process regarding your contract termination…” (emphasis added) (the Refusal)
23On 30 October 2023, Ascension’s lawyers wrote to the directors of Bowen, alleging breaches of the Mandate Agreement and inviting a response:
“…We invite [Bowen] to respond to the matters set out in this letter by no later than 4.00pm on Monday, 6 November 2023. In the absence of a satisfactory response, we will seek [Ascension’s] instructions to escalate the matter without further notice to you…”
24Bowen did not respond to the letter.
Law
25There is no issue that, pursuant to section 8(1) of the CAA, the Court must refer the parties to arbitration unless the arbitration agreement is “null and void, inoperative or incapable of being performed.”[5]
[5] CAA, s 8(1).
26The focus of the present application is on inoperability by reason of waiver or repudiation.
Relevant principles
27There is no dispute that:
“An arbitration agreement is inoperative at the very least, when it ceases to have contractual effect under the general law of contract. That can occur as a result of a number of doctrines of the law of contract such as discharge by breach, by agreement or by reason of waiver, estoppel, election or abandonment.”[6]
[6]CPB Contractors Pty Ltd v Celsus Pty Ltd [2017] FCA 1620 (CPB) at [64] (Lee J), quoting Dyna-Jet
Pte Ltd v Wilson Taylor Asia Pacific Pte Ltd [2017] 3 SLR 267 at [162] (Vinodh Coomaraswamy J) (High Court).
28It may also cease to have effect following repudiation.[7]
[7] CPB at [166], referring to Downing v Al Tameer Establishment [2002] 2 All ER (Comm) 545.
29Establishing that an arbitration clause is inoperative or incapable of being performed is a high bar, and the onus lies with the party resisting the stay of proceedings.[8]
[8]Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd [2017] VSC 97 at [34] and [38]. Having regard to the onus, I address the plaintiff’s submissions below, first.
Waiver
30“Waiver” is a vague and imprecise term that is used in many senses, and often must be defined according to its context.[9]
[9] Zhang v Shanghai Wool & Jute Textile Co Ltd (2006) 201 FLR 178 (Zhang) at [14].
31In the present context, Ascension relies on “waiver in the stronger sense”, as articulated by Austin J in ACD Tridon v Tridon Australia.[10] Austin J refers to a passage of Toohey J in Commonwealth v Verwayen,[11] quoting from Halsbury’s Laws of England:
“Waiver is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted, and is either express or implied from conduct. It may sometimes resemble a form of election, and sometimes be based on ordinary principles of estoppel, although, unlike estoppel, waiver must always be an intentional act with knowledge.”[12]
[10] [2002] NSWSC 896.
[11] (1990) 170 CLR 394 (Verwayen).
[12] Lexis Nexis, Halsbury’s Laws of England, 4th ed, vol 16 (at 1976) at [1471], quoted in Verwayen at 472.
32Whelan J in La Donna Pty Ltd v Wolford AG referred to Austin J’s description of “waiver in the stronger sense” as “arising where a party makes an unequivocal final choice between alternative procedures so that it could be said that the party had abandoned the right, if the right was thereafter asserted.”[13]
[13] [2005] VSC 359 at [21] to [22].
33Waiver is constituted by the deliberate, intentional and unequivocal release or abandonment of the right that is later sought to be enforced.[14]
[14]Zhang, 186 [14]. Mr Elias referred to Chernov JA’s citing of the authors of The Law of Waiver, Variation and Estoppel, who say that the elements that are common to all waiver “in the true sense of the word” are: “1. an unequivocal representation by X either by words or conduct that it will forgo certain rights; 2. X makes that representation when it is aware of the facts that give rise to the rights which are being forgone, of the right to forgo those rights and the connection between the two.”
Repudiation
34In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd, Gleeson CJ, Gummow, Heydon and Crennan JJ set out the test for repudiation as:
“… conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other person, renunciation either of the contract as a whole or of a fundamental obligation under it.”[15]
[15] [2007] HCA 61 at [44].
Submissions
Plaintiff’s submissions
35Mr Elias, on behalf of Ascension, submitted that, having regard to the words used in the Refusal, and to the context in which it was sent, the Refusal cannot reasonably be construed as anything other than a deliberate and unequivocal abandonment of the right to enforce clause 15.2 of the Mandate Agreement.
36The Court ought to be satisfied that Mr Smith, on behalf of Bowen:
(a) unequivocally represented by the Refusal that the right to enforce clause 15.2 would be forgone. The Refusal is not qualified in any way as to time or process;[16] and
(b) he was aware and had knowledge of the facts that gave rise to the right to enforce clause 15.2 and that it could be waived.
[16]That is, it in no way suggests that Bowen may be willing to enter a Dispute Resolution process at some future time, nor do the words used suggest that the Refusal is limited or confined to a refusal to engage in discussions to resolve the matter amicably.
37The text of the Proposal ought reasonably be construed as an invitation to arbitrate under clause 15.2 of the Mandate Agreement. It refers expressly to clause 15.2, to the dispute process taking place in Melbourne and to Ascension having its legal counsel present. It does not refer to any of the text of clause 15.1, which does not use the words “discuss” or “professional”.
38The context in which the Proposal was sent supports that construction:
(a) By the time the Proposal was sent, it was painfully clear to everyone that amicable resolution as contemplated by clause 15.1, had failed, and that they were in the realm of clause 15.2.
(b) Clause 15 was expressly raised during attempts to resolve issues amicably. When clause 15 was raised in discussions leading up to the Ascension Termination Notice, it must have been taken to be a reference to some kind of more formal process for resolving the issues.
(c) Other attempts at resolving the issues amicably failed. The “all hands” meeting to discuss the Divestment Strategy is another example of the parties trying to resolve the disputes amicably, as are other communications between Mr Banwait and Mr Evans.
(d) The reference to clause 15 in the Ascension Termination Notice must be read as a reference to the arbitration agreement in clause 15.2 of the Mandate Agreement as, by the time of the Ascension Termination Notice, efforts to resolve their disputes amicably (the subject of clause 15.1) had failed. Properly construed, the Ascension Termination Notice raises matters in dispute and invokes the dispute resolution process in clause 15.2.
39In that context, the Proposal could only have been a reference to arbitration under clause 15.2 of the Mandate Agreement. It cannot sensibly be maintained that by the Refusal, Mr Smith, on behalf of Bowen, did not intend to waive any right to arbitration.
40A conclusion that the Refusal was a deliberate and unequivocal abandonment of the right to enforce clause 15.2 of the Mandate Agreement is further supported by two emails, from which it may be inferred that Bowen was contemplating a curial legal proceeding only, not arbitration:
(a) Mr Smith’s email to Mr Banwait of 3 August 2023 at 11.15am, in which he stated “[t]he Shareholders will now also be adding Ascension as a party to the legal suit for value destruction against Prove”; and
(b) Mr Barnett’s reference to “Will just result in us suing them” in his email of 3 August 2023 at 4.19pm to Mr Smith, when forwarding the Proposal.
41Bowen seeks to have it both ways: to approbate and reprobate. It has sought to fob off Ascension and not engage in arbitration. It did not respond to the letter from Ascension’s lawyers on 30 October 2023, and now seeks to enforce the very clause it waived by the Refusal. From a policy perspective, to find otherwise, would allow parties to prevaricate about whether they might engage in litigation or arbitration.
42Further and alternatively, the Refusal was such as to convey to a reasonable person in the situation of Ascension, a renunciation of the obligation to arbitrate in accordance with clause 15.2. Bowen, by the Refusal, evinced an intention not to be bound by clause 15 and thereby repudiated the arbitration agreement provided for by that clause. This repudiation was accepted by Ascension by the filing of the Statement of Claim in the County Court on 29 May 2024.
Defendant’s submissions
43Mr Jeffrie, on behalf of Bowen, contended that the Refusal was not an intentional and unequivocal abandonment of the right to exercise Bowen’s rights under clause 15.2 of the Mandate Agreement to refer the disputes to arbitration.
44Rather, the Refusal was a response to an inaccurate and confusing email seeking to discuss the Ascension Termination Notice in circumstances where that notice no longer had any effect:
(a) The Proposal is an ambiguous request which does not trigger clause 15.2. It is a conflation of two different obligations. The word “arbitration” is not used. The only specific reference to what is contemplated is to “discussions in a professional manner”, despite an ambiguous reference to “clause 15.2” and to “Melbourne”. To read the words “discussions in a professional manner” as a reference to arbitration is not a reasonable reading of the email.
(b) The reference to clause 15 in the Ascension Termination Notice ought not to be construed as an invitation to arbitrate under clause 15.2, such that the Proposal ought reasonably be construed as an invitation to arbitrate. There was no dispute to be arbitrated at that stage:
(i)The allegations set out in the Ascension Termination Notice were for the purpose of articulating the basis upon which the Mandate Agreement was to be terminated for cause (failing resolution within 60 days). It was not a claim for a remedy and is different in that respect from the Statement of Claim.
(ii)The Ascension Termination Notice was “overtaken” by the Bowen Termination Notice, which was said to take effect immediately. The Ascension Termination Notice was no longer effective.
(c) Even if there was a dispute capable of being arbitrated at the time of the Refusal, the Refusal could only be interpreted as a refusal to engage in discussions to resolve the matter amicably and not an unequivocal rejection of arbitration:
(i)Mr Smith was not a party to the discussions with Mr Evans during which clause 15 was raised. In any case, there is no evidence that specific reference was made to clause 15.2 or to arbitration during those discussions.
(ii)It may be inferred from Mr Smith’s words at the beginning of the Refusal: “The letter issued on the 3rd of August was a formal communication from the Company, approved by the majority of Directors”, that he considered Mr Banwait was ignoring the Bowen Termination Notice, in circumstances where the Proposal was sent to Mr Evans copying in Mr Barnett and not to Mr Smith.
(iii)The Refusal is conditional, as it was expressed to be “regarding [Ascension’s] termination notice”.
45Mr Smith’s refusal to engage in “a dispute resolution process regarding [Ascension’s] termination notice” is not reasonably a reference to the arbitration agreement at all and could not be seen as an unequivocal abandonment of Bowen’s rights to rely on the arbitration agreement. This is particularly so in circumstances where the word “arbitration” was never mentioned.
Conclusion and Analysis
Waiver
46I am not satisfied that the Refusal constitutes a deliberate, intentional and unequivocal abandonment of the right to enforce clause 15.2 of the Mandate Agreement.
47The Refusal is a response to the Proposal. The Proposal is ambiguous. It is not a clear invitation to arbitrate under clause 15.2 of the Mandate Agreement.
48The Proposal conflates separate steps contemplated by clause 15:
(a) Mr Banwait’s reference to “discuss in a professional manner” identifies with the subject matter of clause 15.1, which requires parties to seek to resolve any dispute arising from or in relation to the Mandate Agreement amicably.
(b) The suggestion by Mr Banwait to “proceed via Clause 15 (Dispute Resolution) which will take place in Melbourne per Clause 15.2” is predicated on “[s]hould [Bowen] wish to discuss in a professional manner”, focusing the Proposal on the subject matter of clause 15.1, that is, an amicable resolution of any dispute.
49Having regard to the text of the Refusal and the context in which it was sent, it ought not be inferred that Mr Smith (on behalf of Bowen) intended to abandon the right to enforce clause 15.2 of the Mandate Agreement:
(a) The text of the Refusal cannot reasonably be construed as a deliberate and unequivocal abandonment of the right to enforce the arbitration agreement in clause 15.2 of the Mandate Agreement. It is limited in scope. The Refusal is a rejection of “a Dispute Resolution process regarding your [Ascension’s] contract termination.” (emphasis added).
(b) The context in which the Proposal was sent and the Refusal followed, supports the conclusion that the Refusal is not an unequivocal abandonment of the right to enforce clause 15.2 of the Mandate Agreement:
(i)The Proposal was made in the context of the Ascension Termination Notice: Mr Banwait states in the Proposal that “[a]ll points in Ascension’s Termination Notice stand”.
(ii)The Ascension Termination Notice was expressed to take effect in 60 days “failing a request to enter a dispute resolution request pursuant to clause 15 of the agreement”. Although the Ascension Termination Notice raises matters the subject of dispute, the general reference to clause 15 ought to be construed as an invitation to try to resolve those matters “professionally” before the Ascension Termination Notice took effect (in 60 days), rather than an invitation to enter into a determinative process, that is, arbitration in respect of those matters. This construction is supported by the concluding paragraph in the Ascension Termination Notice and is consistent with the subject matter of clause 15.1:
“The contractual termination notice period of 60 days should be sufficient to close the transaction in the required timeline if the issues summarised in this notice are addressed professionally.”
(iii)At the time the Refusal (to enter “a Dispute Resolution process regarding [Ascension’s] contract termination”) was sent, Bowen had issued the Bowen Termination Notice alleging breaches of Ascension’s obligations under the Mandate Agreement. The Bowen Termination Notice was expressed to take effect immediately.
50Mr Smith’s evidence that at the time he sent the Refusal, he “did not turn [his] mind to arbitration at all” because he “did not understand Mr Banwait’s email on 3 August 2024 to mean that Ascension Capital was seeking to trigger arbitration” is supported by the objective correspondence. The word “arbitration” is not used in any of the correspondence.
51I am not persuaded that the discussions between Mr Banwait and Mr Evans in which Mr Banwait says clause 15 was raised support Mr Elias’s submission that the Proposal must reasonably be construed as an invitation to arbitrate under clause 15.2 of the Mandate Agreement. Even if they could be said to have raised the prospect of arbitration under clause 15.2, on Mr Banwait’s account, those discussions did not include Mr Smith and Mr Barnett. As such, it could not be inferred that they informed Mr Smith’s or Mr Barnett’s understanding of the Ascension Termination Notice and the Proposal, such that the Refusal ought to be construed as a rejection of an invitation to arbitrate under clause 15.2 on the part of Bowen.
52In relation to Bowen’s cryptic reference to joining Ascension as a party to a legal suit for value destruction against Prove and the reference by Mr Barnett to “Will just result in us suing them” in his email to Mr Smith on 3 August 2023, in the absence of evidence as to their context and substance, I do not consider an inference ought to be drawn that Bowen was contemplating litigation only and thereby intended to abandon the right to enforce the arbitration agreement in clause 15.2 of the Mandate Agreement.
53Ascension has the burden of proving that the arbitration agreement is inoperative. For the reasons set out above, I am not satisfied that the Refusal ought to be construed as an intentional and unequivocal abandonment of the right to enforce clause 15.2 of the Mandate Agreement.
Repudiation
54For the reasons set out above, by the Refusal, Bowen has not evinced an intention to no longer be bound by the arbitration agreement nor to fulfill it solely in a manner substantially inconsistent with Bowen’s obligations.
55The Refusal would not convey to a reasonable person in the position of Ascension, renunciation of the arbitration agreement in clause 15.2 as a whole or of a fundamental obligation under it.
Orders
56For the reasons set out in this ruling, I will make orders staying the proceeding and referring the parties to arbitration.
57Subject to any matters that the parties bring to my attention on the question of costs, I propose to order that the Plaintiff pay the Defendant’s costs of the application on the standard basis to be taxed in default of agreement.
58I invite the parties to prepare draft orders to give effect to these reasons.
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