Ashjal Pty Ltd v Elders Toepfer Grain Pty Ltd - [2012] NSWSC 545

Supreme Court

New South Wales

Medium Neutral Citation: Ashjal Pty Ltd -v- Elders Toepfer Grain Pty Ltd [2012] NSWSC 545
Hearing dates: 4 May 2012
Decision date: 04 May 2012
Jurisdiction: Equity Division - Corporations List
Before: Hammerschlag J
Decision:
Separate question whether written contracts contain an implied term answered no

Catchwords: COMMERCIAL ARBITRATION - Contract - whether written contracts between the parties contains an implied term amounting to an agreement under s 34A(1) of the Commercial Arbitration Act 2010 (NSW) - implied term contended for does not meet established tests
Legislation Cited: Commercial Arbitration Act 1984 (NSW)
Commercial Arbitration Act 2010 (NSW)
Cases Cited: BP Refinery Western Port Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Texts Cited: Grain Trade Australia ("GTA") Trade Rules
Category: Procedural and other rulings
Parties: Ashjal Pty Ltd (ACN 074 244 072) - Plaintiff
Elders Toepfer Grain Pty Ltd (ACN 126 806 979) - Defendant
Representation: Counsel:
J. O'Sullivan - Plaintiff
K.J. Williams - Defendant
Solicitors:
Jarratt Webb & Graham - Plaintiff
Thompsons Lawyers - Defendant

File Number(s): 2012/74342

EX TEMPORE Judgment

HIS HONOUR:The plaintiff as respondent and the defendant as claimant went to arbitration in relation to disputes between them which arose under two contracts both dated 23 July 2010 ("the contracts") and under which the plaintiff sold Australian origin wheat to the defendant.

The contracts provided for all disputes, controversies or claims arising out of, relating to or in connection with them to be resolved by arbitration in accordance with Grain Trade Australia ("GTA") Trade Rules. Those rules incorporate the GTA Dispute Resolution Rules.

The arbitration culminated in a final award dated 17 November 2011 in which the defendant was successful. The arbitration found that the plaintiff had wrongfully cancelled the contracts and was liable to indemnify the defendant for $119,000 for the non-delivery of grain.

When the contracts were entered into, the Commercial Arbitration Act 1984 (NSW) was in force ("the old Act").

Section 38(2) of the old Act provided that:

Subject to subsection (4) an appeal shall lie to the Supreme Court on any question of law arising out of an award.

Section 38(4) of the old Act provided that:

An appeal under subsection (2) may be brought by any of the parties to an arbitration agreement (a) with the consent of all the other parties to the arbitration agreement or, subject to s 40, with leave of the Supreme Court.

On 30 September 2010 the old Act was repealed and the Commercial Arbitration Act 2010 (NSW) came into force ("the new Act").

Section 34A(1) of the new Act provides:

An appeal lies to the Court on a question of law arising out of an award if (a) the parties agree, before the end of the appeal period referred to in subsection (6), that an appeal may be made under the section, and (b) the Court grants leave.

Section of the new Act…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NSWSC 545
Decision Date: 04 May 2012

CaseChat Overview and Summary

The plaintiff, Ashjal Pty Ltd, initiated proceedings against the defendant, Elders Toepfer Grain Pty Ltd, seeking a declaration that there was an agreement to arbitrate under s 34A(1) of the Commercial Arbitration Act 2010 (NSW). The dispute arose from the interpretation of the written contracts between the parties, which the plaintiff argued contained an implied term amounting to an agreement to arbitrate. The case was heard in the Supreme Court of New South Wales.

The primary legal issue before the court was whether the written contracts between Ashjal Pty Ltd and Elders Toepfer Grain Pty Ltd included an implied term that constituted an agreement to arbitrate as per s 34A(1) of the Commercial Arbitration Act 2010 (NSW). The court needed to determine whether such an implied term met the established tests for implication in fact or law. Specifically, the court examined whether the term was necessary for the reasonable or effective operation of the contract and whether it was so obvious that it went without saying.

The court found that the implied term contended for by the plaintiff did not meet the established tests for implication. The court held that the term was not necessary for the reasonable or effective operation of the contract and did not go without saying. The written contracts between the parties did not provide a sufficient basis to imply an agreement to arbitrate. Consequently, the plaintiff's claim for a declaration that there was an agreement to arbitrate under s 34A(1) of the Commercial Arbitration Act 2010 (NSW) was dismissed. The court concluded that the implied term was not sufficiently supported by the evidence or the principles of contract law.

The final orders of the court were that Ashjal Pty Ltd's claim for a declaration that there was an agreement to arbitrate under s 34A(1) of the Commercial Arbitration Act 2010 (NSW) was dismissed. The court also awarded costs of the proceeding to Elders Toepfer Grain Pty Ltd.

Orders