Auburn Council v Austin Australia Pty Ltd (Administrators Appointed)

[2004] NSWSC 141

Reported Decision: (2004) 22 ACLC 766

Supreme Court

CITATION:	Auburn Council v Austin Australia Pty Ltd (Administrators Appointed) [2004] NSWSC 141
HEARING DATE(S):	8/3/04
JUDGMENT DATE:	8 March 2004
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Bergin J
DECISION:	See Paragraph 50
CATCHWORDS:	[Commercial Arbitration] - Party to arbitration in administration - Whether arbitration proceedings are - "proceedings in a court" within the meaning of s440D of the Corporations Act 2001- Whether leave necessary - Application for leave to proceed with application for security for costs
LEGISLATION CITED:	Arbitration Act 1996 (UK) Commercial Arbitration Act 1984 (NSW) Corporations Act 2001
CASES CITED:	Alliance Petrolum Australia NL v The Australian Gas Light Company (1983) 34 SASR 215 Arpic Pty Ltd v Austin Austin Pty Ltd (2004] NSWSC 83 AWA Ltd v Exicom Australia Ltd (1990) 19 NSWLR 705 Brian Rochford (administrators appointed) Ltd v Textile Clothing & Footwear Union of NSW (1998) 30 ACSR 38 Circaz Pty Ltd v Manolidis (2003) 45 ACSR 542 Johnson v Macri and Marcellino Pty Ltd unreported, NSWSC Cole J 08.06.90 Jones v Hall (1942) 42 SR (NSW) 203 NSW Bar Association v Muirhead (1988) 14 NSWLR 173
PARTIES :	Auburn Council (Plaintiff) Austin Australia Pty Ltd (Defendant)
FILE NUMBER(S):	SC 50008/04
COUNSEL:	D. Williams SC with M. Cohen (Plaintiff) T. Davie (Defendant)
SOLICITORS:	Matthews Folbigg Pty Ltd (Plaintiff) Colin Biggers & Paisley (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

BERGIN J

8 MARCH 2004

50008/2004 AUBURN COUNCIL V AUSTIN AUSTRLIA PTY LTD (ADMINISTRATORS APPOINTED)

Background

1 The plaintiff, Auburn Council, and the defendant, Austin Australia Pty Ltd, entered into a Construction Management Contract on 22 March 1999 in which the defendant agreed to provide management services and to exercise certain functions on behalf of the plaintiff in connection with work described as the re-development of the Auburn Civic Centre (the Contract). Clause 20 of the Contract provided:

Arbitration
(a) In case any dispute or difference shall arise between the Principal and the Construction manager as to either during the progress of the Works or after the determination, abandonment or breach of the Contract
the construction of the Contract; or

i) as to any matter or thing of whatsoever nature arising thereunder or in connection

therewith

then either party shall

give to the other notice in writing of the dispute or difference and
at the expiration of seven days , unless it shall have been otherwise settled, the dispute or difference shall be and is hereby submitted to the arbitration of any Arbitrator who shall be, at the option of the party who first serves the notice of dispute either the President or the Acting President of the Chapter of the Institute of Arbitrators, Australia, in the State or Territory in which the works are situation, or his nominee.

PROVIDED THAT the Arbitrator shall be a member of the chapter of the Institute of Arbitrators, Australia, in the State or Territory in which the Works are situated .

(a) In serving the notice of dispute the party serving it shall provide evidence that he has deposited (with the Institute or the Association referred to above) the sum of $750.00 for security in respect of expenses of the arbitration proceedings and thereafter each party shall contribute further sums in equal amounts as may be directed by the Arbitrator.
(b) The deposit of the $750.00 security in respect of expenses of the arbitration proceeding with the Institute or Association referred to in sub-clause 20(a) shall be a condition precedent to the giving of the notice of dispute.

2 A dispute arose between the parties and they agreed to proceed to arbitration before the nominee arbitrator, Mr I. Bailey (the arbitrator), with the defendant as the claimant/cross respondent and the plaintiff as respondent/cross claimant (the arbitration).

3 It appears from the evidence before me that the arbitration, including expert conclaves, proceeded for approximately 40 days in April, May, October, November and December 2003. On 31 December 2003 Mr John Gibbons and Mr Keiren Hutchison of Ernst & Young, Sydney, were appointed administrators of the defendant. The plaintiff’s solicitor notified the arbitrator of the appointment of the administrators and requested advice as to whether he considered the proceedings to be stayed. The defendant’s solicitors notified the arbitrator that the administrators were of the view that the matter should proceed and without delay.

4 On 13 January 2004 the plaintiff’s solicitor requested the defendant’s solicitor to advise whether they had the administrator’s written consent to proceed with the action in accordance with s440D of TheCorporations Act 2001 (the Act). On the same day the plaintiff’s solicitor wrote to the arbitrator requesting that no further work be undertaken until the stay of proceedings “is appropriately lifted in accordance with s440D” of the Act. The following day the arbitrator advised that as s440D refers to “a proceeding in a court against a company” it may not be relevant to the proceedings “by the company”. It is apparent that the arbitrator advised the parties that he did not regard the question in relation to the stay as an appropriate one for him to determine, but that if he received “written consent” from the administrators there would be no stay pursuant to the Act.

5 The plaintiff’s solicitors advised the defendant’s solicitors that their letter to the arbitrator informing him that the administrators were of the view that the matter should proceed and without delay, did not constitute a valid written consent in accordance with the Act and invited the provision of an appropriate written consent. On 16 January 2004 the defendant’s solicitors wrote to the plaintiff’s solicitors advising that the administrators had indicated their desire to proceed with the defendant’s claim and requested the plaintiff’s solicitors to advise whether they were seeking the administrator’s consent to the continuance of plaintiff’s cross-claim. The plaintiff’s solicitors made that request on 20 January 2004. On 22 January 2004 the plaintiff’s solicitor requested the defendant’s solicitor to advise whether they had instructions to provide security for costs. Although the defendant’s solicitors provided a cheque to the Institute of Arbitrators and Mediators in the amount of $30,000, said to represent security for the arbitrator’s fees, no response was provided in respect of the request to provide security for the plaintiff’s costs. The written consent of the administrators to the continuance of the plaintiff’s cross-claim was not provided.

6 On 6 February 2004 a preliminary conference was held before the arbitrator at which the defendant informed the arbitrator that the administrators’ view was that their consent was unnecessary for the cross claim proceedings to continue. The arbitrator confirmed that the first two weeks in April 2004 had been set aside for further evidence, conclaves and submissions. There is also a meeting planned for 9 and 10 March 2004 at which the defects experts are to meet with the arbitrator.

Proceedings commenced

7 The plaintiff commenced these proceedings by Summons filed on 19 February 2004 seeking orders for leave to proceed with the Summons and an order that “to the extent necessary” it be granted leave to proceed with its cross-claim in the arbitration. It also seeks security for its costs in the arbitration from 1 December 2003 to the completion of the proceedings. That application is made pursuant to Part 53 rule 2 of the Supreme Court Rules 1970 (the Rules) and s 1335 of the Act.

Stay

8 The first matter for consideration is whether s440D of the Act applies to the plaintiff’s cross-claim in the arbitration proceedings. Section 440D provides:

Stay of proceedings
(1) During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with except:
(a) with the administrator’s written consent; or
(b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes.
(2) Subsection (1) does not apply to:
(a) a criminal proceeding; or
(b) a prescribed proceeding.

9 The question is whether the cross claim in the arbitration proceedings is, for the purposes of s440D of the Act, “a proceeding in a court against the company or in relation to any of its property”. It is agreed that clause 20 of the Contract is an arbitration agreement to which the Commercial Arbitration Act 1984 (NSW) (the CA Act) applies.

10 In written submissions counsel for the plaintiff submitted that “arbitral proceedings may be seen to fall within the operation of s 440D of the Act” and in support relied upon Austin J’s decision in Brian Rochford (admin apptd) Ltd v Textile Clothing & Footwear Union of NSW (1998) 30 ACSR 38 in which his Honour was considering the question of whether the Industrial Relations Commission was a “court” for the purposes of s 440D. Austin J said at page 56:

It is said that the function of conciliation separates the commission, from a court. I disagree. If the commission’s function were only to conciliate, acting as a mediator of competing claims, the position may be different, but the commission’s duty to encourage conciliation is a step to be taken along the way to resolving the dispute, if necessary by making a determination and orders under s 89. While conciliation is no doubt given greater emphasis before the commission than before other tribunals, the process of conciliation is well known to superior courts of record, which are accustomed to refer matters to arbitration, or to referees, and in recent times to other procedures for mediation or dispute resolution. What is significant is that despite these procedures, the tribunal has the ultimate authority to determine the dispute by making binding orders.

11 This is not a matter in which the Court has referred a matter to arbitration. The parties have privately agreed to arbitrate their dispute before an arbitrator. Although that distinction was seen to be one without a difference in Alliance Petroleum Australia NL & Ors v The Australian Gas Light Company (1983) 34 SASR 215 per King CJ at 236-237, it has to be noted that in that case the court was considering the phrase “civil or criminal proceeding”. King CJ said:

Rules of law are prescribed by statute for the conduct of arbitrations. Statutory powers are conferred on arbitrators. The jurisdiction of the courts is invoked in aid of the arbitration procedure. Attendance of witnesses may be compelled, witnesses may be sworn, and wilfully false evidence before an arbitrator constitutes the crime of perjury. The procedure results in an award which is enforceable at law. Arbitration is clearly recognised by the statute as a method of resolving legal disputes alternative to litigation in the courts. I think in the ordinary use of language such a procedure would be included in the description ‘civil proceedings’. There is no authority to the contrary.
I do not think that one can distinguish for this purpose between arbitrations pursuant to an order of a court and arbitrations pursuant to a submission. Both are authorised by statute and both possess the characteristics to which I have referred. Nor do I think that the nature of the question to be decided by the arbitrator can affect the characterisation of the arbitration as a civil proceeding. If the question is not one which may be lawfully submitted to an arbitrator, there is no valid submission to arbitration and, of course, no civil proceeding. If the question is one which may be lawfully submitted to arbitration, it seems to me that the arbitration must be a civil proceeding irrespective of the nature of the question. The arbitration is a civil proceedings because the law makes the question a proper subject of arbitration and the arbitration procedure possesses the characteristics referred to above which will render it a civil proceeding.

12 In oral submissions, senior counsel for the plaintiff, Mr DL Williams SC, submitted that the better view is that proceedings before an arbitrator that have resulted from a submission pursuant to a private agreement, are not proceedings before a “court” within the meaning in s440D of the Act. Mr Williams candidly indicated that the application was made for abundant caution. Mr T Davie, counsel for the defendant, made no submissions in respect of this matter, notwithstanding that his clients had been requested to provide a written consent or to join in the application for an order that “to the extent necessary” leave be granted to continue with the cross-claim. No criticism can be levelled at the defendant in this regard as a view had been formed that leave was unnecessary.

13 This matter has been brought to final hearing urgently because the arbitration is proceeding and costs are being incurred on a daily basis. Counsel’s researches reveal that this question has not been previously decided.

14 In Rochford v Textile Clothing Austin J concluded that the word “court” in s 58AA of the Act does not apply to the words “a proceeding in a court against the company” in s 440D. His Honour found that those words have their “general, undefined meaning” (at 51). The general definition of “court” includes “a place where justice is administered” or “a judicial tribunal duly constituted for the hearing and determination of cases”: New Oxford Dictionary of English. In NSW Bar Association v Muirhead (1988) 14 NSW LR 173 Kirby P said at 191

Nowadays, so many tribunals and other statutory bodies and office holders have been created with power to make decisions affecting individuals, that there is a natural disinclination to extend to them, in all of their variety, the exceptional procedures and drastic penalties that the courts have fashioned for themselves by the law of contempt.

15 In Rochford v Textile Clothing Austin J reviewed the relevant case law in respect of the meaning of “court” and concluded that (a) there are no conclusive, generally-applicable criteria for classifying a body as a court; (b) the answer in each case depends on the particular statutory question to be decided: and (c) the answer is to be supplied in light of a close consideration of the statutory constitution and functions of the body in question. I respectfully agree with his Honour’s conclusion. In those circumstances it is appropriate to make an analysis of the arbitrator’s role and the provisions of the CA Act to determine whether the cross-claim in these arbitral proceedings are “proceedings in a court” for the purposes of s 440D.

16 The CA Act entitles parties to an arbitration agreement to exclude the right of appeal under section 38 (2) (an exclusion agreement) (s 40). The parties are also able to authorise an arbitrator to act as a mediator, conciliator or other non-arbitral intermediary between them, whether before or after proceeding to arbitration and whether or not they are continuing with the arbitration (s 27(1)). The parties are also able to agree that when the arbitrator is seeking a settlement of the matter in any of these roles the arbitrator need not be bound by the rules of natural justice (s 27(3)).

17 The parties are required to do all things that the arbitrator requires “to enable a just reward to be made” and the parties are prohibited from doing, or causing to be done, any act to prevent the award being made (s 37).

18 The arbitrator has no power to compel the attendance of any person at the arbitration and has no power to compel the production of any document other than through an application to the Court (s 18). Unless the parties agree otherwise an arbitrator is not bound by the rules of evidence and may inform himself or herself in relation to any matter in such manner as thought fit (s 19). Unless otherwise agreed between the parties, the arbitrator has a power to make an award ordering specific performance of any contract if the Supreme Court would have power to order specific performance of that contract (s 24). The Court has powers to make 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 (s 47). The Court also has power to extend the time fixed by the arbitration agreement in relation to an arbitration (s 48).

19 The enforcement of an award made under an arbitration agreement requires the leave of the Court and where leave is given, judgment may be entered in terms of the award (s 33).

20 Section 38(5) was amended in 1990 to restrict the scope of judicial supervision of arbitral awards in respect of arbitration agreements in which the parties did not exclude a right to appeal to the Court under section 38. Leave to appeal may only be granted where the right of one or more of the parties may be substantially affected by the determination of a question of law and where there is a manifest error of law on the face of the award or, there is strong evidence that the arbitrator made an error of law and the determination of that question may add, or be likely to add substantially to the certainty of commercial law(s 38(5)). So long as it is not in respect of an error of fact or law on the face of the award, the Court has power to remit any matter to the arbitrator for reconsideration (s 43).

21 An arbitrator may be removed by the Court for misconduct or, if the arbitrator has misconducted the proceedings. The arbitrator may also be removed if the Court is satisfied that the arbitrator is incompetent or is unsuitable to deal with the particular dispute. Removal may also occur if there has been undue influence “in relation to an arbitrator” (s 44).

22 The Arbitration Act 1996 (UK) provides for a process of judicial arbitration. The provisions of Part 1 of that Act apply to arbitration before a judicial arbitrator with the modifications specified in Schedule 2 (s 93(6)). When the judicial arbitrator exercises arbitral powers they are exercised in the capacity as a High Court judge and have effect as if exercised by that Court (Sch 2 cl 4). There is presently no such provision in the CA Act.

23 An arbitrator is not bound by the rules of evidence and can inform himself or herself in any manner thought fit. The arbitrator has none of the powers that the court has to compel obedience to a court order and has only limited powers to make specific orders which, without leave of the court, are not enforceable.

24 It does seem that the policy of the Corporations Act is to provide administrators with an immediate breathing space by the imposition of a stay on proceedings on foot at the time of the administration until leave is sought and possibly granted. It also seems that such policy could be frustrated if proceedings are able to be brought and or continued against the company in administration, in a place other than in a court. However that is what the legislature has permitted to occur.

25 In deciding that the definition of “court” in s58AA of the Act did not apply to the word “court” in s 440D, Austin J followed the “lead”, as he put it, of Jordan CJ, in Jones v Hall (1942) 42 SR (NSW) 203, at 208 as follows:

… the authorities establish also that if the words in a Statute when read in their primary or natural sense would produce the result which, in relation to the provisions of the Statute itself, are fantastic or absurd, a court is entitled to pay the Legislature the not excessive compliment of assuming that it intended to enact sense and not nonsense.

26 The circumstances of this case are different from those with which Austin J was dealing. In that case the moratorium had been applicable to proceedings before the industrial commission prior to the amendment of the relevant statute in 1996. Austin J’s analysis of the change in the legislation provided a basis upon which he could take the lead provided by Jordan CJ to conclude that it would have been unintended, or absurd, to give the word “court” the meaning in s58AA.

27 It is not absurd or fantastic to exclude an arbitrator from the general definition of “court”. One can understand that the legislature would have been cognisant of the capacity of parties to agree, privately, to have disputation resolved by resort to a mechanism other than a court, such as arbitration, conciliation or mediation, whether structured or unstructured. It is also not absurd or fantastic to conclude that the legislature would be cognisant of the provisions of the CA Act and the exclusion of the Court from the process of arbitration except to a very limited extent.

28 There are many hallmarks of what some arbitrators do, for instance administering an oath, hearing evidence, deciding facts and giving reasons for a decision, that are similar to what occurs in Courts created by statute. However those similarities do not seem to me to convert an arbitrator, who is appointed by reason of the arbitration agreement, into a “court” for the purposes of s 440D. It seems to me that s 440D does not apply to this arbitration and there is no need for leave to continue the cross claim.

29 By reason of the urgency of this application and the need to have some certainty in the proceedings, it seems to me that a better course to adopt is to grant leave to the plaintiff to commence the proceedings for leave to continue the cross-claim in the arbitration proceedings and to make the provisional order sought by the plaintiff in paragraph 2 of the Summons. In that way there can be no prejudice to the parties proceeding to finality with their arbitration proceedings.

Security for costs

30 The next question is whether leave should be granted to the plaintiff to commence these proceedings for security for costs. It is agreed that there is jurisdiction in this Court to order security in relation to costs incurred in arbitration proceedings: Johnson v Macri and Marcellino Pty Ltd (unreported, SCNSW, Cole J, 8.6.90).

31 The plaintiff relies upon s 1335 of the Act and there is no issue between the parties that the defendant is insolvent and, according to the administrators report to creditors was insolvent at the time of the appointment of the administrators and “had been for a number of months”. I raised this question with counsel for the defendant as being an exceptional circumstance, in that, the defendant had apparently pursued the arbitration, incurring debts at least for senior and junior counsel and solicitors, whilst apparently insolvent. Mr Davie submitted that no criticism can be levelled at the directors of the defendant based on the content of the administrators’ report and was not in a position to respond further. I agree that the administrators’ view of the company prior to 31 December 2003 may have been formed with the benefit of hindsight and the directors may not have been in a position to know the extent of the incapacity to meet debts.

32 These matters were raised with Mr Davie because he had put a submission that leave should not be granted to the plaintiff, or security should not be ordered, because the plaintiff had delayed in bringing its application for security. Ms Brew, the solicitor for the plaintiff, gave unchallenged evidence that there was an understanding in the plaintiff that prior to the appointment of the administrators there was no proper basis upon which to bring such an application. The plaintiff was entitled to assume by the presence of the defendant during this long arbitration, including in November and December 2003, that the defendant was more probably than not solvent.

33 The plaintiff moved promptly after the appointment of the administrators and sought their agreement for security for the plaintiff’s costs in the arbitration in defending the defendant’s claim. That was declined as late as 6 February 2004 and, as I have said, these proceedings were commenced on 19 February 2004. I do not regard the defendant’s submission on delay as having any force.

34 The defendant also submitted that this application should not be entertained because it would distract the administrators from their task under the Act. This case is a little different to those relied upon to make the submission that the grant of leave is rare. The Westpac Bank appointed the administrators and the administrators promptly informed the arbitrator that they were of the view that the arbitration should proceed and “without delay”. The thorny problem of whether a stay was in place was debated between the parties and ultimately left to the Court to decide. Costs were continued to be incurred in the arbitration from the date of the appointment of the administrators and notwithstanding the plaintiff’s attempts to reach an agreed position in respect of security it was not possible.

35 Far from the administrators claiming that the arbitral proceedings would distract them from their administration tasks, they positively embraced the continuation of and involvement in those proceedings.

36 The defendant also submitted that it is clear that a liquidator will be appointed in the very near future. The administrators’ report to the creditors recommended that step and in the light of the evidence of insolvency it may well be that such a step is taken rather promptly. The defendant submitted that there is no prejudice in requiring the plaintiff to wait until the liquidator is appointed to make its application. I was unable to ascertain in argument what the difference would be in the circumstances of this case between the application being heard today or later in the week when a liquidator may be appointed.

37 In any event it is obvious from the evidence before me that rather large amounts of costs are being incurred on a daily basis and if the plaintiff does not have security there is a disadvantage.

38 The next point raised by the defendant was that the plaintiff had sought to secure an advantage in this application by blurring the nature of the claim before the arbitrator with the nature of the cross-claim. It is in this territory that the epithets of “aggressor” and “defensive action” have been used. Although Barrett J in Arpic Pty Limited v Austin Australia Pty Limited [2004] NSWSC 83 described the epithet “aggressor” as an emotive term with doubtful utility (at par 22) it has some utility in an application for security for costs.

39 The plaintiff claims that its cross-claim is really a defence to the defendant’s claim by way of equitable set-off. In this regard it points to paragraphs 47 and 48 of its Amended Defence before the arbitrator. Those two paragraphs claim reliance upon the whole of the amended cross-claim as an answer to the defendant’s claim, as though it was set out in the Amended Defence. There is then a claim that if any sum is found due to the defendant then the plaintiff “sets-off all sums found due”. In support of this submission reliance was placed on the approach adopted by Giles J in AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 at 712.

40 The closeness of the respective claims and their nature is really a matter that needs to be assessed in this application because the plaintiff is only entitled to security for costs in defending the defendant’s claim before the arbitrator. I have in mind the principles expounded in Circaz Pty Limited and Ors v Manolidis and Ors [2003] 45 ACSR 542 where Davies AJ said at 14:

….once it is shown, in a case where the plaintiff is a corporation that the corporation is unlikely to pay the defendant’s costs if unsuccessful then consideration will be given as to whether there is some form of security for the payment of those costs which can readily be given and the giving of which will not frustrate or stifle the plaintiff’s claim. Ordinarily it is not a difficult task to ascertain whether there is some form of security which can be ordered which will alleviate or minimise the risk to the defendant without frustrating the further conduct of the proceedings….. this process can often take no more than an hour or two, provided the parties approach the issues with a proper attitude.

41 Mr Davie submitted that his clients were at a disadvantage because they were unable to make a proper assessment, at this stage, as to whether an order for security would stifle the litigation. That submission demonstrates that there is no evidence before me that it would be stifled. Westpac Banking Corporation appointed the administrator and it may take the view that it would fund the litigation and, from the administrators’ approach that the arbitration should proceed without delay, there is at least an inference available that such may well be occurring. In any event, I am not satisfied on the evidence before me that an order for security will stifle the arbitration.

42 I am satisfied that it is appropriate to grant the plaintiff leave and it is appropriate that an order for security be made.

Amount of Security

43 The amount of security sought by the plaintiff is $529,184.18. That amount includes $118,886.18 for “past” costs from 1 December 2003 to 19 February 2004. It is obvious that further costs will have been incurred since that date.

44 Although the plaintiff claims that there should be no delineation between the costs for the claim and the costs for the cross-claim because of its claim for set-off, it seems to me that submission should be rejected. As best I can assess in these urgent circumstances, the cross-claim includes a claim for misleading and deceptive conduct and damages incurred by reason of that conduct. That claim seems to be put on the basis that the plaintiff was misled into believing that the Contract was a lump sum contract and that if it is found not to be a lump sum contract, it has suffered damages by way of the amounts it has to pay the defendant over and above that lump sum. The intricacies of that claim have not been exposed in the evidence and having regard to the fact that this arbitration preceded over forty days it would be inappropriate in a claim such as this to do more than the plaintiff has sought to do today in characterising the claims.

45 There was some dispute about the different amounts claimed by the plaintiff and the defendant before the arbitrator. It was suggested that the defendant’s claim may have been approximately $2.5 million whilst the plaintiff’s claim was in the vicinity of approximately $7 million. The administrators’ report to creditors assesses them as $2.8 million as against $3.5 million.

46 In exercising my discretion I regard it as appropriate to recognise that the defence by way of set-off will include many of the facts and matters that may be relied upon by the plaintiff in its cross-claim. However I do not regard it as appropriate to allow the plaintiff to claim the whole of its costs, including the misleading and deceptive conduct claim. The assessment to be made is not akin to a precise science but one that is just and reasonable in all the circumstances of this case.

47 No real challenge has been made to the figures contained in Ms Brew’s affidavit except in relation to the amount claimed by the quantity surveyor. That challenge seems to have established that the quantity surveyor would be working seven days per week and that such work would continue beyond the date of the conclusion of the arbitration hearing. Those figures seem to me to need some adjustment.

48 I do not intend to make an order in respect to past costs, however I do intend to allow the amount claimed for future costs with an adjustment to the Conduit Group fees and an adjustment for costs incurred that are presently included in the future costs category but are obviously part of costs that have already been expended.

49 I am satisfied that an appropriate amount to be ordered for future costs is $325,000.

Orders

50 I make the following orders:

1. I grant leave to the plaintiff to proceed with this Summons against the defendant.

2. To the extent necessary the plaintiff is granted leave to proceed with its cross-claim in the arbitration

proceedings before Mr I Bailey.

3. I order that the defendant is to give security for the plaintiff’s costs of the arbitration in the amount of

$325,000 by way of bank guarantee in a form approved by the plaintiff.

4. The defendant’s claim before the arbitrator is stayed until the security is provided.

5. The defendant is to pay the plaintiff’s costs of these proceedings.

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Last Modified: 03/09/2004