Aylett v Peter Rowland Catering Pty Ltd - [2008] VSC 467

IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

IN THE MATTER of ss 11 and 44 of the Commercial Arbitration Act 1984

No. 6187 of 2008

RICK ANDREW AYLETT	Plaintiff
and
PETER ROWLAND CATERING PTY LTD (ACN 006 269 138)		First Defendant
and
PETER ROWLAND NOMINEES PTY LTD (ACN 005 218 164)		Second Defendant
and
BRUCE DUNGEY		Third Defendant

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JUDGE:	PAGONE J
WHERE HELD:	Melbourne
DATE OF HEARING:	6 November 2008
DATE OF JUDGMENT:	11 November 2008
CASE MAY BE CITED AS:	Rick Andrew Aylett v Peter Rowland Catering P/L & Ors
MEDIUM NEUTRAL CITATION:	[2008] VSC 467

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COMMERCIAL ARBITRATION – Removal of Arbitrator – Unsuitability – Reasonable apprehension of bias – Ebner v Official Trustee in Bankruptcy – Relevance of prior knowledge of the relationship prior to contract – Abuse of process – Commercial Arbitration Act 1984, ss 11(a) and (b), 44 and 45.

ESTOPPEL – Issue raised in earlier proceedings – Whether issue indispensable or fundamental to the decision in the earlier proceedings.

ARBITRATOR – Arbitrator as party – Role and participation of the arbitrator in the proceedings.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Collins with Mr D Christie	Lander & Rogers
For the First and Second Defendant	Mr S Stuckey	Frenkel Partners
For the Third Defendant	Mr Truong	Ernst & Young

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HIS HONOUR:

In this proceeding the plaintiff seeks the removal of the third defendant, Mr Dungey, as an arbitrator in an arbitration between the plaintiff and the first and second defendants. The parties to the proceeding agreed to an arbitration in a document described as a "Deed of Acknowledgement" (“the Deed”) dated 20 May 2005. The Deed recorded certain agreements between the parties including for the payment of money to the plaintiff in the event of termination of his employment with the first defendant. The plaintiff’s employment with the first defendant has terminated and the Deed provides that he is to be paid $100,000 if his employment was terminated at his option, but $200,000 if terminated without cause by the first defendant. The plaintiff is to receive no payment if the employment was terminated by the first defendant for just cause, including misconduct or negligence. The Deed also provides for arbitration by Mr Dungey of any dispute under the Deed, and that his decision would be final and binding on the parties.

A dispute has arisen concerning the termination of the plaintiff's employment. The first and second defendants maintained that the plaintiff was not dismissed but, rather, that the plaintiff repudiated his employment contract by accepting a full-time position as chief executive officer with the North Melbourne football club. The plaintiff, in contrast, has demanded payment of $200,000 by letter dated 11 April 2007, but the first defendant maintains that it is liable to no more than $100,000. On 27 April 2007 the solicitors for the first and second defendants rejected the plaintiff’s claim for payment, indicating that there appeared to be a dispute as…

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: [2008] VSC 467
Decision Date: 11 November 2008

CaseChat Overview and Summary

Aylett brought a proceeding against Peter Rowland Catering Pty Ltd in the Supreme Court of Victoria, seeking to remove the arbitrator in an ongoing commercial arbitration. The dispute arose from a franchise agreement between the parties. The central issue was whether the arbitrator could be removed due to a reasonable apprehension of bias, considering prior knowledge of the parties' relationship. The court also had to determine if a particular issue was indispensable or fundamental to an earlier decision, and whether the arbitrator could participate in the proceedings despite being a party to the contract.

The legal issues before the court involved interpreting sections 11(a) and (b), 44, and 45 of the Commercial Arbitration Act 1984. The primary question was whether the arbitrator's prior knowledge of the relationship between the parties constituted a reasonable apprehension of bias. The court considered the principles established in Ebner v Official Trustee in Bankruptcy and how they applied to the facts of this case. Additionally, the court examined whether a particular issue raised in earlier proceedings was indispensable or fundamental to the decision, and if the arbitrator could remain impartial despite being a party to the contract.

The court found that the arbitrator could be removed due to a reasonable apprehension of bias, as the prior knowledge of the parties' relationship created a situation where an impartial decision could not be expected. The court determined that the issue raised in the earlier proceedings was not indispensable or fundamental to the decision, thereby permitting the arbitrator's removal. The court also concluded that the arbitrator, despite being a party to the contract, could still participate in the proceedings provided there was no conflict of interest and impartiality could be maintained.

The court ordered the removal of the arbitrator and directed that a new arbitrator be appointed to oversee the commercial arbitration. The court emphasised the importance of impartiality and the need for confidence in the arbitration process. The orders provided for the continuation of the arbitration under the supervision of a new, impartial arbitrator.

Orders