Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd

[1988] FCA 73

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BE9EEM :

B(?PID CORPORATION PTY. L I M I T D

Applicant

THIESS	COWACTORS	PTY.
L I M I T D

First Respondent

Second Respondents

JUDGES KW.IMG ORDER:	B O I a . C.J., SHEPPARD and LEE JJ.
E-TE OF ORDEI?	9 MARCH 1988
N-IERE KaJE	PERTH
THE COURT 0RDEP.S WIT:-
L T h c applicant pay the respondents' costs of the motion.
L T h e	applicant's notice of motlon of 4 February 1988 seeklng

leave to appeal against the order	of French J. made	on 20
January l?e8 be dismissed.

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of the Federal Court Rules

Applicant

THIESS COPITRACTORS PTY.

LIMITED

First Respondent

O V E ARUP FTY. LIMITED, .9RUP

P.9RTNJEP.S PTY. LIMITED and O V E .9P.UP COMSULT.WTS FTY. LIMITED

Second Respondents

THE COURT: EOPEPI, C. J. , SHEPP.9P.D and LEE JJ.

: - E 9 March 1988

R E E O M S FOR JUI?C"T

This is a notice of motlon seeking leave to appeal against an

crdcr made by French J. on 20 Januar;- 1988. The application is

made by the applicant !"Bond") slhich has sued the first

respondcnt !"Thiess") for causes of action under the Trade

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Prlctlces Act 1074 and for breach of contract. Bond has also

sued the second respondents ("Ove Arup") in the same proceedings

but the;- are not concerned with the matters xhich arise for

conzideratlon in the present motion.

The background to the matter is this. On 24 February l98?

French J.	made an ordcr rcztralnlng Thless frcm prosecutlng an
xbltratlon Setzeen It I n 3 Eond	m acccrdance vlch a ncizlre of

r s fz r '2 rco tz I r b l t r a c l o n zcr-zed b - : Thiess on 1 3 CeFtenber 1996.

The notlco :.-as q1:.en purzuant tc an arbltration cause, clause 49 ,

:n zcrtaln q z n c r a l ccnditlonz of ccntract ::hlch "ere annexed to

m d f3rmed part 3f J. ccntract	made on 12 March 1935 whereby Eond
engaged Thiczs to carry out	certain civil engineerlng vork on
llnd at Mlllendm in Wcstcrn P.ustralla.	The cause3 of action

relied U ~ O R b; Eond againzt Thiess in the principal proceedings

Irlze out of such vork and the contract of 12 March 1985.

The second respondents were engaged by Bond to act as its

consulting and supervising cngineer for the development of the l m d . The; W e n appointed the superintendent under the contract.

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His Honour made the order of 2 4 February 1937 staying the

xbltration proccedinqs substantlally because he accepted

submissions made by counsel for Eond that a11 Issues which would x i z e for determination in the application and in the arbltration

proceedings were justiciablc	in this Court and that Thiess would
be able to raise in the proccedings all matters of claim	vhich It
deslred to raise in the arbltration.

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After his Honour's order was made Thiess filed a cross claim

:hereby it raised the matters which it aished to rely upon in the

Irbitration. Eond made application to strike out certain parts of the cross-claim. This matter came before French J. vho, on 1 O2ctober 1097. made orders striklng out a number of paragraphs of

the	cross c l a l m .
Thiczs took the '.'lex that hls Honour's declslon demonstrated
that, nctr:lthztzn<lnq	the bcllef of the Fartles and hls Honour
that all matter3 rzhhlch Thicss wished to raise before	the
Irbltrxtzr slcre ]>~stlc~able	in tnis Court, that slas not in facz
the case. It dccided to seek leave to dlscontinue	Its crcss

cllim and to ha-..e the stay of the arbitration lifted. His Honour

3ave lea.u-e to dlzcontinue the cross-claim and varied the order

relltlnq to the sta;- so that Thicss vas restrained from prosecutlnq the arbitration but only beyond completion of all

Frellmlnary and interlocutory matters. Bond	wishes	to appeal
againzt that decision.

In order t o understand the differences which there are

betveen the parties it	is necessary to refer to some of the
proxsions of the general conditions of contract.	Clause 23

pro-.xdes for directions to be made by the Superintendent and for thc steps xhich Thiess might take in the event of its being dlssatisfied with those directions. The relevant parts of clause

2 2 are as follows:-

" 2 3 . 1 Directions of the Superintendent. The Superintendent shall exercise in a reasonable

and equitable manner the powers conferred	on	-
him by the Contract.

The slork under the Contract shall be executed

in accordance with the Contract and any directions of the Superintendent pursuant to the pro-zislons of the Contract.

.	........ ........ ........ ........ ........ ....
If	the Contractor considers that he is
in-:olved in loss or expense beyond	that
Frovlded for elsewhere in the Contract	by

reason of-

!a) compliance b;- him uith a directlon of

the SuFerlntendcnt, or

(b) the Suprmtendent mthholdin?,

unreasonabl; delaylng	or refusinq to
ql-:?	a direction whlch hc 15 by the
Sontr3ct requlrcd to gl'.'e,	prc-s-i.led
that zuch dlrection	is notsllthheld,

refused or delayed by reason of or in relation to scme breach of the Contract

by the Contractor,

then the Ccntractor ma;- claim payment by the

Princlpal of such loss or expense by-

(1) gi-ring in wrlting promptly after he

becomes aware of such situatlon, notice thereof to the Superintendent, such notice to contain particulars of the direction and if the amount of the loss and expense 1s then known an itemized statement thereof, and

(ii)  if the amount of such loss and expense

is not then kno-m, giving to the

Superintendent the notice referred to

in subparagraph (i) and as soon as

practicable thereafter giving an
itemized statement.

The Superintendent shall thereupon determine the amount of any such l o s s and expense and give notice in writing thereof to the Princlpal and the Contractor. The amount so determined shall be pald by the Principal to the Contractor.

........ ........ ........ ........ ........ .....

2 3 . 2 Dissatisfaction with Directions of the Superintendent. The parties to the Contract

shall give effect to	the directions of the
Superintendent provided that	if either party
is dissatisfied with any directlon of the

Superintendent he ma;- notify the other party of such dissatisfaction and then or subsequently, proceed in accordance with the pro-rlsions of Clause 49 provided that unless

the party so notifies the other party withln direction was given, he shall not be entitled to have the said matter referred to	txo months	after the date on which such	I
srbltration"	.

Clause 4 9 , as earlier mentioned, is the arbitration clause.

Its oFenlng words oblige Thiess to comply with all directions

gl:.en bg the Superintendent pursuant to the contracc. It then

continues:	-
"All dlzFutsz or dlfferences arislnu out of
the S3ntracc 3r cmcernlng the perfsrmance or the non-performance by either party of hls
obllgations  under the Contract, whether
before or aftcr  the completlon of the Marks,
-hall be determined as follows:

One or both of the parties shall notify the Superintendent in writing

that ;L dlspute under this clause has .

arisen and shall wlthin fourteen days of such notlfication submlt the matter at issue in writing with detailed particulars to the Superintendent for determination and the Superintendent shall, wlthin fourteen days after receipt thereof, glve his determination

to both parties to the Contract.

If either party is dissatisfied with the determination given by the Superintendent, or if he fails to give his determlnation, pursuant to (a) of this clause, the dissatisfled party may

-not later	than twenty-eight days after the Superlntendent is required to give
his determination glve notice in
writlng to the other party requiring that the matter at issue be referred to arbitration and specifying with detailed particulars the matter at issue and thereupon the matter at issue
shall be determlned by arbitration.
If, however, elther party does not
within the said period of twenty-eight
days give such a notice to the other
party requiring that the matter at
issue be referred to arbltration the
determinatlon given b? the
Superintendent pursuant to (a) in this clause shall not be sub~ect to arbitration.

........ ........ ........ ........ ........ ....

At the heart of the disagreement between the parties is the nature of the re71ew to which Thiess is entltled. The primary

submission of counsel for Bond vas to the effect that the only

-day in vhich Thicss can seek review was to proceed agalnst Bond,

zhcther In this Court or b;- way of arbitratlon proceedings, for

brcach of a promlse madc by Eond to Thlczs thlt hc

zupcrlntendent would exercise the povers conferred upon hlm	b;-
rrhc csr.tt-a:rr	I n a rcascnable and cqulrable manner. Unless Thiczs

c m :h=:; that there was somerrhlng unre3sonable o r inequltable Ibzut m:- of the directlons which the superintendent gave, Thless had no rcmcd; :?hether In ludicial proceedings or in arbitratlm procccdlngs. Counsel for Bond said that the promise, which he

conceded was included in the contract, was derlved from the

openlng words of clause 23.1 of the general conditions earlier

quoted on the basis that the superintendent was Bond's agent for

the purposes of the carrying out of the contract.

Counsel for Thiess. on the other hand, contended that clauses

2 3 and 49, whe-n read together, conferred on Thiess a rlqht to have all dlrcctions of the superlntendent reviewed in arbitration procccdinqz irrespective of whether the superintendent was shown to hazrc acted unreasonably or inequltably. In his submisslon the ::ordz uzcd in these two clauses dlsclosed an intention on the part of the parties that the arbitrator was to stand in the shoes

of the superintendent whose directions =ere thus all exposed to
In independent review which would enable the arbitrator	to
substitute his	0-m decisions for those of the superintendent if
he dizagrzed with him in any respect. Counsel relied	on the

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dcclsion of the	Court of Appeal in England in Northern Reqional
Health Authorit? v.	Derek Crouch Construction Co. Limited C19843
1 Q.B. 644.

The point whlch is raized bp thcse comFeting submissions is a

p l n t of substance which it v111 be important to resolve at some clme. Eut there is a question, not-dithstandlng the argument ::hlch :;e hax had, whether now is the appropriate tune to resolve It. 'i"?.: lzarncd prlmclr; Judge dealt %nth the mattcr. He

roferrcd to the Crcuch case at length and	to certaln other
uthorltlc;. He concluded hls ~udgment	as fol1cws:-

"Ic might well bc possible for Thiess to

raise a cross-claim based upon a failure by

9ve Arup, attributable to Eond, to exercise

'in a reasonable and equitable manner' the
povers conferred on it by the contract. That
courze howcvcr, m a y not offer the same direct
substitutive remedial power as is available

to the arbitrator. I say 'may not' because

it is conceivable that the court mlght be

able b;. some appropriate exercise of its remedial powers or of a combination thereof, to arrive at a similar result. It remains to 5e demonstrated that the court could do so. In the circumstances and glven the significance of cl. 2 3 determinations to Thiess' cross-claim I think the best course

-	for the present is to allow it to proceed at
least through all interlocutory stages
necessary to prepare for the hearing of the arbitration. The matters at issue as disclosed in the Notice of Reference are wide in their terms and as framed they are capable of encompassing issues able to be resol-zed by the court. MO doubt in the course of the interlocutory proceedings in the arbitration, the issues will be better defined than they
are at present.
The parties may come back to the court in
that regard if it is thought that some
confinement of the matters to be raised
before the arbitrator is appropriate to avoid
unnecessary overlap between the arbitral and I
the judiclal proceedings.
I propose therefore to order that Thiess have
lcave to discontinue its cross-claim and to *:ar;. the in]unction in order that it may
proceed through the necessary interlocutory
stages in connection with the arbitration".

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It is apparent that hls Honour expressed no final n e w on the

Fcinc :;hich is at issue. One	of the reasons he did not was that
thzrn was not before	hlm any preclre formulation of Thiess'

C l l l X l . It ::as ql:.en lca:7e to dlscontlnue Its cross claim,

cubztantlal parts of which had	In any ecent been scruck out, and
t'nc claim zhlch it	wished to formulate before the arbitrator had

nct been propcunded. $.S his Honour said, the matters at issue 41sclosed in the notlce of reference to arbitration are wide in their terms and are capable of encompassing issues tve would say, at least some of the Issues), able to be resolved by the Court. Undoubtedly the interlocutory steps to take place before the arbltrstor will, as his Honour said, much more clearly define the issues than is the case now.

For these reasons =e think that Bond has shown no error in the dccision against	which leave to appeal is sought. His Honour
exercised a discretion in a matter relating	to practice and
procedure. He determined no matter of substance	between the

parties. Lest there be any misunderstanding, we make it clear that ndthing we have said is intended to determine any such

mattcr elther.

I n all the circumstances, therefore, we have reached the

conclusion that this is not a case for leave to appeal,	The
mo'tlon is dimlssed with costs.

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Counsel for Applicant:	Mr. T.E. Hugnes, P.C. wlth Mr.
P. Tottle
Collcltcrs for Applicant:	Robmson Cox.
140 St. Ceorqe's T c r r x e ,
Perth. T.J.4. €000.

Counze 1 for First Rezpon dent: Mr. Cllff ord

Solicitors for First Rcspondcnt: Freehlll, Hollingdale L Page,

15 Hilliam Street,

Perth. N . A . 6000.

Counsel for Second Respondents:  Mr. J.T. Saunders

Solicitors for Second Respondent: Kott Gunning,

22 St. George's Terrace,

Perth. W.A. 6000.

Date of hearing:	4 March 1988
Place of hearing: