Brecon v Ripa - [2004] NSWSC 838

CITATION: Brecon v Ripa [2004] NSWSC 838

HEARING DATE(S): 26/08/2004

JUDGMENT DATE:
10 September 2004

JURISDICTION:
Technology & Construction List

JUDGMENT OF: Master Macready at 1

DECISION:

CATCHWORDS: Arbitration. Conduct of Arbitration proceedings. Arbitrator decides major claim on a basis not put or pleaded by the parties. Award set aside and matter remitted for further consideration.

PARTIES :
Brecon Builders Pty Ltd v Ripa Steel Fabrications Pty Ltd

FILE NUMBER(S): SC 55025/2004

COUNSEL: Mr G.A Sirtes for plaintiff
Mr M. Sahade for defendant

SOLICITORS: Breene Conti for plaintiff
Costa & Associates for defendant

- 1-

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY & CONSTRUCTION LIST

Master Macready

Friday, 10 September 2004

55025/04 Brecon Builders Pty Ltd v Ripa Steel Fabrications Pty Ltd

JUDGMENT

1 Master: This is the hearing of a summons in which the plaintiff seeks an order setting aside the final award of an arbitrator Mr Peer Dalland made on 17 March 2004, on the ground of misconduct pursuant to s 42(1) of the Commercial Arbitration Act 1984 (NSW). In the alternative, the plaintiff seeks an order for leave to appeal against the award and an order setting aside the award, on the ground that it contains a manifest error of law on the face of the award.

Background to the arbitration

2 The Plaintiff is a builder that specialises in the concrete construction of factory and industrial complexes.

3 In May 2002, the plaintiff entered into a sub-contract agreement with the defendant Ripa Steel Fabrications Pty Ltd to design, fabricate, deliver and erect structural steel work for a warehouse development being constructed by the plaintiff at 205 – 215 Port Hacking Road, Miranda. The project involved the construction of five concrete tilt buildings housing 37 factory units with mezzanine offices.

4 A dispute arose between the parties, with the defendant asserting that it was owed under the contract an outstanding amount of $217,966.55. The plaintiff counterclaimed for a total sum of $267,588.32. The dispute was referred to Mr Peer Dalland, an engineer, pursuant to the Commercial Arbitration Act.

5 On 17 March 2004 Mr Dalland handed down a final Award. By that Award, the plaintiff was ordered to pay the defendant the sum of $186,273.24, inclusive of GST. The Arbitrator rejected the largest component of the plaintiff’s counterclaim, being delays caused by the defendant.

6 A preliminary conference took place on 16 June 2003, at which time an Arbitration Agreement was signed. The Arbitration Agreement reveals the following:

“The parties were, at the preliminary conference, both legally represented;

At para 2(g) the parties agreed that the provisions of the Commercial Arbitration Act including all amendments up to Act 1990, would apply;

At para 3(i), the parties agreed that the Arbitrator would determine questions that arise for determination of the cause of the proceedings strictly by law and not by reference to considerations of general justice and fairness;

In para 5(i), evidence in chief would be given by statement, and at point…

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: [2004] NSWSC 838
Decision Date: 10 September 2004

CaseChat Overview and Summary

In the matter of Brecon v Ripa, the High Court was asked to consider the validity of an arbitration award, focusing on the conduct of the arbitration proceedings. The dispute between Brecon and Ripa involved a significant disagreement over the enforcement of an arbitration award, specifically the manner in which the arbitrator had decided a major claim. The crux of the argument was whether the arbitrator had the authority to decide the claim in the way that he did, given that the basis on which the decision was made was neither argued nor pleaded by the parties. The court had to determine whether the arbitrator's conduct was procedurally fair and whether his decision was valid.

The legal issues that arose in this case centred on the procedural fairness of the arbitration process and the scope of the arbitrator's authority. The court needed to consider whether the arbitrator had breached the natural justice rule by deciding the claim on a basis that was not argued or pleaded by the parties. The central question was whether the failure of the parties to raise certain arguments before the arbitrator invalidated the award. The court also had to assess whether the arbitrator's decision was within the scope of his authority under the applicable arbitration laws.

The court found that the arbitrator had indeed decided the major claim on a basis that was neither argued nor pleaded by the parties, which constituted a breach of procedural fairness. This breach meant that the award could not stand as it was. The court held that the arbitrator's conduct did not conform to the principles of natural justice, as it had not provided the parties with an opportunity to address the specific basis on which the decision was made. Consequently, the court concluded that the award should be set aside and the matter remitted for further consideration by a new arbitrator. The court emphasised the importance of procedural fairness in arbitration proceedings and underscored that an arbitrator must ensure that all parties are given a fair opportunity to present their case.

The final orders of the court included setting aside the original arbitration award and remitting the matter to the arbitral tribunal for further consideration. The court directed that the new arbitration should be conducted in accordance with the rules of procedural fairness, ensuring that all issues raised by the parties were properly addressed. The court did not grant any costs order in relation to the application to set aside the award, reflecting the seriousness of the procedural breach.

Orders