SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BUILT ENVIRONS PTY LTD v SAUNDERS INTERNATIONAL LIMITED
[2012] SASC 111
Judgment of The Honourable Justice White
29 June 2012
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK - GENERAL
ARBITRATION - THE AWARD - APPEAL OR JUDICIAL REVIEW - GROUNDS FOR REMITTING OR SETTING ASIDE - ERROR OF LAW - CONSTRUCTION OF CONTRACT
The plaintiff contracted with BHPB to carry out upgrade works at Olympic Dam and sub-contracted some of the works to the defendant - the plaintiff and the defendant did not execute a formal contract - their contract was to be inferred from their conduct, including their exchange of documents - the plaintiff terminated the contract, claiming that the defendant did not perform its work to the standard required - it claimed damages from the defendant - the defendant counter-claimed for variations and losses, including losses caused by the alleged unlawful termination.
At the request of the parties the Court referred the matter for arbitration by an arbitrator nominated by the parties. The Arbitrator has made two interim awards.
The defendant applies, under s 66(4) of the Supreme Court Act 1935 (SA), for the adoption by the Court of all but part of the two interim awards as its judgment - the plaintiff objects to the adoption and challenges the findings and reasoning of the Arbitrator.
Consideration of the principles concerning the adoption of an arbitrator's award as the judgment of the Court and of the reasons required to be provided by an arbitrator - consideration of the principles concerning contract formation, identification of contractual terms and the scope of the defendant's work, use of post-contractual conduct, and of the fourth category of Masters v Cameron (1954) CLR 353.
Held (refusing to adopt the awards): s 66(4) of the Supreme Court Act 1935 (SA) establishes a strong presumption in favour of adoption and requires good reason for the Court not to adopt an arbitrator's award - the challenges to the Arbitrator's conclusions concerning contract formation rejected but the plaintiff did establish flaws in the Arbitrator's conclusions concerning the scope of the defendant's work - deficiencies in the Arbitrator's reasons so numerous that good reason has been shown for the awards not to be adopted as the judgment of the Court.
Supreme Court Act 1935 (SA) s 50, s 65, s 66, s 67; Commercial Arbitration and Industrial Agreements Act 1986 (SA) s 29(1), s 19(3); Industrial Referral Agreements Act 1986 (SA); Supreme Court Rules 1970 (NSW) Part 72 r 13, referred to.
Buckley v Bennell Design and Constructions Pty Ltd (1978) 140 CLR 1; Chocolate Factory Apartments Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784; Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549; Leighton Contractors (SA) Pty Ltd v Hazama Corporation (Australia) Pty Ltd (1991) 56 SASR 47; Green v The Queen (2011) 86 ALJR 36; Westport Insurance Corporation v Gordian Runoff Ltd (2011) 85 ALJR…
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- Case
- [2012] SASC 111
- Decision Date
CaseChat Overview and Summary
The primary legal issue the court needed to resolve was whether the arbitrator made any errors in law in interpreting the scope of the contract. Specifically, the court needed to determine if the arbitrator had misunderstood the legal principles, misconstrued the evidence, or engaged in unsustainable reasoning in concluding that the defendant's scope of work did not include certain obligations under the contract. The court also needed to assess if the arbitrator's decision was based on a proper interpretation of the relevant standards and if the findings regarding the extent of compliance and timelines were adequately addressed.
The court found that the arbitrator had indeed made several errors in law, including a misunderstanding of the legal principles, misconstruing the evidence, and engaging in unsustainable reasoning. The court highlighted that the arbitrator had not identified any provision in API 650 that required the removal of surface defects, and had failed to make findings about the extent to which Saunders had complied with the requirements or the timelines for compliance. The court concluded that these errors were significant and could not be overlooked. Consequently, the court found that the arbitrator's decision was flawed and required correction.
The court set aside the arbitrator's decision and remitted the matter back to the arbitrator for reconsideration, ensuring that the correct legal principles are applied and the evidence is properly interpreted. The court did not provide specific details on the final orders, but it was clear that the case needed to be re-evaluated by the arbitrator to rectify the identified errors.
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Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Established by: WHITE J
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