Commonwealth of Australia v Cockatoo Dockyard Pty Limited

[2007] HCATrans 150

[2007] HCATrans 150

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S488 of 2006
  No S5 of 2007

B e t w e e n -

COMMONWEALTH OF AUSTRALIA

Applicant

and

COCKATOO DOCKYARD PTY LIMITED

Respondent

Applications for special leave to appeal

GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 24 APRIL 2007, AT 2.12 PM

Copyright in the High Court of Australia

MR P.T. TAYLOR, SC:   If it please the Court, I appear with my learned friend, MR M.E. LUITINGH, for the applicant.  (instructed by Australian Government Solicitor)

MR T.G.R. PARKER, SC:   May it please the Court, I appear with my learned friend, MR B.F. KATEKAR, for the respondent.  (instructed by Allens Arthur Robinson)

GUMMOW J:   Yes, Mr Taylor.

MR TAYLOR:   Your Honours, this application concerns whether the issue estoppel rule in Blair v Curran should, we submit, be modified in the manner held by the Court of Appeal, that is to say, whether in the first Tribunal the finding need be, to use the words of Justice Dixon, “legally indispensable to the conclusion” or whether it need only be one of a number of alternative bases for the conclusion, as the Court of Appeal determined. 

Your Honours, the arbitration concluded in 1996 and it concerned a claim by the respondent under a contract for reimbursement of a particular bundle of costs arising from negligence claims against it.  The Commonwealth resisted Codock’s claim relying upon clause 3.11 of that contract which is set out in the application book at page 167.  In the middle of that page, paragraph 151, the contract provided that:

“Costs which could have been avoided or reduced by the exercise of reasonable standards of skill, care and efficiency, to the extent that such could have been avoided or reduced, shall not be allowed into contract cost.”

That meaning in its context that it shall not be reimbursable.  The arbitrator found in favour of Codock that this particular bundle of costs arising from negligence claims were reimbursable.  The relevant part of his decision is set out at tab 9 on the authorities bundle of the applicant.  Tab 9 is an extract from the interim award of the arbitrator and if your Honours go to page 163 of that decision ‑ ‑ ‑

GUMMOW J:   Before you do that, Mr Taylor, and use up your valuable time, what do you say about Mr Parker’s submissions on page 305, paragraph 13, running over from 304 to 305?

MR TAYLOR:   Your Honour, in our submission, the construction for which the Commonwealth contends has only been properly dealt with once by the arbitrator.  On the other occasions ‑ ‑ ‑

GUMMOW J:   That would not normally attract a grant of special leave, you see, so that brings you to your ground 2 which is Arnold’s Case.  Do you want to say anything to us about Arnold?

MR TAYLOR:   Before your Honour leaves the question of ground 1, what has happened is that the arbitrator has considered the construction, in our submission, but the other tribunals, the decision of the primary judge and the decision of the Court of Appeal have not given any ‑ ‑ ‑

GUMMOW J:   That is even less reason for us to be the first off the rank.

MR TAYLOR:   To consider it?

GUMMOW J:   Yes.  It is the final court of appeal.

MR TAYLOR:   Your Honour, the position is that the Commonwealth will not have an opportunity to run a case that judgments against Codock finding negligence against Codock are caught by a clause which, on its face, seems to preclude recovery for expenses resulting from negligence.  In our submission, little weight can be given to a conclusion which has not been developed by any reasons.  They have given no reasons why a clause that says that costs which could have been avoided by reasonable skill and care cannot be recovered is inapplicable to a judgment against Codock for failing to take reasonable care and skill. 

In our submission, the question of whether the Commonwealth is permitted to take the point is not just a question to be determined, in a sense, summarily on whether the clause seems to mean what the Court of Appeal preliminarily determined it meant but, rather, whether the Commonwealth should be entitled to maintain a defence or a case that it sought to run and which, in our submission, cannot be precluded by issue estoppel grounds.

If, as we say, the decision of the arbitrator was only one of a number of alternative bases for his decision, then the decision of the Court of Appeal is directly in conflict with the decision of an earlier Court of Appeal decision of Abi‑Saab where in that case Chief Justice Gleeson said that only a decision about a matter which it was necessary to decide can create an issue estoppel.  In this case, the arbitrator’s decision itself reveals that it was unnecessary for him to decide anything about the construction once he had found against the Commonwealth on the failure to plead ground. 

Your Honours, at paragraph 237 on page 195 the Court of Appeal determined that, crucially, the true construction of clause 3.11, if it had been answered in favour of the Commonwealth, would have been a complete answer to Codock’s claim.  In our submission, that cannot have been the

case given that the arbitrator determined before he even got to the construction question that he would reject the Commonwealth argument on the pleading point.

Your Honours, as to ground 2, namely, the Arnold point, our submission is in short terms that the Court of Appeal did not determine whether and to what extent the special circumstances test in Arnold applied in Australia and, therefore, it was legally – they were not then, in our submission, properly able to determine whether the exception applied to the particular case because its existence and ambit had not been determined.  In our submission, the circumstances that occurred in Arnold, whilst not precisely the same as in this case, this is a case where like Arnold there was not a right of appeal and where there was a ‑ ‑ ‑

GUMMOW J:   What was the relevant framework of the dispute in Arnold?  It arises out a rent review, does it not?

MR TAYLOR:   Yes, your Honour, whereas in this case it was an arbitration on, as I said, a different matter.  But the appeals were limited in a similar way and there was a real contest about the correctness of the decision of the Tribunal in the rent review in Arnold, as there is in this case.  There is a third element in this case, which was not present in Arnold, namely, that there was an express acknowledgment by the respondent before the arbitrator that they were not seeking an order in respect of future costs which is now what they seek to use the decision of the arbitrator to do, namely, to preclude the Commonwealth from maintaining an argument about the very costs, in our submission, that they admitted that the decision would not go to by that concession.

So we say that in those circumstances there is a basis for the special circumstances exception in Arnold to apply.  Your Honours will have seen that although there is some discussion about it in various cases, the closest one gets to a decision about whether the special circumstances exception does apply is perhaps the primary judge in the present case who held that it did.  Those are our submissions, your Honour.

GUMMOW J:   Thank you, Mr Taylor.  We do not need to call on you, Mr Parker.

In refusing special leave we are not to be taken as expressing any view upon the principle said to be derived from the decision of the House of Lords in Arnold and Ors v National Westminster Bank Plc [1991] 2 AC 93. This is because in any event we are not satisfied that there are sufficient prospects for success in demonstrating error by the New South Wales Court of Appeal in its holding that the “special circumstances” apparently required by Arnold were not present on the facts of this case. 

None of the other grounds upon which the applicant relies, particularly those premised upon success on a construction point, would attract a grant of special leave.  Special leave is refused with costs.

AT 2.23 PM THE MATTER WAS CONCLUDED