Cox Constructions Pty Ltd v Decor Ceilings Pty Ltd - [2005] SASC 251

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
COX CONSTRUCTIONS PTY LTD v DECOR CEILINGS PTY LTD
Reasons for Decision of The Honourable Justice Layton
7 July 2005
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PRACTICE UNDER RULES OF COURT
ARBITRATION - THE AWARD - APPEAL OR JUDICIAL REVIEW - POWERS OF COURT
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA
Two notices of specific directions - one an application by the appellant seeking an extension of time for compliance with r 94.03 of the Supreme Court Rules and Supreme Court Practice Direction 13A - further that the extension be until a time after judgment in another related action. The second, a Notice for Specific Directions of the respondent seeking an earlier Notice for Specific Directions of appellant be dismissed for want of prosecution - both notices concern a procedural issue - two separate actions - both a consequence of an arbitration in which an interim award made - each party sought to challenge aspects of award - leave to appeal granted by single judge of this Court to respondent but not to appellant - appellant filed Notice of Alternative Contentions in the respondent's appeal - heard before a single judge of this Court - whether embarrassment caused if two appeals on foot involving same issues were decided differently.
Held: No prejudice to grant extension - refusal to extend time until judgment in other action delivered. Not persuaded matters would cover the same field - application refused.
Commercial Arbitration Act 1986 (SA) s 38; Supreme Court Rules 1987 (SA) r 94.03; Supreme Court Practice Directions (SA) PD 13A, referred to.
Decor Ceilings Pty Ltd v Cox Constructions Pty Ltd 545/04; Cox Constructions Pty Ltd v Decor Ceilings Pty Ltd 566/04 [2004] SASC 243; Decor Ceilings Pty Ltd v Cox Constructions Pty Ltd [2005] SASC 146; Leighton Contractors Pty Ltd v South Australian Superannuation Fund Investment Trust (1994) 63 SASR 444, considered.

COX CONSTRUCTIONS PTY LTD v DECOR CEILINGS PTY LTD
[2005] SASC 251
CIVIL

LAYTON J: The matter before me consists of two Notices for Specific Directions. The first being a Notice for Directions of Décor Ceilings Pty Ltd (“Décor”) dated 13 May 2005. The second being an application by Cox Constructions Pty Ltd ("Cox") dated 8 June 2005.
Both notices concern a procedural issue.
The Décor Notice for Specific Directions seeks that an earlier Notice for Specific Directions of Cox filed on 1 September 2004 to appeal the decision of Anderson J made on 18 August 2004, be dismissed for want of prosecution.
The Cox Notice for Specific Directions of 8 June 2005, seeks that it be given an extension of time for compliance with Rule 94.03 of the Supreme Court Rules 1987 (SA) (“SCR”) and Supreme Court Practice Direction 13A, until such time after the judgment of the Court in Action No 545 of 2004.
In summary, the situation arises in the context of two separate actions. Both of these actions arise as a consequence of both parties having entered into an arbitration in which an interim award was made by an arbitrator on 12 May 2004 (“the award”). Each party sought to challenge aspects of the award and each sought leave to appeal from the award.
Décor sought leave to appeal in Action No 545 of 2004 (“the Décor Appeal”) and Cox sought leave to appeal in Action No 566 of 2004 (“the Cox Appeal”).
As the matter was an arbitration, leave to appeal was required by virtue of the provisions of the Commercial Arbitration Act 1986 (SA) (“the Act”).
Both applications for leave of the parties were heard before Anderson J who granted the application in the Décor Appeal, but refused the application in the Cox Appeal. [1]
[1] Décor Ceilings Pty Ltd v Cox Constructions Pty Ltd 545/04; Cox Constructions Pty Ltd v Décor Ceilings Pty Ltd 566/04 [2004] SASC 243.
Anderson J gave Décor leave to appeal on the following grounds:
The Reasonableness of Décor’s Tender Price
1. The learned arbitrator erred as a matter of law and misdirected himself about the nature of evidence necessary to establish reasonableness and in particular he:-
1.1 found it was necessary for the appellant to call evidence of an independent and expert nature in addition to the evidence given by Décor’s estimator (Mr Erbsland) and his tender “take-offs” file. (Reasons pp 72-73)
1.2 erred in treating the extra judicial commentary of Justice Byrne as prescriptive and confused the ability to call more evidence with an obligation to call more evidence. (Reasons p 72); and
1.3 failed to consider effect of the decision of ACT Supreme Court in Chadwick Industries ats Concrete Constructions which was referred to the learned arbitrator by the appellant.
The Back-charge for H E Sugars & Co Labour-$9,390
2. In the event that this Honourable Court makes an order in terms of ground 1 above then there is no legal basis upon which the respondent is entitled to a credit for the cost of another contractor providing labour which the appellant would otherwise have provided. As a consequence the learned arbitrator should not have reduced the Interim Award to the Appellant by $9,360. [2]
[2] Décor Ceilings Pty Ltd v Cox Constructions Pty Ltd [2005] SASC 146 at [14].
The grounds of appeal sought by Cox in its Proposed Grounds for Appeal and the reasons for the refusal of leave by Anderson J, are conveniently summarised at paragraphs 16 to 18 of the decision of Besanko J in the following terms:
[16] Anderson J refused leave to appeal to the respondent in relation to the following grounds of appeal:
1. The Learned Arbitrator erred as a matter of law in awarding the Respondent the sum of $40,655 for its delay claim (reasons p76). The learned Arbitrator should have found that the lack of proper notices given to the Appellant by the Respondent prevented the Respondent from succeeding on its delay claim.
2. The Learned Arbitrator erred as a matter of law and fact in finding that the subcontract between the Appellant and the Respondent was comprised of:
(A number of documents are then identified in this ground which it is unnecessary for me to set out having regard to the issues on this application.)
(Reasons p 51).
The learned Arbitrator should have found that the subcontract between the Appellant and the Respondent included the subcontract agreement that the Appellant sent to the Respondent on 8 July 1999, as varied by the letter from the Appellant to the Respondent dated 10 September 1999 and in any event, that the “nil damages” clause in the subcontract with respect to Extensions of Time applied.
3. The Learned Arbitrator erred as a matter of law and fact in finding that the Appellant’s damages claim failed for the period after about late-December 1999 (reasons p 77). The Learned Arbitrator should not have made such a finding, as:
3.1 the Respondent had sufficient resources to progress the subcontract works as agreed and contracted for an insufficient time within which to complete those works; and
3.2 the Respondent made various promises to the Appellant with respect to its resources and work rate; and
3.3 the Respondent did not produce evidence that there were insufficient work areas available to it to progress the subcontract works as agreed, nor evidence as to any breaches of the subcontract by the Appellant from that time; and
3.4 the Respondent still took longer to carry out the subcontract works than the time provided for the whole works under the head contract.
[17] In relation to ground one, the Judge noted that the appellant’s delay claim and additional hours claim were pursued as claims for breach of contract and not pursuant to notices given under clauses 35.5 and 36 of the contract. He was not satisfied that there was a manifest error of law on the face of the award or strong evidence that the arbitrator made an error of law. He refused leave in relation to ground one.
[18] In relation to ground two, again the Judge was not satisfied that there was a manifest error of law on the face of the award, or strong evidence that the arbitrator made an error of law. He said damages were not awarded on the basis of clauses 35.5 and 36 of the contract and that as far as adding substantially to the certainty of commercial law was concerned, the law was well settled in terms of how a court decides what documents make up a contract. He refused leave in relation to ground two. [3]
[3] Dècor Ceilings Pty Ltd v Cox Constructions Pty Ltd [2005] SASC 146 at [16]-[18].
On 1 September 2004, Cox in a Notice for Specific Directions sought leave to appeal to the Full Court from the decision of Anderson J refusing leave to appeal. It is this Notice which Décor now seeks to have dismissed for want of prosecution.
On the 25 October 2004, Cox filed a Notice of Alternative Contentions in the Décor Appeal. Décor sought an order striking out the Notice of Alternative Contentions on the grounds that it was an abuse of process of the Court and/or contrary to section 38 of the Act. Besanko J determined this issue on 15 April 2005, and whilst His Honour struck out the Cox Notice of Alternative Contentions, he granted liberty to Cox to file a fresh Notice of Alternative Contentions consistent with his reasons[4].
[4] Ibid at [42] per Besanko J.
On 11 May 2005, Cox filed its fresh Notice of Alternative Contention which sought:
1. That the terms of the sub-contract between Cox Constructions Pty Ltd (“Cox”) and Décor Ceilings Pty Ltd (“Décor”) (“the subcontract”) excluded Décor’s claim for damages for disruption, which is a question of law.
2. In particular, material to alternative contention 1 above, that the contract provided for notices to be given for Décor’s claim as a condition precedent to any entitlement, which notices were not given and the interpretation of the contract being a question of law.
3. Material to alternative contention 2 above, that the requirement for notices and Décor’s failure to give notices was sufficiently pleaded by Cox, which interpretation of the pleadings is a question of law.
4. In particular, material to alternative contention 1 above, that the amount of damages agreed between Cox and Décor and provided for in the subcontract in respect of Décor’s disruption claim was nil (“the nil damages term”), which interpretation and application of a contractual term is a question of law.
5. Material to alternative contention 4 above, that the nil damages term was included as part of the subcontract terms, which interpretation of the subcontract terms is a question of law.[5]
[5] Notice of Alternative Contentions by the Respondent, filed 11 May 2005.
Between the date 25 October 2004 when the Notice of Alternative Contentions was filed and 15 April 2005 when Besanko J delivered his decision, the following events occurred.
By submissions dated 26 October 2004, Décor outlined it’s objection to the Notice of Alternative Contentions of Cox filed on 25 October 2004.
On 27 October 2004, at a hearing before White J the issue of the situation of the Cox appeal was raised (see letter 5 November 2004 Exhibit TRG 1 and letter 7 November 2004 Exhibit TRG 3 to the affidavit of Thomas Ramsden Grace sworn on 13 May 2005).
By letter of 5 November 2004, solicitors for Cox indicated they would seek instructions on a course of action that “would render the appeal of Justice Anderson's decision unnecessary” stating that it believed that the issues raised in the Notice of Alternative Contentions in the appeal to be “siblings” of the matters raised in the Cox appeal. In that letter it was proposed:
…it would be a better use of the Court's resources and alleviate the possibility that different judgments are handed down with respect to the same issues, if the parties agree to be bound on [the Cox appeal] by the Court's decision in [the Décor appeal] both on your client’s appeal points and our client’s alternative contentions. This of course, would in no way affect either party's appeal rights against the single Judge's decision.
The solicitors for Décor responded by letter of 5 November 2004 indicating that it declined to consent to this course of action, asserting that the Cox Notice of Alternative Contentions was misconceived. (Exhibit TRG 2)
On 7 November 2004, the solicitors for Cox sent a further letter to the solicitors for Décor setting out a detailed history of the matter and including in it the reasons why the Cox appeal had not progressed since the hearing before White J on 27 October 2004. They repeated that in their assessment there was a direct relation between the topic of both the appeals and concluded with the statement that they would take instructions from Cox as to what orders it would seek for the most expeditious way for the appeals to proceed. (Exhibit TRG 3)
On 12 November 2004, Besanko J heard argument as to the Cox Notice of Alternative Contentions. At that hearing, when there was a query about the progress of the Cox appeal, Counsel for Cox asserted that its appeal was “being put on hold until a decision is made on …[the Décor appeal]”. This assertion from the bar table was confirmed in a letter to the solicitors for Décor on 1 December 2004. (Exhibit TRG 4)
By e-mail of 2 December 2004, the solicitors for Décor indicated that they did not consent to any extension of time within which Cox could progress in its appeal to the Full Court and indicated that they remained of the view that the Cox appeal should be prosecuted immediately. (Exhibit TRG 5)
As a matter of chronology the decision of Besanko J following the hearing on 12 November 2004 was handed down on 15 April 2005.
By letter of 20 April 2005, solicitors for Décor noted that Cox had not sought to prosecute its application for leave to appeal in the Cox appeal and that Décor proposed to bring an application seeking that the application for leave to appeal be dismissed. (Exhibit TRG 6)
This letter was followed up by a further letter from the solicitors for Cox dated 22 April 2005 indicating that their client “will now pursue its appeal”. (Exhibit TRG 7)
The Décor appeal including the Notice of Alternative Contentions of Cox was due to be heard before Besanko J on 30 June 2005, which subsequently occurred and the file indicates that the decision is reserved.
This completes the relevant saga of events.
Common Ground
It is common ground that the issues set out in paragraphs 1 and 2 of the Proposed Notice of Appeal which are the subject of the Cox Appeal, are essentially the same issues as those set out in the Notice of Alternative Grounds 1 to 5 of Cox in the Décor Appeal. It is also common ground that paragraph 3 of the Proposed Notice of Appeal in the Cox Appeal, which concerns a damages claim after late December 1999, will not be the subject for consideration by Besanko J on the Décor Appeal.
It is also common ground that at all times Cox has indicated that it wished to pursue its appeal and was certainly not abandoning the appeal. However, its contention was that it should not be progressed until after the Décor Appeal was decided.
Contentions by Décor
The essential argument of Décor is that there is no utility in waiting for the reasons of Besanko J on the Décor Appeal because the issues in the Décor appeal would be different from those matters which would be heard in relation to the Cox Appeal on the leave to appeal or if leave was granted, on the appeal itself. Whilst there is some overlap of issues it was not complete.
Further, it was submitted that the common issues in relation to the Cox Appeal to be heard before Besanko J, would not involve the same material as the leave to appeal application in the Cox Appeal as the latter would be done on more limited documentation, in accordance with section 38 of the Act.[6] In addition, it was submitted that there would be a constraint on the manner in which the same issues may be argued before Besanko J by reason of the fact that the Notice of Alternative Contentions are being required to be “defensive” to the appeal grounds of Décor, for the reasons given by Besanko J.[7]
[6] Leighton Contractors Pty Ltd v South Australian Superannuation Fund Investment Trust (1994) 63 SASR 444 per Debelle J.
[7] Décor Ceilings Pty Ltd v Cox Constructions Pty Ltd [2005] SASC 146 at [37].
In short, on this point it was argued that the evidence and the contentions would not be exactly the same in both appeals and that the Cox Appeal contained a further ground but on more limited material.
A second argument was that if the Cox Appeal was not progressed Décor would suffer prejudice. It submitted that if Décor was successful in the Décor Appeal, it did not wish to be faced with an argument that there was still the Cox Appeal on foot and that therefore there should be a stay of enforcement of the resultant award. A further area of prejudice asserted was that as the arbitrator had not yet dealt with the questions of interest and costs on arbitration, the interest running would be significant and would continue to rise.
Third, it was submitted that Cox in seeking to obtain an extension of time could not rely on any assumed consent on the part of Décor to the assertion made from the Bar table before Besanko J. On the contrary, opposition had been explicitly indicated to its proposal on a number of occasions and still no action had been taken.
Contentions of Cox
The basic argument of Cox is that it would be inappropriate for there to be two appeals on foot at the same time involving exactly the same issues, further, it would be embarrassing, inefficient and inappropriate for there to be potentially different views being expressed by judges of this Court in relation to the same issues. As part of this argument it was also put that if leave to appeal in the Cox Appeal had to be progressed, there would at one and the same time be arguments being addressed before Besanko J on 30 June 2005 and that at the same time Cox would be required to put in the necessary documentation and written or oral arguments before the Full Court on leave to appeal in relation to the same points.
Counsel for Cox disputed the submission of Counsel for Décor that different considerations would apply on the two appeals and submitted that no essentially different material would be used.
Conclusions
I am satisfied that by reason of the conduct and communications between the solicitors for Cox and Décor, that there has been no embarrassing or prejudicial delay caused so far to Décor as a consequence of the failure of Cox to progress the Cox appeal. As previously indicated it is conceded that there was no suggestion of Cox abandoning its appeal. Therefore, I dismiss the application by Décor to dismiss the Notice for Specific Directions of Cox to appeal the decision of Anderson J. I consider it appropriate to grant the first part of the Notice for Specific Directions of Cox to extend time for compliance with Rule 94.03 of the SCR and Practice Direction 13A. My concern is, what period for extension should be granted for, and in particular whether it should be granted until such time as judgment in the Décor Appeal is determined by Besanko J.
I am not persuaded that the matters coming before Besanko J on the Décor Appeal would necessarily cover exactly the same field as that which could be argued on the Cox Appeal at either the leave to appeal stage, or if leave is successful, on appeal.
Further, I bear in mind the fact that leave to appeal in the Cox Appeal will be dependant only upon the material which was before Anderson J. That material is different from that which was before Besanko J at the time when His Honour concluded that a fresh Notice of Alternative Contentions in the Cox Appeal could be filed. There would not be an embarrassing or inappropriate contradictory determination by two single judges, as their decisions are made on different material.

That being so, there is no argument which suggests that Cox should obtain an extension of time to pursue its appeal but in effect to have that stayed until after the decision of Besanko J on the Décor Appeal. This is not to say that a decision by Besanko J would not have considerable influence on any matter which may go before the Full Court if leave is granted to Cox to pursue its appeal. However, the matters do not appear to be simply duplication.
Further, when looking at the potential outcomes, it appears to me that whichever party loses before Besanko J, that party may well appeal from His Honour’s decision. Cox may appeal whether or not it obtains leave to appeal in the Cox Appeal. Décor may appeal, especially if leave to appeal is granted in the Cox Appeal, but even if leave to appeal is refused.
That being the case, it seems to me that there could later be an application to have any appeals in the Full Court heard at the same time.
For these reasons I order the following:
1. Dismiss the Notice for Specific Directions of Décor dated 13 May 2005.
2. I allow paragraph 1 of the Notice for Specific Directions of Cox dated 8 June 2005 and grant an extension of time for Cox to comply with SCR 94.03 and Practice Direction 13A to 14 days from the date hereof.