JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: DALCON CONSTRUCTIONS PTY LTD -v- CHU & ANOR [2002] WASCA 290
CORAM: STEYTLER J
HEARD: 17 SEPTEMBER 2002
DELIVERED : 23 OCTOBER 2002
FILE NO/S: ARB 4 of 2002
BETWEEN: DALCON CONSTRUCTIONS PTY LTD
Applicant
AND
VINCENT KUS CHU
DOLLY CHU
Respondents
Catchwords:
Commercial arbitration - Leave to appeal - Building contract dispute - Where quantum meruit claim summarily rejected - Applicant not given opportunity to lead evidence or make submissions - Whether manifest error of law on face of award - Turns on own facts
Commercial arbitration - Leave to appeal - Building contract dispute - Costs of arbitration - Whether arbitrators' discretion concerning award of costs properly exercised - Whether manifest error of law on face of award - Turns on own facts
Legislation:
Commercial Arbitration Act 1985, s 38, s 38(5)
Result:
Leave to appeal granted
Appeal allowed
Category: B
Representation:
Counsel:
Applicant: Mr R A Zilkens
Respondents : No appearance
Solicitors:
Applicant: Zilkens & Co
Respondents : No appearance
Case(s) referred to in judgment(s):
Australian Coal & Shale Employees' Federation v Commonwealth (1953) 94 CLR 621
Board of Education v Rice [1911] AC 179
Chen v Minister for Immigration and Ethnic Affairs (1994) 48 FCR 591
Gold Coast City Council v Canterbury Pipe Lines (Aust) Pty Ltd (1968) 118 CLR 58
House v The King (1936) 55 CLR 499
Promenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203
Tuta Products Pty Ltd v Hutcherson Bros Pty Ltd (Receivers Appointed) (1972) 127 CLR 253
UDR Equipment Pty Ltd v Afkos Industries Pty Ltd (2000) 22 WAR 221
Case(s) also cited:
Chrulew v BormReid & Co [1992] 1 WLR 176
Harold v Smith (1860) 5 H & N 381; 157 ER 1229
Minister for Aboriginal Affairs v PekoWallsend Ltd (1986) 162 CLR 24
Ozols v Trotman, unreported; SCt of WA (Steytler J); Library No 950412; 9 August 1995
Transport Workers Union of Australia v Leon Laidley Pty Ltd (1980) 28 ALR 589
STEYTLER J: The applicant is a builder. Between 30 June 1997 and 19 June 1999 it built a house for the respondents pursuant to the terms of a building contract dated 23 May 1997. The applicant and the respondents fell into dispute over the building of the house and they took their dispute to arbitration. The applicant lodged points of claim, relying upon the terms of the building contract which, it said, had been varied on 10 February 1998. It claimed an amount of $11,714.50, said to be owing to it under a progress claim made pursuant to the terms of the contract. It also made claims for damages for breach of the contract and a quantum meruit claim, together totalling over $125,000, as well as claims for interest and costs. The respondents, in their points of defence, denied that the applicant was entitled to anything. Indeed, they said that the applicant had itself…
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- AGLC
- Dalcon Constructions Pty Ltd v Chu [2002] WASCA 290
- Case
- [2002] WASCA 290
- Decision Date
CaseChat Overview and Summary
The legal issues before the court centred on whether the determination of the questions of law raised could substantially affect the rights of the parties involved and if there was a manifest error of law on the face of the award. Specifically, the court needed to assess whether the arbitrators exercised their discretion properly in awarding costs and if their decision could be considered a manifest error of law. The court also had to consider whether the circumstances warranted granting leave to appeal under the provisions of the Commercial Arbitration Act 1985.
The court found that there was a manifest error of law in the award, particularly in how the arbitrators exercised their discretion concerning the award of costs. The court was critical of the arbitrators' failure to properly consider several material factors, such as the success or failure of each party on various issues, the responsibility for wasted costs, and the offer of settlement made by Dalcon. The court held that the errors on the face of the award were significant and could substantially affect the rights of the parties involved. Consequently, the court granted leave to appeal, emphasising the importance of the sums of money at stake and the need for the appeal to address these substantial issues.
The court's decision was that leave to appeal should be granted, as there was a manifest error of law in the award and the determination of the questions raised could substantially affect the rights of the parties. The court acknowledged the significant financial implications for Dalcon and the necessity to address these issues through the appellate process.
Orders
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
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Ratio Decidendi
Legal Principle Established
It consequently seems to me, with due respect, that the result arrived at by the arbitrators necessarily reflects a failure on their part to exercise a proper discretion (see Australian Coal & Shale Employees' Federation v Commonwealth (1953) 94 CLR 621 at 627). They appear quite plainly to have acted on a wrong principle, to have failed to make any real analysis, for the purposes of an award of costs, of the success or failure of each party on the various issues before them, to have failed to assess what was the responsibility of each party for wasted costs (and, so far as delays were concerned, to what extent each delay resulted in wasted costs) and to have given little weight to the offer of settlement which had been made by the applicant, each of these having been material considerations (as to which, see House v The King (1936) 55 CLR 499 at 504). Under s 38 of the Commercial Arbitration Act 1985, an appeal on a question of law arising out of an award lies to the Supreme Court where leave is given to bring that appeal. Section 38(5) provides that the Court shall not grant leave unless it considers that, having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more of the parties to the arbitration agreement and there is either a manifest error of law on the face of the award or strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law. Here there is no suggestion that anything that I am to determine might add, or be likely to add, substantially to the certainty of commercial law. Consequently, the only issues, in considering whether or not there should be a grant of leave, are whether the determination of the questions of law which have been raised could substantially affect the rights of one or more of the parties to the arbitration agreement and whether there was a manifest error of law on the face of the award. As to the latter point, I have previously said, in UDR Equipment Pty Ltd v Afkos Industries Pty Ltd (2000) 22 WAR 221, at par 51, that this Court should adopt what has been said by Sheller JA in Promenade Investments Pty Ltd v New South Wales (1992) 26 NSWLR 203. There, Sheller JA said (at 225 ‑ 226) that, before leave is granted, there should be "powerful reasons for considering on a preliminary basis, without any prolonged adversarial argument, that there is on the face of the award an error of law". In my opinion there was, for the reasons which I have already given, a manifest error on the face of the award, in this sense, in each of the respects raised by the grounds of appeal. Indeed, I am satisfied of this on more than merely a preliminary basis. I am also satisfied that, having regard for the reasonably large (to a small proprietary company) sums of money involved, the determination of the questions raised could substantially affect the rights of one or more of the parties. That being so, it follows that leave to appeal should be given.