Engel v The Adelaide Hebrew Congregation Incorporated - [2007] SASC 234

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
ENGEL v THE ADELAIDE HEBREW CONGREGATION INCORPORATED
[2007] SASC 234
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Bleby and The Honourable Justice Vanstone)
26 June 2007
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - OTHER MATTERS
Appeal - contract - arbitration agreement - whether District Court Judge should have granted defendant stay of proceedings - whether plaintiff's action was in respect of a matter parties agreed to refer to arbitration - whether relevant clauses of contract incorporated Jewish law - on construction of the contract, plaintiff's action not in respect of a matter parties agreed to refer to arbitration - Judge correct to refuse to stay proceedings.
Held: appeal dismissed.
Commercial Arbitration and Industrial Referral Agreements Act 1986 (SA) s 53; Real Property Act 1886 (SA) Part XVII, referred to.
Adelaide Hebrew Congregation Inc v Engel [2007] SADC 23, discussed.
Halpern & Ors v Halpern & Anor [2007] EWCA Civ 291; Shamil Bank of Bahrain EC v Beximco Pharmaceuticals [2004] 1 WLR 1784, considered.

ENGEL v THE ADELAIDE HEBREW CONGREGATION INCORPORATED
[2007] SASC 234
Full Court: Doyle CJ, Bleby and Vanstone JJ

DOYLE CJ: This appeal raises the issue of whether the District Court should have stayed an action before it, rather than proceed to enter judgment for the plaintiff as it did, on the ground that the plaintiff’s action was in respect of a matter that the parties had agreed to refer to arbitration.
The action
In April 2005 Rabbi Engel accepted an offer by letter from the Adelaide Hebrew Congregation Incorporated (“the Congregation”) to appoint him as its rabbi. He had already been rabbi for about seven years. The letter sets out terms of appointment. They include the provision of accommodation at no cost to Rabbi Engel.
The contract (in the form of a letter) states that it is to continue until 30 December 2006: cl 8.1. It requires the Board of the Congregation to give Rabbi Engel three months’ notice “prior to the end of the contract period should the Board intend not to renew the contract”: cl 8.2.
The Board gave notice that it did not intend to renew the contract by letter dated 25 June 2006.
Rabbi Engel did not accept that the Congregation was entitled to bring his appointment as rabbi to an end. Relying on cl 1 and cl 11 of the contract as an arbitration agreement for the purposes of the Commercial Arbitration and Industrial Referral Agreements Act 1986 (SA) (“the Act”), he gave notice of dispute to the Sydney Beth Din, described in an affidavit as a Jewish Ecclesiastical Court. He gave three separate notices of dispute. They are dated 6 November 2006, 19 December 2006 and 31 December 2006.
The Beth Din appears to have arranged a mediation, but that was unsuccessful. It is not clear when that occurred, but it appears to have been early in 2007. By letter dated…

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: [2007] SASC 234
Decision Date: 26 June 2007

CaseChat Overview and Summary

The case of Engel v The Adelaide Hebrew Congregation Incorporated involved an appeal against a decision of the District Court of South Australia. The dispute centred around the interpretation of an employment contract between the plaintiff, Rabbi Engel, and the defendant, the Adelaide Hebrew Congregation Incorporated. Rabbi Engel, the congregation's rabbi, sought to enforce his employment contract, which had expired, and to challenge the termination of his role by the congregation. The congregation argued that the dispute should be referred to arbitration as per the terms of the contract.

The central legal issue before the court was whether the District Court judge was correct in refusing to grant a stay of proceedings to allow the dispute to be referred to arbitration. The court had to determine whether the plaintiff's action fell within the scope of the arbitration agreement in the contract. The appeal also considered whether Jewish law had been incorporated into the contract, potentially making it the proper law of the contract, and whether such an order could be enforced by the court.

The court found that the contract contained arbitration clauses but that the plaintiff's action did not pertain to a matter agreed to be referred to arbitration. Specifically, the plaintiff's action did not relate to disputes over religious law and practice, which were the only matters explicitly covered by the arbitration agreement. The court also noted that even if Jewish law applied, an order under that law reinstating Rabbi Engel as rabbi could not be enforced by the court. The court held that the District Court judge was correct in refusing to stay the proceedings. Consequently, the appeal was dismissed.

The court's decision underscored the importance of the specific terms of an arbitration agreement and the necessity for the dispute to fall within those terms for arbitration to be mandated. Furthermore, it highlighted the limitations of the court's ability to enforce orders based on religious law.

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

I add that I agree with Mr Roder’s further submission that even if Rabbi Engel has a remedy under Jewish law, which would result in an order under that law that he be restored as rabbi and given possession of the property, this Court would not enforce such an order by injunction or by order for a specific performance. An order requiring the Congregation to reinstate Rabbi Engel as its rabbi is not an order of a kind that could be enforced by an order for specific performance. That is a reason why, in the exercise of its power under s 53, it was open to the District Court Judge to conclude that in any event the proceedings should not be stayed, as the purpose of the stay was to maintain Rabbi Engel in office as the rabbi of the Congregation, in the hope that the final award of the Beth Din would be an award requiring him to be maintained in that position. But that, as I have said, is an order that could not be enforced by the Court.Conclusion For those reasons, I would dismiss the appeal. BLEBY J: I agree that the appeal should be dismissed for the reasons given by the Chief Justice. VANSTONE J: I agree.

Ratio Decidendi

Legal Principle Established

The third notice of dispute is dated 31 December 2006. It also focuses on the purported termination by letter of 18 December 2006, and seems to add nothing to the earlier notices.Consideration of submissions In argument before us Mr O’Brien did not base any submissions on the letter of 18 December. On both sides that letter seems to have dropped out of sight. The Court raised the matter with Mr O’Brien in the course of submissions, but, as I have said, he did not base any particular argument on it. The parties appear to treat this letter as having been rendered irrelevant by the expiry of the contract, and accordingly I proceed on that basis. Before the District Court Judge a good deal of the argument seems to have been directed to the question of whether the proper law of the contract was Jewish law. The Judge rejected that submission. I am inclined to agree with the Judge, but it is not necessary to decide that point. On appeal Mr O’Brien’s submission was, as I have already noted, that cl 1 and cl 11 incorporated provisions of Jewish law, and he relied on the incorporated Jewish law. Accordingly, it is not necessary to consider any further the submission that Jewish law is the proper law of the contract. I agree that cl 1 and cl 11 of the contract each contain an agreement to refer future disputes to arbitration, and so are arbitration agreements for the purposes of the Act. Clause 1, read in context, is limited to matters of religious law and practice. I realise that this expression should not be read narrowly. But cl 1 reflects a clear distinction between religious matters relevant to the life of the congregation, and other matters. There is no suggestion in the present case that there is a dispute between the Congregation and the rabbi as to matters falling under cl 1. The notices of dispute do not refer to any such dispute. They do not invoke cl 1. It can be put to one side. Clause 11 provides for arbitration by the Beth Din of an issue between the Congregation and the rabbi if there is a dispute as to Rabbi Engel’s performance. The relevant issue must be one as to the rabbi’s “performance”. It will support a reference to arbitration of a matter only if the matter falls within cl 11. It may be that the Congregation is dissatisfied with Rabbi Engel’s performance. That would explain its decision not to renew the contract, and its decision to bring the District Court proceedings. I accept that it may be that there is a dispute between the Congregation and Rabbi Engel as to his “performance” that can be referred to arbitration by the Beth Din under cl 11. If that is so, the arbitration can take place, and the Beth Din can make an award. However, at least on the face of things, that would be an award as to the “performance” of Rabbi Engel, and presumably the award would determine whether or not complaints about his “performance” were soundly made. But even if an award is made by the Beth Din in Rabbi Engel’s favour, the issue remains of how a reference of a dispute over Rabbi Engel’s performance, and an award in respect of that dispute, can affect the fact that the contract, and the appointment as rabbi, appear to have expired on 30 December 2006. On the face of things the reference to arbitration of a dispute over Rabbi Engel’s performance appears incapable of affecting or preventing the expiry of the contract.