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 15 February 2007 the Beth Din then summoned the Rabbi and the Congregation to attend before it, with a view to the Beth Din determining the dispute. In the letter the Beth Din stated that pending resolution of the dispute it considered that Rabbi Engel continued to be the rabbi to the Congregation.
The Congregation refused to participate in an arbitration before the Beth Din. The Congregation claimed that any matters in dispute between the Rabbi and the Congregation could not bear on the issue of whether the contract and the appointment as rabbi had come to an end.
Rabbi Engel refused to accept that his appointment as rabbi was at an end. He continued to occupy the property that the Congregation had provided for him.
On 14 February 2007 the Congregation issued a summons under Part XVII of the Real Property Act 1886 (SA), claiming an order for possession of the property.
On 21 February 2007 Rabbi Engel applied for a stay of the proceedings.
The matter came before a Judge. Affidavits were filed on each side. On 6 March 2007 the Judge declared that the contract had expired and ordered Rabbi Engel to give up possession of the property to the Congregation. The Judge refused the application for an order staying the proceedings while the Beth Din dealt with the matters (if any) validly referred to it for arbitration. She said that the application made by the Congregation to the Court, which turned on the question of whether the contract and the appointment as rabbi had expired, was not in respect of any matter agreed to be referred to arbitration: Adelaide Hebrew Congregation Inc v Engel [2007] SADC 23 at [25] and at [42]-[43]. The Judge noted that Rabbi Engel was at liberty to continue his proceedings before the Beth Din.
Rabbi Engel is no longer acting as rabbi of the Congregation. He no longer occupies the property. He has appealed against the Judge’s decision.
Before the Judge, Mr O’Brien, counsel for the Rabbi, advanced various arguments in opposition to the orders sought by the Congregation. On appeal he argued only one ground, which is that the Judge should have stayed the proceedings.
Mr O’Brien argues that each of cl 1 and cl 11 of the contract is an arbitration agreement; that Rabbi Engel has referred a dispute or disputes to the Beth Din under these clauses, and that the proceedings by the Congregation for a declaration that the contract is at an end, and for possession of the property, are proceedings in respect of the matters referred to arbitration by the Beth Din, and so should be stayed.
The latter point is the heart of the matter argued. Mr O’Brien does not argue that, on their face, cl 1 or cl 11 provide for a referral to arbitration of the issue of whether the contract is at an end, whether the appointment as rabbi is at an end, or whether the right to occupy the property has expired.
He argues that because the clause provides for certain disputes to be referred to the Beth Din, the clauses are intended to incorporate provisions of Jewish law that would be applied by the Beth Din in deciding the matters referred to arbitration. Alternatively, he appears to argue that cl 1 and cl 11 are governed (the meaning of this term remains unclear) by Jewish law. Either way he submits that unless and until the District Court heard evidence of Jewish law that the Beth Din would apply, the Judge could not dispose of the case as she did. She could not dispose of the case unless she was in a position to find that Jewish law did not provide, in all the circumstances, that Rabbi Engel continued to be rabbi of the Congregation, and was entitled to remain in occupation of the property, at least until the Beth Din had completed the arbitration of the matters referred to it by making an award.
Mr O’Brien acknowledges that there was no evidence before the District Court from a qualified expert to the effect that Jewish law provided as he suggested it might.
Mr O’Brien did not ask the District Court Judge for an adjournment to enable him to file an affidavit from an expert in Jewish law. His submission is that if Rabbi Engel’s reference of a dispute to arbitration by the Beth Din has the consequence that the incorporated Jewish law must be applied to the dispute, it follows that the Judge could not decide in favour of the Congregation because the Judge could not make a finding on a material matter, the effect of the incorporated Jewish law, until the Judge had expert evidence before her.
Mr O’Brien also seems to acknowledge that as things stand he cannot explain how Jewish law might be to the effect that he postulated, (that is, that Jewish law might require the Congregation to continue to treat Rabbi Engel as its rabbi, and to treat the contract as remaining on foot) bearing in mind (as will appear) that neither cl 1 nor cl 11 appear to deal with the issue dealt with by the District Court Judge, namely, whether the contract appointing Rabbi Engel as rabbi had expired, and whether the entitlement to occupy the property had expired with the expiry of the appointment.
Mr Roder for the Congregation put a short and simple submission. It is that the contract has expired. Rabbi Engel is no longer the Congregation’s rabbi. The right of occupation of the property has expired with the expiry of the appointment. There is no evidence that Jewish law, even if incorporated by cl 1 and cl 11, might have the effect suggested by Mr O’Brien. It is difficult to see how Jewish law on matters relevant to cl 1 or cl 11 could affect the expiry of the contract. In any event, an Australian court would not specifically enforce an entitlement to act as rabbi, and so would not require the Congregation to give Rabbi Engel possession of the property. The Rabbi is at liberty to pursue any damages claim that he might have, but, on Mr Roder’s submission, there is no answer to the claim that the contract is at an end and that the entitlement to possession of the property is also at an end. There is no point in staying the action, and no basis for doing so, because the expiry of the contract, and the termination of the right to occupy the property, cannot be affected by the outcome of any arbitration by the Beth Din.
The contract
As I have mentioned, the contract is in the form of a letter addressed to Rabbi Engel. It offers him the position of rabbi of the Congregation, and sets out “Terms of Appointment as Rabbi”. Clause 1 is as follows:
1.RELIGIOUS MATTERS: You are appointed as Rabbi of the Congregation and, in this capacity, will be its Spiritual Leader and its Rabbinic Authority. Your rulings on matters of religious law and practice shall be binding. You reserve the right to decide whether an issue is related to Jewish law and practice. In the event of an unsolvable dispute as to the relevance of religious law to an issue, the advice of the Sydney Beth-Din will be sought. If they find the issue to be relevant to Jewish law and practice, your religious decision on the matter will be followed. Your job description is per the attached schedule. In accordance with Rule 4 of the Constitution,
“The form of worship and religious observance shall be in accordance with the form of worship already established and in accordance with the practice of Orthodox Synagogues within Australia.”
In matters of Congregational policy which do not have a bearing on religious law and practice, it is agreed that you will comply with the directions of the Board of Management.
Subsequent clauses deal with salary, the provision of a telephone at no cost, the provision of housing at no cost, the provision of a motor vehicle, with superannuation and with holidays. Clauses 8 and 9 provide as follows:
8.CONTRACT PERIOD:
8.1     The contract period is to commence from the date of your written acceptance of this offer and shall continue until 30 December 2006.
8.2     The Board shall give Rabbi Engel 3 months notice prior to the end of the contract period should the Board intend not to renew the contract.
9.NOTICE PERIOD BY RABBI ENGEL:     You will have the right to terminate this contract at any time during the contract period by giving three months prior notice to the Board of your intention to terminate the contract.
Clause 10 deals with relocation expenses on termination of the appointment. Clause 11 provides as follows:
11.PERFORMANCE REVIEW:     The Board wants to have open lines of communication with you and to ensure you receive regular feedback from it on your performance. The Board also wants regular feedback from you to ensure that any problems are resolved at the earliest possible time.
11.1   If a member has a problem with the performance of the Rabbi he’s advised to personally take this issue up with the Rabbi privately.
11.2   If the problem persists, it should be brought to the attention of the President of the Board of Management of the Adelaide Hebrew Congregation, who may then choose to approach Rabbi Engel in private on the matter.
11.3   If the issue cannot be resolved between the Rabbi and the Board of Management, the issue should be brought to the attention of the Sydney Beth-Din for their advice and input.
11.4   In the case that they can’t bring the parties together, the Sydney Beth-Din should be consulted for arbitration, and their decision on the matter shall be binding on Rabbi Engel and the Board of Management of the Adelaide Hebrew Congregation.
All of the above should be done behind closed doors and not be brought to the   attention of the general membership of the Adelaide Hebrew Congregation.
Clause 12 deals with attendance at meetings of the Board of Management of the Congregation:
12.    BOARD MEETINGS:     At the request of the Board of Management and at the Board’s discretion, you will be expected to attend Board meetings to present a report covering the previous month’s activities and plans for the next month(s).
The Board Meeting Agenda will be structured so that you can attend the early part of meetings and participate in those areas of activities which may have religious law implications.
The references to the Beth Din
The first reference is dated 6 November 2006. It recites some of the history of the matter, and matters on which it is asserted the Rabbi and the Congregation are in dispute. It sets out contentions advanced by Rabbi Engel as to the proper construction of the contract. It claims that the Congregation, in breach of cl 11, has failed to deal with complaints about his performance as required by cl 11. It asserts that the contract is “performance based” and “with review and dispute resolution provisions” that must be followed. It is not clear just what matters are referred to the Beth Din for arbitration. Clause 11.14 of the notice states:
11.14On the basis of the matters raised above, Rabbi Engel’s case put succinctly is that in the absence of sustainable allegations of misconduct or proof of substantial breaches by Rabbi Engel of the Contract, he has security of tenure and is entitled to treat the Contract as a continuing Contract.
It may be that what is referred to arbitration is the contention that there are no sustainable allegations of misconduct and no proof of substantial breaches, and that accordingly, on the proper construction of the contract, Rabbi Engel continues to be the rabbi. By this notice Rabbi Engel seeks orders from the Beth Din that he be continued in his position, that his wages continue and that he remain in occupation of the property in question.
The second notice is dated 19 December 2006. It sets out what has happened since the first notice. It claims urgent interim orders protecting the rabbi’s position. In part this was because by a letter of 18 December 2006 the President of the Congregation purported to terminate Rabbi Engel’s position forthwith, because of a refusal to meet with the Executive of the Congregation, because of an unauthorised departure on holidays, and because of his management of a school referred to in the letter. In the second notice Rabbi Engel sought orders overturning or reversing this purported termination of the contract.
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.
This is another way of putting Mr Roder’s submission that the subject matter of the proceedings, the expiry of the contract, and with it the expiry of the appointment as rabbi and of the right to possession of a property, is not “in respect of a matter agreed [by cl 11] to be referred to arbitration”, and so does not fall within the power to stay proceedings conferred by s 53 of the Act. The power under s 53 arises when:
(1)(a)A party to an arbitration agreement commences proceedings in a court against another party to the agreement in respect of a matter agreed to be referred to arbitration.
The only answer that Mr O’Brien offers to this apparently sound submission is to rely on the incorporation of Jewish law, by cl 11 of the contract, as the law to govern or regulate the arbitration of a dispute as to the rabbi’s performance.
I accept Mr O’Brien’s submission that the parties to a contract governed generally by Australian law, or of which Australian law is the proper law, can agree to incorporate provisions of another system of law as provisions of the contract. In Halpern & Ors v Halpern & Anor [2007] EWCA Civ 291 the Court of Appeal of England so decided following its earlier decision in Shamil Bank of Bahrain EC v Beximco Pharmaceuticals [2004] 1 WLR 1784. However, as Waller LJ pointed out in Halpern at [33] there must be certainty about what is being incorporated. He made a further point at [35] that is relevant to the present case. He said:
[35]This solution under which matters of interpretation can be assisted by rules or a law different from the applicable law of the contract, but matters affecting the contract as a whole must be dealt with by the applicable law is, as it seems to me, consistent with the Convention. It must be the solution applied in situations in which different laws can be applied to different parts of the contract, as envisaged by the Convention. If the applicable law of the contract is A but law B is expressed to cover some aspect of the contract, there has to be only one law which can cover matters such as mistake, repudiation of the whole contract etc and that must be the applicable law of the contract as a whole. The different law can only apply to that part of the contract, so as to affect the interpretation of that part of the contract.
I will return to this point in a moment. But the effect of what Waller LJ said is that the incorporated law can apply only to, and operate only as part of, that part of the contract into which it is incorporated.

I am also prepared to accept that cl 11 of the contract indicates an intention shared by the parties that if a dispute is referred to the Beth Din under cl 11, that dispute will be resolved by the Beth Din applying Jewish law. I am prepared to assume that that is the law that the Beth Din applies.
But accepting the submission as to incorporation, and making the assumption that the Beth Din would apply Jewish law, two difficulties remain.
How can the reference to the Beth Din of a dispute over Rabbi Engel’s performance as rabbi affect the question of when the contract, and so his appointment and entitlement to possession of the property, expire? The incorporated provisions of Jewish law must be provisions relating to the performance of a rabbi, or to disputes over performance as a rabbi. And, if it is said that the incorporated Jewish law can somehow affect the expiry of the contract, or lead to the result that Rabbi Engel remains rabbi despite the expiry of the contract, where is the evidence that will support an argument to that effect?
I consider that, to obtain a stay, it was incumbent on Rabbi Engel to establish that the provisions of Jewish law incorporated by cl 11 might result in the Beth Din, applying that law, deciding and awarding that Rabbi Engel remained the rabbi of the Congregation, and continued to be entitled to occupy the property, despite the apparent termination of the contract by the passage of time. This was not established before the Judge. No explanation was offered as to how Jewish law relating to a rabbi’s performance might prevent the contract from expiring, or how it might provide that, in some way, he remained the rabbi after termination of the contract in accordance with its terms. If anything, the provisions of cl 8.2 of the contract would suggest otherwise.
I do not accept Mr O’Brien’s submission that it was sufficient for him to show that cl 11 incorporated provisions of Jewish law, and that there was no need to identify at all what those provisions were and how they might bring about the result that Rabbi Engel remained the rabbi of the Congregation. The failure to do that means that the basis for a stay was not made out. The basis for a stay was not made out because it was not shown that the incorporation of Jewish law produced the result that the matter referred to arbitration, Rabbi Engel’s performance, included the matter of whether the contract and appointment had in fact terminated, and so leading to the conclusion that the proceedings in the District Court were in respect of a matter agreed to be referred to arbitration.
I remain doubtful whether Jewish law incorporated by cl 11 of the contract could contradict the apparent effect of cl 8 of the contract. There is some difficulty in treating cl 11 as incorporating, as it were, the whole body of Jewish law, enabling the Beth Din to resolve a dispute as to Rabbi Engel’s performance by applying any available principle of Jewish law that might entitle the Beth Din to order the Congregation to restore the rabbi to his position as rabbi and to restore possession of the property to him. But it is not necessary to resolve this point because the case for a stay fails at an earlier point.
In so reasoning I have not overlooked the fact that by letter dated 15 February 2007 the Registrar of the Beth Din informed the Congregation that pending resolution of the matter before it the Beth Din considered Rabbi Engel “the sole legitimate Minister of the Adelaide Hebrew congregation”. By the same letter it threatened the Congregation with the issue of a Siruv (or contempt order) should it fail to submit to the jurisdiction of the Beth Din. But that statement in the letter is not sufficient to establish that Jewish law is to the effect suggested by Mr O’Brien, and that the incorporated provisions of Jewish law can override cl 8 of the contract.
For those reasons the District Court Judge was correct to refuse to stay the proceedings. They were not in respect of a matter agreed to be referred to arbitration as required by s 53(1)(a) of the Act, if a stay were to be granted. The contract of appointment expired on 30 December 2006. Mr O’Brien does not now persist with arguments put to the District Court Judge to the effect that the Congregation is not entitled to the relief sought, even if the stay application is refused. Accordingly, as the Judge was correct to refuse the application for a stay, the appeal against the declaration and order must be dismissed.
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.