Esso Australia Resources Ltd & Ors v The Honourable Sidney James Plowman (Minister for Energy and Minerals)

[1994] HCATrans 231

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No Mll9 of 1993

B e t w e e n -

ESSO AUSTRALIA RESOURCES LTD,
BHP PETROLEUM (NORTH WEST
SHELF) PTY LTD and BHP

PETROLEUM (BASS STRAIT) PTY LTD

Appellants

and

THE HONOURABLE SIDNEY JAMES
PLOWMAN (THE MINISTER FOR
ENERGY AND MINERALS), GAS

AND FUEL CORPORATION OF

VICTORIA and GENERATION

VICTORIA (formerly State

Electricity Commission of

Victoria

Respondents

MASON CJ

Esso(2) 81 9/3/94

BRENNAN J
DAWSON J
TOOHEY J

McHUGH J

TRANSCRIPT OF.PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 9 MARCH 1994, AT 10.27 AM

(Continued from 8/3/94)

Copyright in the High Court of Australia

MASON CJ:	Ye~, Mr Myers.
MR MYERS:	Thank you, Your Honour.  Your Honour

Mr Justice Brennan asked me a question yesterday

morning concerning the application of legislation

regulating arbitrations to both agreements. The

answer is to be found, I believe, in section 3(2)

of the 1984 Act, which provides that that Act

applies to an arbitration agreement, whether made

before or after the commencement of the Act, and to

an arbitration under such an agreement and a

reference in an arbitration agreement to the Arbitration Act 1958 is to be construed as a reference to the 1984 Act.

Your Honour the Chief Justice asked me the question whether one was relying upon implication

or an express term. There is one reference which I

should like to provide to the Court. It is to

volume 9 of Halsbury's Fourth Edition,

paragraph 351 at page 224, where it said:

In addition to the terms which the

parties have expressly adopted, there may be

other terms imported into the contract, these

latter being generally known as "implied

terms" ..... Theoretically, a distinction may be

drawn according to whether or not the

"implied" term can be logically implied from

the language of the contract.

As a general rule, the courts will

enforce not only the terms expressly agreed
between the parties, but also those which are

to be logically implied from those express

terms. The question of whether a term is to

be logically implied from the express terms of

the agreement is a matter of construing the

intention of the parties -

And it is really that case that we are putting as
the foundation of our contract case.	The term

"logically implied" appears to come from an article

by Professor Glanville Williams, which is referred

to in footnote 4 and Your Honours have that

reference on the second page.

MASON CJ:  I thought that the thrust of your case was based

on a term implied by law.

MR MYERS:  The starting point as to whether the agreement is

an agreement for a private arbitration is in the

end a question of construction of the contract.

What have the parties agreed to? They have agreed

to their dispute being determined by this person

and nothing else.

Esso(2) 82 9/3/94

MASON CJ:  So it all depends on the construction of the

particular contract.

MR MYERS: That is the starting point. Then, as we put it,

Your Honour, one moves to what might be described

as an implied term regarding information and

documents supplied in the course of the contract

which protects the inherent nature of the contract.

That is aptly described as implied according to

law.

MASON CJ:  So it is a two-stage process. One, you are

concerned to make any implication from the language
of the particular contract, whether you use the
word "logically" or not; then, in relation to that

class of contracts where you come to the conclusion

that as a matter of implication of a term, it is a

private arbitration. Then you take another step

and imply another term as a matter of law.

MR MYERS:	Yes, Your Honour.
McHUGH J:	Mr Myers, what about excluding the public. Most

arpitrations are held on private premises, but

supposing, for example, a courtroom in the

supreme court was utilized. Would the arbitrator

have any power to exclude members of the public

from attending?

MR MYERS:  He would have an obligation to ensure that

strangers did not attend. Whether he could fulfil

that obligation might depend where he had chosen to

hold the arbitration. If he had chosen to hold it

in the city square he could not fulfil his

obligation so he could be prevented from holding it

in the city square or in the supreme court, a place

where the public are permitted access.

McHUGH J:  I am sorry to pursue the point, but what about

the point that was made yesterday about witnesses.

Supposing the witnesses were called to give

evidence, it might be in relation to a claim on an

insurance policy in respect of a burglary, can that

witness be prevented, in any way, from saying what

he saw or heard in the course of that arbitration?

MR MYERS:  From the mere description of the facts that

Your Honour has given me, no, unless there was some

other relationship out of which an obligation to

silence that witness - a power to require that

witness to be silent, no, as a mere witness.

McHUGH J: So, it is not the proceedings themselves that are

confidential?

MR MYERS:  The contract affects only the parties to it

unless, for example, one of the parties has

Esso(2) 83 9/3/94

contracted with the ~itness on the basis that he

will not disclose any matter that he might be

required to reveal in the course of the

arbitration.	Indeed, very often, that would be the
case - - -

McHUGH J:	Well, it is an obligation
MR MYERS:	- - - because the witness would be a professional witness, and he would be under obligations of
confidentiality by virtue of his contract.
MCHUGH J:	Yes, that is right.
MR MYERS:	Your Honours, Mr Finkelstein referred to

section 14 of the Commercial Arbitration Act in the

course of his submissions as founding a submission

that it would empower the arbitrator to decide who

could stay and what could be done with information

or documents handed over in the arbitration.	We
say to the contrary. Section 14 could not

authorize an arbitrator, for example, to decide to

allow in the press, which was one example that

Mr Finkelstein gave. Granted that the arbitrator

can determine the procedure, but he can only

determine the procedure within the framework of the

private arbitration. His only function is to

decide the dispute between the two parties.	He
does not have a function of facilitating the

dissemination of information to interested persons

or, indeed, to the public generally.

So he could not allow in the press, for

example, relying upon section 14, nor would

section 14 enable the arbitrator to say what may or

may not be done or able to be done with information

and documents supplied in the course of the

arbitration. It simply does not bear upon that.

Indeed, the reason why Mr Finkelstein signed the

statement of claim in this action is that the power

of the arbitrator to deal with questions of

confidentiality and so on would be extremely

limited. That is a matter that does not come

within his province.

Related to this, my friend referred to three old English cases: Haigh, Copp and Laycock. None

of this is inconsistent with the case that we are

putting. Each of them is a case dealing with

really who is a stranger or not, for example, in

Haigh, whether the shorthand writers were

strangers, presence necessary or expedient for

determining the arbitration. In Copp was an expert

on farming practices, and so on.

My friend, Mr Finkelstein, and also other friends who addressed Your Honours yesterday said

Esso(2) 84 9/3/94

that we are seeking to invoke a new category of

implied term. On the contrary, we say that

Mr Justice Leggatt was correct when he said that

the principles that we assert are graven on the

hearts of commercial lawyers, and

Mr Justice Colman, in a passage to which I did not

expressly direct Your Honours yesterday in Hassneh

v Mew, which is case number 4 on the list, on

page 246 column Bat point 9 said:

If the parties to an English law contract

refer their disputes to arbitration they are

entitled to assume at the least that the

hearing will be conducted in private. That

assumption arises from a practice which has

been universal in London for hundreds of years

and, I believe, undisputed.

And His Honour goes on.

Mr Shaw referred to some of the evidence as to the position of practice in Victoria. May I simply

direct Your Honours' attention to several other

affidavits which deal with this matter.

Mr Hunter's affidavit which is at page 224, dealing

with the New South Wales position, expresses the

practice in the terms for which we contend.

Mr Castan, an experienced arbitrator in Victoria,

does likewise in relation to Victoria in an

affidavit commencing at page 230. Mr Boyd, who is

one of the joint authors of Mustill & Boyd, at

page 235 deals with the position in England and in

international practice to which he can refer and

Mr Bond, commencing at page 273, deals with the

position in international arbitrations and he

speaks as the former Secretary-General of the

International Court of Arbitration of the

International Chamber of Commerce and that he has

that appears from page 275. Each of those

affidavits refers to practices and assumptions of

parties which are wholly consistent with the

position which the appellants argue for. My learned friend, Mr Finkelstein, referred to

a series of statutory provisions in the

Commercial Arbitration Act as perhaps supporting

the contention that he was putting. One of those

provisions was section 26, which enables

arbitrations in Victoria to be consolidated. I

simply wish to draw Your Honour's attention to the fact that that provision was enacted last year and

came into force on 1 July last year, and the need

for it, to the contrary of what Mr Finkelstein asserted, supports the appellants' contentions.

Your Honours, Mr Finkelstein referred in

particular to three United States cases: Gossard,

Esso(2) 85 9/3/94

Panhandle and Giacobazzi. Each of those cases is

referred to, for ease of reference, at page 270 of

the appeal book in paragraph 32 of an affidavit of

Julian David Lew.

Each of the cases, as it appears from that

reference, concerned whether documents produced in

an arbitration could be subject to discovery in

court proceedings. On the contrary, to what was
put by our friend, they do not support his case. Indeed, they proceed, properly understood, on an assumption of confidentiality in relation to the

documents produced in the arbitration and the

question is whether the court procedures for
discovery apply notwithstanding so as to overcome
the protection that they would naturally have in

the arbitration.

In the course of addressing Your Honours

yesterday I referred to the two notices of

contention and the pleadings concerning whether an

arbitration is private, and I omitted to complete

my reference there. The position with the

plaintiff Minister is this, that the plaintiff

Minister denied, at page 44 of the appeal book, the plea on behalf of the producers that the

arbitration was private. Paragraphs 13 and 14 is a

denial of the allegations in paragraphs 69 and 70;

they are found in the appeal book at page 36 and

they include the allegations that the arbitration

was private, and I can inform Your Honours that

both at first instance and in the appellate
division of the Supreme Court of Victoria,

Mr Finkelstein, on behalf of the Minister,

contended and argued that the arbitration was not

private in the sense that strangers are excluded,

just as he did before Your Honours yesterday.

TOOHEY J:  But are you suggesting, Mr Myers, that he was

precluded from doing so?

MR MYERS:  No, I am not suggesting that at all, Your Honour.

I simply omitted to complete some references to the

way in which the issue arose and is before

Your Honours and His Honour the Chief Justice put

it to me at one point, I think, "Well it was never

a real issue"; I think that is not so, because on

the Minister's pleading it was always an issue and

it was so argued below.

The last matter is this:  my friend

Dr Buchanan yesterday referred to clause 19.5

information. May I ask Your Honours to go again to

the appeal book at page 367, which sets out the

orders that His Honour Mr Justice Marks made.

Section 6A deals with the Gas and Fuel Corporation, information under clause 12.8, and section 60 deals

Esso(2) 86 9/3/94

with 19.S(b) information. Both those declarations

were set aside and they were set aside for this

reason, that the producers said that any dispute

about whether information has been provided under

the contract is a matter for the arbitrators and it

should be stayed - the proceedings so far as they

relate to those should be stayed, and the fact is that the Full Court set aside those declarations.

There is no evidence before Your Honours concerning

whether clause 19.S or clause 12.8 information has

been provided and if it is to be an issue, then it

is a matter for the arbitrators.	May it please,
Your Honour.

MASON CJ:  Mr Myers, there is one question I wanted to ask

you:  when you look at the declarations that you

seek at pages 469 to 470, the only qualification to

the obligation not to disclose is the qualification

expressed in the words "unless disclosure is

authorized by statute".

MR MYERS:	Yes, Your Honour.
MASON CJ:	What do you say to the suggested qualification that was enunciated by Mr Justice Colman in Hassneh
at page 249? At page 248 he refers to the
judgments of the Court of Appeal in Tournier; the
bank obligation not to disclose arising from the
bank and customer relationship and to the
qualifications expressed by Lord Justice Scrutton and Lord Justice Atkin in that case. And then at
page 249 he went on to say in the first column:

In my judgment a similar qualification

must be implied as a matter of business

efficacy in the duty of confidence arising

under an agreement to arbitrate. If it is

reasonably necessary for the establishment or

protection of an arbitrating party's legal

rights vis-a-vis a third party, in the sense

which I have described, that the award should

be disclosed to that third party in order to

found a defence or as the basis for a cause of

action, so to disclose it would not be a

breach of the duty of confidence.

Then it goes on again at 249:

if it is reasonably necessary for the

protection of an arbitrating party's rights

vis-a-vis a third party that the award should

be disclosed to that third party, so to

disclose it, including its reasons, would not

be a breach - - -

MR MYERS:  We say that the exception that we have expressed,

unless disclosure is authorized by statute, is

Esso(2) 87 9/3/94

sufficient because disclosure for the processes of

court proceedings would be such a disclosure. It

is not necessary to have the expression of the

exception as widely expressed as His Lordship does

in that passage that Your Honour has read to me.

In other words, if they need to go to court, then

it falls within our exception. If they do not need

to go to court, then they are not entitled to - - -

MASON CJ:  Can I ask you another question about that. qualification enunciated by Mr Justice Colman at The

page 249 is expressed in terms of the legal rights

of the arbitrating party. If you look at the

passage from the judgment of Lord Justice Atkin in

Tournier, it does not seem to me that the

qualification expressed in relation to the bank is

necessarily so limited because there

Lord Justice Atkin is talking about the need to

protect the interests of the bank.

MR MYERS:  I agree with that, Your Honour. What is said in

Tournier's case is broader than what His Lordship

says in Hassneh v Mew. I accept what Your Honour

is putting to me.

MASON CJ: Is there any further discussion in the cases of

the qualification in the banker-customer

relationship that would throw light on the accuracy

of Lord Justice Atkin's formulation?

MR MYERS:  I believe not, Your Honour. It is a matter that

we have looked at. Again, putting it bluntly, it

is rather murky because of the breadth of the

language that Lord Justice Atkin uses.	May it
please the Court.

MASON CJ:  Thank you. The Court will consider its decision

in this case.

AT 10.50 AM THE MATTER WAS ADJOURNED SINE DIE
Esso(2)	9/3/94