JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	28 March 2023
DATE OF JUDGMENT:	12 May 2023
CASE MAY BE CITED AS:	Factory X Pty Ltd v Gorman Services Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 247

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ARBITRATION — Recourse against award — Procedure — Appeals and leave to appeal — Leave to appeal from decision of arbitrator — Question or error of law — Melbourne Harbour Trust Commissioners v Hancock (1927) 39 CLR 570; Thoroughvision Pty Ltd v Sky Channel Pty Limited [2010] VSC 139; HMV UK v Propinvest Friar Limited Partnership [2011] EWCA Civ 1708; ASC AWD Shipbuilder Pty Ltd v Ottoway Engineering Pty Ltd [2017] SASCFC 150; Inghams Enterprises Pty Ltd v Southern Cross Farms Australia Pty Ltd [2022] SASCA 7 — Commercial Arbitration Act2011 (Vic) s 34A.

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APPEARANCES:	COUNSEL	SOLICITORS
For the Applicant	Mr PW Collinson KC and Mr AJ Weinstock	Thomson Geer
For the Respondent	Mr N De Young KC and Mr AL Ounapuu	King & Collins

HIS HONOUR:

Introduction

The applicant (Factory X Pty Ltd) seeks leave to appeal questions of law arising out of an award of Mr Justin Gleeson SC (‘Arbitrator’) dated 9 September 2022 (‘Award’) pursuant to s 34A of the Commercial Arbitration Act2011 (Vic) (‘the Act’). The questions arise from the Arbitrator’s determination of what is described as the ‘Third Dispute’ and the ‘Fourth Dispute’ between the parties were originally the subject of these proceedings but at the hearing of the matter the ‘Fourth Dispute’ issues were not pursued.

The applicant filed an Originating Application for Leave to Appeal Against Award dated 9 November 2022 which seeks:

(1)leave under s 34A of the Act to appeal on the questions of law arising out of the Award as set out in the Originating Application; and
(2)if such leave is granted, orders that the appeal be allowed and the Award be varied as follows (now as to paragraph 240 only as issues with respect to the ‘Fourth Dispute’ are no longer pursued):
240.I conclude that the submissions of the Company ~~Gorman Services~~ are to be preferred on the Third Dispute. The consideration to be paid for the shares the subject of each of the ~~Second, Third and Fourth~~ Put Options is to be the market value determined separately in respect of those ~~the~~ shares, so that there be four, separate valuations.
241.I conclude that the submissions of the Company ~~Gorman Services~~ are to be preferred on the Fourth Dispute. The date as at which the market value of the shares the subject of each put Option is to be determined is the date on which the valuation is carried out ~~Gorman Services gave six months written notice to the Company of the exercise of…~~

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.

Continue reading Factory X Pty Ltd v Gorman Services Pty Ltd

Details

AGLC: Factory X Pty Ltd v Gorman Services Pty Ltd [2023] VSC 247
Case: [2023] VSC 247
Decision Date: 12 May 2023

CaseChat Overview and Summary

Factory X Pty Ltd and Gorman Services Pty Ltd were involved in a contractual dispute which was referred to arbitration. The dispute concerned the interpretation of certain terms in the contract and the calculation of damages. The matter was brought before the Supreme Court of Victoria where Factory X sought leave to appeal against the arbitral award. The core legal issue before the court was whether there was an error of law in the arbitrator's decision that warranted an appeal. The court considered relevant case law, including Melbourne Harbour Trust Commissioners v Hancock, Thoroughvision Pty Ltd v Sky Channel Pty Limited, HMV UK v Propinvest Friar Limited Partnership, ASC AWD Shipbuilder Pty Ltd v Ottoway Engineering Pty Ltd, and Inghams Enterprises Pty Ltd v Southern Cross Farms Australia Pty Ltd, to determine if the error of law was substantial enough to warrant appeal.

The Supreme Court examined the nature of the error and its impact on the outcome of the arbitration. The court found that the arbitrator had indeed made an error in the application of the law, which significantly affected the award. The court applied the principles set forth in the Commercial Arbitration Act 2011 (Vic) s 34A and concluded that the error warranted an appeal. The court emphasised the importance of correct legal interpretation in commercial arbitrations, especially when damages are calculated. The decision highlighted that while deference is given to the arbitrator's decision, significant errors of law could still lead to an appeal.

Following its analysis, the court granted Factory X's application for leave to appeal the arbitral award. The court's decision underscored the need for precise legal interpretation and application in arbitration, particularly regarding the calculation of damages. The order allowed Factory X to pursue its appeal against the arbitral award, ensuring that the error of law identified would be reviewed in the higher court.

Orders