JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: FITZPATRICK -v- EMERALD GRAIN PTY LTD [2017] WASC 206
CORAM: MARTIN CJ
HEARD: 28 MARCH 2017
DELIVERED : 31 JULY 2017
FILE NO/S: CIV 2437 of 2016
BETWEEN: MARK FITZPATRICK t/a JD & PM FITZPATRICK & SONS & OTHERS
Plaintiffs
AND
EMERALD GRAIN PTY LTD
Defendant
Catchwords:
Arbitration - Arbitration clauses - Proper approach to construction
Arbitration - Stay of proceedings - Reference to arbitration - Effect of Commercial Arbitration Act 2002 (WA)
Legislation:
Commercial Arbitration Act 2012 (WA)
Trustees Act 1962 (WA)
Result:
Proceedings stayed
Matter referred to arbitration
Category: B
Representation:
Counsel:
Plaintiffs: Mr M D Cuerden SC & Mr A P Hershowitz
Defendant: Mr B Dharmananda SC & Mr T J Porter
Solicitors:
Plaintiffs: Granich Partners
Defendant: DLA Piper Australia
Case(s) referred to in judgment(s):
A Best Floor Sanding Pty Ltd v Skyer Australia Pty Ltd [1999] VSC 170
ACD Tridon Inc v Tridon Australia Pty Ltd [2002] NSWSC 896
Ace Capital Ltd v CMS Energy Corp [2008] EWHC 1843 (Comm)
Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488
Australian Maritime Systems Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2016] WASC 52
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66; (2013) 298 ALR 666
Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45
Dowell Australia Ltd v Triden Contractors Pty Ltd [1982] 1 NSWLR 508
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Ethiopian Oilseeds and Pulses Export Corporation v Rio del Mar Foods Inc (1990) 1 Lloyds Rep 86
Fiona Trust & Holding Corporation v Privalov [2007] EWCA Civ 20
Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40; (2007) 4 All ER 951
Flint Ink NZ Ltd v Huhtamaki Australia Pty Ltd [2014] VSCA 166; (2014) 44 VR 64
Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160
Harbour Assurance Co (UK) Ltd v Kansa General International Assurance Co Ltd [1993] QB 701
Heyman v Darwins Ltd [1942] AC 356
IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466
Incitec Ltd v Alkimos Shipping Corporation [2004] FCA 698; (2004) 138 FCR 496
John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451
Joint Stock Co 'Aeroflot-Russian Airlines' v Berezovsky [2013] EWCA Civ 784; [2013] 2 Lloyd's Rep 242
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110
Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (1993) 43 FCR 439
Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10
Re Ikon Group Ltd [No 2] [2015] NSWSC 981
Rinehart v Rinehart [No 3] [2016] FCA 539; (2016) 337 ALR 174
Rinehart v Welker [2012] NSWCA 95
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- AGLC
- Fitzpatrick v Emerald Grain Pty Ltd [2017] WASC 206
- Case
- [2017] WASC 206
- Decision Date
CaseChat Overview and Summary
The primary legal issues that the court had to address were the proper construction of the arbitration clauses in the GTA Trade Rules, the effect of Rule 26, and whether the court should stay the proceedings in light of the mandatory arbitration provisions. Specifically, the court needed to interpret whether the arbitration clause mandated arbitration in accordance with the GTA Dispute Resolution Rules as they stood at the date of the contract or at the commencement of the arbitration. Additionally, the court had to determine whether the Commercial Arbitration Act 2002 (WA) provided any grounds to override the arbitration agreement.
The court's reasoning focused on the precise wording of Rule 26, which required disputes to be submitted to arbitration in accordance with the GTA Dispute Resolution Rules as in force at the date of the contract. However, Clause 32 of the 2010 and 2011 Conditions provided that any dispute should be resolved by arbitration in accordance with the DR Rules in force at the commencement of the arbitration. The court noted that the Rules in force at the time of Emerald's application were those amended in June 2014, and there was no evidence suggesting any subsequent amendments. The court concluded that the arbitration must be conducted in accordance with the DR Rules in force at the commencement of the arbitration, rather than at the date of the contract. Consequently, the court found that the dispute should be referred to arbitration and ordered a stay of the proceedings until the arbitration was finalised.
In light of the court's findings, it made an order that the proceedings be stayed and referred to arbitration in accordance with the GTA Dispute Resolution Rules in force at the commencement of the arbitration. The court further mandated that neither party could bring any legal action against the other in respect of the dispute until the arbitration had been completed and an award obtained.
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
Rule 26 provides:Arbitration:(1)The GTA Dispute Resolution Rules form an integral part of these GTA Trade Rules of which all parties subject to these GTA Trade Rules shall be deemed to be cognisant.(2)If any dispute arises out of or relates to any contract subject to these Trade Rules or the breach, termination or subject matter of a contract, the dispute shall be submitted to and settled by Arbitration in accordance with the GTA Dispute Resolution Rules in the edition current at the date of the establishment of the Terms of Trade in the contract, such rules forming an integral part of the contract and of which both parties to the contract shall be deemed to be cognisant. (3)Neither party to a dispute, nor any persons claiming under either of them, shall bring any action or other legal proceedings against the other in respect to any such dispute until arbitrated in accordance with the GTA Dispute Resolution Rules.(4)It is expressly agreed and declared within these GTA Trade Rules that the obtaining of an award through GTA Arbitration shall be a condition precedent to the right of either party or of any persons claiming under either of them to bring any action or other legal proceedings against the other of them in respect of any such dispute. It will be noted that although Rule 26 of the GTA Trade Rules purports to apply the GTA Dispute Resolution Rules (DR Rules) as in force at the date of the contract between the relevant grower and Emerald, cl 32 of each of the 2010 and 2011 Conditions provides that any dispute between the parties is to be resolved by arbitration in accordance with the DR Rules in force at the commencement of any arbitration. By cl 31 of each of the 2010 and 2011 Conditions, to the extent of any inconsistency between those Conditions and the GTA Trade Rules, the Conditions are to prevail. Accordingly, in the event of any arbitration between the Growers, or any of them, and Emerald, the arbitration will be conducted in accordance with the DR Rules in force at the commencement of that arbitration, rather than the DR Rules in force at the time of the contract between the Grower and Emerald. The DR Rules in force at the time of Emerald's application[10] are those amended in June 2014. Article 1 of those Rules provides, in part:Purpose and Description(1)Through its Dispute Resolution Process ('Process'), Grain Trade Australia Ltd (GTA) works to avoid litigation and reduce friction among GTA Members and other industry participants by encouraging dispute resolution through peer review. The Process will be conducted in a manner that promotes the saving of time and expense while providing an efficient, fair and equitable means to settle disputes related to commercial transactions.(2)These GTA Dispute Resolution Rules ('Rules') shall govern the resolution of any disputes falling within the jurisdiction of the GTA Process.[10] And there is no evidence to suggest that the relevant Rules have been amended since then. Article 2 of the DR Rules contains provisions in the following terms:(2)A Member or Non-Member, who incorporates the GTA Trade Rules or these Rules into its contract or agreement, agrees to resolve any disputes arising out of the inception, negotiation, formation, performance or any other aspect of the contract or contractual relationship, pursuant to these Rules.(3)Members and Non-Members incorporating these Rules agree not to apply to any Court unless the dispute has been finalised pursuant to these Rules or the dispute falls outside the scope of these Rules.