Formosa v Eminent Forms Pty Ltd

In the case of Formosa v Eminent Forms, the dispute arose between the builder and the respondent, with the matter being resolved in the court. The builder, Formosa, contested the award of costs by the arbitrator, asserting that the award was improper and should be reconsidered. The court was tasked with determining whether the arbitrator correctly exercised his discretion in awarding costs and, if not, whether the matter should be remitted to the arbitrator for re-evaluation or if the court should substitute its own discretion.

The central legal issue was whether the arbitrator had properly exercised his discretion in awarding costs to the builder, Formosa. The court had to evaluate whether the factors considered by the arbitrator were adequate and whether the decision was made in a manner that was not capricious but based on good and cogent reasons. The court also had to determine whether it was appropriate to substitute its own discretion in awarding costs or to remit the matter back to the arbitrator for further consideration.

In its reasoning, the court highlighted that the exercise of discretion by the arbitrator should not be reduced to a complex mathematical exercise but should be based on a broad consideration of relevant factors. The court noted that the arbitrator had failed to properly exercise his discretion, leading to the conclusion that the appeal should be allowed and the award of costs set aside. However, the court found that it was not in a position to substitute its own discretion due to the complexity of the issues and the need for the arbitrator to consider all relevant facts. Consequently, the court decided to remit the matter to the arbitrator for a proper exercise of discretion in awarding costs.

The court's final order was to remit the matter to the arbitrator to make an award of costs according to law, with the possibility of some supplementary argument to ensure a fair and comprehensive evaluation.