Fremantle Port Authority v Martin - [2025] WASC 301

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   FREMANTLE PORT AUTHORITY -v- MARTIN [2025] WASC 301
CORAM:   LUNDBERG J
HEARD:   23 JULY 2025
DELIVERED          :   6 AUGUST 2025
FILE NO/S:   ARB 3 of 2025
BETWEEN:   FREMANTLE PORT AUTHORITY
Plaintiff
AND
JOHN MARTIN
First Defendant
CONTAINER REFRIGERATION PTY LTD
Second Defendant

FILE NO/S: ARB 4 of 2025
BETWEEN: FREMANTLE PORT AUTHORITY
Plaintiff
AND
JOHN MARTIN
First Defendant
CONTAINER REFRIGERATION PTY LTD
Second Defendant

Catchwords:

Arbitration - Arbitration agreement contained within a long term commercial lease specifically concerning the improvements on the premises not removed by the lessee - Compensation to be paid to lessee for improvements at fair value - Procedure allows for appointment of two valuers and then a third valuer acting as arbitrator - Arbitrator authorised by the lease to resolve 'differences' between the valuers - Arbitrator made determination which plaintiff contends denied it procedural fairness and exceeded his authority under the arbitration agreement

Arbitration - Applications to set aside the arbitrator's determination under the Commercial Arbitration Act 2012 (WA) - Whether determination constituted an 'award' for the purposes of the legislation

Arbitration - Application for relief pursuant to s 34(2)(a)(ii) and s 34(2)(b)(ii) of the Commercial Arbitration Act 2012 (WA) - Whether plaintiff had a reasonable opportunity to present its case - Whether procedural fairness afforded to the lessor – Whether discretion should be exercised to set aside the award

Arbitration - Application for relief pursuant to s 34(2)(a)(iii) of the Commercial Arbitration Act 2012 (WA) - Whether arbitrator exceeded jurisdiction or authority - Whether discretion should be exercised to set aside the award

Arbitration - Application for a decision in relation to arbitrator's ruling on his jurisdiction or authority pursuant to s 16(9) of the Commercial Arbitration Act 2012 (WA)

Legislation:

Commercial Arbitration Act 2010 (WA) s 16, s 18, s 27J, s 34, s 34A

Result:

Relief granted

Category: B

Representation:

ARB 3 of 2025

Counsel:

Plaintiff	:	Dr E M Heenan SC and B Willesee
First Defendant	:	No appearance
Second Defendant	:	G R Hancy

Solicitors:

Plaintiff	:	Pragma Lawyers
First Defendant	:	Douglas Lawyers
Second Defendant	:	Lavan

ARB 4 of 2025

Counsel:

Plaintiff	:	Dr E M Heenan SC and B Willesee
First Defendant	:	No appearance
Second Defendant	:	G R Hancy

Solicitors:

Plaintiff	:	Pragma Lawyers
First Defendant	:	Douglas Lawyers
Second Defendant	:	Lavan

Case(s) referred to in decision(s):

CBI Constructors Pty Ltd v Chevron Australia Pty Ltd [2024] HCA 28; (2024) 98 ALJR 1098
Colin Joss & Co Pty Ltd v CUBE Furniture Pty Ltd [2015] NSWSC 735
Edmund Barton Chambers (Level 44) Co-operative Ltd v The Mutual Life & Citizens Assurance Co Ltd (1984) NSW ConvR 55-177
Ivankovic v Western Australian Planning Commission [2020] WASC 401
LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2024] HCA 12; (2004) 98 ALJR 610
Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2018] QCA 39
R v Australian Broadcasting Tribunal; Ex parte…

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.

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Details

Case: [2025] WASC 301
Decision Date: 6 AUGUST 2025

CaseChat Overview and Summary

The case of Fremantle Port Authority v Martin involves a dispute between the Fremantle Port Authority, the lessor, and Martin, the lessee, regarding the compensation to be paid for improvements made by the lessee on leased premises. The dispute was referred to arbitration under a specific clause of the commercial lease, which outlines the process for determining the fair value of the improvements. The arbitration process included the appointment of two valuers and a third valuer, acting as the arbitrator, to resolve any differences. The lessor challenges the arbitrator's determination, arguing that it was reached without procedural fairness and that the arbitrator exceeded his authority under the terms of the arbitration agreement.

The primary legal issues in this case revolve around the interpretation and application of the arbitration agreement and the procedural fairness afforded during the arbitration process. The lessor contends that the arbitrator's determination was procedurally unfair because it did not allow the lessor to present its case on the proper construction of the term 'fair value'. Furthermore, the lessor argues that the arbitrator exceeded his authority by determining the monetary value of the improvements, which was outside the scope of the arbitration submission. The case also involves questions about whether the arbitrator's determination constitutes an 'award' under the Commercial Arbitration Act 2012 (WA) and whether the court has the discretion to set aside the award based on the lessor's claims of procedural unfairness and jurisdictional excess.

The court examined the specific terms of the arbitration agreement and the procedural steps taken during the arbitration process. It held that the arbitration agreement was clear in its scope and that the arbitrator's role was limited to resolving the scope of the term 'balance of the Term'. The court found that the arbitrator's determination went beyond this scope by determining the monetary value of the improvements, thereby exceeding his authority. Additionally, the court concluded that the lessor was denied procedural fairness as it was not given an opportunity to present its case on the proper construction of 'fair value'. Based on these findings, the court exercised its discretion under the Commercial Arbitration Act 2012 (WA) to set aside the arbitrator's determination.

The final orders of the court included setting aside the arbitrator's determination and directing the parties to return to arbitration in accordance with the proper scope of the arbitration agreement. The court emphasised the importance of adhering to the terms of the arbitration agreement and ensuring procedural fairness for all parties involved in the arbitration process.

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

The arbitration agreement in question is to be found in cl 3.18(b)(v) of a long-term commercial lease of land in the Rous Head industrial area to the north of the Fremantle Port, entered into between the plaintiff lessor and the second defendant lessee (the Lease). The arbitration agreement is specific to the resolution of disputes as to the determination of compensation for the value of improvements made by the second defendant lessee. There is, in addition, a general arbitration agreement contained in cl 11 of the Lease. It is, however, the arbitration agreement at cl 3.18(b)(v) and the related dispute resolution process which is the subject of the present proceedings. Under the arbitration agreement, the first defendant arbitrator was appointed by the Australian Property Institute at the request of the parties (the Arbitrator). The Arbitrator, who was not legally qualified, issued a determination in the matter on 14 February 2025 (the Arbitrator's Determination), which the plaintiff characterises as an 'award' but, as to that characterisation, the second defendant is less convinced. The Arbitrator's Determination and the course of the arbitration itself are the focus of the present proceedings. In ARB 3 of 2025, the plaintiff seeks orders under s 34(2)(a)(ii) and s 34(2)(b)(ii) CAA to set aside the Arbitrator's Determination, and raises contentions in this regard as to the denial of procedural fairness during the arbitration process. As to the relief to set aside the Arbitrator's Determination, the stated ground for the relief sought is that the plaintiff was not given an opportunity to, and thus was unable to present its case on, the proper construction of the phrase 'fair value', defined by cl 3.18(b)(v) and used in cl 3.18(b)(iii) of the Lease, contrary to s 18 CAA and in conflict with the public policy of the State. The plaintiff also contends, relying on s 34(2)(a)(iii) CAA that the directions made by the Arbitrator (referred to as directions 1 to 6) were beyond the scope of the submission to arbitration. The plaintiff contends that the scope of the Arbitrator's authority is limited to resolving whether, in circumstances where the term of the Lease has expired by effluxion of time, the 'balance of the Term remaining to which the Valuers must have regard in performing their function is nil or some other period of time and, if some other period of time, what that period of time is', and therefore the Arbitrator did not have authority, in the matter presently referred to arbitration, to determine the monetary value of the 'fair value' of the 'Improvements'. The term 'Improvements' is defined in the Lease to include 'any building, structure, fence, pipe, cable, road, connection, drain, railway, railway siding, electrical installation, electrical sub-station, gas, sewerage or drainage installation, jetty structure and any alteration, variation or addition to the level or surface of the ground of the Demised Land'.[2] The words 'Term' and 'Valuer' are also defined in the Lease. [2] Lease, cl 1.1