Gebauer Nominees Pty Ltd v Cole [No 2] - [2008] WASCA 41

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: GEBAUER NOMINEES PTY LTD -v- COLE [No 2] [2008] WASCA 41

CORAM: STEYTLER P
McLURE JA
NEWNES AJA

HEARD: 15 NOVEMBER 2007

DELIVERED : 13 MARCH 2008

FILE NO/S: CACV 69 of 2006
CACV 70 of 2006

BETWEEN: GEBAUER NOMINEES PTY LTD
Appellant
AND
GERHARD JOSEPH COLE as trustee for the HOTROX CHARCOAL UNIT TRUST t/as HOTROX CHARCOAL COMPANY
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :HASLUCK J
Citation  :GEBAUER NOMINEES PTY LTD - v - COLE as Trustee for THE HOTROX CHARCOAL UNIT TRUST t/as HOTROX CHARCOAL COMPANY [2006] WASC 57
File No  :CIV 1158 of 2005, ARB 6 of 2005

Catchwords:

Arbitration - Application to amend name of claimant allowed by arbitrator - Order of arbitrator set aside by primary judge - Primary judge remitted to arbitrator for reconsideration question as to whether agreement entered into by claimant as individuals in personal capacity or as trustees - No issue for arbitrator to reconsider - Personal liability of trustees for contracts entered into as trustees - Turns on own facts

Arbitration - Application for removal of arbitrator for misconduct - Error of law by arbitrator in allowing change of name of claimant - No misconduct by arbitrator - Turns on own facts

Legislation:

Commercial Arbitration Act 1985 (WA), s 38, s 42, s 44

Result:

Appeal allowed in part

Category: B

Representation:

Counsel:

Appellant: Mr J G Staude
Respondent: Mr D Vilensky

Solicitors:

Appellant: Williams Handcock Lawyers
Respondent: Bowen Buchbinder Vilensky

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

Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd (1987) 78 ALR 193
Forsayth NL v Australasian Gold Mines NL (No 1) (1992) 7 WAR 549
Gebauer Nominees Pty Ltd v Hotrox Charcoal Co [2006] WASC 155
Gebauer Nominees Pty Ltd v Hotrox Charcoal Company [2002] WASC 55
Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773
Holland Stolte Pty Ltd v Murbay Pty Ltd (1991) 105 FLR 304
Hotrox Charcoal Company v Gebauer Nominees Pty Ltd [2002] WASCA 293
King v Thomas McKenna Ltd [1991] 2 QB 480
Lovell Partnerships (Northern) Ltd v AW Construction Plc (1996) 81 BLR 83
Moran v Lloyd's [1983] QB 542
Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360
Re Johnson (1880) 15 Ch D 548

JUDGMENT OF THE COURT: This is an appeal against the judgment of Hasluck J in which his Honour set aside the interim award of an arbitrator allowing the amendment of the name of the claimant in the arbitration and remitted the issue of the proper claimant to the arbitrator for reconsideration, but dismissed the appellant's application to remove the arbitrator for misconduct.
The appellant (Gebauer) now appeals against the order remitting the issue of the proper claimant in the arbitration proceedings to the arbitrator, contending that the identity of the proper claimant is plain beyond argument and there…

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: [2008] WASCA 41
Decision Date: 13 MARCH 2008

CaseChat Overview and Summary

The appeal involves Gebauer Nominees Pty Ltd, the appellant, and Gerhard Joseph Cole, the respondent. The dispute concerns an arbitration process stemming from a lease agreement for premises in O'Connor, which was leased to Hotrox Charcoal Company, a business name registered by Cole and Patrick Edward Mullally. The arbitration was initiated due to a dispute regarding the premises' condition post-rainwater ingress. The primary judge, Hasluck J, set aside the arbitrator's interim award that allowed the amendment of the claimant's name in the arbitration, instead remitting the issue of the proper claimant to the arbitrator for reconsideration. The primary judge also dismissed Gebauer's application to remove the arbitrator for misconduct. Gebauer appealed against the order remitting the issue of the proper claimant, arguing that the identity of the proper claimant was evident and that Hasluck J erred in not ordering the removal of the arbitrator. The appeal was set against the backdrop of protracted arbitration proceedings with a history of interlocutory disputes.

The central legal issues in the appeal involved whether the arbitrator's decision to amend the claimant's name in the arbitration was proper and whether there was misconduct warranting the removal of the arbitrator. The court had to determine whether the identity of the proper claimant was clear and if the primary judge's decision to remit the issue back to the arbitrator was justified. The court also needed to assess if the arbitrator's error in allowing the name change constituted misconduct.

The court found that the proper claimants were Messrs Cole and Mullally, who were the signatories to the lease. The court held that the Trust was not an available alternative because it was not a separate legal entity capable of being a party to a contract. The court held that the learned primary judge erred in concluding that it was necessary for the arbitrator to find whether the lessee was Messrs Cole and Mullally or The Hotrox Charcoal Unit Trust. The court also found that there was no misconduct by the arbitrator in allowing the change of name of the claimant. The court thus allowed the appeal in part and set aside the order remitting the issue of the proper claimant to the arbitrator.

The court further noted that the potential for further litigation regarding whether the proper claimants were Messrs Cole and Mullally or Messrs Cole and Mullally as trustees of The Hotrox Charcoal Unit Trust would be a sterile debate and could lead to further unnecessary costs and delays. If the parties did not consent to substitute Messrs Cole and Mullally as the claimant, the court would permit the respondent to amend his application relating to the proper claimant and remit it back to the arbitrator, subject to considering the terms of the application.

Orders

Orders of the court

Appeal allowed in part

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

JUDGMENT OF THE COURT: This is an appeal against the judgment of Hasluck J in which his Honour set aside the interim award of an arbitrator allowing the amendment of the name of the claimant in the arbitration and remitted the issue of the proper claimant to the arbitrator for reconsideration, but dismissed the appellant's application to remove the arbitrator for misconduct. The appellant (Gebauer) now appeals against the order remitting the issue of the proper claimant in the arbitration proceedings to the arbitrator, contending that the identity of the proper claimant is plain beyond argument and there is no issue to be considered. Gebauer also contends that Hasluck J erred in law in failing to order the removal of the arbitrator. This appeal arises out of extremely protracted arbitration proceedings which have an unfortunate history of interlocutory disputes involving applications to this court: see Gebauer Nominees Pty Ltd v Hotrox Charcoal Company [2002] WASC 55; Hotrox Charcoal Company v Gebauer Nominees Pty Ltd [2002] WASCA 293; Gebauer Nominees Pty Ltd v Hotrox Charcoal Co [2006] WASC 155. In addition, there was heard at the same time as this appeal an application by Gebauer for leave to appeal against the last‑mentioned of those decisions. The background and much of the history of the arbitration proceedings are set out in those earlier judgments, but for convenience we will refer to the pertinent facts so far as they are relevant to this appeal. Gebauer is (or was) the owner of premises in O'Connor on which there is erected a factory unit. In 1998, Gebauer leased the premises to the 'Hotrox Charcoal Company' for a term of 24 months commencing 1 May 1998. Hotrox Charcoal Company was a business name registered by Gerhard Joseph Cole (Mr Cole) and Patrick Edward Mullally (Mr Mullally). For convenience we will refer to the lessee as Hotrox Charcoal Company. Hotrox Charcoal Company intended to use the premises for the manufacture of a certain type of briquette. Hotrox Charcoal Company says that the briquette it intended to produce has a number of commercial and domestic applications, including in the provision of fuel for aluminium or silicon smelters. A dispute subsequently arose between the parties. Hotrox Charcoal Company contended that, on or about 2 June 1999, rainwater entered the premises rendering the factory unfit for occupation, and the plant and equipment Hotrox Charcoal Company had installed in it, unusable. It alleged that the ingress of water had occurred because Gebauer had failed to maintain the premises in good repair. The parties referred the dispute to arbitration pursuant to cl 28 of the lease. Clause 28.2 of the lease provided, among other things, that 'any dispute arising out of this lease is to be determined by a single Arbitrator under the provisions of the Commercial Arbitration Act 1985'. A barrister, Mr D A Forrester, was nominated as arbitrator by the chairman of the Western Australian Chapter of the Institute of Arbitrators and Mediators of Australia.

Ratio Decidendi

Legal Principle Established

Of course, while a trustee is personally liable on any contract which he or she enters into as trustee, the law does permit a trustee to contract with a third party on the basis that the trustee's personal liability is limited - for example, to the extent of their right to indemnity from the trust funds - but clear words are necessary to limit what is prima facie the unlimited personal liability of a trustee. A trustee's liability will not be limited to his or her right to indemnity from the trust funds simply because the other contracting party knew the person was a trustee; nor will a statement that a person contracts 'as trustee' be sufficient to exclude full personal liability: Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773. There must be evident a clear intention of the parties that the liability of the trustee is to be limited: see Ford & Lee, Principles of the Law of Trusts (3rd ed, 1996) [14010]. However, no issue of limitation of liability is relevant on the present appeal. In our view, it is clear that the lessees under the lease were the signatories to it, Messrs Cole and Mullally. As Messrs Cole and Mullally were the lessees under the lease, they are the proper claimants in the arbitration. It follows, in our respectful view, that the learned primary judge erred in concluding that in order to determine the application to amend the description of the claimant it was first necessary for the arbitrator to find whether the lessee was Messrs Cole and Mullally or The Hotrox Charcoal Unit Trust. The Trust is not an available alternative because, not being a separate legal entity, it cannot be a party to a contract. We would therefore uphold this ground of appeal. There is a further matter that arose on the hearing of the appeal. The respondent accepts that the arbitrator erred in ordering that Mr Cole as trustee for The Hotrox Charcoal Unit Trust be substituted as the claimant. Gebauer accepts that the proper claimants are Messrs Cole and Mullally. The respondent also accepts that the proper claimants are Messrs Cole and Mullally but wants the matter referred back to the arbitrator for him to determine whether the proper claimant is those gentlemen in their capacity as trustees of The Hotrox Charcoal Unit Trust. A technical difficulty for the respondent is that there was no relevant amendment application before the arbitrator or the primary judge. A more significant consideration is the potential for the parties to waste further time and money arguing about whether the proper claimants are Messrs Cole and Mullally or Messrs Cole and Mullally as trustees of The Hotrox Charcoal Unit Trust. That would be a sterile debate. The absence of any reference to the lessee's capacity as trustee in the name of the party would not prevent the respondent (claimant) from proving in the damages claim that the lease was trust property as would be the damages flowing from the breach. If this court set aside the order remitting the matter to the arbitrator, the claimant would remain Hotrox Charcoal Company. Having regard to the tortured conduct of this litigation that is an entirely unsatisfactory outcome. If the parties consent, this court would be prepared to make an order that Messrs Cole and Mullally be substituted as the claimant and that the interim award be amended accordingly. If that consent is not forthcoming we would permit the respondent to amend his application relating to the proper claimant and, subject to considering the terms of the application, remit it back to the arbitrator.