Gemcan Constructions Pty Ltd v Westbourne Grammar School - [2020] VSC 429

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
ARBITRATION LIST

S ECI 2020 01666

GEMCAN CONSTRUCTIONS PTY LTD	Plaintiff
v
WESTBOURNE GRAMMAR SCHOOL	Defendant

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JUDGE:	LYONS J
WHERE HELD:	Melbourne
DATE OF HEARING:	24 June 2020
DATE OF JUDGMENT:	10 July 2020
CASE MAY BE CITED AS:	Gemcan Constructions Pty Ltd v Westbourne Grammar School
MEDIUM NEUTRAL CITATION:	[2020] VSC 429	First Revision: 14 July 2020

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ARBITRATION – Agreement to arbitrate – Arbitrator and rules to be nominated pursuant to item of schedule to agreement marked ‘Not Applicable’ – Whether valid and binding agreement –Commercial Arbitration Act 2011 (Vic), s 10 (number of arbitrators), s 11(3) (court appointment in absence of agreement) and s 19 (determination of rules of procedure).

ARBITRATION – Commercial Arbitration Act 2011 (Vic), 11(3) – Choice of senior or junior counsel as arbitrator - Experience as arbitrator – Fees of arbitrator – Complexity of factual and legal issues in arbitration – Balancing exercise – Senior counsel appointed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr L Connolly	Maddocks
For the Defendant	Mr M A Robins QC	Champions Lawyers

HIS HONOUR:

Introduction

The Applicant, Gemcan Constructions Pty Ltd (‘Gemcan’), seeks an order for the appointment of Mr Toby Shnookal QC as arbitrator of a number of disputes that have arisen under a construction contract (the ‘Contract’) between it and Westbourne Grammar School (‘WGS’). The Contract relates to construction, installation and commissioning of fire, security, electrical, hydraulic and mechanical services and landscaping works at WGS’s Williamstown campus (the ‘Works’).

In this proceeding, Gemcan contended that the disputes have been referred to arbitration pursuant to cl 42.2 of the Contract and that, as the parties cannot agree on an arbitrator, the Court should appoint Mr Shnookal as an arbitrator pursuant to s 11 of the Commercial Arbitration Act 2011 (Vic) (the ‘Act’). By contrast, WGS contended that there is no binding agreement for arbitration in the Contract. This is because the relevant schedules referred to in the arbitration clause to identify the person to nominate the arbitrator and the rules to be applied in the arbitration are marked ‘Not Applicable’ and ‘Nor Applicable’ respectively. Even if there was a valid agreement for arbitration, WGS opposed the appointment of senior counsel as arbitrator, preferring the appointment of a junior counsel.

For the reasons that follow, I have concluded that:

(1)cl 42.2 of the Contract constitutes a valid agreement to refer the disputes to arbitration; and
(2)Toby Shnookal QC should be appointed as arbitrator pursuant to s 11 of the Act.

Material relied upon

In support of its application, Gemcan relied upon:

1.1.an Affidavit of Anna Elizabeth Scannell affirmed 30 March 2020 (‘first Scannell affidavit’);
1.2.an Affidavit of Anna Elizabeth Scannell affirmed 25 May 2020 (the ‘second Scannell affidavit’); and
1.3.an Affidavit of Anna Elizabeth Scannell affirmed 4 June 2020 (the ‘third Scannell affidavit’).

WGS relied upon an Affidavit of Michael John Champion affirmed 13 May 2020 (the ‘Champion affidavit’).

Contract

On or about…

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: [2020] VSC 429
Decision Date: 10 July 2020

CaseChat Overview and Summary

Gemcan Constructions Pty Ltd sued Westbourne Grammar School for breach of contract. The parties had entered into a construction contract with an arbitration clause, stipulating that disputes would be resolved by arbitration under the Commercial Arbitration Act 2011 (Vic). The clause also contained a schedule item marked ‘Not Applicable’ which specified the number of arbitrators and the rules of procedure. The primary issue was whether the arbitration agreement was valid and binding, particularly concerning the appointment of an arbitrator and the determination of procedural rules. Gemcan argued that the marked item in the schedule should be disregarded, while Westbourne contended that the clause was invalid due to the marked item.

The court examined the validity of the arbitration agreement under the Commercial Arbitration Act 2011 (Vic). It considered whether the marked item in the schedule rendered the agreement invalid or if it could be disregarded as a clerical error. The court also assessed the appointment of an arbitrator and the procedural rules, specifically under sections 11(3) and 19 of the Act. In appointing an arbitrator, the court balanced the experience and fees of the potential candidates against the complexity of the issues. The court concluded that the marked item did not invalidate the agreement and could be disregarded. It further held that the appointment of a senior counsel as the arbitrator was appropriate given the complexity of the dispute.

Consequently, the court found the arbitration agreement to be valid and binding. The marked item in the schedule was deemed inconsequential, and the procedural rules were determined in accordance with the Act. The court appointed a senior counsel as the arbitrator due to the complexity of the factual and legal issues involved in the arbitration. The decision ensured that the arbitration process would proceed as stipulated in the contract, with the appropriate procedural framework and an experienced arbitrator. The court's ruling confirmed the enforceability of the arbitration clause, providing clarity for both parties in resolving their dispute.

Orders