JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: GR ENGINEERING SERVICES LTD -v- EASTERN GOLDFIELDS LTD [2018] WASC 19
CORAM: TOTTLE J
HEARD: 3 NOVEMBER 2017
DELIVERED : 24 JANUARY 2018
FILE NO/S: CIV 2140 of 2017
BETWEEN: GR ENGINEERING SERVICES LTD
Plaintiff
AND
EASTERN GOLDFIELDS LTD
First DefendantINVESTMET LTD
Second DefendantSQUIRE PATTON BOGGS (AU)
Third Defendant
Catchwords:
Arbitration - Arbitration clauses - Proper approach to construction
Arbitration - Stay of proceedings - Reference to arbitration under Commercial Arbitration Act 2012 (WA) s 8
Interpleader - Rules of the Supreme Court 1971 (WA) O 17 - Share transfer form held in escrow - Competing claims to share transfer form
Legislation:
Commercial Arbitration Act 2012 (WA), s 1C, s 7, s 8
Rules of the Supreme Court 1971 (WA), O 17 r 1, r 2
Result:
Matter referred to arbitration
Proceedings stayed in part
Interpleader relief granted
Category: B
Representation:
Counsel:
Plaintiff: Mr M L Bennett
First Defendant : Mr T P O'Leary
Second Defendant : Mr T P O'Leary
Third Defendant : Mr J C Vaughan SC
Solicitors:
Plaintiff: Bennett + Co
First Defendant : Gilbert + Tobin
Second Defendant : Gilbert + Tobin
Third Defendant : Jackson McDonald
Case(s) referred to in judgment(s):
Attenborough v London & St Katharine's Dock Co (1878) 3 CPD 450
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66
Carew Corporation Pty Ltd v The R&I Bank of Western Australia Ltd (Unreported, WASCA, Lib No 930713, 21 September 1993)
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Eriez Magnetics Pty Ltd v Duro Felguera Australia Pty Ltd [2017] WASC 304
Fitzpatrick v Emerald Grain Pty Ltd [2017] WASC 206
Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [No 3] [2013] VSC 435
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10
Sun Insurance Office v Galinsky [1914] 2 QB 545
Western National Plant Pty Ltd v Smith Broughton Pty Ltd (Unreported, WASC, Lib No 980368, 26 June 1998)
TOTTLE J:
Introduction
These reasons concern the following interlocutory applications:
(i)An application by the first defendant, Eastern Goldfields, to refer the dispute between it and the plaintiff, GR Engineering, to arbitration and to stay the proceedings. The application is brought pursuant to Commercial Arbitration Act 2012 (WA) (CAA) s 8.
(ii)An application by the third defendant, Squire Patton Boggs, for interpleader relief pursuant to Rules of the Supreme Court 1971 (WA) (RSC) O 17 r 1.
GR Engineering commenced this action by writ on 10 July 2017. It seeks:
(i)'liquidated damages' in the amount of $9,940,995.07 from Eastern Goldfields for breach of a design and construct engineering contract (the Contract);[1]
(ii)alternatively, $5,000,000 as due to it from Eastern Goldfields pursuant to the terms of an agreement (the Partial Accord and Satisfaction…
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- AGLC
- GR Engineering Services Ltd v Eastern Goldfields Ltd [2018] WASC 19
- Case
- [2018] WASC 19
- Decision Date
CaseChat Overview and Summary
The court was required to decide whether the current dispute between GR Engineering and Eastern Goldfields fell within the scope of the arbitration clause in their contract. Eastern Goldfields argued that the arbitration clause mandated referral to arbitration as the dispute related to the subject matter of the contract. GR Engineering contended that the proceedings should not be stayed as the arbitration clause was not triggered, and the dispute did not fall within the scope of the clause. The court had to interpret the clause and determine whether the dispute was within its scope, taking into account the specific language and context of the contract. The court also had to consider the implications of a stay on the proceedings and whether it would lead to a multiplicity of proceedings or inconsistent findings.
The court found that the arbitration clause in the contract did apply to the current dispute, and the proceedings should be stayed and referred to arbitration. The court held that the clause covered the dispute and that GR Engineering's alternative claim for breach of the Partial Accord and Satisfaction Agreement was a claim to enforce payment under the contract. The court also found that the failure of Eastern Goldfields to appoint a superintendent did not preclude the enforcement of payment claims. The court concluded that referring the dispute to arbitration was in the interest of justice and would avoid a multiplicity of proceedings and inconsistent findings. The court ordered that the proceedings be stayed and referred to arbitration in accordance with the arbitration clause in the contract.
The court ordered that the proceedings be stayed and referred to arbitration in accordance with the arbitration clause in the contract. The court further ordered that the costs of the application be paid by Eastern Goldfields.
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
Section 8 of the CAA provides:8Arbitration agreement and substantive claim before court (cf Model Law Art 8)(1)A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party's first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.(2)Where an action referred to in subsection (1) has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court. An 'arbitration agreement' is defined to mean 'an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not'. It must be in writing and may be contained in a clause in a contract: s 7. Eastern Goldfields' principal submissions are as follows:[32](i)By cl 41 of the Contract, the parties agreed to arbitration of any 'difference or Dispute … [arising] in connection with the subject matter of the Contract' and the current dispute falls within that definition;(ii)The present dispute does not fall within the carve‑out constituted by cl 41.4 because on its true construction, leaving to one side applications for injunctive or urgent declaratory relief, the clause only permitted proceedings to enforce payment found to be due under the Contract in accordance with a ruling of an arbitrator.[33](iii)In any event the present proceedings are not 'proceedings to enforce payment due under the Contract' as the claim made by GR Engineering is made pursuant to an alleged, apparently unwritten agreement outside the Contract (as GR Engineering's claims cannot have been certified for payment as no superintendent was appointed under the Contract), or any claim made by GR Engineering is made pursuant to an alleged 'Partial Accord and Satisfaction Agreement' pleaded by GR Engineering, neither of which are claims for payment made 'under the Contract'.[32] First and Second Defendants' Outline of Submissions in Support of Application to Stay Proceedings filed 22 September 2017.[33] ts 63. GR Engineering's principal submissions are as follows:[34][34] Plaintiff's Outline of Submissions in Opposition to First and Second Defendants' Application for a Stay of Proceedings and Referral to Arbitration filed 6 October 2017.(i)It commenced the current proceedings in accordance with its right under the Contract to enforce payments due to it from Eastern Goldfields, on the basis that:(a)Its primary claim against Eastern Goldfields is for payment due under the Contract;(b)Its alternative claim against Eastern Goldfields is for breach of the pleaded Partial Accord and Satisfaction Agreement, which is a variation to the payment provisions of the Contract, and is therefore a claim to enforce payment under the Contract which falls within the carve out in cl 41.4;(ii)The pleaded Partial Accord and Satisfaction Agreement was a mechanism by which Eastern Goldfields sought to address its liability to GR Engineering for payments due under the Contract, by which Eastern Goldfields acknowledged its obligations to make payment;(iii)Contrary to Eastern Goldfields' and Investmet's contentions, payment claims were certified by an officer of Eastern Goldfields, who became the superintendent under the Contract;(iv)Eastern Goldfields, whose obligation it was to appoint a superintendent to certify payment claims, cannot have the benefit of its failure to do so by now requiring the proceedings to be stayed on the basis that GR Engineering cannot bring a proceeding to enforce payments due under the Contract;(v)A notice of dispute, required to trigger the arbitration clause under the Contract, has not been issued, and accordingly it is not possible to refer the dispute to arbitration;(vi)The Contract is only enforceable as between GR Engineering and Eastern Goldfields, and Investmet has no standing to apply for an order pursuant to CAA s 8; and(vii)GR Engineering's claims against Investmet and Squire Patton Boggs cannot be referred to arbitration without Eastern Goldfield's consent, which has not been provided. Accordingly, to refer only the dispute between GR Engineering and Eastern Goldfields to arbitration would result in a multiplicity of proceedings, an increase in costs, and the possibility of inconsistent findings or results.