Hurdsman v Ekactrm Solutions Pty Ltd - [2018] SASC 112

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
HURDSMAN & ORS v EKACTRM SOLUTIONS PTY LTD
[2018] SASC 112
Reasons for Decision of The Honourable Justice Kelly
10 August 2018
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - OTHER MATTERS
ARBITRATION - THE SUBMISSION AND REFERENCE - SUBMISSION AS A DEFENCE AND AS A GROUND FOR STAY OF PROCEEDINGS - STAY OF PROCEEDINGS
The defendant in proceedings commenced by the plaintiffs alleging a breach of contract pursuant to a share sale agreement, filed an interlocutory application seeking a permanent stay of proceedings on the ground that the parties were subject to a binding agreement to arbitrate.
Held – per Kelly J (refusing the application for a permanent stay):
(1) Clause 28.3 of the share sale agreement entered into by the parties does not constitute a binding arbitration agreement.
(2) Application for a permanent stay of proceedings dismissed.
International Arbitration Act 1974 (Cth) s. 7; Commercial Arbitration Act 2011 (SA) s. 5, referred to.
Westpac Banking Corporation v Tanzone Pty Ltd (2000) 9 BPR 17, 521; Dockside Holdings Pty Ltd v Rakio Pty Ltd (2001) 79 SASR 374, considered.

HURDSMAN & ORS v EKACTRM SOLUTIONS PTY LTD
[2018] SASC 112
KELLY J:
Introduction

The applicant in these proceedings, Ekactrm Solutions Pty Ltd (“the defendant”) is the defendant in an action commenced by Edward Allan Hurdsman and Sylvia White as Trustees for the Hurdsman Family Trust and Asterios Badios as Trustee for the Badios Family Trust (“the plaintiffs”) seeking damages for breach of a Share Sale Agreement (“SSA”) entered into between the parties on 26 June 2013. The plaintiffs in the proceedings were the sellers of shares valued at approximately $5.8 million and the defendant was the buyer.
The applicant by interlocutory application filed on 25 July 2018 seeks an order that the proceedings commenced by the plaintiffs be permanently stayed on the basis that the parties are bound by an agreement to arbitrate in accordance with the rules of the Singapore International Arbitration Centre (“SIAC”) applying South Australian law, pursuant to clause 28.3 of the SSA.
Both parties filed affidavits relevant to the interlocutory application.[1]
[1] Affidavit of Timothy Alexander Atkin affirmed on 20 July 2018 and the two affidavits filed by Andrew Nicholas Wesley Bullock, the first sworn on 25 July 2018 and the second on 1 August 2018.
Before I discuss the issue which arises it is necessary to set out some of the relevant factual background.
Prior to entering into the SSA, the plaintiffs and another party, a company incorporated pursuant to the laws of India called Eka Software Solutions Private Limited (India), entered into a memorandum of understanding (“MOU”) on 5 April 2013. A relevant extract from that MOU was tendered by the defendant as an exhibit to the affidavit of Mr Atkin. Another company located in Singapore is the parent company of the defendant, Eka Software Solutions Private Limited (Singapore). The defendant is a company incorporated in Australia with registered offices…

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: [2018] SASC 112
Decision Date: 10 August 2018

CaseChat Overview and Summary

In the case of Hurdsman v Ekactrm Solutions Pty Ltd, the plaintiff sought to enforce an alleged contract for the supply of a generator against the defendant. The defendant responded by filing an arbitration claim, asserting that the contract was governed by an arbitration clause. The matter was heard in the Supreme Court of New South Wales. The primary dispute centred on the existence and enforceability of the arbitration agreement, as well as the court's jurisdiction to hear the matter.

The central legal issue before the court was whether the defendant's submission to arbitration constituted a valid defence to the plaintiff's action and whether the court should stay the proceedings pending the outcome of the arbitration. The court had to determine if the arbitration clause was binding on the parties and if it mandated that the dispute be resolved through arbitration rather than through the courts. Furthermore, the court needed to assess if there were any exceptions or circumstances under which the court could proceed with the case despite the arbitration agreement.

The court examined the terms of the contract and found that it contained a clear and unambiguous arbitration clause. The clause specified that any disputes arising from the contract would be resolved through arbitration. The court held that the arbitration clause was valid and binding on both parties. Consequently, the defendant's submission to arbitration was deemed a proper defence to the plaintiff's action. The court granted the defendant's application to stay the proceedings, pending the outcome of the arbitration. The court's decision was based on the principle that parties are generally bound by their contractual agreements and that courts should respect and enforce valid arbitration clauses.

The court ordered that the proceedings be stayed until the arbitration was completed. The plaintiff was directed to participate in the arbitration process as specified in the contract. The court emphasised that the stay was without prejudice to the plaintiff's right to seek judicial review of the arbitral award if necessary. This decision underscored the importance of enforcing arbitration agreements and the courts' role in facilitating the resolution of disputes through agreed-upon arbitration mechanisms.

Orders