International Malting Company Australia Pty Ltd v Pyle

[2003] VSC 7

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
COMMERCIAL DIVISION

No. 2002 of 2003

INTERNATIONAL MALTING COMPANY AUSTRALIA PTY LTD (ACN 068 420 244)	Plaintiff
v
GRAEME MAXWELL PYLE	Defendant

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JUDGE:	Byrne J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 February 2003
DATE OF JUDGMENT:	14 February 2003
CASE MAY BE CITED AS:	International Malting Company Australia Pty Ltd v Pyle
MEDIUM NEUTRAL CITATION:	[2003] VSC 7

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Arbitration – application to restrain arbitration – whether arbitration agreement entered into – whether signed minutes of preliminary meeting constitute ad hoc arbitration agreement – oral application for stay.

Commercial Arbitration Act 1984 s. 53

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	M.D. Wyles	Mallesons Stephen Jaques
For the Defendant	G.H. Golvan QC with C. Sievers	Hargraves

HIS HONOUR:

1. Before the court is an application by summons filed on behalf of the plaintiff, International Malting Company Australia Pty Ltd (“IMCA”), on 12 February 2003.  The summons deals with various procedural matters but, significantly for present purposes, it seeks an interlocutory order restraining the defendant, Graeme Maxwell Pyle, from proceeding with an arbitration which was commenced before Mr Kenfield, as arbitrator, some time last year.

1. The point raised on the summons and the affidavit in support is that the agreement under which the arbitration proceeded did not exist.  It is said on fairly strong authority that that is a matter for the court to determine and that, since there was a serious issue to be tried as to the existence of the agreement, the court should, on an interlocutory basis, restrain the further process of the arbitration until this whole matter has been resolved.

1. The issue arises ultimately out of a document entitled “Agreement to Convert Malting Barley into Malt” executed by IMCA and Mr Pyle on 18 December 1998.  This is a document which is expressed in terms of being a formal agreement and which contains in cl. 10 provision for arbitration in the following terms:

“Any dispute arising under or in relation to this agreement shall be referred to arbitration before an arbitrator mutually appointed by the parties and filing agreement by the present for the time being of the Institute of Arbitrators.”

1. The case put on behalf of IMCA is that, when this document was executed, the parties understood that it was not to have contractual significance;  it was simply a piece of paper that Mr Pyle might use for his own marketing purposes.  It is said that both he and the representative of the IMCA, Ian Geoffrey Maccan, so agreed.  So much appears, it is said, from paragraph 26 of Mr Maccan’s affidavit of 12 February 2003 where words to that effect were said to have been exchanged between Mr Pyle and Mr Maccan in their negotiations on 10 August 1998.

1. Second, it was put on behalf of IMCA that the agreement was not in truth an agreement, but an illusion, because it imposed no obligations, at least upon the company.  Such a submission of course raises the very issue that the parties would have the arbitrator determine because it does appear from the proceeding before the arbitrator that Mr Pyle there contends that the agreement does impose upon the company an obligation to process his barley and IMCA says it does not.  In any event, it is said that the document is an illusory contract and therefore should not be treated as having any legal effect.  And, likewise, the arbitration agreement in cl. 10 is ineffective. 

1. On behalf of the defendant, Mr Pyle, it is submitted that the evidence does not show a triable issue that the parties did not agree to enter into a contract on 18 December 1998, and further, although the point was not enlarged, that the document is not illusory and, possibly, even if it were, then that does not destroy the arbitration agreement.

1. A second submission, a submission which to my mind is the one which resolves this case, is that following the outbreak of disputes between the parties, they wrote to Mr Kenfield and presumably made arrangements for him to act as arbitrator.  On 1 August 2002, represented by solicitors and counsel respectively, the parties attended Mr Kenfield for a preliminary meeting.  During, or at the conclusion of, that meeting they executed a document which is part of Exhibit DMG1 to the affidavit of Domenic Mathew Gatto sworn on 12 February 2003.  What is put is that, whatever doubts one may have had about the November 1998 agreement, this August 2002 document amounts to or contains an ad hoc reference to arbitration which is an arbitration agreement within the meaning of the Commercial Arbitration Act 1984 s. 4(1). Accordingly, the arbitrator is vested with jurisdiction under the Act and by this August 2002 agreement to determine the disputes mentioned in the agreement. The document refers in paragraph 2, in an informal but comprehensible way, to the matters in dispute. They identify the claim of Mr Pyle, who was the claimant in the arbitration, in summary form and also by reference to his points of claim. This pleading dated 1 August 2002 is also part of the same exhibit. It was evidently before the parties at the time of this meeting.

1. What I read from this document signed on 1 August 2002 is that it is, as it is described, an arbitration agreement whereby the parties agreed to refer the dispute contained in paragraph 2, including the points of claim to the arbitration of Mr Kenfield.  The document contains a great number of other provisions for the conduct of the arbitration agreement which I need not go through.  It was executed, it would seem, by Mr Pyle, subject to being confirmed for some reason, and by the solicitor for IMCA, Mr Gatto. 

1. In the circumstances the parties then bound themselves to refer those matters to arbitration and the jurisdiction of the arbitrator therefore cannot seriously be challenged.  In short, I find that there is no serious issue to be tried as to the ineffectiveness of this August 2002 arbitration agreement and so there is no serious issue to be tried that on the bases contended on behalf of the company that the arbitrator lacks the jurisdiction to proceed with the arbitration.  Accordingly, the application should fail.

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