Isicob Pty Ltd v Baulderstone Hornibrook (Qld) P/L (in liq)
[2001] QSC 64
•12 March 2001
SUPREME COURT OF QUEENSLAND
CITATION: Isicob Pty Ltd v Baulderstone Hornibrook (Qld) P/L (in liq) [2001] QSC 064 PARTIES: ISICOB PTY LTD
ACN 010 398 044
(applicant)
v
BAULDERSTONE HORNIBROOK (QLD)
PTY LTD (IN LIQUIDATION)
ACN 010 117 549
(respondent)FILE NO/S: S2347 of 2000
S2348 of 2000DIVISION: Trial Division DELIVERED ON: 12 March 2001 DELIVERED AT: Brisbane HEARING DATE: 27-28 November 2000 JUDGE: White J ORDER: Dismiss the applications CATCHWORDS: ARBITRATION - THE AWARD - APPEAL OR JUDICIAL REVIEW - GROUNDS FOR REMITTING OR SETTING ASIDE - ERROR OF LAW ON FACE OF AWARD & MISCONDUCT
ESTOPPEL - FORMER ADJUDICATION AND MATTERS OF RECORD OR QUASI OF RECORD - BY AWARD OF ARBITRATOR
EQUITY - GENERAL PRINCIPLES - EQUITABLE DOCTRINES AND PRESUMPTIONS - ELECTION - IN GENERAL - whether election can be made when unaware of rights
Barton v Armstrong [1973] 2 NSWLR 598; [1976] AC 104
Cockerill v Westpac Banking Corporation (1996) 142 ALR 227
Commercial Arbitration Act 1990
Crescendo Management Pty Ltd v Westpac Banking Corporatation (1988) 19 NSWLR 40
Elders Trustee and Executor Co. Ltd v Commonwealth Homes and Investment Co. Ltd (1941) 65 CLR 603
Equiticorp Financial Services Ltd (NSW) v Equiticorp Financial Services Ltd (NZ) (1992) 29 NSWLR 260
Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298
Kennedy-Taylor (Qld) Pty Ltd v Civil & Civic Pty Ltd (unreported Appeal No. 8733, 3 February 1998)
Immer (No. 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1992-1993) 182 CLR 26
Masters v Cameron (1954) 91 CLR 353
Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723
Northern Ocean Shipping Co. Ltd v Huyundai Construction Co. Ltd [1979] 3 WLR 419Sargent v ASL Developments Ltd (1974) 131 CLR 634
Westpac Banking Corporation v Cockerill (1998) 152 ALR 267COUNSEL: Mr R A Holt SC, with him Mr D A Kelly for the applicant
Mr A J Morris QC for the respondentSOLICITORS: Bennett and Philp for the applicant
Clayton Utz for the respondent
Introduction
The applicant (“Isicob”), a formwork subcontractor, and the respondent (“Baulderstone”), as head contractor, referred their disputes to arbitration pursuant to the terms of the subcontract. Isicob sought, inter alia, to rescind the subcontract because it had been entered into by reason of economic duress. As a result, it contended that it was then entitled to be paid for the work which it had carried out for Baulderstone on a quantum meruit basis.
Isicob seeks leave to appeal on the ground of errors of law in the interim award (“the Award”) published by Mr Ian Cameron (“the arbitrator”) on 16 February 2000 pursuant to s 38(2) and s 38(4)(b) of the Commercial Arbitration Act1990. If leave is granted the hearing was conducted on the basis that it also constituted the hearing of the appeal. Isicob also seeks to have the Award set aside on the ground of the arbitrator’s misconduct pursuant to s 42(1)(a) of the Act and have the arbitrator removed pursuant to s 44(a).
Isicob commenced the formwork on 30 August 1990. The subcontract was not signed until 30 October 1990 after negotiations about a number of the terms in the days preceding signing. Progress claims were made and paid in the course of the work after the subcontract had been signed. Isicob’s work on the project was completed in 1991. Baulderstone released Isicob’s last bank guarantee on 2 November 1993. The parties were in dispute about a number of matters after cessation of the work.
The arbitrator was appointed in June 1997. It was not until 9 October 1998, when it delivered its statement of claim, that Isicob alleged that it had entered into the subcontract under economic duress and was thereby entitled to rescind the contract and be paid for the value of the work done. On the pleadings there is a difference of some $2m between the lump sum contract price of $2.6m plus some extras and the quantum meruit claim. There are, in the alternative, claims under the subcontract for variation, damages for breach, and the cost of the extension of the contract.
No doubt, having embarked upon the path of arbitration under the aegis of an engineer, as Mr Cameron was, the parties and their advisers felt bound to continue on it but, as the pleadings, submissions and reasons of the arbitrator reveal, he was required to decide complex and very difficult legal matters. Characterising conduct as constituting duress in a commercial setting is fraught with difficulty. With the utmost respect to those appellate courts which have considered the matter the authorities offer limited guidance, see, for example, the discussion by Giles J in Equiticorp Financial Services Ltd (NSW) v Equiticorp Financial Services Ltd (NZ) (1992) 29 NSWLR 260 at 297.
Added to that, Baulderstone raised defences of election (or affirmation as it appears in the pleadings), delay and estoppel: concepts not without difficulty. Instead of agreeing to have these issues determined by a legally qualified arbitrator or a special referee as a preliminary issue, which might be thought to have been a prudent course, Baulderstone applied to the arbitrator to have the question of economic duress decided by him as a preliminary point. This was unsuccessfully opposed by Isicob who wanted both the issue of economic duress, the quantum meruit claim and other claims under the contract arbitrated as a whole.
It can, I think, fairly be commented that the arbitrator’s reasons demonstrate the obstacles in the way of one whose discipline is not law in deciding difficult and subtle legal questions. This comment is made, conscious that awards should not be scrutinised with the over critical eye which might be cast upon a first instance judgment by an appellate court. Where parties have chosen to resolve their disputes by arbitration, a reviewing court ought not be too ready to draw the dispute into the litigation system. That acknowledgment of finality where arbitration has been chosen as the method of dispute resolution is reflected in the Commercial Arbitration Act 1990 (“the Act”) which imposes quite stringent qualifications on the granting of leave to appeal an award.
By s 38(2) an appeal lies to the Supreme Court “on any question of law arising out of an award” but subject to ss(4). That subsection provides
“An appeal under subsection(2) may be brought by any of the parties to an arbitration agreement -
(a)with the consent of all the other parties to the arbitration agreement; or
(b) subject to section 40, with the leave of the Supreme Court.”
By ss (5)
“The Supreme Court shall not grant leave under subsection (4)(b) unless it considers that -
(a)having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of 1 or more parties to the arbitration agreement; and
(b) there is -
(i) a manifest error of law on the face of the award; or
(ii)strong evidence that the arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law.”
The requirement of leave does not apply, inter alia, where there has been misconduct on the part of an arbitrator or the arbitrator has misconducted the proceedings, s 42(1). Where that occurs a court may set aside the award either wholly or in part.
“Misconduct” is defined in s 4 of the Act to include
“… corruption, fraud, partiality, bias and a breach of the rules of natural justice.”
Mr R A Holt SC, who, with Mr Declan Kelly appeared for Isicob, was concerned to emphasise that the misconduct alleged against the arbitrator was “technical” misconduct. One aspect of the alleged misconduct is identified in the points of contention dated 27 November 2000
“In the numerous instances identified in the attached Schedule, the Arbitrator either made findings inconsistent with the evidence, or findings unsupported by the evidence. Although many of the instances are, in isolation, apparently unimportant, taken together they reveal a process of decision-making so consistently flawed and so seriously deficient as to constitute misconduct.”
Other alleged misconduct is that the arbitrator decided an unpleaded issue and failed to decide a pleaded issue and that he did not give Isicob an adequate opportunity to reply by way of submissions in breach of the rules of natural justice.
In broad compass, the issues for the arbitrator to decide were
(i) did Isicob execute the subcontract under economic duress;
(ii) if it did, was it entitled to have the subcontract set aside.
In answer to that question the arbitrator had to decide
(iii)whether Isicob had elected to affirm the subcontract after the duress was removed; and
(iv) if it had not, was Isicob estopped from denying that it was bound by
the subcontract.
Isicob bore the onus of proving the first issue and Baulderstone bore the evidentiary onus of the third and fourth issues.
The principle factual issue for the arbitrator to decide was whether a threat was made by Baulderstone on 30 October 1990 to close down the works, exclude Isicob and engage another subcontractor to complete the subcontract works already commenced by Isicob and for which it had not so far been paid, if Isicob did not execute the subcontract document which was presented to it on that day. The arbitrator found himself unable to resolve this factual issue.
However, he then considered whether, if the threat had been made, it constituted duress and concluded that it did not since he found that Baulderstone’s conduct was neither “illegitimate” nor “unconscionable”. He made the further surprising finding that there was no effective duress, in any event, when the contract was signed, because it had been concluded, “with a few loose ends” to be tidied up, on 30 August 1990.
The arbitrator further found that even if there were duress Isicob had affirmed the subcontract subsequently. He also found that Isicob was estopped from avoiding the subcontract and making a claim on restitutionary principles.
There are considerable difficulties in the way of fully comprehending the arbitrator’s reasons. There are, what appear to be, inconsistent findings about the formation of the subcontract, a misunderstanding of the onus of proof, some incorrect statements of fact as well as other problems which will emerge in the course of these reasons. The question is whether these defects constitute manifest errors of law and whether the rights of one or both of the parties would be substantially affected by having the question of law determined and/or whether the erroneous findings of fact could constitute misconduct. I was not pressed with the submission that the determination of the questions of law would add or be likely to add, substantially to the certainty of commercial law. This dispute between Isicob and Baulderstone, although involving important legal issues, is merely an application of principle to the facts of the case.
Background
Baulderstone was the successful tenderer to the Commonwealth for the construction of offices in Townsville in 1990. Isicob submitted a price to Baulderstone for the supply, erection and dismantling of formwork for the concrete in the project. It entered and commenced work on the site with the permission of Baulderstone on 30 August 1990 prior to entering into a written agreement.
Negotiations about certain of the terms took place over the ensuing weeks but by the end of October 1990 Baulderstone was anxious to have a settled agreement in writing, not least because it could not or would not make any progress payments to Isicob in the absence of a written subcontract agreement. This was a condition known to Isicob from the outset. Isicob had, by then, on 16 October, lodged its first progress claim.
There were a number of factual disputes before the arbitrator about certain events and their interpretation between 23 August 1990 when Baulderstone invited Isicob to “commence all necessary procurement and forward planning” and the execution of the subcontract on 30 October 1990.
The works the subject of the subcontract were completed in 1991. Up until June 1997 there were various negotiations between the parties about extra payment for the subcontract work which culminated in Isicob notifying a dispute under the subcontract and the arbitrator being nominated on 3 June 1997. But it was not until towards the end of 1998 that Isicob alleged for the first time that it was entitled to avoid the subcontract because of economic duress and sought to be paid on a quantum meruit basis.
After the arbitrator had acceded to Baulderstone’s request to decide as a preliminary issue the question of economic duress there were a number of interlocutory skirmishes. The hearing of this issue commenced before the arbitrator on 11 October 1999 and proceeded over 18 days to 21 December 1999. If that fact alone does not do so, a perusal of the transcript reveals that the arbitration appears to have been protracted, disjointed and not entirely harmonious.
Baulderstone was represented by Mr R N Wensley QC throughout the hearing. Isicob was generally represented by Mr G Gore, an engineer, who was its contract adviser particularly during the period August 1990 to October 1990 (he may have performed the services over a lengthier period but that is not relevant for these proceedings). Mr Gore was also Isicob’s legal consultant. Isicob was represented by counsel, Mr G Brandis, on a limited basis which Mr Brandis explained to the arbitrator on 11 October 1999
“I have been asked by Mr Gore, who I understand has acted as the advocate for Isicob heretofore, to appear for the purposes of opening the case and presenting a closing address and Mr Gore will cross-examine the respondent’s witnesses. Mr Gore himself will be a witness and I will also participate to the limited extent of having him sworn and being here during his cross-examination and re-examining him.” Exhibit 1, volume 2, page 3.
Directions had been given earlier as to the conduct of the arbitration. Evidence-in-chief was by written statement.
Some preliminary points
(i) Error of Law
Isicob submitted that the arbitrator
(a) applied the wrong test when considering whether Isicob had signed the subcontract under duress;
(b) took an incorrect approach to the question whether Isicob had affirmed the subcontract subsequent to signing it; and
(c) erred in his analysis of the question of whether Isicob was estopped from denying the subcontract.
(ii) Misconduct - issues of fact
In the schedule to its points of contention Isicob contended that there were some 78 discreet findings of fact by the arbitrator which were inconsistent with uncontradicted evidence or for which there was no evidence and, taken together, revealed such a flawed process of decision-making as to amount to misconduct. However at the commencement of the hearing before me, Mr Holt (and Mr Kelly), who had recently come into the matter, abandoned some 59 of those allegations of factual error and confined the submissions to the remaining 19.
(iii) Misconduct - failure to accord procedural fairness
Isicob submitted that the arbitrator failed to accord it natural justice (or otherwise fell into error) when he decided an issue not pleaded and when he refused to allow Isicob to make written reply to Baulderstone’s submissions in chief and confined counsel to a limited (as to time) oral response following the oral presentation of the principle written submissions.
Concession
At the outset, Mr AJ Morris QC, for Baulderstone, submitted that although there is much to criticise in the infelicity and inconsistency of expression in the reasons, to read them in the way contended for by Isicob about the formation of the subcontract would lead, inevitably, to a conclusion that the arbitrator’s approach was bizarre and irrational and this was a conclusion not readily to be made. Mr Morris conceded that if that criticism was made out the Award should be set aside subject to findings on the defences. Further, in assessing complaints of defects in an award, Mr Morris submitted that the critical standards which might otherwise apply may not do so to one who is not legally qualified, Kennedy-Taylor (Qld) Pty Ltd v Civil & Civic Pty Ltd BC 9800330, appeal no. 8733 of 1996, judgment delivered 3 February 1998 per Macrossan CJ at pp 5 and 6; per Williams J (as his Honour then was) at pp 1 and 2; and per Byrne J at p 3, of their respective judgments.
Misconduct - failure to decide an issue
The central factual issue for the arbitrator’s decision was whether Mr Allan Russell, Baulderstone’s then new project manager, threatened Mr Trevor Reddicliffe, the managing director of Isicob, on 30 October 1990 that if the subcontract as presented to him that day was not signed, notwithstanding that Isicob had been performing formwork on the project since the end of August and had not been paid for that work, Baulderstone would shut down the job and get another subcontractor. The words alleged to have been said by Mr Russell in response to Mr Reddicliffe’s expressed unhappiness with the subcontract tendered for signature by Mr Ross Cameron that Isicob had expended considerable capital to date and could not continue much longer were that
“… he was not going to put up with the same bullshit that occurred on the Adco job over the signing of the contract … sign the contract Ross Cameron has giving [sic] you, or I will shut the job down and get someone else to do the work”, the Award p 7, exhibit 1, volume 6, p 255.
The arbitrator found himself unable to decide whether Mr Russell said these words to Mr Reddicliffe. Mr Russell’s evidence was that he could barely remember the meeting and asserted that he would not have made such a threat in any event. The arbitrator found Mr Russell “a good and honest witness” and the Reddicliffes (father, Bill, and son, Trevor) “very emotional witnesses who had obviously collaborated in the preparation of their statements and generally less reliable witnesses”, p 17. At p 19 of his reasons the arbitrator said
“I accept Mr Russell’s statement that he would not have contemplated throwing the Claimant off the job but I am unable to find that on the balance of probabilities that Mr Russell did not threaten to suspend work on the subcontract.”
The arbitrator said that he was unable to make a finding that this threat was not made, as urged upon him by Baulderstone’s counsel, rather than expressing that he was unable to conclude on the balance of probabilities that the threat had been made, given that Isicob bore the onus of proving the fact of the threat, if that is what he meant to convey. But is not clear that is what he intended. When summarising his conclusion on this aspect of the Award he stated at pp 19-20 that he rejected “the written and oral evidence of the two Reddicliffes which seeks to prove duress” and accepted “the evidence given by several witnesses for the Respondent that there was no duress” and added at p 20,
“I FIND that the claim of duress is a manufactured claim with no basis in fact and must fail.”
Unfortunately, this is of no real assistance in respect to the central issue because it was made after the arbitrator had concluded that the threat, if made, was neither illegitimate nor unconscionable.
Neither Mr Holt nor Mr Morris developed the argument that what appears to be a misapprehension about the onus of proof constituted an error of law. If the arbitrator had found expressly that Isicob had not satisfied him that the threat had been made, that would have concluded the matter. Failure to make a finding of fact central to a dispute will usually be problematical but not necessarily fatal if, as here, the existence of the fact is assumed for the purpose of deciding whether, if it had occurred, the party who was seeking to establish that fact thereby obtained rights.
The arbitrator went on to consider whether, if the threat had been made, it constituted impermissible duress upon Isicob so as to entitle it to avoid the contract. He concluded that it did not. Before going to the arbitrator’s consideration of duress, his findings about of the formation of the contract need to be considered.
Misconduct - deciding an issue neither pleaded nor argued
The arbitration was conducted by both sides on the basis that the subcontract was entered into on 30 October 1990 when the document was executed. There are passages in the reasons which suggest that the arbitrator’s considered conclusion was that the subcontract was entered into on or about 30 August 1990 when Isicob commenced work on the site.
Isicob submitted that the arbitrator found that the subcontract “with a few loose ends” to be tidied up was made on 30 August and thereby fell into error since no fact supported and no party had contended for that conclusion. Such a finding had, as an important consequence, that any issue of duress on 30 October would be irrelevant except insofar as it might indicate an intention to breach the contract. Nevertheless the arbitrator did consider the allegation of duress on the supposition that the contract was not concluded until 30 October 1990.
Isicob had been awarded the subcontract subject to completing a questionnaire covering matters to be incorporated in the written subcontract. The purpose of the questionnaire, as found by the arbitrator, was to narrow matters which needed further negotiation and to ensure that all relevant matters had been taken into account by any subcontractor to the project when pricing the work initially for the tender. The general conditions of subcontract were the SCNPWC edition 3 conditions which the arbitrator described as “widely used conditions of subcontract for government contracts” together with Annexure A being general conditions of subcontract peculiar to Townsville and Annexure B being special conditions tailored for the formwork subcontract.
To a large extend the major terms were settled at the outset. The subcontract document forwarded to Isicob on 16 August 1990 before it went onto the site stated that no progress claims would be paid to a subcontractor until the subcontract was fully documented. On 17 August, Isicob forwarded copies of the subcontract conditions and the questionnaire to its contractual adviser, Mr Greg Gore, for his opinion. The arbitrator recorded that Mr Gore was otherwise engaged and did not give attention to this request until October 1990.
Isicob maintained that it had responded to the questionnaire on 17 August while Baulderstone asserted that it had never received any response. The arbitrator found that Isicob had not returned the questionnaire to Baulderstone. He relied on the fact that Mr Cameron of Baulderstone continued to remind Mr Trevor Reddicliffe through August, September and October that the questionnaire had not been returned and that there was no response from Mr Reddicliffe that he had done so.
There were early concerns expressed by Isicob as to the capacity of the crane on site and who was to be responsible for down time and other associated costs. This was an ongoing dispute. Counsel agreed before me that the arbitrator was incorrect when he concluded at p 17 that “vertical hoisting was not a live issue on 30 October 1990”.
On 23 August 1990 Isicob received certain documents from Baulderstone by facsimile transmission. The cover sheet stated
“Re: Townsville Cwth Offices - Herewith a letter of intent re formwork contract. Please note we cannot prepare subcontract agreement until we have received duly completed (to our satisfaction) questionnaire previously forwarded to you. Please give this matter your urgent attention. Regards R Cameron”.
The enclosed document, MEC 17904, stated
“CONTRACT: Commonwealth Offices Townsville (stage 2)
Re: Formwork, jump-form & screens
We confirm our verbal advice that, subject to the negotiation of mutually acceptable subcontract conditions, it is our intention to award you the subcontract to perform the above works on this project for the sum of $2,600,000.
We shall forward our proposed subcontract agreement to you in the near future for your execution.
In the meantime we would be pleased if you would commence all necessary procurement and forward planning.”
Isicob maintained that the concluding sentence was a notice “to start work on the subcontract”, p 4 of the reasons. On the other hand, Baulderstone said that it was “a qualified notice of intent to enter into a subcontract subject to the negotiation of mutually acceptable subcontract conditions”, ibid. The arbitrator noted that Isicob was given possession of the site necessary for the execution of its subcontract on 30 August 1990 and that it “continued to work on the subcontract thereafter.” He noted that Baulderstone did not prevent Isicob from starting on the subcontract work.
“In fact, the Respondent [Baulderstone] treated the Claimant [Isicob] as though it was the subcontractor for the formwork although, at that stage, mutually acceptable subcontract conditions had not been finally negotiated, nor had a letter of acceptance been issued nor had a subcontract been signed.
The arbitrator found against Isicob’s argument that MEC 17904 was an unconditional letter of intent requesting Isicob to plan procurement and commence the execution of the subcontract. He noted that Isicob started to mobilise on the site “even though no mutually satisfactory agreement had been reached on the subcontract conditions”. He concluded that Baulderstone was lax in its administration of the contract in allowing Isicob to mobilise and commence work without having concluded mutually acceptable subcontract conditions. He then found
“… that in allowing the Claimant [Isicob] to mobilise on site and then start actual work, the Respondent [Baulderstone] had, by conduct, acquiesced in the Claimant’s entry into the Subcontract. I FURTHER FIND that, in acquiescing with the Claimant’s entry into the Subcontract, the Respondent did not lose the right to pursue the completion of the questionnaire or the achievement of mutually acceptable subcontract conditions,” ibid.
Despite these and other findings about the subcontract as signed on 30 October 1990 the arbitrator returned to document MEC 17904 and reached a surprising conclusion:
“ I have already found that the Claimant misinterpreted and accepted the Respondent’s qualified letter of intent MEC 17904 on 23 August 1990 as a letter of acceptance and started to mobilise on site and carry out the work of the subcontract on 30 August 1990. I have further found that by acquiescing in this acceptance the Respondent did, by conduct, confirm the claimant’s entry into the subcontract on 30 August 1990. This voluntary entry into the contract by the Claimant with many aspects of the subcontract still under negotiation and still unresolved was an act of free choice by the Claimant and cannot be said to have been forced upon the Claimant by the Respondent. So, on this reading of the subcontract formation any pressure exerted by the Respondent after 30 August 1990 was not aimed at wrongfully forcing the Claimant into a bargain; the bargain had already been made, albeit with a few loose ends. I FIND that the bargain with a few loose ends was made on 30 August 1990 and any subsequent negotiations or “alleged threats” made by the Respondent cannot be duress as claimed and the claim of economic duress must fail.” p 16
The arbitrator then said
“If, however, my finding that the Claimant and the Respondent entered into the subcontract on 30 August 1990 is incorrect, it is necessary to look further at the making of the Subcontract.
It is impossible to interpret this paragraph in the arbitrator’s reasons as an unhappy use of language by a practical man who, when he is speaking of “entering into the subcontract” really means “commencing the works, the subject of the subcontract,” as was contended for by Mr Morris. Neither could it be construed as a finding based on what the arbitrator thought was Isicob’s position that it was a notice to commence work which in some fashion constituted a binding contract with a few details to be worked out, perhaps a contract similar to the first kind referred to in Masters v Cameron (1954) 91 CLR 353 at p 360. But neither Isicob’s submissions nor its pleadings contended for this conclusion. Yet, notwithstanding his unambiguous statement that the subcontract was formed on 30 August, the arbitrator reviewed in detail the ensuing conduct of the parties and made clear at various points in his reasons that the parties were still negotiating the terms of the subcontract after 30 August.
The arbitrator set out and considered a series of faxed letters from Baulderstone’s Mr Cameron urging Isicob to return the duly completed questionnaire so that a subcontract agreement could be drafted. On 17 September 1990 Mr Cameron wrote
“Note that signed subcontract must be in place before our computer system will allow any S/C payments. Note also 20th each month is claim date & you will be als [sic] wanting to claim for work done. You urgent attention would be appreciated.”
On 8 October 1990 Mr Cameron again communicated with Mr Reddicliffe.
“I refer to our telephone conversation last week and confirm that we cannot even draft the subcontract agreement until you return the duly completed questionnaire previously forwarded.
Further to the above no subcontract progress claims can be authorised until such time as the formal subcontract agreement is duly executed. Progress claims are due on the 20th of each month. Unless the contract is in place by then we cannot process your progress claims. It is imperative that you action this urgently. We await your reply.”
On 10 October 1990 Mr Trevor Reddicliffe and Mr Cameron met and agreed on certain amendments to the terms of the subcontract.
The arbitrator noted that on 11 October 1990 Mr Trevor Reddicliffe faxed a copy of the amended subcontract conditions to Mr Gore and on the cover sheet said
“BHQ [Baulderstone] will not pay without a signed contract. Bill & I have tried our best. Ross Cameron bought this contract around and we agreed on some points. He will be calling you at 3.00 p.m. Is not urgent we get it finalised. He wants to sign the contract tomorrow. All [sic] the very least you can talk to him & start the dialogue.”
The arbitrator did not accept that the word “not” appearing in the cover message should read “now”. He did accept that the word “all” should read “at”.
The arbitrator noted that on 15 October 1990 there was a telephone conversation between Mr Gore and Mr Cameron in which various clauses in the contract were discussed. He noted that on 23 October Mr Gore wrote to Baulderstone listing 23 items in the subcontract document which Isicob required to be altered before it would sign. On 24 October 1990 Baulderstone replied accepting thirteen of the required alternations, rejecting seven, partially accepting two and held one in abeyance. Finally on 30 October 1990 Mr Trevor Reddicliffe and Mr Ross Cameron met in Mr Cameron’s office. Two further alterations were made to the contract. Mr Trevor Reddicliffe complained that there had been no payment of the first progress claim which had been submitted on 16 October 1990. He alleged that Mr Cameron replied after a complaint that Isicob had been working without payment “that is your problem”. Then occurred the alleged exchange with Mr Russell. Mr Reddicliffe said in his statement that he then signed the subcontract unwillingly. The arbitrator found expressly that Mr Reddicliffe did not complain to Mr Russell that he was being forced to sign.
There was nothing in either the pleadings or the lengthy written submissions which could have induced the arbitrator to take so wrong an approach to the contract. As was conceded by Mr Morris, if that were all, the Award would have to be set aside. However the arbitrator’s approach to duress and to the defences raised by Baulderstone need to be considered.
Error of Law - Duress
If the arbitrator merely made wrong findings of fact about the circumstances of the alleged duress or, indeed, drew erroneous influences from those facts that would not create appellable error. But Isicob contends that the arbitrator fell into error by misconceiving the causative test for duress. Although the arbitrator had concluded that the subcontract was, on the whole, fair, he accepted that it is to the making of a contract that an inquiry about duress must be addressed.
The arbitrator was referred by both counsel to Crescendo Management Pty Ltd v Westpac Banking Corporatation (1988) 19 NSWLR 40 as stating the law in Australia as it relates to economic duress. The arbitrator quoted the well known passage by McHugh JA (as his Honour then was) at pp 45-6 as the statement of principle which he should apply.
“In my opinion the overbearing of the will theory of duress should be rejected. A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct. But the categories are not closed. Even overwhelming pressure, not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress.”
The arbitrator found a passage from Barton v Armstrong [1973] 2 NSWLR 598; [1976] AC 104, regularly referred to in the authorities, of assistance,
“… in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as legitimate. Thus, out of the various means by which consent may be obtained - advice, persuasion, influence, inducement, representation, commercial pressure - the law has come to select some which it will not accept as a reason for voluntary action: fraud, abuse of relation of confidence, undue influence, duress or coercion.”
The arbitrator indicated that he was familiar with the decision of Giles J in Equiticorp, including at p 297, where his Honour suggested that the threat of unlawful action such as breach of contract will readily be characterised as illegitimate conduct. But the arbitrator did not seek to apply that characterisation to the alleged conduct on 30 October in the circumstance where he had concluded that the contract had been entered into on 30 August.
At p 15 of his reasons the arbitrator summarised the effect of the decisions on economic duress to which he had made reference. It seems clear that he did not regard “the overbearing of the will” as the appropriate approach to the resolution of this issue as is contended for by Isicob.
Isicob contends that when the arbitrator said at p 17
“The question therefore becomes; was the subcontract forced upon an unwilling Claimant by unconscionable pressure exerted by the Respondent”
he erroneously required an answer to the question, whether the will was overborne. Although the use of that expression may be calculated to confuse it should be seen in the context of what the arbitrator was then considering in his reasons. Further the use of the expression “unwilling” does not connote involuntariness which was the state which McHugh JA said was a wrong characterisation of what actually occurs. The arbitrator had set out at p 17 the two issues which Isicob’s counsel had submitted he needed to consider.
“(a) whether or not, at the time it signed the Subcontract, the Claimant had any practical alternative other than to do so, and
(b)whether, by insisting upon the Subcontract in those terms, the Respondent’s conduct was unlawful or otherwise illegitimate.”
The arbitrator had concluded earlier in his reasons that Baulderstone’s conduct was not unlawful because, he said, this was not part of Isicob’s case. (Isicob was not to know that the arbitrator would conclude that the subcontract was formed on 30 August and it therefore had no opportunity to address the consequences of a threat to breach that contract which, if proved, would be unlawful.)
Mr Holt submitted that the arbitrator failed to consider Baulderstone’s unlawful conduct, if the threat were made, of refusing to pay for work already done. Even on Isicob’s case there was nothing express that Baulderstone would not pay Isicob. The arbitrator had concluded that although Baulderstone might close the job down while the subcontract negotiations concluded it always intended that Isicob would complete the work. The correspondence supported this conclusion. It was to the effect that there would be no payment “under the subcontract” until a document was signed. There was, in addition, the arbitrator’s assessment of Baulderstone’s officers. It was not contemplated that there would be no subcontract and it could not have been reasonably thought that Baulderstone would not pay for the work on some basis.
Returning to the issue of causation. It was in the context of the question posed by Isicob as its first issue, namely, whether at the time it signed the subcontract Isicob had any practical alternative, that the arbitrator asked the impugned question.
It had been suggested by counsel for Baulderstone that there were a number of alternatives open to Mr Trevor Reddicliffe when confronted with the ultimatum to sign. For example, he could have consulted with his father, Mr Bill Reddicliffe, he could have taken legal advice, he could have consulted with Mr Gore, or he could have approached Mr Russell’s superior, Mr Kennedy, and complained about the pressure. The arbitrator concluded that as Mr Trevor Reddicliffe took none of these steps it was “indicative of a fairly relaxed state of Mr Reddiciffe’s mind on 30 October and is not indicative of a desperate state of mind”, p 18.
The arbitrator restated this proposition at p 19 when he said
“I FIND that the Claimant signed the subcontract on the morning of 30 October 1990 without seeking advice from its lawyers or contracts adviser or Mr Bill Reddicliffe or without complaint to a higher authority in the Respondent team because Mr Trevor Reddicliffe was not overly concerned with the subcontract. He accepted that the Subcontract as finally negotiated on 24 and 29 October was a fair subcontract that he could live with.”
Although this may seem a surprising finding given that Baulderstone’s counsel had submitted that Mr Trevor Reddicliffe was, no doubt, “genuinely distressed at having to sign the subcontract” in that form, particularly with the cranage clauses that it contained, these were findings of fact and, unless they can be elevated to misconduct, they are not appellable.
There is no substance to the complaint that the arbitrator misunderstood causation as it appears p 17.
Mr Holt submitted that the arbitrator, in reality, failed to address the central question, whether illegitimate pressure had induced or been a reason for Mr Trevor Reddicliffe to sign the contract. There are a number of findings which might suggest that the arbitrator was confused as to just what Isicob had to establish to demonstrate duress. He found that the terms of the subcontract were fair whilst acknowledging that the conditions about the crane were not perfect and concluded that the contract was not unconscionable although he had, in the previous paragraph of his reasons set out that pressure must be illegitimate or unconscionable for duress to be found.
He said that since the cranage issue was no longer live on 30 October and because the subcontract terms were, overall fair, Mr Reddicliffe signed in a fairly relaxed state of mind. He expressed the view that Mr Russell would not have “thrown” Isicob off the job whatever he might have said. The arbitrator found that Mr Reddicliffe did not complain to Mr Russell on 30 October about signing the subcontract. He found that if Isicob, as it alleged it said it was, was in an impossible financial position, that was of its own making.
It was not relevant that the contract was objectively fair if Isicob was wrongfully pressured into signing it. It was a wrong emphasis to find that Isicob’s financial difficulties were of its own making since the question was whether Baulderstone took advantage of that situation in a way that was unconscionable. It was not relevant to consider Mr Russell’s future unexpressed intentions. What was important was the effect of pressure upon the quality of the consent of Isicob and whether, in all the circumstances, it was illegitimate, Westpac Banking Corporation v Cockerill (1998) 152 ALR 267 per Kiefel J at 289.
Muddled and difficult to follow as much of this part of the reasons is, I am not persuaded that the arbitrator approached overall the question of duress erroneously. He was, as it seems to me, looking at the whole picture to answer the central question. A finding that the pressure was neither illegitimate nor unconscionable is a mixed question of fact and law and there was no error of law.
Error of law - affirmation
The arbitrator concluded that there was a delay of some eight years from the date that the subcontract was signed until Isicob raised the right to rescind. He found that during that period Isicob conducted itself in its relations with Baulderstone as if it were governed by the terms of the subcontract. That was admitted on the pleadings by Isicob. He seems to have accepted that Isicob was ignorant of the right to rescind a contract procured under duress until the pleadings were drafted in October 1998 but further expressed the view that if it had consulted its lawyers (as opposed to Mr Gore, it might be supposed) it would have been made aware of its potential entitlement.
The arbitrator appears to have concluded that since Isicob should be taken not to have known of its right to rescind it was never confronted with the need to elect whether to proceed under the subcontract or to rescind it. He found assistance from Northern Ocean Shipping Co. Ltd v Huyundai Construction Co. Ltd [1979] 3 WLR 419 in reaching his decision on this aspect of the arbitration. He said that Mocatta J had concluded that a delay of 9 months after the party who had acted under duress was relieved of the pressure before it took action was too long. But Mocatta J had not concluded that delay alone was sufficient, p 433. He found that the conduct of making a payment (not under protest) after the threat was over followed by delay indicated that the contract had been affirmed.
The arbitrator was confronted with a difficult issue to which, on the cases, there is no clear answer. That is, whether a party must be proved to know only the facts necessary to entitle it to rescind the contract or whether that party must also know of the existence of the legal right to rescind.
The arbitrator referred to the judgment of Mason J in Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 656
“A person confronted with a choice between the exercise of alternative and inconsistent rights is not bound to elect at once. He may keep the question open, so long as he does not affirm the contract or continuance of the estate and so long as the delay does not cause prejudice to the other side. An election takes place when the conduct of the party is such that it would be justifiable only if an election had been made one way or the other (Tropical Traders Ltd v Goonan (1964) 111 CLR 41). So, words or conduct which do not constitute the exercise of a right conferred by or under a contract and merely involve a recognition of the contract may not amount to an election to affirm the contract.”
He also referred to Immer (No. 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1992-1993) 182 CLR 26 particularly the discussion of Sargent at p 42.
“But, in drawing this distinction, Mason J was focussing on the dichotomy between awareness of the right to rescind and awareness of the facts giving rise to the right. We do not read that passage from his Honour’s judgment as implying that a party to a contract who is aware either of the right to rescind or of facts giving rise to a right to rescind will necessarily be held to have elected to affirm a contract if he or she acts on the basis that the contract remains on foot. Such an implication is at odds with the notion of being confronted with the necessity of making a choice.”
The arbitrator, supposing that Isicob was ignorant of its legal right to avoid the subcontract because of duress, concluded that it was never confronted with the need to elect. He added,
“In accordance with the judgment in Imner [Immer] the Claimant will not be necessarily held to have elected to affirm the contract.”
He concluded
“That ignorance of the law relating to duress and recision cannot be taken as protection of the rights of the Claimant indefinitely. … In this case there was a delay of at least seven years between the removal of whatever pressure there was at the time of return of the bank guarantees to October 1998. I THEREFORE FIND that by delaying at least seven years before seeking to elect to rescind the subcontract the Claimant has affirmed the subcontract.” p 21.
Baulderstone pleaded its case on affirmation in the following way.
“28.The claimant first alleged that it was forced to sign the contract under economic duress when the claimant delivered its statement of claim on 9 October 1998.
29.Until 9 October 1998 the claimant conducted itself as if the contract terms applied.
30. In so doing, the claimant affirmed the contract.”
Baulderstone initially declined to give particulars of Isicob’s alleged conduct but subsequently said that it relied upon the whole of Isicob’s conduct until October 1998. Isicob admitted in paragraph 7 of its Reply that prior to 9 October 1998 it acted as if it believed that the subcontract was binding on it.
Baulderstone pleaded as a separate defence undue delay.
“31.Further and in the alternative, in the premises referred to in paragraphs 28, 29 and 30, the claimant unduly delayed in bring its duress claim and if (which is denied) the claimant was entitled to avoid the subcontract because of duress, it lost that entitlement because of the said delay."
When challenged about the sufficiency of this pleading Baulderstone alleged that the detriment which it suffered by virtue of the delay was the same as that which supported its estoppel defence. That was found in paragraph 32.
“32.The respondent says the claimant is estopped from saying it was forced to enter into the subcontract because of economic duress, because the claimant acted at all times prior to 9 October 1998 as if the terms of the subcontract applied, which induced the respondent to believe the subcontract was binding, and that the claimant accepted it was binding, and therefore induced the respondent, to its detriment, to:
(a)administer the claimant’s works in accordance with the terms of the subcontract;
(b)pay claims made by the claimant under the terms of the subcontract;
(c)release security in accordance with the terms of the subcontract; and
(d)submit to this arbitration in accordance with the subcontract terms.”
The detriment was subsequently further particularised on 13 May 1999 as,
“(a)the respondent did not and could not refer the claimant’s allegations of economic duress to arbitration;
(b)the respondent did not and could not seek to negotiate a contract with the claimant;
(c)the respondent did not and could not administer the works as if there was no subcontract in existence;
(d)the respondent did not and could not obtain statements from its material witnesses when all of the facts in dispute were fresh in those witnesses’ minds;
(e)the respondent kept project records as if there was a subcontract in place;
(f)the respondent did not keep records that would be relevant for administering works without a subcontract;
(g)the respondent valued progress claims, variation claims, extension of time claims and other claims as if the terms of the subcontract applied;
(h)the respondent paid the claimant as if the subcontract applied;
(i)the respondent released security as if the subcontract applied; and
(j)the respondent did not sue other subcontractors to perform the claimant’s work.”
The arbitrator made no specific reference to any conduct on the part of Isicob which could constitute an affirmation of the contract between the time the pressure was removed and the election to rescind. He must be taken to have adopted the admission by Isicob that it had conducted itself during that time as if the subcontract was operative between the parties. On the authorities, without something more, this may be equivocal, Cockerill v Westpac Banking Corporation (1996) 142 ALR 227 per Cooper J at first instance at p 280-3. See also, Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298.
The arbitrator was concerned that no election could have been made if Isicob did not, in effect, know of its rights. Mason J adverted to this problem in Sargent at p 656 when he said
“The central problem in these cases lies in ascertaining what in the eye of the law are the elements essential to the making of a binding election, in particular whether knowledge of the existence of the alternative right is a prerequisite in the party against whom election is alleged. The question is complicated because in some instances election may take place as a matter of conscious choice with knowledge of the existence of the alternative right and in other cases it may occur when the law attributes the character of an election to the conduct of a party.”
His Honour reviewed the authorities which had come to different conclusions as to whether it is necessary that a party have knowledge of its rights before it can be said to make an election. He referred to Elders Trustee and Executor Co. Ltd v Commonwealth Homes and Investment Co. Ltd (1941) 65 CLR 603 and observed that the court had not unequivocally resolved the conflict,
“The Court did not give its assent to the general principle enunciated by Jordan CJ [that only knowledge of the facts was necessary]; nor did it state positively that in those cases in which the party’s conduct was unequivocal in its effect it constituted an election without knowledge of the alternative right. However, it conceded that “it may well be” the result where rights are exercised … by virtue of a contract, and the rights so exercised were such as would not exist unless the … contract subsisted on foot. Although this concession does not amount to a final and authoritative expression of opinion, it does perhaps indicate a disposition to accept the proposition that in the circumstances mentioned knowledge of the existence of the alternative right, as distinct from knowledge of the facts giving rise to the right, is not essential to the making of a binding election.”
pp 657-8
His Honour concluded
“If a party to a contract, aware of a breach going to the root of the contract, or of other circumstances entitling him to terminate the contract, though unaware of the existence of the right to terminate the contract, exercises rights under the contract, he must be held to have made a binding election to affirm. Such conduct is justifiable only on the footing that an election has been made to affirm the contract: the conduct is adverse to the other party and may therefore be considered unequivocal in its effect. The justification for imputing to the affirming party a binding election in these circumstances, though he be unaware of his alternative right, is that, having a knowledge of the facts sufficient to alert him to the possibility of the existence of his alternative right, he has acted adversely to the other party and that, by so doing, he has induced the other party to believe that performance of the contract is insisted upon. It is with these considerations in mind that the law attributes to the party the making of a choice, though he be ignorant of his alternative right.”
To similar effect was the judgment of Stephen J. At p 645 his Honour concluded after discussing the authorities
“… all that need be established in order for the doctrine of election to apply is knowledge by the vendors of the facts giving rise to inconsistent legal rights; … if they then knew of the relevant facts giving rise to the rights of recision, that is, the existence of a planning scheme affecting the land sold, that is enough to invoke the doctrine. Their own interpretation or understanding of the nature or extent of their contractual rights will be irrelevant …”
It is unfortunate that the arbitrator made no findings about specific conduct by Isicob after the pressure was removed, which, on the best case for Isicob, was after the bank guarantees were released. Mere delay, if it be accepted that there was no knowledge of the legal right to rescind, will be insufficient without some evidence of adherence to the contract to constitute an election to affirm it, Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723. However delay of any duration will give rise to issues of detriment which finds its place in the discussion of the other defence of estoppel, ibid.
Error of law - estoppel
Finally, Baulderstone alleged that the representation made by Isicob that the subcontract remained on foot and its reliance on that representation which led to it administering the subcontract, making payments under it, dealing with claims and carrying out other subcontract administrative actions to its detriment prevented Isicob from rescinding the contract. The arbitrator’s findings after setting out the esssential elements of an estoppel were brief.
“By such reliance the Respondent has suffered detriment by being denied the ability to (1) seek early legal advice on a possible threat to the subcontract; (2) take statements from important witnesses when the matters were fresh in their minds; (3) ensure the safe keeping of records in respect of costs. I accept the Respondent’s submission that were the subcontract to be voided at this late stage and payment to the Claimant be on a quantum meruit basis the Respondent would suffer considerable detriment due to its inability to properly mount a defence of claims made on that basis. The Claimant’s submission that there has been no detrimental reliance is wrong.” p 22
The arbitrator observed
“Commerce could not function if parties to contracts maintained the right to void a contract indefinitely. There must be finality in a contract. The doctrine of estoppel is designed to provide that finality. So long as the three limbs of estoppel are satisfied a party is prevented by law from asserting the contrary to that which it has previously represented. In this case the Claimant represented that the contract was on foot and it is estopped from now asserting that the subcontract was not on foot.” ibid
Isicob’s submissions before me were not expansive on the question of estoppel. It contended that the arbitrator’s reasoning on this issue was “infected by the same errors” as his reasoning about election. By that I take Isicob to mean that since it (Isicob) did not know of its legal right to rescind, Baulderstone could not invoke the doctrine of estoppel against it. But different considerations arise in the case of estoppel even if, for argument, it be accepted that a party alleging affirmation of a contract must show that the party seeking to rescind knew of its legal right to do so.
In Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (supra) Priestley JA at 305 in a case concerning duress and affirmation said
“Turning to estoppel, I note first that the type of situation where an estoppel may operate even although the doctrine of election does not is where the latter doctrine does not apply because the party with the right of election did not know his legal rights regarding election but nevertheless acted in such a way as to represent to the other party that the contract was being affirmed and that the other party then acted to that party’s detriment on the basis of the representation.”
Similarly in the judgment of Handley JA. See also Newbon v City Mutual Life Assurance Society Ltd, supra. There is no demonstrated error of law on the part of the arbitrator about estoppel and his findings of fact are sufficient to support the defence.
Misconduct - procedural fairness
Isicob had contended that the arbitrator failed to allow the parties sufficient opportunity for submissions in reply and in this way failed to accord them procedural fairness. This was a complaint canvassed before the arbitrator by Mr Brandis for Isicob on more than one occasion but which was opposed by Mr Wensley for Baulderstone.
Directions had been given from time to time as to how the arbitration was to progress. On this matter the arbitrator directed that he would receive principle submissions in writing by each side which would have been exchanged with a few days intervening before the oral submissions to those written submissions were made. There was no limit on the length of the written submissions. Mr Brandis for Isicob submitted that there should be an opportunity for written submissions in reply after the principle submissons had been made. Mr Brandis was concerned that Mr Wensley’s submissions would be so extensive that it would require days for Mr Gore and Mr Reddicliffe to analyse them in order for him to make an appropriate reply. The arbitrator was concerned to bring the arbitration to an end and ruled that a day would be devoted to oral submissions. Each side was limited to two hours to speak to the written submissions to be followed by an oral reply of about an hour which might be supplemented by a brief written document on the day.
It is in that context that Isicob complains that it was not afforded natural justice. What constitutes an opportunity to be heard will vary in the circumstances. It is far from unusual to confine submissions in a court to a limited period and is not thought to constitute a breach of the principles of procedural fairness that that should be so.
The arbitrator had been engaged in this matter for a long period. He put no limit on the length of the written submission which, in the event, were extensive, - 168 pages from Baulderstone and some 65 pages from Isicob. It was entirely appropriate for the arbitrator to confine the opportunity for reply in the way in which he did. The issues of fact to be raised by Baulderstone had been clearly identified in the pleadings, in the various interlocutory steps and throughout the arbitration hearing. The issues of law were in no doubt.
It is likely that the way Isicob chose to conduct the arbiration - retaining counsel for limited periods - may have contributed to its concerns but that was its choice and there was no misconduct in failing to allow counsel for Isicob to have further time to make written submissions in reply.
Misconduct - findings of fact contended to be in error
The remaining findings of fact which Isicob contends are so perverse as to collectively constitute misconduct are, for the most part irrelevant or marginal to the central issue which the arbitrator had to find and I do not propose to canvass them. They are set out at length in the papers and submissions. The arbitrator’s use of the expression “common ground” between the parties certainly led him into error in respect of a number of factual matters.
The most serious factual error was about the crane issue. His conclusion that the capacity of the crane and the allocation of the risk associated with crane breakdown had been addressed and was not an issue as at 30 October 1990 was against evidence. As a consequence of this wrong finding the arbitrator seems to have been led into an erroneous conclusion that Mr Trevor Reddicliffe was not overly concerned with the subcontract on 30 October and regarded it as fair. Mr Reddicliffe’s state of mind when he signed the subcontract was an important matter when the arbitrator had to decide whether pressure exerted upon him caused him to sign the contract.
Ultimately, although there were important findings of fact about which the arbitrator reached an erroneous conclusion, the process of fact finding was not so flawed as to constitute misconduct. Parties who choose arbitration for its many benefits must also be taken to accept its limitations. That means, in general, erroneous findings of fact will be unreviewable.
Conclusion
The arbitrator’s reasons are seriously flawed in the ways which I have set out. I have given much consideration as to whether the Award should be set aside for that reason. But on the final issue of estoppel the arbitrator made no error. I have considered whether the misconduct in not deciding the factual issue of whether the threat was made and in deciding an issue not before him, namely, that the contract was entered into on 30 August and other errors to which I have referred, have so infected the whole of the Award, that, notwithstanding the findings on estoppel, the Award ought to be set aside. I have concluded that it ought not. The factual findings which the arbitrator made on estoppel were completely discreet from all other issues they could stand alone and govern the outcome.
In the result it could not be concluded that the rights of the parties would be affected if leave to appeal were granted. The applications for leave to appeal are refused.
Since the misconduct has not affected the rights of the parties the Award ought not be set aside in whole or in part on that ground. The application to set aside the Award is dismissed.
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