Island Industries Pty Limited v The Administrator of Norfolk Island
[2003] NFSC 1
•20 JUNE 2003
SUPREME COURT OF NORFOLK ISLAND
Island Industries Pty Limited v The Administrator of Norfolk Island
[2003] NFSC 1ARBITRATION – Application to set aside award of an arbitrator made pursuant to an agreement contained in a licence to use Crown land for rock crushing – Estoppel - Powers of Administrator of Norfolk Island – Whether conditions of agreement relating to rehabilitation of land are invalid – Whether arbitration agreement ousts jurisdiction of Court – Validity of appointment of arbitrator – Extent of Court’s supervisory powers over arbitrator’s decision – Significance of Norfolk Island legislation conferring on the Norfolk Island Supreme Court the same jurisdiction in relation to Norfolk Island as that conferred in relation to the Australian Capital Territory on the Supreme Court of the Australian Capital Territory – Enforcement of arbitrator’s award – Leave granted to enforce the award in the same manner as a judgment or order of the Court.
Norfolk Island Act 1979 (Cth) ss 5, 7, 11 Schedule 2
Judicature Act 1960 (NI) s 3
Supreme Court Act 1960 (NI) s 5
Supreme Court Act 1933 (ACT) s 20
Commercial Arbitration Act 1986 (ACT) ss 33, 38, 42, 57`
ISLAND INDUSTRIES PTY LIMITED v THE ADMINISTRATOR OF NORFOLK ISLAND, DAVID KENDALL PITCHER and MICHELLE JAN SAAL PITCHER
SC 4 of 2002
THE ADMINISTRATOR OF NORFOLK ISLAND, DAVID KENDALL PITCHER and MICHELLE JAN SAAL PITCHER v ISLAND INDUSTRIES PTY LIMITED
SC 11 of 2002
WILCOX J
20 JUNE 2003
SYDNEY (HEARD AT NORFOLK ISLAND)
IN THE SUPREME COURT
OF NORFOLK ISLAND
SC 4 of 2002
BETWEEN:
ISLAND INDUSTRIES PTY LIMITED
PLAINTIFFAND:
THE ADMINISTRATOR OF NORFOLK ISLAND
FIRST DEFENDANTDAVID KENDALL PITCHER
SECOND DEFENDANTMICHELLE JAN SAAL PITCHER
THIRD DEFENDANT
JUDGE:
WILCOX J
DATE OF ORDER:
20 JUNE 2003
WHERE MADE:
SYDNEY (HEARD AT NORFOLK ISLAND)
THE COURT ORDERS THAT:
1. The proceeding be dismissed.
2.The plaintiff, Island Industries Pty Limited, pay the costs of the defendants, the Administrator of Norfolk Island, David Kendall Pitcher and Michelle Jan Saal Pitcher.
IN THE SUPREME COURT
OF NORFOLK ISLAND
SC 11 of 2002
BETWEEN:
THE ADMINISTRATOR OF NORFOLK ISLAND
FIRST APPLICANTDAVID KENDALL PITCHER
SECOND APPLICANTMICHELLE JAN SAAL PITCHER
THIRD APPLICANTAND:
ISLAND INDUSTRIES PTY LIMITED
RESPONDENT
JUDGE:
WILCOX J
DATE OF ORDER:
20 JUNE 2003
WHERE MADE:
SYDNEY (HEARD AT NORFOLK ISLAND)
THE COURT ORDERS THAT:
1.Leave be granted to the second and third applicants, David Kendall Pitcher and Michelle Jan Saal Pitcher, to enforce against the respondent, Island Industries Pty Limited, the award made by Ms E M Symons on 25 March 2002 in the same manner as a judgment or order of this Court.
2. The said respondent pay the costs of this proceeding incurred by the applicants.
IN THE SUPREME COURT
OF NORFOLK ISLAND
SC 4 of 2002
BETWEEN:
ISLAND INDUSTRIES PTY LIMITED
PLAINTIFFAND:
THE ADMINISTRATOR OF NORFOLK ISLAND
FIRST DEFENDANTDAVID KENDALL PITCHER
SECOND DEFENDANTMICHELLE JAN SAAL PITCHER
THIRD DEFENDANT
IN THE SUPREME COURT
OF NORFOLK ISLAND
SC 11 of 2002
BETWEEN:
THE ADMINISTRATOR OF NORFOLK ISLAND
FIRST APPLICANTDAVID KENDALL PITCHER
SECOND APPLICANTMICHELLE JAN SAAL PITCHER
THIRD APPLICANTAND:
ISLAND INDUSTRIES PTY LIMITED
RESPONDENT
JUDGE:
WILCOX J
DATE:
20 JUNE 2003
PLACE:
SYDNEY (HEARD AT NORFOLK ISLAND)
REASONS FOR JUDGMENT
WILCOX J:
By consent, two related matters have been heard together. Both of them arise out of an arbitration conducted pursuant to a licence granted by the Administrator of Norfolk Island (“the Administrator”) to Island Industries Pty Ltd (“Island Industries”). The other parties, in each matter, are David Kendall Pitcher and Michelle Jan Saal Pitcher.
The facts
Between 29 October 1970 and 15 October 1988, Island Industries occupied an area of Crown land on Norfolk Island known as Portion 48c. The company used the land as a quarry. Rock crushing was carried out.
In early 1999, it was decided the quarry should reopen for a short period in order to enable supply of urgently needed crushed rock. Accordingly, on 15 March 1999, the Administrator granted a new licence to Island Industries. Having regard to submissions raised in these proceedings, it is necessary to mention certain terms of this document.
The licence agreement contained the following recitals:
“A.Island Industries Ltd [sic – should be Pty Limited] by leases, licences and authorisations granted between 29 October 1970 and 15 October 1997 under the Crown Lands Ordinance 1913 (NI) (repealed) and the Crown Lands Act 1996 (NI) occupied and used an area of Crown Land on Norfolk Island known as portion 48c (the Land) to operate a basalt rock crushing plant.
B.The last such licence granted to Island Industries Ltd [sic] expired on 15 October 1998 and, although no further rock crushing has taken place on the Land, Island Industries Ltd [sic] has not vacated the Land.
C.Stocks and supplies of crushed rock products on Norfolk Island are virtually exhausted and there is an urgent need for the temporary resumption of rock crushing.
D.The rock crushing plant previously operated by Island Industries Ltd [sic] on the Land is the only immediate source of supply of crushed rock products for Norfolk Island and the Administration has recommended that the Administrator issue a short term licence to Island Industries Ltd [sic] to satisfy the need.”
Clause 1.1 of the agreement defined the word “Administration” as being “the Administration of Norfolk Island established pursuant to the Norfolk Island Act 1979”. That same subclause defined “the Land” as “Crown Land portion 48c, Norfolk Island”, as more particularly described in Schedule A and shown on an attached plan, and “the Licensee” as Island Industries.
By cl 2.1 the Administrator granted to Island Industries “a Licence to occupy and use the Land from the commencement date until the expiry date for the purpose of operating thereon a basalt rock crushing plant, and for such other associated activities as may be authorised in writing from time to time by the Administrator”. The “expiry date” was 15 September 1999.
Clause 3.1 required Island Industries to pay to the Administrator a licence fee of $500. However, in addition to this, under cl 7 of the agreement, Island Industries undertook rehabilitation obligations. It is necessary to set out only cl 7.1 to 7.3:
“7.1The Licensee must, at its own cost and expense, and to the satisfaction of the Administrator:
(a)remove all structures from the Land;
(b)rehabilitate the Land; and
(c)rehabilitate all areas within the Ball Bay Reserve damaged by the Licensee’s activities, whether during the term of this Licence or a previous lease, licence or authorisation.
7.2 The Licensee must:
(a)rehabilitate the adjacent properties at its own cost and expense and to the reasonable satisfaction of the owners concerned for all damage caused thereto by the Licensee’s activities, whether during the term of this Licence or a previous lease, licence or authorisation; or
(b)at the election of an owner, provide the owner with a reasonable sum of money, in lieu of such rehabilitation, to enable such rehabilitation to be carried out by contractors of the owner’s choice.
7.3In the event of a dispute over the cost, type or extent of rehabilitation required by subclauses 7.1 and 7.2, a party to the dispute may give the other party or parties thereto notice in writing of a dispute. If the dispute is not resolved within 20 working days of such a notice, a party to the dispute may by notice in writing served on the other party or parties require the dispute to be resolved by the determination of an independent arbitrator nominated in writing by the Administrator, or if the Administrator is a party to the dispute, by the Chief Magistrate or by an independent person nominated in writing by the Chief Magistrate. The cost of obtaining arbitration shall be borne as the arbitrator directs. The decision of the arbitrator shall be final and binding on the parties and no appeal shall lie therefrom.”
The words “rehabilitate” and “rehabilitation” were defined by cl 1.1 as meaning:
“(a)the removal of debris, rubbish, run off, offensive and unsightly material, or contaminants;
(b)the repair or replacement of roads, paths, fences and boundary pegs;
(c)the planting of suitable native trees and vegetation;
(d)landscaping;
(e)earthworks to reduce or prevent soil erosion or slippage; and
(f)works to reduce the amount of, or improve the quality of, stormwater released onto or from the Land;”
The term “adjacent properties” was defined by cl 1.1 as meaning “Norfolk Island land portions 49b3 and 49f1 in the ownership of Mr and Mrs Howard Pitcher and Mr and Mrs David Pitcher”.
Clause 12.1 said the Licence “is governed by laws in force in the Territory as applied by the Act”; that is, the Norfolk Island Act 1979 (Cth).
The agreement was executed by the Administrator, by Island Industries under its common seal, and by two directors of the company, John Terence Brown and Peter Mark Evans. By cl 9.1, the directors jointly and severally guaranteed the performance by Island Industries of the terms and conditions of the agreement.
Despite the definition of “adjacent properties” in cl 1.1 of the agreement, it appears that, by the date of the Licence, both Portion 49b3 and Portion 49f1 were owned by David and Michelle Pitcher (“the Pitchers”). They formed the view that Island Industries had failed to comply with cl 7.2(a) of the agreement. They took up the matter with the Administrator. On 30 March 2000 the Administrator wrote a letter to Mr Brown in which he said:
“I refer to Mr David Pitcher’s letter to you dated 29 March 2000 concerning the rehabilitation of portions 49b3 and 49f1.
I write to confirm that Mr Pitcher’s letter constitutes a Notice of a Dispute for the purposes of clause 7.3 of Island Industries’ Licence Agreement dated 15 March 1999.
Clause 7.3 provides that the parties to the dispute have twenty working days to try to resolve this matter (ie, until close of business on 26 April 2000). If the dispute has not been resolved by then, either party to the dispute may thereafter, by serving a written notice on the other party, require the dispute to be resolved by an independent arbitrator selected by this Office.
You should note that the Licence Agreement expressly provides that:
(a)the cost of obtaining arbitration shall be borne as the arbitrator directs; and
(b)the decision of the arbitrator shall be final and binding on the parties and no appeal shall lie therefrom.
In the event that you consider an accommodation cannot be reached, you may wish to submit to this Office the names of two or three individuals on the Island who you consider are sufficiently qualified and independent to act as an arbitrator.
Please note that I have written in identical terms to Mr Pitcher.”
Apparently, no agreement was reached between Island Industries and the Pitchers as to selection of an arbitrator. So the Administrator appointed Ms E M Symons to conduct the arbitration.
On 15 September 2000, Ms Symons held a preliminary conference at which Mr Adrian Cook QC appeared for the Pitchers and Mr Brown for Island Industries. Ms Symons filled in a check-list, mainly by circling either the answer “Yes” or “No” to questions. She noted affirmative answers to the questions: “Is agreement in writing?” and “Is agreement in fact between the parties?” The agreement was identified as “Deed between Resp. Administrator Licence Ag’t”. The Arbitration Clause was shown as “7.3”. There were affirmative answers to the questions: “Do agreement(s) and nomination(s) appear in order?” and “Does arbitrator appear to have jurisdiction?”
There was also a statement that the relevant law was the Commercial Arbitration Act 1990; this apparently being a reference to a Queensland Act. But that was clearly wrong. As mentioned, the agreement provided for the relevant law to be that of Norfolk Island; the case had nothing to do with Queensland.
Ms Symons noted the agreement of the parties as to what was the general nature of the claims:
“(1) Whether damages caused by R
(2) if yes, reasonable cost to rehabilitate.”
Ms Symons also noted that the claimants sought $117,313 and Island Industries valued the claim at $2,000.
On that same day, Mr Cook and Mr Brown signed a document that was submitted to the Administrator. It read:
“David and Michelle Pitcher are in dispute with Island Industries P/L in relation to paragraph 7.3 of the Licence Agreement dated 15.3.99 between the Administrator of Norfolk Is. and Island Industries Pty Ltd.
David and Michelle Pitcher and Island Industries Pty Ltd agree to submit the dispute to arbitration.”
In January 2002, Ms Symons conducted an arbitration hearing over three days. On 25 March 2002, she made a determination in the following form:
“I determine the company pursuant to clause 7.2(a) of the Licence pays to [sic] David and Michelle Pitcher the sum of $76,000 by close of business 30 April 2002.”
The arbitrator’s published determination included her reasons, in which she revealed the components of the sum of $76,000 allowed by her.
On 13 June 2002 the Administrator issued a formal notice, addressed to the directors of Island Industries. The notice said:
“On 25 March 2002, an Arbitration Determination was issued in relation to arbitration proceedings between David Kendall Pitcher and Michelle Jan Saal Pitcher (‘the Pitchers’) and Island Industries Pty Ltd. The proceedings, commenced under sub-clause 7.3, related to a dispute concerning rehabilitation under sub-clause 7.2 of the Licence.
The Determination required that Island Industries Pty Ltd pay the sum of $76,000 to the Pitchers by close of business 30 April 2002. No such payment was made.
Notice is hereby given that you are required to forward the sum of $76,000 to the Administration of Norfolk Island by no later than 4.30pm on 21 June 2002, failing which the amount owing will be treated as a debt due to the Administrator and all bond monies held will be drawn upon and debt proceedings will be commenced in the Supreme Court for the balance owing. For ease of reference you should ensure that monies paid are accompanied by a copy of this Notice.”
Island Industries did not comply with the Administrator’s notice. However, the Administrator released to the Pitchers the sum of $18,320.73, apparently being bond monies held by him. This left a balance of $52,679.27, which has not been paid.
The two proceedings
Matter SC 4 of 2002 was instituted by Island Industries on 23 April 2002. The Originating Application named the Administrator as first defendant and the Pitchers as second and third defendants. The Originating Application was subsequently amended so as to claim the following relief:
“Declarations that:
1.The purported determination of Elizabeth Marjorie Symons dated 22 March 2002 is not final and binding and is null and void and of no effect.
2.Island Industries is not bound by the purported determination of Elizabeth Marjorie Symons dated 22 March 2002.
3.Elizabeth Marjorie Symons erred in law, and in making erroneous findings of fact, in making her purported determination of 22 March 2002.
4.The purported determination of Elizabeth Marjorie Symons dated 22 March 2002 is beyond the scope of the terms of the Agreement, pursuant to which the purported Arbitration proceedings were conducted.
Orders that:
1.The purported determination of Elizabeth Marjorie Symons dated 22 March 2002 be set aside.
2. Such further order or orders as the Court deems fit.
3. Costs.”
The plaintiff’s Statement of Claim set out the alleged facts of the case, which proved mainly uncontroversial, and various legal contentions.
On 29 November 2002 the Administrator and the Pitchers instituted matter SC 11 of 2002, by filing in the Court a Notice of Motion seeking the following orders:
“(1)That leave be granted to the Applicants, jointly and severally, to have deemed to be a Judgement of the Court the arbitration award of Elizabeth Symons of 25th March 2002, less bond monies held by the Administration of Norfolk Island and subsequently paid to the second and third Applicants, and that the said judgement be entered as a Judgement of the Court and be enforceable as surety by the Applicants.
(2)The Respondent pays the Applicants costs including this motion and any entry of judgement herein.”
The Notice of Motion was supported by an affidavit of Graham Charles Rhead, Crown Counsel, setting out the history of the matter and annexing relevant documents.
At the hearing of the matter, on 3 and 4 June 2003, Island Industries was represented by Mr Christopher Hoy of counsel. Mr Rhead appeared for the Administrator and Mr Cook for the Pitchers. A number of points were argued. I will deal with them separately.
Validity of the licence
In written submissions provided by Mr Brown prior to the hearing, it was asserted that the Administrator had no power to grant the licence, in the absence of advice from the Executive Council; that no such advice was provided; consequently the licence was invalid.
The submission refers to s 5 of the Norfolk Island Act 1979 (“the Act”). This is the Commonwealth statute that establishes the current system of government on the island.
Part II of the Act is headed “Administration”. It includes s 5 which provides:
“(1)There shall be an Administrator of the Territory, who shall administer the government of the Territory as a Territory under the authority of the Commonwealth.
(2)The Administration is a body politic with perpetual succession by the name of the Administration of Norfolk Island.
(3)Subject to this Act, the Administration of Norfolk Island is capable by that name of:
(a) suing and being sued;
(b) making contracts;(c)acquiring, holding and disposing of real and personal property; and
(d)doing and suffering all other matters and things a body corporate may do or suffer.”
Section 6 of the Act provides that the Administrator is to be appointed by the Governor-General by Commission and is to hold office during the Governor-General’s pleasure. Section 7(1) deals with the Administrator’s powers and functions:
“(1) The Administrator shall exercise all powers and perform all functions that belong to his office, or that are conferred on him by or under law in force in the Territory, in accordance with the tenor of his Commission and:
(a)in relation to a matter that, in his opinion, is a matter specified in Schedule 2 – in accordance with such advice, if any, as is given to him by the Executive Council;
(b)in relation to a matter that, in his opinion, is a matter specified in Schedule 3 – in accordance with the advice of the Executive Council;
(c)where it is provided by this Act that he is to act on the advice of the Executive Council or the Legislative Assembly – in accordance with that advice;
(d)in forming an opinion as provided by this Act – at his own discretion; and
(e)in all other cases – in accordance with such instructions, if any, as are given to him by the Minister.”
The “Minister” is the relevant Commonwealth Minister.
Part III of the Act is concerned with the Executive Council of Norfolk Island. By s 11 the Executive Council is “to advise the Administrator on all matters relating to the government of the Territory”. Members of the Executive Council are appointed by the Administrator on the advice of the Legislative Assembly (s 13(1)).
Island Industries argues the grant of the licence was a matter that fell within Schedule 2 of the Act. Mr Hoy referred to three items in that Schedule: quarrying (item 19), noxious trades (item 23) and industry (item 81). He argued that it followed that s 7(1)(a) applied to the grant of the licence and asserted that no advice concerning the grant of the licence had been provided to the Administrator by the Executive Council.
Even assuming that the grant of the licence was a matter that fell within Schedule 2, an assumption about whose correctness I express no opinion, there are at least three problems about Mr Hoy’s submission. First, it is not established that no advice was provided by the Executive Council. It may be recalled that recital D of the agreement stated that “the Administration has recommended that the Administrator issue a short term licence”. I agree with Mr Hoy that the reference to “the Administration” having made a recommendation was inapt. As s 5(2) of the Act makes clear, the “Administration” is a body politic. It is a legal entity capable of suing, being sued and entering into legal transactions. However, having no mind, it is incapable of offering advice or making a recommendation. Possibly the author of the agreement had in mind a recommendation of the Executive Council or of a particular member of the Executive Council; if so, it would have been better to have expressed the recital in that way. However, the fact that the recital’s reference to “the Administration” was inapt does not mean the Court should find that the Administrator acted without advice from the Executive Council. If that had been necessary, the presumption of regularity would apply. This presumption was articulated in an American case, Knox County v Ninth National Bank 147 US 91, by Brewer J at 97: “It is a rule of very general application, that where an act is done which can be done legally only after the performance of some prior act, proof of the later carries with it a presumption of the due performance of the prior act”. That statement was adopted by Griffith CJ, with the agreement of Barton and O’Connor JJ, in McLean Bros & Rigg Ltd v Grice (1906) 4 CLR 835 at 850. See also Western Stores Ltd v Orange City Council (1971) 2 NSWLR 36 at 47. Supposing, therefore, that the advice of the Executive Council had been necessary, in the absence of evidence to the contrary, it must be presumed to have been given. There was no evidence as to the absence of advice.
However, and this is the second point, it is incorrect to read s 7(1)(a) as requiring that the Administrator receive advice from the Executive Council in relation to the exercise of any power, or the performance of any function, in connection with a Schedule 2 matter. Section 7(1)(a) refers to “such advice, if any, as is given to him by the Executive Council”. The paragraph contemplates there may be no advice. It stands in contrast to para (b), relating to Schedule 3 matters, that requires the Administrator to act only on the advice of the Executive Council. The intention of the Parliament, in relation to Schedule 2, was not to insist there be advice in every case; but to ensure that, where there was advice, the Administrator would act in accordance with it.
The third problem about Island Industries’ submission is that it ignores the company’s own actions. Pursuant to the grant of the licence, Island Industries re-entered Portion 48c and used it for the purpose of crushing rock. No doubt the company removed from the land, and sold for its own benefit, rock that was present on the land at the time of the licence and owned by the Crown. Absent the licence, the company’s actions would have been tortious acts. The Administrator took no action to restrain the company from doing these acts, no doubt on the basis that it held a valid licence. Can the company be now allowed to assert it did not?
I do not think this is an occasion for a dissertation on the law of estoppel. It is enough to note a statement of Mason CJ and Wilson J, in Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 404:
“One may therefore discern in the cases a common thread which links them together, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has ‘played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it’ … Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption.” (Citations omitted)
Although their Honours referred to the position of a “plaintiff”, as was appropriate in that case, there is no reason to believe they were concerned to limit the operation of the principle to parties on only one side of the record. I would read the passage set out above as applying to any party to litigation who has acted to his or her detriment on the basis of a relevant basic assumption. That is the present situation. It would be unconscionable conduct on the part of Island Industries for it now to ignore the assumption by virtue of which it enjoyed rights over Portion 48c not otherwise available to it.
Validity of the rehabilitation conditions
In its written submission, Island Industries contends that, even if the licence itself was valid, cl 7 (dealing with rehabilitation) was not. It is argued the discretion possessed by the Administrator in relation to the grant of a licence, although apparently at large, is not unlimited; the discretion must be exercised in accordance with the scope and purpose of the empowering legislation. Reference is made to the classic statement of Dixon CJ in Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505. The submission refers also to the statement of Lord Denning in Pyx Granite Co Limited v Ministry of Housing [1958] 1 QB 554 at 572 about conditions imposed on a town planning approval. Clause 7 is said to be beyond power and/or unreasonable because it imposed on Island Industries a rehabilitation responsibility, not only in respect of any damage caused by operations carried out during the term of the licence, but also damage to the land, or adjacent properties, caused by Island Industries under a previous lease, licence or authorisation. The submission states:
“The 1999 licence was a short term licence (6 months) designed to address a specific need of the Norfolk Island community. It was not, and could not be used as, a panacea for the resolution of past history. But this is what the conditions relating to the rehabilitation of areas outside lot 48c deal with. They relate to and encompass about 30 years of past use when terms were negotiated and agreements reached about those particular usages and periods of time. By analogy, the terms are the equivalent of past consideration for a contract which is, in law, no consideration. In any event, on no account can the conditions be said to relate fairly and reasonably … to the permitted usage under the licence.
All that could properly be considered is the rehabilitation of damage to lot 48c which occurred during the currency of the 1999 licence or which was caused by the rock crushing which occurred during the 1999 licence. It was not open to the Administrator acting validly to impose, by conditions on the licence, liability upon Island Industries for past conduct which if actionable at the suit of adjoining landowners gave rise to defences at law on the part of Island Industries.”
The principles stated in Browning and Pyx Granite have been endorsed and applied in numerous cases. They are beyond dispute. However, I do not think they assist Island Industries in the present case, for two reasons.
First, the decision made by the Administrator in relation to the terms of the licence was not a decision made pursuant to statutory authority. The Administrator exercises statutory powers and functions but, in granting the licence, he was entering into an agreement with Island Industries. Admittedly, his ability to grant an effective licence depended upon the circumstance that he held a statutory office that enabled him to make decisions concerning Crown lands. But the terms of the licence were determined, not by the unilateral exercise of a statutory power, but by agreement with Island Industries. The company was not like an applicant for a town planning consent, a supplicant for the favourable exercise of a statutory discretion; the company was a person making a deal. It agreed to the conditions that are now said to be beyond power and/or unreasonable.
In any event, it is not obvious to me that it was manifestly unreasonable for the Administrator to stipulate that the rehabilitation required of Island Industries under the licence extend to damage it had caused during an earlier lease, licence or authorisation. That damage may have occurred years earlier. But cl 7 related only to damage caused by Island Industries, not by others. The Administrator and/or the Pitchers may have had legal rights against Island Industries in relation to that damage. It would not have been unreasonable for the Administrator to think it was preferable to avoid litigation about past activities by making the price of a new licence the obligation to deal with old damage, as well as any new damage; especially in the context of a very small licence fee. If Island Industries had thought the price excessive, it could have declined to accept the new licence.
Further, once again, an estoppel arises against Island Industries. The company assented to the content of cl 7. It executed the licence agreement and took advantage of the rights the agreement conferred on it. The company cannot now be heard to say that an important component of the agreement is invalid.
There is also an estoppel as against the Pitchers. As I have recounted, at the preliminary conference conducted by Ms Symons, Island Industries agreed there was a subsisting arbitration agreement between the parties, constituted by the licence agreement, and that Ms Symons had jurisdiction as arbitrator. On the strength of this agreement, Ms Symons proceeded with the arbitration hearing. The Pitchers participated in that hearing, no doubt at some expense and inconvenience. Under those circumstances, Island Industries is estopped from resiling from the position it took at the preliminary conference.
Ouster of jurisdiction
The next submission of Island Industries is that cl 7 of the licence agreement is invalid because it excludes the jurisdiction of this Court in relation to any dispute, about rehabilitation, that might arise between the parties to the agreement. It is said:
“Such ouster of jurisdiction is contrary to public policy and cannot be a valid exercise of the Administrators powers. Nor can any part of the licence which is connected to this ouster be valid or enforceable. This means that the whole of Clause 7 ought be held to be invalid and struck down (assuming the 1999 licence was validly granted in the first place).”
In the course of oral submissions, Mr Hoy drew attention to s 3 of the Judicature Act 1960 (NI). It provides:
“Subject to any Acts, Imperial Acts and Ordinances in force in the Territory and to any laws made under such an Act, Imperial Act or Ordinance –
(a)all statutes, and laws made under statutes, in force in England on 25 July 1828, being the date of the passing of the Imperial Act 9 Geo. IV, c.83; and
(b)subject to the statutes and laws referred to in paragraph (a), all the principles and rules of common law and equity,
are, by force of this Act, so far as they are applicable and mutatis mutandis, in force in the Territory as laws of the Territory.”
Mr Hoy argued that any breach of the licence agreement would give rise to an action for breach of contract cognisable in this Court under para (b) of s 3; however, that cause of action was purportedly excluded by cl 7.3 of the agreement, especially by the last sentence thereof which excludes any appeal from the arbitrator’s decision.
It seems to me the argument of invalidity by virtue of public policy is also excluded by the estoppels to which I have referred. In any event, the argument is misconceived. Clause 7.3 of the licence agreement does not exclude the jurisdiction of this Court to entertain an action for breach of the contract constituted by the licence agreement. Nor does it purport to restrict any party’s access to this Court in relation to such a breach. Any of the parties could have ignored cl 7.3 and sued in this Court. Had one of them done so, the existence of cl 7.3 might have led this Court to stay the action, but that would have been a discretionary course taken by the Court in the exercise of its jurisdiction. The situation is explained in Russell on Arbitration (19th ed) at 172:
“A party to a contract to refer disputes to arbitration has a perfect right to bring an action in respect of those disputes, and the court has jurisdiction to try such disputes. Any provision to the contrary would be an ouster of the jurisdiction of the courts. A provision that the arbitrator’s decision shall be final only makes express what section 16 implies and does not amount to an ouster of the jurisdiction of the court. But the court has a discretion to say whether it will try such disputes or stay the proceedings, provided the other party comes in time and otherwise complies with the provisions of the section.” (Citations omitted)
The reference to “section 16” is a reference to the United Kingdom Act, but that is immaterial to the relevance of the passage.
Mr Hoy’s reliance on the last sentence in cl 7.3 is without substance. That sentence only excludes an “appeal” against the arbitrator’s decision. As Russell makes clear, there is no rule of public policy against parties agreeing to submit their dispute to the final determination of a third party. Such an agreement must be read subject to whatever rights to challenge the determination are allowed under the general law (whether by common law or statute) but a sentence like that in cl 7.3 can readily be read subject to that proviso.
Validity of the appointment of Ms Symons
It is an agreed fact in these proceedings that it was the Administrator who appointed Ms Symons as arbitrator, not the parties.
Building on that agreed fact, Island Industries argues the appointment was invalid. Two reasons are advanced. First, it is said the Administrator did not have any dispute with Island Industries enabling him to seek arbitration; any dispute was between the Pitchers and Island Industries. Second, it is argued:
“In any event, the appointment of the arbitrator by the Administrator was not within his statutory power. There is no Schedule 2 power dealing with arbitrations in the territory. There is no Norfolk Island legislation dealing with arbitrations and thus no power is allocated to the Administrator to make any such appointment. There is no basis to imply a power since the jurisdiction of the Courts are recognized by statute and are more than sufficient for the purposes of resolving disputes.”
These arguments are untenable, even leaving aside the estoppel problem they would create for Island Industries if they otherwise had substance. The fact that the Administrator had no dispute with Island Industries in relation to any damage it had caused to the Pitchers’ land did not preclude him appointing an arbitrator. Indeed, it qualified him to do so. Clause 7.3 enabled a party to the dispute (including a party to a dispute under cl 7.2, that is an owner of an adjacent property) to require the dispute “to be resolved by the determination of an independent arbitrator nominated in writing by the Administrator, or if the Administrator is a party to the dispute, by the Chief Magistrate” or an independent person nominated by him. It had been agreed between the Administrator and Island Industries that the Administrator should appoint the arbitrator if, and only if, he was not himself a party to the dispute. As Island Industries’ argument concedes, that was the factual situation. The arbitrator’s action in appointing Ms Symons was an action performed pursuant to the agreement.
The second reason given by Island Industries wrongly assumes that, in making the appointment, the Administrator was purporting to exercise a statutory power. The fact that a particular office-holder enjoys statutory powers and exercises statutory functions does not mean he or she is incapable of performing non-statutory actions.
Review of the merits of the arbitrator’s decision
Island Industries contends this Court has jurisdiction to supervise arbitrations carried out pursuant to an agreement whose governing law is that of Norfolk Island. This jurisdiction is said to extend to review of the merits of the arbitrator’s decision. Upon that basis, Island Industries seeks to adduce evidence designed to satisfy the Court that the arbitrator erred in both her findings of fact and her assessment of the appropriate amount of the award. It was agreed between the parties that the tender of such evidence should be postponed until the Court rules on the question whether or not this course is open to Island Industries.
Unlike most jurisdictions, Norfolk Island does not have a statute dealing specifically with arbitrations. Consequently, one must be wary in considering cases from other jurisdictions relating to courts’ supervisory powers. Many depend upon the terms of a local statute that has no Norfolk Island counterpart.
However, Norfolk Island law includes the statute law of England, as in force on 25 July 1828, and the common law. The English statutes in force in 1828 included an Act of 1698 (9 and 10 Will II c.15) short-titled “Act for determining differences by arbitration”. That Act provided that, from and after 11 May 1698, “it shall and may be lawful for all merchants and traders, and others desiring to end any controversy, suit or quarrel … for which there is no other remedy but by personal action or suit in equity, by arbitration, to agree that their submission of their suit to the award or umpirage of any person or persons should be made a rule of any of his Majesty’s courts of record, which the parties shall choose, and to insert such their agreement in their submission, or the condition of the bond or promise, whereby they oblige themselves respectively to submit to the award or umpirage, of any person or persons, which agreement being so made and inserted in their submission or promise, or condition of their respective bonds, shall or may” be enforceable as an order of the court in which the rule is entered.
Clause 7.3 of the licence agreement differs from the clause contemplated by the 1698 Act in that it makes no reference to a court. Consequently, it is difficult to see that Act as a source of jurisdiction to supervise an arbitration. However, s 5(1) of the Supreme Court Act 1960 (NI) confers on this Court “the same jurisdiction in and in relation to the Territory as the Supreme Court of the Australian Capital Territory has in relation to the Australian Capital Territory”. Section 20(1) of the Supreme Court Act 1933 (ACT) confers on the Supreme Court of the Australian Capital Territory “all original and appellate jurisdiction that is necessary to administer justice in the Territory”. This includes jurisdiction to assist arbitrators: see In the matter of a consent arbitration between Tooley and Cross (Wilcox J, Supreme Court of Norfolk Island, 30 October 1998, not reported). I there applied English authorities concerning the jurisdiction of superior courts of record to act in aid of inferior courts and tribunals: see Currie v Chief Constable of Surrey [1982] 1 All ER 89 and The Queen v Greenaway (1845) 7 QB 126; 115 ER 436.
Tooley does not touch the jurisdiction of this Court to set aside an arbitrator’s decision. However, other Australian Capital Territory statutory provisions have the effect of conferring that jurisdiction on this Court.
The Commercial Arbitration Act 1986 (ACT) applies to arbitrations conducted pursuant to an “arbitration agreement”. This term is defined to mean “an agreement in writing to refer present or future disputes to arbitration”. Clause 7.3 of the subject licence agreement falls within this definition, applying it to an agreement made under the law of Norfolk Island rather than that of the Australian Capital Territory.
Part 2 of the Commercial Arbitration Act deals with the appointment of arbitrators and umpires. Part 3 is concerned with the conduct of arbitration proceedings and Part 4 with awards and costs. Those three Parts have no application to the present case; they are not imported into Norfolk Island law.
However, the situation is different in relation to Part 5 of the Commercial Arbitration Act. It is headed “Power of the Court”. It confers jurisdiction, in relation to certain aspects of arbitral proceedings, on the Supreme Court of the Australian Capital Territory and, in some cases, also on the Magistrates Court: see the definition of “court” in s 4(1) of the Act.
Section 38 of the Act relevantly provides:
“(1) Without prejudice to the right of appeal conferred by subsection (2), the court shall not have jurisdiction to set aside or remit an award on the ground of error of fact or law on the face of the award.
(2) Subject to subsection (4), an appeal shall lie to the Supreme Court on any question of law arising out of an award.
(3) On the determination of an appeal under subsection (2) the Supreme Court may by order -
(a)confirm, vary or set aside the award; or
(b)remit the award, together with the Supreme Court’s opinion on the question of law which was the subject of the appeal, to the arbitrator or umpire for reconsideration or, where a new arbitrator or umpire has been appointed, to that arbitrator or umpire for consideration;
and where the award is remitted under paragraph (b) the arbitrator or umpire shall, unless the order otherwise directs, make the award within 3 months after the date of the other.
(4) …
(5) …
(6) …
(7) Where the award of an arbitrator or umpire is varied on an appeal under subsection (2), the award as varied shall have effect (except for the purposes of this section) as if it were the award of the arbitrator or umpire.”
Section 42 of the Act confers jurisdiction on “the court” (including the Supreme Court) to set aside an award, but only under limited circumstances. The section relevantly provides:
“(1) Where –
(a)there has been misconduct on the part of an arbitrator or umpire or an arbitrator or umpire has misconducted the proceedings; or
(b)the arbitration or award has been improperly procured;
the court may, on the application of a party to the arbitration agreement, set the award aside either wholly or in part.
(2) Where the arbitrator or umpire has misconducted the proceedings by making an award partly in respect of a matter not referred to arbitration pursuant to the arbitration agreement, the court may set aside that part of the award if it can do so without materially affecting the remaining part of the award.”
Section 57 provides:
“Jurisdiction to hear and determine applications and appeals under this Act is vested in the Supreme Court.”
It seems to me that ss 38, 42 and 57, read together, resolve the issue of this Court’s jurisdiction to supervise the award made by Ms Symons. The backdrop to the application of those sections is s 5(1) of the Norfolk Island Supreme Court Act which, it will be remembered, confers on this Court “the same jurisdiction in and in relation to the Territory [that is, Norfolk Island] as the Supreme Court of the Australian Capital Territory has in and in relation to the Australian Capital Territory”. When one goes to Australian Capital Territory law to ascertain what jurisdiction the Supreme Court of that Territory has in relation to an “arbitration agreement” one finds a provision (s 38) conferring jurisdiction on that Court to entertain an appeal, but only in respect of “any question of law arising out of an award” (s 38(2)). Specifically, the Court does not have jurisdiction to set aside, or remit, an award on the ground of error of fact (s 38(1)).
Apart from making an order consequentially upon a successful appeal on a question of law, the Supreme Court of the Australian Capital Territory has power to set aside an award, under s 42, where there has been “misconduct” on the part of the arbitrator or the award has been improperly procured – presumably by the opposing party. Neither of these situations applies in this case.
The term “misconduct” is defined by s 4(1) of the Australian Capital Territory Commercial Arbitration Act so as to include “corruption, fraud, partiality, bias and breach of natural justice”. This definition states wider grounds than those available under the statute applying in England in 1828: the Arbitration Act 1698. That Act made void “any arbitration or umpirage procured by corruption or undue means”.
In Meyer v Leanse [1958] 2 QB 371 at 380 Parker LJ (with whom Jenkins and Pearce LJJ agreed) said that, along with jurisdiction under the 1698 Act, “the court had always exercised its inherent jurisdiction at common law to set aside an award for misconduct”. This jurisdiction may have been wider than the statutory jurisdiction conferred by the 1698 Act. If so, it is strongly arguable that the wider jurisdiction is available to this Court under s 3(b) of the Norfolk Island Judicature Act. However, this point need not be determined in the present case. No suggestion of misconduct, of any kind, has been made against Ms Symons. The only criticism of her is that she made an award which, according to Island Industries, contains erroneous findings of fact and determines the Pitchers’ damages at an excessive level. Even if there is validity in those criticisms – a matter about which I offer no opinion – they would not constitute misconduct at common law or pursuant to the 1698 English statute or s 42 of the Commercial Arbitration Act of the Australian Capital Territory. Essentially, Island Industries asks this Court to entertain an appeal on the facts: a course clearly forbidden by s 38(1) of the ACT Act.
There is no suggestion that the Pitchers improperly procured the award.
All Island Industries’ points of objection to Ms Symons’ award fail. The award is valid. Island Industries’ Originating Application must be dismissed.
Enforcement of the award
I turn to the application for enforcement of the award made, by the Administrator and the Pitchers, in matter SC 11 of 2002. In para 24 above, I set out the terms of the orders these parties sought in their Notice of Motion. However, there seems to be no statutory provision, whether of Norfolk Island or the Australian Capital Territory, that would empower the Court to make an order in precisely those terms.
During the course of submissions, I drew attention to s 33 of the Queensland Commercial Arbitration Act 1990. The Australian Capital Territory Act was not then available to me but I suggested that, if it contained a similar provision, this might afford a suitable remedy to the Administrator and the Pitchers. Counsel for the Administrator and the Pitchers agreed and Mr Hoy did not suggest otherwise, on behalf of Island Industries.
As it happens, the Commercial Arbitration Act of the Australian Capital Territory contains an identical s 33. It reads:
“An award made under an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect, and where leave is so given, judgment may be entered in terms of the award.”
The appropriate course is for me to make an order in terms of s 33. The effect of that order will be that judgment may be entered for the sum determined by Ms Symons, less the amount already paid to the Pitchers. The judgment debt will carry interest at the usual rate of 10 per cent per annum: see s 39 of the Supreme Court Act. However, interest will accrue only from the date of the entry of judgment. There is no provision for interest between the date of the award and that of judgment.
Disposition
The order I will make in relation to matter SC 4 of 2002 is that the proceeding be dismissed with costs.
In relation to matter SC 11 of 2003, I will order that leave be granted to the Pitchers to enforce the award made by Ms Symons in the same manner as a judgment or order of this Court. It will follow that the Registrar will be empowered to enter judgment in terms of the award. Island Industries must pay the costs of each of the applicants.
I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox. Associate:
Dated: 20 June 2003
Counsel for Island Industries Pty Limited: Mr C Hoy Solicitor for Island Industries Pty Limited: McIntyres Counsel for The Administrator of Norfolk Island: Mr G Rhead, Crown Counsel Counsel for David Kendal Pitcher and Michelle Jan Saal Pitcher: Mr A Cook QC Date of Hearing: 3 and 4 June 2003
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