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John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd

John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd

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Case Copied 22 April 2015 79 min read

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451
Hearing dates: 5, 9, 17 March 2015
Decision date: 22 April 2015
Jurisdiction: Common Law
Before: Hammerschlag J
Decision:
Plaintiff and first defendant referred to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2010 (NSW).
Plaintiff’s action against second defendant stayed.
Catchwords: COMMERCIAL ARBITRATION – Commercial Arbitration Act 2010 (NSW) ss 5, 7(1) and 8(1) – arbitration agreement requiring disputes or differences arising out of or relating to the performance or breach of the agreement to be negotiated and if they cannot be resolved by negotiation the parties to confer to ascertain whether they agree that the dispute shall first be subject to an alternative dispute resolution process – further contractual provision that the agreement cannot be varied other than in writing – party A (plaintiff) brings an action in respect of a dispute with party B (first defendant) arising out of or relating to their contract or its breach but also has factually related disputes with non-parties – request by party B under s 8(1) that the parties be referred to arbitration – whether the dispute between the parties to the arbitration agreement is arising out of or relating to their agreement or its breach – CONTRACT – party A claims an oral agreement that the dispute be resolved by court action – whether such an agreement is established - CONTRACTUAL CONSTRUCTION – whether, if established, the agreement is for resolution of the dispute by an alternative dispute resolution process - EQUITY - estoppel - whether party B is estopped from denying the asserted oral agreement or has waived its right to rely on the arbitration agreement
HELD - that the dispute between the parties is one arising out of or relating to the agreement or its breach - no oral agreement as alleged established - Court proceedings are not an alternative dispute resolution process - no estoppel established - no waiver established.
COMMERCIAL ARBITRATION - arbitration agreement requiring parties first to negotiate any dispute then have expert determination as a condition precedent to arbitration - party A brings an action against party C (second defendant) in respect of a dispute with party C arising out of or in connection with their contract or its breach but also has factually related disputes with non- parties - party C seeks a stay of the action alternatively makes a request under s 8(1) that the parties be referred to arbitration - whether the dispute between the parties to the arbitration agreement is arising out of or in connection with their agreement or its breach - CONTRACT - whether arbitration agreement is void for uncertainty - EQUITY - whether party C has waived its right to rely on the arbitration agreement - STATUTORY CONSTRUCTION - whether the arbitration agreement is inoperative within s 8(1) for lack of fulfilment of the condition precedent.
HELD: that the dispute…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] NSWSC 451
Decision Date: 22 April 2015

CaseChat Overview and Summary

John Holland Pty Ltd (plaintiff) brought an action against Kellogg Brown & Root Pty Ltd (first defendant) for disputes arising from their contract. The plaintiff also had related disputes with non-parties. The first defendant sought to have the matter referred to arbitration in accordance with an arbitration agreement between the parties. The plaintiff argued that the dispute should not be referred to arbitration because it was already in court. Additionally, the plaintiff claimed that an oral agreement existed to resolve the dispute through court action. The first defendant also argued against referring the matter to arbitration because the parties had not yet attempted to negotiate the dispute as required by the arbitration agreement.

The court considered whether the dispute between the parties arose from or related to the contract, and if the arbitration agreement applied. It examined whether an oral agreement existed for the dispute to be resolved by court action, and if the first defendant had waived its right to enforce the arbitration agreement. The court also addressed whether the arbitration agreement was void for uncertainty due to the requirement for expert determination before arbitration.

The court found that the dispute between the parties did indeed arise from or relate to the contract, and that the arbitration agreement was applicable. It concluded that no oral agreement for court action existed, and that court proceedings were not considered an alternative dispute resolution process. The court also determined that no estoppel or waiver was established by the parties. It held that the arbitration agreement was not void for uncertainty but was presently inoperative due to the unfulfilled precondition of negotiation. The court denied the referral to arbitration and granted a stay of the proceedings.

The court ordered that the proceedings against the first defendant be stayed and that the matter be referred to arbitration after the parties have attempted to negotiate the dispute. The court also ordered that the plaintiff pay the first defendant's costs of the application.

Orders