Kennedy-Taylor (Qld) Pty Ltd v Civil and Civic Pty Ltd
[1996] QSC 174
•20 September 1996
IN THE SUPREME COURT
OF QUEENSLAND
Motion No. 2700 of 1996
[Kennedy-Taylor (Qld) Pty Ltd v Civil & Civic Pty Ltd]
IN THE MATTER of the Arbitration Act 1973
- and -
IN THE MATTER of an Arbitration between KENNEDY-TAYLOR (QLD) PTY LTD (ACN 009 672 468) Claimant/Subcontractor and CIVIL & CIVIC PTY LIMITED (ACN 000 098 162) Respondent/Contractor
- and -
IN THE MATTER of an application to set aside the Award of the arbitrator ERIC BLYTH BRIER made and published on 19 March 1996
JUDGMENT - DERRINGTON J.
Delivered:20 September 1996
CATCHWORDS: Judicial Review - Award of Arbitrator - Error of Law, on ground of - Natural justice, on ground of breach of - Technical misconduct in form of incompetence, on ground of - Dispute relating to subcontract - Whether agreement reached between parties - Whether agreement repudiated by non-performance - Whether arbitrator wrong in law - Whether findings unsupported by evidence - Whether competent to comprehend issues - Whether gave sufficient reasons.
Arbitration Act 1973, s.32; Shevill & Ors v. Builders Licensing Board (1981-1982) 149 CLR 620; McDermott v. Black (1940) 63 CLR 161; Payser and Mills Arbitration [1964] 2 QB 467; R.P. Robson Constructions Pty Ltd v. D & M. Williams (1990) Building & Construction Law Reports 219.
Counsel:Mr J. Muir QC for the Applicant
Mr W. Sofronoff QC with him Mr S. Lumb for the Respondent
Solicitors:Clayton Utz for the Applicant
Freehill Hollingdale and Page for the Respondent
Hearing Date:29 August 1996
IN THE SUPREME COURT
OF QUEENSLAND
Motion No. 2700 of 1996
IN THE MATTER of the Arbitration Act 1973
- and -
IN THE MATTER of an Arbitration between KENNEDY-TAYLOR (QLD) PTY LTD (ACN 009 672 468) Claimant/Subcontractor and CIVIL & CIVIC PTY LIMITED (ACN 000 098 162) Respondent/Contractor
- and -
IN THE MATTER of an application to set aside the Award of the arbitrator ERIC BLYTH BRIER made and published on 19 March 1996
JUDGMENT - DERRINGTON J.
Judgment delivered 20 September 1996
This is the latest chapter in a saga of litigation beginning with an arbitration of a dispute relating to claims by the applicant, a subcontractor, against the respondent, a contractor, for work done under the subcontract between them. The arbitrator was an engineer appointed by the President of the Institute of Engineers in accordance with the terms of the subcontract.
He delivered a provisional award, with reasons, on the basis that the parties would be given an opportunity to make submissions upon the provisional findings and proposed award, and that the final award would then be made, reflecting the arbitrator's view of the submissions.
Because the provisional award and the supporting reasons favoured the contractor, before any further step could be taken, the subcontractor brought proceedings in this court attacking the provisional award on a variety of grounds, including allegations of bias and incompetence against the arbitrator. This failed before both the primary judge and the Court of Appeal and the matter was remitted to the arbitrator to hear the submissions as he had proposed and to deliver his award.
At that time, the parties first began to be represented before the arbitrator by counsel. Extensive legal argument ensued, though the matters for determination had become limited to two issues described respectively as accord and satisfaction and estoppel.
The essential issue was whether any agreement had been reached between the parties resolving all the subcontractor's claims under their various heads. The contractor alleged that the parties' representatives orally agreed to a full and final settlement of all such claims under the subcontract on the following terms:
"The contractor's payment of the sum of $68,921;
The contractor's seeking approval from the principal for three variations amounting to $4861 followed by its payment thereof to the sub-contractor should the approval be forthcoming; and
The contractor's provision to the subcontractor of details of certain back charges, describing their breakdown."
In the alternative the contractor claimed that the subcontractor was estopped from denying such an agreement.
The subcontractor denied the formation of any such agreement, claiming that the relevant negotiations resulted only in an attempt to reach agreement on the amounts owing in respect of particular items of the total claim. Alternatively, it claimed that if an agreement had been reached, the contractor had repudiated it by non-performance; or, in the further alternative, that by reason of such non-performance there was no satisfaction on the accord. It also denied estoppel.
It should be explained that prior to the provisional award the lay advocate representing the contractor had followed the contractor's pleading in ignoring the second and third terms listed above, which were not in issue, and had concentrated his attention on the issue as to whether the agreement was expressed to discharge all the subcontractor's claims or only some of them. That had been the real dispute between the parties since the disagreement began. The arbitrator similarly did not advert to the other terms and in his award he found that there was an agreement to discharge all the subcontractor's claims for the payment of the sum of $68,921, thereby omitting reference to the undisputed terms.
By the time of the remitted hearing of the argument after the challenge to the provisional award had failed, the contractor had corrected its pleading to allege that agreement had contained all of the terms described above. This then accorded with the evidence of its witnesses at the original hearing. On the resumed hearing, it argued in accordance with this and did not suggest that the payment of the $68,921 was the only consideration to be passing from it. Again the real issue was whether agreement was to discharge all of the claims of the subcontractor.
It is common ground that very soon after the negotiations had been completed, the contractor paid the sum of $68,921, but the subcontractor wrote repudiating any claim that the payment reflected any agreement in settlement of the whole of its claims, and accepting the payment only on account of one of its claims. In the meantime, the contractor's representative had secured the necessary approvals and had commenced to collect the necessary information as required by the other terms of the agreement, but on receipt of the subcontractor's apparent repudiation, it did nothing further towards the payment of the approved amount or the provision of the details of back charges. Conversely, it did nothing to suggest its unwillingness to perform those obligations, and on the contrary, in evidence before the arbitrator its representative expressed a willingness to do so.
Again, the arbitrator's final findings and reasons for his award largely favoured the contractor. Though they omitted repetition of the more detailed explanation exhibited in the reasons accompanying his provisional award, they continued along the same lines by providing supplementary discussion of the matters more recently argued. However there was one variation. In his final reasons, as the subcontractor agrees, he accurately identified the full terms of the agreement, and he acted on it. His discussion of the subcontractor's arguments on repudiation were predicated on that premise.
Unfortunately, in his pronouncement of his final award, he merely confirmed his provisional award by a simple reference to it. Because it had determined that the contractor's obligation under the contract was only to make the payment of $68,921, this was in conflict with the reasoning and conclusions clearly stated in the reasons accompanying his final award in that respect. He overlooked amending the earlier finding and consequently the final award extended the error.
In fairness, it should be recognised as a slip in the formal pronouncement of the award, and while technically this may have been misused by the contractor, that would have been contrary to its acknowledgment of its obligations in respect of the omitted parts, and the error would have been corrected. That there had been no issue as to the omissions may well account for their oversight. The error also came at the end of the arbitrator's disposal of lengthy and convoluted submissions that would certainly have inflicted considerable distraction on him.
Upon the publication of the final award, the subcontractor brought these proceedings under s.32 of the Arbitration Act 1973 to set it aside and to remove the arbitrator on twelve grounds, including technical misconduct in the form of incompetence. Primary among these is the error in the formal award described above. It has also been used as the basis of some of the other grounds advanced, which in substance were only variations on that theme. Certainly, it does constitute an error and, providing it is not exaggerated, should be brought into consideration in respect of the subcontractor's general allegations of incompetence, but it does not of itself betray incompetence.
For its part, the contractor complains that the subcontractor was trying to re-open issues that have already been decided against it in that, having clearly lost according to the terms of the provisional award, and having tried and failed at that time to remove the arbitrator on the same grounds, both before the trial judge and the Court of Appeal, it is doing no more than attempting to re-litigate those issues and should be barred by issue estoppel. This is incorrect. If the subcontractor can advance new material that has come into existence since that litigation, for the arbitrator's work on the final award which is now attacked is different from that which was the subject of the earlier criticism, it is entitled to pursue those new grounds. However, there were some resolved issues which the subcontractor tried to re-open in a more subtle way. In this it was not successful.
It may be useful at this point to dispose of the topic of estoppel which was argued at length before the arbitrator and decided by him in favour of the contractor. Before this court, learned counsel on both sides unhesitatingly accepted that the issue was irrelevant because any representation founding it must have become a term of the contract. The arbitrator was justified in addressing it, considering the length and complexity of the argument before him. It is a pity that it was not made plain to him that his decision became necessary only if the contractor failed on the contract point. This does not help the subcontractor in the present application, for it is just not a relevant issue.
However, in case it should be argued to be relevant, it should be remarked the arbitrator's findings on this topic were totally consistent with his findings as to the existence and terms of the agreement. The only argument by the subcontractor on this point was to suggest that the arbitrator's erroneous attention to the issue at all after his decision on the contract point revealed incompetence. It has no substance whatever and peripheral arguments relating to it are of a similar quality. His error of law is no reflection on his competence, and it has no bearing on the result.
GROUNDS OF APPLICATION
The amended notice of motion claims that -
1.There are "errors of law on the face of the award including -
(a)the arbitrator's finding (page 7 paragraph 2 of his decision) as to the terms of an alleged oral agreement between the parties was unsupported by any, or any sufficient, evidence and was a finding which departed from the cases advanced by each of the parties as to such terms;
(b)the findings in the first paragraph on page 7 of the arbitrator's reasons for his award are not supported by and or contradict the other findings of the arbitrator;
(c)The arbitrator was wrong in law in concluding, as he did in the last paragraph on page 7 of his award, that the Claimant is estopped from "representing a contrary decision" based on the facts as found by the arbitrator.
(d)The arbitrator was wrong in law in finding the existence of both a binding agreement and an estoppel and erred in his reasons for finding an estoppel and alternatively the estoppel he found to exist.
(e)The arbitrator erred in holding, in effect, that the applicant was relieved from further performance of the agreement found by him in consequence of any prior repudiatory conduct by the applicant.
(f)The arbitrator failed to consider or duly consider the arguments advanced on behalf of the claimant and give reasons for decisions in relation to such arguments and so denied the claimant natural justice.
(g)The arbitrator failed to construe or to construe properly the oral agreement alleged by the respondent.
(h)Findings in the award published on 19 March 1996 are inconsistent with findings in the award which the arbitrator purported to affirm and the existence of inconsistencies otherwise in the award.
(i)Alternatively the arbitrator erred in finding that estoppel could operate and did operate to relieve the respondent from its obligations under the oral agreement and the consequences of breach thereof.
2.The arbitrator has denied natural justice to the claimant.
3.The arbitrator is incompetent and or unsuitable and or unable to comprehend and decide upon the issues in dispute in the arbitration.
4.The arbitrator adhered to wrong and or manifestly untenable and unjust views."
Rather than discuss these separately, for they are often repetitive in substance and some have already received attention above, it would be better to address them in terms of their subject matter and the complaints that have been made under each such head, omitting those that have already been resolved.
Repudiation
The following discussion of this topic appears in the arbitrator's reasons:
"It would appear that about 11 May the amount certified was paid to Kennedy Taylor.
Some time during the week following the meeting of the 1 May, it is presumed that Mr Lawson notified Mr M J Holley, State Manager of Kennedy Taylor, of the matters agreed at that meeting. It would appear that Mr Holley considered such an agreement was unacceptable to Kennedy Taylor, because he wrote to Civil & Civic on 11 May 1990 stating that:-
'We have been advised this week that against our claim for one hundred and sixty five thousand dollars ($165000), it is the intention of Civil & Civic Pty Ltd to make a progress payment of ninety thousand one hundred and fifty six dollars ($90156).
We will accept this payment on account only.
Through the course of this project, we have accepted, under duress, lesser amounts on variations at the time we believed were the reasonable value of the additional works executed.
It is now clearly evident from our internal final status of the contract, that not only have we not addressed the other factors on the project that have caused Kennedy Taylor to expend substantial monies that could not have been foreseen at the time we tendered and entered into a contract for this work, and in addition, at the time the variations were submitted.
Now we advise that a claim is in the course of preparation to recoup that over-expenditure that has incurred through no fault or action of Kennedy Taylor.
We anticipate to be able to present this claim within twenty one (21) days.'
In view of the requirement of the contract that claims were to be notified within 14 days after the date of occurrence, it is surprising that notice of such a claim had not been given during the progress of the contract or during the 22 weeks which had elapsed since the date of practical completion which was in November 1989.
The above letter from Mr Holley was received by Civil & Civic on 17 May 1990. Upon receipt of it Mr Eacersall formed the opinion that the advice from Kennedy Taylor constituted a breach of the agreement made between him and Mr Lawson and discontinued progress with the other two matters which had been agreed on 1 May 1990.
On 29 May Mr Lawson wrote to Civil & Civic on behalf of Kennedy Taylor acknowledging receipt of the payment of $90145 as payment 'on account on the basis of their letter of 11 May'.
. .
In his presentation on 27 February 1996, Mr Muir drew attention to the fact that the three variations which required approval by the Principal, were approved on 25 June 1990. This supported the claim by Mr Eacersall that he had proceeded to carry out his part of the bargain before receiving the letter from Mr Holley dated 11 May 1990. In fact, during cross examination in 1991 Mr Eacersall offered payment immediately for the value of these variations. This was not followed up by the Claimant.
The question of which party was responsible for the repudiation of the verbal agreement, which I believe was entered into on 1 May 1990, depends, in my opinion, on which party first repudiated the agreement.
In the case of Shevill & Ors v. Builders Licensing Board (1981-1982) 149 CLR page 620, the High Court says:-
'If a contract is repudiated by one contracting party, then the other innocent party can elect to either ignore the repudiation and affirm the contract or accept the repudiation and thus bring the contract to an end.'
In this case the evidence tended to me was that the Respondent intended to fulfil its promises and it was the Claimant who resiled from the agreement"
The sub-contractor's argument before this court dealing with alleged error of law on the face of the award in respect of this matter may be summarised from the following paragraphs of its outline of submissions presented here:
"30. The Arbitrator on pp. 6 and 7 of the Award expressed the view that the consequences which flow from repudiatory conduct are dependent on a matter of timing and that once a party engaged in repudiatory conduct the other party is free to refuse to honour its obligations under the contract whilst holding the first-mentioned party to its bargain.
31. The Arbitrator quoted from Shevill v. Builders Licensing Board 149 CLR 620 in which the point was made that, faced with repudiatory conduct by one party to a contract, the other innocent party was obliged to elect to either affirm the contract or to accept the repudiation and bring the contract to an end. The Arbitrator failed to understand the concept thus enunciated. He proceeded to state -
'In this case the evidence tendered to me was that the Respondent intended to fulfil its promises and it was the claimant who resiled from the agreement.'
32. This betrays confusion on the part of the Arbitrator because the finding of intention to fulfil the bargain related to the respondent's state of mind prior to the repudiatory conduct. He found on p.5 (second full paragraph) that upon become aware of the repudiatory conduct the respondent 'discontinued progress with the other two matters which had been agreed on 1 May 1990.' Acceptance of such non performance appears again, by implication, in the second paragraph on p.6 where non performance is explained by reference to the respondent's having found out that the applicant 'had repudiated the agreement'.
33. The findings on repudiation are thus erroneous on their face and fail to conclude, as they should have done, that the compromise agreement had been abandoned or had been terminated by the applicant."
This has a mixture of disparate complaints seemingly rolled up into one point and it tends to create the confusion of which it accuses the arbitrator. He did not show any confusion on the issue of time except in the view of an eye focussed for any criticism possible. He addressed the question of the contractor's attitude up to the time when the subcontractor purported to repudiate the agreement, which was appropriate to the question as to which party first ceased to perform it according to its tenor. This was the primary question and was, incidentally, in conformity with the limited scope of the pleadings on the point. Then he found that after the subcontractor's purported repudiation the contractor did not continue with the performance of the other terms required of it and that it remained willing to perform them. All of these things were rationally related to the issues before him that he was considering when he decided them.
In the other element of this argument, which takes up one of the grounds of the present application, the sub-contractor now advances the proposition that the arbitrator found "in effect, that the (contractor) was relieved from further performance of the agreement found by him in consequence of any repudiatory conduct by the (sub-contractor)"and that "it was free to refuse to honour its obligations while holding the (other party) to its bargain". (Presumably Paragraph 1(e) of the Notice of Motion contains a drafting error.)
This is quite unfair to the arbitrator. He made no such finding. In effect he found no more than that the contractor temporarily withheld further performance when faced with the other party's refusal to proceed with the contract according to the tenor of its terms. He was not required to, and did not, determine any question of the consequences of the former's action or non-action in the event that the latter had been guilty of wrongful repudiation. On this topic the outline of submissions presented to him were clearly directed only to the proposition that it was the contractor who repudiated the agreement by the alleged breaches of withholding further performance. It did not raise any question as to whether there was acceptance by the contractor of any repudiation by the subcontractor.
In particular, no issue was raised as to whether the suspension of further performance by the contractor after the subcontractor's wrongful repudiation amounted to acceptance of it. Indeed in paragraph 32 on p. 15 of its submissions to the arbitrator, the subcontractor clearly adopted the argument that the contractor had treated the contract as continuing on foot. It is quite unfortunate to complain now that the arbitrator's reasons were confused because they did not address a question that was neither pleaded nor argued.
In any case, learned counsel for the subcontractor did not explain or advance any principle that in these circumstances the mere suspension of performance by an innocent party faced with repudiation by the other party must amount to acceptance of the repudiation. Such a proposition was implied, though of course not expressly stated, in the criticism of the arbitrator's decision.
Accord and Satisfaction
The argument on this topic presented by the subcontractor to the arbitrator was directed at two preliminary issues, namely, whether there was any concluded agreement at all and, if so, whether it involved the total settlement of the subcontractor's claims. First, seizing upon the contractor's amended pleading that it was an express term of the agreement that the contractor would pay the agreed amounts in full and final settlement of all claims of the contractor, it was argued that the reference to an "express term" meant that it was necessary that the words pleaded must have been said by 'one of the gentlemen engaged in the conversation that concluded the agreement'; and that it was agreed in evidence by both that those precise words were not used in that conversation, nor was any permutation or combination of them used. The conversation referred to took place in a meeting which had been, at an earlier date, convened, according to the arbitrator, "to try and finalise the claims and agree on the final value of the contract number 00017."
It is plain from his reasoning that the arbitrator found that the conversation that gave rise to the term that the agreement was to be in full settlement of the subcontractor's claims took place when the meeting was convened expressly for that purpose; and that at the meeting so convened the parties participating in the agreement understood that the matters agreed to there were the basis of the finalisation of the subcontractor's claim. The understanding referred to must, in this context, refer to the terms on which the meeting was convened, as the arbitrator found.
The proposition that express terms of an agreement must be expressed only on the occasion when the final agreement is reached, which is the silent premise on which the submission is predicated, is of course not correct. The parties were not required to go through, for a second time, the formal repetition of what has already been agreed to, particularly where in formulating the agreement they understood that the terms on which the meeting was arranged had set the basic term.
Except by some convoluted and artificial analysis of the arbitrator's expression of his reasons, or by a misapprehension of principle, it is difficult to understand the criticism of the arbitrator on this point. His explanation was in the form of a brief but full statement of his findings, the implications of which clearly provided their own answers to the subcontractor's submissions. The findings were open to him on the evidence and quite sufficiently explained. There is no good cause for this criticism of his work.
Before this Court the subcontractor took an alternative line of argument, claiming that the arbitrator did not properly address the issue as to whether the agreement was an accord executory or an accord and satisfaction, as referred to in McDermott v. Black (1940) 63 CLR 161 per Dixon J (as he then was) at pp 183-185.
Still again, this is an unfair criticism. The argument presented to the arbitrator in the subcontractor's outline of submissions wherein that authority is referred to is predicated on the contractor's wrongful repudiation of the contract. If there had been wrongful repudiation by the contractor, it may have been necessary for the arbitrator to have construed the contract with this discrimination in mind. However, his finding that the repudiation had been committed by the subcontractor removed the hypothesis on which its argument was based. Once that was found to be absent, the arbitrator should not be expected to have ventured into theoretical discussion of the argument.
Nor was there any error of law by the arbitrator in failing to apply the principle. In substance, because the agreement in the present case required the undertaking of future action by the contractor, then it was either a release by the subcontractor in consideration of the promise by the contractor to do the things and make the payments agreed to; or it was a promise to grant a release upon the promised performance of the contractor's obligations, the consideration being a promise for a promise. In either case, on the wrongful repudiation by the subcontractor, the contractor either already had the benefit of the release or at least had an enforceable promise of release, neither of which was affected by the repudiation. The subcontractor's refusal, contrary to the agreement, to accept payment other than on its own terms entitled the contractor to withhold further performance until the subcontractor was prepared to accept it in accordance with the terms of the agreement. The contractor retained the right to complete its promised obligations and to enforce the contract by the subcontractor's obligatory acceptance of such performance as a discharge of those obligations.
Not surprisingly, the contrary argument was not advanced directly but was implicit in a complex argument mixing it with the proposition, also not directly stated, that the contractor's suspension of performance was not justified and amounted to a repudiation, notwithstanding the subcontractor's anterior repudiation; or that it was an acceptance of it.
It might be added that it is not an easy task to explain such errors that are concealed and compounded in such complexity, and it is well to take in the observation of Kiefel J. in an earlier round of this litigation that an arbitrator is not to be expected to state his reasons with the same precision (and, I would add, completeness of analysis) as a lawyer. If he has made findings supported by the evidence and reached conclusions that are in accordance with those findings and the law, and gives adequate reasons for these, he should not be treated as incompetent for failing to spell out for the losing party the answers to all the matters that it has unsuccessfully raised. Otherwise it would be an invitation to defeat by the use of obfuscation any arbitration that appeared to be developing badly for a party. Neither should the arbitrator be subjected to criticism for failing to answer arguments that have become otiose because the findings of fact have left them without foundation.
Sufficiency of Reasons
The subcontractor complains that the arbitrator's reasons are in several relevant respects absent or insufficient. It is argued that this vitiates the award on two grounds, that it fails to meet the arbitrator's legal obligation to give adequate reasons; and that it is a breach of natural justice in not explaining to the subcontractor the reasons for the failure of its submissions in respect of each issue raised by it.
The reasons given in support of the final award were somewhat brief and did not descend to a fine discussion of the arguments of learned counsel. However, there were findings of fact on all the essential features and an appropriate application of law to those findings. It is interesting that there is no successful claim of any error of any substantive point of law on the face of the award, for the findings of fact are sufficiently full and explicit to afford the subcontractor the opportunity to mount an argument in that direction if one existed.
The reasons given by the arbitrator with his final award do not venture into long explanations of his findings of fact in any great detail. That exercise had been undertaken in the reasons associated with the provisional award. There, he had explained in detail why on credibility he preferred the contractor's witness over the subcontractor's witness, and the consequences of that preference in terms of found facts. He did not replicate this in the reasons published with his award, apparently being content to describe the results to the extent that they bore upon the limited undecided questions remaining before him. This recitation was consistent with his original findings and reasoning except in one respect, namely, in his advertence to the additional terms of the contract relating to the obligations of the contractor, as discussed above.
This variation was in conformity with the argument of learned counsel for the subcontractor. It was not in conformity with the arbitrator's description of the contract in his provisional award, but it seems that he had no difficulty in agreeing with the argument put to him. This correction in favour of the subcontractor and in conformity with the contractor's case did not require explanation, and in any case the absence of any express explanation could hardly be the cause of any complaint by the subcontractor.
As for the two major questions of accord and satisfaction and repudiation, as the facts turned out the only issues within the former were whether any agreement had been reached between the respective representatives of the parties, and if so whether it involved a discharge of the contractor from all the claims of the subcontractor. In the result, there was little further to discuss on that subject. Because of the findings as to the terms of the contract, the issues of disputed fact on the subject of repudiation were minimal, for the subcontractor's repudiatory letter spoke for itself, the contractor did not claim to have taken any further steps after that time, and the subcontractor did not allege any antecedent repudiatory action. On the cases advanced by the parties, there was little more to be said.
Learned counsel for the subcontractor argues that, for the purpose of his complaint as to the deficiency of reasons published with the award, it is impermissible to have regard to the reasons published in association with the provisional award. Even if it were so, the specific and detailed findings of fact in the final set of reasons clearly imply that the arbitrator found in favour of the contractor on the basis of the credibility of its witness. With the benefit of the further explanation that accompanied this finding and an ordinary understanding of its logical consequences, that should have been sufficient for the purpose.
In addition, although there is no direct expression of incorporation of the earlier reasons, in his final AWARD AND REASONS the arbitrator referred to his provisional award. In the circumstances leading up to its delivery and because of its form and expression, the incorporation into it of the original reasons is also implied. The final set of reasons began where the provisional ones had terminated and the later confirmed the earlier reasons by the statements of the conclusions that the earlier had supported. With the variations which the arbitrator admitted by way of correction, together they formed a logically integrated whole.
The subcontractor has argued that the arbitrator's reference to the award but not to the reasons meant that he did not intend to incorporate the latter into his later combined award and reasons. It is necessary for the subcontractor to have recourse to this argument because, if the reasons for the provisional award are included, the complaint of insufficiency of reasons becomes transparently hollow. This technical legal argument is unrealistic for there are strong indicia to the contrary. The extent to which the arbitrator went in the first place in stating the detail of his reasoning and findings manifested his intention to provide a full account of these matters for the benefit of the parties; and apart from the more specific indicia of his intention, it would be less than fair to believe that he did not intend the parties to have the same benefit from that work in respect of his final award.
On the issue of natural justice, it is not entirely clear how the subcontractor complains on the ground of natural justice of not knowing the reasons behind the arbitrator's findings while at the same time trying on technical grounds to shut out the material, known to it, that provides them. The nature of the remedy would not seem comfortably to admit of such a technical approach, for if the reasons are given and are amenable to criticism, as they are, the party has lost nothing in substance that has any relevance to natural justice..
There is no valid argument against the publication of the arbitrator's reasons in two chapters in this way, if they were intended to be presented as such. They took a proper form and appear to have been conscientiously prepared. Even if there were some technical breach, which has not been established, there would have been no injustice and certainly no misconduct or incompetence on the arbitrator's part that would have justified interference by this court.
The subcontractor further complains that the arbitrator did not specifically address its arguments according to its submissions made after the delivery of the first set of reasons. If the argument is understood to refer to the absence of a specific discussion of each of such points, then this is correct, but it does not follow that the arbitrator was at fault. For example, in respect of the subcontractor's arguments that depended on findings of fact that were not accepted, there was no need to traverse them or even to mention them.
As for the other submissions not directly discussed, different considerations apply. For example, where the submission was simply logically incorrect, it was sufficient to state the correct position that should have revealed the error of the argument without further elaboration. The argument that "The evidence of Lawson and Eacersall shows that there was no oral agreement with the alleged express term" is answered by the arbitrator's finding that the express term referred to, that is, that the agreement would settle all the subcontractor's claims, was agreed to prior to and as the basis of the meeting between those two persons. The argument became inappropriate in the light of this finding.
Similarly, in answer to the argument that: "The circumstances of the dealings between the parties on and immediately before 1 May 1990 show that there was no agreement such as that alleged", the explanation of the arbitrator as to how the correspondence and the conversations between the parties' representatives led to his construction that what was said amounted to an express agreement is enough without specific explanation as to how it followed that the submission was wrong. The demonstration of the facts and evidence relied on, leading to the rational conclusion postulated, is itself a formulation of reasons for the decision and at the same time a rejection of inapplicable arguments or arguments based on other evidence to the contrary. It has already been observed that an arbitrator is not expected to answer complex but erroneous arguments if the steps to the result are clearly revealed and the answer to the arguments is implicit in that exercise.
Moreover a general explanation may discountenance a number of specific arguments at the same time, and it is not necessary to advert to each one separately. It might be added that the arbitrator is not required to give reasons in relation to every particular point that has been argued at the hearing: Poyser and Mills Arbitration [1964] 2 QB 467 at 478.
The subcontractor's complaints are similarly wanting when they refer to issues which the arbitrator was not asked to consider. On the issue of repudiation, its argument that the arbitrator did not consider whether the contractor accepted the subcontractor's repudiation is now canvassed. This was not an issue, as it has been demonstrated above.
Further, that some issues became otiose as the result of some findings meant that it was unnecessary to discuss them. It was only in the context of the alleged repudiation by the contractor that the question of accord and satisfaction was relevant. As it was demonstrated above, on the finding of the contractor's willingness to perform the balance of its obligations despite the subcontractor's attempted repudiation, the issue of accord and satisfaction did not become relevant so as to require the provision of reasons relating to it.
In summary, the arbitrator's expression of reasons for his decision are sufficient for the purpose. His duty to provide sufficient reasons to explain an award is set out in the following passage from the judgment of Giles J in R P Robson Constructions Pty Ltd v. D & M Williams (1990) Building & Construction Law Reports, 219 at 221-222 which summarises the thrust of the authorities:
"While it is thus necessary, and important, that reasons be given, it must be remembered that arbitrators will not always be skilful in the expression of their reasons. I respectfully agree with Smart J. when he said in Menna v. H.D. Building Pty Ltd (unreported, 1 December 1986):
'Elaborate reasons finely expressed are not to be expected of an arbitrator. Further, the court should not construe his reasons in an overly critical way. However, it is necessary that the arbitrator deal with the issues raised before him and make all necessary findings of law . . . The reasons must not be so economical that a party is deprived of having an issue of fact dealt with by the court.'
The reasons should, however, be sufficient to indicate to the parties why the arbitrator reached the conclusion or conclusions which he did as the foundation for his award: to adopt a phrase from Soulemezis v. Dudley (Holdings) Pty Ltd at 273, to apprise the parties of the broad outline and constituent facts of the reasoning on which he has acted. Further, the reasons should be sufficient to enable the Court to see whether there has been any error of law."
The reasons provided in this case comply satisfactorily with these criteria.
The only point on which the applicant has been successful is the arbitrator's failure to include in his formal award a determination that the relevant agreement by way of accord and satisfaction included the additional terms. The award therefore should be amended, which is an appropriate course as it will then conform with the common view of both parties and the arbitrator.
Because the amendment relates to a purely technical matter which the contractor has never questioned, the subcontractor's success on that issue should not affect the order for costs in favour of the contractor, which otherwise was completely successful.
IT IS THEREFORE ORDERED
That the award of the arbitrator be amended as follows:
By setting aside his confirmation of subparagraph (b) of paragraph 3 (which has the heading, "Accord and Satisfaction") and substituting in lieu thereof the following:
"(b)That it was an express term of the said agreement that the Respondent would pay and the claimant would accept the sum of $94,705 less credits of $25,784 being a final payment of $68,921 together with such amounts as might be approved in respect of variation numbers 35, 36 and 43 and that the Respondent would provide to the claimant details of back charges describing the breakdown of certain back charges totalling $15,707.23 in full and final settlement of all claims and entitlements of the claimant under the subcontract, or arising out of or in relation to the subcontract works."
By inserting the word "part" in sub-paragraph (c) of the said paragraph 3 between the words, "In" and "performance".
By deleting the whole of paragraph 4 (which has the heading "Estoppel" and substituting the following:
"4.Estoppel
Because of the foregoing it is not necessary to decide this issue."
And That otherwise the Application be dismissed.
And That the Applicant pay to the Respondent the costs of and incidental to the application, including reserved costs, if any, to be taxed.
0