Kidman v Commonwealth - [1925] HCA 55

KIDMAN AND OTHERS

APPELLANTS; RESPONDENTS,

THE COMMONWEALTH OF AUSTRALIA

RESPONDENT. APPLICANT, Arbitration-Award-Application for leave to enforce award-Matters of defence-

Validity of ward-Agreement to submit to arbitration matters in dispute in action - Validity of contract in respect of which action brought-Authority of Attorney- General of Commonealth-Estoppel--Arbitration Act 1902 (N.S.W.) (No. 29 of 1902), sec. 14-Naval Defence Act 1910-1918 (No. 30 of 1910-No. 45 of Nov. 13, 16, 1918), sec. 41-Defence Act 1903-1918 (No. 20 of 1903-No. 47 of 1918), sec. 63.

The appellants brought an action in the High Court against the Common- wealth to recover a certain sum as money due under two contracts for the building of certain ships by the appellants, and alternatively as damages for their breach. Notice had been previously served on the appellants of certain claims against them by the Commonwealth. While the action was pending the Attorney-General of the Commonwealth agreed with the appellants to submit to arbitration under the Arbitration Act 1902 (N.S.W.) the matters in dispute between the parties. This agreement recited the making of the two contracts. The questions submitted were whether the Commonwealth was entitled to refuse to accept delivery of certain vessels, and what sums of money (if any) were due by either of the parties to the other in respect of the contracts. The arbitrator having made his award in favour of the Commonwealth for a certain sum of money, the appellants moved the Supreme Court of New South Wales to set aside the award or to remit it to the arbitrator on certain grounds, none of which related to the validity of either of the contracts. That motion was dismissed. On an application by the Commonwealth to the Supreme Court for leave to enforce the award in the same manner as a judgment of that Court,

37 CLR 234

Held, that, in the circumstances, the appellants were not entitled to challenge the validity of the two contracts or the authority of the Attorney-General to make the agreement for arbitration on behalf of the Commonwealth.

Decision of the Supreme Court of New South Wales (Full Court): Common- wealth v. Kidman, (1923) 23 S.R. (N.S.W.) 590, affirmed.

APPEAL from the Supreme Court of New South Wales.

On 6th July 1918 an agreement was entered into between the Honourable William Alexander Watt, the Acting Prime Minister of the Commonwealth, purporting to act for and on behalf of the Commonwealth, of the one part, and Sidney Kidman, Joseph Mayoh and Arthur Mayoh, trading as Kidman &Mayoh (hereinafter called

the contractors"), of the other part, whereby the contractors agreed to build six ships for the Commonwealth. On 4th August 1919 a further contract was made between the same parties whereby it was provided that the number of ships to be built should be two instead of six. On 2nd April 1922, by notice served on the contractors, the Commonwealth purported to cancel the two contracts of 6th July 1918 and 4th August 1919, on the…

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: [1925] HCA 55
Decision Date: 18 December 1925

CaseChat Overview and Summary

The appellants, Kidman and Mayoh, appealed to the High Court of Australia against an order of the Supreme Court of New South Wales granting the Commonwealth leave to enforce an arbitration award. The dispute originated from two contracts for the building of ships between the appellants and the Commonwealth. Following disputes, the parties entered into an agreement to submit the matters in contention to arbitration. An award was made in favour of the Commonwealth, and the appellants' subsequent application to set aside or remit the award was dismissed by the Supreme Court. The Commonwealth then sought leave to enforce the award as a judgment, which was granted, leading to this appeal.

The central legal issues before the High Court were whether the appellants were entitled to challenge the validity of the original shipbuilding contracts and the authority of the Attorney-General to enter into the arbitration agreement on behalf of the Commonwealth. The appellants argued that the contracts were invalid due to a lack of parliamentary authority and executive sanction, rendering the subsequent arbitration award a nullity. Conversely, the Commonwealth contended that the appellants were estopped from raising these objections at this stage, given their conduct throughout the proceedings and the nature of the arbitration agreement.

The High Court, in dismissing the appeal, reasoned that the parties had entered into a valid and independent agreement to submit their disputes to arbitration, irrespective of the validity of the underlying contracts. The Court found that the Attorney-General possessed the authority to bind the Commonwealth to such an arbitration agreement. Furthermore, the appellants' conduct, including their participation in the arbitration without raising objections to the contracts' validity and their prior application to set aside the award on grounds unrelated to the contracts' validity, precluded them from now challenging the contracts' enforceability. The Court emphasised that the arbitration agreement constituted the arbitrator as the final judge of both fact and law, and the appellants were bound by the award.

The appeal was dismissed with costs.

Orders