Landtec Projects Corporation Pty Ltd v Spiers Earthworks Pty Ltd
[2007] WADC 204
•22 NOVEMBER 2007
LANDTEC PROJECTS CORPORATION PTY LTD -v- SPIERS EARTHWORKS PTY LTD [2007] WADC 204
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WADC 204 | |
| Case No: | CIV:495/2007 | 9 NOVEMBER 2007 | |
| Coram: | O'SULLIVAN DCJ | 21/11/07 | |
| PERTH | |||
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed Application for stay of proceedings dismissed | ||
| PDF Version |
| Parties: | LANDTEC PROJECTS CORPORATION PTY LTD (ACN 110 704 875) SPIERS EARTHWORKS PTY LTD (ACN 112 057 977) |
Catchwords: | Arbitration Application for stay of proceedings Appeal from decision of a Deputy Registrar Discretion Risk of inconsistent decisions Multiplicity of proceedings |
Legislation: | Arbitration Act 1985 (WA) s 53(1) |
Case References: | Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [1999] WASCA 144 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
SPIERS EARTHWORKS PTY LTD (ACN 112 057 977)
Defendant
Catchwords:
Arbitration - Application for stay of proceedings - Appeal from decision of a Deputy Registrar - Discretion - Risk of inconsistent decisions - Multiplicity of proceedings
Legislation:
Arbitration Act 1985 (WA) s 53(1)
(Page 2)
Result:
Appeal allowed
Application for stay of proceedings dismissed
Representation:
Counsel:
Plaintiff : Mr A Metaxas
Defendant : Mr B P Wheatley
Solicitors:
Plaintiff : Metaxas & Co
Defendant : Nicholson Clement
Case(s) referred to in judgment(s):
Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [1999] WASCA 144
(Page 3)
1 O'SULLIVAN DCJ: This is an appeal by the plaintiff against a decision of a Deputy Registrar of this Court made on 21 September 2007 whereby a stay of proceedings was ordered.
2 As such the matter falls to be decided afresh.
Facts
3 The plaintiff and the defendant entered into a contract for the performance by the defendant of certain earthworks in relation to a subdivision of land at Pinjarra. The defendant claims to have completed the works and to be owed an amount in the order of $285,000. The plaintiff says that the work is defective and has not been properly completed.
4 The contract between the parties (which is not before me in its entirety, but which I was told it was unnecessary for me to see) contained provisions for the settlement of disputes between the parties by arbitration.
5 By letter dated 18 September 2006 the defendant's solicitor wrote to the plaintiff requesting that the parties confer to settle some differences between them. The letter further stated:
"It is to be hoped that the matter may be able to be resolved at this conference. If not, then the matter can proceed to arbitration. We note that you have indicated in the past that we would be agreeable to the matter proceeding by way of arbitration, if need be."
6 The conference took place on 4 October 2006 and part of the dispute was said to have been resolved. As to the balance there were further negotiations between the parties but settlement was not reached and on 18 December 2006 the defendant's solicitor wrote to the President of the Institute of Engineers requesting that an arbitrator be nominated pursuant to the terms of the contract.
7 There was then some correspondence between the parties and with the appointed arbitrator but it is not necessary to refer to it in detail for present purposes.
8 On 18 January 2007 solicitors for the plaintiff sent a facsimile to the defendant's solicitors indicating that they intended to file a writ in this Court seeking damages against the defendant for breach of contract and one was ultimately filed on 19 March 2007.
(Page 4)
9 It is the action commenced by that writ which has been stayed by the order of the Deputy Registrar dated 21 September of this year.
10 The contract between the parties provides for the appointment of a "Superintendent" responsible for carrying out certain duties. Mr Anthony Wilkie was duly appointed.
11 On 22 November 2005 the plaintiff and a company called CMT Pty Ltd commenced an action against Mr Wilkie. By statement of claim dated 23 December 2005 the plaintiffs pleaded that in about January 2003 Mr Wilkie, who is a consulting engineer, was engaged to provide his services in relation to the subdivision. It further pleaded that pursuant to an agreement or agreements between the defendant and the plaintiffs the defendant was under an obligation to provide his services with reasonable skill, care and diligence and had failed to do so.
12 It was against this background that the defendant sought a stay of these proceedings before the Deputy Registrar and, as I have noted, was successful in its application.
Some terms of the contract
13 The general conditions of the contract between the plaintiff and the defendant are before me. They include the following:
"8.1 Discrepancies
The several documents forming the Contract are to be taken as mutually explanatory of one another. If either party discovers any ambiguity or discrepancy in any document prepared for the purpose of executing the work under the Contract, that party shall notify the Superintendent in writing of the ambiguity or discrepancy. In the event of an ambiguity or discrepancy being discovered and brought to the attention of the Superintendent, or discovered by the Superintendent, the Superintendent shall direct the Contractor as to the interpretation to be followed by the Contractor in carrying out the work.
If the direction causes the Contractor to incur more or less cost than the Contractor could reasonably have anticipated at the time of tendering, the difference shall be valued under Clause 40.5.
(Page 5)
- 8.4 Supply of Documents by Contractor
If the Contract requires the Contractor to supply documents, the Contractor shall supply the number of copies stated in the Annexure or, if no number is stated, 5 copies.
If the Contractor submits documents to the Superintendent, then –
(a) …
(b) notwithstanding the provisions of Clause 23, the Superintendent's approval shall not relieve the Contractor from responsibility for the Contractor's errors or omissions or compliance with the requirements of the Contract … ."
"23 Superintendent
The Principal shall ensure that at all times there is a Superintendent and that in the exercise of the functions of the Superintendent under the Contract, the Superintendent –
(a) acts honestly and fairly;
(b) acts within the time prescribed under the Contract or where no time is prescribed, within a reasonable time; and
(c) arrives at a reasonable measure or value of work, quantities or time.
If, pursuant to a provision of the Contract enabling the Superintendent to give directions, the Superintendent gives a direction, the Contractor shall comply with the direction.
In Clause 23 'direction' includes agreement, approval, authorization, certificate, decision, demand, determination, explanation, instruction, notice, order, permission, rejection, request or requirement.
- Except where the Contract otherwise provides, a direction may be given orally but the Superintendent shall as soon as practicable confirm it in writing.
If the Contractor in writing request the Superintendent to confirm an oral direction, the Contractor shall not be bound to comply with the direction until the Superintendent confirms it in writing."
- "28.3 Errors in Setting Out
If the Contractor discovers an error in the position, level, dimensions or alignment of any work under the Contract, the Contractor shall immediately notify the Superintendent and, unless the Superintendent otherwise directs, the Contractor shall rectify the error.
If the error has been caused by incorrect information, survey marks or data supplied by the Superintendent, the cost incurred by the Contractor in rectifying the error shall be valued under Clause 40.5."
"42.6 Effect of Certificates
The issue of a payment certificate or a Certificate of Practical Completion shall not constitute approval of any work or other matter nor shall it prejudice any claim by the Principal or the Contractor."
"42.10 Set Offs by the Principal
The Principal may deduct from moneys due to the Contractor any money due from the Contractor to the Principal otherwise than under the Contract and if those moneys are insufficient, the Principal may, subject to Clause 5.5, have recourse to retention moneys and, if they are insufficient, then to security under the Contract."
(Page 7)
Commercial Arbitration Act – section 53
14 The defendant's application to stay these proceedings was brought pursuant to s 53 of the Commercial Arbitration Act 1985 (WA) which provides in subsection (1) as follows:
"If a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to subsection (2), apply to that court to stay the proceedings and that court, if satisfied –
(a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and
(b) that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration
may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit."
15 Counsel for the plaintiff did not argue that there was no "arbitration agreement" between the parties, nor that the defendant was not ready and willing to do all things necessary for the proper conduct of the arbitration. However, he submitted that a stay should have been refused in the exercise of a judicial discretion to do so.
16 Counsel submitted that the issues arising in the action between it and Mr Wilkie overlap with those the subject of the arbitration and these proceedings. He pointed out that Mr Wilkie was not required to submit to arbitration and that there was therefore a risk that inconsistent decisions might be made by the Arbitrator on the one hand and a Judge sitting on the trial of the Wilkie action on the other. This could be avoided if both the trial in the Wilkie action and the one in these proceedings were heard together or consecutively by the same Judge.
(Page 8)
17 By its statement of claim in these proceedings filed 5 June 2007 the plaintiff pleads that the defendant is in breach of its agreement with the plaintiff in that it has:
"5 … failed to use the materials and standard of workmanship required by the contract insofar as in the construction of James Eden Drive, the defendant failed to properly compact the sub-base and/or used poor materials at Chain Ages 120 to 270.
6 … failed to remedy the breach pleaded in par 5 above."
18 Further details of this allegation are not pleaded but they or some of them and further complaints made by the plaintiff are apparent from attachments AP3 and AP4 in the affidavit of Anthony Palermo sworn 5 June 2007 which are letters to the defendant from the plaintiff and a Superintendent appointed by the plaintiff to replace Mr Wilkie.
19 No defence has been filed, but by his affidavit dated 30 April 2007 Bradley Spiers, the managing director of the defendant, states:
"10 In or about August 2005 one reason why Landtec was withholding additional funds became apparent when Landtec informed Spiers that there was a problem with one of the intersections that formed part of the works. Spiers alleged that the problem arose as a result of a design fault while Landtec alleges the problem was a result of defective works.
11 Landtec raised a further issue in respect of invoices issued by Spiers pertaining to variations in the Contract. Landtec queried the variations approved by Wilkie and sought additional information in respect to these. It is my understanding that Landtec had a falling out with Wilkie and sacked him, appointing new consulting engineers DPM. Spiers asserts that at all times it followed the procedure identified in Clause 8 above and accordingly is entitled to receive payment in respect of these invoices. It is not Spiers' responsibility to provide information to Landtec as to the scope of authority of Wilkie who acted as Landtec's agent."
20 It is also apparent from attachment AP5 to the affidavit of Anthony Palermo that the plaintiff will rely upon evidence from a
(Page 9)
- Professor Emery, an expert civil engineer, to maintain that some work done by the defendant was defective and some design work and supervision by Mr Spiers was also defective.
21 In its action against Mr Wilkie the plaintiff pleads in the statement of claim that Mr Wilkie:
"11 … failed to perform the services with reasonable skill, care and diligence insofar as the defendant;
…
11.2 prepared construction drawings without requisite skill;
…
11.4 failed to supervise work performed by the contractors; and
11.5 failed to accurately assess the earthworks required."
22 In my opinion there is a real possibility that issues raised before the Arbitrator will also arise in the action between the plaintiff and Mr Wilkie in this Court.
23 Counsel for the defendant argued that the matters pleaded in the two actions in this Court are quite separate and of course that is true. Mr Wilkie's duties to the plaintiff under the contract between them were different to the defendant's duties. But it is quite clear from the affidavit of Mr Spiers dated 30 April 2007 that in defending any claim against it the defendant will say that any defects in the work carried out by it were the responsibility of Mr Wilkie as designer or superintendent or supervisor of the work. As to that cl 8.1, cl 8.4, cl 28.3 and cl 42.6 of the General Conditions would appear to have a bearing.
24 Counsel argued that the plaintiff has delayed too long in bringing these proceedings and should be held to its agreement to go to arbitration. I think there is some substance in this submission, particularly in the light of the fact that its action against Mr Wilkie was commenced more than a year before the appointment of an arbitrator. However, in the end it is necessary to consider how the issues between the parties can be best resolved.
25 It is true that, as counsel said, an arbitrator who is an expert will often be in a better position than a Court to deal quickly and efficiently
(Page 10)
- with issues related to his field of expertise (see, for example, Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd [1999] WASCA 144) but it is not readily apparent that that is the position here where matters of contract law as well as technical questions would seem to arise.
26 In my opinion it is clear that the matters to be canvassed in the plaintiff's action against Mr Wilkie are so closely connected with those to be argued between the plaintiff and the defendant that it is desirable that both claims be dealt with in this Court. In that way the danger of any inconsistency between the decision of an Arbitrator and a Judge of this Court can be avoided and the need for evidence to be taken more than once from witnesses may also be eliminated.
27 I am of course conscious that this decision may result in a delay in the hearing of the defendant's claim, but orders can be made to ensure that the proceedings in this Court are conducted in a timely manner and I will hear from counsel as to any appropriate directions.
28 In my view the appeal should be allowed and the decision of the learned Deputy Registrar set aside. The defendant's application for a stay of proceedings should be dismissed.
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