Lepcanfin Pty Ltd v Lepfin Pty Ltd - [2019] NSWSC 1328

Supreme Court

New South Wales

Medium Neutral Citation: Lepcanfin Pty Ltd v Lepfin Pty Ltd [2019] NSWSC 1328
Hearing dates: 13 August 2019
Date of orders: 11 September 2019
Decision date: 10 September 2019
Jurisdiction: Equity - Commercial List
Before: Rein J
Decision:
1. Paragraph 1 of the Summons is dismissed and the proceedings are otherwise permanently stayed.
2. The Plaintiff to pay the Applicants’ costs of the Notice of Motion, as agreed or assessed.
3. The Plaintiff to pay the Defendants’ costs of the proceedings, as agreed or assessed.

Catchwords:
CIVIL PROCEDURE – Summary disposal – Where the applicants sought, by notice of motion, to dismiss, strike out or permanently stay the plaintiff’s claim on the basis that the plaintiff was contractually bound to adhere to a dispute resolution regime under which disputes between the parties are to be referred to expert determination rather than litigated in Court – Whether the Court should exercise its discretion to stay the proceedings.

EXPERT DETERMINATION – Construction of the expert determination agreement by which the expert was appointed, having regard to the circumstances known at the time of execution of the agreement –Where the plaintiff challenged the expert’s mandate to determine an issue because, the plaintiff contended, it was not part of what was referred to the expert – Where the parties were found to have agreed to delineate the dispute to be referred to the expert by points of claim and points of defence.
CONTRACTS – Construction and interpretation – meaning and scope of the phrase “arises out of this agreement” – Where the dispute resolution regime in a deed applies to disputes that arise “out of this agreement” – Whether disputes concerning associated guarantees and a mortgage can be said to arise out of the deed and are, therefore, to be referred to expert determination.
Legislation Cited: Nil
Cases Cited: Australian Vintage Pty Ltd v Belvino Investments No 2 Pty Ltd [2015] NSWCA 275; (2015) 90 NSWLR 367
Birla Nifty Pty Ltd v International Mining Industry Underwriters Ltd [2014] WASCA 180
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Dance with Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640
Ex parte Young; In re Kitchin (1881) 17 Ch D 668
Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466
Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Rinehart v Hancock Prospecting Pty Ltd [2019] HCA 13; (2019) 93 ALJR 582
Rinehart v Welker [2012] NSWCA 95; (2012) 95 NSWLR 221
Samick Lines Co Ltd v Owners of the “Antonis P Lemos” [1985] AC 711
Sweetpea Petroleum…

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: [2019] NSWSC 1328
Decision Date: 10 September 2019

CaseChat Overview and Summary

In the case of Lepcanfin Pty Ltd v Lepfin Pty Ltd, the primary dispute involved a contractual obligation to resolve disputes through expert determination rather than litigation. The plaintiff, Lepcanfin Pty Ltd, initiated legal proceedings against Lepfin Pty Ltd, which sought to dismiss, strike out, or permanently stay the plaintiff's claim on the basis of the contractual dispute resolution clause. The central issue before the court was whether it should exercise its discretion to stay the proceedings in favour of the expert determination process. The court also needed to interpret the terms of the expert determination agreement, particularly whether the expert had the authority to determine an issue that the plaintiff argued was outside the scope of what was referred to the expert. Additionally, the court had to interpret the phrase "arises out of this agreement" within the context of the deed, determining whether disputes concerning associated guarantees and a mortgage were within the scope of the agreement and therefore subject to expert determination.

The court began by examining the construction of the expert determination agreement, focusing on the circumstances known at the time of its execution. It determined that the parties had agreed to delineate the dispute to be referred to the expert by the points of claim and points of defence. This interpretation was based on the understanding that the scope of the expert's mandate was defined by the issues explicitly referred to them. The court then turned to the interpretation of the phrase "arises out of this agreement," concluding that disputes concerning associated guarantees and a mortgage could be said to arise out of the deed and were, therefore, subject to expert determination. The court held that the phrase was broad enough to encompass related financial instruments and security interests tied to the primary agreement.

Ultimately, the court decided to exercise its discretion in favour of staying the proceedings to allow for expert determination. The court found that the plaintiff was contractually bound to adhere to the dispute resolution regime and that the issues in dispute were within the scope of the expert's mandate. Consequently, the court ruled that the plaintiff's claim should be stayed pending the outcome of the expert determination process. This decision underscored the importance of adhering to contractual dispute resolution provisions and the court's willingness to enforce such clauses where they are clear and properly delineated.

Orders