Masawa Australasia Pty Ltd v J Corp Pty Ltd

[2000] WASC 5

MASAWA AUSTRALASIA PTY LTD -v- J CORP PTY LTD & ANOR [2000] WASC 5

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2000] WASC 5
Case No:	ARB:21/1998	Heard:	2 JUNE 1999
Coram:	PARKER J	Delivered:	21/01/00
No of pages:	31	Judgment Part:	1 of 1
Result:	Leave to appeal refused
PDF Version

Parties:	MASAWA AUSTRALASIA PTY LTD J CORP PTY LTD GREGORY CHRISTIAN STEINEPREIS
Catchwords:	Arbitration Leave to appeal from Arbitrator's Award Questions of Law Principles on which leave should be granted
Legislation:	Commercial Arbitration Act 1985 (WA) s 38
Case References:	F H Compton & Sons Operations Pty Ltd v Umpty Pty Ltd (1989) SBCL 134 Finucane v New South Wales Egg Corporation (1988) 80 ALR 486 Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 Larkin v Parole Board (1987) 10 NSWLR 57 Multiplex Constructions v International Golf Services Pty Ltd, unreported; SCt of WA (Olney J); Library No 6978; 17 December 1987 Promenade Investments Pty Ltd v State of New South Wales (1992) 26 NSWLR 203 Qantas Airways Ltd v Joseland Gilling (1986) 6 NSWLR 327 Thiess Contractors Pty Ltd v Water Corporation of Western Australia, unreported; SCt of WA (Parker J); Library No 970561; 28 October 1997 Tor Line A/B v Alltrans Group of Canada, the TFL Prosperity [1982] 1 Lloyd's Rep 617 Update Constructions Pty Ltd v Roselle Child Care Centre Ltd (1990) 20 NSWLR 251 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Blair v Curran (1939) 62 CLR 464 Collector of Customs v Pressure Tankers Pty Ltd (1993) 115 ALR 1 Egri v DRG Australia Ltd (1988) 19 NSWLR 600 Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455 Grey v Pearson (1857) 6 HL Cas 61 Lucas v Godwin (1837) 3 Bing (NC) 738 Marford Nominees Pty Ltd v State Planning Commission, unreported; SCt of WA (Murray J); Library No 960047; 11 February 1996 Perini Corporation v The Commonwealth (1969) 2 NSWR 530 Sutcliffe v Thackrah (1974) AC 727 The Commonwealth v Verwayen (1990) 170 CLR 394 United Scientific Holdings Ltd v Burnley Borough Council (1978) AC 904 Waterford v The Commonwealth (1987) 163 CLR 54 Woolworths (WA) Ltd v Liquorland (Aust) Pty Ltd, unreported; FCt SCt of WA; Library No 940553; 7 October 1994

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : MASAWA AUSTRALASIA PTY LTD -v- J CORP PTY LTD & ANOR [2000] WASC 5 CORAM : PARKER J HEARD : 2 JUNE 1999 DELIVERED : 21 JANUARY 2000 FILE NO/S : ARB 21 of 1998 BETWEEN : MASAWA AUSTRALASIA PTY LTD

Applicant

AND

J CORP PTY LTD
First Respondent

GREGORY CHRISTIAN STEINEPREIS
Second Respondent

Catchwords:

Arbitration - Leave to appeal from Arbitrator's Award - Questions of Law - Principles on which leave should be granted

Legislation:

Commercial Arbitration Act 1985 (WA) s 38

Result:

Leave to appeal refused

(Page 2)

Representation:

Counsel:

Applicant : Mr C L Zelestis QC & Mr J D Finlay
First Respondent : Mr M H Zilko
Second Respondent : No appearance

Solicitors:

Applicant : J D Finlay & Co
First Respondent : Durack & Zilko
Second Respondent : No appearance

Case(s) referred to in judgment(s):

F H Compton & Sons Operations Pty Ltd v Umpty Pty Ltd (1989) SBCL 134
Finucane v New South Wales Egg Corporation (1988) 80 ALR 486
Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689
Larkin v Parole Board (1987) 10 NSWLR 57
Multiplex Constructions v International Golf Services Pty Ltd, unreported; SCt of WA (Olney J); Library No 6978; 17 December 1987
Promenade Investments Pty Ltd v State of New South Wales (1992) 26 NSWLR 203
Qantas Airways Ltd v Joseland Gilling (1986) 6 NSWLR 327
Thiess Contractors Pty Ltd v Water Corporation of Western Australia, unreported; SCt of WA (Parker J); Library No 970561; 28 October 1997
Tor Line A/B v Alltrans Group of Canada, the TFL Prosperity [1982] 1 Lloyd's Rep 617
Update Constructions Pty Ltd v Roselle Child Care Centre Ltd (1990) 20 NSWLR 251

Case(s) also cited:

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Blair v Curran (1939) 62 CLR 464
Collector of Customs v Pressure Tankers Pty Ltd (1993) 115 ALR 1
Egri v DRG Australia Ltd (1988) 19 NSWLR 600
Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455


(Page 3)

Grey v Pearson (1857) 6 HL Cas 61
Lucas v Godwin (1837) 3 Bing (NC) 738
Marford Nominees Pty Ltd v State Planning Commission, unreported; SCt of WA (Murray J); Library No 960047; 11 February 1996
Perini Corporation v The Commonwealth (1969) 2 NSWR 530
Sutcliffe v Thackrah (1974) AC 727
The Commonwealth v Verwayen (1990) 170 CLR 394
United Scientific Holdings Ltd v Burnley Borough Council (1978) AC 904
Waterford v The Commonwealth (1987) 163 CLR 54
Woolworths (WA) Ltd v Liquorland (Aust) Pty Ltd, unreported; FCt SCt of WA; Library No 940553; 7 October 1994

(Page 4)

1 PARKER J: By an amended notice of originating motion the applicant, Masawa Australasia Pty Ltd ("Masawa"), seeks leave to appeal from the whole of an award made by Mr G C Steinepreis, the second respondent (the "Arbitrator"). Leave is sought pursuant to s 38(4) of the Commercial Arbitration Act 1985. The grounds on which leave to appeal is sought are:

"1. The Arbitrator erred in law in failing to find that, on the proper construction of cl.10.10 of the contract, and in the events which occurred, an architect's notice was not required before the first respondent became liable for liquidated damaged.

2. The Arbitrator erred in law in failing to hold that, on the proper construction of cl.10.10 of the contract, the architect's letter dated 26 July 1994 was an effective notice under that clause.

3. The Arbitrator erred in law in failing to hold that the contract, on its proper construction, gave rise to a liability for liquidated damages on the part of the first respondent, without a further architect's notice given that the appellant and the first respondent were agreed at the arbitration hearing that practical completion was not in fact achieved until 16 January 1996, because of breaches of contract by the first respondent.

4. The Arbitrator erred in law in failing to hold that, the first respondent having accepted that it was liable for liquidated damages for the period between 24 August and 16 November 1994, the first respondent was estopped form contending that:


(a) no architect's notice had been given under cl.10.10,

(b) no such notice had been given to the appellant.


5. The Arbitrator erred in law in failing to hold that no issue estoppel arose from the opinion of Mr C J Pullin QC, in relation to the notice requirement under cl.10.10 of the contract, given that:

(Page 5)

(a) at the time Mr Pullin's opinion was obtained, the parties had not resolved the issue of when practical completion had actually been reached, and

(b) Mr Pullin opined that cl.10.10 could operate by reference to an Arbitrator's findings as to the dates when practical completion had and should have occurred (and, a fortiori, would operate in relation to such dates as agreed by the parties).

6. The Arbitrator erred in law in failing to find that:

(a) on the true construction of cl.9.1 of the contract a builder's notice given thereunder necessarily involves a representation by the builder that the works had been constructed in accordance with the contract,

(b) the statements of the first respondent, in writing the letter dated 7 November 1994 and orally at the meeting on 15 November 1994, were to be interpreted in accordance with the true construction of cl.9.1 of the contract, and

(c) when so interpreted, such communications constituted false representations that the works had been constructed in accordance with the contract, and were thereby misleading or deceptive.


7. The Arbitrator erred in law in failing:

(a) to hold that the casual connection between misleading or deceptive conduct on the part of the first respondent and damage suffered by the appellant could, in law, be established by proof that the first respondent's conduct contributed to the architect's conclusion that practical completion had been reached on 16 November 1994, and

(b) to apply that principle to the facts and to find that the requisite casual connection was established.

(Page 6)

8. The Arbitrator erred in law in failing:

(a) to consider whether, had the first respondent disclosed the true state of the premises in late 1995, the appellant would still have taken possession in January 1996,

(b) to find that, in that event, the appellant would not have taken possession of the premises and, accordingly, that the appellant suffered loss and damage by reason of the first respondent's misleading or deceptive conduct,

(c) to award damages to the appellant for misleading or deceptive conduct for a period after 16 January 1996 and until the defects in the premises were rectified."

By the originating motion it is contended that these eight grounds raise some nine questions of law which I will not specifically identify at this point.

2 On the hearing of the motion for leave both Masawa and the first respondent ("J Corp") agreed that it would be convenient and efficient to present full argument on the merits. This was done, but on the basis that I would first decide whether leave should be granted on any of the questions of law which the applicant sought to raise and that I would only consider the full merits of such a question if I was first persuaded that a grant of leave was appropriate in respect of that question.

3 In the appeal the applicant seeks orders setting aside that part of the award of the Arbitrator whereby he dismissed or failed to award liquidated damages to Masawa and for the matter to be remitted to the Arbitrator for reconsideration with the direction that he calculate and award liquidated damages. By the notice of originating motion these orders were directed both to the period between 16 November 1994 and 16 January 1996 and a second period commencing 16 January 1996. This reflected the separate identification of the period following 16 January 1996 to be found in the proposed ground of appeal 8. In the course of argument, however, it was accepted that there was no live issue in respect of the second of those periods as the date of practical completion which brought to an end any possible contractual liability of Masawa to pay liquidated damages was 16 January 1996. For this reason

(Page 7)

I will not consider the question of liability for liquidated damages beyond 16 January 1996.

Commercial Arbitration Act 1985 - Leave to appeal

4 Leave is sought pursuant to s 38 of the Commercial Arbitration Act 1985 (WA). Relevantly this provides:

"38 (1) Without prejudice to the right of appeal conferred by subsection (2), the Court shall not have jurisdiction to set aside or remit an award on the ground of error of fact or law on the face of the award.

(2) Subject to subsection (4), an appeal shall lie to the Supreme Court on any question of law arising out of an award.

…

(4) An appeal under subsection (2) may be brought by any of the parties to an arbitration agreement-


…

(b) subject to section 40, with the leave of the Supreme Court.

(5) The Supreme Court shall not grant leave under subsection (4)(b) unless it considers that -

(a) having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and

(b) there is -


(i) a manifest error of law on the face of the award; or

(ii) strong evidence that the Arbitrator or umpire made an error of law and that the determination of the question may add, or may be likely to add,

(Page 8)

substantially to the certainty of commercial law."

(With reference to s 38(4)(b) this is not a case to which s 40 has any application).

5 It has been noted that s 38, like similar provisions in other jurisdictions, is concerned with finality in arbitration proceedings. It is designed to limit the intervention of the courts in arbitration; Update Constructions Pty Ltd v Roselle Child Care Centre Ltd (1990) 20 NSWLR 251 at 259-260 per Kirby P (as he then was). Also in point is dicta of Bingham J in Tor Line A/B v Alltrans Group of Canada, the TFL Prosperity [1982] 1 Lloyd's Rep 617 at 625 where his Lordship said:

"The philosophy of the new Act clearly is that the election of parties to have their disputes resolved by arbitration should be respected in the sense that awards should not be scrutinised with an over critical eye and that the court should exercise restraint … in seising themselves of legal questions."

6 Section 38(5) was amended in 1997 to strengthen it in its restriction against leave to appeal being granted. By s 38(5)(a) leave shall not be granted by this Court unless the question of law is one which could substantially affect the rights of one or more of the parties to the arbitration, having regard to all the circumstances. The 1997 amendment also added the further requirements of s 38(5)(b). Hence, before leave can be granted, there must also now be either:

"(1) a manifest error of law …; or

(2) strong evidence that the Arbitrator … made an error of law and that the determination of the question may add, or may be likely to add, substantially to the certainty of commercial law." (emphasis added)"

7 From the nature of these additional requirements and the terms in which they are expressed it is clear that the legislature has sought to reinforce the policy of the provision against too ready intervention by this Court.

8 While leave to appeal may not be granted by this Court unless the requirements of both s 38(5)(a) and either (b)(i) or (b)(ii) are satisfied, satisfaction of those requirements does not of itself entitle the applicant to a grant of leave. Section 38(5)(a) and (b) are in effect prerequisites or threshold requirements before leave may be granted. Satisfaction of those

(Page 9)

prerequisites or threshold requirements merely gives rise to an unfetted discretion to grant leave pursuant to s 38(4)(b). This discretion to grant leave is to be exercised after considering all the circumstances of the case; Qantas Airways Ltd v Joseland Gilling (1986) 6 NSWLR 327; Multiplex Constructions v International Golf Services Pty Ltd, unreported; SCt of WA (Olney J); Library No 6978; 17 December 1987; Thiess Contractors Pty Ltd v Water Corporation of Western Australia, unreported; SCt of WA (Parker J); Library No 970561; 28 October 1997 at 6-8.

9 The submissions for J Corp against a grant of leave to appeal in this case placed much emphasis on s 38(5)(b). It is clear that, all other considerations aside, leave could not be granted in respect of a question of law unless one or other of the requirements of this paragraph has been satisfied.

10 In the absence of direct authority on s 38(5)(b) useful guidance to the meaning of some of its terms is provided by decisions given in the context of other legislation. Hence, it would seem that by the words "manifest error" the legislature contemplated that the error of law should be evident or obvious rather than merely arguable; Larkin v Parole Board (1987) 10 NSWLR 57 at 70-71 and Promenade Investments Pty Ltd v State of New South Wales (1992) 26 NSWLR 203 at 225. Thus in a very similar statutory context it has been held that a statutory requirement that there be a manifest error of law before leave is granted requires that there should be "powerful reasons for considering on a preliminary basis, without any prolonged adversarial argument, that there is on the face of the award an error of law"; Promenade Investments Pty Ltd v State of New South Wales at 226.

11 Given the scheme of s 38 it is important that careful attention be given to the requirement for leave and that I should not be drawn into a decision on the merits of any question which Masawa seeks to raise unless a grant of leave to appeal in respect of that question of law has been justified by Masawa.

Background

12 By an agreement in writing dated 21 September 1993 (the "contract") J Corp agreed to construct four two-storey attached houses in double clay brick, concrete and iron (the "works") for Masawa in South Perth for $901,176. The contract comprised a number of documents, specifications, drawings, etc. In particular, there was a standard form of contract prepared by the Royal Australian Institute of Architects and the Master

(Page 10)

Builders' Construction and Housing Association, Australia Inc for a lump sum contract for simple building works ("SBW"). The exhibited agreement reveals it to be the second print of that standard form of contract in a form which was issued originally in February 1992. There is also before me a current and third print.

13 By SBW cl 1.3.3 J Corp was to bring the works to practical completion by 19 July 1994. This was not achieved. Practical completion was defined by SBW cl 1.2.9 as "the stage of being substantially complete and fit for use and/or occupation by the proprietor".

14 Masawa had appointed a Mr K J Wiacek who practised under the style of Landmark Architecture, to be the architect for the purposes of the contract. Mr Wiacek extended the date for practical completion to 24 August 1994 pursuant to SBW cl 9.2 although it appears that this extension of time was not granted until November 1994. Practical completion was not achieved by 24 August 1994.

15 On 7 November 1994 J Corp gave notice by letter to Mr Wiacek that the works had reached practical completion and on 16 November 1994, pursuant to SBW cl 9.1, Mr Wiacek gave notice to Masawa and J Corp that in his opinion the works had reached the stage of practical completion on 15 November 1994. He expressed this in terms of a certificate that the works had reached the stage of practical completion with the defect liability period to commence from 16 November 1994. By SBW cl 9.1 it is provided that:

"The Architect shall decide the date when in the Architect's opinion the Works reached a stage of Practical Completion and shall thereupon notify in writing the Proprietor and the Builder accordingly, provided that …"

16 During the following winter water entered the building. Inspection revealed that there had been a failure by J Corp to comply with specifications in particular as to waterproofing, box gutters and downpipes. Between July and December 1995 J Corp carried out some remedial works. On 28 July 1995 Mr Wiacek was replaced by Bond Architecture Pty Ltd ("Bond") as the architect for the purposes of the contract. It appears that on 16 January 1996 Masawa sold one of the four dwellings and so effectively took possession from the builder.

17 Despite the work that had been done by J Corp in 1995 there was further water ingress in the winter of 1996 and further remedial work was undertaken. On 8 August 1996 Bond gave notice that practical

(Page 11)

completion had, in its opinion, been achieved on 16 January 1996. Initially that was disputed by J Corp but since March 1998 it has been accepted by both J Corp and Masawa for the purposes of this arbitration (and now for this application for leave to appeal) that practical completion was in fact achieved on 16 January 1996.

18 Disputes having arisen between Masawa and J Corp inter alia as to the workmanship and the date of practical completion of the works there was a submission to arbitration pursuant to SBW cl 13. Originally, Mr A Gould was appointed as the Arbitrator but subsequently, by consent of the parties, Mr Gould was replaced by Mr G C Steinepreis as Arbitrator in May 1997. Mr Gould was a man of experience as a builder but had no legal expertise. It appears that the parties came to recognise in 1996 that at least in some significant part the arbitration would involve difficult questions of law. As a consequence it was mutually agreed that questions of law which the parties identified as potentially material in the arbitration be posed for opinion to Mr C J Pullin QC. For this purpose Mr Pullin was provided with a statement of agreed facts, although there were, at that time, very many other factual issues as to which the parties were in strong disagreement. It was the agreement of the parties that the Arbitrator should accept and be bound by the answers provided by Mr Pullin to the legal questions posed to him in this way. Mr Pullin provided his opinion answering the questions posed for his consideration on 13 December 1996. When Mr Steinepreis replaced Mr Gould as the Arbitrator during 1997 it was accepted by the parties that Mr Pullin's opinion should bind Mr Steinepreis as it had been intended to bind Mr Gould and Mr Steinepreis proceeded on this basis.

19 There were many factual and legal issues in dispute in the arbitration. At least following the appointment of Mr Steinepreis the arbitration was conducted in a quite structured manner. There were clear pleadings in the form of a detailed statement of points of claim, a statement of defence and points of counterclaim and a reply to the defence and a defence to the counterclaim. Procedures such as discovery were followed.

20 A hearing was conducted before Mr Steinepreis as Arbitrator between 23-25 March 1998 at which both parties were legally represented. Shortly before that hearing J Corp accepted for the purposes of the arbitration that it had been in substantial breach of its obligations under the contract in a number of respects and that it had not achieved practical completion until 16 January 1996. The hearing before the Arbitrator proceeded on the basis of those admissions.

(Page 12)

21 An interim award with reasons was handed down by the Arbitrator on 24 July 1998. By this award Masawa's claims for liquidated damages pursuant to the contract for the period 16 November 1994 to 16 January 1996 and its alternative claims for damages, for misleading or deceptive conduct and breach of contract and negligence were dismissed. Other issues raised before the Arbitrator were also dealt with. The written reasons given by the Arbitrator for the award were detailed, clear and quite extensive. It is from this award with reasons that Masawa now seeks leave to appeal.

22 In his reasons the learned Arbitrator adopted and acted in accordance with the opinion of Mr Pullin insofar the questions and answers were relevant to the facts as they had been determined in the arbitration. It is to be noted, however, that at the time of Mr Pullin's opinion Masawa had not introduced into the arbitration its alternative claims, including its claim for misleading or deceptive conduct so that issues relating to these further claims had not been raised for Mr Pullin's opinion and were not considered by him.

23 I note also that the learned Arbitrator concluded by expressing the view that the result to which he had felt obliged to come seemed to him to be an unfair one as Masawa had not recovered damages for J Corp's considerable delay in achieving practical completion. The learned Arbitrator indicated his view that this result was due at least substantially to the failure of the architect Mr Wiacek to issue a valid notice with respect to liquidated damages under SBW cl 10.10.

Provisions of contract

24 The more material provisions of SBW relevant to the present application are as follows:

"1.2.9 Practical Completion - The stage of being substantially complete and fit for use and/or occupation by the Proprietor.

1.2.10 The Date for Practical Completion - The date on or before which the Builder is to bring the Works to Practical Completion, namely the date stated in Item B9 of the Appendix subject to adjustment as provided for in Section 9.

1.3 BUILDER'S OBLIGATION

(Page 13)

The Builder shall:

1.3.1 Upon being given possession of the Site thereupon commence the Works;

1.3.2 regularly and diligently execute and complete the Works in accordance with this Agreement to the reasonable satisfaction of the Architect;

1.3.3 bring the Works to Practical Completion by the Date for Practical Completion.


5.1 ARCHITECT AS AGENT

The Architect shall act for and on behalf of the Proprietor as the Proprietor's agent where this is so provided or required by this Agreement and the Proprietor shall not act contrary to that authority.

The Proprietor shall not at any time give, or be entitled to give, instructions to the Builder, the Builder's workers or sub-contractors on the Site or elsewhere, relating to the Works or any part thereof, and shall not act contrary to any Architect's instruction.


5.2 ARCHITECT'S AUTHORITY

The Proprietor and the Builder expressly agree that the Architect is hereby authorised:

5.2.1 To issue instructions to the Builder where this Agreement so requires or provides;

5.2.2 to supply to the Builder copies of any documents pursuant to clause 2.1 and to furnish setting-out information to the Builder pursuant to clause 6.4; and

5.2.3 to act as the assessor, valuer or certifier where this Agreement so requires or provides.


9.1 PRACTICAL COMPLETION

The Architect shall decide the date when in the Architect's opinion the Works reached a stage of Practical

(Page 14)

Completion and shall thereupon notify in writing the Proprietor and the Builder accordingly, provided that:

9.1.1 Should the Builder give written notice to the Architect that in the Builder's opinion the Works have reached Practical Completion and the Architect does not within 10 days of receipt of such notice give notice in writing to the Builder of the matters and things remaining to be done for Practical Completion; or

9.1.2 should the Proprietor without the written consent of the Builder occupy or use the Works or part thereof prior to the stage of Practical Completion having been reached,

then the Works shall be deemed to have reached Practical Completion on the date stated in the Builder's notice or the date of occupation as the case may be.

9.2 DELAYS

9.2.1 Upon it becoming evident to the Builder that progress of the Works is likely to be delayed, the Builder shall notify the Architect stating the nature, cause and extent of the delay.

9.2.2 Should progress of the Works be delayed due to causes beyond the control of the Builder, then the Builder shall be entitled to a reasonable extension of time for Practical Completion.

9.2.3 The Architect shall determine whether an extension of time for Practical Completion shall be granted and the extent thereof and shall so notify the Builder in writing within 10 days of receipt of the Builder's notice under sub-clause 9.2.1.

9.2.4 If the Architect does not notify the Builder in terms of sub-clause 9.2.3 the time for Practical Completion of the Works shall be deemed to be extended by the time stated in the Builder's notice given under sub-clause 9.2.1.

(Page 15)

9.2.5 Notwithstanding the provisions of this clause the Architect may at any time, by notice in writing to the Builder during the currency of this Agreement, extend the time for Practical Completion if in the Architect's opinion the Builder is entitled to such an extension.

10.10 LIQUIDATED AND ASCERTAINED DAMAGES

If the Builder shall fail to bring the Works to Practical Completion by the Date for Practical Completion then:


10.10.1 The Architect may give notice in writing to the Builder and the Proprietor not later than 20 days after the date of Practical Completion that in the Architect's opinion the Works ought reasonably to have been brought to Practical Completion on some earlier date stated in that notice not being earlier than the said Date for Practical Completion.

10.10.2 If such notice is given the Builder shall pay or allow to the Proprietor a sum calculated and certified by the Architect at the rate stated in Item P of the Appendix as Liquidated and Ascertained Damages for the period stated in the notice.


The Proprietor shall have no right to damages for delay apart from that expressed in this clause."

25 In addition to the above, by SBW cl 11 there was provision for an initial detailed statement of adjustments to the contract sum to be provided by the builder within two weeks of the date of practical completion and for a final claim to be submitted by the builder at the expiration of the defects liability period or on completion of making good, whichever was the latter. This was to lead to a final certificate which stated the amount due to the builder or due to the proprietor as the architect determined. Further, by cl 13.1 notice might be given by either party of "any dispute or difference concerning this agreement …". Such a dispute if not settled was, by cl 13.3, submitted to arbitration. By cl 13.6 further disputes or differences "relating to the construction of this contract or as to any matter or thing whatsoever arising thereunder" could also be raised in the arbitration proceedings, "whether or not a notice of dispute in respect of it

(Page 16)

has been given". There was, however, no general statement of the powers, functions and jurisdiction of the Arbitrator contained in SBW.

26 Item P of the Appendix to SBW provided that the rate for Liquidated and Ascertained Damages should be $380 per calendar day. Item B 9 the Appendix provided that the date for practical completion was 19 July 1994 and Item E fixed the defects liability period as 26 weeks after practical completion.

Liquidated Damages: Grounds 1 - 4:

27 The most significant issue to which a number of the points of law identified in Masawa's submissions and grounds 1-4 of the proposed Grounds of Appeal relate is the question of liquidated damages. This involves, in particular, questions as to the proper construction of SBW cl 10.10 and its interrelationship with cl 9. To deal with this issue some more detailed factual matters need to be identified.

28 As noted earlier in these reasons on 7 November 1994 J Corp wrote to the architect saying:

"We hereby give notice that as of 7 November 1994, the above project has reached practical completion. A final claim will be submitted in due course."

Mr Wiacek replied the following day to arrange a practical completion inspection on 11 November 1994. His letter concluded:

"A Practical Completion Certificate will be issued upon satisfying (sic) inspection by the Architect."

An inspection was carried out on 11 November 1994 during which many items were listed by the architect as requiring attention. He then arranged for a further inspection on 15 November 1994. A good deal of evidence was led before the learned Arbitrator from those who were involved in these two inspections. The reasons of the Arbitrator indicate there were some significant differences between the witnesses about these inspections. These differences were carefully weighed in the Arbitrator's reasons.

29 On 16 November 1994 Mr Wiacek issued what he described as a Notice of Practical Completion which stated:

"After inspection of the Works on 15/11/94 and in accordance with the contract between Masawa Australasia Pty Ltd and

(Page 17)

J Corp Pty Ltd I certify that the Works reached the stage of Practical Completion.

Defect liability period will commence from 16/11/94."

This notice or certificate of practical completion came to be disputed by Masawa before the Arbitrator and as has been indicated it was accepted in the end by both parties that in fact practical completion had not been achieved until 16 January 1996.

30 The date for practical completion of the works had been extended by Mr Wiacek from 19 July 1994 to 24 August 1994 pursuant to SBW cl 9.2.5. It appears that this occurred in November 1994. There was, however, no further extension beyond 24 August 1994 of the date for practical completion by Mr Wiacek. Despite this, no notice was given by Mr Wiacek to J Corp and Masawa "not later than 20 days after the date of Practical Completion" that in Mr Wiacek's opinion the Works ought reasonably to have been brought to Practical Completion on some stated earlier date than 15 November 1994, as contemplated by SBW cl 10.10.

31 Mr Wiacek had however written to J Corp, although on the Arbitrator's finding there was no evidence that a copy had been sent to Masawa, on 26 July 1994 which was just a week following what was then the original agreed Date for Practical Completion of 19 July 1994. This letter stated that "Practical Completion was scheduled for this month and damages for the completion will apply from now and will be deducted from the next progress claim. In our estimate the job is at least 16 weeks behind planned schedule". Further it appears that Mr Wiacek in fact deducted a sum of $31,540 by way of liquidated and ascertained damages for the delay in achieving practical completion between 24 August 1994 (being the date to which he later extended the time for practical completion) and 15 November 1994. This deduction was calculated at the daily rate for liquidated and ascertained damages provided by the contract. It is not apparent from the papers before me whether this deduction was made in the final stages of contract accounting or whether it was made progressively following the letter of 26 July 1994. Submissions for J Corp before me suggest it was the former. J Corp did not give notice of dispute concerning this deduction from its entitlement to payment under the contract, nor did Masawa dispute in November 1994 that practical completion had then been achieved. It was not until after the opinion of Mr Pullin in December 1996 that Masawa formerly disputed that practical completion had been achieved on 15 November 1994.

(Page 18)

32 Neither party gave notice of dispute concerning the failure of the architect to give notice pursuant to SBW cl 10.10 concerning liquidated damages not later than 20 days after 15 November 1994, nor that some different measure of liquidated and ascertained damages ought to have been paid by J Corp to Masawa than the sum of $31,540 which came in the end to be deducted by Mr Wiacek.

33 Before the Arbitrator, Masawa accepted that no notice pursuant to SBW cl 10.10.1 had been issued by Mr Wiacek after 15 November 1994 but it sought to rely on the letter of Mr Wiacek of 26 July 1994 as sufficiently satisfying the notice requirements of cl 10.10 so as to entitle Masawa to recover liquidated damages pursuant to the contract. The learned Arbitrator was not persuaded that the letter of 26 July 1994 could be taken as satisfying the requirements of SBW cl 10.10. The Arbitrator proceeded on the basis that a notice which satisfied the requirements of SBW cl 10.10 was necessary to enliven any entitlement of Masawa to liquidated damages. In taking this view the learned Arbitrator seems to have accepted and acted on the basis of Mr Pullin's opinion which, if not expressly, clearly enough proceeded on the basis that a notice pursuant to SBW cl 10.10 was essential before the builder could be liable to pay liquidated and ascertained damages for delay.

34 Before me, Masawa maintains its reliance on Mr Wiacek's letter of 26 July 1994 as sufficiently satisfying SBW cl 10.10, although it puts as an alternative that the letter of 26 July 1994, read together with the extension of time granted by Mr Wiacek to 24 August 1994 and the notice or certificate of practical completion dated 16 November 1994, may be taken as a sufficient compliance with the provisions of SBW cl 10.10 as to notice in respect of liquidated damages.

35 Before me Masawa also seeks to rely on the notice which Bond purported to give pursuant to SBW cl 10.10 on 8 August 1996 by which notice Bond expressed the opinion that the works ought reasonably to have been brought to practical completion on 24 August 1994 and were not brought to practical completion until 16 January 1996. There was no reliance upon this notice of Bond before the Arbitrator. It is submitted that this was so because Mr Pullin had foreclosed reliance on the Bond notice as he had answered "no" to question 3 which had expressly posed whether the Bond notice was valid. While that is so, there was never any issue raised before the Arbitrator as to the validity of the Bond notice and whether it might be taken to satisfy SBW cl 10.10 and none of the proposed grounds of appeal challenge the correctness of Mr Pullin's opinion or the Arbitrator's award for failure to accept the validity of the

(Page 19)

Bond notice and to act on it. In these circumstances I am not persuaded, as a matter of general discretion, that leave to appeal should be granted in respect of any question as to the validity of the Bond notice of 8 August 1996 or as to any entitlement of Masawa to liquidated damages in reliance on that notice. That is so whether or not, as a matter of law, the notice of 8 August 1996 could satisfy SBW cl 10.10 in the circumstances of this case, although, as I will indicate later, I am not persuaded that there is either manifest error of law or strong evidence of an error of law within the meaning of s 38(5)(b) of the Commercial Arbitration Act in the opinion of Mr Pullin that the notice of 8 August 1996 is not a valid notice pursuant to SBW cl 10.10.1.

36 Before me, Masawa also now seeks leave to contend that, even if no notice which satisfies SBW cl 10.10 had been given, an award of liquidated damages should have been made by the Arbitrator as Mr Wiacek's certificate of practical completion has been "overtaken" by the "agreement" between the parties that practical completion was not achieved until 16 January 1996. It is contended that the architect's certification is "subordinate" to the agreement of the parties and that the object of notification under cl 10.10 has been fulfilled by the builder's admission and the agreement of the parties that practical completion was not achieved until 16 January 1996. The applicant's case was not advanced on this basis before the learned Arbitrator.

37 This ultimate submission of Masawa that a notice which satisfies SBW cl 10.10 is not necessary for Masawa to be entitled to liquidated damages pursuant to the contract is not easy to reconcile with cl 10.10. The terms of the provision does not appear to contain any general conferral of a right to liquidated damages. Indeed they suggest the contrary. I have set out SBW cl 10.10 in full earlier in these reasons. For present purposes the essential words may be identified to be:

"If the Builder shall fail … then:

10.10.1 The Architect may give notice in writing to the Builder and the Proprietor not later than 20 days after the date of Practical Completion …

10.10.2 If such notice is given the builder shall pay … Liquidated and Ascertained Damages for the period stated in the notice.


The Proprietor shall have no right to damages for delay apart from that expressed in this clause."

(Page 20)

The opening statement is all conditioned by the first word "If". Clause 10.10.1 then permits a notice in writing of the architect's opinion. Clause 10.10.2 once again is conditioned by the opening phrase "If such notice is given …". Only then "… the Builder shall pay … Liquidated and Ascertained Damages …". The payment is to be "for the period stated in the notice". The provision concludes with the exclusion of any other right to damages for delay. In my view it is not the obvious or natural effect of this provision that the proprietor has a right to liquidated damages IF the Works are not brought to practical completion by the Date for Practical Completion. The provision, most naturally construed, appears to be designed to confine any entitlement to liquidated damages to situations where there has been both delay AND compliance by the architect with the notice procedure.

38 While I do not express a concluded view as to the true construction of SBW cl 10.10, for the purpose of considering whether or not leave to appeal should be granted I would observe that the apparent effect of the provision suggests that it is designed to give to both parties, builder and proprietor, timely notice (not later than 20 days after the date of Practical Completion) that, in the architect's opinion or view:

• practical completion ought reasonably to have been achieved at a specified earlier date than the builder has in fact achieved, and

• liquidated damages are payable for the period stated in the notice in respect of the delay.

Either or both parties may wish to disagree with one or more of these matters. The builder may contend that practical completion was achieved earlier, whereas the owner might be of the view that it has not yet been achieved. The builder might contend that "the Date for Practical Completion" should be later than that determined by the architect by virtue of delays which should entitle him to an extension of time or some further extension of time pursuant to cl 9, whereas the owner might take the view that extensions of time granted by the architect were without justification so that the Date for Practical Completion should be earlier than that indicated in the notice. As a consequence of any of such matters the builder may contend that no amount or a lesser amount is payable by way liquidated damages, whereas the owner might contend for a greater amount. Hence, it is that following a notice by the architect pursuant to SBW cl 10.10 to both parties, either or both parties may give notice of dispute and so identify in what respects if any each party disagrees with the opinion or view of the architect expressed in the notice. If and when

(Page 21)

those matters in dispute are referred to arbitration (or if such an issue is raised in an arbitration pursuant to cl 13.6), in my view, it is the apparent effect of SBW cl 13 that the Arbitrator has jurisdiction to determine the matters in dispute and may make an award which alters in any of the disputed respects the opinion expressed by the architect in the notice. By this means, in my view, the apparent effect of the contract is that the architect has jurisdiction to, and may, make an award which varies an entitlement to liquidated damages which has been identified in the notice given by the architect pursuant to cl 10.10. By this means the parties may have reviewed by an Arbitrator the views or opinion of the architect as set forth in the notice and the entitlements respectively of the parties will in the end be as determined by the Arbitrator, not by the architect, in respect of any issue which is duly brought into dispute before the Arbitrator.

39 On this understanding of the apparent effect of cl 10.10 and cl 13, it can be seen that a notice pursuant to cl 10.10 is of significance to both parties as it gives notice to each party of the views or opinion formed by the architect, who is acting as "assessor, valuer or certifier" pursuant to SBW cl 5.2.3, material to the question of liquidated damages and thereby affords each party an opportunity to focus attention on that question and to raise by way of notice of dispute any contrary view which that party seeks to advance relevant to liquidated damages. It is not, in my view, the apparent effect of cl 10.10 and cl 13 as submitted for Masawa, that a notice of dispute must anticipate and set out every possible foreseeable conclusion which the Arbitrator might reach as to any of the material considerations such as the Date for Practical Completion or the date of Practical Completion, if the Arbitrator is to have jurisdiction to award liquidated damages on any basis or in any sum which is different from that identified in the Architect's notice. The effect of these provisions appears to be that, once there is properly raised before the Arbitrator a contention that any date specified by the architect in the notice should be an earlier or later date, it is then within the jurisdiction of the Arbitrator to determine the true date according to the evidence and hence to determine the true period in respect of which liquidated damages is payable. Assuming the question of the correct quantum of liquidated damages has been duly raised in the arbitration it would then be open to the Arbitrator to calculate and award liquidated damages according to his findings as to the true period in respect of which liquidated damages is payable. In so doing the Arbitrator may be persuaded by the evidence to a view which is different from the contentions of either of the parties.

40 One further situation should be mentioned. Should an architect notify in writing the proprietor and the builder that in his opinion the

(Page 22)

works have reached a stage of practical completion pursuant to SBW cl 9.1, but fail to give notice in writing pursuant to SBW cl 10.10.1 to the builder and proprietor that in the architect's opinion the Works ought reasonably to have been brought to Practical Completion on some earlier date, then, in my view, the apparent effect of the provisions is that the failure to give notice pursuant to cl 10.10.1 may itself become the basis for a notice of dispute so that a proprietor, which considers that the architect ought to have formed the opinion that the works ought reasonably to have been brought to practical completion on some earlier date, may raise for arbitration whether or not the architect should have given notice pursuant to cl 10.10.1. Such a dispute would appear to be between the Proprietor and the Builder within the meaning of SBW cl 13.1; Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 at 709 and F H Compton & Sons Operations Pty Ltd v Umpty Pty Ltd (1989) SBCL 134 at 139. Thus, by a duly drafted notice of dispute it would appear to be open to the owner to raise for determination by an Arbitrator whether a notice should have been given by the architect and, if so, what period should have been stated in the notice pursuant to cl 10.10.2. By this means, in my view, it appears that a proprietor has the means to have determined by an Arbitrator any failure by an architect to issue a notice pursuant to cl 10.10 which the proprietor contends should have been issued, whether or not the failure of the architect to issue the notice was due to some difference of opinion about causes for delay or the like or was due to oversight or some other neglect on the part of the architect. In these respects it is to be noted that SBW specifically identifies distinct notices by the architect. There is the written notification of the architect's opinion that practical completion has been achieved pursuant to cl 9.1 which is to be given upon the architect deciding that a stage of practical completion has been reached. There is also the notice of the architect's opinion for the purposes of liquidated damages which has to be given "not later than 20 days after the date of Practical Completion".

41 While cl 9.1 regulates when and how the stage of Practical Completion is reached and the notices for that purpose, and cl 9.2 make provision as to extensions of time by which any variations to the Date for Practical Completion are determined and the notices for that purpose, it is clear that cl 10.10 contemplates a different and further notice of the architect's opinion relevant to liquidated damages which inter alia is to state the period for which the architect considers liquidated damages are payable.
(Page 23)

42 In the event that the issue of the failure of the architect to give notice pursuant to cl 10.10.1 and the entitlement of the proprietor to an award of liquidated damages is duly raised in an arbitration, the reasoning of Smart J in F H Compton & Sons Operations Pty Ltd v Umpty Pty Ltd (supra) particularly at 140 is, in my respectful view, highly persuasive that the Arbitrator may award liquidated damages under an arbitration clause of the type in this contract even though the architect has failed to give notice under cl 10.10. The precise decision in F H Compton & Sons Operations Pty Ltd v Umpty Pty Ltd did not take the matter this far but the reasoning suggests that this is an appropriate extension of the decision in that case.

43 On this basis it would appear that Masawa, in the present case, has either to demonstrate that a notice within the meaning of SBW cl 10.10 was given by the architect or that there had been duly raised before the Arbitrator the question whether such a notice ought to have been issued by the architect so as to give rise to an entitlement to liquidated damages. There is nothing in the pleadings that were dealt with by the learned Arbitrator which raises for the Arbitrator's decision in any form the question whether a notice pursuant to SBW cl 10.10 should have been given by the architect to the builder and the proprietor. Among the issues raised for the Arbitrator's decision was the question whether the date of Practical Completion was 16 January 1996 rather than 15 November 1994 as certified by Mr Wiacek pursuant to SBW cl 9.1. There is also an issue whether, by implication, the Arbitrator has jurisdiction to award liquidated damages where the Arbitrator determines that the date of Practical Completion is later than had been determined by the architect. No where, though, is there raised a question as to the failure of the architect to issue a notice pursuant to cl 10.10. Hence, the apparent consequence of this is that the learned Arbitrator might only have awarded liquidated damages to Masawa if he found that a notice within the meaning of cl 10.10 had been issued by the architect. That is the view which the learned Arbitrator applied.

44 It is common ground that no such notice issued after 15 November 1994. Indeed that was readily accepted in the arbitration and before me by Masawa. Hence, before the Arbitrator Masawa focussed on the letter of Mr Wiacek of 26 July 1994 and in addition, before me, Masawa also raised the purported notice of Bond of 8 August 1996, as being notices for the purpose of cl 10.10. The learned Arbitrator was not persuaded that the letter of 26 July 1994 was or could be a notice for the purposes of cl 10.10 in circumstances where the architect had determined that the date of Practical Completion was 15 November 1994. Before me, Masawa submits inter alia that cl 10.10.1 should not be read

(Page 24)

as requiring that the notice be given after the date of Practical Completion as determined by the architect, and that the letter of 26 July sufficiently raised for the purposes of J Corp the fact that what was then the Date for Practical Completion, ie 19 July 1994, had just passed and the works were far from completed and expressly informed J Corp that liquidated damages would be applied from that time. Although the Arbitrator found that it had not been established that this letter was sent to Masawa at the time, it is submitted that, to the extent that the requirement of cl 10.10.1 is that notice be given to both the builder and the proprietor, notice to Masawa can be seen to be a provision for the benefit of Masawa and this had been effectively waived by its pursuit of a claim for liquidated damages. It is also somewhat feintly argued that the Arbitrator as a matter of law ought to have found that there was evidence of the letter being received by Masawa but that issue would not warrant a grant of leave given the terms of s 38(5)(b) of the Commercial Arbitration Act.

45 In my view two matters stand out as quite strongly, if not compellingly, indicating that the letter of Mr Wiacek of 26 July 1994 cannot be a notice within the meaning of SBW cl 10.10 in the present circumstances. These are, first, the careful distinction to be found in cl 10.10 between "the Date for Practical Completion" and "the date of Practical Completion". The former of these is the date agreed for the completion of the works pursuant to the contract as adjusted by any extensions of time determined by the architect pursuant to cl 9. The second of these is the date which the architect decides pursuant to cl 9.1 when in the architect's opinion the Works have reached a stage of Practical Completion. The 20 days referred to in cl 10.10.1 is 20 days after "the date of Practical Completion". The submissions for Masawa gloss over this careful contractual distinction in submitting that the letter of 19 July 1994 was sent to J Corp not later than 20 days after 19 July 1994 when 19 July 1994 was then "the Date for Practical Completion" not "the date of Practical Completion". Secondly, further force to this distinction arises from the requirement of cl 10.10.2 that the notice itself is to state "the period" in respect of which liquidated and ascertained damages are to be paid or allowed. Not only was there no attempt to indicate any period in the letter of 26 July 1994, but this requirement of cl 10.10.2 indicates that, in the circumstances with which we are concerned, the notice would seem necessarily to have to issue after "the date of Practical Completion" because it would be necessary to identify that date to be able to state in the notice the period in respect of which liquidated and ascertained damages were to be paid or allowed. It does not overcome these difficulties to attempt to read the letter of

(Page 25)

26 July 1994 with the extension of time to 24 August 1994 and the Notice of Practical Completion of 16 November 1994 as Masawa also submits.

46 Hence, without needing to consider more extensively the other matters which persuaded the learned Arbitrator that the letter of 19 July 1994 was not a notice within the meaning of cl 10.10 it would seem to me that these two matters are sufficient to sustain the apparent correctness of the view taken by the learned Arbitrator. It has not been demonstrated by Masawa that in rejecting the letter of 19 July 1994 the reasons of the learned Arbitrator reveal either manifest error of law or that there can be seen to be strong evidence of an error of law on the part of the Arbitrator.

47 Earlier in these reasons I have indicated that the Bond notice of 8 August 1996 was not specifically relied on by Masawa before the learned Arbitrator. I have also indicated my view that as a matter of general discretion I would not be persuaded to grant leave to appeal in respect of that notice of 8 August 1996. The submissions of Masawa in this respect are that the failure to expressly rely on the Bond notice was because of the answer which had been given by Mr Pullin to question 3 which had been posed for him. Mr Pullin concluded unequivocally that it was not valid. Mr Pullin's opinion proceeded on the basis that as the latest date of practical completion for which Masawa was contending was 16 January 1996 then a notice on 8 August 1996 would not be a notice in writing "not later than 20 days after the date of Practical Completion" within the meaning of cl 10.10.1. Even if it could be said that the award and reasons of the learned Arbitrator had incorporated the opinion of Mr Pullin in respect of his answer to question 3 (when Masawa didn't raise the issue), and even if it is accepted for the moment as Masawa submits that time should not be seen to be of the essence of cl 10.10 so that the period of "not later than 20 days" should be seen to be merely regulatory and not mandatory, I would not be persuaded, nevertheless, that there is either manifest error of law or that there is strong evidence of error of law in a decision in these circumstances that a notice given on 8 August 1996 in respect of a date of practical completion of 16 January 1996 is not a valid notice within the meaning of cl 10.10.1.

48 That leaves the ultimate submission of Masawa that liquidated damages might be awarded by the Arbitrator even though the architect had failed entirely to give notice to the builder and the proprietor pursuant to SBW cl 10.10.1. It is submitted, in particular, that there is no material decision to be made by the architect under cl 10.10 as both the Date for Practical Completion and the date of Practical Completion are determined by the architect pursuant to SBW cl 9. Hence, it is submitted, the notice

(Page 26)

may be construed as a mere formality and failure to give it may be disregarded in circumstances where it was clear to the builder that there had been a failure to complete the works by the Date for Practical Completion and that the proprietor was seeking liquidated damages in respect of the delay. For reasons which have been developed earlier, it appears to me that the apparently obvious and natural reading of SBW cl 10.10 is to give to that provision a more significant role than Masawa's submission would acknowledge of ensuring that both builder and proprietor are aware in a timely manner of the opinions of the architect on the issues affecting liquidated damages and in particular of ensuring that in one specific notice there is brought to the attention of both builder and proprietor the opinion then held by the architect as to the Date for Practical Completion (including any questions of extension of time) and the date of Practical Completion and the period for which liquidated damages are payable. Hence, I am not persuaded that, insofar as the learned Arbitrator's reasons for his award proceeded on the basis that a notice within the meaning of cl 10.10 was required to give rise to a liability in the builder to pay liquidated damages (in an arbitration where no dispute as to the architect's failure to give such a notice was raised for decision by the Arbitrator), there is shown to be any manifest error of law on the part of the Arbitrator or strong evidence of error of law on the part of the Arbitrator.

49 In these reasons I have kept in mind the requirements in particular of s 38(5)(b) of the Commercial Arbitration Act. In considering the reasons of the learned Arbitrator and the matters in which Masawa contends he fell into error of law I have often assessed the reasons by reference to the apparent or probable effect of provisions of SBW. In this I have been conscious that different constructions from what has impressed me as being the apparent or probable effect of SBW are "arguable" and were argued, but where in these reasons their effect is seen to be that the Arbitrator acted in accordance with the apparent or probable effect of SBW I intend also to convey that I have not been persuaded by other merely "arguable" constructions that manifest error of law on the part of the Arbitrator has been demonstrated or that there is strong evidence that he has made an error of law.

50 For these reasons I am not persuaded that leave to appeal ought to be granted in respect of any of the questions of law identified in the amended notice of originating motion which relate to the proper construction of SBW cl 10.10 or 9.1 and to which the proposed grounds of appeal numbered 1 to 4 relate.

(Page 27)

51 I should add that the proposed ground of appeal 4 would seek also to raise an estoppel against J Corp on the basis that it had accepted liability for liquidated damages for the period between 24 August and 16 November 1994. Masawa's contention was that this acceptance of liability should estop J Corp from contending that no architect's notice had been given under cl 10.10 or that no such notice had been given to Masawa (a reference to the Arbitrator's finding that the letter of 26 July 1994 had not been shown to have been served on Masawa). The submissions of Masawa went further than ground 4 and also introduced waiver in respect of service of the letter of 26 July 1994 on Masawa. It is objected by J Corp that neither this estoppel nor waiver were pleaded or raised before the Arbitrator. A consequence of this is that evidentiary issues relevant to each had not been pursued, nor have relevant factual findings been made by the Arbitrator. In these circumstances I would not grant leave to appeal as a matter of general discretion with respect either to the estoppel or the waiver issues.

Issue estoppel - ground 5

52 The learned Arbitrator accepted the submissions for J Corp, it appears, that he should hold himself in effect bound by the opinion of Mr C L Pullin QC according to principles of issue estoppel. Masawa objects that this is not a case for the doctrine of issue estoppel and that the learned Arbitrator fell into error as a consequence in that he regarded himself precluded from departing from the answer to question 4(a) given by Mr Pullin which he read as revealing Mr Pullin's opinion, implicitly at least, that an architect's notice was required by SBW cl 10.10 before there was any liability in J Corp, or an entitlement of Masawa, to pay and receive respectively liquidated damages. It was submitted that the learned Arbitrator should have held that liquidated damages could be determined and awarded by the Arbitrator according to the dates when practical completion did in fact occur and according to the Date for Practical Completion. As it had been agreed by the parties that practical completion did not occur until 16 January 1996 it followed, in the submission of Masawa, that the Arbitrator should have awarded liquidated damages for the period 16 November 1994 to 16 January 1996 even if it were the case, as the Arbitrator found, that no notice had been given by the architect pursuant to cl 10.10.

53 I have dealt with the real substance which underlies the point of concern which gives rise to this ground 5 when dealing with the submissions of the parties with respect to grounds 1 to 4. For the reasons

(Page 28)

already given I am not persuaded in the end that there is either manifest error in law or strong evidence that the Arbitrator made an error of law in his failure to award liquidated damages between 16 November 1994 and 16 January 1996 in the circumstances revealed and raised in this arbitration. In particular, I am not persuaded that there was any such error of law revealed insofar as the Arbitrator proceeded on the basis that a notice pursuant to cl 10.10 was necessary for J Corp to have a liability to pay liquidated damages (in the absence, that is, of there having been duly raised before the Arbitrator the failure of the architect to issue such a notice so as to give rise to a liability to pay liquidated damages).

54 Ground 5 was introduced, it seems to me, to allow the issue of underlying substance to be reached. As I have considered the issue of underlying substance and am not persuaded to grant leave to appeal in respect of it, there is no point in giving detailed consideration to applicability of the doctrine of issue estoppel which ground 5 seeks to raise.

55 I would indicate briefly though that my approach to this issue has differed from that submitted by J Corp. Mr Pullin was approached by the parties to provide answers to the legal questions the parties identified as material to the arbitration. By some process the parties agreed that Mr Pullin's opinion was obtained with a view that it should be bind the Arbitrator, and thereby the parties. While a different Arbitrator was subsequently appointed, Mr Steinepreis proceeded on the basis that Mr Pullin's opinion was to bind him as it had been intended to bind Mr Gould. This issue really arises because of, and is complicated by, the informality which attended the retention of Mr Pullin and the failure to identify and spell out clearly the force and effect which his opinion should have in the arbitration. Hence, we have J Corp submitting that Mr Pullin's opinion is final and binding and determinative for all purposes of the arbitration and hence of this application. On the other hand, Masawa submits that is not so and advances that in a real sense Mr Pullin was in the role of a second Arbitrator. I would note that if that last submission were correct there was not at the time of his opinion in 1996, nor is there in this present application, any attempt to seek leave to appeal from his "award".

56 In my view, however, it is clear enough that Mr Pullin was never appointed an Arbitrator in this dispute. He provided a legal opinion which was intended by the parties to guide and bind the Arbitrator to the extent at least that Mr Pullin's answers proved relevant in light of the factual findings of the Arbitrator. It appears to me the Arbitrator proceeded on

(Page 29)

that basis. The result is that, to the extent that the learned Arbitrator relied on and applied Mr Pullin's opinion in making his award, the legal opinion of Mr Pullin has become incorporated into the award. Hence, to the extent, if any, that error in law is now demonstrated in the legal opinion of Mr Pullin then, insofar as that opinion has been incorporated into the award, that error of law is in effect an error of law on the part of Mr Steinepreis and is reviewable as such by way of appeal, but only if leave is granted. Hence, I have dealt with the substantive underlying issue in the course of dealing with grounds 1 to 4 and have not been persuaded that a grant of leave in respect of the issue is justified.

Misleading and deceptive conduct - grounds 6-8

57 The learned Arbitrator proceeded on the basis that the last sentence of SBW cl 10.10, which precluded the proprietor from damages for delay apart from that expressed in cl 10.10, was not intended to, and could not have the legal effect of, excluding any entitlement to damages of the proprietor which arose by virtue of the statutory provisions of the Trade Practices Act 1974 (Cth).

58 In my respectful view, the learned Arbitrator was clearly correct in this view and, as I understand it, that matter is not in dispute for the purposes of this application.

59 Following the opinion of Mr C J L Pullin QC in December 1996, Masawa introduced into the arbitration, pursuant to SWB cl 13.6, claims which may be sufficiently described as raising misleading and deceptive conduct under the Trade Practices Act. In essence, it was contended that by virtue of J Corp's letter of 7 November 1994 to the architect, by which J Corp gave "notice that as of 7 November 1994, the above project has reached practical completion", and by statements of officers of J Corp and their conduct (including conduct by silence), particularly at the site inspections on 11 November 1994 and 15 November 1994, as well as at later dates, the conduct of J Corp constituted misleading and deceptive conduct so entitling Masawa to damages. The measure of these damages was claimed to be the amount of liquidated and ascertained damages that would have been payable pursuant to the contract.

60 With respect to the letter of J Corp of 7 November 1994, it is Masawa's case that this letter necessarily involves an implicit statement of fact, namely, that the builder had constructed the works in accordance with the contract. As such, it is Masawa's case that this letter was misleading and deceptive as the works had not, in fact, been constructed

(Page 30)

in accordance with the contract. Before the Arbitrator, it was also contended that the letter was an express statement of fact that the works had reached a stage of practical completion. The learned Arbitrator considered the extensive, detailed and at time markedly conflicting evidence (so far as these things may be gleaned from his reasons), with respect to all of the allegations of misleading and deceptive conduct with some considerable care. In particular, with regard to the letter of J Corp of 7 November 1994, the learned Arbitrator was persuaded that its contents were notice to the architect of the builder's opinion that the works had reached practical completion, as contemplated by SBW cl 9.1.1. The learned Arbitrator further held that that opinion was both honestly and reasonably held at the time. Further, the learned Arbitrator found that Mr Wiacek did not rely upon the letter or its content when he came to give notice certifying that practical completion had been achieved on 15 November 1994. Masawa now contends that an error of law is revealed in the Arbitrator's finding that the letter of 7 November was only a statement of J Corp's opinion. Further, Masawa contends that the learned Arbitrator erred in law when he failed to conclude that the evidence sustained a causal connection between the misleading and deceptive conduct relied on and damage. It is submitted that the Arbitrator should have considered what Mr Wiacek would have done had the builder not sent the misleading notice dated 7 November 1994. In this regard, the submission is that it should be taken as obvious that Mr Wiacek would not have come to certify practical completion. In respect of this submission with respect to causation, reliance is placed upon Finucane v New South Wales Egg Corporation (1988) 80 ALR 486 at 517.

61 Given the contractual context within which the parties were dealing, in my view, it is difficult to sustain the proposition that it was not open to the learned Arbitrator to conclude that the letter of 7 November 1994 was intended and understood to be a statement of the opinion of the builder, as expressly contemplated by SBW cl 9.1.1. Other views may well also have been open to the learned Arbitrator depending, in particular, upon the state of the oral evidence which is not, of course, before me. But that is not the issue. On the face of the reasons, I am not persuaded that manifest error of law or strong evidence of error of law on the part of the learned Arbitrator is revealed insofar as he held and proceeded on the basis that the letter of 7 November 1994 was only a statement of opinion. Further, for the purposes of s 38(5)(b) of the Commercial Arbitration Act, I would not be persuaded that the certainty of commercial law may be advanced, or may be likely to be advanced substantially, by any further

(Page 31)

consideration of that question on appeal in this case. In any event, in view of the factual findings of the learned Arbitrator in respect of the basis upon which Mr Wiacek came to his decision that practical completion had been achieved by 15 November 1994, I would not have been persuaded that the determination of the issue of causal connection, in the circumstances of this case, might add, or might be likely to add substantially, to the certainty of commercial law.

62 Ground 6(b) also invokes oral statements during the site inspection on 15 November 1994, although these were not the subject of oral or written submissions. The nature of the issue and of the learned Arbitrator's factual findings leaves me with the same view about any oral statements on 15 November 1994 as I have indicated with respect to the letter of J Corp of 7 November 1994.

63 Ground 8 was not the subject of either oral or written submissions and, as it deals with the question of damages for the period after 16 January 1996, I understand it is a ground that it not pursued for Masawa.

Summary

64 The circumstances of this case leave me, as they left the Arbitrator, with a sense of dissatisfaction that Masawa should be unable to recover liquidated damages, given the conduct of J Corp as disclosed by the reasons of the learned Arbitrator. The primary reason for this outcome, however, appears, on the face of the materials before me, to be the failure of Mr Wiacek to act in accordance with the contract which he was administering as architect. I express that observation contingently, because I have not heard the full facts or Mr Wiacek. It may be that Masawa's remedy lies against its architect.

65 For the reasons given, I would not grant leave to appeal.