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Melbourne Harbour Trust Commissioners v Hancock

Melbourne Harbour Trust Commissioners v Hancock

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Case Copied 9 June 1927 43 min read

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39 CLR 570

THE MELBOURNE HARBOUR TRUST

COMMISSIONERS HANCOCK

ON APPEAL FROM THE SUPREME COURT OF Arbitration-Award-Setting - aside award-Construction of contract-Question of

construction left to arbitrator-Application of wrong principle-Uncertainly of award-Misconduct of arbitrator-Arbitration Act 1915 (Vict.) (No. 2614), sec. MELBOURNE,

A contract between the appellants and the respondent, for the carrying out by the respondent of certain works in connection with the construction of a wharf, contained a clause providing that the appellants' engineer should have the power of requiring from time to time the omission of any particular portion or portions of the work and of deducting the value of the omitted part from the amount of the contract and that the respondent should have no claim for loss. damage or compensation on that account. Certain omissions having been required by the engineer and a dispute having arisen between the parties, a reference was made to an arbitrator of the question whether under the contract the omission could properly be made. The arbitrator by his award determined that the omission was not one that could properly be made under the contract, and he stated in his reasons for his award that the contract did not authorize the engineer to require an omission which fundamentally altered the contract, as he found that the particular omission did.

Held, (1) that the reasons of the arbitrator should be read with his award (2) that the construction of the contract was a matter committed to the arbitrator, that his decision thereon was correct and, the question whether the particular omission did fundamentally alter the nature of the contract being one for the arbitrator alone, that his award was not open to attack on the ground that in construing the contract he had proceeded upon wrong principles of construction or had otherwise been guilty of some error of law.

Kelantan Government v. Duff Development Co., (1923) A.C. 395, applied.

39 CLR 571

39 C.L.R.

OF AUSTRALIA. The contract also contained a clause providing that the respondent, on receiving a written notice from the engineer, should from time to time suspend the whole or any portion of the works as might be directed, and another clause providing that none of the provisions of the contract should be varied, waived, discharged or released unless by express consent of the appellants under their

Held, that notwithstanding the last-mentioned clause the appellants might be precluded by their conduct from relying on the absence of a written notice directing a suspension.

Craine v. Colonial Mutual Fire Insurance Co., (1920) 28 C.L.R. 305 York- shire Insurance Co. v. Craine, (1922) 2 A.C 541 31 C.L.R. 27, followed.

The arbitrator in respect of a claim for loss occasioned by a suspension of certain portion of the work awarded a certain sum and, in the event of the Supreme Court of Victoria determining that certain views expressed by him in his reasons as to the meaning of the clause relating to suspensions were erroneous, a certain larger sum.

Held, that…

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: [1927] HCA 26
Decision Date: 9 June 1927

CaseChat Overview and Summary

The Melbourne Harbour Trust Commissioners (appellants) appealed to the High Court of Australia from a decision of the Supreme Court of Victoria, which had dismissed their motion to set aside an arbitration award. The dispute arose from a contract for wharf construction between the Commissioners and Charles Daniel Hancock (respondent). A key issue involved the engineer's power under clause 13 of the contract to require omissions of work and deduct their value, and the respondent's claim for loss arising from such omissions and a suspension of work.

The legal issues before the court included whether the arbitrator had erred in law by misconstruing clause 13 of the contract, which permitted omissions, and clause 21, concerning the suspension of works. Specifically, the court had to determine if the arbitrator's finding that a particular omission fundamentally altered the contract was reviewable, and if the arbitrator had correctly applied principles of construction. Additionally, the court considered whether the award was uncertain due to an alternative sum offered in the event of a court determining the arbitrator's views on quantum meruit were erroneous, and whether the arbitrator had been guilty of misconduct by inducing the appellants to refrain from seeking a special case from the court.

The High Court, affirming the decision of the Supreme Court, held that the construction of the contract, including the interpretation of clause 13 and the scope of the engineer's power to order omissions, was a matter specifically committed to the arbitrator by the terms of the submission. Therefore, his decision on this point was not open to attack on the ground of error of law unless it appeared on the face of the award that he had acted illegally or proceeded on principles of construction not countenanced by law. The court found no such error in the arbitrator's reasoning, which considered the contract as a whole and the nature of the work. Regarding the suspension of work, the court applied the principle from *Craine v. Colonial Mutual Fire Insurance Co.*, holding that the Commissioners could be precluded by their conduct from relying on the absence of a written notice, a determination for the arbitrator. The court also found the award not to be uncertain, as the alternative sum was conditional and did not come into operation in the absence of a court determination. Finally, the court agreed with the Supreme Court that the arbitrator's conduct did not amount to misconduct.

The appeal was dismissed.

Orders