Minister for Industrial Affrs v Civil Tech & Anor No. Scgrg-99-328 Judgment No. S151

[1999] SASC 151

MINISTER FOR INDUSTRIAL AFFAIRS v CIVIL TECH PTY LTD AND BARRY TOZER
[1999] SASC 151

Civil

Debelle J   (ex tempore)

1. This is yet another application in this arbitration which has effectively been stalled since an interim award was made by the arbitrator on 25 November 1996.  The parties to the arbitration are the Minister for Industrial Affairs (“the Minister”) and Civil Tech Pty Ltd  (“Civil Tech”).

2. On 25 November 1996 the arbitrator delivered an interim award concerning an issue which the parties had agreed should be determined as a preliminary issue.  The issue was whether Civil Tech was bound by a letter of release dated 14 February 1992.  The arbitrator decided that the letter of release was voidable on several grounds, namely, economic duress, unconscionability, and absence of accord and satisfaction.  In his reasons the arbitrator also found that the letter of release was voidable on the grounds of common mistaken misrepresentation, grounds which had not been pleaded.

3. The Minister sought leave to appeal from the interim award. Leave to appeal was refused. The Minister then obtained from the Full Court leave to appeal from the decision refusing leave to appeal. Pursuant to that leave, the Minister then applied to the Full Court for leave to appeal against the interim award. On 26 February 1998 the Full Court allowed the appeal against the decision refusing leave to appeal and also allowed the appeal against the interim award. The Full Court ordered that the interim award be remitted, together with the court's opinion on the questions of law which were the subject of the appeal to the court, to the arbitrator for reconsideration in the light of any determination the arbitrator may make concerning a claim of estoppel made by the Minister in his rejoinder dated 10 September 1996. That issue is set out as in the interim award as issue No 5. With respect, it is not entirely clear what is meant by the order of the Full Court. I have paraphrased that order. The full terms of the order are to be gleaned from paras 2 and 5 of the order.

4. Some understanding of the order can also be gleaned from the reasons for judgment.  In its reasons the Full Court held that the decision by the arbitrator that the letter of release was voidable on the ground of an absence of accord and satisfaction was wrong.  The Full Court also held that the finding that the letter of release was voidable on the ground of unconscionability did not disclose any manifest error of law nor any other error which justified interference by the court.  Thus, the finding of unconscionability was upheld.  The court then went on to deal with what it called “the affirmation plea”.  That is the plea to which reference is made in paras 2 and 5 of the order of the court and which is set out on p9 of the reasons of the court.  The court held that the arbitrator had not addressed that question and that he was obliged to do so.  In the opinion of the court, that constituted an error of law which justified it interfering with the award.

5. The court has failed to deal with the questions whether the letter of release was voidable on the other grounds nominated identified by the arbitrator, namely economic duress, common mistake and misrepresentation.  It is reasonable to infer that the claim of economic duress was considered by the Full Court to be subsumed under the heading of unconscionability.  If that is so, there remain the issues of common mistake and misrepresentation.  I am informed that these issues were argued before the Full Court.  As to the other grounds, the Full Court said in its reasons:

   “All the other grounds, if valid, would merely render the agreement voidable at the option of the respondent.  There may have been, at one time, a category of common mistake which would render a contract void, but that seems unlikely to have survived ...  Thus, all the remaining grounds, would rely on equitable principles for the avoidance or setting aside of the contract, and are grounds which would be liable to be defeated if the affirmation plea were successful.”

The court then went on to deal with the question of accord and satisfaction and unconscionability.  The reasons of the Full Court show that it has not in any respect interfered with the decision by the arbitrator that the letter of release was voidable on the grounds of common mistake or misrepresentation.

1. It has been necessary to go into these matters because there is a live issue between the parties as to the matters which are to be determined by the arbitrator in consequence of the order of the Full Court.  This debate between the parties has already led to one application, which I determined on 22 January 1999.  That was an application to remove the arbitrator on the grounds of misconduct, incompetence and unsuitability.  The application was made by the Minister.  In the alternative, the Minister sought an order in the nature of a declaration that the arbitrator was bound by the decision of the Full Court.  I dismissed the application.  When dismissing the application for the declaration I said:

   “As an alternative ground of relief the Minister seeks a declaration that the arbitrator is bound by the judgment of the Full Court.  The arbitrator is aware that he is bound by the decision of the Full Court.  He said so in his letter dated 9 April 1998.  It is apparent from these reasons that it is not open to the arbitrator to hold that the letter of a lease is void for common mistake.  He has already held that it is voidable on that ground.  He must, therefore, proceed in accordance with the reasons of the Full Court and decide whether the affirmation plea defeated the ground of unconscionability.”

2. When the matter resumed before the arbitrator on 12 March 1999 there was a debate as to the matters which the arbitrator had to determine.  In the result the arbitrator made the following orders:

3. That this matter proceed in accordance with the order of the Full Court made on 26 February 1998 where the court remitted to me the issue which I refer to as the claim of estoppel as referred to in para 21 of the rejoinder filed in this arbitration by the respondent.

1. That the claimant is not entitled to argue that the letter of 14 February 1992 is void ab initio.

1. That the parties are at liberty to make all such arguments with respect to the claim of estoppel as referred to in the order of the Full Court of the Supreme Court. 

1. I do not consider that I am restricted to hear submissions as to whether “the affirmation plea defeated the ground of unconscionability” as set out in the reasons for judgment of the Honourable Justice Debelle dated 22 January 1999.

The arbitrator then adjourned the arbitration to enable the Minister to file such application as he may be advised in this court. The Minister has issued proceedings seeking a declaration that the arbitrator is bound by the decision I made on 22 January insofar as, it is said, I found that the arbitrator must “decide whether the affirmation plea defeated the ground of unconscionability”. In the alternative the Minister seeks an order that the arbitrator be removed. No ground for removal is stated in the application.

1. When determining the issues, the subject of the reasons published on 22 January 1999, it was of course necessary to examine the reasons of the Full Court to determine the nature of the issues remitted to the arbitrator for the purpose of determining whether he had been guilty of any misconduct.  Nothing which I stated in those reasons could in any respect narrow or confine the operation of the order made by the Full Court.  Indeed, a moment's reflection would indicate that, even if I had purported to do so, I would have plainly been exceeding my authority and would in effect have been reviewing the decision of the Full Court.  The remarks I made when dismissing the application by the Minister for a declaration that the arbitrator was bound by the judgment of the Full Court were not intended to confine the effect of the orders made by the court.  The sentence relied upon by the Minister, “He must, therefore, proceed in accordance with the reasons of the Full Court and decide whether the affirmation plea defeated the ground of unconscionability,” does no more than indicate what in truth is the position.  The position is that the arbitrator must act in accordance with the reasons of the Full Court and, in the proper discharge of that duty, one matter to which he must attend is the affirmation plea. 

2. The reasons of the Full Court do not confine the issues to be determined by the arbitrator to the affirmation plea so far as it affects the ground of unconscionability.  It is open to Civil Tech to rely, to the extent to which it can, upon the questions of common mistake and misrepresentation in respect of which findings have already been made by the arbitrator.  Those pleas too might be affected by the affirmation plea.

3. It follows that the submissions made by the Minister to the arbitrator seeking to narrow the issues for determination by him were wrong.  The gravamen of the application made to me was to confine the issues to whether the affirmation plea defeated the ground of unconscionability.  For the reasons I have given, the arbitrator is not bound in that way.  The Minister was seeking to use my reasons published on 22 January 1999 in an impermissible way.

4. The reasons for this decision could have been a good deal briefer.  It is sufficient to dispose of this application to say that what was said by me in my reasons for judgment on 22 January 1999 could not in any way narrow the operation or ambit of the order of the Full Court.  To that extent, the rest of my reasons might be said to be obiter dicta.  I have dealt with the matter at greater length than perhaps is necessary because I am concerned that this arbitration should be able to resume without any further difficulty concerning the matters which the arbitrator might properly determine.

5. For all of these reasons, the application is dismissed.