Morton v Peter Schwartz (Overseas) Pty Ltd
[2001] VSC 318
•4 September 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
No. 6231 of 2001
| JONATHON DENTON MORTON | Plaintiff |
| v. | |
| PETER SCHWARTZ (OVERSEAS) PTY. LTD. AND OTHERS | Defendants |
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JUDGE: | BEACH, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 27 AUGUST 2001 | |
DATE OF JUDGMENT: | 4 SEPTEMBER 2001 | |
CASE MAY BE CITED AS: | MORTON v. PETER SCHWARTZ (OVERSEAS) PTY. LTD. & ORS. | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 318 | |
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CATCHWORDS: Practice and Procedure – Costs of proceeding – Proceeding necessitated by failure of plaintiff to respondent to arbitration in which he is involved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. C.M. Sievers | Byrne & Clark |
| For the First Defendant | Mr. S.R. Horgan | Middletons Moore & Bevins |
| For the Second, Third and Fourth Defendants | Mr. S. Theodore | Blake Dawson Waldron |
HIS HONOUR:
This proceeding relates to an arbitration conducted by the second, third and fourth defendants (the arbitrators) on 22 May 2001 of a dispute between the plaintiff and the first defendant concerning six contracts entered into by the plaintiff and the first defendant between 18 April 2000 and 1 December 2000 relating to the supply and delivery by the plaintiff of grain and pulse commodities.
By their award dated 22 May 2001 the arbitrators found in favour of the first defendant and awarded it the sum of $838,097.06. It further held that the plaintiff was to pay the National Agricultural Commodities Marketing Association Incorporated's (the NACMA) arbitration fee of $5,525.00.
The plaintiff was not represented at any hearing by the arbitrators either prior to or on 22 May, nor did he provide any written submissions to the arbitrators prior to the hearing. It would appear that the hearing by the arbitrators was by telephone link.
At all events on 8 June 2001 the plaintiff filed an originating motion in the Court seeking to have the arbitrators' award set aside.
Although there are no grounds upon which the plaintiff seeks the relief specified in the originating motion it is clear from material subsequently filed by the plaintiff that the ground to be relied upon by the plaintiff is a denial of natural justice based primarily upon the fact that he was not represented at the hearing by the arbitrators (if the conversation be telephone link between them could be categorised as such) and had not had a proper opportunity to make submissions to the arbitrators.
The proceeding came before me for hearing on 27 August. By that time the parties had agreed that the arbitrators' award should be set aside and that the matter should be remitted to them for re-hearing.
It is clear that the decision of the first defendant to agree to the setting aside of the award was a commercial decision and not one made by it by virtue of any doubt it had concerning the validity of the arbitrators' award. A similar observation can be made in respect of the decision of the arbitrators.
The one matter that the parties have not been able to agree upon is which of them should be responsible for the costs of this proceeding.
Having considered in some detail the history of the events leading up to the award of the arbitrator it is my opinion that the plaintiff should be responsible for the costs of the proceeding.
I have arrived at that conclusion for the following reasons.
On 7 December 2000 the first defendant wrote to NACMA and told it that it wished for an arbitration against the plaintiff and sought information as to what it needed to do to proceed.
By letter of 12 December 2000 NACMA sent a number of documents to both the first defendant and the plaintiff concerning the procedure to be followed. The letter made it clear to the plaintiff that NACMA had been asked to and intended to hold an arbitration of the dispute between the plaintiff and the first defendant.
By letter of 8 January 2001 the first defendant sent appropriate details of the dispute between the parties to NACMA.
The plaintiff through a law clerk in the employ of his solicitors has said that he did not become aware of the existence of the first defendant's letter of 8 January 2001 until a copy was exhibited to an affidavit of the first defendant's solicitor sworn 10 July 2001.
I accept that that was the situation.
Between the end of January 2001 and the beginning of April there were various communications between the plaintiff's solicitors, the first defendant's solicitors and the NACMA concerning the arbitration and in particular whether it should be held or whether the plaintiff and first defendant should have their dispute determined by litigation. No useful purpose will be served by detailing such matters in my reasons.
What I do consider to be important, however, is the following letter of 3 April 2001 sent by NACMA to the solicitors for the plaintiff and the solicitors for the first defendant:
"Gentlemen
PETER SCHWARTZ (OVERSEAS) PTY. LTD. and MORTONS SEED AND GRAIN
In relation to the dispute between these Companies, I wish to advise NACMA intends to proceed with the Arbitration as requested by the Claimant who has nominated Mr. Max Perkins as an Arbitrator.
NACMA intends to nominate Mr. George Hammond as the Chairperson for the arbitration process. We now request the Respondent to nominate the third Member of the Arbitration Panel, and for this purpose the attached Schedule of Arbitration is provided.
The Claimant's Submission is attached and the Respondent's Rebuttal is required by 26 April 2001.
Should there be any queries on this matter please contact the writer.
Yours faithfully
Bryce Bell
EXECUTIVE DIRECTOR."
In my opinion that letter could have left the plaintiff and its solicitors in no doubt but that NACMA proposed to proceed with the arbitration.
On 23 April the plaintiff's solicitors sent the following letters to NACMA:
"Dear Sir,
Re: Morton's Seed & Grain and Peter Schwartz
We confirm that we have furnished our client with a copy of the Arbitration Referral document. We are awaiting instructions from our client, once it has had the opportunity to study the contents, bearing in mind that the dispute area seems to be far wider than originally anticipated.
We will revert to you as soon as practically possible. Our clients' rights, of course, remain fully reserved."
On 10 May they sent the following letter to NACMA:
"Dear Sir,
Re: Peter Schwartz
We confirm that we are in the process of obtaining final instructions from our client. We confirm that the telephonic advice received from Mr. Bell to the effect that Schwartz seeks conclusion of the dispute as described although this is wider than the original dispute mentioned. It is for this reason that our client needs to research the claim further and respond to the additional issues raised."
Thereafter there was no communication between the plaintiff's solicitors and NACMA prior to the arbitrators making their award. Specifically the plaintiff did not nominate an arbitrator as he was required to do, nor did he make any submissions to the arbitrators as he was entitled to.
In those circumstances I think it is a very moot point as to whether there was any denial of natural justice on the part of the arbitrators.
In my opinion the plaintiff had been given ample opportunity to make submissions to the arbitrators and simply failed to do so. In certain respects therefore he became the author of his own misfortune. In my opinion he should now bear the responsibility for it.
I order that the plaintiff pay the first defendant's costs of the proceeding including the costs of the first defendant's summons of 10 July, its costs of 27 August and any reserved costs.
I order that the plaintiff pay the second, third and fourth defendants' costs of 27 August.
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