Muir, S.R. v Dobson & Corry Pty Ltd
[1990] FCA 478
•31 Aug 1990
JUDGMENT No ........ ...,...... * 7 g/...%
C A T C H W O R D S
PRACTICE & PROCEDURE - application for stay of proceedings pursuant to S. lO(1) Arbitration Act 1973 (Q.) - building
dispute together with allegations of, inter alia, misleading
and deceptive conduct and fraud - principles to be applied
where not all the matters can be determined by the arbitrator.
Arbitration Act 1973 (Q.)
SANDRA ROSE MUIR V. DOBSON & CORRY PTY LTD & ANOR.
31 AUGUST 1990
NO. QLD. G68 of 1990
SPENDER J.
BRISBANE
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY )
1 NO. QLD G68 of 1990 GENERAL DIVISION )
BETWEEN: Sandra Rose MUIR
Applicant
AND: DOBSON & CORRY PTY LTD
First Respondent
AND: Frank DOBSON
Second Respondent
MINUTES OF ORDER
JUDGE MAKING ORDER: SPENDER 3. DATE OF ORDER: 31 August 1990 WHERE MADE: BRISBANE THE COURT ORDERS THAT:
(1) The Notice of Motion be dismissed.
(2) The costs of the respondent to the motion be her
costs in the principal proceedings.
NOTE: Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY
1 NO. QLD G68 of 1990 GENERAL DIVISION )
BETWEEN: Sandra Rose MUIR
Applicant
AND: DOBSON & CORRY PTY LTD
First Respondent
AND: Frank DOBSON
Second Respondent
SPENDER J.
BRISBANE
31 August 1990
REASONS FOR JUDGMENT
This is a notice of motion on behalf of the first and second respondents in the principal proceedings in the Federal Court, seeking that the Federal Court proceedings be stayed pursuant to S. lO(1) of the Arbitration Act 1973 (Q.) until the completion of the arbitration commenced between the applicant, Sandra Rose Muir, and the first respondent upon the
reference of the first respondent. The notice of motion was filed on 16 July 1990. The Federal Court proceedings were commenced by an application filed on 14 June 1990 by Mrs. Muir. She is the wife of one of Her Majesty's counsel practising in Brisbane and there are practical reasons why proceedings in which she is a party should be litigated in the Federal Court rather than the Supreme Court of Queensland. That consideration is
however irrelevant to the present motion. The proceedings relate to a contract for the building of a dwelling house by the first respondent for the applicant, pre-contractual representations allegedly made by the second respondent on behalf of the first respondent, as well as representations in the course of construction.
I.
In the application Mrs. Muir claims damages against
both respondents pursuant to S. 82(1) of the Trade Practices
Act_ 1974, damages for breach of contract against the first
respondent, and against each respondent further or other relief under S. 87 of the Trade Practices Act and, in particular, an order that the first respondent be restrained from pursuing the rights or remedies under cl. 28 of an agreement referred to in paragraph 3 of a detailed statement of claim filed with the application. Mrs. Muir also sought a declaration that the specifications referred to in paragraph 3 of the statement of claim were part of the agreement referred to in that paragraph. Whether the specifications which the
applicant says formed part of the agreement are part of the agreement is a matter of serious contention between the parties. The applicant alternatively claims a declaration that the first respondent is estopped from denying that the specifications formed part of the said agreement.
The statement of claim filed on 14 June 1990 is a 44
page document of considerable detail. In it the applicant
alleges that she entered into an agreement dated 7 October
1987 with the first respondent to build for her a dwelling house on land, of which she was the owner at Corinda in Brisbane, for the sum of $255,033.00. The applicant says the agreement consisted of, inter alia, specifications comprising S8 pages as well as a number of other documents. The applicant asserts that the first respondent failed to perform and complete the works in accordance with the plans and specifications and in a proper and workmanlike manner. In addition to the statement of claim, particulars of the allegations made in the statement of claim of some 27 pages were filed. The applicant alleges breaches of the contractual agreement and breaches of the warranties implied by virtue of ss. 71 and 74 of the Trade Practices Act 1974.
Thus far the statement of claim essentially
addresses a building dispute between the parties, but thestatement of claim alleges that in pre-contractual meetings
there were representations made by the second respondent which induced her to enter into the agreement alleged. 1n particular the applicant asserts pre-contractual representations about the specifications, and that she requested a quotation on the basis of the specifications, and asserts that she signed a copy of the specifications in the presence of Mr. Dobson, who took that signed copy away. It is asserted that the respondents never intended to build in accordance with the specifications but, on the contrary, intended that the house would be built as cheaply as possible without reference to the specifications and without reference
to the representations as to quality. It is asserted that further deception was engaged in to conceal or avoid detection of the original deception and to cause the applicant to accept departures from the contract.
The applicant's case in part asserts fraud inducing the contract and fraud in the course of construction. There
,I
is particular reference to the use of unseasoned hardwood contrary to what is said to be the specifications; specific complaint is also made of the substitution of "durian" timber for wooden windows and doors in preference to silky oak. There is further specific complaint concerning the failure to provide a Polatzi trap to take sewerage and waste water from the en suite to the sewer, one result of which is a "dropped ceiling" to conceal plumbing. It is contended by the applicant that Mr. Dobson said that it was not possible to install the Polatzi trap to avoid dropped ceilings, having regard to the size of the joists; the applicant says that the Polatzi trap could have been provided and plumbing could have been installed so as to obviate the need for dropped ceilings
specifications. if the joists were of the size required by the plans and The applicant alleges that Mr. Dobson is a person who is knowingly concerned in the contraventions by the first respondent of Part V of the Trade Practices Act and damages under the Act are claimed against him.
While it is true that many questions are raised as to the performance of the contract, the nature of the work
that was done, whether proper materials were used and so on, as one would anticipate in an ordinary building dispute, the applicant's claim is not a simple building dispute camouflaged as a S. 52 claim; there seem to be genuine trade practices claims comprehended in the statement of claim. The assertions ,. concerning the failure to install the Polatzi trap for example seem to be of this kind. There are, of course, a large number of factual allegations the resolution of which does not immediately commend itself as exciting.
It is necessary to deal with the history of the matter until the referral by the first respondent to arbitration.
The building contract is dated 7 October 1987 and
the statement of claim alleges that the house was
substantially constructed by the first respondent betweenabout 6 October 1987 and about 7 May 1988.
On 15 January 1990 Mr. Dobson, having referred to complaints of water damage and retention of moneys, said:
" I believe that if we cannot negotiate a mutual
settlement then we will both have to pay tocall in an arbitrator as provided for under the
contract . "
O n 7 February 1990 M r . Dobson, on b e h a l f o f the
f i r s t r e s p o n d e n t , s a i d , i n t e r a l i a :
" Under the c o n t r a c t , where there i s a d i s p u t e , the c o n t r a c t c a l l s for a n a r b i t r a t o r . W i t h
y o u r p e r m i s s i o n we would l i k e to c a l l on the
HIA to a p p o i n t a n a r b i t r a t o r t o l i s t the i t e m s
o f work t h a t a r e d e f e c t i v e and what r e m e d i e s
would be n e e d e d .
Once a g a i n we r e i t e r a t e the f a c t t h a t a n y
r e c t i f i c a t i o n t h a t h a s not been c o m p l e t e d h a s
not j u s t r e a d y t o c a r r y o u t
been
( o u r ) f a u l t .
W e h a v e
a l w a y s been
t h i s work .
W e r e a l i z e the i n c r e d i b l y b u s y work l o a d o f
John Muir t o o r g a n i z e some o f the above b u t we
would l i k e t o h a v e i t s e t t l e d by the e n d o f
February . "
There i s a d e t a i l e d r e s p o n s e b y M r . Muir on h i s w i f e ' s b e h a l f
d a t e d 9 February 1990, w h i c h e n c l o s e d a l i s t o f m a t t e r s w h i c h
needed r e c t i f i c a t i o n and s e e k i n g a number o f a s s u r a n c e s , and
c o n c l u d e d :
" W e h a v e r e s o l v e d t h a t the h o u s e m u s t be
f i n i s h e d t o the s t a n d a r d s promised . I f accompl i shmen t o f t h a t e n d r e q u i r e s l i t i g a t i o n , so be i t . "
T h e r e i s n e x t a c o n t e n t i o u s le t ter d a t e d 27 February
1990 f rom the second r e s p o n d e n t t o Mr. Muir. T h i s let ter o f
some f i ve pages makes d e t a i l e d reference i n numbered
paragraphs t o p a r t i c u l a r c o m p l a i n t s o f the le t ter o f 9
February and c o n c l u d e s :
" However there d o e s a p p e a r t o be a m a j o r p rob lem
w i t h w o r k i n g o u t e x a c t l y what h a s t o be done and I would p r e f e r t h a t a n i n d e p e n d e n t
a r b i t r a t o r be a p p o i n t e d t o a s s e s s what work i s r e q u i r e d .
T o t h a t e n d , we would a p p r e c i a t e y o u r o r g a n i s i n g the a p p o i n t m e n t o f a n a r b i t r a t o r to
c a r r y o u t the a r b i t r a t i o n o f these i t e m s and t o
determine what rect i f icat ion, i f any, i s required. "
M r . Muir swears t h a t t h i s l e t t e r was never received. He
swears that he f i r s t saw the l e t t e r on 31 July 1 9 9 0 . This
claim i s consistent with a l e t t e r dated 11 April 1 9 9 0 t o the
directors o f Dobson & Corry P t y L t d from Mrs. Muir, which commences :
" There has been no response t o my l e t t e r o f 9 February 1990.
Accordingly, I propose t o commence an action against Dobson & Corry and M r . Dobson within 1 4
days o f today's date. A copy o f the proposed statement o f claim i s enclosed.
I am enclosing the statement o f claim so that -
(a) if you wish, an attempt can be made to
resolve the matter without l i t igat ion; (b) you w i l l have the opportunity o f taking legal advice;
( c )
there w i l l be no delay i n the prosecution o f the action once it commences. "
The l e t t e r concludes:
" I f you wish to discuss the matter within 14
days, I w i l l be happy t o meet w i t h you provided
my husband or sol ic i tor i s present.If you consider that there i s no point i n having any such discussion please advise the name o f a so l ic i tor on whom service can be
e f f ec ted . "
I t i s a curious feature t h a t , i f the l e t t e r was sent and
received, none o f the subsequent correspondence from either side re fers t o a l e t t e r o f 27 February, or i t s contents, or
that the mistake with which Mrs. Muir's l e t t e r o f 11 April commences i s not corrected.
On 15 May 1990 a f i v e page l e t t e r was sent by Mrs.
Muir which commences:
" I refer to m y l e t t e r to you o f 1 1 t h A p r i l 1990.
S i n c e s end ing t h a t l e t ter , John and I have had
a ' w i t h o u t p re jud i ce ' m e e t i n g w i t h Frank Dobson
on t h e 2 5 t h A p r i l 1990 and a f u r t h e r ' w i t h o u t
pre jud ice ' m e e t i n g w i t h V ince C o r r y on the 7 t h May 1990.
I remind you o f the c o n t e n t s o f my let ter o f
1 1 t h A p r i l . "
Towards the end she i n d i c a t e s t h a t she h a s :
" ... not c l o s e d m y mind t o the p o s s i b i l i t y o f
r e c t i f i c a t i o n by your company, shou ld t h a t be
o f f e r e d . "
and conc ludes b y say ing :
" I look forward t o h e a r i n g from you. "
O n 2 8 May Mrs. Muir wro t e b y f a c s i m i l e say ing :
" D e s p i t e t h e t i m e which has e x p i r e d s i n c e ,
f irstly, the d a t e when I f irst gave you a l i s t
o f d e f e c t s and s econd l y , the d a t e on which I t h r e a t e n e d l e g a l proceed ings , n o t h i n g h a s been done t o s a t i s f y me t h a t a n y t h i n g wor thwhi le
w i l l be o f f e r e d by your company by way o f
r e c t i f i c a t i o n . "
And concluded b y say ing :
" I propose t o have t h a t work done and t o
i n s t i t u t e proceed ings w i t h o u t f u r t h e r n o t i c e . "
On 29 May 1990 M r . Dobson r e p l i e d t o the f a c s i m i l e
from Mrs. Muir o f t h e prev ious day , and t h e le t ter conc luded:
" I r e i t e r a t e o u r w i l l i n g n e s s t o c a r r y o u t a l l
c o n t r a c t u a l r e c t i f i c a t i o n s under t h e c o n t r a c t ,
the problem i s c l a r i f y i n g what t h e s e a r e . "
O n 1 June Mr. Dobson r e p l i e d t o a l e t ter o f M r . Muir
o n 30 May 1990, s a y i n g :
" I r e f e r t o your l e t t e r o f the 30th instant and rei terate that I wish t o resolve the matter
without recourse t o the courts. "
He asked i f M r . Muir would be prepared t o discuss with him:
" the appointment o f a consultant t o determine a
l i s t o f rec t i f icat ions which he would agree t o be bound by, and for us then to carry out the
rect i f icat ion work pursuant to that: l i s t 7 "
3.
On 5 June 1 9 9 0 the o f f e r was not accepted, and on 8
June 1 9 9 0 M r . Dobson wrote:
" Following your reply on Tuesday t o our o f f e r we would appreciate i t i f you would not take any action until next Wednesday. We w i l l then come back with our response t o your position. "
On the same d a y M r . Muir responded and said:
" The o f f e r made by Sandra i n her l e t t e r o f 15 May i s open for acceptance. I t i s proposed that the application, statement o f claim and particulars be put i n final form over the long weekend and that proceedings be conm~enced on Tuesday or Wednesday. "
There was no further response by M r . Dobson as
foreshadowed by h i m on 8 June, but on 13 June 1 9 9 0 Messrs.
Cleary & Hoare, on behalf o f the f i r s t respondent, wrote t o
Mrs. Muir:
" We enclose Notice o f Dispute or Difference by
way o f service upon you. "
The notice re fers t o the agreement dated 7 October 1987 and t o
c1.28 o f t h a t agreement which provides:
" Any dispute or dif ference arising between the Owner and the Builder ei ther during the progress o f the works or a f t e r the determination abandonment or breach o f the contract a s to the interpretation o f the contract or as to the matter or thing arising thereunder or i n connection therewith then ei ther party w i l l give to the other notice o f
s u c h d i s p u t e or d i f f e r e n c e and s u c h d i s p u t e or
d i f f e r e n c e s h a l l be and i s hereby r e f e r r e d t o
the a r b i t r a t i o n and f i n a l d e c i s i o n o f a s i n g l e
a r b i t r a t o r who s h a l l be a p p o i n t e d by the
Hous ing I n d u s t r y A s s o c i a t i o n wh ich a r b i t r a t o r
s h a l l be:
f a ) A member o f the I n s t i t u t e o f A r b i t r a t o r s and
f b ) Has p r a c t i c a l s k i l l s i n the t y p e or n a t u r e
o f the d i s p u t e
i n accordance w i t h and s u b j e c t t o the
p r o v i s i o n s o f the A r b i t r a t i o n A c t 1973 or a n y
s t a t u t o r y m o d i f i c a t i o n or r e - e n a c t m e n t thereof
for the t i m e b e i n g i n f o r c e . Any award or
a s s e s s m e n t made by the A r b i t r a t o r s h a l l be
b i n d i n g on the B u i l d e r and the Owner and
neither s h a l l be e n t i t l e d t o commence or
m a i n t a i n a n y a c t i o n upon a n y s u c h d i s p u t e wh ich h a s been so r e f e r r e d t o a r b i t r a t i o n u n t i l s u c h d i s p u t e h a s been d e t e r m i n e d by the A r b i t r a t o r and then only i n accordance w i t h the award
a s s e s s m e n t g i v e n by s u c h A r b i t r a t o r . "
The disputes or differences which the builder asserted in the notice are expressed as follows:
" (i) the true interpretation and proper construction of the Agreement; (ii the Builder's performance of its obligations
under the Agreement;(iii) the Proprietor's performance of its
obligations under the Agreement; (iv) the amount of moneys owing by the Proprietor to the Builder;
(v) the amount of money owing (if any) by the Builder to the Proprietor;
(vi) the amount of money (if any) the Proprietor is entitled to withhold from the moneys owing by the Proprietor to the Builder; and
(vii) the contents of the agreement, in particular whether any specifications were tendered to the Builder by the Proprietor on her behalf and whether these form part of or are to be read in conjunction with the Agreement.
The notice was hand delivered at 3.55 p.m. on 13 June 1990.
S e c t i o n 10 o f t h e A r b i t r a t i o n Ac t 1973 ( Q l d ) ( " t h e
A r b i t r a t i o n A c t " ) p rov ide s :
" ( 1 ) I f a n y p a r t y t o an agreement t o a r b i t r a t e ,
o r a n y person c l a i m i n g through o r under h im, commences a n y l e g a l proceed ings i n a n y c o u r t
a g a i n s t a n y o t h e r p a r t y t o t h e agreement t o
a r b i t r a t e , o r a n y person c l a i m i n g through o r under him, i n r e s p e c t o f a n y m a t t e r agreed t o be r e f e r r e d , a n y p a r t y t o t h o s e l e g a l
proceed ings may a t a n y t i m e a f t e r appearance,
and b e f o r e d e l i v e r i n g a n y p l ead ings o r t a k i n g
a n y o t h e r s t e p s i n t h e proceed ings , a p p l y t o t h a t c o u r t to s t a y t h e proceed ings and t h a t
c o u r t o r a judge t h e r e o f , i f s a t i s f i e d t h a t t h e r e i s no s u f f i c i e n t reason why t h e m a t t e r shou ld n o t be r e f e r r e d i n accordance w i t h t h e
agreement and t h a t t h e a p p l i c a n t was a t the
t i m e when t h e proceed ings were commenced and
s t i l l remains r e a d y and w i l l i n g t o do a l l
t h i n g s n e c e s s a r y t o t h e proper conduct o f t h e a r b i t r a t i o n , may make an o r d e r s t a y i n g t h e proceed ings . ( 2 ) The powers c o n f e r r e d by s u b s e c t i o n ( l )
s h a l l be e x e r c i s e d t o the same extent and i n
t h e same manner i n c a s e s where t h e r e i s a
p r o v i s i o n (whe ther i n an agreement t o a r b i t r a t e
or o t h e r w i s e ) t h a t an award under an agreement
t o a r b i t r a t e s h a l l be a c o n d i t i o n preceden t t o
t h e b r i n g i n g o f an a c t i o n w i t h r e s p e c t t o a n y
m a t t e r t o which such agreement a p p l i e s , a s i n
c a s e s where there i s n o such p r o v i s i o n and such
p r o v i s i o n s h a l l be read only a s an agreement t o
a r b i t r a t e and s h a l l n o t p reven t a n y cause o f
a c t i o n from a c c r u i n g b e f o r e a r b i t r a t i o n and
s u b j e c t to a n y o r d e r made under s u b s e c t i o n ( l )
s h a l l n o t o r d e f e n c e o f a n y a c t i o n or
a f f e c t
t h e
i n s t i t u t i o n ,
p r o s e c u t i o n
coun t e rc la im . "
I n Leoform P t v Ltd v . W a t t s C o n s t r u c t i o n D i v i s i o n P t y
Ltd [l9831 1 Qd.R. 408, Campbell C .J . h e l d t h a t o n t h e proper
c o n s t r u c t i o n o f S . lO(2) o f t h e A c t , S c o t t v . m c l a u s e s a r e t o be t r e a t e d i n t h e same way a s t h o s e agreements t o
a r b i t r a t e which do not prov ide t h a t no a c t i o n s h a l l be brought
u n t i l an award has been made
It is clear that S. 10 of the Arbitration Act is picked up by S. 79 of the Judiciary Act 1903 and is made applicable to the proceedings now before the Court: see John Robertson & Co. Limited (In Lia.1 v. Ferauson Transformers Pty Ltd (1973) 129 C.L.R. 65 at 95 per Mason J.; Bond Cor~oration
Ptv Ltd v. Thiess Contractors Ptv Ltd (1987) 14 F.C.R. 193,
per French J. at 205-207 and Neilsen v. Hempston Holdinas Ptv ,. Ltd (1984) 65 A.L.R. 302, per Pincus J. at 311-312.
In addition, as French J. observed in the
Cor~oration Case at 203:
" The court has a general power t o control i t s
own proceedings and that power extends t oenable i t t o order a s tay o f proceedinus:
Huahes Motor Service Ptv ~ t 2 v. wino ~ o m ~ u t e r Ptv Ltd (1978) 35 FLR 346 a t 351 per Bowen CJ; Huller v. Fencott (1981) 53 FLR 184 a t 189 per
Toohey J. "
In Stevens v. Trewin and Van Den Broek [l9681 Qd.R.
411, the Full Court of Queensland was concerned with the
question whether a District Court has power to stay its
proceedings, pending the determination of arbitration proceedings. Hanger J. dealt with the submission that "though the Supreme Court had power t o stay actions, no such power resided i n a District Court." He said a t 417:
" There is, however, ample authority aqainst the proposition. In ~ o s k e r v. ~ e m ~ e s i (i841) 7 M . & W. 501, a t DD. 503-4: 151 E.R. 864-5.
Alderson B : said: 'The power o f each Court over i t s own process i s unlimited; i t i s a power incident t o a l l Courts, in fer ior as well a s superior; were it not so, the Court would be obliged t o s i t s t i l l and see i t s own process
abused f o r t h e purpose o f i n j u s t i c e . The
exercise o f t h e power i s c e r t a i n l y a m a t t e r f o r t h e mos t c a r e f u l d i s c r e t i o n . ' See a l s o Re i che l v. Maarath (1889) 14 A.C. 665, a t p. 668; W i l l i s v . Earl Beauchamp (1886) 11 P . D . 59, a t
p . 63; and T r i n a a l i v. Stewardson S t u b b s &
c o l l e t t P t v L t d [l9661 1 N.S.W.R. 354, a t p. 361. "
Bray C. J. in The Commonwealth v. Adelaide steams hi^
Industries Ptv Ltd (1974) 24 F.L.R. 97 said at 100:
" Undoubtedly t h e r e i s an i n h e r e n t j u r i s d i c t i o n
i n t h e c o u r t t o s t a y a n y proceed ing which, i n
i t s o p i n i o n , amounts t o an abuse o f i t s
p roces s . T h i s j u r i s d i c t i o n c o v e r s s e v e r a l
f i e l d s . A conven i en t summary o f them i s con ta ined i n t h e second e d i t i o n o f A t k i n ' s
E n c v c l o ~ a e d i a o f Court Forms i n C i v i l
Proceedinas v o l . 37, pp. 156-168, "
and later at 103:
" M y v i e w i s t h a t , a p a r t from t h e e f f e c t o f the
S c o t t v. m c l a u s e , and u n l e s s an award h a s
a c t u a l l y been made, t h e c o u r t w i l l o n l y s t a y an
a c t i o n because o f an agreement t o refer the
d i s p u t e t o a r b i t r a t i o n i n t h e c i r cums tances set
o u t i n S . 3, and t h a t whether i t i s a c t i n g
s p e c i f i c a l l y under the s t a t u t o r y power o r i n the exercise o f i t s i n h e r e n t j u r i s d i c t i o n t o preven t an abuse o f i t s p roces s . I t w i l l n o t
regard an a c t i o n brought d e s p i t e t h e existence
o f such an agreement t o refer a s an abuse o f
i t s p roces s because of the p r i n c i p l e t h a t it w i l l n o t a l l o w i t s j u r i s d i c t i o n t o be o u s t e d by
p r i v a t e compact . "
The discretion conferred on the court by S. lO(1) of the Arbitration Act to grant a stay arises if the court is satisfied that there is no sufficient reason why the matter should not be referred in accordance with the agreement and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration.
T h e F e d e r a l C o u r t p r o c e e d i n g s comprehend more t h a n
" t h e m a t t e r s agreed t o be r e f e r r e d " t o a r b i t r a t i o n b y c l a u s e
28 o f the b u i l d i n g a g r e e m e n t .
T h e p r a c t i c a l e f f e c t o f p r o v i s i o n s s u c h a s S . lO(2)
o f the A r b i t r a t i o n A c t i s a s o b s e r v e d by t h e Ful l Court o f ,.
V i c t o r i a i n G . W . J . Blackman & C o . S .A. v . Oliver Davev G l a s s
C o . Ptv L t d [l9661 V.R . 570, where the C o u r t s a i d a t 574:
" In form the section t h r o w s upon the p a r t y t o a
s u b m i s s i o n , who d e s i r e s t h a t the agreemen t f o r
a s u b m i s s i o n s h o u l d be e n f o r c e d , the b u r d e n o f
s a t i s f y i n g the c o u r t t h a t there i s no
s u f f i c i e n t r e a s o n why the m a t t e r s h o u l d not be r e f e r r e d i n a c c o r d a n c e w i t h the s u b m i s s i o n .
B u t i n consistently a c t e d on
a p p l y i n g
the
section
the
c o u r t s
h a v e
the v i e w t h a t the p a r t i e s
s h o u l d be k e p t t o their b a r g a i n u n l e s s s t r o n g r e a s o n s a r e shown why a n a c t i o n commenced i n
d e f i a n c e o f the agreemen t for a s u b m i s s i o n s h o u l d be a l l o w e d t o c o n t i n u e . In s u b s t a n c e i t i s the p a r t y who i s r e s i s t i n g the a p p l i c a t i o n
for a s t a y who h a s the b u r d e n o f s a t i s f y i n g the
c o u r t t h a t there a r e s t r o n g grounds f o r
r e f u s i n g t o a l l o w the d i s p u t e t o be d e t e r m i n e d
i n a c c o r d a n c e w i t h the s u b m i s s i o n .
S e e further Huddart P a r k e r L t d v . T h e M i l l H i l l (1950) 8 1
C.L.R. 502 a t 508 per Dixon J. I n t h a t reference, Dixon J. s a i d :
" I t f o l l o w s t h a t , i n m y o p i n i o n , t h i s C o u r t h a s
power t o s t a y the s u i t s i f , upon a p r o p e r exercise o f the C o u r t ' s d i s c r e t i o n , i t a p p e a r s
t h a t i t i s a c o u r s e w h i c h s h o u l d be t a k e n .
Under the s t a t u t o r y power e x p r e s s e d i n S . 5 o f
the A r b i t r a t i o n A c t 1928 ( V i c t . ) the C o u r t or
the j u d g e , a s s u m i n g t h a t the other n e c e s s a r y
c o n d i t i o n s a r e f u l f i l l e d , m u s t be s a t i s f i e d
t h a t there i s no s u f f i c i e n t r e a s o n why the m a t t e r s h o u l d not be r e f e r r e d i n a c c o r d a n c e
w i t h the s u b m i s s i o n . T h i s l a n g u a g e m i g h t
a p p e a r t o p l a c e the b u r d e n upon the d e f e n d a n t s a p p l y i n g f o r a s t a y . B u t the C o u r t s b e g i n w i t h the fact that there is a special contract between the parties to refer, and therefore in the language of Lord Moulton in Bristol Cor~oration v. John Aird & Co. [g131 A.C. 241, at p. 259, consider the circumstances of a case with a strong bias in favour of maintaining the special baraain or as Scrutton L.J. said in l&etromlitan Tunnel and Public Works Ltd. v. London Electric Railwav Co. [l9261 Ch. 371, at p. 389, ' A guiding principle on one side and a very natural and proper one, is that parties who have made a contract should keep it.' At the same time, as is shown by the two cases cited, the Court's discretion has not been restricted by any exclusive definition of the circumstances which will warrant a refusal of a stay: see per Lord Parker in Aird's Case [l9131 A. C., at p. 260, and per Scrutton L. J. in the Metropolitan Tunnel Case [l9261 Ch., at pp. 389, 390. "
The applicant relies on the history of the dealings and submits that the first respondent has been guilty of considerable delay in making the reference to arbitration. I t was submitted on her behalf that throughout the period up to 13 June 1990 the respondents were aware that the applicant was threatening litigation and in default of settlement proposing to litigate defined issues in the Federal Court, and that a draft statement of claim identifying the issues had been
forwarded to them. It is asserted that since 9 February 1990
the respondents had been prepared to lead the applicant to believe that they were not proposing arbitration but wished either to settle the proposed Federal Court proceedings or defend them on the merits. It is also said, rightly, that the application for a stay of the Federal Court proceedings was not made until 16 July 1990, more than a month after those proceedings had been instituted.
Delay is a relevant consideration. Sir Michael J.
Mustill and Stewart C. Boyd in commercial &hitration at page 426 state:
" D e l a y d i s c r e t i o n i s m a t e r i a l t o the exercise o f the
i n two r e s p e c t s . F i r s t , b e c a u s e a
p a r t y who w i s h e s t o c l a i m a s t a y m u s t d o so
p r o m p t l y ( c i t i n g , in ter a l i a , Doleman & S o n s v.
O s s e t t Corpn. [l9121 3 KB 257 per F l e t c h e r -
Moul ton LJ a t 2 6 8 ) . Second , b e c a u s e i f the
d i s p u t e i s one wh ich r e q u i r e s t o be r e s o l v e d q u i c k l y , t h i s may i n d u c e the C o u r t t o t a k e the
d i s p u t e i n t o i t s own h a n d s , p a r t i c u l a r l y i f
there i s r e a s o n t o believe t h a t the r e s p o n d e n t
m i g h t impede t h e p r o g r e s s o f the a r b i t r a t i o n . " In Russell on Arbitration 19th Ed., the learned
author says at p. 191:
" W i t h o u t p r o c e e d i n g s a c t u a l l y t a k i n g a s t e p i n the
a p a r t y w a n t i n g a s t a y s h o u l d a p p l y
p r o m p t l y , and i f he d o e s not t h a t i s a ground
on which the d i s c r e t i o n can be e x e r c i s e d
a g a i n s t h im . "
The applicant also asserts that the conduct and
correspondence referred to are not such as to enable the first
respondent to discharge its obligation to satisfy the court that it was at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration. It is said that the delay in attempting to commence arbitration was not suggestive of the requisite willingness, the reference itself is so vague in its terms and fails to formulate any claims capable of being addressed; and that in the purported arbitration no points of claims have been put forward as yet is further proof of lack of willingness. While not completely analogous, the observations in Hammond v. [l9751 V.R. 108, by Menhennit J. at 116 were relied on:
" [I]f at the time of the institution of the proceedings all the applicant had was an option to have disputes submitted and he has not exercised the option, it is difficult, if not impossible, for hinr to show that he was ready and willing because he had not even taken the necessary step to bring about a submission. "
It was also asserted that the first respondent had waived whatever rights it may have had under cl. 28 of the agreement, acquiesced in the conduct of the Federal Court proceedings being instituted and is estopped from asserting any rights under the arbitration clause.
As to whether Dobson & Corry Pty Ltd were on 14 June 1990 and still remain ready and willing to do all things necessary to the proper conduct of the arbitration, the events leading to the reference are ambivalent for the first respondent. The history of the dealings and the terms of the correspondence as well as the vagueness or lack of
particularity of the notice suggest that the reference was
seen as a means of stalling the long-threatened and well
particularised Federal Court proceedings. However, on this question as well as on the assertions of waiver, acquiescence and estoppel, much depends on the resolution of the factual conflict concerning the letter of 27 February 1990.
It is unnecessary to inquire further into these aspects of the matter because, in the view I take, there are strong reasons why the proceedings in the Federal Court ought not be stayed, or to put it in the statutory language, there are a number of sufficient reasons why the matter should not be referred in accordance with the agreement.
3.
In my opinion, a significant reason why a stay should not be granted on this notice of motion is that the arbitrator has no power to decide the applicant's claims for relief based on the Trade Practices Act 1974. Beaumont J. in Alleraan Pharmaceuticals Inc. v. Bausch & Lomb Inc. (1985) ATPR 140-636 at 47,173 said:
" ... can i t be s a i d that the applicants' claims that the several provisions o f the Trade Practices Act have been contravened are referable t o arbitration under th i s clause7 In my opinion, those claims f a l l outside the purview o f that clause. In my view, causes o f action i n the form o f contraventions o f sec.
52, 53(a) , 53(d) or 53(g) arise exclusively
from the statutory provisions themselves. I t i s t r i t e t o say that causes o f action under the general l a w , whether i n contract or otherwise,
arise independently o f these provisions. the absence o f any substantive nexus or In connection between the contract sued upon and the contraventions o f the several provisions o f P t V o f the Trade Practices Act alleged, and, i n my view, none ex i s t s here, the l a t t e r causes o f action cannot be referable to arbitration pursuant to ( the Arbitration clause o f the
agreement ) . ' l
He concluded at 47,174:
" . . .an alleged contravention o f P a r t V o f the Trade Practices Act i s not, as a matter o f characterisation, a 'controversy or claim arising out o f or relating t o the agreement' for the purposes of (the arbitration clause) of
that contract. "
French J. similarly concluded in the Bond Cor~oration Case that an arbitrator has no jurisdiction in respect of claims or causes of action said to arise under S .
82 of the Trade Practices Act.
It is clearly desirable that the whole matter be dealt with in one proceeding if that may fairly and expeditiously be done. As a general rule, multiplicity of proceedings and the possibility of inconsistent findings should be avoided.
In Taunton-Collins v. Cromie [l9641 1 W.L.R. 633, the plaintiff had employed an architect to build a house and issued a writ against the architect for damages for negligence and breach of duty. The action was transferred to an official referee and the plaintiff then joined the contractors as second defendants. The contractors applied to the official
referee to stay the proceedings as against them, and sought, under the arbitration clause in the contract, that the dispute so far as they were concerned be referred to arbitration. The official referee refused a stay and the contractors appealed to the Court of Appeal. In dismissing the appeal, Lord Denning M.R. said at 635-6:
" It seems to me most undesirable that there should be two proceedings in two separate tribunals - one before the official referee, the other before an arbitrator - to decide the
same q u e s t i o n s o f f a c t . I f the t w o p r o c e e d i n g s
s h o u l d go on i n d e p e n d e n t l y , there m i g h t be
i n c o n s i s t e n t f i n d i n g s . The d e c i s i o n o f the o f f i c i a l referee m i g h t con f l i c t w i t h the
d e c i s i o n o f the a r b i t r a t o r . T h e r e would be much e x t r a cost i n v o l v e d i n h a v i n g t w o s e p a r a t e
p r o c e e d i n g s g o i n g o n s i d e by s i d e ; and there
would be more d e l a y . F u r t h e r m o r e , a s M r . F i n e r
p o i n t e d o u t , i f t h i s a c t i o n before the o f f i c i a l
referee went on by i t s e l f - b e t w e e n the
b u i l d i n g owner and the a r c h i t e c t - w i t h o u t the b u i l d e r s b e i n g there, there would be many
p r o c e d u r a l d i f f i c u l t i e s . "
McNair J . i n T h e " P i n e H i l l " [l9581 2 L l o y d s Rep.
146 r e f u s e d t o o r d e r a s t a y o f p r o c e e d i n g s b y the s h i p o w n e r s
a g a i n s t the c h a r t e r e r s . He c o n c l u d e d t h a t e v e r y t h i n g s h o u l d
be d e a l t w i t h i n the one a c t i o n , the sh ipowners h a v i n g b r o u g h t
a n a c t i o n a g a i n s t the b i l l o f l a d i n g h o l d e r and the c h a r t e r e r s . H e p o i n t e d o u t t h a t there was t he r i s k o f i n c o n s i s t e n t f i n d i n g s o f f a c t . T h e r e was a number o f other m a t t e r s w h i c h c u m u l a t i v e l y l e d h im t o refuse t o s t a y the
p r o c e e d i n g s a g a i n s t the c h a r t e r e r s but he, a t 152, a t t a c h e d
c o n s i d e r a b l e w e i g h t t o t he c o n s i d e r a t i o n t h a t :
" A s e r i o u s r isk would be r u n t h a t o u r w h o l e
j u d i c i a l p r o c e d u r e , a t a n y r a t e i n r e l a t i o n t o
t h i s c l a i m , would be b r o u g h t i n t o d i s r e p u t e , i f
a s I h a v e i n d i c a t e d there i s a s e r i o u s
p o s s i b i l i t y , you g e t c o n f l i c t i n g q u e s t i o n s o f
f a c t d e c i d e d by t w o d i f f e r e n t t r i b u n a l s . "
I n the Bond C o r p o r a t i o n C a s e , ( s u p r a ) , i n
c o n s i d e r i n g w h e t h e r a s t a y s h o u l d be g r a n t e d , French J .
r e f e r r e d t o the c i r c u m s t a n c e t h a t some q u e s t i o n s o f l a w w h i c h a r e n o t n e c e s s a r i l y s t r a i g h t f o r w a r d would be r a i s e d , and t h e n
s a i d a t 210:
" More i s s u e s between i m p o r t a n t l y the a r b i t r a t i o n w i l l r a i s e
the f irst responden t and the
a p p l i c a n t which a r e c l o s e l y r e l a t e d , i f n o t
common, t o the i s s u e s r a i s e d between the
a p p l i c a n t and the second r e s p o n d e n t s .
There i s a p o s s i b i l i t y t h a t i n c o n s i s t e n t
f i n d i n g s o f f a c t may emerge from the
a r b i t r a t i o n and from the proceed ings i n th i s Cour t .
There a r e i s s u e s o f l a w r a i s e d i n the
proceed ings i n th is Court which a r e c l o s e l y
r e l a t e d t o some o f t h e q u e s t i o n s t h a t may a r i s e
i n the a r b i t r a t i o n and which cannot be r e s o l v e d
by t h e a r b i t r a t o r .
The q u e s t i o n whether the f irst responden t h a s
contravened S . 52 o f the Trade P r a c t i c e s Ac t i s
r e l a t e d t o i t s performance o f t h e c o n t r a c t
which w i l l , i t seems, be r e l i e d upon by the
a p p l i c a n t t o f a l s i f y c e r t a i n o f the
r e p r e s e n t a t i o n s a t t r i b u t e d t o i t .
That i s n o t t o make a n y comment about the
s t r e n g t h o f the a p p l i c a n t ' s c a s e a g a i n s t the
f i r s t r e sponden t . As I have a l r e a d y i n d i c a t e d ,
i t i s p l a i n l y n o t w i t h o u t d i f f i c u l t y .
I n the end , however, I am o f the v i e w t h a t i n
o r d e r t o avo id a m u l t i p l i c i t y o f proceed ings ,
the p o s s i b i l i t y o f i n c o n s i s t e n t f i n d i n g s , and
t o e n a b l e t h e proper r e s o l u t i o n o f q u e s t i o n s o f
l a w which may a r i s e , the f irst r e s p o n d e n t ' s
mo t ion f o r a s t a y o f the proceed ings pending the d e t e r m i n a t i o n o f the a r b i t r a t i o n h e a r i n g
shou ld be r e f u s e d . "
T h e same f a c t o r s e x i s t i n the p re sen t c a s e , and l ead me
t o a s i m i l a r c o n c l u s i o n .
I n S tack v. Coast S e c u r i t i e s (No. 9) P t v Ltd (1983)
1 5 4 C.L.R. 261, Mason, Brennan and Deane JJ. s a i d a t 298:
" The f irst and paramount c o n s i d e r a t i o n i n the
exercise o f t h i s d i s c r e t i o n i s t o do what i s best i n the interests o f the l i t i g a n t s . In
th is r e s p e c t the Federal Court can r e s o l v e the
entire c o n t r o v e r s y ; the Supreme Court cannot do
s o because t h e second l i m b o f S . 86 o f the A c t
s t a n d s i n i t s way. The c o u r t which can resolve the e n t i r e c o n t r o v e r s y h a s an o b v i o u s
advan tage . G e n e r a l l y s p e a k i n g , i t s
d e t e r m i n a t i o n o f a l l t h e i s s u e s w i l l be made
more e f fec t ive ly and more e x p e d i t i o u s l y and a t
less expense t han t h e r e s o l u t i o n o f t h e
c o n t r o v e r s y which depends on d e t e r m i n a t i o n s
made by two c o u r t s i n s e p a r a t e p r o c e e d i n g s i n
which the i s s u e s a r e n e c e s s a r i l y f ragmen ted .
To o f f s e t th i s a d v a n t a g e o f f e r e d by the Federa l C o u r t p o w e r f u l c o u n t e r v a i l i n g r e a s o n s n e e d t o be shown. "
The observations by Murphy J. at 299-300 are t o a like effect:
" In g e n e r a l , the existence i n a c o u r t o f an
e x c l u s i v e j u r i s d i c t i o n i s a c o m p e l l i n g r e a s o n f o r e x e r c i s i n g i t s a c c r u e d j u r i s d i c t i o n . The a d m i n i s t r a t i o n o f j u s t i c e w i l l g e n e r a l l y be
better i f the Federa l C o u r t resolves the entire
controversy, r a t h e r t h a n t h a t i t and a n o t h e r
c o u r t or c o u r t s make d e t e r m i n a t i o n s i n s e p a r a t e p r o c e e d i n g s on fragmented i s s u e s , a l t h o u g h
there may be e x c e p t i o n s . The p r e s u m p t i o n
t h e r e f o r e , i s t h a t the Federa l C o u r t s h o u l d
exercise i t s a c c r u e d j u r i s d i c t i o n , b u t th is m a y be d i s p l a c e d i n e x c e p t i o n a l c i r c u m s t a n c e s . "
The stay which is sought would leave other matters to be resolved by the Federal Court. The claims against the second respondent are based solely on statute. He is not a party to the arbitration proceedings and will not be bound by any rulings made by the arbitrator. There is, however, a large area of facts and issues that are common and it is obviously preferable that multiplicity of proceedings and the
consequential increased costs be avoided, if that can be done fairly and expeditiously.
It is apparent that there are real questions of credibility in this case, particularly in relation to the question of what specifications were the subject of the contract and as to the letter of 27 February 1990.
2 3
In McGrath v. OfSullivan [l9641 N.S.W.R. 436,
Collins J. was of the view that a stay might be refused if the
main issue in the legal proceedings was credibility. He said
" That t y p e o f d i s p u t e , I t h i n k , i s e m i n e n t l y one
f o r the c o u r t s . "
In my opinion this is merely one factor and does not loom as
large as the other matters to which I have referred. Of more " significance, however, in my opinion, is the fact that the
present case involves allegations of impropriety or fraud.
In Mustill and Boyd's Commercial Arbitration 1982 at
page 428, the authors said:
" ... i t h a s a lways been c l e a r t h a t t h e e x i s t e n c e
o f an a l l e g a t i o n o f fraud or near - f raud i s
s u f f i c i e n t ground for r e f u s i n g a s t a y : p a r t l y
because i t i s o n l y f a i r t h a t a p a r t y a g a i n s t
whom a s e r i o u s charge i s made should have t h e
o p p o r t u n i t y o f an i n v e s t i g a t i o n i n open c o u r t , and p a r t l y because o f a f e e l i n g t h a t t h e judge
i s better capable o f d e a l i n g w i t h such an i s s u e
t h a n an a r b i t r a t o r . " '
An allegation of fraud was decisive in the exercise
of the discretion in Carter v. Merewether (1898) 15 N.S.W.
(W.N.) 95; see also Wallis v. Hirch [l8561 1 C.B.N.S. 316; 140
E.R. 131; Moller v. Lion Insurance Co. Ltd (1884) 2 Q.L.J.R.
22; Carmichael v. Johnston (1899) N.Z.L.R. 565, and particularly Radford v. Hair [l9711 1 Ch. 758, per Pennycuick V.C. at 764. In this case, it is a party against whom the allegation is made who has made the reference and is seeking a stay. Nonetheless, it is proper to consider that a party
against whom an allegation of fraud or improper conduct is made has the opportunity of having the charge aired in open court. The courts, of course, will be astute not to permit the mere making of allegations of impropriety to avoid a reference to arbitration but, in the view I take of the matter, the nature of the allegations made are serious and appear to have a tenable basis.
This seems to me to be a case where the court should not make an order the effect of which will be to split proceedings between the parties and having part of the issues dealt with in arbitration and the remainder in the court.
For the reasons which I have expressed above, I am satisfied that there are strong and sufficient reasons for refusing to allow the dispute referred to in the notice of 13 June 1990 to be determined in accordance with the submission to arbitration. In my opinion, I should exercise my discretion and decline to order a stay of proceedings pending
present view that Mrs. Muir's costs of the motion be her costs the determination of the arbitration hearing. I will hear the parties on costs although it is my in the principal proceedings.
I c e r t i f y t h a t t h i s and t h e 23 ( t w e n t y - t h r e e ) p r e c e d i n g pages a r e a t r u e c o p y o f t h e r e a s o n s for judgment h e r e i n o f h i s
Honour M r . J u s t i c e J. E . J . Spender .
G A s s o c i a t e Date: 31 August 1990
Counsel f o r t h e a p p l i c a n t
on t h e mot ion: M r . J . Webb
S o l i c i t o r s f o r t h e a p p l i c a n t
on t h e mot ion: C l e a r y & Ifoare
Counsel f o r t h e r e s p o n d e n t s
on t h e mot ion: Mr. P . Dutney
S o l i c i t o r s f o r t h e r e s p o n d e n t s
on t h e mot ion: Walker & Wilson
Date o f Hearing: 31 J u l y 1990 Date o f Judgment: 31 August 1990
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