Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd

Northbuild Constructions Pty Ltd (the appellant) and Discovery Beach Project Pty Ltd (the respondent) were parties to a building contract for the construction of a high-rise development. Disputes arising under the contract were referred to experts for expert determination. The contract explicitly stipulated that the expert was not to act as an arbitrator. Despite this, the disputes involved questions of witness credibility, leading the parties to endorse a procedure formulated by the experts that included taking oral evidence and permitting cross-examination of witnesses. This situation raised the question of whether the expert determination had been transformed into arbitration through the parties' agreement and the manner in which the proceedings were conducted.

The primary legal issues revolved around whether the nature of the expert determination had been altered to arbitration due to the parties' approval of the experts' procedure and the involvement of witness credibility. Given the express requirement in the contract that the expert should not act as an arbitrator, and the statutory provision under s 4 of the Commercial Arbitration Act 1990 (Qld) that an agreement to refer a dispute to arbitration must be in writing, the court had to determine whether the procedural changes implemented by the parties had the effect of converting the expert determination into arbitration. The court examined the extent to which the procedural steps and the involvement of witness credibility aligned with the characteristics of arbitration rather than expert determination.

The court found that despite the procedural changes and the involvement of witness credibility, the expert determination did not transform into arbitration. The court reasoned that the parties' agreement and the procedural changes did not meet the statutory requirement for a written agreement to refer a dispute to arbitration. Furthermore, the court held that the involvement of witness credibility did not inherently convert the proceedings into arbitration. The court concluded that the expert determination remained as such, and the dispute resolution process did not shift to arbitration. Consequently, the appeal was dismissed with costs awarded to the respondent.