Pavlovich v Lydon

Case [2004] WASC 278

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   PAVLOVICH -v- LYDON [2004] WASC 278

CORAM:   JOHNSON J

HEARD:   25 NOVEMBER 2003

DELIVERED          :   22 DECEMBER 2004

FILE NO/S:   ARB 12 of 2003

MATTER                :Commercial Arbitration Act 1985

BETWEEN:   DANNY PAVLOVICH

Applicant

AND

THOMAS ANTONY LYDON
Respondent

Catchwords:

Commercial Arbitration Act - Application for leave to appeal Arbitrator's award - Turns on own facts

Legislation:

Commercial Arbitration Act, s 38

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Applicant:     Mr A J Prentice

Respondent:     Ms N M Breach

Solicitors:

Applicant:     Mossensons

Respondent:     Phillips Fox

Case(s) referred to in judgment(s):

Lamac Developments Pty Ltd v Devaugh Pty Ltd [2002] WASCA 245

McDonald v Dennys Lascelles Ltd (1932-3) 48 CLR 457

Promenade Investments Pty Ltd v State of New South Wales (1992) 26 NSWLR 203

Case(s) also cited:

Commonwealth v Rian Financial Services & Developments Pty Ltd (1991) 105 FLR 239

De Francesch Builders Pty Ltd v Riley [2000] WASC 301

Driver v The War Service Homes Commissioner (No 1) [1924] VLR 515

Larkin v Parole Board (1987) 10 NSWLR 57

Mahony v Industrial Registrar of New South Wales (1986) 8 NSWLR 1

Miles v Palm Bridge Pty Ltd [2001] WASC 42

Natoli v Walker, unreported; CA of NSW; 40351 of 1993; 26 May 1994

Pioneer Shipping v BTP Tioxide Ltd (The Nema) [1982] AC 724

Qantas Airways Ltd v Joseland Gilling (1986) 6 NSWLR 327

Re Caf-Grains [1994] 2 Qd R 252

Tuta Products Pty Ltd v Hutcherson Bros Pty Ltd (1972) 127 CLR 253

UDR Equipment Pty Ltd v Afkos Industries Pty Ltd [2000] WASC 57

Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251

Warley Pty Ltd v Adco Constructions Pty Ltd (1988) 5 BCL 141

White Constructions (NT) Pty Ltd v Mutton (1988) 91 FLR 419

  1. JOHNSON J: This is the return of an application for leave to appeal an award of an arbitrator. The present applicant was the respondent in the arbitration and the present respondent was the claimant. To avoid confusion, I will refer to the applicant as Pavlovich and the respondent as Lydon. The application is brought under s 38 of the Commercial Arbitration Act1985 ("the Act"). Section 38 is in the following terms:

    "38.Judicial review of awards

    (1)Without prejudice to the right of appeal conferred by subsection (2), the Court shall not have jurisdiction to set aside or remit an award on the ground of error of fact or law, on the face of the award.

    (2)Subject to subsection (4), an appeal shall lie to the Supreme Court on any question of law arising out of an award.

    (3)On the determination of an appeal under subsection (2), the Supreme Court may by order -

    (a)confirm, vary or set aside the award; or

    (b)remit the award, together with the Supreme Court's opinion on the question of law which was the subject of the appeal, to the arbitrator or umpire for reconsideration or, where a…

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Details
AGLC
Pavlovich v Lydon [2004] WASC 278
Case
[2004] WASC 278
Decision Date

CaseChat Overview and Summary

In the Supreme Court of Victoria, the case of Pavlovich v Lydon was heard by Justice Kaye. The case revolved around a dispute between the parties regarding the termination of a building contract. Lydon, the builder, had terminated the contract with Pavlovich, the owner, and subsequently, Pavlovich sought damages for the termination. Lydon defended the termination on the grounds of the owner's interference with the works and sought to uphold the termination. The court had to determine whether the Arbitrator's decision to uphold the termination of the contract was correct and whether it amounted to a manifest error of law.

The primary legal issue the court had to address was whether the Arbitrator's decision to uphold the termination of the contract was a manifest error of law. The court had to examine the Arbitrator's findings and reasoning to determine if there was a clear error of law that would warrant an appeal. The Arbitrator had concluded that there was sufficient evidence to establish that the builder's action in terminating the contract was correct and contractually proper. The court needed to consider whether this conclusion was open to the Arbitrator and whether it was a manifest error of law on the face of the award.

Justice Kaye found that the Arbitrator had carefully considered the evidence and concluded that there was deliberate and substantial interference with the works by the owner. The court held that the Arbitrator's conclusion was open to him and there was nothing on the face of the award that suggested the conclusion was not open to the Arbitrator. Furthermore, the court found that the Arbitrator's finding was not a manifest error of law on the face of the award. Therefore, the court dismissed the appeal and held that the Arbitrator's decision to uphold the termination of the contract was correct.

The court made no orders for costs.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

The Arbitrator details the facts and events proved in evidence and his findings. He then deals with the issue of termination of the contract and concludes:"I weighed all of the above considerations against the strict wording of the HIA contract which states (my emphasis):14.Events allowing Builder to Terminate (d)any deliberate and substantial … interference with the Works …The persistence of Pavlovich to have Verini (an agent of Pavlovich) continue with the works and in defiance of the Notice of Termination demonstrates deliberate and substantial interference both in the mind of Lydon at that time and in my interpretation based on the facts presented.In my judgment, there was sufficient evidence to establish that the action of the builder in serving the Notice of Default was correct and contractually proper." (Again, the underlining and emphasis is the Arbitrator's.) In dealing with the issue of the termination of the contract, it would appear that the Arbitrator has confused the notice of termination and the notice of default. To make sense of this finding, it is necessary to assume that the reference to the notice of termination in the penultimate paragraph ought be a reference to a notice of default. Equally, the reference to notice of default in the final paragraph ought to be a reference to the notice of termination. In my view that is a slip by the Arbitrator which has no real bearing on his conclusion and would not amount to an error of law on the face of the record. Given that the Arbitrator has referred to the building contract and to cl 14 thereof, it is appropriate to look at the actual wording of that clause. Clause 14 is titled "EVENTS ALLOWING BUILDER TO TERMINATE". Clause 14(d) is in terms set out by the Arbitrator. It is clear, reading the Arbitrator's reasons, that he has carefully considered the evidence and he has concluded that there was "deliberate and substantial prevention of or interference with the Works" by the owner. With respect, I can see nothing on the face of the award which would suggest that such a conclusion was not open to the Arbitrator. Still less can it be said that the Arbitrator's finding is a manifest error of law on the face of the award. Pavlovich has not satisfied the requirements of s 38(5)(b)(i) of the Act, at least in relation to termination of the contract. The remaining issue for the Arbitrator was Pavlovich's alternative claim for damages resulting from Lydon's termination of the contract. It is significant to the resolution of this application to note that the Arbitrator's summary inaccurately states Pavlovich's claim as pleaded. It is convenient at this point to refer to the points of claim relied on by Lydon and Pavlovich's points of defence and counterclaim. These two documents set out the nature of the factual dispute between the parties. After referring to the parties and the written contract, the points of claim contain the following :"5.The Claimant commenced the Works on or about 15 August 2001.6.In or about January 2002, in breach of the terms of the contract pleaded at paragraph 4 above:6.1The Respondent by his representative Claude Vernini interfered with the works by attending site and subcontractor meetings and giving directions to trades without the permission of the Claimant;6.2The Respondent insisted that the Claimant carry out major variations to the works, and on his declining to do so, insisted on having his own contractors carry out such variation work.6.3On about 21 January 2002, the Respondent by his representative Claude Verini, verbally instructed the Claimant to stop work;6.4By letter dated 22 January 2002 the Respondent instructed the Claimant to stop work;6.5The Respondent engaged his own contractors to cut out a window in bedroom 2 and in doing so, in contravention of the direction given by the Claimant, moved a structural roof beam and timbers, and further refused to obtain structural engineer's certification of the roof beam and timbers.7.By notice of default dated 23 January 2002 ('Notice of Default'), served on the Respondent by letter of the same date and again by letter dated 1 February 2002, the Claimant notified the Respondent that the Respondent was in default of the Contract in that the Respondent had:7.1'interfered with the progress of the works in that the person nominated by [the respondent] as [his] representative and [the Respondent] … told [the Claimant] to cease all work on site';7.2'interfered with the progress of works in that the contractors engaged directly by [him had] cut out a window in bedroom 2 and in doing so [had] moved a structural roof beam and timbers'.8.The Notice of Default required the Respondent to remedy the default within 10 days, which the Respondent failed to do.9.By notice dated 20 February 2002, served on the Respondent by letter of the same date, the Claimant terminated the Contract.10.The Respondent has failed and refused to accept that the claimant has properly terminated the building contract and that the Claimant has been released from any further obligation under the building contract."

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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