Pinanca Pty Ltd v Trinity Projects Pty Ltd

[1991] TASSC 67

Serial No 48/1991
List "A"

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Pinanca Pty Ltd v Trinity Projects Pty Ltd [1991] TASSC 67; A48/1991

PARTIES:  PINANCA PTY LTD
  v
  TRINITY PROJECTS PTY LTD

FILE NO/S:  M482/1988
DELIVERED ON:  27 June 1991
JUDGMENT OF:  Underwood J

CATCHWORDS:

Arbitration — leave to appeal — Commercial Arbitration Act 1986, s38(2) — meaning of "an award" — incorporation of extraneous documents as part of the award.

Judgment Number:  A48/1991
Number of paragraphs:  38

Serial No 48/1991
List "A"
File No M482/1988

PINANCA PTY LTD v TRINITY PROJECTS PTY LTD

REASONS FOR JUDGMENT  UNDERWOOD J

27 June 1991

1. By a notice of motion the applicant seeks leave to appeal against the award of an arbitrator and an order that the award be set aside, on the grounds respectively that there is a question of law arising out of the award and that the arbitrator misconducted himself.

1. The arbitrator, Eric Thomas Whitford, made two awards. The first he described as an interim award. It was made on 30 November 1988 and dealt with the substance of the dispute between the parties. The second, described by the arbitrator as the final award, dated 15 January 1989, deals with the costs of the arbitration. The notice of motion, filed seven days after publication of the interim award, refers only to that award but, although no application has been made to amend the notice of motion, it is appropriate in the circumstances to treat the motion as seeking leave to appeal and to appeal against both the interim and the final award. Counsel for the respondent conceded in argument that such a course would not cause any prejudice to the respondent.

Some Background Facts:

1. The respondent company wished to develop properties known as 31 – 35 Salamanca Place and the adjoining 1 Montpelier Retreat, Hobart for commercial purposes. The project called for the substantial modification of some old buildings, originally used by companies serving the shipping industry in the port of Hobart. On 22 November 1984 the applicant and the respondent entered into a contract. It is a project management contract. In essence, it provides that the respondent will design the proposed development in accordance with drawings and an Outline Elemental Specification prepared by architects engaged by the applicant, arrange for contractors to carry out the necessary works, supervise those works and generally, manage the project through to completion. The contract provides for a specified guaranteed maximum price for the execution of the whole project. As a consequence of disputes which arose during the progress of the works, the parties entered into a second agreement on 16 April 1986 the terms of which modified some of the provisions of the first agreement. Further disputes arose and, in mid–1987, Mr Whitford was appointed arbitrator to determine all matters in dispute. The arbitration hearing occupied something in the order of 113 sitting days, 75 of which were taken up with cross–examination of the respondent's managing director. The net result of this extremely long hearing was an award that the applicant make payment to the respondent of $129,589.00 and the respondent make payment to the applicant of $70,802.26, a net difference between the parties of only $58,786.74. The length of the hearing, the resultant costs and the end result moved the arbitrator to observe at p79 of his reasons for the interim award:

"As a result of the time spent on the hearing, the costs will have reached horrendous proportions and it saddens me to think that in the long run so much money has been spent on such little result."

These Proceedings:

1. Prior to hearing the notice of motion, the applicant filed, in the form of appeal books, what appears to be all the material which was before the arbitrator. These books contain over 4,000 pages and include a typed copy of the arbitrator's notes of evidence taken on the hearing. Pursuant to the Rules of Court, Part IX, r6(1)(b), the applicant has filed no less than 36 questions of law. In accordance with a consent order made on a directions hearing, the parties lodged and exchanged written submissions. These total 78 pages. It appears that, by these proceedings, the "horrendous proportions" of costs are going to become even more horrendous.

1. Upon a directions hearing before me, there was some discussion as to whether the application for leave should be determined as a preliminary point or after full argument on the merits. See Pioneer Shipping Ltd & Ors v BTP Tioxide Ltd ("The Nema") [1982] AC 724; cf Qantas Airways Ltd v Joseland & Gilling & Anor [1986] 6 NSWLR 327. During the course of this discussion it became apparent that there was a fundamental difference between the parties; the resolution of which would determine the nature and extent of the hearing on the motion and the relevance of much of the written material to which I have referred. The respondent's contention was that the awards comprised only the documents published by the arbitrator on 30 November 1988 and 15 January 1989. The applicant's contention was that the awards comprised not only those documents but in addition, by incorporation, all the material contained in the appeal books. It became evident that preliminary determination of the identity and extent of the awards under attack was clearly necessary in order to determine the admissibility of any evidentiary material on the hearing of the motion and the relevance of any submissions which might be made.

1. The Rules of Court O39, r8, empower a judge, at any time, to order (inter alia) that a question (whether of law or fact) be tried before any other question. The discretion to order the separate trial of a question should not be exercised unless there is, amongst other matters, a clear demarcation between the questions sought to be tried and the other questions at issue between the parties. See Polskie v Electric Furnace Co Ltd [1956] 1 WLR 562; George Wimpy& Co Ltd v Territory Enterprise Pty Ltd [1966] VR 312. I am satisfied that there is a clear demarcation in this matter between the question "what are the awards?" and all the other questions raised by the notice of motion. Determination of this question before all others will precisely define the ambit of the evidence admissible on the hearing, identify relevant argument, save time in argument and undoubtedly save costs; consideration of the last factor appears to be well overdue in this protracted and expensive dispute. The parties consented to this question being determined before all others and accordingly an order is made that the following question of law raised by the notice of motion be determined as a preliminary question before the determination of the motion:

"Whether the awards of the arbitrator comprise only the documents published under his hand on 30th November 1988 and 15 January 1989, the former comprising four pages to which are attached 80 pages of reasons, the latter comprising seven pages and if not, what documents or parts of documents constitute the awards which are the subject matter of this notice of motion?"

The Law:

1. It is necessary to refer to some of the provisions of the Commercial Arbitration Act 1986. Section 4 defines an award to mean a final or interim award. The Act, Part V deals with the powers of the Court, confining them to those spelled out by the statute. So far as is material for present purposes, Part V provides:

"Section 38

(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 Court on any question of law arising out of an award.

(3)       ...

(4)       An appeal under subsection (2) may be brought by any of the parties to the arbitration agreement –

(a)       ...

(b)       subject to section 40, with the leave of the Court

(5)       The Court –

(a)       shall not grant leave under subsection (4)(b) unless it considers that, having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more of the parties to the arbitration agreement; and

(b)       may make any leave which it grants under subsection (4)(b) conditional upon the applicant for that leave complying with such conditions as it considers appropriate.

(6)       ...

(7)       ...

(8)       ...

Section 42

(1)       Where –

(a)       there has been misconduct on the part of an arbitrator or umpire or an arbitrator or umpire has misconducted the proceedings; or

(b)       the arbitration or award has been improperly procured,

the Court may, on the application of a party to the arbitration agreement, set the award aside either wholly or in part.

(2)       ...

(3)       ...".

1. Leaving aside misconduct, appellate jurisdiction is confined to questions of law "arising out of the award". It does not extend to include questions of law arising out of the arbitration. Prior to the enactment of the 1986 Act, the Court has long asserted the power to set aside an award for error of law apparent on its face. See Kent v Elstob (1802) 3 East 18. Judicial expression of regret that this power was assumed is often found in the reported cases. See for example, Hodgkinson v Fernie (1857) 3 CB (NS) 189 at p202, 140 ER 712 at p717; Champsey Bhara & Co v Jivraj Balloo Spinning and Weaving Co Ltd [1923] AC 480 at p487; Tuta Products Pty Ltd v Hutcherson Bros Pty Ltd(Receivers Appointed) (1972) 127 CLR 253 at p266. Consequently, the decided cases have tended to adopt a restricted view of what constitutes the award. In Champsey Bhara & Co v Jivraj Balloo Spinning and Weaving Co Ltd (supra) Lord Dunedin said at p487:

"An error in law on the face of the award means, in their Lordships' view, that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous."

1. This passage has often been cited with approval. See Giacomo Costa Fu Andrea v British Italian Trading Co Ltd [1963] 1 QB 201 at p211; Tuta Products Pty Ltd v Hutcherson Bros Pty Ltd (Receivers Appointed) (supra) at p258; Blaiber & Co Ltd v Leopold Newborne (London) Ltd [1953] 2 Lloyd's Rep 427.

1. In the present case it is clear from the words used by the arbitrator that his awards comprise the four pages dated 30 November 1988 and the seven pages dated 15 January 1989. Attached to the former are eighty pages of reasons. The attachment makes it equally clear that the reasons for the interim award form part of it. Junior counsel for the applicant submitted that all of the material set out in the appeal books also formed part of the interim award because that material is impliedly incorporated into that award. Alternatively, he submitted that, at the least, the contracts dated 22 November 1984 and 16 April 1986, the final submissions of the parties and the pleadings are incorporated into the award.

1. The authorities on this question of whether the whole or any part of a contract or other document is impliedly incorporated into the award and their effect were collected and summarised by Smith J in Gianfriddo v Garra Constructions Pty Ltd [1971] VR 289 at pp290, 291. It is useful to set out that summary in full. It was adopted by Wallace J in Edwards v Jaxon Constructions Pty Ltd [1973] WAR 105 at pp107, 108 and referred to with apparent approval by a member of the majority of the Court in the Tuta Products' case (supra) at p262:

"1A mere recital or narrative statement in the award that a specified contract was entered into will not be sufficient to incorporate it in the award: Blaiber & Co Ltd v Leopold Newborne (London) Ltd, [1953] 2 Lloyd's Rep 427, at p430; Nils Heime Akt v G Merel & Co Ltd, [1959] 2 Lloyd's Rep 292, at p293; James Laing, Son & Co (MC) Ltd v Eastcheap Dried Fruit Co, [1961] 2 Lloyd's Rep 277; Giacomo Costa Fu Andrea v British Italian Trading Co Ltd, [1963] 1 QB 201, at p219; [1962] 2 All ER 53. Nor will a mere recital or narrative statement that an act has been done for reasons stated in a specified document be sufficient to incorporate that document: Champsey Bhara & Co v Jivraj Balloo Spinning and Weaving Co Ltd, [1923] AC 480; [1923] All ER Rep 235.

2Even if the words relied upon are in the portion of the award which expresses the decision or direction by the arbitrator on the matter referred to him, they will still be insufficient to incorporate the provisions of a contract if they merely state in general terms that there has been a breach of contract, or that because of a specified act or event the contract is void or has been discharged: see the Blaiber Case, supra, at p429, and the Giacomo Costa Case, supra, at (QB) pp217 and 219.

3If, however, the decision or direction given is expressed in terms which are to such a degree referential that, without reading a document referred to, it is not possible to understand what has been decided or directed, or not possible to give effect to the decision or direction, then the document should be treated as incorporated in the award: see the Champsey Bhara Case, supra, at (AC) p487; Hitchins v British Coal Refinery Processes Ltd, [1936] 2 All ER 191, at p194, and the Giacomo Costa Case, supra, at (QB) p210.

4Again if the decision or direction is expressed to be based upon the wording of a specified clause of a contract the clause is incorporated: compare the Blaiber Case, supra, at p429. And the same is true if there is a finding either that an act was properly done under, or properly done having regard to the provisions of, a specified cause, or that it constituted a breach of a specified clause: see Absalom (FR) Ltd v Great Western (London) Garden Village Society Ltd, [1933] AC 592, at p612; [1933] All ER Rep 616, and cll 3 and 4 of the award in that case: Arcos Ltd v London & Northern Trading Co Ltd (1932), 44 Lloyd's Rep 6; (1933), 45 Lloyd's Rep 297, at pp300, 301 (SC).

5How matters stand where the decision or direction is expressed to be based, not upon the wording or effect of any specified clause, but upon the wording or effect of the contract as a whole, or of the provisions of the contract relating to a particular subject–matter, is debatable; but the weight of authority supports the view that in such circumstances the contract, or the relevant part of it, is incorporated. See, on the one hand, the Giacomo Costa Case, supra, at (QB) pp216, 217; and see, on the other hand, the test propounded in the same case at p219, and see Landauer v Asser, [1905] 2 KB 184, and the observations thereon in the Champsey Bhara Case, supra. Compare also Aktiebolaget Legis v V Berg & Sons Ltd, [1964] 1 Lloyd's Rep 203, at p211."

1. The awards under attack on this notice of motion are clearly structured documents. The reasons for the interim award begin with some background under the heading "The Reference to Arbitration". In it, the arbitrator refers to his appointment, a preliminary conference, the timetable of procedural events, persons representing the parties and the length of hearing time. The reasons continue under the heading "The Substance of the Dispute". Under this heading, in narrative form, the arbitrator outlines the nature and extent of the dispute. The third section is entitled "The Nature of the Contract and its Works". Here there appears a summary, again in narrative form, of the effect of the contract and the nature of the works. A considerable proportion of this section is devoted to criticism of the fact that the applicant's architect, who put together the Outline Elemental Specification for the applicant, subsequently was engaged by the respondent as its architect. Still in narrative form, there follows a general account under the heading "Programming of the Works". Next the reasons deal with relevant contractual terms under the heading "Contract Conditions Requiring Interpretation". The content of this section is accurately described by the arbitrator in the introductory paragraph as follows:

"Before considering the evidence as presented to me and arriving at determinations of questions based upon this evidence I have found it necessary to interpret certain of the contract conditions."

1. I will refer later to this section in more detail. The following section headed "General Assessment of Witnesses" sets out the arbitrator's findings with respect to the credibility of the witnesses and the weight given to their evidence. The balance of the reasons (pp46–80) deal with each of the claims made by the parties. The four pages of the attached award list in summary form and total the result of the arbitrator's determination of these claims. The award made on 15 January 1989, confined to the question of the costs of the arbitration, contains a short recital, sets out reasons and makes an award of costs.

1. To support his submission that the arbitrator incorporated in his award his notes of all the evidence and, by reference thereto, all the exhibits tendered on the arbitration, junior counsel for the applicant relied upon the second paragraph of the reasons for the interim award (p1) which stated:

"A preliminary conference was held in Melbourne, on 18 August, 1987, at which both parties were represented and agreement was reached as to my conditions of appointment and other matters related to the conduct of the arbitration, all as set out in the minutes which I prepared and sent to the parties on the same date."

1. Those minutes record that agreement was reached with respect to 19 procedural matters including a timetable for the exchange of pleadings, representation of the parties, place of hearing and so on. Minute (l) records:

"It is accepted that no transcript of evidence will be made and that I will make my own comprehensive notes, an unedited transcribed copy of which will be appended to the award documents."

1. It was common ground on the hearing before me that those notes were not appended to the award documents but, at the request of one of the parties, a copy of these notes was sent to each of the parties after the award had been made.

1. The test to be applied is whether, upon a proper construction of the interim award (which includes the attached reasons) the arbitrator intended that the notes of evidence and/or exhibits were to be treated as forming part of the award itself. In Max Cooper v University of New South Wales [1979] 2 NSWLR 257 (Privy Council) arbitrators, during the course of an arbitration stated a case for the opinion of the Supreme Court. On receipt of the opinion the arbitrators resumed the hearing and duly made an award. Relevantly, the award stated before proceeding to its conclusion:

"AND we having stated a case for the opinion of the Supreme Court upon the said questions of law

AND the matter having been decided by the Court of Appeal on appeal from the Supreme Court wherein it was stated as the opinion of the Court of Appeal that the builder was entitled to recover from the proprietor for loss or expense by reason of increased wages resulting from delay

AND the Court remitted the stated case to us with that expression of opinion

AND HAVING HEARD AND CONSIDERED the evidence adduced on behalf of the respective parties

AND what was alleged by counsel

WE FIND ...".

1. At p264 their Lordships advised in the following terms:

"The preliminary question for their Lordships is one of construction only and construction of that document alone in which the arbitrators purported to set out their award. Did they by the actual words they used in it make manifest their intention to make it challengable, by incorporating in their award, as a statement of the legal reasoning which they had applied in reaching their decision, those additional documents mentioned in the narrative part of the award from the perusal of which, propositions of law might be extracted? Reference in the award to the existence of other documents is of itself neutral; it raises no presumption of incorporation as part of the award. Unless the intention to incorporate is clear, the presumption, as their Lordships have already said, should be against incorporation." [My emphasis].

1. The manner in which the arbitrator refers to the minutes of the preliminary conference as part of the general introductory paragraphs to the reasons for the interim award make it clear that he did not intend to incorporate those minutes, or the notes of evidence as part of the award. The preliminary conference is referred to as part of the background which led to the arbitration hearing. The reference to the minutes of that conference forms no part of the legal reasoning applied by the arbitrator to make his award. Even if the arbitrator intended the minutes of the preliminary conference to be incorporated in his award those minutes, at most, show no more than it was the then intention of the arbitrator to annexe the notes of evidence to the award. There is nothing in the words of the award to indicate that he had such an intention at the time it was published. The following statement in the advice of the Privy Council in Max Cooper v University of New South Wales (supra) at p263 is entirely apposite to describe the reference relied upon by the applicant's junior counsel:

"Up to this point in the award the language used is that of historical narrative rather than that of ratiocination; there is nothing in these paragraphs to suggest that the arbitrators intended thereby to expound to the reader of them the actual reasoning on which their finding contained in the succeeding par(i) was based or to do anything more than to give an objective account of what had happened in the reference leading up to the award."

1. With respect to the applicant's submission that, by incorporation, the award included the final submissions of the parties and the pleadings, junior counsel for the applicant relied upon no specific passage in the reasons. On a careful reading of the whole of both awards it is abundantly clear that the arbitrator evidenced no intention to incorporate either of these documents as part of the award. There was no reference to those documents as part of the legal reasoning for the awards made.

1. Accordingly, on the preliminary question, I rule that the notes of evidence and the exhibits referred to therein, the final submissions of parties and the pleadings do not form part of the award. This leaves only the question of whether the two contracts or parts of them are incorporated into the award.

1. Junior counsel for the applicant relied heavily on a passage in the judgment of Menzies J in Tuta Products Pty Ltd v Hutcherson Bros Pty Ltd (supra) at pp264, 265. As in the Max Cooper case, the arbitrators in Tuta Products sought and obtained an opinion from the Supreme Court. In their award they recited that they had obtained an opinion from the Supreme Court by stating, "We find in conformity with the said judgment of the Supreme Court as follows ...". In the Max Cooper case their Lordships said that the terms in which the opinion of the Supreme Court is referred to in the Tuta Products case are significantly different from those before the Privy Council. The difference is clear. In the Max Cooper case the arbitrators stated no more than the fact that a case had been remitted to the Court and a specified answer obtained. In the Tuta Products case the arbitrators expressly said that their finding was in accordance with the judgment of the Court thereby impliedly incorporated that judgment into the award. In the passage in the Tuta Products case relied upon by counsel for the applicant, Menzies J said:

"In some of the cases cited it is said that, where an award is seen to be based upon the effect of a contract or other document, that document is incorporated in the award for the purpose of determining whether or not error of law appears upon the face of the award. From this way of stating the matter I am not concerned to differ. The point can, however, be stated differently by saying that, if it appears from the award itself that it is based upon a proposition of law, the court is not confined to the award to determine whether or not that proposition is in error."

That statement is in conformity with the advice of the Privy Council in the Max Cooper case. The critical words are, "if it appears from the award itself that it is based upon a proposition of law". No doubt, some of the cases to which his Honour was referring are those set out in para.4 in the judgment of Smith J in Gianfriddo v Garra Constructions Pty Ltd (supra) cited above. Smith J summarised the effect of these cases by the general expression that if the decision is expressed [my emphasis] to be based upon the wording of a specified clause of a contract the clause is incorporated. It is necessary to examine the cases that his Honour referred to. The first is Absalom (F R) Ltd v Great Western (London) Garden Village Society Ltd [1933] AC 592. In this case their Lordships made it clear that there is a distinction between cases where disputes are referred to an arbitrator in the decision of which a question of law becomes material and cases in which a specific question of law is referred to an arbitrator. The present matter falls within the former category. In such cases, prior to the passage of the 1979 Arbitration Act, (UK) the Court could interfere if an error of law appeared on the face of the award but in the latter cases no such interference was possible on the ground that the decision upon the question of law was erroneous. In Absalom the relevant passage in the award is as follows:

"I award and judge that having regard to the provisions of Clause 30 of the said conditions providing that the contractors should be entitled upon the valuation of the surveyor and under the certificates to be issued by the architect to the contractors within the period in that clause mentioned to payment by the employers from time to time by instalments when in the opinion of the architect actual work to the value of £1,000 had been executed in accordance with the contract at the rate therein provided the architect had up to the said 11th day of March, 1929, issued to the contractors certificates in accordance with the terms of the contract."

1. With respect to that passage Lord Russell of Killowen said at p611:

"There still remains the question whether this error of law is apparent on the face of the award. I think it is. The award recites the contract and refers in terms to the provisions of Condition 30. Condition 30 accordingly is incorporated into and forms part of the award just as if the arbitrator had set it out verbatim and had then proceeded to state the construction which he placed upon it."

1. The next case referred to in Gianfriddo by Smith J is Akross Ltd v London and Northern Trading Co Ltd (1933) 45 Lloyd's Rep 297. In this case the Court of Appeal held that a reference to a clause in a contract by its number and a statement that there had been a breach of that clause was sufficient to incorporate that clause in the award.

1. For present purposes, the effect of the cases to which I have referred is that where an award, expressed to be based wholly or in part on a proposition of law, refers to another document, either wholly or in part, in terms which show that such document or part of the document forms part of the reasoning for the proposition of law, that document or part thereof is incorporated into the award.

1. In his reasons for the interim award under the heading "Contract Conditions Requiring Interpretation" the arbitrator stated (p13), "The following clauses therefore are those I have decided require interpretation".

1. In this section of the reasons for the interim award, the arbitrator discusses in detail eight clauses in the General Conditions of Contract and parts of its annexure. The general conditions of contract comprise an interpretation clause, twenty–five numbered clauses and an annexure. Although the award discusses only eight clauses and part of the annexure it is clear from the terms of the discussion that the arbitrator had regard to the whole of the general conditions of contract as part of the reasoning process used to arrive at the conclusions reached with respect to the clauses to which he specifically referred. For example: "After a careful study of this contract I have arrived at the conclusion that standard conditions for extensions of time allowances cannot be read into this contract" (p22), "I have found nothing in the contract conditions to indicate that 'in writing' means a specific letter with a direct description of any particular claim" (p27) and "this contract does not require the contractor to provide quantities ..." (p28). The references to the whole of the general conditions of contract and its annexure are such that, applying the principles of law set out earlier, the whole of this document is incorporated in, and forms part of the interim award.

1. In addition to the general conditions of contract there are six special conditions of contract. No counsel made any oral submission with respect to references in the award to the special conditions but, by agreement, after the hearing, I received a document from both sides headed "Agreed as Specifically Referred to" [in the award]. In this document cls 1.02 and 1.06 of the special conditions are said to be referred to at pp55 and 50 respectively, of the reasons for the interim award. Clause 1.02 is the Rise and Fall Clause. It specifies a formula for the calculation of the Rise and Fall allowances. With respect to the rise and fall claim the arbitrator said (p55) that the method of calculation "is quite explicit so far as arithmetic is concerned. What is not clear is the starting date for the calculations and the period over which the calculations are to apply".

1. Special condition 1.02 includes as part of the calculation for Rise and Fall claims an "initial labour cost index". The condition defines this index by reference to "the date upon which tenders closed". According to the award, there was no "formal tender date" but the final price offer was made on 30 October 1989 and on this basis the arbitrator applied that date as the date upon which tenders closed. The award specifically refers to Special Condition 1.02 and quotes (erroneously) from it, "the month for which tenders closed". The form of expression in the award indicates that the words used in Special Condition 1.02 formed part of the legal reasoning which led to the conclusion that those words were a reference to the date the final price offer was made. Accordingly Special Condition 1.02 is incorporated into the award. The position with respect to Special Condition 1.06 is different. It is not specifically identified by the arbitrator. Its operation is referred to in passing (p50) and not in terms which indicate that the words of this Special Condition formed any part of any legal reasoning.

1. The second agreement, made between the parties on 16 April 1986, is referred to in the award at the end of the section headed "Contract Conditions Requiring Interpretation" in the following terms at p30:

"4.2     The Second Agreement

Clause 4 of the Second Agreement states that 'any claims arising after the 15th day of April, 1986 will be determined in accordance with the terms of the contract as amended hereby'. This statement is satisfactory proof that the original contract conditions have not been discarded in favour of the Second Agreement but some have been amended. Most of these amendments relate to changes in completion dates and the guaranteed maximum price but also cover other important provisions involving damages.

So long as the first agreement is current the way is open for the Claimant to recover extra costs arising from valid variations and extensions of time, if they any longer have significance. In addition there is extra provision in relation to industrial unrest not provided for originally.

There is no provision in the Second Agreement related to site allowance cost recovery however.

I have already interpreted the liquidated damages provisions as they apply to the Second Agreement in paragraph 4.1(4) above so that there is no need to reiterate these here."

1. It is appropriate to refer to the following passage from the judgment of Windeyer J in Tuta Products (supra) at p266:

"The question is not so much one of literal form as of substance. When, as here, a document is referred to in an award the question is, adopting the words of Sellers LJ that I have quoted, whether it was intended by the arbitrators to be regarded as forming part of their reasoning for the conclusion."

1. The reference to the second agreement falls in the same category as the reference to the first agreement. The terms of both referrals evidence an intention to incorporate both agreements into the award as part of the legal reasoning on which the award is based.

1. No separate oral submission was made with respect to the incorporation of the Outline Elemental Specification or Schedules AD, A & B of the claimant's Further and Better Particulars of Claim. However, in the document referred to earlier and handed in after the conclusion of the hearing, both are mentioned as having been referred to at identified pages in the award. The page references given are incomplete. However with respect to the Schedules of the Particulars of Claim the position is quite clear. There is nothing in any of the references to those Schedules in the award to suggest that they are intended to be incorporated as part of the legal reasoning applied by the arbitrator to reach his decision. The Outline Elemental Specification is a different matter. According to the award it is a critical document. It is first referred to at p5 under the heading "Nature of the Contract and its Works" as being "brief in the extreme". The arbitrator went on to observe that its brevity was such that "it was inevitable that dispute [sic] would arise between the Parties before completion could be achieved". On the next page the arbitrator went on:

"... another major problem arose over the final interpretation of the elemental specification. The Contract called for a detailed design brief to be prepared before architectural work started in detail and this was not done. As a result there were continual complaints by the Claimant that he was being asked to do work never intended at tender stage."

He concluded with the opinion that arguments over the interpretation of the Outline Elemental Specification produced continual dispute and were the prime cause of the arbitration.

1. On the following page he referred to this specification again, observing that its brevity is responsible for the major part of the claimant's claims.

1. When discussing the interpretation of cl 4.1(e) of the general conditions of contract (variations) under the heading "Contract Conditions Requiring Interpretation" the arbitrator said this about the Outline Elemental Specification:

"Major problems arose on this contract over variations which have been the prime cause of this dispute.

Firstly, as this was a design and build project, the problem was to determine what was a variation. This was made especially difficult because the offer was made using minimal information about the project as described in the Outline Elemental Specification, (OES).

Secondly, no client's brief was ever produced which would overcome many of the weaknesses in the Outline Elemental Specification, and, ...".

1. The Outline Elemental Specification is also referred to on a number of occasions in the section of the award headed "Consideration of the Individual Claims and Counter–Claims". Notwithstanding the importance of this document and the frequent references in the award to it I have reached the view that those references disclose no intention by the arbitrator to incorporate that document into the award, nor do they show that it forms part of the reasoning for any proposition of law.

1. I determine the preliminary question as follows:

The award of the arbitrator published on 30 November 1988 comprises:

(i)        Four pages of the award.

(ii)       The attached 80 pages of reasons for the award.

(iii)      The general conditions of contract and its annexure.

(iv)      Special conditions of contract numbered 1.02.

(v)       The second agreement made on 16 April 1986.

The award of the arbitrator dated 15 January 1989 comprises seven pages all published simultaneously.

1. I will hear counsel with respect to the manner in which the remaining issues should be determined.