Pinanca Pty Ltd v Trinity Projects Pty Ltd (No 2)
[1991] TASSC 109
•19 December 1991
107/1991
List "A"
COURT: SUPREME COURT OF TASMANIA
CITATION: Pinanca Pty Ltd v Trinity Projects Pty Ltd (No 2) [1991] TASSC 109; A107/1991
PARTIES: PINANCA PTY LTD
v
TRINITY PROJECTS PTY LTD
FILE NO/S: M482/1988
DELIVERED ON: 19 December 1991
JUDGMENT OF: Underwood J
CATCHWORDS:
Arbitration—Award—Leave to appeal—Commercial Arbitration Act, s38(2)(4) and (5)—Nature of discretion—Leave to appeal refused.
Arbitration—Arbitrator—Misconduct—Commercial Arbitration Act, s42(1)—What constitutes misconduct—Application dismissed.
Judgment Number: A107/1991
Number of paragraphs: 35
Serial No 107/1991
List "A"
File No M482/1988
PINANCA PTY LTD v TRINITY PROJECTS PTY LTD (NO 2)
REASONS FOR JUDGMENT UNDERWOOD J
19 December 1991
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 respective grounds that there is a question of law arising out of the award and that the arbitrator misconducted himself.
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.
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."
On 27 June 1991 I determined a preliminary point of law on the motion. The foregoing is taken from the reasons for judgment (Pinanca Pty Ltd v Trinity Projects Pty Ltd Serial No 48/1991) given for making the following determination:
"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 condition 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."
The material relevant to the application for leave to appeal and the appeal against the arbitrator's award having been identified, the hearing of the motion resumed on 3 December 1991.
Statutory authority for an appeal against the award of an arbitrator lies in the Commercial Arbitration Act 1986, s38 which relevantly provides:
"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) [This subsection sets out the powers of the Court on determination of an appeal].
(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) ...
(6) ...
(7) ...
(8) ...".
Section 40 is not material to these proceedings, so the question is whether the court should exercise its discretion and grant the applicant leave to appeal against the award. In the circumstances of this case it was convenient to hear argument on the application for leave to appeal at the same time as argument on the appeal itself. This was the course taken in Qantas Airways Ltd v Joseland and Gilling & Anor (1986) 6 NSWLR 327. Immediately thereafter, I heard argument on the second ground of the motion, namely that the award be set aside on the grounds that there was misconduct on the part of the arbitrator.
With respect to the question of leave there is some divergence of view between English authority and Australian authority and some conflict between cases in different Australian jurisdictions. The prevailing view in the United Kingdom was expressed by the House of Lords in Pioneer Shipping Ltd & Ors v BTP Tioxide Ltd ("The Nema") [1982] AC 724. In that case Lord Diplock said at pp742,743:
"Where, as in the instant case, a question of law involved is the construction of a 'one–off' clause the application of which to the particular facts of the case is an issue in the arbitration, leave should not normally be given unless it is apparent to the judge upon a mere perusal of the reasoned award itself without the benefit of adversarial argument, that the meaning ascribed to the clause by the arbitrator is obviously wrong. But, if on such perusal it appears to the judge that it is possible that argument might persuade him, despite first impression to the contrary, that the arbitrator might be right, he should not grant leave; the parties should be left to accept, for better or for worse, the decision of the tribunal that they had chosen to decide the matter in the first instance."
Later at p743 his Lordship said:
"For reasons already sufficiently discussed, rather less strict criteria are in my view appropriate where questions of construction of contracts in standard terms are concerned. That there should be as high a degree of legal certainty as it is practicable to obtain as to how such terms apply upon the occurrence of events of a kind that it is not unlikely may reproduce themselves in similar transactions between other parties engaged in the same trade, is a public interest that is recognised by the Act particularly in s4. So, if the decision of the question of construction in the circumstances of the particular case would add significantly to the clarity and certainty of English Commercial Law it would be proper to give leave in a case sufficiently substantial to escape the ban imposed by the first part of s1(4) ... but leave should not be given even in such a case, unless the judge considered that a strong prima facie case had been made out that the arbitrator had been wrong in his construction; ..."
The English approach to the proper exercise of the discretion to grant leave to appeal against an arbitrator's award has been followed in Victoria. See Karenlee Nominees Pty Ltd & Anor v Robert Salzer Constructions Pty Ltd [1988] VR 614. It was not followed in Qantas Airways Ltd v Joseland and Gilling & Anor (supra), a decision of the New South Wales Court of Appeal. That court said (at p33) that, although the matters to which Lord Diplock referred were important, the discretion is one to be exercised after considering all the circumstances of the case. In the ACT, Miles CJ followed the Qantas Airways' case in Parliament House Construction Authority v CitraConstructions Ltd (1989) 93 ACT.R. 1. His Honour said, correctly in my view, that apart from the provisions of subs(5) and, where appropriate s40, the statute imposes no fetters on the exercise of the judicial discretion and it would be wrong for a court to attempt to impose fetters not laid down by Parliament. Of course, the matters referred to by Lord Diplock above are all cogent matters, but not matters which comprehensively define the manner in which a court should approach the question of giving leave to appeal pursuant to the provisions of s38(4)(b). This was the approach taken in WhiteConstructions (NT) Pty Ltd v Mutton (1988) 57 NTR 8. The question was recently considered by the Full Court of the Supreme Court of Victoria in Leighton Contractors Pty Ltd v Kilpatrick Green Pty Ltd Unreported, 22 October 1991. The court there held that it should follow the New South Wales Court of Appeal and not the House of Lords. Fullagar J (with whose reasons the other members of the court agreed) said at p23:
"In my opinion none of the 'Nema guidelines' are binding with the force of law upon any judge in Victoria who has to exercise the discretion conferred by s38 of the Commercial Arbitration Act to grant or withhold leave to appeal to the Supreme Court. The guidelines should be taken as doing no more than indicate some of the important factors, and possible consequences, to be considered by the judge in exercising his wide discretion upon a consideration of all the circumstances of the case. The exercise of the discretion conferred by s38 does not depend on whether the claimant has made out a strong prima facie case or has fulfilled any of the other requirements to which Lord Diplock in the Nema referred."
In my opinion I should follow the decisions of the New South Wales Court of Appeal and the Full Court of Victoria. Apart from the desirability of uniformity with respect to statutory provisions common throughout Australia (see R. v Parsons [1983] 2 VR 499; Leighton Contractors Pty Ltd v Kilpatrick Green Pty Ltd (supra) at pp8,9), those decisions are in accordance with the common law concerning the exercise of a discretion conferred without fetter on the judiciary by the legislature. See R. v The Australian Broadcasting Tribunal & Ors; ex parte 2HD Pty Ltd (1979) 144 CLR 45 at p50; Gardner v Jay (1885) 29 Ch D 50 at p58; Evans v Bartlam [1937] AC 473 at pp488,489; Klein v Domus Pty Ltd (1963) 109 CLR 467 at p473; R. v Jessop [1974] Tas SR 64 at pp92,93. Before turning to the questions of law which the applicant claims arise out of the award and to which the appeal relates (Rules of Court Pt.9, r.6(1)), it is relevant on the application for leave to note the arbitrator's finding that the contract is not in standard form, but one derived from a standard form. The arbitrator found (at p12) that many problems of interpretation arose out of the parties' attempt to abbreviate the standard form general conditions of contract. It is, in the words of "The Nema", a "one–off" contract. It is also relevant to note that the arbitration occupied a very considerable amount of time and involved the parties in enormous expense.
Distilled to its bare essentials, the arbitration arose out of claims by the respondent (Trinity) to recover costs which it believed were incurred by reason of it being required to carry out more work than originally intended and also for the cancellation of liquidated damages deducted by the applicant (Pinanca) from monies otherwise due to Trinity. In addition, Pinanca claimed entitlement to liquidated damages in excess of one million dollars for alleged late completion and a number of other claims for alleged faulty work, losses of rentals and finance and administration charges. Some of the claims by each party were allowed but many were disallowed. The result, as mentioned at the beginning of these reasons, was an award that Trinity pay Pinanca $70,802.26 and Pinanca pay Trinity $129,589.00. The arbitrator disallowed Pinanca's very substantial claim for liquidated damages. This claim was disallowed as a result of a finding by the arbitrator that Pinanca had delayed completion of the contract without granting Trinity extensions of time for completion. The arbitrator correctly ruled as a matter of law, that in the absence of an intention to the contrary, expressly or impliedly contained in the contract, liquidated damages cannot be recovered by a proprietor where he has caused or contributed to delay in completion. This is so even if the contractor has disabled himself from completing by the due date. See SMK Cabinets v Hill Modern Electrics Pty Ltd [1984] VR 391 and the cases referred to in the judgment of Brooking J at pp395,396. On this application counsel for Pinanca did not submit that the arbitrator erred with respect to that ruling but submitted that had the arbitrator not made certain other errors in law he would not have ruled that Pinanca was prevented from recovering liquidated damages.
In support of the applications for leave to appeal and the appeal, 30 errors of law were alleged. In three cases the alleged errors were, in substance, repetitions of other alleged errors. Thirteen of the alleged errors were abandoned and with respect to five others no submissions were advanced or maintained that the determination of the question of law could substantially affect the rights of one or more of the parties to the arbitration agreement (s38(5)(a)). In the case of two alleged errors, counsel for Pinanca conceded that, having regard to the sum of money involved, a determination of those two questions alone could not substantially affect the rights of the parties. It was also conceded that in the case of three alleged errors of law, if the arbitrator was right in holding that Pinanca was prevented by its delay from recovering liquidated damages, determination of those questions of law would have no effect on the rights of the parties. I shall turn now to the remaining four alleged errors of law. In substance they constitute particulars of one matter of complaint namely, that the arbitrator erred in law in ruling that Pinanca was prevented from recovering liquidated damages.
The award refers to the extremely sketchy nature of the outline elemental specification, the absence of a programme of works or critical path network and the lack of a client brief. The first and last matters gave rise to disputes over what constituted changes to the original works on which the tender was based and, together with the absence of a critical path network, made it impossible to measure any delays caused by such changes. The arbitrator said at p6 of the interim award:
"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 [Trinity] that he was being asked to do work never intended at tender stage ... the brief was never prepared. This result produced continual dispute over the work content required under the contract and accordingly has finally been the prime cause of this arbitration."
With respect to the absence of a programme of works or critical path network the arbitrator said at p9:
"It is obvious, however, that without such a programme it was not possible for the claimant or the respondent to determine valid extensions of time to the contract. I emphasise that the contract does not require the contractor [Trinity] to provide such a critical path or any programme in fact.
Because this programming was so critical, and so much of the dispute rests upon it, I encouraged [Trinity] to produce what I call an 'as built' programme to show the activities and their timings as they actually occurred. [Trinity's] Mr Burbury went to a lot of trouble and expense in order to satisfy this request but despite this effort was not able to produce what I would call a true 'as built' programme. He made several attempts to produce a satisfactory programme starting with one which only showed what he believed to be delays caused by others but finally attempted to produce a complete one showing all delays. Unfortunately the data upon which the programme had to be produced was not accurate or complete enough to produce a reliable network with the result that the true determination of delays was left much in doubt and this was one cause of the extensive time put into the cross–examination of one of [Trinity's] witnesses."
With respect to the ability to measure any delay the arbitrator said at p21:
"The lack of a contract requirement to produce a critical path network to define the project performance in detail left [Trinity] and [Pinanca] in a position of having no way to test the validity of extension of time claims. No attempt was made by the superintendent or the principal's representative to produce any programme that would have allowed the superintendent to asses what extension of time should be granted if any of the five provisions as set out in clause 14.01 were satisfied. Without such information he could only guess the effect but he chose not to produce one."
Alleged Error of Law (Numbered 3 in Pinanca's Questions of Law).
Error occurred in the arbitrator finding that Trinity was not contractually required to provide a construction programme to the superintendent and/or the principal's representative.
The contract, which forms part of the award, does not, by express words, impose an obligation on either party to prepare a programme of works. Counsel for Pinanca submitted that a proper construction of cl 5.01 imposed such an obligation on Trinity and, the arbitrator erred in law in finding to the contrary. Clause 5.01 provides as follows:
"APPROVALS
The contractor shall arrange for and obtain all necessary consents and approvals now or hereafter required by law for the carrying out of the Works or any alterations or additions thereto or deletions therefrom including those which it is the contractor's responsibility to obtain pursuant to the documents referred to herein. The contractor is responsible for ensuring consents and approvals are obtained in time to avoid delays. Where the time taken by statutory authorities to grant consents and approvals is in excess of the programme, and the allowance in the programme was reasonable under normal circumstances, the contractor may claim for an extension of time if the works have been delayed."
Counsel for Pinanca expressly denied that his submission encompassed a proposition that Trinity's obligation to prepare a programme of works was to be implied from cl 5.01 or any other clause or clauses in the contract. It is clear that cl 5.01 does not impose any obligation on either party to prepare a programme of works. It seems to assume that there is one in existence prior to the contract. In any event, even if Pinanca's submission is correct, the fact is that no programme of works was prepared and consequently it is difficult to see, even if this question of law was determined in favour of Pinanca, how that could substantially affect the rights of the parties.
Alleged Error of Law (Numbered Items 10 and 20 in Pinanca's Questions of Law).
Error of law occurred:
(a)in the arbitrator holding that a claim for an extension of time is not a claim within the meaning of that word in cl 24 of the contract; and
(b)in the arbitrator finding that the onus of proving that the works had been delayed was on the superintendent.
Clause 14.01 of the contract imposed an obligation upon Trinity to execute the works to practical completion by the date specified in the annexure to the contract or, within any extended time granted or allowed by the superintendent pursuant to that clause. Clause 14.01 went on to provide:
"If the work shall be delayed for any of the following causes, that is to say:
(a)On account of extra work required by the Principal or the Superintendent
(b)On account of any alterations required by or instructions given by the Principal or the Superintendent
(c)In consequence of proceedings being taken or threatened by or dispute with adjoining or neighbouring owners not arising out of any default or neglect of the contractor
(d)By delays of any person engaged by the Principal or the Superintendent to carry out any portion of the said works
(e)By reason of necessary instructions, plant or details to be given by the Superintendent not being given at the due time.
The contractor [Trinity] shall be granted a fair and reasonable extension of time for completion in respect thereof PROVIDED ALWAYS that in the event of the Superintendent's decision being unacceptable to the contractor the matter may be referred to arbitration under the terms of clause 21."
The annexure to the contract provided that the time for practical completion of the work shall be 11 December 1985 and the time for practical completion of each separable part of the work shall be 15 June 1985. Throughout the whole contract only one extension of time was applied for and it was granted. The application and grant was pursuant to the terms of cl 5.01 and related to delay in obtaining a statutory authority. A period of 17 days was allowed. No other claims for extensions of time were made, nor were any other extensions of time granted. Counsel for Pinanca submitted that, although cl 14.01 did not provide that extensions of time had to be claimed, that obligation was imposed on Trinity by cl 24. It provides:
"The Principal shall not be liable upon any claim by the contractor in respect of any matter arising out of the contract unless the claim, together with the full particulars thereof, is lodged in writing with the principals not later than one month after the date of the occurrence of the events or circumstances on which the claim is based or written notice of intention to make the claim specifying the nature of the claim is lodged with the principal within that time and the claim, together with full particulars thereof, is lodged in writing with the principal before the issue of the final certificate."
Clause 24 does not refer to a claim for an extension of time. Clause 24 relates to claims made by the contractor which, if successful, impose a liability on the principal. A claim for an extension of time can impose no such liability. A claim for an extension of time can only affect the date for practical completion and, if granted, will reduce the contractor's potential liability to pay liquidated damages. Thus, as counsel for Trinity submitted, an extension of time is in the nature of a defence to a claim by the principal against the contractor for liquidated damages. Clause 14.01 provides that, "The contractor shall be granted a fair and reasonable extension of time for completion" in respect of delay occasioned by one or more of the five circumstances specified in the clause. The arbitrator ruled at p22 of the award:
"I believe that [Pinanca's] Superintendent had a clear contractual responsibility to decide a fair and reasonable extension of time for obviously valid variations such as those I have listed whether or not he had access to any programming produced by [Trinity]."
That ruling accords with the plain words of cl 14.01. In the ordinary course of things, the circumstances which would entitle Trinity to an extension of time would be circumstances within the knowledge of the superintendent who, according to the definition clause in the contract, is the person appointed in writing by Pinanca to be superintendent for the purposes of the contract. There is nothing in the terms of the contract to indicate that the grant of an extension of time, to which Trinity would be entitled in the event of the occurrence of one or more of the five circumstances specified in the clause, was conditional upon the making of a claim by Trinity to Pinanca. Even if it was, the contract prescribes no time limit for the making of such claims and they were clearly made, at the latest, at the time of the arbitration hearing.
Alleged Error of Law (Numbered Item 12 in Pinanca's Questions of Law).
Error of law occurred:
(a)in the arbitrator holding that, upon a proper construction of the contract, the contractor was not required to prove that it was entitled to an extension of time;
(b)on the face of the award and upon a proper construction of the contract, in holding that there was an obligation on the Superintendent to asses the claimant's time extension claims without there being any means of measuring same as was so found by the arbitrator.
I have already dealt with the alleged error in para(a) above.
As is apparent from the extracts of the interim award, set out earlier, the arbitrator concluded that the absence of a programme of works deprived Pinanca of the ability to measure any extensions of time to which Trinity might be entitled pursuant to the provisions of cl 14.01. At p21 of the interim award the arbitrator said:
"Because of the design and build nature of the contract there was a considerable difference of opinion about whether or not contractually valid variations had occurred and this is understandable in the circumstances because of the grossly deficient nature of the basic information [outline element specification]. There were however a number of obvious variations which were ordered, contractually formally or otherwise, which satisfy one or more of the five conditions set down in clause 14.01. These are,
the delay in access to parts of the site and the issue of permits, (for which time has been granted) [this is the period of 17 days referred to earlier],
the changes made to the site and location of the Hydro Electric Commission sub–station,
changes made to the part of the building to be set up as a hot bread kitchen,
changes made to the balcony restaurant,
changes made to the tenancy fit out for the major tenant in Stage 2, Prime Computers,
for example.
The [principal's representative], not the Superintendent, after much argument about the length of the extensions of time for the first item of ten and seven days respectively added a total of seventeen days to the time for completion and consequently the date for practical completion.
No extensions of time have been granted for the other items.
Whatever justification the respondent might have had for refusing or neglecting to grant extensions for alleged variations there can be none for the obvious variations listed above."
Pinanca's submission was that it was inconsistent to find that there were no means of measuring any delay and to find that there were a number of "obvious variations" which caused delay. There are two answers to this submission. If the two findings are inconsistent they are findings of fact and not findings of law. There arises no question of a misdirection of law with respect to the facts that had to be found. Accordingly, once there is evidence from which a fact can be found, no error of law arises even if inconsistent factual findings are made. See Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139; Edelsten v Ward (No 1) (1989) 63 ALJR 345. Secondly, there is no inconsistency in the two findings of fact referred to in this alleged error of law. The findings carry the implication that the "obvious variations" were of a kind that, in the opinion of the arbitrator, must have delayed completion of the works for some period of time even if it was impossible to measure the length of that period. Such delay was for one or more of the causes prescribed by cl 14.01 and, as no extension of time was granted, (no matter how difficult the measurement of that extension might have been) Pinanca was thereby deprived of the right to recover liquidated damages that might otherwise have been recoverable in accordance with the terms of the contract.
Alleged Error of Law (Numbered 17 in Pinanca's Questions of Law).
The arbitrator erred in law in finding upon the terms of the contract and the facts set out in the award, that time had been set at large.
In support of this alleged error of law counsel for Pinanca submitted that, as a consequence of the finding that there were no means to measure delay, the arbitrator erred in law in ruling that there had been delays caused by "obvious variations" and in finding that there was a delay of "some 198 working days" with respect to the installation of the electricity sub–station. To a large extent I have already dealt with the submission on this alleged error of law. The following appears in the interim award at p26:
"The original intention of [Trinity] was to complete the construction of the sub–station ready for HEC installation on or about 9 April, 1985. In view of the simplicity of this structure I can see no reason why this timing could not have been achieved. In fact the revised construction, because of the delay in documentation and the very much more complicated form of construction inside an existing building, was not completed until the same stage [sic] until about 10 March, 1986, a total delay of some 198 working days and this induced further delays to the power installation which could not be avoided by [Trinity] and delaying the final commissioning of the lift until mid–September 1986 ...
As the start of this delay commenced about 10 January, 1985 it affected the whole of the original contract period and ran well beyond the extended contract period for the tenancies of 30 May, 1986."
Application of the reasoning given with respect to the immediately preceding alleged error of law reveals that the submissions made in support of this complaint all relate to alleged errors of fact. Further, absence of means to measure delay during the progress of the works because of the absence of a programme of works, does not necessarily mean that the arbitrator is incapable of making any measurement of delay after the achievement of practical completion.
Accordingly, I find that the arbitrator did not err in law in finding that Pinanca was barred from recovering liquidated damages by reason of it having delayed the works and in not granting extensions of time as it was required to do by cl 14.01. It follows that the application for leave to appeal must be dismissed for no other alleged error of law, if made out, could substantially affect the rights of the parties to the arbitration.
I now turn to the second ground of the motion to review namely, that the award should be set aside on the grounds of misconduct. The statutory authority for the second ground of the motion is the Commercial Arbitration Act, s42(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 court may, on the application of a party to the arbitration agreement, set the award aside either wholly or in part."
In support of this application it was alleged that:
1The arbitrator had made contradictory findings of fact.
2The arbitrator had made contradictory findings of law.
3The arbitrator had made errors of law.
4The arbitrator purported to decide issues that were not within the terms of the reference.
5The arbitrator was or appeared to be biased.
In a document some 35 pages long Pinanca set out particulars of the grounds it relied upon. There were over 100 separate matters of complaint. Some were repetitious and many expressed in confused and convoluted terms. The document was difficult to follow and understand. The submission came down to the proposition that, by reason of the matters particularised, a fair minded observer might entertain a reasonable apprehension of bias. See R. v Watson, ex parte Armstrong (1976) 136 CLR 248; Livesey v New South Wales Bar Association (1983) 151 CLR 288; Vakauta v Kelly (1989) 167 CLR 568; R. v Carter and the Attorney–General ex parte Gray and McQuestin, Full Court 9091.
Further, it was submitted that by reason of the matters particularised, there might be aroused in the mind of a fair minded observer a reasonable suspicion that there had been a failure to consider the relevant contentions and submissions with a fair and unprejudiced mind and there was indicated a trend or pattern which had, or appeared to have, the effect of unfairly disadvantaging Pinanca. See Gas and Fuel Corporation of Victoria v Wood Hall Ltd and Leonard Pipeline Contractors Ltd [1978] VR 385.
In argument, counsel for Pinanca abandoned many of the particulars so that there remained:
1Three matters of alleged contradictory findings of fact.
2One matter of alleged contradictory finding of law. This allegation was put as an alternative to one of the alleged contradictory findings of fact.
3Fourteen alleged errors of law. These were the same errors relied upon in argument upon the application for leave to appeal.
4No matters were relied upon in support of the proposition that the arbitrator had purported to decide issues that were not within the terms of the reference.
5Five matters from which it was alleged bias might reasonably be apprehended.
It is unnecessary to refer to the matters relied upon in any detail. The alleged contradictory findings of fact and law are not contradictory findings at all. Even if they were, they would not amount to misconduct when considered alone or in conjunction with all the other matters on which Pinanca relied. The same observation can be made about the alleged errors of law, four of which have been considered in some detail earlier in these reasons. In Gas and Fuel Corporation of Victoria v Wood Hall Ltd and Leonard Pipeline Contractors Ltd (supra) Marks J said at p398:
"Insofar as the arbitrator mis–stated and/or misconceived the submissions or contentions of counsel and/or was mistaken in fact or law, I hold that such things in themselves did not constitute misconduct capable of founding an order for his removal.
This is not to say however, that if he did one or more such things that they are deprived of significance for all purposes. In my view such things may be looked at, particularly in their setting, for the purpose of determining in the context of the rules of natural justice what impression may have been made by them on the fair minded observer, whether a party or member of the public.
I have said that they must be considered in their setting. In saying 'setting', I refer, but not exclusively to the nature of the mistake, mis–statement or misconception, the educational standard, qualifications and experience of the arbitrator and thus what might reasonably be expected of his powers of comprehension, the simplicity or otherwise of the submissions or contentions concerned and the procedure by which and the manner in which they were handled by the arbitrator. In considering the question of technical bias a court must be able to look at a mistake or alleged mistake or misconception or mis–statement of argument by an arbitrator in combination with the process or path by which he came to make the impugned pronouncements. Further, a mistake, misconception or mis–statement in one setting may take on a more suspect appearance when considered together with other impugned pronouncements made in another.
In my view, a mistake in law or fact or a misconception or mis–statement of an argument by an arbitrator is capable of scrutiny in order to determine whether it was so expressed and/or occurred in such a setting and/or was itself of such a nature, that a reasonable suspicion might be aroused in the mind of a fair minded observer that the mistake, misconception or mis–statement stemmed from or was associated with a failure to consider relevant contentions and/or submissions with a fair and unprejudiced mind. Further, such examination may be made to determine whether particular mistakes, misconceptions or mis–statements occurring in one setting, when considered in a general context in which there were other mistakes, misconceptions, mis–statements and/or irregularities, contribute to an overall or generally biased suspicion of the kind with which we are concerned.
A further point of such an exercise may be to determine whether there developed a trend or pattern which had the effect or appeared with reason to have the effect of unfairly disadvantaging a party."
Application of the foregoing test to the submissions made on behalf of Pinanca demonstrate that the applicant falls a long way short of establishing technical misconduct. With respect to the setting, bearing in mind that the hearing occupied 113 sitting days, the arbitrator said at p79 of the interim award:
"The preparation of this award has been one of the most difficult I have yet encountered because of the mass of documents which I have had to re–digest. As all of the participants will no doubt agree, the evidence adduced in this long hearing has been carried in our minds for almost a year to the disruption of our normal activities and personal lives. I certainly hope that I do not encounter other parties in the future who have let their affairs get so out of hand that a similar arbitration comes about."
The arbitrator's interim award is a detailed and carefully reasoned judgment. It contains even handed and, prima facie, appropriate criticism of both parties and some of their witnesses. In result, neither party achieved substantial success on their claims. No fundamental error of law has been demonstrated. No fundamental inconsistency in findings of fact or law have been demonstrated. The production of an award so free from error as this one is after such a complex arbitration is a tribute to the skill of the arbitrator. There is no substance in any of the arguments that alleged errors of law or inconsistency in findings would arouse in the mind of a fair minded observer a suspicion of bias or lack of impartiality or unfairness to either party.
On behalf of Pinanca it was submitted that the manner in which the proceedings were conducted was such as would arouse in the mind of the fair minded observer a suspicion of bias or unfairness. By way of particulars it was submitted that the arbitrator encouraged and permitted Trinity to tender in evidence, seriatum, several exhibits attempting to show the "as built" construction programme against which some measurement of delay could be made. The arbitrator did ask Pinanca to produce an "as built" programme of works. This is referred to earlier in these reasons. It was unsatisfactory. Throughout the proceedings, Trinity's principal witness made several attempts to produce a satisfactory "as built" programme of works but, in the end, failed to satisfy the arbitrator that he could do so. The arbitrator did make some very limited use out of the material to find some rudimentary dates but apart from that, rejected all efforts to produce a programme of works because each effort was unreliable. There is no substance whatsoever in the submission that the course the arbitrator followed in this respect would arouse a suspicion of bias. Any possible hint of bias in permitting Trinity to make several attempts to produce this programme of works disappears with the arbitrator's rejection of all efforts as unsatisfactory.
On behalf of Pinanca it was submitted that the arbitrator's rejection of Pinanca's application to amend its pleadings to add a claim with respect to uneven floors was one of the matters which, together with other matters, would arouse a suspicion of bias. An examination of the relevant part of the proceedings shows that the arbitrator considered the application to amend but refused it because he took the view that even if the facts alleged were made out Pinanca would not be entitled to recover any monetary sum. It was also suggested that bias was apparent from some exclamation marks that the arbitrator had put in notes that he made during the course of the proceedings and from a comment that he had written following a submission, "at this stage I find it hard to accept that the respondent can claim both liquidated damages and other claims because liquidated damages are meant to cover all damages likely to occur." A note such as that does no more than indicate that the arbitrator is alert to the issues, knowledgeable about the relevant law and has formed a tentative prima facie view about a submission that had been made to him. It certainly would not cause the fair minded observer to be suspicious that he was biased against Pinanca. The motion will be dismissed.
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