Port of Portland Pty Ltd v Alcoa Portland Aluminium Pty Ltd
[2003] VSC 417
•31 October 2003
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST
No. 2047 of 2003
F5554
| PORT OF PORTLAND PTY LIMITED (ACN 072 507 012) | Plaintiff |
| v | |
| ALCOA PORTLAND ALUMINIUM PTY LTD (ACN 006 306 752) | Defendant |
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JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24 October 2003 | |
DATE OF JUDGMENT: | 31 October 2003 | |
CASE MAY BE CITED AS: | Port of Portland Pty Ltd v Alcoa Portland Aluminium Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2003] VSC 417 | |
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Arbitration and Award – Reference to expert assessors – Stay of litigation – Whether dispute or difference – Whether matter referred to assessment is the subject matter of court proceedings – Whether proceeding should be stayed pending assessment.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms Elizabeth Hollingworth SC with Mr J.P. Gorton | Mallesons Stephen Jaques |
| For the Defendant | Mr Stewart M. Anderson | Cornwall Stodart |
HIS HONOUR:
By an agreement in writing dated 9 February 1981, the Portland Harbour Trust Commissioners agreed to construct for Alcoa of Australia Ltd a berth in Portland Harbour and to make the berth available for its exclusive use to serve the operation of its aluminium smelter for a term of 99 years. The plaintiff, Port of Portland Pty Ltd (“POPL”), and the defendant, Alcoa Portland Aluminium Pty Ltd (“Alcoa”), are the successors in title to the Commissioners and Alcoa of Australia Ltd, respectively.
By cl. 33(a) of the agreement, Alcoa is obliged to pay wharfage at the rates set out in the third schedule to the agreement upon materials entering the berth and leaving the berth at specified rates per unit of mass or volume.
Paragraph 2 of the third schedule provides for setting of the wharfage rates for inward materials for each financial year with provision for escalation provided that the rate as escalated should not exceed a maximum which is to be calculated in accordance with a specified formula. The formula includes a P factor which is expressed to be “0.7 until 30th June, 1990”. The inclusion of this factor means that the maximum escalation is 70% of that which would otherwise be provided for under the formula.
The schedule makes provision for the review of the wharfage escalation formula in the following terms:
“The wharfage escalation formula is to be reviewed by parties in the period 1st July – 30th December, 1989, for application to the 1990-1 year.”
It appears from the pleadings in this proceeding that the parties did not agree to vary the maximum escalation formula for the year 1990-1 or thereafter. With respect to each of the years 1990-1, 1991-2, 1992-3, 1993-4, 1994-5, 1995-6, 1996-7, 1997-8, and 1998-9, POPL continued to set wharfage rates which did not exceed the maximum calculated in accordance with the formula, including the P factor of 0.7. Alcoa in respect of each of these years paid the wharfage rates as set.
In each of the years 1999-2000-1, 2001-2, 2002-3, POPL set the wharfage rates having regard to the maximum escalation formula but not including the P factor of 0.7.
With respect to the year 2003-4, POPL has set the wharfage rates on the same basis as in the previous four years, that is, having regard to a maximum escalation formula which did not include the P factor. POPL has taken the position that it is entitled to act in this way for the balance of the term of the agreement. Alcoa has challenged the right of POPL to set the rates in this way for this year or in the future.
By writ filed on 19 June 2003, POPL has brought this dispute to court. In its amended statement of claim filed on 4 August 2003 it seeks declarations:
(a)that on a proper construction of the agreement the maximum escalation formula specified in the third schedule continues to apply, but without the P factor of 0.7; and
(b)that the rates which it has set for the year 2003-4 are properly payable pursuant to cl. 23(a).
Alternatively, it seeks rectification of the agreement to the same effect.
Clause 51 of the agreement contains a dispute resolution procedure. Notwithstanding that it is described as an arbitration clause, it is accepted by the parties that it is in fact a referral to two assessors and an umpire acting as experts and not arbitrators. The clause, insofar as it is relevant for my purposes, is in the following terms:
“If there shall be any difference or dispute between the parties hereto in respect to any matter arising out of or in connexion with this Agreement either party may give notice to the other of the difference or dispute and if the difference or dispute is not settled within one month after service of the notice then the matter in dispute shall be determined by two assessors and their umpire…”
By notice dated 4 July 2003, Alcoa has sought to invoke this clause. The notice recites the agreement and cl. 51 and summarises the provisions of cl. 23(a) and the relevant part of the third schedule. It goes on, then, to give notice under cl. 51 in these terms:
“3.Despite review as required by Item 2(c) of the Third Schedule to the Agreement, the parties have failed to agree a maximum wharfage escalation formula, either in the period 1st July – 31st December, 1989, or thereafter (‘dispute’).
4.Alcoa considers that the dispute is a ‘difference or dispute between the parties hereto in respect of or in connexion with this Agreement’ for the purpose of clause 51 – Arbitration of the Agreement.
5.Unless the dispute is settled within one month after service of this notice then, as provided by clause 51 – Arbitration, the dispute shall be determined by two assessors and their umpire all acting as experts and not as arbitrators, to be appointed in accordance with the Agreement.”
By summons filed on 8 September 2003, Alcoa applies for an order staying POPL’s proceeding pending the determination of this dispute in accordance with cl. 51. This judgment concerns this application.
It was accepted by the parties that the court has power in its inherent jurisdiction to order a stay where the parties to the proceeding have agreed to refer the subject matter of the proceeding to assessment and that it should do so unless the justice of the case requires that the issue be determined by the court notwithstanding the agreement of the parties.
The first issue raised in argument is whether there is in fact a “difference or dispute between the parties hereto in respect of any matter arising out of or in connexion with this Agreement”. This cannot be doubted. It is clear that there are any number of disputes between the parties as to the meaning and effect of the third schedule. I shall not attempt to identify all of them because the true area of dispute is considerably obscured by the form of Alcoa’s defence which puts in issue a large number of matters which, as it appeared in argument, are not in contention. There certainly appears to be a dispute or a difference as to whether the P factor has application after 30 June 1990, as to whether it is possible for the parties to undertake any review of the formula after 31 December 1989, as to whether any such review endures after the year 1990-1 and, if not, whether there is any maximum escalation for 1991-2 and thereafter and, if so, what this is. Some of these are or are likely to be issues in the proceeding.
Next, and this was the area of contest before me, is whether Alcoa’s notice of 4 July is “a notice of the difference or dispute”. For my purposes I can put to one side paragraphs 4 and 5 of this notice. Paragraph 4 merely asserts that Alcoa considers that the dispute identified in paragraph 3 falls within clause 51 of the agreement. Its opinion is not relevant. The notice asserts in paragraph 3 that the parties “have failed to agree a maximum wharfage escalation formula, either in the period 1 July – 31 December 1989 or thereafter”. It appears from the pleadings that this is not in dispute. It does not appear in the statement of claim or the defence that any such agreement was reached in 1989 with respect to the 1990-1 year. It is alleged by POPL and denied by Alcoa that POPL by letter dated 5 July 1990 informed Alcoa that it would agree to a “Maximum Wharfage Formula” continuing to contain a P factor of 0.7 for the years from 1 July 1991 to 30 June 1999. It is alleged in paragraph 12(a) of the statement of claim and admitted by the defendant that the parties have not reached agreement as to an alternative P factor to apply after 30 June 1999.
The role of the notice of dispute in a provision such as cl. 51 is to set the jurisdiction of the assessors. Their task is to resolve the dispute or difference there identified and no more; they are not empowered to embark on other disputes. Accepting that, as a commercial document, the court will construe the notice in a commercial way, it does not, even so, appear that it identifies any dispute other than the existence or no of a failure to agree the maximum wharfage escalation formula for the period 1990-1 or thereafter. If the parties wish to refer these disputes to assessment that is their prerogative. I express no view as to whether such a reference is competent given the apparent unanimity on this matter. In any event, it is not a dispute or difference which is to be determined in the court proceeding. On this ground the application must fail. I need not concern myself with the further question whether, as a matter of discretion, the stay should be granted or refused.
The application will be dismissed with costs.
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