Portland Diesel and Marine Pty Ltd v Ocean Fresh Fisheries Pty Ltd
[2005] TASSC 130
•22 December 2005
[2005] TASSC 130
CITATION:Portland Diesel & Marine Pty Ltd v Ocean Fresh Fisheries Pty Ltd [2005] TASSC 130
PARTIES: PORTLAND DIESEL & MARINE PTY LTD
v
OCEAN FRESH FISHERIES PTY LTD
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 418/2005
DELIVERED ON: 22 December 2005
DELIVERED AT: Hobart
HEARING DATE: 12 December 2005
DECISION OF: Master S J Holt
CATCHWORDS:
Arbitration – The submission and reference – Submission as a defence and as a ground for stay of proceedings – Stay of proceedings – Power of court to stay – Generally.
Commercial Arbitration Act 1986 (Tas), s53.
Aust Dig Arbitration [29]
REPRESENTATION:
Counsel:
Plaintiff: I D Faulkner SC and G B Bradfield
Defendant: L Sealy and C R Doherty
Solicitors:
Plaintiff: Bradfields
Defendant: Dobson Mitchell & Allport
Judgment Number: [2005] TASSC 130
Number of paragraphs: 10
Serial No 130/2005
File No 418/2005
PORTLAND DIESEL & MARINE PTY LTD v
OCEAN FRESH FISHERIES PTY LTD
REASONS FOR DECISION MASTER S J HOLT 22 DECEMBER 2005
This is an application by the defendant for a stay of proceedings on the ground that the subject matter of the action is the same as the subject matter of an arbitration agreement between the parties. The defendant relies upon s53 of the Commercial Arbitration Act 1986 (Tas), and in the alternative on the inherent jurisdiction of the court to stay proceedings. Section 53 is as follows:
"Power to stay court proceedings
(1) If a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to subsection (2), apply to that court to stay the proceedings and that court, if satisfied –
(a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and
(b) that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration –
may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit.
(2) An application under subsection (1) shall not, except with the leave of the court in which the proceedings have been commenced, be made after the applicant has delivered pleadings or taken any other step in the proceedings other than the entry of an appearance.
(3) Notwithstanding any rule of law to the contrary, a party to an arbitration agreement shall not be entitled to recover damages in any court from another party to the agreement by reason that that other party takes proceedings in a court in respect of the matter agreed to be referred to arbitration by the arbitration agreement." [emphasis added]
It is necessary to set out some background. None of the evidence presented on the hearing of the application was disputed. In summary, it was as follows. For about four years the plaintiff had been providing general engineering advice and maintenance services for the defendant's fleet of fishing vessels. The plaintiff would send invoices for work performed from time-to-time with the amounts invoiced payable within thirty days of issue. In May 2004 the plaintiff performed work on the stern tube seal of the defendant's fishing vessel FV Megisti Star. After the work was performed and the vessel was back in the water, oil continued to leak and the vessel was re-slipped and further work undertaken. Much of the further work was carried out by the plaintiff which in June 2004 issued invoice 2815 for the additional work. The amount invoiced was $25,956.97. When GST was added to this amount the total was $28,552.66, which the defendant paid in full.
On 10 September 2004 the defendant sent a letter to the plaintiff notifying a dispute which the parties referred to arbitration. The letter is as follows:
"Re: MEGISTI STAR F – Stern Tube Seal Leak 12 May 2004
As you are aware, the work carried out by your company on the stern tube seal work [sic] on our vessel Megisti Star in May 2004, was not successful and required us to withdraw the vessel from service for re-slipping to replace the leaking seal. We consider that the initial work was sub-standard. The cost of the second slipping and the rectification work, in addition to the fishing time lost, was significant.
We do not believe that we should be liable for the cost of the second rectification slipping and the amount invoiced to us by your company for that rectification work.
It is deeply regrettable that I hereby inform you, that the amount of thirty eight thousand four hundred & sixty seven dollars & ninety two cents ($38,467.92) will be withheld from payments due from Ocean Fresh Fisheries Pty Limited to Portland Diesel & Marine, for costs directly attributable to your failure to replace the stern tube seals in a satisfactory manner.
The amount is made up as follows:
Company Invoice # Details Charges Excl GST
Hobart Ports Authority DS003330 Slip vessel 26/05 to 02/06 $6 427.10
Rolls Royce Marine 600203 Supply seal ring $1 735.00
Portland Diesel & Marine 2815 Replace stern seals & bearings $25 956.97
ASD Diving Contractors 0015 Inspect Stern gear $450.00
Lost Stern Tube Lubes
Shell Lubes 101548012 Strombus MP 20Lx2 stern tube oil $399.74
Shell Lubes 101630945 Strombus MP 20L x 2 stern tube oil $402.12
Shell Lubes 101653321 Strombus HS 20L x 6 $1 013.16
Shell Lubes 101653321 Strombus MP 20L x 2 $402.12
Shell Lubes 101718339 Strombus MP 20L x 6 $1 206.37
Shell Lubes 101718339 Strombus HS x 20L x 4 $675.44
$38 467.92
Yours faithfully"
As at the date of the letter the unpaid invoices on other work (the FV Megisti Star invoice having been paid in full) was significantly less than the sum of $38,467.92 which the defendant claimed. Over time the defendant withheld payment on other invoices unrelated to the Megisti Star bringing the debit balance of the defendant's account to the amount in dispute, namely, $38,467.92.
Included in the amount comprising the shortfall of $38,467.92 were unpaid invoices for work performed by the plaintiff on another of the defendant's fishing vessels, the FV Petersen. The total of the unpaid invoices for work on that vessel was $31,801.74. On 28 September 2005 the plaintiff issued its writ against the defendant endorsed as follows:
"The Plaintiff's claim against the Defendant is for an outstanding debt for marine, engineering and maintenance work performed by the Plaintiff on the Defendant's ship, The Petersen, for the period between May 2004 and September 2004 and the Plaintiff claims the outstanding sum of $31,801.74 plus interest and costs to be taxed."
The defendant entered an appearance and filed its application for the stay on the basis that the Court proceedings are in respect of the matter agreed to be referred to arbitration. The plaintiff says that the dispute identified by the letter of 10 September was confined to the work on the FV Megisti Star, but the defendant says that the letter notifying the dispute which was referred to arbitration included the question whether the defendant was entitled to withhold payment on any or all of the plaintiff's invoices up to an amount of $38,467.92 and so encompassed the debt claim the subject of the action.
I conclude that the matter referred to arbitration was confined to the claim for damages in respect of the work on the FV Megisti Star. There is and never has been any dispute about the work performed on the FV Petersen, nor any dispute about the amount invoiced for that work. There was nothing for the arbitrator to determine about this matter because there was no dispute. What the arbitrator was asked to determine was whether or not the defendant was entitled to recover from the plaintiff damages in respect of work undertaken on the FV Megisti Star and, if so, the amount of the damages. The situation was that if the defendant obtained an award of damages, the unpaid award would be the equivalent of a debt and, if at the time it was made the defendant was indebted to the plaintiff there would be a set-off. But this was a mere incident of the arbitration and not a matter of dispute for the arbitrator to determine. The practicality before the referral for arbitration was that if the plaintiff sued to recover a debt the defendant would counterclaim for damages for the work on the FV Megisti Star and so I have no doubt that at the time of the referral of the damages claim to arbitration the defendant and possibly the plaintiff contemplated that no proceedings for debt would be commenced prior to the arbitrator's determination. But this does not elevate the undisputed debt to the status of "a matter agreed to be referred to arbitration". The defendant did not claim that the plaintiff was or should be prevented from pursuing the action because of a representation or a promise or because of an agreement not to pursue an action for debt whilst the arbitration was pending. There has not been a duplication of proceedings and so the ground put forward as justifying a stay, either under the statute or pursuant to the inherent jurisdiction, has not been made out.
These reasons are sufficient to dispose of the matter, but even if I had determined that the subject matter of the action and the arbitration were the same there was a further difficulty confronting the defendant. It was common ground between the parties that the Commercial Arbitration Act, s53, only applies where there is an arbitration agreement and no concluded arbitration. It was common ground that by the time of the hearing of the application the arbitrator had made a decision in favour of the plaintiff. The plaintiff says that the arbitrator's determination was made in February 2005 before the action was commenced and the defendant says that it was not made until November 2005 after the action had been commenced. Regardless of when the award was made by virtue of the fact that it was made before the hearing of the stay application there is no reason for a stay as the defendant's remedy now is to plead accord and satisfaction: Bulk Chartering and Consultants Australia Pty Ltd v T&T Motor Trading Pty Ltd (1993) 114 ALR 189 at 212. The defendant contended, however, that the arbitration process is yet to be concluded as the defendant considers that the arbitrator denied it procedural fairness and accordingly the award might be set aside on appeal with the result that further arbitration proceedings might then occur. Counsel for the plaintiff responded by saying that the defendant had not presented evidence that it intended appealing and in any event the defendant's prospects of success on appeal were either non-existent or negligible.
Regardless of appeal intents or prospects I would not have granted a stay. If there has been no lawful determination in respect of the defendant's claim for damages the defendant remains free to pursue that claim. Allowing the action to proceed would not force the defendant into a multiplicity of proceedings giving rise to extra expense and the possibility of inconsistent findings of fact. The plaintiff sued for debt and the defendant was under no compulsion to link its claim in respect of the FV Megisti Star to the debt claim. The defendant has now elected not to link the claims. On 9 December 2005 the defendant informed the plaintiff that the sum withheld being $38,467.92 had been paid into a solicitors' trust account for immediate forwarding to the plaintiff. This being so there is now no reason for a stay or any further pleadings as all that remains in the action is a formal order bringing it to an end along with a consideration of any costs applications which might be made.
The application for a stay is dismissed.
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