Prizac Developments P/L v Unley Property Dev P/L No. Scciv-01-317

PRIZAC DEVELOPMENTS PTY LTD v UNLEY PROPERTY DEVELOPMENT PTY LTD
[2001] SASC 245
Full Court: Olsson, Bleby and Gray JJ
Application for Leave in Private

OLSSON J This is an application to the Full Court, pursuant to SCR 94.01, for leave to appeal against a decision of Perry J refusing leave to appeal against the award of an arbitrator under a building contract, made pursuant to the Commercial Arbitration Act 1986. It comes before the Full Court for initial consideration in private, pursuant to SCR 94.03(c).
Perry J published written reasons for decision – Prizac Developments Pty Ltd v Unley Property Development Pty Ltd and Anor [2001] SASC 141. It is complained that, in considering the application for leave, he fell into error in concluding that his consideration was restricted to the relevant instrument of award published by the arbitrator; and that it was not open to him also to go to the contract documentation and other materials related to it bearing on the subject building works.
In essence it is argued that, given the provisions of s 38(5)(b) of the Commercial Arbitration Act 1986 which limit a grant of leave (inter alia) to situations in which there is “a manifest error of law on the face of the award”, it is permissible for the court to examine extraneous documents when the justice of the case requires that course and, in particular, where it is apparent that the arbitrator has intended to incorporate the provisions of other documents into the award, so that one needs to be read with the other. (Compare, for example, the reasoning in authorities such as Gold Coast City Council v Canterbury Pipe Lines (Aust) Pty Ltd (1968) 118 CLR 58 (“Gold Coast”), Pearl Marin Shipping A/B v Pietro Cingolani S.A.S. (The ‘General Valdes’)” (1982) 1 Lloyd’s LR 17 (“The General Valdes”)).
In written submissions the applicant seeks to derive comfort from Donvito v Diekman (SCNSW, 3 March 1989, unreported), Graham Evans & Co Pty Ltd v SPF Formwork Pty Ltd (1991) 8 BCL 147 and Leighton Contractors Pty Ltd v South Australian Superannuation Fund Investment Trust (Debelle J, 11 November 1994, unreported).
It suggests that these stand as authority for the proposition that extraneous materials can be referred to when the justice of the case requires.
In Graham Evans & Co Pty Ltd v SPF Formwork Pty Ltd (supra) at 148 Brownie J adopted the approach of Smart J in Warley Pty Ltd v Adco Constructions Pty Ltd (1988) 5 BCL 141. He concluded that it was “legitimate, when examining the reasons for making an award, expressed in the award, to refer to the documents mentioned in the award, for the purpose of understanding the award itself, and the reasons for making the award, but it was not legitimate to comb through the evidence on the arbitration, to see whether there was some error of law which arose out of the arbitration, rather than out of the award”.
Giles J seems to have taken a somewhat similar, albeit perhaps more cautious, approach in Donvito v Diekman (supra). However, both this case and Graham Evans & Co Pty Ltd v SPF Formwork Pty Ltd arose from legislation in a form prior to an amendment made in 1990 to bring it into line with the scheme currently expressed in s 38 of the South Australian statute. At the time of those decisions there was a general appeal “on any question of law arising out of an award”.
It follows that they are not really pertinent for present purposes.
A perusal of his reasons in Leighton Contractors Pty Ltd v South Australian Superannuation Fund Investment Trust (supra) reveals that, in that case, Debelle J merely seems to have taken it as patent that, for the purpose of considering whether there is manifest error on the face of the award, it is appropriate to have reference to the terms of the building contract to which it relates. There is no separate discussion of that issue.
In the course of his reasons Perry J summarized the history of relevant events and directed attention to the restricted right of appeal arising under s 38 of the Commercial Arbitration Act as it is presently expressed.
He pointed out that leave to appeal may only be granted if the applicant is able to demonstrate manifest error of law on the face of the award, of a kind the determination of which could substantially affect the rights of one or more parties to the arbitration agreement.
In addressing the application he concluded that the only documents which he could properly address were the copy of the award itself and the draft notice of appeal. He expressly rejected a proposition that it was open to him to consider copies of the relevant building contract, a document setting out the design requirements laid down by one of the proposed tenants of the building constructed, the notice of dispute under the contract and certain engineering reports.
As to this the applicant submits:-
“10. His Honour specifically ignored:
10.1The Contract; and
10.2The Specifications to the Contract; and
10.3The Notice of Dispute.
11.It is submitted that His Honour erred in adopting such a narrow construction of the face of the Award.
12.In so far as it is necessary for the Court to understand:
12.1The issues in dispute;
12.2The reasoning of the Arbitrator;
12.3The errors of law of which Prizac complains;
the Court ought to have regard to the award, the Contract and any other documents which could be said to have been incorporated into the award by their reference in the award.
13.In the case at bar the single most fundamental issue (from which the rights of the parties flow) is the Contract, its scope and its terms.
14.In the award the Arbitrator refers specifically to:
14.1The evolution of the Building Contract (page 6 to 8 of the Award).
14.2The Woolworths Specification (page 6, 7, 8).
14.3The Architectural Specification (page 6).
and accordingly, it is submitted that those documents are thereby incorporated into the award as if they were attached or repeated seriatim.
15.To ignore these documents is an error.”
The detailed submissions then sought to be presented to demonstrate alleged manifest error are, in substance, dependent on having recourse to certain of the documentation adverted to by Perry J, particularly the building contract.
It seems to me that this application raises an important legal issue likely to be of recurrent importance. It is by no means free from doubt. The issue is as to the extent to which the reasoning in Gold Coast and The General Valdes may be resorted to in relation to a purported appeal pursuant to s 38.
I would favour the making of an order, pursuant to SCR 94.03(c)(ii), that the application for leave be listed for definitive oral argument on notice to the other party, so that a fully reasoned decision can be arrived at in light of that argument.
BLEBY J I agree.
GRAY J I agree.

[2001] SASC 245

18 July 2001