Rapidwall Holdings Partnership v Rapid Engineering Australia Pty Ltd - [2005] SASC 253

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
RAPIDWALL HOLDINGS PARTNERSHIP v RAPID ENGINEERING AUSTRALIA PTY LTD
Reasons of Judge Withers a Master of the Supreme Court
8 July 2005
ARBITRATION
Termination of arbitration - Commercial Arbitration Act s53(2).

RAPIDWALL HOLDINGS PARTNERSHIP v RAPID ENGINEERING AUSTRALIA PTY LTD
[2005] SASC 253

JUDGE WITHERS. The plaintiff has applied to the Court relevantly for the following orders:
1.…
2.That pursuant to Rule 46A.12, the plaintiff have leave to amend the Statement of Claim so as to incorporate facts giving rise to causes of action which have arisen after the instigation of this action as set out in the Amended Statement of Claim annexed to the Affidavit of Benjamin Swithin Farmer sworn on the 16th day of December 2004 and filed in these proceedings on that date.
3.That pursuant to Section 53(2) of the Commercial Arbitration Act, the arbitration currently before Mr Ian Nosworthy of Nosworthy Partners between Rapid Building Systems Pty Ltd as Claimant and Rapidwall Holdings Partnership as Respondent, be terminated and that the matter referred to Arbitration be removed into this Court.
The application is supported by an affidavit of a solicitor for the plaintiff, Benjamin Swithin Farmer, filed on 22 March 2005 and an affidavit of William John Wallace sworn on that date. No affidavits in response to this particular application were filed. Both parties filed written submissions. Mr Riggall appeared for both the defendant and Rapid Building Systems Pty Limited, a party to the arbitration. The application to terminate the arbitration was argued first. The decision on that application will impact on the application to amend. I will hereafter refer to the plaintiff partnership as “Holdings”, to the defendant as “Engineering” and to Rapid Building Systems as “Buildings”.
This claim was initiated by Holdings by summons on 30 April 2003. In that summons Holdings asserted that it received a written offer from Engineering on 1 October 2002 to supply to it certain manufacturing plant on certain conditions. Holdings asserts that it accepted that offer on 1 October 2002.
In support of Holdings’ position was an affidavit of William John Wallace sworn on 26 March 2003 and Leon Peter McEvoy, a solicitor for Holdings, both filed on 30 April 2003. The affidavits had various exhibits attached. In response an affidavit of Petrus Johannes Wilhelmus Zwaans was filed on the part of Engineering in which affidavit Mr Zwaans described himself as the defendant’s operations manager and the person authorised to swear the affidavit on the part of the defendant. Several further affidavits were filed on each side but the major affidavits were those already described.
In the initial claim Holdings sought various declarations that Engineering was obliged to deliver the plant to it and not to otherwise dispose of it. Those initial demands were resolved by undertakings given in May 2003 extending to October 2003. There were then various negotiations reported until November 2004 when the plaintiff intimated it wished to proceed and would seek to file an amended statement of claim.
The contract between Holdings and Engineering was a separate and distinct agreement but part of a batch of agreements between Holdings and companies with which Engineering was associated which were described as the Rapid Group of Companies. It is important to note that pursuant to those agreements Holdings acquired from the Rapid Group the existing factory to produce the Rapidwall product and became the sole manufacturer of that product in Australia at that time.
In these proceedings Holdings now asserts that it has built a factory at a cost of some $5 million to house the new manufacturing plant to be supplied by Engineering and that it has made payments of instalments of the purchase price to Engineering for that plant totalling $950,000 but that the plant has not been delivered.
Following completion in late August 2003 of factory premises built by Holdings to house the anticipated equipment some part of the equipment was delivered and installed in October 2003. However, Holdings complained that it was not of merchantable quality. Engineering denied this. There were then negotiations in November and December 2003 in relation to a possible sale by Holdings of the intended equipment to a third party which may have resulted in this matter being resolved or significantly affected. That did not come to fruition. Holdings demanded delivery of the equipment by letter from its solicitor of 12 December 2003 but noted it considered the same defective and that it would undertake necessary remedial work. On the terms for delivery advanced by Holdings, Engineering did not deliver the equipment. Holdings asserts that in October 2004 it accepted the alleged repudiation by Engineering of the Sale and Supply Agreement which repudiation was evidenced by its non-delivery of the equipment.
In the meantime in another action in this Court (No 1146 of 2004) Rapid Building Systems Pty Ltd (“Buildings”), which was the owner of the intellectual property associated with the product Rapidwall and part of the Rapid Group of Companies took action against Holdings seeking an injunction to restrain it from acting in alleged breach of certain conditions in a Licence Agreement dated 2 October 2002 between Buildings as licensor and Holdings as licensee and to stop it from selling or otherwise distributing Rapidwall building products in the eastern states of Australia. That matter came before Anderson J, who on 5 October 2004 refused the injunction on the basis that damages would be an adequate remedy for Buildings if it succeeded and if a proper accounting was done. He ordered that Holdings “provide to the plaintiffs [Rapid Building Systems] on a regular fortnightly basis records of all sales made outside of South Australia until such time as the arbitration is finally determined”. It was an important part of his Honour’s decision that the dispute between Buildings and Holdings in that matter had been referred to an arbitration provided for by the Licence Agreement. He noted the hearing of the arbitration should be expeditious.
It is that arbitration which Holdings the applicant in these proceedings now seeks to have terminated pursuant to Section 53(2) of the Commercial Arbitration Act. That arbitration proceeded to a mediation conference that was unsuccessful. Each of the parties (Holdings and Buildings) has filed respectively points of claim, points of defence and counterclaim and points of reply and defence to counterclaim. Affidavits explaining the background to the dispute have been filed with the arbitrator. Since the mediation failed, the presently appointed arbitrator who presided over that mediation has expressed the view that it would be inappropriate for him to hear the arbitration. It appears that the arbitration is now at a stage where to proceed it will be necessary for a further appropriately qualified person to be appointed and to give directions as to the manner in which the arbitration is to continue and then to hear evidence and determine the dispute.
However, Holdings now seeks orders terminating that arbitration and, in a separate application filed on 16 December 2004, leave to join to this action further parties, namely Mr Zwaans and Buildings “so as to avoid the multiplicity of proceedings, increased costs and the real possibility of inconsistent findings between these Court proceedings and the arbitration” – see affidavit of Mr Wallace filed 23 March 2005, para 15. The application to join further parties was supported by a brief affidavit of Benjamin Swithin Farmer which exhibited a proposed statement of claim but no further material in support was provided. The proposed statement of claim alleged against the suggested three defendants raises issues of a breach by the defendants of Section 52 of the Trade Practices Act and Section 84 of the Fair Trading Act and includes a claim for damages against all three defendants for both wrongful conversion and the tort of conspiracy.
Section 53(2) of the Commercial Arbitration Act 1986 provides as follows:
53(2)If—
(a)     a party to an arbitration agreement commences arbitration proceedings;
(b)     an application for removal of the proceedings into the Court is made by another party to the arbitration agreement;
(c)     the application is made –
(i)before the arbitrator begins taking evidence in the proceedings;
or
(ii)by leave of the Court – at some later stage in the proceedings;
(d)     the Court is satisfied that there is a sufficient reason why the subject matter of the proceedings should be dealt with by the Court rather than by arbitration,
the Court may make orders terminating the arbitration proceedings and removing the matter into the Court.
I am told by counsel for Holdings that this particular provision is not replicated in similar arbitration legislation in Australia. However, the section does no more than provide a statutory authority for the Court to make orders terminating an arbitration and removing the subject matter of the arbitration into Court where “there is a sufficient reason” so to do. The converse is the situation provided for in Section 53(1) of the Act where the Court may stay proceedings if it is satisfied that there is “no sufficient reason” why the matter should not be referred to arbitration and that the applicant remains ready and willing to do all things necessary for the proper conduct of the arbitration.
The general approach of the Court is that parties to an arbitration agreement should be held to their bargain, see Bristol Corporation v John Aird & Co [1913] AC 241 at 258. I note the comments of Rogers J in Qantas Airways Ltd v Dillingham Corporation and Others (1985) 4 NSWLR 113 where he said:
The Court should be astute to ensure that, where parties have agreed to submit their disputes to arbitration, they should be held to their bargain even if this may involve additional cost and expense…
In Savcor Pty Ltd v Solomon Corrosion Control Services Pty Ltd and Ors [2001] VSC 428, Byrne J said:
The administration of justice, which cares for arbitration as it does for litigation, as well as the interests of the parties, dictate that there should be finality to disputation and that parties who solemnly commit themselves and others to a course of conduct in the resolution of such disputation should be held to their commitment.
Suffice it to say that the general authorities support the proposition that parties who incorporate an arbitration clause into an agreement will be expected to be bound by that clause and to utilise the agreed process.
In this matter there is no arbitration clause in the Sale and Supply Agreement between Holdings and Engineering. Rather, the arbitration clause which has been invoked by Buildings is part of the licensing agreement between that company and Holdings. That Licence Agreement was a distinct and separate part of the group of agreements recording business transactions between Holdings, Engineering and Buildings and the Rapid Group. None of the other agreements in this suite of agreements includes an arbitration clause.
The arbitration clause upon which Buildings relied in referring the matter to arbitration is set out in the Licence Agreement, which is Exhibit WJW5 to the affidavit of Wallace sworn on 26 March 2003. Clause 33 of that Licence Agreement provides as follows:
33.In relation to Arbitration:
33.1.if during the term of this Agreement or at any time thereafter any claim or dispute will arise between the parties as to their respective rights or obligations under this Agreement such matter will be referred for determination to one or more arbitrators to be appointed by mutual agreement between the parties. The arbitrators will receive written and verbal submissions from the parties within the time appointed by the arbitrators and the arbitrators will give reasonable consideration to such submissions before making a determination. The arbitrators will determine the matter in dispute for reasons given in writing and will despatch a copy thereof to each party. Any determination made by the arbitrators pursuant to this clause 33 will be final and binding on the parties and neither of them will be entitled to commence or maintain any action against the other upon any such claim or dispute until such matter will have been referred to or determined as aforesaid. The costs and expenses of the arbitrators will be borne equally between the parties;
33.2.in default of agreement between the parties as to the appointment of arbitrators such claim or dispute will be submitted for adjudication to the Australian Commercial Disputes Centre Sydney whose determination will be final and binding; and
33.3.the provisions of this clause 33 will apply only to the extent permitted and allowed by the laws of the State. If this clause is adjudicated as invalid void or unenforceable by any Court of competent authority then this clause 33 will be severed and deleted from this Agreement without prejudicing or affecting the validity and enforceability of the remainder of this Agreement.
No party suggested that the arbitration clause was in any way invalid. In this jurisdiction Clause 33 of the Licence Agreement must be subject to the provisions of Section 53(2) of the Commercial Arbitration Act. The Court has the power to terminate an arbitration pursuant to Section 53(2) if it is satisfied that the requisite circumstances exist.
In the matter of Santos Ltd and Ors v Delphi Petroleum Pty Ltd [1999] SASC 485, where the Full Court considered whether or not a stay of proceedings in this Court should be granted by reason of arbitration proceedings, in delivering the judgment of the Court Wicks J at para 111 said:
A stay may be refused where part of the relief claimed is beyond the scope of the arbitrator’s jurisdiction: Jacobs’ Commercial Arbitration Law and Practice, para 50.690. Where only some of the matters before the court are covered by an arbitration agreement, these may be the subject of a stay, leaving the balance of the matters to proceed in court: Halsbury’s Laws of Australia,Volume 1, para 25-185 and Standard Insurance Co Ltd v Scandrett (1923) 23 SR (NSW) 254.
The operative words of s 53 of the Arbitration Act 1986 are that the court may make an order staying the proceedings. The word “may” imports a discretion.
Also, it is a condition to the granting of a stay that the court must be satisfied “that there is no sufficient reason why the matter should not be referred to an arbitration in accordance with the agreement”. Once a valid arbitration agreement has been found to exist, the onus shifts to the party which is the plaintiff in the litigation to satisfy the court that there is no sufficient reason why the stay should not be granted.
In that matter the Court was considering an application for a stay pursuant to Section 53(1) of the Commercial Arbitration Act 1986. In this matter the Court is considering an application not to stay the Court proceedings but rather to terminate existing arbitral proceedings and to remove them into Court. However, the reasoning and approach is in my respectful view analogous. Part only of an arbitration may be terminated and removed into Court if that is appropriate.
In the Santos Ltd case (supra) the Court found that almost the whole of the defendant’s claim was outside the scope of the arbitration agreement with probably only several discreet matters falling within it. The Court decided that at best those matters were ancillary to the principal causes of action and should be dealt with as part of the principal action. The Full Court upheld the decision of the Judge at first instance who had refused to strike out the statement of claim and who had refused to grant a stay.
In considering whether a stay of proceedings should be granted to enable an arbitration to continue in the matter of Savcor v State of New South Wales [2001] NSWSC 596, Barrett J considered the factors relevant to the exercise of the discretion in paragraphs 41 to 49 of that judgment which may be summarised as follows:
(a)Parties who enter into a bargain for a dispute resolution procedure should be kept to that bargain unless good cause for departing from it can be shown.
(b)If holding parties to their bargain results in a duplication of effort and increased costs this is a factor to be considered but is not of itself a sufficient basis for a stay.
(c)The fact that alternative dispute resolution may in some circumstance give rise to a multiplicity of proceedings with a risk of inconsistent concurrent findings can be a powerful factor in decisions by courts not to compel adherence to the alternative procedure.
In the matter of Timic v Hammock [2001] FCA 74, Sundberg J in considering an application for a stay of proceedings where a dispute had been referred to an arbitration said:
When an applicant takes proceedings in the forum in breach of an agreement to refer disputes to arbitration, the court’s discretion to grant a stay is exercised in favour of the grant unless strong cause for not doing so is shown.
Further, in the matter of Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 in the New South Wales Court of Appeal, Gleeson CJ said:
When the parties to a commercial contract agree, at the time of making the contract, and before any disputes have yet arisen, to refer to arbitration any dispute or difference arising out of the agreement, their agreement should not be construed narrowly. They are unlikely to have intended that different disputes should be resolved before different tribunals, or that the appropriate tribunal should be determined by fine shades of difference in the legal character of individual issues, or by the ingenuity of lawyers in developing points of argument.
In arguing the matter before me the parties first dealt with the issue of the termination or otherwise of the arbitration. They then argued the issue as to joinder of the proposed parties, namely Mr Zwaans and Rapid Building Systems and the proposed pleadings and their appropriateness or otherwise. The latter two matters must necessarily be affected by the outcome on the first issue. I therefore intend to consider the termination of the arbitration issue first.
The justification put forward by Holdings for the Court to intervene under Section 53(2) was as follows:
(a)That the relationship between the parties involved in this action and in the arbitration was such that the Court should hear all of the evidence to avoid there being two separate hearings on the disputes, to avoid unnecessary costs and to avoid the possibility of inconsistent findings.
(b)That the matter under arbitration flowed from an agreement that was one part of a group of agreements all entered into as one substantial transaction and it is appropriate that the Court should be seized of the whole of the dispute between common or related parties.
(c)That part of the Licence Agreement required Rapid Building Systems to procure a sale to the plaintiff of necessary plant and to use its best endeavours to ensure that such plant was available and the plaintiff relied on that obligation in deciding to enter into a sale and supply agreement with the defendant.
(d)That the defendant had not delivered the equipment despite payment by the plaintiff of a substantial sum of money.
(e)That the plaintiff’s defence to the claim subject to arbitration that it had not performed its obligations under the Licence Agreement appropriately was to a significant degree based on the non-delivery of the new plant and the alleged breach by Rapid Building Systems of its obligations to procure and use best endeavours in relation to that plant and delivery.
(f)That the plaintiff had incurred substantial costs in building a new factory and had lost substantial profit which it had done relying on the representations of Rapid Building Systems contained in the Licence Agreement.
(g)That the evidence of the same individuals will be necessary in both the arbitration and in this action.
(h)That both proceedings require a determination of issues about statements and representations prior to the agreements being entered into and in relation to the conduct of the parties after agreements were entered into.

Engineering and Buildings submitted that the plaintiff had not satisfied the requirements of Section 53(2)(d) nor the requirements of the general law. They asserted that the general rule that the parties should be held to their bargain to arbitrate their disputes “should only be departed from if there is good cause” (see Abigroup Contractors Pty Ltd v Transfield Pty [1998] VSC 103) is analogous to the requirement of Section 53(2)(d) and that “sufficient reason” and “good cause” mean the same. Engineering and Buildings asserted that the principal matters in the reference on the arbitration were not matters that were directly relevant to the issues in the proceedings in this Court nor was there any significant overlap. It is more difficult to make that assertion in respect of the proposed expanded proceedings.
A perusal of the points of claim, points of defence and counterclaim and points of reply and defence to counterclaim filed in the arbitration does not support much direct interaction between the issues in the arbitration and those in these proceedings save and except in relation to the counterclaim by Holdings and the allegation that Buildings was in breach of its obligations to Holdings under Clauses 6.1 and 6.3 of the Licence Agreement. Those clauses respectively read:
6.In relation to the Plant:
6.1    the Licensor hereby agrees to procure the sale to the Licensee of all necessary Plant and parts thereof the specifications for which will be determined by the Licensee after consultation with the Licensor and the Licensee agrees to purchase the same from Licensor or its nominated supplier;
6.2    …
6.3    the Licensor will use its best endeavours to ensure that Plant is available for delivery ex factory within two (2) calendar months of the determination of the specifications of the Plant as hereinbefore provided; …
In the points of claim filed in the arbitration by Buildings two breaches of the Licence Agreement are alleged against Holdings, the plaintiff in these proceedings. Those breaches are:
(1)That in March 2003 Holdings did not supply product to Queensland and delayed in supplying product for India causing harm to Buildings.
(2)That in breach of the Licence Agreement Holdings continued to supply product to the eastern states of Australia from February 2004 and thereafter.
The first alleged breach occurred at a time that was before Holdings’ new factory was available to receive equipment from Engineering. The second alleged breach complains about an oversupply of product in areas alleged to be outside the ambit of the licence. Holdings asserts that pursuant to the Licence Agreement and representations made to it it is entitled to continue to supply at least some of the eastern states of Australia.
In its points of defence Holdings raised a number of disputes about the construction of the Licence Agreement and asserted that it at all times acted in accordance with that agreement. In Clause 16 of its Points of Defence Holdings asserted that Buildings failed to comply with Clauses 6.1 and 6.3 of the Licence Agreement. Holdings then pleaded a counterclaim against Buildings which contained a number of elements:
(a)That Buildings unreasonably withheld consent to supply product to New South Wales.
(b)That Buildings through Zwaans asserted that Holdings would have the exclusive right to produce and supply product for two and a half to three years in Australia from the time of the commissioning of its new factory.
(c)That in reliance on those representations Holdings entered into the Sale and Supply Agreement with Engineering the subject of these proceedings.
(d)That Buildings was in breach of its obligations under Clauses 6.1 and 6.3 causing Holdings loss.
(e)That Buildings was in breach of a guaranteed supply agreement.
(f)That Buildings misrepresented the cutting cost to Holdings causing Holdings damage.
(g)That Buildings failed to provide a hardcopy and web base technical manual causing Holdings damage.
(h)That Buildings failed to establish a technical support office causing Holdings damage.
(i)That Buildings failed to give reasonable assistance to Holdings to perform its obligations under the agreement causing damage.
Holdings alleges that as a consequence of the various breaches and representations before described, it built a factory and has suffered damage and loss for which it should be compensated.
In Clauses 16.2 and 16.3 of the points of defence in the arbitration proceedings Holdings relied on Clauses 6.1 and 6.3 of the Licence Agreement and alleged that Buildings was in breach of its obligations under those clauses. It alleged that the offer to supply plant by Engineering, the defendant in these proceedings, was linked to Buildings by reason of Buildings’ obligations under Clause 6 of the Licence Agreement. Holdings asserts that it suffered loss and damage by the non-supply.
In its reply to the defence and its defence to the counterclaim Buildings asserts that all of the allegations relating to a breach of Clauses 6.1 and 6.3 by it and the agreement between Engineering and Holdings were irrelevant to the reference and vexatious and, in any event, that it had fully discharged its obligations under Clauses 6.1 and 6.3 of the Licence Agreement – see paragraphs 18 and 21.
As I understand it in submissions before me counsel for Buildings asserted that any dispute arising out of an alleged breach of Clauses 6.1 or 6.3 of the Licence Agreement was a matter that fell within the ambit of the arbitration and for that reason not a matter where a separate action should be allowed to proceed against Buildings in this Court. However, if there were alleged breaches that the Court thought were best dealt with in these proceedings then that should not affect the balance of the arbitration.
While a claim for damages arising out of an alleged breach of Clauses 6.1 or 6.3 by Buildings may well fall within the ambit of the arbitration, Buildings asserts that such a claim is “irrelevant and vexatious” to the arbitration. The content of the Defence to Counterclaim filed by Buildings where it describes the attempt by Holdings to manifest an alleged breach of Clauses 6.1 and 6.3 by it as “irrelevant and vexatious” to the reference and the attempt by Holdings to rely on an alleged breach by Engineering of the supply agreement as “irrelevant and vexatious to the reference” are significant pleas. If that alleged breach is “irrelevant and vexatious” to the principal issues in the arbitration then it can hardly be so characterised in respect of these proceedings.
Mr Zwaans on the affidavits is the spokesperson for the Rapid Group of Companies and is described as the manager of Engineering and the managing director of Buildings. Holdings asserts that Zwaans made false representations upon which Holdings relied in deciding to enter into the agreement with Engineering and that he (Zwaans) should be joined as a party to these proceedings along with Buildings. Those alleged representations included both the timely supply of plant to Holdings of “Rolls-Royce” quality and the right of Holdings to a period of licensed product supply into the eastern States of Australia.
Were it not for the allegations of misleading and deceptive conduct under Section 52 of the Trade Practices Act and Section 84 of the Fair Trading Act and the allegation of an entitlement to damages for harm caused by wrongful conversion and the tort of conspiracy involving the proposed three defendants, the issues in this matter could be conveniently dealt with by ordering that the alleged breach by Buildings of Clauses 6.1 and 6.3 of the Licence Agreement be terminated from the arbitration and removed into this Court but that the arbitration otherwise proceed.
However, Holdings alleges that the representations upon which it relied in entering into the agreements, which included the Licence Agreement with Buildings and the Sale and Supply Agreement with Engineering, went beyond simply representations as to the quality and timely delivery of the manufacturing plant. Rather those representations upon which it says it relied in entering into those agreements went to the alleged right of Holdings to produce and supply Rapidwall product for two and a half to three years exclusively from the time when its new plant was installed – see allegation 6.1 in the proposed statement of claim (Exhibit BSF1 to the affidavit of Mr Farmer of 16 December 2004). Further, in paragraphs 38 to 43 of that document it is alleged that Zwaans in breach of contractual obligations to Holdings agreed with others that Buildings would install a new Rapidwall plant in Victoria and provide a licence to another entity, not the plaintiff, to manufacture and distribute the Rapidwall product within Australia. The plaintiff asserts that the conduct of Zwaans, Engineering and Buildings was misleading or deceptive or likely to mislead or deceive contrary to Section 52 of the Trade Practices Act and Section 54 of the Fair Trading Act and that representations had been made to Holdings on which it relied which were inconsistent with the proposed development of the Rapidwall plant in Victoria and the granting of a national licence to another body at that time.
Holdings’ proposed statement of claim asserts that by reason of the conduct of the defendants the plaintiff suffered loss and damage in continuing to pay instalments for the purchase price of the proposed plant and in proceeding with the construction of the factory to receive the new plant and to produce Rapidwall. In the proposed statement of claim in paragraph 49, the plaintiff seeks:
49 .1against the first defendant [Engineering] $950,000.00 as money received by the first defendant to the plaintiff’s use;
49.2damages against the first defendant for breach of the supply agreement in the amount of $5 million being the cost of design and construction of the new factory and ancillary equipment;
49.3damages against the third defendant [Buildings] for breach of the licence agreement in the amount of $950,000.00 paid to the first defendant and the amount of $5 million paid for the new factory and ancillary equipment;
49.4damages against the first defendant, the second defendant [Zwaans] and the third defendant pursuant to section 82 of the Trade Practices Act and section 84 of the Fair Trading Act in the amount of $950,000.00 and the amount of $5 million;
49.5damages for wrongful conversion against each of the defendants;
49.6damages for the tort of conspiracy against each of the defendants;
The plaintiff also seeks interest and costs.
The alleged representations go to the whole of the agreements between the plaintiff group and the Rapid Group of Companies and result in an overlapping of issues presently subject to the arbitration and the proposed proceedings.
Having regard to the principles to which I have earlier made reference and, in particular, to the factors relevant to the exercise of the discretion as discussed by Barrett J in the Savcor case (supra), it is my view that this is a matter where on balance the continuation of the arbitration proceedings together with the continuation of a separate action against Engineering will produce a multiplicity of proceedings with a risk of inconsistent concurrent findings on similar issues. Further that factor outweighs the desirability of the parties in this case being kept to their bargain for an arbitration. To incorporate the matters into the one proceeding will also result in the avoiding of a duplication of effort and a duplication of costs.
In all the circumstances there will be an order pursuant to Section 53(2) of the Commercial Arbitration Act terminating the arbitration and removing this matter into these proceedings.
There will be a further order giving leave to the plaintiff to join as defendants to the proceedings Petrus Johannes Zwaans and Rapid Building Systems Pty Ltd.
It is inappropriate for the Court to rule on the acceptability or otherwise of proposed pleadings that have not been filed. The plaintiff has had the benefit of argument on the content. There will be leave to the plaintiff to file an amended statement of claim within 21 days of this date. The defendant is to file any defence and counterclaim within 28 days thereafter.
I will hear the parties as to costs and any consequential orders. I direct the attention of the parties to Rule 50 of the Supreme Court Rules which may well be appropriate to apply in this matter. I direct that the plaintiff prepare Minutes of Order reflecting these reasons.