Santos Ltd v Crusader Resources N L

[1991] HCATrans 255

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide Nos Al7 and A22 of 1991

B e t w e e n -

SANTOS LIMITED

Applicant

and

CRUSADER RESOURCES N.L.

Respondent

Applications for special leave

to appeal

BRENNAN J
DEANE J

TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON THURSDAY, 5 SEPTEMBER 1991, AT 12.13 PM

Copyright in the High Court of Australia

Santos 1 5/9/91

SIR M.H. BYERS, QC:  Your Honours, I may sound repetitive

but in this, as in the preceding matter, there are

two cases which really raise identical questions of

principle. There are two applications for leave

from different decisions.

BRENNAN J:	They can be heard together?
SIR MAURICE:	Yes, if the Court pleases.

BRENNAN J: This is No Al7 and A22?

SIR MAURICE:	Yes, Your Honour.
BRENNAN J: Yes.	I presume you appear in both matters for

the applicant?

SIR MAURICE:  Yes, Your Honour. I appear with my learned

friends, MR F.M. DOUGLAS, QC, MR R.L.LAWSON, QC and

MR D. GASZNER. (instructed by Corrs Chambers

Westgarth)

MR D.F. JACKSON, QC:  Your Honours, I appear with my learned

friends, MR T.A. GRAY, QC and MR C.N.H. BAGOT for

the respondent in each matter.	(instructed by
Piper Alderman).	I do not object to them being

heard together, notwithstanding the fact they raise

quite disparate issues.

BRENNAN J: Yes.

SIR MAURICE:  Your Honours, each application is concerned

with the meaning and application of section 53 of the Commercial Arbitration Act of South Australia

which is part of uniform legislation amongst the

States but in South Australia its predecessor had

an unusual sort of history which I will mention in

a moment.

So what I had in mind, Your Honours, that I

will just indicate to Your Honours the section and
the context to the Act to indicate two things.	The
second application is an application from the

decision of the trial judge refusing a stay, so we

have to show that is a decision of the supreme

court, which I propose to do. The first

application is from a decision of the Full Court of

the Supreme Court in an appeal, the first step of

which was the refusal of a stay. And we say in

each question the refusal of the stay arises and

affects the issue involved.

TOOHEY J:  I am sorry, Sir Maurice, I do not understand how

the question of a stay bears upon Al7?

SIR MAURICE: Well, Your Honour, it bears upon it for this

reason: the first joust between the parties in A17

Santos 2/ 3 SIR M. BYERS, QC 5/9/91

was an application for a stay. The reason was that

the parties were parties to an agreement, which I

will have to take Your Honours to in a moment, one

clause of which arises in each action. It is an

agreement, the parties being the people who are

extracting natural gas from the Cooper Basin and

selling it to the South Australian Pipeline

Authority and the Australian Gas Light Company.

In that agreement, the initial quanta of the

interests of the parties is stipulated in terms of

the agreement: so much percentage and the

percentage is stated. The clause in question is a

clause which provides for a variation in those

quanta. It affects a large number of other things.

It affects expenditure, but it affects entitlement

to the amount of gas and so forth.

Now, the resolution of those questions in the

one clause takes two steps, each of which ends in

arbitration in default of agreement. The first one

is that they agree to what is called the "input

data". The second: if they cannot agree the input

data, arbitration. Now, they have not been able to

get to arbitration yet although Santos is eager to

do so.

The second arm of the agreement is that once you have the input data agreed, you then apply

certain provisions in the agreement which relate to

the what is called "Go-It-Alone" schedules and

other material so as to produce a final figure

which is the adjustment in respect to rights which

are called block rights and unit rights.	Now, in
the first case it is the last arm of the

arbitration clause that was involved but that was

involved as a matter of interpretation after the

stay. So, the intervention of the supreme court

meant that the parties were deprived of their

result in a figure and there was supplanted for it	arbitration which alone, given disagreement, could
an order for specific performance of the very terms of the arbitration agreement in a particular way.

So, the result of it - it bears upon it

because we say, Your Honours, the agreement itself

requires arbitration. That is the only way you can

arrive at the varied rights, and the supreme court

in each case has refused arbitration.

TOOHEY J: But is the earlier decision of the Full Court,

that is in Al7, upholding for different reasons the

decision of the primary judge that there should not

be a stay? Is that the subject of any application

to this Court?

Santos	SIR M. BYERS, QC	5/9/91
SIR MAURICE:	No.	There was no application for leave to

appeal from the refusal of the stay in the first

case but we say that is not necessary and there is

authority in this Court which says that, so we

submit. What I have endeavoured to explain to

Your Honours is the significance on the final

result in the first case of the refusal to stay,

and the significance was that instead of an award which was protected from challenge by the Act for error upon its face on fact or law, they received an order of the supreme court for specific

performance directed to the mode in which the

arbitration clause should be given effect to.

The second case is a case in which the very process is called in question. So that the second

case poses more directly the question but the first

case poses the same question. I know,

Your Honours, that sounds complicated but that is

only because I am endeavouring to - - -

TOOHEY J: Well, no, it does not sound complicated. It just

does not sound right.

SIR MAURICE:  If Your Honour will give me a little time I

will endeavour to sustain the statement, but can I

first of all go to the Act which we say is involved

and which we say the interpretation of which is

involved and which is part of a general uniform

State law in all the States following an agreement by the Committee of Attorneys-General to have

uniformness of the statutes. There were these
uniform statutes put in place in 1984 and 1986 and

eventually, in Queensland, in 1990.

We have a book of statutes and authorities -

could I hand those up to Your Honours - in which

there is a copy of the Arbitration Act. Now, I

just want to go to that first, if the Court

pleases. Your Honours, can I just say this. Where

the interlocutory relief affects the final order,

you do not need to appeal the interlocutory relief.

I suppose that is really what I am saying in answer

to Your Honour Mr Justice Toohey, and I will refer

Your Honours to authority for that.

Now, could I take Your Honours to section 53

of this Commercial Arbitration Act, 1986? It is in

the first - under heading 1, Your Honours, and

section 53 is at page 617 of the volume of the

statutes. It says:

If -

a party to an arbitration agreement -

that is the case here -

Santos SIR M. BYERS, QC 5/9/91

commences proceedings in a court against

another party to the agreement -

that happened in both cases -

in respect of a matter agreed to be referred

to arbitration -

we say that happened in both cases -

an application for a stay of the proceedings

is made by another party to the arbitration

agreement -

that happened -

the application is made -

I do not need to worry Your Honours about (i) or

(ii)    -at a later stage. Then:

(d) the court is satisfied -

(i) that there is no sufficient reason why

the matter should not be referred to
arbitration in accordance with the agreement;

and

(ii) the applicant -

and I do not need to worry Your Honours about

that -

the court may make an order staying the

proceedings and may give such directions with

respect to the future conduct of the

arbitration as it thinks fit.

Now, in each case it refused to stay because

the court said there was no sufficient reason

within the meaning of (d)(i).	The reason in each
case why that was asserted was that there were

questions of interpretation of the agreement to

refer to arbitration involved although those very

questions could be resolved by the arbitrator.	So,
that was why the stay was refused.	So that the

court was saying, certainly in the first and also

in the second, "We will refuse a stay although the

question of law that is involved is a question that

the arbitrator could decide."

BRENNAN J:  Was there a question also as to whether relief

under the Trade Practices Act could be granted by

the arbitrator?

SIR MAURICE: There was that question. Well, that was an

issue raised but it never affected the final

Santos 6 SIR M. BYERS, QC 5/9/91

determination of the matter in either - but that

was only raised in the first proceedings. But

there was no question, when one goes to the court's

orders, about the Trade Practices Act. Everything

depended upon - and I will take Your Honours to the

pleadings - the view that was asserted in the suit

by the plaintiff, Crusader. They were saying that,

"This is the true interpretation of the agreement

and what you are doing is not sanctioned by the

agreement." That is what they were saying.	They
were certainly saying that in the second case.

I can go straight to the proceedings now but I

just want to say a word or two about the statute.

Now, if Your Honours go to section 38 - and I am

only directing this to the question that the judge,

when refusing a stay in the second proceeding, was

exercising the jurisdiction of the supreme court. Clearly section 53 requires that but that says so

and section 38 makes it even more apparent.

Section 38(1) says:

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.

And then, under that:

an appeal shall lie to the Supreme Court on

any question of law arising out of an award.

Can I take Your Honours now to subsection (6):

Unless the Supreme Court gives leave, an

appeal shall not lie to the Full Court of the

Supreme Court from a decision of the Supreme

Court to grant or refuse leave -

so, again, when they are using the words "Supreme

Court", they refer to - assuming an exercise by the

judge. The same in subsection (7):

An appeal shall not lie to the Full Court of

the Supreme Court from a decision of the

Supreme Court on an appeal under

subsection (2) unless -

(a) the Supreme Court or the Full Court of the

Supreme Court grants leave;

and

(b) it is certified by the Supreme Court that

the question of law to which its decision

relates either is one of general public

Santos SIR M. BYERS, QC 5/9/91

importance or is one which for some other
special reason should be considered by the

Full Court of the Supreme Court.

So, we say that section reinforces the notion that

a judge, when he is referred to as "the court", of

course, is acting as the court and henceforth is the court for the purposes of the section of the Judiciary Act.

Now, the same is true of section 39. If

Your Honours go to section 39(1):

on an application to the Supreme Court .....

with the consent of an arbitrator -

and -

with the consent of all other parties -

they -

have jurisdiction to determine any question of

law -

Then there is a restriction on entertaining that

application under (2), but (4) is the important
section - (3) and (4):

Unless the Supreme Court gives leave, no appeal shall lie to the Full Court of the

Supreme court from a decision of the
Supreme Court to entertain or not to entertain

an application -

and then subsection (4) says:

An appeal shall not lie to the Full Court of

the Supreme Court from a decision of the

Supreme Court on a question of law under

subsection (1) unless -

the Supreme Court or the Full Court of the

Supreme Court grants leave.

Now, again, therefore, Your Honours, it is a notion

that the jurisdiction being exercised is the

jurisdiction of the supreme court.

Now, that is only relevant to the second

application for leave to show that when section 58
refers to the grant of a stay by the supreme court,

it means the court and that reinforces it, we say.

Your Honours, before now coming to the

proceedings and the matter at issue in each case,

can I just refer Your Honours to one idiosyncrasy

Santos SIR M. BYERS, QC 5/9/91

of the South Australian preceding legislation.

Now, I do so for this purpose: none of the judges

in any of the applications for a stay refer to the

fact that the parties had agreed arbitration, that

that was their forum - none of them.

Now, Your Honours, that is perhaps explicable

when one remembers the preceding Act which is the

Arbitration Act, 1891-1974. Could I hand

Your Honours copies? Would Your Honours go to

section 24a(l) which is at 389 of the print. That
says:

Subject to subsection (2) of this section, any provision of an agreement -

(a) requiring differences or disputes arising

out of the agreement, or any other agreement,

to be referred to arbitration -

one goes down to the bottom -

shall be void.

Then subsection (2) accepts certain building,

contracts and the like from that prohibition. So

that it would seem that the statute law of South

Australia, at any rate from 1974, rendered, in an

application for a stay as to which jurisdiction was

conferred by section 3 of this Act, irrelevant the
question that the parties had agreed to

arbitration. So, in that sense, it was totally

different from the laws of all the other States.

BRENNAN J:	When was the relevant agreement made?
SIR MAURICE:	In 1975, Your Honour, but it is the subject of

a special Act which excludes 24a. Your Honour, the

special Act is the Cooper Basin (Ratification) Act

and the section is section 19 and is at page 76 of

the print. So the legislative intention, so far as

arbitration is concerned, certainly prior to the

1986 Act, is, one reads:

Section 24a of the Arbitration Act, 1891-1974,

shall not apply to or in relation to any

submission or agreement to submit to

arbitration under or arising out of -

(a) the Indenture;

(b) the Unit Agreement and any other

agreement -

then -

the P.A.S.A. Future Requirements -

Santos 9 SIR M. BYERS, QC 5/9/91

well, I need not worry Your Honours with that.	But
ttUnit Agreement'': if Your Honours turn over to

page 78, Your Honours will find that defined in the

Act to which approval - which is ratified by the

statute:

ttUnit Agreement'' means the agreement providing

for the rationalisation of field production
gathering and treatment of Unitized Substances

in the form of that submitted -

it is this agreement. So, what they did was, first

of all, to prohibit agreements to submit to

arbitration. They are to be void. So, they

removed from the area of a stay and they excluded

this agreement so that the presence of the

agreement to submit to arbitration would be

essential, as a matter of legislative intention,

prior to the 1986 Act and in that respect this
particular agreement was unique. It was a special

agreement. The indenture that is referred to,

Your Honours, is an agreement between the

government and the parties. I need not worry

Your Honours about that but it is about the Cooper

Basin and the rights to explore for petroleum and

so on. In the course of that they pick up and

exclude 24a in its application to this agreement.

So, Your Honours, what we want to say firstly

is that the decision of the trial judge,

Mr Justice Bollen in application A22 is a decision

of the supreme court. And then we want to say that

it may be that the absence from the observations of

any judge of what is, on any view, the crucial

factor in determining whether or not to grant a

stay - the absence of notice of that fact - may,

perhaps, be explained - it cannot, of course, be

justified - by the history of this legislation.	I
should just add, Your Honours, to complete that,
that section 3 of the 1986 Act repealed the Arbitration Act, 1891-1974.

Now, Your Honours, it might be convenient if I

were to take Your Honours to the agreement in

question which is slightly tedious but I am afraid,

Your Honours, I must ask Your Honours to be patient

with me. Your Honours will find, in volume 2 of

the papers in A17 of 1991, at page 318 there

appears clause 4.0S(b). Now, can I just indicate

to Your Honours how it is - perhaps I should just

say something about this first. If Your Honours go

down to 4.0S(b) Your Honours will see it begins:

For the purpose of any review and adjustment

to Block Participations and Unit

Participations pursuant to Clause 4.02(a)

Santos 10 SIR M. BYERS, QC 5/9/91

hereof or Clause 4.02(b) hereof the input

data -

now, can I stop there. Your Honours, the agreement

defined - and what I am handing this up for is merely to show that the agreement fixed by its

terms the initial quantum of the block and unit

participations. Could I hand up two sets of
photocopies of parts of the agreement, the first

one of which, Your Honours, is the definition of

"Block Participations". And it -

means the percentages apportioned to a Block

from time to time in respect to expenditures

on Unit Facilities and on Unit Operations and

to the production of all Unitized Substances -

that is oil and gas and the like -

in accordance with this Agreement.

Your Honours may see flagged "Proviso B" with a

little yellow sticker and Your Honours will see

that proviso B, which is at page 12, says that:

Subject to the provisions of Clause 4.02(a)

hereof during the period from 6.00 am South

Australian time of the date of this

Agreement -

1975 -

to 6.00 am South Australian time of the date

referred to in Clause 4.02(b)(i) -

that is 1 January 1983 and thereafter successive

two-yearly intervals -

the Block Participations referred to in

Clause 1. 06. 1 -

et cetera -

shall be as set forth in the Second Schedule

hereto.

Now, Your Honours will see the second schedule and

Your Honours will see the name of the block because

this area has a number of blocks named in mostly

unpronounceable ways and then there is set out the

percentages. Your Honours see "20 per cent" of -

if one takes the first block, which I cannot read -

and then 79 per cent for the next, and so on.	The
point of it is, one has fixed stated quanta.

Then if Your Honours go to "Unit

Participations" at 1.53, it:

Santos 11 SIR M. BYERS, QC 5/9/91

means in respect of a Party the sum of the

percentages obtained by multiplying the
undivided interest of that Party from time to

time in each Block by the relevant Block

Participation applicable to such Block from

time to time.

And then there are various types of unit

participations. I do not want to worry

Your Honours with those. If Your Honours go over

to "Proviso D" which has been flagged, I think,

Your Honours, and Your Honours go to page 37,

Your Honours will see that:

subject to the -

indeed, the language of the previous proviso is

reiterated. It is as set out - this time it is the

third schedule and the third schedule sets out

percentage quanta or amounts against various owners

as to "Gas Unit Participation" and so on, and the

gas is natural gas, of course. And then it goes

on, "Field Operating" and they are various items of

expenditure.

So, one starts off, Your Honours, with an agreement that nominates the amount of the interest

in mathematical terms of each partner. Then it

provides, in 4.0S(b), for a variation. Can I just

take Your Honours to 4.0S(b) which arises in each

action? It says:

For the purpose of any review and adjustment

to Block Participations and Unit

Participations ..... the input data referred to

in Clause A to the definition of Go-It-Alone

Production Schedule -

they are also in the application book, and I will

take Your Honours to those in a moment -

shall be reconsidered -

now, Your Honours may omit the words in brackets,

it is really explanatory -

and re-evaluated in the light of all available

information by Unit Operator -

that is Santos -

in consultation with Unit Technical Committee

and such reconsideration and re-evaluation

shall be submitted to the Parties for their

consideration and approval. Each of the

Parties shall within a period of twenty eight

(28) days following submission of such

Santos 12 SIR M. BYERS, QC 5/9/91

reconsideration and re-evaluation advise Unit

Operator and each of the other Parties in

writing as to whether or not that Party

approves such reconsideration and

re-evaluation and in the event that any Party

does not so approve then such Party shall

provide specific grounds in support thereof.

If any Party does not so approve such

reconsideration and re-evaluation and the

Parties do not unanimously approve any

revision thereto within fourteen (14) days

following -

a further -

twenty eight (28) days then the matter shall

be referred to arbitration pursuant to the

provisions of Article XXIII hereof.

So, article 4.05(b), in terms, of its own force requires the submission to arbitration.

BRENNAN J: Sir Maurice, we might continue this rivetting

inquiry at 2.15.

SIR MAURICE:  I only wish Your Honour were serious.

BRENNAN J: Could you give us a brief identification of the

special leave points that you see them at this

stage?

SIR MAURICE:  Yes. The special leave point is this,

Your Honour, that Their Honours have misapplied or

misapprehended the meaning of the stay provision in

section 53. They have done so in a manner that is,

on its face, crucial in the sense that one starts

off in all leave cases by saying, "Well, the
crucial factor is have the parties agreed

arbitration?" If they have, then you say, "Well,
they have to get it until you displace it." Here,
they just do not consider that. That has been the approach in all the other States. When I say, "all

other States", I should say, in particular, New

South Wales and Victoria

The effect of Their Honours' view is that they

have frustrated the application of the arbitration

clause and the application of the Arbitration Act,

and we say that is a matter of general public

importance because it involves a misinterpretation,
perhaps unique to South Australia and

understandable in view of the unique South

Australian history, of the terms of section 53.

Therefore, if you have uniform legislation, you

have to have uniform interpretation and that is the

point.

Santos 13 SIR M. BYERS, QC 5/9/91

BRENNAN J:  Well, we will adjourn until 2.15.

AT 12.48 PM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 2.24:

BRENNAN J: Yes, Sir Maurice?

SIR MAURICE:  Your Honour the presiding judge, I think,

shortly before lunch raised with me the question of

the Trade Practices Act. Could I refer

Your Honours and could we hand up a decision of the

Court of Appeal of New South Wales where they have
held that the results of the amendments by the
Commonwealth to both the Trade Practices Act and
the cross-vesting legislation empowered the
exercise by an arbitrator of an award in a question
under the Trade Practices Act. The decision is IBM

Australia Ltd v National Distribution Services Ltd,

100 ALR 361.

Your Honours, Mr Justice Handley discusses the

question at page 381 - there are other judgments
but this is, I think, the most concise - where he

refers to the words - as to what was the

subject-matter of the arbitration: "related to this Agreement or the breach

thereof".

Then he refers to two cases and he then goes on

about lines 15 or 16 to say:

I can see no basis for excluding claims

arising under statutes which grant remedies

enforceable in or confer powers on courts of
general jurisdiction; for example, the
Contracts Review Act 1980 (NSWJ, the
Frustrated Contracts Act 1978 (NSW) or the

Insurance Contracts Act 1984 (NSW). Once this

position is reached there is no basis, in my

opinion, for excluding claims arising under

the Trade Practices Act 1974 (Cth). An

arbitrator who is authorised by the submission

to determine controversies or claims under that Act must also be able to exercise the

powers which are conferred by that Act on

courts of general jurisdiction, provided those

powers are appropriate.

Santos 14 SIR M. BYERS, QC 5/9/91

I do not think the next paragraph matters.	Then
the next paragraph is:

The submission in the present case was

expressed to be governed by the laws of New South Wales. Until the commencement of the

Jurisdiction of Courts (Miscellaneous

Amendments) Act 1987 (Cth) and the

Jurisdiction of Courts (Cross-vesting) Act

1987 (Cth) of the same year the Trade

Practices Act conferred exclusive jurisdiction

in Pt V cases on the Federal Court.	It seems
to me that while this state of affairs
continued -

well, you could not get it.

However, when, following the commencement of

the 1986 legislation, the Supreme Court was

given concurrent jurisdiction in cases under

Pt V of the Trade Practices Act, which
includes s 52, the situation changed and
submissions in the present form thereafter did

confer on an arbitrator jurisdiction to

determine controversies and claims arising

under the Act.

And then he refers to the observations - "implied

term" which the -

court is bound to recognise is that ..... the

arbitrator is to have the authority to give

the claimant such relief as would be available

in a court of law having jurisdiction with

respect to the subject matter. Since the

Supreme Court as a court of general

jurisdiction under State law now has

jurisdiction with respect to claims under Pt V

of the Trade Practices Act, it must follow

that the arbitrator has the same powers.

So, the Court of Appeal held that a question

arising under the Trade Practices Act was
susceptible of arbitration, and we would say that
if that decision be correct, the same situation

applies in South Australia, the Act being federal

statutes.

Now, Your Honours, I had take Your Honours to the first half of the arbitration clause.

DEANE J: Sir Maurice, we refused leave to appeal from that

decision, did we not? We did one or the other.

SIR MAURICE:  Your Honour, unfortunately, I cannot assist

Your Honour on that question but if the question

arises in this appeal then it would indicate that

Santos 15 SIR M. BYERS, QC 5/9/91

this application is a case in which special leave

should be granted for that reason. However, that

is all I would wish to say.

Your Honours, the second arm of the

arbitration clause - it is at page 319. It picks

up when the input data has either been agreed or

arbitrated so that you get agreement. That is at

page 319 of volume 2 in A17. It is about line 23.

Then they say:

Immediately following receipt of such

unanimous approval -

that is about the input data -

or of the making of an arbitration award or

decision (as applicable) Unit Operator -

that is Santos -

in consultation with Unit Technical Committee

shall prepare and submit to the Parties a

Go-It-Alone Production Schedule (as such

expression is defined in the Fourth Schedule

hereto) and a review and adjustment of Block

Participations and Unit Participations subject

to and in accordance with the provisions of

the Fourth Schedule hereto. The Block

Participations and Unit Participations so

prepared and submitted to the Parties shall

take effect from the relevant dates -

and omitting the words in brackets. That takes one

down to about line 12 or 13:

and shall be binding upon the Parties for all

purposes of this Agreement unless and until an

arbitration award or decision in respect to

any matter arising therefore is made pursuant

to Article XXIII hereof to the contrary.

So, again, you have submitted the resolution of the

second arm, namely, the block participation.

The Full Court seemed to be erroneously of the

view that the omission of the words "Go-It-Alone

Schedule" from the passage in a long sentence

ending with a reference to "arbitration" - that is

about line 4 down to line 15 - meant that the

Go-It-Alone Schedule was not involved. I do not

want to take Your Honours' time with this but if

one looks to the Fourth Schedule, Your Honours, one

sees - and if Your Honours go to 338 of the

application book Your Honours will see:

Determination of Block Participations

Santos 16 SIR M. BYERS, QC 5/9/91

Block Participations (which shall be

calculated by reference to the Go-It-Alone

Production Schedule and the Go-It-Alone

Economic Report -

they are respectively at page 328 and 321-322, and I do not want to take Your Honours to it. But the

only point of that is that the reference to "Block

Participation" and "Unit Participation" picks up,

of course, the Go-It-Alone Production Schedule

because one has to determine what those

participations are by reference to that schedule.

So, you have a complete closed field of

arbitration and given disagreement, no other way of

varying the contractual rights between the parties.

So, one would assume that on an application for a

stay the exercise of the discretion would be one

which would have regard to the fact that the

parties agreed their new rights to be determined by

arbitration and, in fact, in the event of

disagreement, they could not be determined

otherwise.

Also, Your Honours, the area of the

arbitration covered, in the second arm, any matter

arising from the block participation and unit

participation, and in the first arm, it embraced

every matter arising from the input data. Now, I

have not given Your Honours the exact words because

I am quoting now from memory but what we say is

that it clearly appears from that, as the

Full Court, indeed, itself, held in the first of the two proceedings, that the question of the

congruence of the process with the arbitration

clause fell within the arbitration agreement and

yet they said, "We won't refer it."

Now, I should take Your Honours to that. I do

not need to take Your Honours to the judgment at

His Honour's view that this question was outside first instance because Their Honours said that	the ambit was wrong. So, can I take Your Honours
to volume 1 - that is Al7. If Your Honours go to page 42 to page 43. That is the judgment of
Mr Justice White. Now, about line 14
Mr Justice White says:

His Honour's first reason for dismissing Santos' application to stay the court

proceedings was that s.53 did not begin to

apply to the dispute because nothing in the

so-called notice of arbitration was capable of

attracting s.53 until a valid GIAP Schedule

had been prepared and submitted to the other

joint venturers. He treated the question as

one going to jurisdiction in a way which

Santos 17 SIR M. BYERS, QC 5/9/91

excluded the very operation of the arbitration

clause and the Act. In my opinion, the
threshold question does not go to jurisdiction
in a way which excludes the operation of

clause 23.02 -

that is the arbitration clause -

or s.53 of the Act because an arbitrator can

consider his own jurisdiction. An arbitrator

(when and if appointed) will have concurrent

power to decide factual matters "in connection

with" -

and he is quoting Article XXIII -

or "in relation to" his jurisdiction. (Of

course any ruling by him on this topic could

be challenged and reviewed by the court.)

Well, that is open, perhaps, to doubt.	And then he
goes on:

If any challenge to his jurisdiction is made

at the outset of the arbitration the

arbitrator will not be required to throw up

his hands in horror, as it were, and shrink

away from the arbitration or from making a

decision on his jurisdiction to proceed. His

investigation thereof would be a matter "in

connection with" or "in relation to" one of

the matters mentioned in clause 23.02 para.(a) of the original agreement. See the discussion of the vexed question of the respective roles

of the court -

and then he refers to Mustill and Boyd, and then he

says:

It is clear that one of the matters which an

arbitrator can investigate is the possibility

of his own lack of jurisdiction. For these
reasons I think his Honour was in error in the
first part of his reasons in holding that s.53

of the Act did not apply at all.

So, he says, within the arbitration clause. That

is the first reason.

Then His Honour's reasons for refusing the stay: if Your Honours go to page 50, about

line 11, he says:

Bollen J. was right, in my opinion, in

saying or implying that there is an arguable

case on the threshold question in the stay

application. There is some matter, some

Santos 18 SIR M. BYERS, QC 5/9/91

arguable point, in relation to the factual

questions as to the extent of departure from

the strict terms of the agreement which could

in turn affect the threshold question. These

matters should go to the court -

now, that is his reason, they should go to the

court -

for determination. It is not clear from what

Bollen J. said and from the nature of the

material before him whether he intended to
defer becoming fully seized of the question of
construction until the trial of the issues in
the statement of claim. Although an

arbitrator could also go into these things, it

was, he said, more desirable that the court

remain seized of the question and get on with

it.

He pointed to the futility of the same

point going to arbitration and then coming

back for review to this court and then on

appeal to the Full Court when it was already

in this court and ready to be decided in the

near future. He accepted that, if an

arbitrator was appointed and did embark upon

an enquiry into the threshold question and

rule adversely to Crusader, the latter would

inevitably apply to the court at that later

stage for a review and would probably appeal

to the Full Court if there was an adverse

decision. Crusader takes the point seriously.

It would be a wasteful, costly, slow and

circuitous procedure.	No error having been
demonstrated -

in the exercise of the discretion.	Now he is
clearly talking about section 53.	And if

Your Honours go over to page 52, he says at about

line 3: 

I have said enough to indicate that the

question is, in my opinion, substantially a

legal question of construction buried in a

matrix of semi-technical material with some
disputed side issues and that it is, as

Bollen J. said, preferable that the court

should continue to deal with it and with the

othe+ issues raised in the statement of claim.

Now, I will come to the statement of claim in a

moment, Your Honours.

Now, Your Honours, Mr Justice Millhouse at

page 54 agreed with Mr Justice White and

Mr Justice Olsson, at page 70, was also of the view

Santos 19 SIR M. BYERS, QC 5/9/91

that Mr Justice Bollen was wrong about the matter

being outside the arbitration agreement.	At
page 70, Your Honours, at about line 22:

Having noted those principles, I must,

however, acknowledge the force of a basic

submission made by Mr Mansfield QC. He

strongly contended that Bollen J. had patently

fallen into error when he reasoned, as one of

the bases of exercise of his discretion, that

the issue of validity of the relevant GIAPS

raised a fundamental initial question of

jurisdiction. With all due respect to the

learned judge, it seems to me that

Mr Mansfield QC is necessarily correct when he

contends that this cannot be the situation

because, once it be accepted that the

situation falls within the purview of

section 53 of the Arbitration Act, it must

follow - as night follows day - that there is

necessarily an acceptance, at that point, that

the subject matter of the application is,

indeed, one which the parties have agreed be

referred to arbitration.

And the reason why he refuses to do it is, at

page 71, about line 14, he says:

The fact is that, although not going to

"jurisdiction", the issue of the validity of

the GIAPS and the consequential effect, if it

be a nullity as averred by the plaintiff,

raises an important threshold question of

mixed law and fact which - in the context of a
major commercial cause - can promptly be

disposed of by the Court within the next few

weeks.

The case, as it transpired, went for 61 days and resulted in a judgment for the plaintiff before

Mr Justice Bollen - judgment for Santos.
Its resolution could well totally resolve the current dispute between -
Those, in our	respectful submission, considerations
do not bear -	do not even touch the question
whether it is	a question that should go to
arbitration.	He also says at page 72, line 3, I
suppose, Your	Honours:

When there is added to those facets the further consideration of the difficult issue of the alleged fiduciary duty -

yes, fiduciary duty was alleged -

Santos 20 SIR M. BYERS, QC 5/9/91

its alleged breach of that duty and the legal

consequences of any breach, then it becomes

apparent that the decision of Bollen J. as to

exercise of discretion was patently correct in

its result -

Now, what the learned judge said about fiduciary

duty is that it did not really add anything to the

contrary. Now, that, I think, is the substance of
the judgments of the Full Court.

Now, Your Honours, perhaps I should say something briefly, bearing in mind my promise but

still necessary to acquaint Your Honours with the
issue about what the case was upon which these
issues were passed. At the beginning of page 78

the statement of claim makes a number of

allegations of fact which are, perhaps, unnecessary

to worry Your Honours with. At page 110 they say,

"These are the legal conclusions to all those

facts."

By reason of the facts and matters pleaded in

paragraph 16 to 16K inclusive the Santos

Review failed to constitute a Go-It-Alone

Production Schedule and a review and adjustment of Block Participation and Unit

Participation in respect of the Blocks to

which the Unit Agreement applies.

So, they are saying, "What you did under the

arbitration agreement did not amount, in terms of

the arbitration agreement, to a pursuit of it."

So the next one is:

By reason of the facts and matters pleaded in

paragraphs 16 to 16K inclusive and 17 the

delivery by Santos to the other parties to the

Unit Agreement of the Santos Review failed to

constitute a submission to the parties of the	Unit Agreement of a Go-It-Alone Production
Schedule and a review and adjustment of Block
Participations and Unit Participations
pursuant to Clause 4.0S(b) -

Now, they say, "Well, you didn't do what

clause 4.0S(b) invited you to do or required you to

do." And then they go on and say:

By reason of the facts and matters

pleaded ..... the delivery by Santos to the

other parties to the Unit Agreement of the

Santos Review failed to constitute a submission to the parties of the Unit

Agreement of a Go-It-Alone Production Schedule and a review and adjustment of Block

Santos 21 SIR M. BYERS, QC 5/9/91

Participations and Unit Participations

pursuant to Clause 4.0S(b) of the Unit

Agreement and therefore -

there are no consequences, which I shall not worry

Your Honours with.

Now, what they are alleging is that a pursuit

of the process involved in setting off the arbitral

arrangement did not meet the requirements of the

arbitration clause. The arbitration clause, in our

respectful submission, makes it quite clear - and

the judges have said - that that was a matter which

fell within the matters to go to the arbitrator.

Therefore, one gets the position that the parties

have agreed the matter should be arbitrated. One

of the parties then applied to the court for a

stay. The court said that it was a matter to be

arbitrated but they refused to stay without having

regard to the point of principle, namely, that the

parties had agreed it should go to arbitration.

Now, we respectfully submit that that is a total

error of principle and needs to be corrected.

BRENNAN J:  We are speaking about Al7, I presume, are we,

Sir Maurice?

SIR MAURICE: Yes. It applies to both though, but I will

come back to the other one in a moment.

BRENNAN J: Yes. Where does this argument lead us in terms

of the relief that you seek in Al7?

SIR MAURICE: This argument leads us to me saying, in the

appeal from the final judgment, that on that appeal

consistently with decisions of this Court, I can

call in question matters which were decided on

interlocutory applications although no appeal has

been brought against those applications, and
perhaps I should take Your Honours to that straight

away.

BRENNAN J:  Having made that point good, what then?

SIR MAURICE: What then? The next point I say, that the

judges then - that is one ground why I can appeal

against the final order. That is a necessary

consequence. The other ground is that the final

order is itself based on a misconstruction of the

agreement. Now, that may not be a special leave

point. But I say it totally misconceives the point

of the arbitration agreement. That is the final

judgment. I will have to come to that.

BRENNAN J:  The first limb then is that there was a stay

application which was wrongly refused?

Santos 22 SIR M. BYERS, QC 5/9/91

SIR MAURICE:	Yes.
BRENNAN J:	And then the matter went on?
SIR MAURICE:	And the matter went on.

BRENNAN J: There was an appeal from the judgment which

resulted at the end of that hearing - - -

SIR MAURICE: In Santos' favour, yes, Your Honour.

BRENNAN J: 

And that then resulted in the final judgment

which you seek special leave to appeal against
here?

SIR MAURICE: That is so, Your Honour. So, it went on and

the decision of the trial judge was, "The suit is

dismissed." In other words, the matter goes to

arbitration. Now, what the Full Court said is,

"No, the matter doesn't go to arbitration."

"Why?---Because we construe the arbitration clause

in a manner different from the learned trial

judge."

TOOHEY J:	But that is not what they were saying when it got to them on the second round of this litigation, was
it, Sir Maurice? I mean, the arbitration point, in
a sense, had gone by then.
SIR MAURICE:	Yes, it had gone then as an appeal but the question - I do not dissent from what Your Honour
Mr Justice Toohey has put to me. All I am saying
is, there is a question whether I can raise that on the appeal from the final judgment. In other
words, there is a question whether I can raise, on
the appeal from the final judgment, the
interlocutory error.  I say, yes.

TOOHEY J: It is just there is nothing in the notice of

appeal or affidavit in support of the application

for special leave in Al7 that would alert anyone to

the fact that it was the earlier decision that was

under challenge. Is that right?

SIR MAURICE: Well, in Al7 we gave notice that we would

wish -

to amend the Grounds of Appeal -

this is by a notice dated 23 August -

by adding the following ground of appeal as

paragraph BA:

The Full Court and the Trial Judge in the

interlocutory refusal of a stay, failed to

give due or any weight to the fact

Santos 23 SIR M. BYERS, QC 5/9/91

Article 4.0S(b) and Article 23.02(e) of the

Joint Venture Agreement provide the

consensual, or in its default, arbitral

variation of the rights and obligations of the

Parties agreed in Article 4.01, Article 11.02

and Article 23.02(e) and that absence

unanimous consent, variation could only be

achieved by arbitration.

TOOHEY J: Yes, I see, thank you. Talking of documents, the

material before the Court does not include the

order of the Full Court made on the substantive

litigation. Is that available now?

SIR MAURICE:  We have it now, Your Honour. I am sorry,

Your Honour, at the moment, for some reason or

other, we only seem to have two.

BRENNAN J: Well, I have one already, I think, Sir Maurice.

SIR MAURICE:  The orders they made - what they did was grant

specific performance	of the arbitration agreement,
as I understand it.	1 is a declaration. 2: I
think that is also a	declaration:

That the defendant is obliged as soon as

practicable to resubmit a body of data to the

parties to the Unit Agreement for

consideration as input data for Review and

Adjustment as at 1st January 1987 and upon

receiving unanimous approval or being

determined -

now, that must mean, "or it being determined" -

by arbitral award in respect of that or some

other body of data -

they do not say what that other body of data is -

for the purpose of 4.0S(b) to prepare and

submit to the other parties to the Unit

Agreement a Go-It-Alone Production Schedule to
Review an Adjustment of Block Participation
and Unit Participation in respect of the

Blocks on the basis of the Input Data the

subject of the unanimous approval of the

parties or being determined by arbitral

award - I think they mean either "approval" or

"arbitrated" -

within the meaning -

now "Clause 4.05 of the Fourth Schedule'' is

obviously wrong. It means clause 4.05 of the unit

Santos 24 SIR M. BYERS, QC 5/9/91

agreement. So, on its face, that order is wrong.

Then they go on:

That the defendant specifically perform

clause 4.05(b) of the Unit Agreement by
submitting a body of data to the parties to
the Unit Agreement for consideration as input

data for a Review and Adjustment as at

1st January 1987 and upon receiving unanimous

approval or being determined -

that must mean "it being determined" -

by arbitral award in respect of that or some

other body of data for the purpose of 4.05(b)

by immediately preparing and submitting a Go-

rt-Alone Production Schedule and Review and

Adjustment of Block Participations and Unit

basis only of the Input Data the subject of the unanimous approval of the parties to the	Participations in respect of the Blocks on the input data.
Now, what they were really saying -

Your Honour, it is a very long thing, but they

said, "Well, you go off and specifically perform

that." Presumably, they said they could supervise

that too. If one were to take the time to take

Your Honours through the Fourth Schedule, and the
various descriptions of the various matters that

have to be considered such as policy for putting

pipes in wells and taking them out, the VG and VE

and these other things, it is really slightly

amusing, with great respect to the learned judge.

BRENNAN J: Sir Maurice, the point that you are making based

on the Arbitration Act, as I understand it, is

this, is it not, that the interlocutory proceedings

were wrongly resolved. There should have been a

determine the issues which should have gone to stay. There was not. Therefore, the court assumed, wrongly, the jurisdiction to hear and arbitration. They were determined and that

determination is open to attack not because it was

wrong but because it was made, is that right?

SIR MAURICE: Well, yes, because it was made and because it

was wrong. I want to have both because the trial

judge, Your Honour, spent all this time and

eventually decided that the adjustment was within

the meaning - was an adjustment to which it

applied, so you would arbitrate it, presumably.

Now, he had 61 days doing that. Then, when it got

up to the Full Court they said, "Oh no, you've got

to construe 'so prepared' meaning, literally and

precisely", as I understand them, "answering clause

Santos 25 SIR M. BYERS, QC 5/9/91

(a)", and they are still talking about the input

data, there being no departure whatever.

Perhaps if I can just digress for a second.

There was a change to the input data either as part

of the process of working it out as 4.05 required

or otherwise, but however. So, we want to say that

is wrong, that the very issue to go to arbitration
is whether or not - one of the issues that could go

to arbitration is whether or not the review that is

being prepared does accord with clause 4.0S(b)

because it is a matter arising out of the block

adjustment submitted to the parties. One would say

it does not accord, another one will say it does

accord.

DEANE J:	But assume for the moment, against yourself, that you be wrong on the construction of the agreement,
where would this complaint about the refusal to
grant a stay lead? Would you ask that we grant a
retrospective stay to take you back and obliterate
the 61 days?
SIR MAURICE:	Your Honour, nothing can obliterate 61 days, I

would think. Fortunately, I was not involved.

But, no, Your Honour, what we would want, say, the

Full Court was wrong, the trial judge was right,

and so it just goes along to arbitration. There is

no problem.

BRENNAN J:  The trial judge could not have been right. On

your argument, he should not ever have said

anything.

SIR MAURICE:  I quite agree with that, Your Honour. I mean,

if I went on the interlocutory point, then they are

all wrong and manifestly wrong but that is on the

basis, as Mr Justice Deane put it to me, that I am

right on the question of construction and it may be

that that would apply to both. But what I am

submitting, Your Honour, is that the parties here

have indicated in the clearest of terms what their

choice is and consistently with authority and the

proper interpretation of a uniform law, you have

got to have regard to that as a crucial factor.

DEANE J: But is not the problem this: I mean, assume there

had been no application for a stay, you could not

submit, could you, that the trial judge lacked

jurisdiction?

SIR MAURICE:  No, I do not think I could.

DEANE J: Well then, if that is so

SIR MAURICE:  It was only a breach of contract, that is all,

Your Honour.

Santos 26 SIR M. BYERS, QC 5/9/91

DEANE J: Well, if that is so and there is jurisdiction,

absent the stay, when one looks at the nature of a

stay, is it not a classic stable-door situation?

SIR MAURICE: Well, I submit not, Your Honour, because this

does not - the stay would stop all the supreme

court proceedings and so the only choice would be

arbitration and that is what the learned judge, in

the long run, having refused the stay, decided.

But we say the proper choice was to grant the stay

and give effect, consistently with principle, to

the parties' intention. But you did not do that so

what has happened is that people have been acting

in breach of their agreement, namely, the

plaintiff, Crusader. The result is that there is a

judgment which is, in our submission, erroneous in

relation to the arbitration, because what was

considered before the court should have been before

the arbitrator who alone can make a decision.

DEANE J: Well now, that is what I am missing. What is it

that says the parties have agreed to exclude the

jurisdiction of the court as distinct from the

parties conferring authority on an arbitrator which

does not exclude the jurisdiction of the courts in

the absence of an order for a stay?

SIR MAURICE:  Because, Your Honour, what they have said is,

"We want to agree a new term but we envisage that

there may be disagreements. Now, to cope with the

situation of disagreement, we will have an
arbitration." The court can never agree to the new

term. The arbitrator, in place of the parties, can agree to a new term. Therefore, if you look to the

purpose of the clause, the parties were saying, "We

want arbitration." That is the whole substance of

the clause. It is to get agreement, and the court

can never do it. So, therefore, the court, when it

came to - all the court can do is to delay the

process which it has done, twice.

So that all one gets from attempts to proceed

to the court are delays contrary to the intention

of clause 4.05.

BRENNAN J: But if you have a judgment by the court, given

within jurisdiction, you are bound by that unless

you can set it aside, are you not?

SIR MAURICE: That is what I am trying to do.

BRENNAN J: Exactly.

SIR MAURICE: Exactly.

BRENNAN J:  To say that the court should not have given the

judgment is either to challenge its jurisdiction to

Santos 27 SIR M. BYERS, QC 5/9/91

have given it or to have accepted its jurisdiction

and challenge it on the merits. Now, it seems to

me that thus far the course which is being pursued

at your side of the bar table has been to accept

the jurisdiction of the court, commencing with the

judgment of Mr Justice Bollen and using that as the

foundation for an appeal to the Full Court.

SIR MAURICE: Yes. Well, Your Honour, that is a powerful

proposition which I want to contest, of course.

But what I am saying: the parties cannot take away

the jurisdiction of the court to decide wrongly or

contrary to their interest or contrary to what they

have agreed. Now, I suppose I am really

respectfully submitting here is that when you look

to what they agreed, it is clear they wanted

arbitration because that is the only way they could

get what they wanted.

BRENNAN J:	And is that not specifically what they have got under the decree of the Full Court?
SIR MAURICE:	No, that is specifically what they have not

got. They have not got any arbitration. They have

an order to do things in relation to arbitration.

But what the court has done is stepped into the arbitral process and itself has participated in the

arbitral process. But the arbitral process left to
the arbitrator - and the court so said - the very

question of whether the block participation and

unit participation were departures from the

contract. That was left to the arbitral process,

and the court said, "Yes, it is left to the

arbitral process and the parties have agreed to it

and we cannot, as it were, give effect to the

substance of what they have agreed but we are going

to say, no, you cannot have it."

If one thinks of it in questions of

jurisdiction in a sort of classic sense, then it

cannot be a question of jurisdiction because the	party cannot take it away. If a court has
jurisdiction, it has jurisdiction. And you might
have it on residence and so on here an you make a claim and you invoke it. You go to the court and you say, "Here is my claim and this is what I want
you to adjudicate." But, Your Honour, that is not
to say that if the court embarks on that task that
it is doing it to achieve the consensual aims of
the parties.

Now, this is really what I am at, I suppose,

Your Honour. I am saying that if you look - what

the court has - if you will pardon the expression -

jumped into is the arbitral arena and it has, as it

were, acted as a policeman and said, "Go this way,

go that way. Don't do this, don't do that" and

Santos 28 SIR M. BYERS, QC 5/9/91

that is all the subject-matter of the arbitrator's

agreement.

I do not want to keep on repeating myself. It

is a habit I have, Your Honour. But can I just

remind Your Honours of some observations of

Lord Selborne - and the case is number 11 in this

collection - in Willesford v Watson,

VIII Chancery Appeals 473.	I need not worry
Your Honours with the headnote.	Your Honours, at

page 475 will find that even in 1854 you had an

arbitration provision which provided for a stay.

The provision is at the bottom of the page 475 and

it says:

upon being satisfied -

Your Honours see it is the third line from the top

of the right-hand column -

that no sufficient reason exists why such

matters cannot be or ought not to be referred

to arbitration -

and then if Your Honours were then to turn to

Lord Selborne at page 478, His Lordship says, about

the bottom of the first paragraph:

Whenever, therefore, there is a dispute between the parties as to whether the

instrument, according to its true

construction, does or does not warrant the

particular thing to be done, they have agreed that that dispute shall be referred. Surely,

then, it would be extravagant to say that if the Court thinks that, according to the true construction of the instrument, the thing

ought not to be done, therefore it is not to

be referred.

And we submit with respect that is exactly what the

Full Court have done.

Now, if Your Honours go over to page 479, the

bottom of page 479, Lord Selborne still speaking,

he says:

Then we are told that this is an

arbitrary tribunal, final and without appeal,

and so forth, and that these are not fit

questions to go before the arbitrator. but I

think that the Legislature and the Act of

Parliament under which the Court is now asked

to act have given the answer to that argument.

If parties choose to determine for themselves

that they will have a domestic forum instead

of resorting to the ordinary Courts, then

Santos 29 SIR M. BYERS, QC 5/9/91

since that Act of Parliament was passed a

prima facie duty is cast upon the Courts to

act upon such an agreement.

The parties here have made that

agreement. They probably knew what were the

reasons in favour of determining these

questions by arbitration, and what were the
reasons against it, and they made it part of

their mutual contract that these questions

should be so determined. The Plaintiffs

cannot, therefore, be now heard to complain if

that part of their contract is carried into
effect.

Lord Justice James says he agrees - that he entirely agrees, at page 481, with what the Lord

Chancellor has said.

Your Honours will find in a reference to a

judgment of Mr Justice Owen Dixon in number 8, that

is in the Mill Hill - perhaps Your Honours might

remember it from other proceedings.	I think it
came up in the Oceanic case.	It is reported in 81

CLR 502. The only passage I just wish to refer

Your Honours to is at page 508 where His Honour

says in the last paragraph, having concluded that

the Judiciary Act picked up the Arbitration Act, he

says:

It follows that, in my opinion, this

Court has power to stay the suits if, upon a

proper exercise of the Court's discretion, it

appears that it is a course which should be

taken. Under the statutory power expressed in

s.5 of the Arbitration Act 1928 (Vic) the

Court or the judge, assuming that the other necessary conditions are fulfilled, must be

satisfied that there is no sufficient reason

why the matter should not be referred in

accordance with the submission. This language

might appear to place the burden upon the

defendants applying for a stay. But the special contract between the parties to refer,

and therefore in the language of Lord Moulton

in Bristol Corporation v John Aird & Co,

consider the circumstances of a case with a
strong bias in favour of maintaining the
special bargain or as Scrutton L.J.

said ..... "A guiding principle on one side and

a very natural and proper one, is that parties

who have made a contract should keep it." At

the same time, as is shown by the two cases

cited, the Court's discretion has not been

restricted -

Santos SIR M. BYERS, QC 5/9/91

Now, that is the principle.

BRENNAN J: Sir Maurice, I hope you will forgive me if I am

tedious but to come back to the question of

jurisdiction again: if all of this, this total

area which is, on your submission, to be referred

to arbitration, were now to go arbitration, so long

as the judgment against which you seek leave to
appeal stands, the issue of whether or not what was

done by Santos amounted to a valid review and

adjustment, or whatever it is called, would be

determined as res judicata between the parties,

would it not?

SIR MAURICE:  Your Honour, I cannot deny that. I do not

think I have ever said to the contrary.

BRENNAN J:  No, I did not understand that you had. But if

that is so, the question must come down, must it

not, to the question of whether or not the court

had that jurisdiction?

SIR MAURICE:	No, the question comes down to whether the court embarked on that jurisdiction by a
misconception of its powers because, Your Honour,
when one is thinking about jurisdiction, it had a
power to stay in section 53.  In the clearest
possible terms it had a power to stay. Santos
lodged an application for a stay. So, that power
was invoked and the court decided that, so the
court decided section 53 - it exercised. Now, we
say, if one is talking about jurisdiction, then
that exercise of jurisdiction was wrong. We also say there is another error, but that was wrong to do that because what the statute, on its true
construction compelled you to do was to stay your
hand.

While you cannot say your decision is a

nullity, you wrongly refused to stay your hand.
That is, I think, what I am saying.	Then you

wrongly refused and, as it were, you persisted in
your refusal by going on to the final adjudication.

We say that is erroneous as well because - as a

matter of interpretation.

But, Your Honours, we respectfully submit that

this Court has said - first of all, in a case of

Nolan v Clifford, l CLR 429, the passage is at page 431, a statement by Sir Samuel Griffith, and

he says about the middle of the page:

On an appeal from a final judgment, all points

raised in the course of the case are open to

the unsuccessful party. If a point is decided

against him on an interlocutory application,

Santos 31 SIR M. BYERS, QC 5/9/91

there is no need for him to keep on raising

it.

And he referred to a case in the Indian - in fact,

there happened to be three of them.

Now, the next case is when His Honour refers

to another one and that is the next year, and it is

a case of Crowley v Glissan, under 2:

On an appeal from a final judgment of the

Supreme Court of a State, it is open to the appellant, without obtaining leave, to question any interlocutory or other order, which was a step in the procedure leading up

to the final judgment.

Now, I have got to satisfy that, of course,	and I
say it clearly was.

Then, if Your Honours go to what

Sir Samuel Griffith said at page 403, leaving aside

the first two lines:

According to the practice of that Court an

application for a new trial is made in two

stages.	The first is a motion for a rule nisi
matter is further considered upon a motion to have the rule nisi made absolute. If the application for the rule nisi is refused, or the rule is granted but discharged on motion to make it absolute, the matter is at an end.	for a new trial. If that is granted the absolute, there is a new trial. These two steps are, in our opinion, two stages in one
proceeding. There is only one judgment of the
Court appealed from, viz., that which grants
or refuses a new trial, and on the appeal all
grounds that were taken by the appellant in
the course of the proceedings are open to him.
That position is clearly supported by the
decision in Maharajah Moheshur Sing v Bengal
Government which was referred to in the case
of Nolan v Clifford ..... The latter case was an
appeal to the Privy Council from the decision
of a Judicial Commissioner upholding the award of 8ertain arbitrators, on an application to
set aside the award. The Privy Council said,
ttThe appeal is, in effect, to set aside an
award which the appellant contends is not
binding upon him. And in order to do this he
was not bound to appeal against every
interlocutory order which was a step in the
procedure that led up to the award." The same
principle has been applied by the Privy
Council in many other cases. The appeal is

Santos 32 SIR M. BYERS, QC 5/9/91

from the judgment of the Court, which in this

case consists partly of an order refusing -

and so on and he goes on. So, again, that happened

to be a case in which arbitrators were appointed;

there was no appeal from it but then in due course

there was an award by the arbitrators and the
appeal from the arbitrators was granted by the

Privy Council.

Your Honours, it is referred again - and I do

not want to read all these, but Mr Justice Jacobs

refers to that in Bunning v Cross, 141 CLR 54 and

the passage begins at the bottom of page 81, which

is No 4.	He says:
This Court is not bound to proceed in its

consideration of this question with the

constriction that the evidence was unlawfully

obtained. This is so even though it may have

been held in the Supreme Court of Western these proceedings that the evidence was

unlawfully obtained. No application was made

to this Court for leave and special leave to appeal from that decision of Jones J. but at

that interlocutory stage no such application

was necessary in order to enable this Court at

this later stage in the proceedings to

consider the question whether the evidence was

unlawfully obtained.

And he refers to Crowley v Glissan and the High

Court Rules, the second of which, Order 70 rule 26,

I must say, Your Honours, no longer exists.

Those observations have been applied in the

next two cases at page 566 - they are decisions of

the Full Court of the Supreme Court - and 238.

Your Honours, all they do - I think, in one case,

Mr Justice Kirby; in the other case,

Mr Justice Clarke, quotes what was said.

Therefore, what we say on the first appeal is

what I have probably said more than once. We say

there was an error; it was a manifest error; it is

an error upon a statute of Australia-wide
application and Your Honours should correct it. It

may be explicable by reasons peculiar to South

Australia. That is all I want to say on the first

matter.

Now, the second appeal, Your Honours, A22:

what happened in this case, again - I am sorry,

Your Honours, perhaps I should say that in relation

to the first appeal, we would also say that the

Santos 33 SIR M. BYERS, QC 5/9/91

final judgment is wrong but I think Your Honours

have understood me to say that.

BRENNAN J:  Yes.

SIR MAURICE:  Because of misconstruction. We say, so far as

courts of other States are concerned, they have

said, "Well, the fact that it is a question of law

raised is no reason why it should not stay". One

is a decision of Mr Justice Jeffrey of the supreme

court - that is Churcher v Mitsui, (1974)

2 NSWLR 179 at page 185 - when he says just that.

It is in that volume. And, Your Honours, a

somewhat lengthier proceeding of Mr Justice Andrew

Rogers at 4 NSWLR 113, at page 117, page 118 to page 121. In the appeal book itself there is a

reference to a decision of the supreme court at

page 217 to 218. Also, the author of a textbook,

Mr Jacobs, does indicate that this decision in

Crusader is out of step. Your Honours, I submit

that is obvious, of course, but at any rate Mr

Jacobs refers to it in his book on Commercial

Arbitration at pages 12,901 to 12,902. It is No 12

of the book, Your Honours. It is at the bottom of

the page.

Your Honours, the decision of

Mr Justice Bollen in the first case begins at

page 38. At about line 30, His Honour says:

Mr Gray says, and Mr Douglas vigorously

denies, only simple questions of construction are raised. Certainly, they are questions of

construction. The applicant ..... Santos, seeks

a stay pursuant to section -

that should be 53 -

It can approach the court for that stay if,

be referred to arbitration by the order in the	and only if, it can point to matters agreed to
contract entered into between the parties and there we turn to article XXIII of the Unit
Agreement -

what he should be turning to, of course, is

article 4.05.

In the first instance, it is said, there is a matter or course of action -

I think His Honour is saying, "Well, that's what is

referred to in article XXIII, and it is one of the

matters referred to", and then he says:

I do not think that a situation in which it

can be said any such matter or course of

Santos 34 SIR M. BYERS, QC 5/9/91

action has reached the point where any

agreement to refer it to arbitration obtains -

Your Honours, we say that is just completely wrong.

If You raise a question as to a matter agreed to be

that very thing, then you have created a dispute.	submitted to arbitration and institute a suit to do point whether the input data - Your Honours will
remember that is the first arm - had to be done one
for each unitized zone or whether you could have
one which would cover a number. So, that was
clearly a matter within article 4.05(b), a matter of dispute about the input data.

So, then he says:

Secondly, it is said these are matters

substantially of a technical nature.

And then he says at line 26:

I think Mr Gray is right in saying perhaps

it's all a question of construction in

relation to the points raised. I do not think

that the matter raised by the Statement of

Claim and summons issued by Crusader in this

action touches, in the appropriate sense, in

the arbitral sense as opposed to liturgic -

I am not quite sure what that means. I think he

does not mean liturgical but, at any rate -

liturgic sense, a matter of a technical

nature.

And he goes on and then goes to the top of the next

page, 40:

For those reasons, I do not think it can

be shown that Santos has any right, pursuant

to s.53 ..... If I be wrong -

then he says, "Right, well I will decide it on

section 53" -

then in my opinion there is sufficient reason,

as contemplated by s.53, why the matter should

not be referred to arbitration but should stay

in the court. The reason is it's better on

the whole, I think, for a court to determine these points which involve construction of a

contract.

Your Honours, that, with great respect, cannot be

right.

Santos 35 SIR M. BYERS, QC 5/9/91

It may well be that will cause some

inconvenience. I think there is likely to be

inconvenience in whichever way the matter

proceeds.

Now, Your Honours, with great respect to the

learned judge, that is not a reason that section 53

permits. He never pays any attention to the

question that the parties have agreed to submit it

to arbitration but says, "Oh well, I think it's

easier, on the basis that they did agree, to have

it decided here."

TOOHEY J: Is A22 before us, Sir Maurice, because of the

refusal of leave to appeal or because -

SIR MAURICE:  Yes. What we say about that, Your Honour: we

say it is a decision of the supreme court.

Your Honour will remember that under section 53 of

the Commercial Arbitration Act, the power to grant

or refuse a stay is imposed in the supreme court.

Your Honour will remember I spent some time earlier

referring to sections 38 and 39 where they talk
about the court and the grant of an appeal to the

Full Court of the Supreme Court.

TOOHEY J: But in the ordinary course, if there had been no

refusal of leave to appeal to the Full Court, would

this matter have been aired before us today?

SIR MAURICE: Well, if it had not been for both matters, the

answer would be, no. If one looks and wonders

whether the court should say - under section 35(a).

What happened here was that the Full Court had

indicated in the previous case, between the same

parties on the same clause, that a question of law

was sufficient not to send it to arbitration; the

question of construction or interpretation. So,

you had the decision of the Full Court of the

Supreme Court. Then Mr Justice Bollen said, "Well,

I'm not going to grant you leave to appeal, so

either you would have to apply for leave to appeal

from the Full Court" - if they refused, you would

have to apply to this Court for special leave to

appeal from their refusal to give you leave to

appeal which would not resolve any issue.

BRENNAN J: Sir Maurice, would you just take us back to the

beginning. What action are we talking about in

A22? Where do we find the originating proceeding

in it?

SIR MAURICE:  I beg Your Honour's pardon.

BRENNAN J: This is some fresh application by Crusader, is

it not?

Santos 36 SIR M. BYERS, QC 5/9/91

SIR MAURICE: Yes, Your Honour. This is a fresh

application. If Your Honour goes to page 187,

Your Honour will see the beginning of the

proceeding and if Your Honour goes to page 189 in

the last two lines, they say:

A dispute has arisen between the plaintiff

Crusader and the defendant Santos in relation

to the interpretation of the Unit Agreement

concerning the reconsideration and

re-evaluation of Input data referred to in

paragraph 11 as follows:

And then they say:

By a facsimile ..... We believe -

and skipping down:

that the input data is required "for each such

Unitized Zone".

Does Your Honour see that about line 15 to 16? So,

one for each unitized zone. Then they repeat it:

The input data, according to the Unit

Agreement, is required for each Unitized Zone.

And then if Your Honour goes over the page, they say, about line 6:

By letter dated 1.6.90 in reply to Crusader's
facsimile referred to in paragraph 12.1

Santos, inter alia, said -

"We don't agree with that, unitized zones."

Your Honour sees about line 14:

As you are well aware, the Producers have

frequently extended unitized zones.

contiguous extensions, Santos regards the
contiguous unitized area as being one unitized
zone.

Where a unitized zone has one or more

BRENNAN J:  And this is all dealing with the 1989 review and

adjustment, is it?

SIR MAURICE:  Yes, Your Honour. The plaintiff also

asserted - Crusader also asserted during the

hearing that it would apply to the 1987 as well.	I
think that is right.

BRENNAN J: It is a quite distinct proceeding.

Santos SIR M. BYERS, QC 5/9/91

SIR MAURICE:  It is quite a distinct proceeding but they say

the points they raise apply at once to the 1987 -

that is the subject of the preceding suit - and

also to the 1989, the subject of the new suit.

BRENNAN J:  And the stay application is then to be found at

page 199.

SIR MAURICE:  Yes, Your Honour. And then the prayers they

seek are at page 196. About line 14, they say:

In the premises Crusader seeks declarations:

that pursuant to the Unit Agreement and in

particular clause 4.0S(b) and the Fourth

Schedule -

they talk about the 1989 review - I do not think
there is any dispute about this - but the

suggestion was that it would apply to both.

Santos, as Unit Operator, is required to

submit such reconsidered and re-evaluated
input data by reference to each Unitized Zone

separately and;

that pursuant to the Unit Agreement -

I have skipped the second and third line -

a subsurface volume of rock containing
reserves of Petroleum -

skipping the next two lines -

outside but contiguous with an existing

Unitized Zone when accepted into the Unit:

forms a new and distinct Unitized Zone.

And hence, they would say, it needs to be

re-evaluated.

BRENNAN J: Well now, Sir Maurice, can you tell us where the

order is that was made by Mr Justice Bollen on this

application?

TOOHEY J:  I think it is in loose form, Sir Maurice, it came

in later.

SIR MAURICE:  Mr Jackson says it is at page 44.

TOOHEY J: No, it is not. That is the application

SIR MAURICE:  No, that is the application for special leave.

I am sorry, Your Honour, I think there is an order.

Santos 38 SIR M. BYERS, QC 5/9/91

None of my learned friends seem to be able to tell

me.

BRENNAN J: Yes, we have an order here.

SIR MAURICE:	They say no order was drawn up.
BRENNAN J:	Somebody has produced one.
SIR MAURICE:	It has been inserted into my learned friend's

book but apparently I have been denied it, if

Your Honour pleases.

TOOHEY J: Well, you are the only one who has been by the

look -

BRENNAN J:  You might like to take a look at the one that we

have. What I was going to ask you, can you show us

where it was that His Honour gave reasons for

refusing leave to appeal to the Full Court?

SIR MAURICE:  Yes. Well, after his judgment there was an

application that the two parties be - page 43, at

the bottom, with commendable brevity, line 29,

His Honour said:

Application for leave to appeal refused.

My learned friend, Mr Gray, said it is:

a matter of pure practice and procedure - a point of view which, with great respect, we would

not agree with. Mr Gray referred to the previous

Full Court ruling in a few lines above that at

line 26. Mr Gray said:

We had a Full Court Court ruling twelve months

ago clarifying all the principles. There is

no basis for leave.

So, we submit that Your Honours should, in the

circumstances, grant leave in both matters.

BRENNAN J: Sir Maurice, if need be, in the second matter,

is your application made in the alternative, that

is, for special leave to appeal from so much of

His Honour's order as refused leave to appeal to

the Full Court?

SIR MAURICE:  Yes, Your Honour, if need be. But I say this

is a question of the administration of justice

under section 35(a). Your Honour, I think that is

all I can say.

BRENNAN J: Thank you, Sir Maurice. Yes, Mr Jackson?

Santos 39 5/9/91

MR JACKSON: 

Your Honours, may I deal first with the

application in respect of A17 and, Your Honours,
perhaps it is our obtuseness in understanding the

material that was in the affidavits and in the

letter to amend the material.  Had we not

understood the position to be somewhat different,

we would have ensured that there was included in
the material not just clause 23.02, the arbitration
clause, but also clause 23.01, part of the same

agreement - perhaps I could hand Your Honours some

copies of that now - which deals with the

submission of the parties not just to arbitration,

in the cases in which they have agreed to do so,
but also to the courts, in particular, the courts
of South Australia.

Your Honours, I mention that - and I would

refer Your Honours to clause 23.01 - purely in

relation to something which seemed to be involved

as part of our learned friend's submission dealing

with the effect of the arbitration clause.

Your Honours will see that the arbitration clause,

23.02, immediately follows 23.01, whereby the

parties consented to submit to the courts of South

Australia. Your Honours, the only point I would

seek to make about that is that it is very

difficult, in the light of a clause of that nature,

to sustain the proposition that everything was to

go to arbitration. The only matters to go to

arbitration were those which were referred to in

that clause and otherwise perhaps in the contract

itself.

Your Honours, having said that, might I

proceed to deal with some other matters arising

from our learned friend's submissions.

Your Honours, one starts from a very curious

situation, in our submission, in that, first, there

was no application for special leave to appeal from

the first decision of the Full Court, and the

proceedings have now been heard substantively.

There was a trial which, as Your Honours have

heard, lasted a long time and there was an appeal.

Yet it is now sought to challenge the correctness

of the earlier decision that there should be a

trial.

Now, Your Honours, it is no doubt true, if one

states the proposition in the abstract, that there

is power, on appeal, to reconsider interlocutory

judgments not appealed from but, like most

propositions stated in the abstract, the practical application of it must vary from case to case and,

in particular, must be considered in the light of

the particular circumstances. Where the

interlocutory order is an order refusing a stay,

having, of course, the consequence that there will

Santos 40 5/9/91

be a trial, it would require a compelling case, in

our submission, to set aside the judgment on the
substantive case. It would have to be a compelling

case, we would submit, compelling in the sense that

it would have to be demonstrated to the Court on an

application of this kind, at least, that there was

a substantial argument that the substantive

decision was wrong and, Your Honours, that has not

been, in our submission, demonstrated.

The second matter, we would submit, is this:

that neither the Full Court nor Mr Justice Bollen

decided whether the issues raised in the action

were issues which the parties had agreed to submit

to arbitration.	I am speaking about the first
Full Court decision, Your Honours.	What was held

by the Full Court in the first appeal was that
section 53 was applicable because clause 4.05(b)
did refer some matters to arbitration - some

matters to arbitration - and the arbitrator was

entitled to examine his own jurisdiction. The

entitlement of the arbitrator to examine his own

jurisdiction and to decide upon it was the feature

which led the court to the view that it was

possible for section 53 to be applicable.

Your Honours, it has not been held that the matters

in issue are matters, the substance of which it has

been agreed to arbitrate.

I will take Your Honours to the passages in the judgments in just a moment. But that is a

matter of some importance because what has to be

demonstrated before the issue arising in that

action as advanced by our learned friends, appears

in a manner which, in our submission, it would be

appropriate for the Court to entertain, it must

appear that it is a matter that necessarily, we

would submit, arises, and it may not because the

true analysis of the matter may well be that there

has been no agreement to submit to arbitration the

particular matters which are the subject of the

proceedings.

Now, Your Honours, I said I would give the

references to indicate that the case was one where
the Full Court did not decide that there had been

an agreement to arbitrate in respect of these

matters save to the extent that what the Full Court

said, as I mentioned a moment ago, was that the

arbitrator had some jurisdiction and he was

entitled to look at it, and that brought into being
section 53.

Could I take Your Honours to page 42; it is in

volume 1? This is Mr Justice White who gave the

principal judgment on this occasion. It is the

passage which commences at line 14. Your Honours

Santos 41 5/9/91

have been referred to this already so I shall not

go to it in detail. It commences at line 14 and it

goes through to page 43, line 17. Your Honours

will see that His Honour concludes by saying:

For these reasons I think his Honour was in error in the first part of his reasons in

holding that s.53 of the Act did not apply at

all.

And the use of the expression "at all" relates back to the earlier discussion by His Honour about the

ability of the arbitrator to decide questions in

relation to his own jurisdiction.

Your Honours, at page 50 the same proposition

appears in different words. It is at page SO,

line 12, and following on from that. Now,

Your Honours, in the judgment of Mr Justice Olsson

the relevant passages appear between pages 68 and

72. May I go first to page 68? At page 68,

commencing at line 19, His Honour there summarizes

the approach taken by the primary judge in relation

to the discretion question under section 53.

Your Honours will see particularly, in

subparagraph (i) on that page, a reference to the

issue on which it was held that the primary judge

had erred. That is, "a fundamental initial

question of jurisdiction."

Now, Your Honours will then see, going to

page 69, about line 14 that His Honour says that it

is convenient:

to address the issue of the exercise ..... of

discretion, on -

what he describes as -

the assumption that it may fairly be argued

that the subject matter of these proceedings

is a matter agreed to be referred to

arbitration by the Unit Agreement.

And at page 70, line 24, His Honour records a

submission made by Mr Mansfield:

He strongly contended that -

the primary judge -

had patently fallen into error -

in raising the -

fundamental initial question of jurisdiction.

Santos 42 5/9/91

Now, His Honour says - and the passage goes

through to page 71, about line 23, that it was

wrong to say what the primary judge had said in the

paragraph which he had numbered (i) on, I think,

page 68, but then went on to say at line 14 on

page 71, that:

The fact is that, although not going to

"jurisdiction'', the issue of the validity of

the GIAPS and the consequential effect, if it

be a nullity as -

alleged -

by the plaintiff, raises an important

threshold question -

Now, Your Honours, it has not, in our submission,

been decided by the Full Court that the particular

question which was the subject of the substantive

hearing was a question which the parties had agreed

to arbitrate. So, the applicant is, in our

submission, faced with that difficulty which is

something which militates against the suitability

of the case, if I could use the common expression,

as a vehicle for the determination of the issues

sought to be raised.

Your Honours, the next feature about the

matter is if I could, perhaps, go back a little to
the fact that the decision, in our submission, on
the substantive issues is no more than a decision

which turns on very particular facts which are

unlikely to recur even in relation to the

particular contract. Now, Your Honours, I do not

want to go into detail about that aspect of the

matter because Your Honours have read the reasons

for judgment and the issue is not particular raised

by our learned friends.

DEANE J:  Mr Jackson, that is self-evident, is it not?

MR JACKSON: Yes, Your Honour.

DEANE J:	I do not think it is disputed.
MR JACKSON:	No, Your Honour. All I was going to say about

it, Your Honour, by way of leading into the matter

was that one needs to identify exactly what the

case decided. And what the case decided, in our

submission, was that in terms of clause 4.0S(b)

what the parties, who were not the operators, such

as Crusader - what those parties had an entitlement

to do was to have the basic facts upon which a

Go-It-Alone Production Schedule might be decided or made up from - agreed or, if they could not agree,

be the subject of arbitration. What emerged, of

Santos 43 5/9/91

course, was that what had been produced was

something which used material very significantly

different from that which had been arbitrated.	So,
the point for arbitration had not arisen.

Now, Your Honours, if one comes to that point,

what one sees is that it is by no means apparent
that the case was one in relation to which there

was any entitlement to have the particular question

arbitrated.

Your Honours, could I just move on a little

from that? Your Honours, perhaps I should just

also say our learned friend said, "We have been

denied" - "we" meaning "they" - have been denied

the opportunity for arbitration.	The whole point
of the case was that we were.	We were entitled to

have the facts agreed or arbitrated if we could not

agree. We got neither. They used facts without

telling us.

Your Honours, could I just add a couple of things concerning the first case? One is this:

the point which is sought to be raised by our

learned friends today has about it, with respect,

an element of freshness in the sense that it

certainly was not at the forefront of the argument

before Mr Justice Bollen. Your Honours, if one

goes, for example, to pages 16 and 17 in volume 1,

where he is dealing with the case, what one sees is

that he has referred to the various cases which are

applicable - I am sorry, perhaps I should start

again. If one looks at page 15 at the bottom of

the page he sets out the first part of the relevant

arbitration clause. He sets out, at page 16, two

placita, (b) and (c), the parts of the arbitration

clause. He says at the top of the next page:

Placita (d) and (e) obviously do not apply.

And I wonder if I could take Your Honours for just	a moment to the letter which sets out the terms of
the new point and that is that there is reliance
upon clause 23.02(e). That does not seem to have
been agitated much before His Honour and it
certainly was not relied on in the Full Court.
That appears at page 73 and, about lines 7 and 8:

. It was common ground that placita (d) and

(e) had no application.

Your Honours, one also has a case, in our submission where even if the point that is sought

to be raised was one of some importance, one still has a case where we have claims which have not yet been dealt with and on which the action - we may

ultimately succeed - whatever be the result of the

Santos 44 5/9/91

present proceedings, and they are the claims for

rescission in reliance on section 53.

Your Honours, if I could move from that to the

other case. The position simply is this, we would

submit, that the first reason why special leave

should be refused is that the case has not been to

the Full Court.

DEANE J: That was what I wanted to ask you. Is this one of

the cases where the Full Court cannot give leave

if - - -?

MR JACKSON:  No, rule 94.02, Your Honour. Under that there

can be an application to the Full Court for leave

de novo - an application to be heard de novo.

DEANE J: That is the application for a stay.

MR JACKSON:  Yes, Your Honour. An application for leave to

appeal from the judgment refusing a stay may be

made to the Full Court notwithstanding the refusal

by the primary judge of an application for leave to

him.

DEANE J: Well, that answers my question.

MR JACKSON: It is rule 94.02.

BRENNAN J:  Have you a copy of it, Mr Jackson?

MR JACKSON:  Yes, Your Honour. There may be some difficulty

now in terms of time; perhaps there is, perhaps there is not, but we should not be visited with

that problem, Your Honours.

DEANE J: There is normally power to extend time.

MR JACKSON:	Of course, Your Honour.
Now, Your Honours, the fact that the matter

has not been to the Full Court has a number of

consequences which, in our submission, are of

importance for present purposes. One is the simple

fact that the Court does not have the advantage of

a discussion by such a court of the issues said to

be involved. Your Honours, another is that the

particul~r issue now relied on does not appear to

have been at the forefront of the arguments in the

appeal on the court or arbitrator question in the

previous case. Could I give Your Honours the

references without taking you to them? Page 43,

line 18 and page 51, line 8, Mr Justice White, and

then pages 68 to 72, Mr Justice Olsson.

Your Honours, I have been around those passages, I

think, before.

Santos 45 5/9/91

What is clear from the discussion in the

previous Full Court judgment is that Their Honours

were not considering the case as an issue of

general principle determining the principles
applicable in exercising the discretion and the

judgment of the Full Court in that case does not

preclude a fuller examination of the issue by that

court.

Your Honours, the second aspect of the case is that the nature of it, that is, a question of how

the discretion is to be exercised, is fundamentally

one in which it is sought to regulate the manner in

which a statutory discretion should be exercised.

Now, Your Honours, discretions, of course, should

not be fettered, although it is true to say that

some features will always be germane to the

exercise of particular discretions but there will

be some discretions of which this is one which will

be likely to be affected critically by

considerations which partake of expediency rather

than law. Now, Your Honours, what I mean by that

is this: in exercising a discretion of the kind

presently in question, a court is entitled to take

into account matters such as the availability of

judges and arbitrators. It would seem ridiculous,

for example, we would submit, if a judge, in exercising a discretion, could not take into account the fact that the court could hear the

issue in a day or two, whereas, any hearing by an

arbitrator, who may not yet be appointed, might lie

in the never-never.

Your Honours, when one looks at page 17, that

is a factor which was taken into account in at
least the first of these matters, the availability

of a court at that time. Your Honours, I am sorry

to labour the point, but if one accedes to that

view that mattes of that kind can be taken into

account, it is not a very large step to take the

view then that the practical exercise of the

discretion may vary in Australia from jurisdiction

to jurisdiction and may vary from time to time.

Your Honours, to put it more exactly, the

situation in the courts and jurisdictions has much

changed in, say, the last thirty years. Almost all

courts now have divisions or lists or procedures

and attitudes directed towards the speedy

resolution of commercial and other disputes.	They
are different from what happened in the past.	And
the relative advantages and disadvantages of
arbitration have changed in different ways at different paces in different jurisdictions and,

Your Honours, I am sorry to labour the point, but

what it does demonstrate that it would be unwise,

in our submission, for the Court to enter upon the

Santos 46 5/9/91

issue on the assumption that the decision would

necessarily be of general application.

Your Honours, it also demonstrates, we would

submit, that it would be unwise for the Court to

deal with the matter as affecting South Australia

without having the advantage of the views of the

Full Court.

Your Honours, there are two other matters

which we would submit militate against the grant of

special leave in this case. One is the suitability
of the case itself as a vehicle to bring forward
the issue and the second is whether the actual

decision was sufficiently attended by doubt.

Your Honours, if I could just deal with those

two things very briefly. As to the first of them,

the suitability of the case: the terms of the

arbitration clause are at page 65 and,

Your Honours, the relevant part of it is

clause 23.02(a) which perhaps does no more than

reflect the position under the general law. The

fundamental question is whether the issue is one in respect of which it has been agreed it should go to

arbitration and it is by no means clear that the

parties have agreed that the issue in this case

should go to arbitration. The judge found that

they had not. That appears at page 39, lines 8 to

19.      Your Honours, I think I have given the wrong

reference in that regard.	May I come back to it in
just a moment?

Now, Your Honours, on that issue the judge might have been right, he might have been wrong,

but it is another hurdle which the applicant has to

surmount.

Your Honours, the final matter is whether the

result arrived at by the judge was attended by
sufficient doubt.	Your Honours, the issue was of a

very narrow kind. It appears at page 196 -

Your Honours, I am sorry, I think I had the wrong book in my hand when I speaking of page 39 before.

It is, in fact, page 39 and lines 8 to 19. If I

could just go back to the question whether the

arbitration clause applied and it was held that it

did not so, Your Honour, the issue may never arise,

in fact.

Your Honours, if I could go to the actual

issue in the proceedings. It appears at page 196

in paragraph 13, and Your Honours will see the

relief claimed in paragraph 13.

BRENNAN J: Page 196 of volume - - -?

Santos	47	5/9/91
MR JACKSON:	Your Honour, it is the unnumbered one.	It is

the one in A22.

Now, Your Honours will see that it is an issue

which goes to the start of the process to be

undertaken under clause 4.05(b). It was an issue

which was fundamentally legal in nature, a pure

question of construction of the agreement. The

need for its definitive resolution was manifest for

two reasons: first, this is 1991. The 1989 review

has to be carried out. Secondly, the proceedings

relate also to the 1987 review and as appears from

pages 2 and 3, following upon the substantive

judgment of the Full Court, the parties agreed that

the application and these proceedings should be

treated as relating to both the 1987 review which,

of course, had to be started again, as well as the

1989.

So that, Your Honours, it is an issue of

considerable importance going to the way in which
the matter starts, and one would think that it
highly desirable, in the light of the history of
the case, to have that dealt with by a court.

BRENNAN J: It is a right of appeal on a question of law

from an arbitrator to the supreme court, is that

right?

MR JACKSON:  I am sorry, I did not hear what Your Honour

said.

BRENNAN J: It is a right of appeal?

MR JACKSON:  Yes. And, Your Honours, the judge was

perfectly right, in our submission, to take a view

by saying, "This issue should be heard by a court."

Your Honours, that is why the discretion is there,

it can go one way or the other.

BRENNAN J: Thank you, Mr Jackson.	Sir Maurice?
SIR MAURICE:	Your Honours, my learned friend begins by

saying that the judges, when they heard the stay

appeal, did not decide that it was within the arbitration clause. Your Honours, with great respect, in terms, at page 42, line 24 - that is in

the first application book - the judge refers to

clause 23. So, that is what he is saying. Now, at

page 71, line 5, which is the other judge, he

refers to it as a matter to be agreed and he refers

to it as a matter within section 53. How can it be

within section 53 if they have not agreed to submit

it to arbitration? Obviously the court decided it

was within section 53 and it had agreed to be

submitted to arbitration.

Santos 48 SIR M. BYERS, QC 5/9/91

So that what one has is a clear decision of

the Full Court refusing a stay because the all-over matter was within the arbitration clause. There is

no doubt about it. I have submitted that that is

clearly a mistake of principle. In our respectful

submission, that is quite clear. I do not want to

go over that again.	The authorities are clear on
that.

Your Honours, as to the correctness of the

Full Court's final judgment, Chief Justice King said he did not agree with what Mr Justice Olsson said as to the words "so prepared" within the

meaning of the contract.	He said there is an area
where you can have departures.	He says that at
page 256 to page 257.	Mr Justice Olsson says that

the words "so prepared" in clause 4.05(b) mean

"prepared according to the mandatory requirements",

literally and precisely, in other words.

So that what they are saying is that there is

a view of the contract that requires a precise

compliance with the clauses of the contract. Now,

we say that is wrong because once you understand

that a dispute about that - now, we are talking

about clause 4.05. That is the clause that sends

it off; 4.05 makes it fit into 23.02. It has to

get in; it says so. It says if there is a dispute

about the input data, it is to go to arbitration.

matter arising out of the revised block or unit

Therefore, that must cover the whole field.

participation - any matter - that must go to

arbitration. So, that must, of necessity, embrace

the whole area, and we say that the crucial

language is 4.05 which says it has got to go to

arbitration.

effect on the final judgment, and I do not want to delivered a decision about a stay. It has had its So what we say is that the Full Court has go through those cases again. It is clear what

reasoning they have adopted. Mr Justice Bollen in

the second case had his attention drawn to what the and he refused to grant leave to appeal because of

what the Full Court said. I have referred

Your Honours to that passage.

Now, what we say, Your Honours, therefore, in respect to my learned friend, is that the case

clearly raises the interpretation of 4.05 and it
raises the interpretation of section 53 and it is

clear, in our respectful submission, that the

Full Court has not paid any regard to the mandatory

crucial factor in Sir Owen Dixon's language or in

Santos 49 SIR M. BYERS, QC 5/9/91

Lord Selborne's language. Now, that is all I want

to say in reply, if the Court pleases.

BRENNAN J:  Thank you, Sir Maurice. The Court will adjourn

to consider what course it will take.

AT 4.12 PM SHORT ADJOURNMENT

UPON RESUMING AT 4.26 PM:

BRENNAN J:  The Court is of the view that special leave to

appeal should be refused in each of these

applications.

As regards application No A17 of 1991, we

consider that it would be inappropriate to grant
special leave to appeal to enable a review of the

correctness of the order refusing a stay of

proceedings in circumstances where, since the

Full Court of the Supreme Court confirmed the refusal of the stay, there has been a lengthy hearing at first instance in the Supreme Court,

followed by an appeal to the Full Court of that

court.

It is unnecessary to consider whether a

successful attack upon the order granting the stay
would, of itself, entitle the applicant to relief

against the judgment from which special leave to

appeal is sought.

The other matters which would be involved in

an appeal to this Court relate to the construction

of particular clauses of a particular agreement and

are not such as to warrant a grant of special leave

to appeal.

As to application No A22 of 1991, it would be

inappropriate for this Court to entertain a direct

appeal from the decision of the primary judge in

the circumstances of this case when the Full Court

possesses jurisdiction to grant leave to appeal

from such a decision. Accordingly, special leave

is refused.

Santos 49 5/9/91

MR JACKSON:  I ask for costs of both applications?

BRENNAN J: With costs.

AT 4.28 PM THE MATTER WAS ADJOURNED SINE DIE

Santos 50 5/9/91