Tanning Research Laboratories Inc v O'Brien

[1989] HCATrans 57

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S212 of 1988

B e t w e e n -

TANNING RESEARCH LABORATORIES

INC.

Applicant

and

J. O'BRIEN

Respondent

Application for special

leave to appeal

DEANE J
TOOHEY J

GAUDRON J

Tanning

TRANSCRIPT OF PROCEEDINGS

·AT SYDNEY ON·FRIDAY, 17 MARCH 1989, AT 12.37 PM

Copyright 1n the High Court of Australia

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MR J.C. CAMPBELL, QC:  Your Honours, I appear with my learned

friend, MR J.E. THOMSON, for the applicant in the

matter. (instructed by Blake Dawson Waldron)

MR R. WHITE: If the Court pleases, I appear for the respondent.

(instructed by Hunt & Hunt)

MR CAMPBELL:  If I could hand up to Your Honours a collection

of material which may be of some use in the application.

Your Honours, in this case we submit that there

is an important question of public importance arising

about the construction of section 7 of the ARBITRATION

(FOREIGN AWARDS AND AGREEMENTS) ACT 1974. It concerns

whether, when there is an international arbitration

agreement and one of the parties to that agreement

goes into liquidation, the Court must stay any

appeal from a decision of the liquidator concerning

proof of debts. We would submit that that is an

important question because there are clearly many

contracts which contain arbitration clauses which are
within the scope of the ARBITRATION (FOREIGN AWARDS AND

AGREEMENTS) ACT and liquidation is by no means an uncommon event.

DEANE J:	Of course, you have going for you in this case a
particular complication, have you not, and that is
that three of the four judges of the supreme court
who have dealt with this have said the case is not
one for a stay?
MR CAMPBELL:	Yes.

DEANE J: And yet the outcome of the litigation to date

is that a stay has been ordered.

MR CAMPBELL:  Precisely, and the very fact that the decision of

the Court of Appeal is that there be a stay and that

that decision has been arrived at through the operation

of the convention which resulted in Mr Justice McHugh

withdrawing his orders means that the law has been

pronounced in a way that the majority of the judges

do not believe it to be.

DEANE J: Well now, if that stood on its own and in the context

of section 7, there would obviously be strong grounds

for arguing that leave should be granted. Now, the

other side of the coin is that there are questions
of estoppel involved which, at first glance anyway,

seem to turn very much on particular facts and lurking

in the background, at least in the Court of Appeal,

there was a question of straight fact.	Now, what do
you say? Can this question be isolated from them or	-?

MR CAMPBELL:  It is not possible to isolate this question from

the issue estoppel question because there is no majority

in the Court of Appeal on issue estoppel. The way that

the numbers stacked up in the Court of Appeal was that

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Mr Justice Kirby held that there was no issue estoppel about the quantum of the debt arising from the Florida

proceedings. Mr Justice McHugh held there was. And

while Mr Justice Mahoney inclined to the view that

there was no issue estoppel, he expressly said that he

did not decide the question.

DEANE J:	The problem about the question of fact is that it does
not lie in your hands except to say, perhaps, that
there would be a matter of concurrent findings.
MR CAMPBELL:	Which question of fact is Your Honour adverting

to?

DEANE J: Well, was there not an appeal on fact to the Court of

Appeal by your opponent?

MR CAMPBELL:	Concerning the quantum?
DEANE J:	Yes.

MR CAMPBELL: That is something that certainly can be adequately

isolated because - - -

DEANE J: That might be so but it is rather difficult to isolate

a question by saying to a respondent that he cannot

cross-appeal in relation to it.

MR CAMPBELL:  Yes. We would submit that any_inconvenience that

arises from that would be fairly small in scope.

The question that there is about the proper construction of the ARBITRATION (FOREIGN AWARDS AND AGREEMENTS) ACT

is a very important one and that this Court just ought

not leave the law in the unsatisfactory state that it

is in as a result of the decision of the Court of

Appeal.

DEANE J:	I think we might hear what Mr White has to say,
Mr Campbell.
MR C.AM:e:BELL-:.	Thank you, Your Honour.
MR WHITE: If the Court pleases. There is no doubt that the issue

under the Act is one of importance or that if it stood

alone there would be strong grounds for this Court to

grant special leave.

The primary reason, however, in my submission,

why it is not appropriate to grant special leave in

this case is that that issue under the Act may just not

fall to be decided.	It arises only if both parties
fail on the	respective estoppels for which they
contend.

There are essentially three issues between the

parties, that is to say, issues of law as distinct

from the issue of quantum to which Your Honour

Justice Deane referred. The three issues were first,

tnat the liquidator said that the applicant was estopped

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from proving its claim in the liquidation, because it

did not mount a cross-claim in the Florida arbitration,

and that argument was upheld by Mr Justice Mahoney in

the court below. If that be right, the question of

staying the proceedings under the Act does not arise.

DEANE J: Except does not the question of a stay arise at the

forefront?

MR WHITE:  In my respectful submission, not because if the

estoppel were made good, the applicant in this case

would be prevented from bringing the proceeding which

is sought to be stayed under the Act.

DEANE J: Except the problem is that rightly or wrongly there is

a stay of the proceedings ordered under the Act and when

one looks at the judgments, the judge at first instance

and the majority of the Court of Appeal have all said

that the section under which the stay has been ordered

is not applicable to the proceedings.

MR WHITE:  Quite so, Your Honour. And this position so far as

other parties in the cotmnunity are concerned would not,

in my submission, be any way advanced if the matter

were to proceed on appeal to this Court and this event and it would do so if it upheld either the view

of Mr Justice McHugh in the court below on issue

estoppel or the view of Mr Justice Mahoney, in my

submission, on the ground of PORT OF MELBOURNE

AUTHORITY V ANSHUN estoppel. If, as is undoubtedly

the case, this is a question of importance and is

likely to arise in the liquidation of insolvent

_companies which are a party to an international

arbitration agreement, it is quite likely in the not

too distant future that another matter will arise for

consideration which will not be complicated by the

respective estoppels which exist in this case.

That, shortly, Your Honours, is the ground of the

opposition for the special leave.

DEANE J:

Thank you, Mr White. The Court is not enthusiastic,

Mr Campbell, but you may have your leave.

MR CAMPBELL:  Thank you, Your Honour. Might there be an order

that costs be costs in the cause?

DEANE J: Yes, costs will be costs in the appeal.

MR CAMPBELL: If the Court pleases.

AT 12.50 PM THE MATTER WAS ADJOURNED SINE DIE

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