Taylor Kemp and Associates Pty Ltd v Gavin W F Ranger and Mrs Elaine B Holbrook No. SCGRG 92/1708 Judgment No. 3749 Number of Pages 3 Arbitration the Award

[1992] SASC 3749

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA MOHR J

CWDS
Arbitration - the award - Arbitrator - interpretation and application of an award - ruling and advice on question of law. Respondents building owners - appellant the builders - indicative price of architect plans from $215,000 to $230,000 - considerable increase in cost - deletions made to plans of house - definition of "reduced scope of work" - appellant obliged to complete house less deletions for sum of $250,000 - failed to do so and work completed by respondents - $10,977.19 balance due to owners - arbitrator's findings correct - award cannot be challenged - appeal dismissed. Commercial Arbitration Acts 38(2).

HRNG ADELAIDE, 18 November 1992 #DATE 10:12:1992
Counsel for appellant:     Mr D Black
Solicitors for appellant:    David Black and Co
Counsel for respondent:     Mr C Eaton
Solicitors for respondent: Eaton and Associates

ORDER
Appeal dismissed.

JUDGE1 MOHR J This is an appeal brought pursuant to Section 38(2) of the CommercialArbitration Act. 2. In essence the appellant says that the arbitrator, a Mr Sarah, erred in his interpretation and application of one section of an award made by Mr Howard, a lawyer, to whom had been referred various matters arising in Mr Sarah's arbitration which called a ruling and advice on various questions of law. 3. The respondents were the building owners. They owned a block of land at Sunnyside Road, Glen Osmond. A Mr Ranger, an architect, prepared sketch plans. Mr Ranger knew Mr Taylor and provided him with a copy of all the sketch plans and together with a schedule of finishes. Mr Taylor was to give an indicative price. He did so within the range "$215,000.00 to $230,000.00". 4. The appellants, apparently through Mr Taylor, after various negotiations undertook to build the house. Work was undertaken but by late August 1990 it became apparent that there was to be a considerable increase in the cost of the building. There was a meeting between the parties on 23rd October 1990 in an effort to sort the matter out. This agreement and its meaning was the subject of the reference to Mr Howard. 5. I have given a very short account of what preceded the reference to Mr Howard. He went into the matter at considerable length and heard witnesses and received documents. There is no complaint that his findings were incorrect. What is in question is whether or not Mr Sarah misinterpreted those findings and in particular one of them. 6. The findings were:-
    "1. The owners accepted the fact of the cost over-run.
    2. The owners chose not to investigate or seek to enforce
    such rights as they may have had to oblige the Builder to
    complete the entire dwelling as planned for not more than
    $250,000.00.
    3. The owners chose to make deletions from the works.
    4. The Builder agreed with the owners that based on his
    estimates of the savings resulting from the deletions the
    balance of the works could be completed for $250,000.
    5. The parties agreed to proceed with the works on the cost
    plus basis on terms that the various items discussed would be
    deleted from the works and the balance would be completed for
    not more than $250,000.
    6. The parties would meet from time to time as they had done
    previously to discuss and agree upon issues affecting the works
    as they arose having regard in particular to:-
    (1) saving costs,
    (2) an early completion date.
    7. It was contemplated by the parties that various items not
    specifically discussed at the meeting might be varied to save
    costs or expedite the works - as well there was some work in the
    nature of fitting out or finishes e.g. tiles where the owners
    needed to work in with the Builder to expedite completion
    without interrupting other trades.
    8. The maximum cost of $250,000 remained but applied to a
    reduced scope of works resulting from the deletions." The particular finding which gives rise to this appeal is Number 8, and relates to the meaning to be put on "a reduced scope of work". 7. The reduced scope of work came about in this way. The parties in their agreement of 23rd October 1990 agreed that certain parts of the planned house would be deleted. Mr Howard described it thus in his reasons for coming to his final findings:- "In fact Mr Taylor agrees and I find that items agreed to be deleted included the garage, internal wall insulation and some joinery. There may have been other deletions - I am not required to make findings as to the precise scope of the deletions." 8. On that basis the matter was referred back to Mr Sarah. The question that he had then to determine was whether the builder had for the sum of $25,000.00 to do the work in the plans and specifications less deletions and what were the deletions. 9. At the resumed hearing before Mr Sarah after he had received Mr Howard's findings and reasons, he heard further evidence. 10. He referred to the Howard reasons and in particular to the passage quoted above and continued:-
    "Secondly, in the Second Hearing the builder admitted that
    there were no other agreements about deletions, and this was
    confirmed in relation to each of the items of claim raised by
    the Owners. This means that if Mr Howard had pursued the issue
    as to whether any other deletions were agreed, he would have
    found that there were no other agreements." 11. Thus by a consideration of Mr Howard's findings and those of Mr Sarah at the second hearing the position was that pursuant to the agreement of 23rd October 1990 the appellant was obliged to complete the house according to the plans and specifications subject to he deletion of the garage, the internal wall insulation and some joinery for the sum of $250,000.00. 12. The appellant did not do so and Mr Sarah found that eighteen items had been completed or were to be completed by the respondents which should have been done by the appellant. He made the appropriate allowances in favour of the respondents with this result:- Valuation of Owner's entitlements for completed work $ 41,168.85 Financial Statement Actual costs of Works $ 255,553.58 Builder's entitlement under the contract $ 250,000.00 Owner's entitlement for uncompleted work ( 41,168.85) Completed work $ 208,831.25 Previous payments $ 219,908.34 Balance due to Owners $ 10,977.19 In my opinion Mr Sarah correctly interpreted and applied Mr Howard's findings and in the light of his findings of fact the award cannot be challenged. 13. I dismiss the appeal.