Tesseract International Pty Ltd v Pascale Construction Pty Ltd

[2023] HCATrans 65

[2023] HCATrans 065

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A26 of 2022

B e t w e e n -

TESSERACT INTERNATIONAL PTY LTD

Applicant

and

PASCALE CONSTRUCTION PTY LTD

Respondent

Application for special leave to appeal

GORDON J
EDELMAN J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO CONNECTION

ON FRIDAY, 19 MAY 2023, AT 9.31 AM

Copyright in the High Court of Australia

GORDON J:   In accordance with the Court’s protocol for hearing matters remotely, I will announce the appearance for the parties.

MR B.W. WALKER, SC appears with MR T.J. MARGETTS, KC and MR L. J. CONNOLLY for the applicant.  (instructed by Macpherson Kelley)

MR F.P. HICKS, SC appears with MR W.V. McMANUS for the respondent.  (instructed by Kennedys (Australasia) Partnership, and FBR Law (as town Agent))

GORDON J:   Mr Walker.

MR WALKER:   May it please the Court. 

GLEESON J:   Excuse me, at the outset – I am sorry, Justice Gordon, I cannot see Mr Hicks. 

GORDON J:   I am sorry, Mr Hicks is appearing by telephone, and he is online.

GLEESON J:   Thank you.

MR WALKER:   May it please your Honours.  The abolition in the large class of cases involving claims for, in particular, monetary relief, classically in the form of damages, so as to abolish so-called “solidary liability”, was a very important step in what we call “the law of the land”, to borrow from Sir Ninian Stephen in an important authority to which I will come.

In particular, it was advanced, as your Honours know, pursuant to consideration of law reform accepted, in the main, by the various jurisdictions in this country with some, but not critical differences between them, by reason of borrowing well-known and well-understood concepts that had underlain, in particular, the abolition of contributory negligence as a complete defence, as well as, of course, contributions between concurrent tortfeasors by similar statutory reform.

As well as, of course, contributions between concurrent tortfeasors by similar statutory reform.  The touchstone in particular can be seen on page 100 of the application book in the apportionment of liability law reform statute of South Australia, which is at the heart of this case.  Section 8(2) using the familiar expression “fair and equitable” in order to describe that percentage to which a defendant’s liability is to be limited by reference to the responsibility, in particular, of other wrongdoers.

You will see, at the federal level, starting on page 103, the parallel provisions are framed differently but not substantively so; on page 104, section 87CD(1)(a) refers to the amount:

that the court considers just having regard to the extent of –

so‑called “responsibility”.  So, an “apportionable” or “proportionate” liability is for cases involving economic loss, property damage not associated with personal injuries, a most important part of the law of Australia, to be litigated or arbitrated, as the case may be.

GLEESON J:   Mr Walker, do you accept that the word “defendant” is not apt to describe a respondent to an arbitration?

MR WALKER:   Of course I do, just as the word “plaintiff” is not apt.  The court below had ultimately little or not difficulty in reading such expressions in the moulded fashion that Sir Anthony Mason described in Codelfa following the Atkinson‑Leighton Joint Venture decision as called for when considering the general principle that arbitrations should be determined according to the law of the land.

GLEESON J:   What is the principle that supports that concept of moulding?  Is it an aspect of the implied term?

MR WALKER: As the jurisprudence stands in this country at the moment, your Honour, yes, it appears to come – when one sees the famous passage, first of all at 146 CLR 235, Justice Stephen compares that with the perhaps even more famous passage at 246, 247. It would appear that there is common ground, bearing in mind what Sir Ninian says on page 235 about the authorities, but it turns on something that is called an implied term.

One of the doctrinal issues, not central, but obviously of some importance, is to examine whether or not that is an implied term in the Moorcock sense or whether it is an implied term by reason by reason of a class of case or whether it is sui generis.  One way or another, however, it is something so significant concerning the well of arbitration compared to litigation as to have attracted the word “principle” from Sir Ninian Stephen.  The principle is pronounced in terms which really call up as necessary such moulding as may be required to reflect the fact that the law of the land is not only judge‑made but is very, very often, and very importantly, statutory.

So, an issue arose, and the Atkinson‑Leighton Case was and still is the cardinal example of this, as to whether the terminology of a statute which was peculiar or expressly directed to the activities of the judicial arm of government could, nonetheless, be moulded so as to have certain substantive provisions applied in an arbitration, and the answer was resoundingly, yes.  Now, that was at first, as your Honours know, with the court’s statutory power to award interest – pre‑judgment interest.

EDELMAN J:   But that is always subject to the agreement of the parties.

MR WALKER:   Of course so, and that brings me, if I may say so, to the Commercial Arbitration Act itself ‑ ‑ ‑

GORDON J:   Mr Walker, just before you undertake that exercise, are we right to proceed on the assumption that, relevantly, recognising that there are differences, that both what I will call the law reform proportionate liability regimes and the Commercial Arbitration Acts are uniform to the extent necessary?

MR WALKER:   That is to the extent necessary, your Honour.  Alas, it is a large footnote to point out textual differences and probably an even larger one to spell out what might actually be substantive differences between jurisdictions.  But, in the main – and as to the points that we are concerned with and would be pressing upon the Court – there is close to uniformity.  There is one exception to that – to which we have drawn attention – Victoria alone predicates the reduction in liability by reference to the wrongdoing of another on the involvement of that other in the proceedings.

So, that is a stand‑out of relevance to the issues that we wish to ventilate.  Otherwise, what your Honour asks ought to be answered, yes, in the main and, certainly, so far as questions that might be regarded as matters of principle.  There seems to be a national uniformity for such close similarity as to make this of national significance.

GORDON J:   As I understand it, in response to the question you were just asked by Justice Edelman, there are three bases upon which you contend that these provisions apply.

MR WALKER:   Yes.

GORDON J:   Are each of those three bases the subject of the application for leave – and by that, I mean own terms, et cetera?

MR WALKER:   Each of the three, in order, perhaps, of significance.  The first two come fairly closely‑yoked together.  They are the choice of law provisions – section 28, at page 107 of the application book, and the implied term.  In terms of national significance, we would have to say the implied term is that which ought interest this Court most.  We accept that.  However ‑ ‑ ‑

EDELMAN J:   . . . . . choice.

MR WALKER:   I am sorry, your Honour?

EDELMAN J:   So, Mr Walker, just in relation to earlier point, I think one other potential difference – I am not sure whether you say anything turns upon it – is that in Queensland, contracting‑out is expressly excluded unlike, I think, every other State, for the proportionate liability provisions.  Justice Doyle did not place much weight on that.

MR WALKER:   No.

EDELMAN J:   Do you say anything turns on that?

MR WALKER:   No, we do not say anything turns on it concerning the issues at hand here.  The fact that one cannot contract out in general – that is, leaving aside questions of the parties choosing their own dispute resolution rules under an arbitration agreement – we do not say that that has any effect.  In particular, we would stoutly resist the notion that it weakens the significance of the question of principle which concerns the comparison of dispute resolution by arbitration according to the law of the land and dispute resolution by litigation according to the law of the land.  That is not ‑ ‑ ‑ 

EDELMAN J:   Does that question of principle extend also to contributory negligence?

MR WALKER:   Well, contributory negligence is one of the most obvious longstanding statutory alterations of the substantive law so as to now be fairly described as the law of the land.  It has this stark distinction, which makes this case an appropriate vehicle to examine the general matter of principle which we urge.  The difference is that in contributory negligence, of course, everybody involved in a dispute concerning its effect will be before the tribunal in question, whether it be judicial or arbitral, by definition – because it is an answer by the party defending a claim to the person advancing the claim.

The difference here is that the answer advanced by the party defending the claim is one which points to somebody outside the duality of claimant‑respondent.  And that is, in our submission, a most important step of principle for the Court to consider in relation to this fundamental question about what is the law to be applied substantively, not procedurally, to the dispute between parties governed by a chosen law.

Now, as your Honours will have noted, and it is more than mere fustian, the way in which the paramount object in section 1C of the Commercial Arbitration Act is familiarly framed.  And so, if I may say so, it is part of what might be called the advertising campaign of centuries in relation to arbitration.  The paramount object is to facilitate a fair and final resolution of commercial disputes, et cetera.

Now, when the choice of law by section 28, which you will find on the next page, picks up the law of the polity, in a federal nation, of course, and that means all three sources of law with which we are familiar, the question arises, how could one, with respect to substantive law, which is expressly framed by reference to what is “just” or “fair” and “equitable”, how could that lead to such a truncation of rights and obligations according to substantive rules in the facilitation of fair and final resolution as has occurred in the Court of Appeal here?  Let me explain.  This is a case which proceeded under subsection (3) of section 28, namely, no:

designation by the parties –

by way of choice of law, but the obvious connection of the dispute and the contract being such as to render the choice of South Australia inevitable, there is no contest around any of that.

Now, the choice of South Australian law is not a choice which, in this case, is attended by any consensual carve‑out pursuant to the arbitration agreement of a kind which can be made.  After all, the parties could even agree to have their disputes decided ex aequo et bono.  So, there is no question here that by operation of familiar principles of choice of law, an arbitration agreement, all encapsulated appropriately in section 28 that it is the law of South Australia, and that is what answers the description in the old‑fashioned but evocative phrase “the law of the land” to which Sir Ninian was referring.

Now, the law of South Australia did not, and does not, render proportionate liability whilst being called the shifting of the risk of insolvency, in particular to a plaintiff away from a defendant by abolishing solidary liability, it does not render that conditional upon the other putative wrongdoer or wrongdoers being before the court in the case of litigation or, as we would submit, before the arbitration in the case of arbitration.  That last proposition is, of course, what we failed on below and what, in our submission, renders this case an urgent and important one for this Court to consider, because it will affect the nature of arbitration both as to its appropriateness to be agreed in prospect and as to its effectiveness in dispute resolution after the event of a contest.

Now, what has occurred in this case is that there has been a carve‑out by reference to some notion of repugnancy – my word, not Justice Doyle’s word – detected by his Honour between the regime of arbitration, which is closed in the sense that third parties cannot be brought in compulsorily in the main, and on the other hand litigation in which procedures can be resorted to, which notoriously can produce successions of cross‑claims and the like.  In our submission, the difficulty that has been thrown up can immediately be seen by considering the nature of the provisions, your Honours have seen them, sections 10 and 11 in the State regime, page 102, section 87CE and, in particular in CE, the costs provisions which are the most elaborate part of that provision.

You can see that, quite explicitly, even something as elementary as the wrongdoer who has the claim made against it not obeying the requirement of the law to provide information, even that will not adduce according to these provisions any removal of the protection of the law reform that is the proportionate liability.

GLEESON J:   Mr Walker, do you suggest that section 11 is a provision that can be moulded?

MR WALKER:   No.  Your Honour, it will not need any moulding.  It will be able to be, subject to understanding the word “plaintiff” and the word “judgment” and, for that matter the word “appeal”, it will be moulded simply to produce the same substantive effect for the arbitral award as section 11 accords to a judgment.

So, yes, that is moulding, but in the sense that is almost second nature to us since Atkinson‑Leighton, so of course section 94 of the Supreme Court Act (NSW) for interest, the use of the word “court” requires, if you like, a kind of moulding. It is a very straightforward part of moulding. It does not leave any rough edge at all. It may be that section 11, for example, may require some more adjustment, but the substantive admonition of section 11 can be directly and plainly applied so long as one ‑ ‑ ‑

GORDON J:   One of the difficulties is the word “actions”, is it not, in the first line.

MR WALKER:   Your Honour, that is right at the heart of the matter.  Yes, right at the heart of the matters.  Those are words which, in our submission, according to the learning in this Court to date, would not deter these being provisions constituting law of the land which will be applied, ad subjectam materiam if you like, with moulding in relation to arbitrations.  Those are important questions as to whether that cumulation of specifically judicial nomenclature prevents the enforcement of the law of the land under such substantive provisions by an arbitration.

Now, it has to be said, of course, that Justice Doyle below in very careful reasons, considers that accumulation of nomenclature, expresses concern about, as it were, its wage but ultimately decides in our favour on that matter.  How we lost, and why, in our submission, this case is ripe to be considered by this Court in an important issue for commerce and the profession can be first seen, if I can take your Honours, please, to page 47 of the application book in paragraphs 70 and 71, where the oddity appears that his Honour correctly ascertains what:

the substantive law of the system of law applicable under ss 28(3) –

see the third line of 70.  And then says that the fact that is applicable does not mean it must be applied, which is entirely contrary to ordinary legal usage of the notion of applicable law.  Think of any choice of law outcome, the applicable law is X, that means you must apply it, because it is law.  When one goes down a few more sentences ‑ ‑ ‑ 

GORDON J:   Well, is that right?  I mean what he says in paragraph 70 is applicable does not mean require, or:

does not operate to require that every substantive law within that system be applied.

So, he draws a distinction.

MR WALKER:   Your Honour, he does.  However, what I am saying is that “the law of the land”, that is an evocative phrase meant to refer to judge‑made law and statute law in a federation both at federal and State level.  We are all familiar with that, whether it is seamless or not does not matter; it is all one.

GLEESON J:   Mr Walker, is your case that section 11 will necessarily apply to an arbitral award or do you put it in the alternative?

MR WALKER:   We have not reached that in this case, but it is – one can address it in alternative fashion but, yes, it would be moulded to an arbitration.  That is, the arbitration award would serve a function in proceedings that might follow it, just as a judgment would serve a function in proceedings that follow the proceedings in which the judgment was given.

Your Honours, I was going to refer you as well, not only to the oddity of the non-applicable applicable law in 70 and 71, but also to the approach that your Honours will see on page 81, paragraphs 189, 190 and 192 in particular.  There is an error, with great respect, in 192.  It is not true that the reduction by reference to the wrongdoing of another will only occur, as his Honour says in the third line of 192:

After the plaintiff has had the benefit of information.

The very provisions to which I have drawn attention – the costs penalty for not cooperating at that elementary level without losing the reduction in liability points out that you get the reduction of liability whether or not somebody is joined.

You get the reduction of liability, indeed, even if you do not provide that elementary, mandatory cooperation of providing information – emphasising, in our submission, how wrong it was for his Honour to say that the evidence concerned for not only third parties but for a plaintiff in terms of a once and for all dispute resolution should be enough to alter the substantive law to an entirely artificial state – a notional state – if people involved in what I might call “multi‑party” – usually, engineering or building disputes – arbitrate rather than litigate.

It is because arbitration is, as your Honours can guess, very often a choice in prospects – not just ad hoc – mostly in prospect by parties before they are in dispute in such work and those claims are, basically, the kind to which this reform was directed.  It is because of that, in our submission, that it is so surprising that the substantive law would be altered in this fashion without there being anything in the law reform proposals or any of the extrinsic materials – that parliaments, in enacting these provisions, had in mind that they would not apply – full stop – would not apply – in arbitrations.

GORDON J:   Yes, thank you, Mr Walker.

MR WALKER:   May it please the Court.

GORDON J:   Mr Hicks.

MR HICKS:   Thank you, your Honours.  The respondent contends that special leave to appeal should not be granted in this matter for the following reasons.  First, the decision of the South Australian Court of Appeal substantially concerns the model legislation as it is set out in the Commercial Arbitration Act (SA) and also the proportionate liability provisions.

To the extent that there are equivalent or similar provisions under other States’ legislation, and, indeed, the Commonwealth, there is no suggesting the approach taken by the South Australian Court of Appeal was inconsistent with or created any difference with the approach taken in other jurisdictions.  In fact, the opposite is the case, and this decision is entirely in conformity with the approach taken in Tasmania, Victoria and Western Australia, where the same or similar issues have arisen.

EDELMAN J:   Well, Mr Hicks, that may just mean that the issue becomes even more important if they are all wrong.

MR HICKS:   I would have to accept that, your Honour.  But we would submit that, in fact, they are all correct, particularly having regard to the manner in which they have approached the question of whether or not these provisions apply by force of their own terms.

EDELMAN J:   But you do not say that there is anything unique to this arbitration agreement that would set it aside from any other arbitration agreement in which these types of general questions arise.

MR HICKS:   No, we do not say that there is anything particular about the terms of the arbitration agreement or the subject matter of the dispute to which arbitrations are applicable – or an arbitration is applicable – between these parties that would make it distinctive in that sense, no.

EDELMAN J:   Thank you.

GORDON J:   Mr Hicks, just while you are interrupted, I understand from what you have just said that you agree with Mr Walker that to the extent relevant – and I say “the extent”, because there are differences – that the substantive provisions of the proportionate liability provisions, and also in the Law Reform Acts and the Commercial Arbitration Acts, are not relevantly different for the purposes of these arguments.

MR HICKS:   The only distinction might be section 11 of the South Australian legislation, because that does seem to have a peculiar feature to it, with respect to the binding nature of a – described as judgment, but if it were extended to an arbitral award, upon third parties who may not have the opportunity or even be aware of the arbitral proceedings going on – and when I say, opportunities, that is, say, opportunity to participate – section 11 does have some very specific features, when one looks at it as it appears in the application book at ‑ ‑ ‑

GORDON J:   You will find it on page 102, I think.

MR HICKS:   Page 102.  Yes.  Thank you, your Honour.  Where the determination or:

the judgment first given . . . determines for the purpose of all other actions –

(a)the amount of the plaintiff’s notional damages; and

(b)the proportionate liability of each wrongdoer who was a party to the action; and

(c)whether the plaintiff was guilty of contributory negligence and, if so, the extent of that negligence.

And that was a matter which his Honour Justice Doyle addressed in some considerable detail when considering whether or not, at least, the South Australian proportionate liability provisions could or should apply to an arbitration of having or going to, as his Honour identified, the inability to join a third party to those proceedings without consent, and the fact that there may very well be, then, a determination that is made absent the participation of someone who is, obviously and materially, affected by it.

For the purposes of the application before the Supreme Court of South Australia, critically, the question of law concerned the whole of Part 3 of the South Australian legislation and Part 6A of the Competition and Consumer Act, and there were two important matters concerning these statutory provisions, which are addressed in the judgment.  First:

The introduction around Australia of various proportionate liability regimes, intended to entitle a defendant to confine its liability for a plaintiff’s loss –

Was described as:

a radical change from the common law –

that is paragraph 14 of the decision, page 28, of the application book.  And secondly, what was introduced were whole schemes or regimes whereby common law “solidary liability” is set aside in favour of apportionable liability, in particular, and prescribed circumstances – and that was addressed at paragraph 63 of the judgment, page 45 of the application book.  Your Honours, this Court in Hunt & Hunt Lawyers v Mitchell Morgan Nominees described proportionate liabilities provisions of Part 4 of the Civil Liability Act (NSW) as a “regime” whereby:

liability is apportioned to each wrongdoer according to the court’s assessment of the extent of their responsibility.  It is therefore necessary that the plaintiff sue all of the wrongdoers in order to recover the total loss –

Further, in Selig v Wealthsure Pty Ltd, this Court considered Division 2A of the Corporations Act and observed that under the statutory regime of proportionate liability, liability was apportioned for each wrongdoer according to the Court’s assessment of the extent of responsibility.  They reiterated what had been put in place was, indeed, a scheme or a whole regime with respect to the application of proportionate liability as it might be exercised in circumstances where a party who is sued for damages wishes to contend that there is some other person who is a concurrent wrongdoer.

The distinction, we submit, that Justice Doyle correctly made when reaching the conclusions that he did and, with whom the other members of the Court agreed, is really best identified in the judgment at paragraphs 189 and following, which is at page 81 of the court book.  Here, the reasons identify that the question of whether or not these legislative provisions should apply to arbitration – although concerned with the force of their own terms – address the separate parts that make up the whole of the scheme.  At paragraph 190, his Honour Justice Doyle, identified that he accepted:

the key operative provision in each of the regimes would be capable of operating in arbitration proceedings; that is, the provision limiting the defendant’s liability to its share in the responsibility for the plaintiff’s harm –

He then went on in paragraph ‑ ‑ ‑

EDELMAN J:   Do you accept the premise of this discussion, that there is, as has been commonly accepted, an implied term that the arbitrator has power to determine a dispute according to the applicable substantive law?

MR HICKS:   We submit that the form of the implied term as it has been described is correctly addressed by Justice Doyle in earlier parts of the decision, and that implied term is not as absolute or as unqualified as it appears that our friends wish to submit.  We say the implied term as described by his Honour Justice Stephen in GIO v Atkinson‑Leighton has always been:

subject to such qualifications as relevant statute law may require –

That is a passage which is set out in the reasons of Justice Doyle at paragraph 140, page 66 of the application book.

EDELMAN J:   But may be intrinsic anyway in picking up – because if the implied term picks up the statute law it also has to pick up all of the qualifications contained in the statute law.

MR HICKS:   Yes, and we would submit that insofar as the implied term is relied upon with respect to these matters, because of the whole of the scheme which needs to be applied singularly or as one, as it were, with respect to proportionate liability, the implied term is not sufficient to confer on the arbitrator power to determine matters on a proportionate basis when the arbitrator does not have the capacity or power to give effect to the whole of the regime and the scheme.

Now, in our submission, in addition to the proposition that what lies behind the principle is that arbitrators must determine disputes according to the law of the land, what is also further stated in that passage from the decision of Justice Stephen is that, to conclude:

a claimant should be able to obtain from arbitrators just such rights and remedies as would have been available to him were he to sue in a court of law of appropriate jurisdiction.

One of the submissions that we make is that quite simply a claimant in the position of Pascale Construction Pty Ltd is not able to obtain from an arbitrator the rights and remedies as would have been available to it had it been able to sue in a court of law because the arbitrator is not able to join those persons alleged to be concurrent wrongdoers to the proceedings and to make, then, awards for a recovery of total loss representing the extent to which each of those concurrent wrongdoers is in fact culpable for the loss and damage that is the subject of claim.

So, in terms of the implied term, or the implied conferral of power, the qualifications or the provisions which attain or attend to it, having regard to the whole nature of the scheme and the regime, preclude the arbitrator from applying, or imposing, part of that regime to the benefit, in this case, of the respondent to the arbitral proceedings without being able to also provide the benefit of the whole of those matters.  We submit that what Justice Doyle said in paragraph 192 at page 81 of the application book is not simply that the “potential” for recovery is

reduced by reference to the wrongdoing of person other than the defendant without that other wrongdoer necessarily being party to ‑ ‑ ‑

EDELMAN J:   That is not a submission though, is it, that there is anything inherent in the proportionate liability legislation that would prevent it from being applicable in an arbitration.  In other words, the parties could, as I understand your submission, expressly provide that the applicable law included the proportionate liability legislation.

MR HICKS:   They could.  We would certainly accept that parties to an agreement for arbitration in respect to the dispute could expressly incorporate any aspect of the law that they wished to encompass as part of the matters to be considered by an arbitrator.  But what we do say is that ‑ ‑ ‑

EDELMAN J:   So, as Mr Walker put it in his terms, your submission really is meeting head‑on the argument that a generalised implied term, whether it be what is sometimes described as an implied term in fact or sometimes described as an implied term in law, is one that does not include as part of the law of the land the relevant proportionate liability legislation?

MR HICKS:   Yes, we submit that is because of the very nature of arbitration itself, the fact that it is an inter partes arrangement for the private determination of disputes between them and between them alone without the invocation or reference to any third party or third party liability.  We submit that the very reference to arbitration itself confines the issues between the parties to simply being a matter of whether or not there is a liability as between them with respect to any particular claim and that the very nature, as I say, of arbitration and its private and consensual content is such that there is no room for the introduction by the implied conferral of power to incorporate or invoke any reference to third parties.

GORDON J:   Mr Hicks, do you accept that there is a tension between what is set out by Justice Doyle at 192 and then read with the paragraphs through – giving rise to 196?  In other words, a recognition that we have the regimes, a recognition that they have comprised part of the substantive law, but then the carve‑out and the way it is explained in 196?

MR HICKS:   We would not necessarily describe it as a tension, but what we accept, certainly, is that there is a description that there may be certain parts of those regimes which are capable of operating in arbitration proceedings, as his Honour Justice Doyle observed in paragraph 190.  But we do submit that those parts cannot be ascribed or applied in isolation or separated from the whole of the regime or the scheme in which they appear.

We submit that Justice Doyle was totally correct in stating that the contemplated potential for proportionate liability, or indeed, the contemplated apportionment of liability, will only occur after the plaintiff has had the benefit of the information from the defendant as to the identity and whereabouts of any wrongdoer, the circumstances giving rise to that liability, and after the plaintiff has had an opportunity to join any such wrongdoers to the proceedings against the defendant.

We submit that the whole of the scheme, optimally applied, involves a single set of proceedings against all concurrent wrongdoers, and that is plainly what is envisaged by those provisions which require the giving of notice under cost sanction, and, in the case of the Commonwealth legislation, the express power of joinder with regards to those alleged concurrent wrongdoers.

We submit that having regard to that object and that approach in the context of asserted concurrent wrongdoers that it is clear that Justice Doyle was correct in not applying simply parts of these provisions – what he described as the “operative provisions” – absent being able to give effect to the whole of scheme in the context of an arbitration.

GLEESON J:   Mr Hicks.

MR HICKS:   Yes, your Honour.

GLEESON J:   Is there any dispute between the parties as to exactly what is involved in the moulding that is said to be required in this case?

MR HICKS:   I am not sure that there is, but I am not sure what exactly the moulding is that is proposed by the applicant other than simply the imposition of what, in a shorthand way, Justice Doyle described as the “operative provisions” such that the respondent in this case, Tesseract International, is entitled to assert that a party is a concurrent wrongdoer, and that issue will be determined by the arbitrator if it is allowed as part of these proceedings, and that concurrent wrongdoer – in this case it is a gentleman by the name of Mr Penhall – will, pursuant to section 11, potentially be subject to the outcome of an arbitral award that he has no capacity to participate in and has not say in the outcome for.

EDELMAN J:   Presumably when you say that there may not be any dispute as to whatever is meant by “moulding”, you do not include what is included in ground 4, which is the notion that the words of the legislation, particularly subsections 8(1) to (3), can be construed – or “moulded”, if you will – so that they extend directly to arbitration.

MR HICKS:   No, we do not.  We say that in terms of ground 4, which is that the terms of these legislative provisions apply by force of their own text, is not correct, and that his Honour Justice Doyle, consistent with what Justice Beech found in Western Australia, and as the Tasmanian Full Court found in Aquagenics, is that these terms of themselves, such as “court” and “action” do not, of themselves, incorporate arbitrations or disputes for arbitration.

And it is quite clear that those terms of court and action for damages clearly are confined to litigation and court process.  And, indeed, coming back to section 11 of the State legislation, it is clear why that was so, and Justice Doyle made observations which, we say, are apposite and correct with regards to those matters.

GORDON J:   Mr Hicks, is there anything else you wish to add?

MR HICKS:   No.  Thank you, your Honours.

GORDON J:   Thank you.  Mr Walker, anything in reply?

MR WALKER:   Briefly.  Ground 4 is not to the forefront of our application, of course.  Your Honours, arbitration notoriously, or famously – depending upon one’s view – does not, with exceptions that do not matter, permit the compulsory joinder of third parties.  So, one, for example, asks about the substantive law by which a concurrent tortfeasor can seek contribution from another.

Those third-party claims can never be ventilated and determined in an arbitration except, of course, by overall consent.  That is part of the landscape in which these reform statutes were legislated, namely, that some disputes, particularly of a kind to which the reforms spoke, would be arbitrated rather than litigated.

Just as one would not suppose that the impossibility of a third-party claim against a concurrent tortfeasor would deprive a respondent to an arbitration of the later capacity to seek, say, in litigation, contribution from such a concurrent tortfeasor, so here the fact that there cannot be the joinder in the arbitration except by consent of a third party whose responsibility renders it not fair and equitable to impose more than a particular liability on the respondent, neither should that be destroyed by the fact that arbitration notoriously prevents compulsory third-party notices.

It is for those reasons, in our submission, that there is not the difficulty to which Justice Doyle was referring so as to produce what, in our submission, is the oddity of the last sentence of his paragraph 189 on page 81 where, by way of expressing a conclusion that produces the outcome, his Honour referred to a result of:

a materially different proportionate liability regime from the one intended by the relevant Parliament.

In order to prevent that, and his Honour is there referring to the inability to have a third party joined in, his Honour destroys entirely the substance of the proportionate liability regime which has been enacted in terms of what is just or what is fair and equitable.

That, in our submission, is a topsy-turvy approach to the question whether or not the choice of law includes the proportionate liability regime.  Now, when one looks at those regimes and sees that neither of them posits the limitation of liability on the participation of the putative third party in the decision concerning the primary liability, and indeed, they do not even condition it upon complying with obligations for the provision of

information, that, in our submission, it can be seen that 189 is, without foundation, it has, working this radical effect, so as to produce a very, very different proportionate liability regime, namely, none at all.

EDELMAN J:   Mr Walker, can I ask you about your grounds of appeal.  Grounds 1, 2, and 3, really, are all bound up with your argument about implied terms, are not they?

MR WALKER:   Yes.  And section 28.  Yes, your Honour. 

EDELMAN J:   And ground 4 sort of stands apart, in that it is concerned with, really, just construction of the legislation, and that is the point upon which, all of it – you would need to say that all of the courts that have addressed that issue to date are wrong.

MR WALKER:   Yes.

EDELMAN J:   Are grounds 1, 2, and 3 all effectively just submissions that address what is the preliminary point of law that is set out at paragraph 9?

MR WALKER:   Yes.

EDELMAN J:   Yes.  Thank you.

GORDON J:   The Court will adjourn to consider what course it will take.

AT 10.19 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.23 AM:

GORDON J:   There will be a grant of special leave in this matter.  Mr Walker, it is clearly less than one day, is it more than half a day?

MR WALKER:   Not really, no, your Honour.

GORDON J:   Thank you.  Mr Hicks, do you agree with that estimate?

MR HICKS:   I do, thank you, your Honour.

GORDON J:   There will be a grant of leave, as I have said, and I ask that your instructors speak to the Deputy Registrar in relation to the further timetable of the matter.

Adjourn the Court, please.

AT 10.23 AM THE MATTER WAS CONCLUDED