Tulip Bay Pty Ltd v Structural Monitoring Systems Ltd

[2019] WASC 122

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   TULIP BAY PTY LTD  -v- STRUCTURAL MONITORING SYSTEMS LTD  [2019] WASC 122

CORAM:   MASTER SANDERSON

HEARD:   19 FEBRUARY 2019

DELIVERED          :   19 FEBRUARY 2019

PUBLISHED           :   16 APRIL 2019

FILE NO/S:   ARB 4 of 2018

BETWEEN:   TULIP BAY PTY LTD

First Plaintiff

KENNETH JOHN DAVEY

Second Plaintiff

AND

STRUCTURAL MONITORING SYSTEMS LTD

Defendant

Catchwords:

Practice and procedure - Interest on arbitration award - Cost of enforcement of award - Turns on its own facts

Legislation:

Nil

Result:

Interest and costs awarded

Category:    B

Representation:

Counsel:

First Plaintiff	:	Mr M J Keating
Second Plaintiff	:	Mr M J Keating
Defendant	:	Mr A P Rumsley

Solicitors:

First Plaintiff	:	Valenti Lawyers
Second Plaintiff	:	Valenti Lawyers
Defendant	:	Alan Rumsley

Case(s) referred to in decision(s):

Structural Monitoring Systems Ltd v Tulip Bay Pty Ltd [2017] WASC 379

Structural Monitoring Systems Ltd v Tulip Bay Pty Ltd [2019] WASCA 16

MASTER SANDERSON:

1. These reasons deal with the question of interest and costs as reflected in pars 2(b) and (c) of the orders I made on 19 February 2019.  The order itself gave leave to the plaintiffs to enforce an arbitration award as a judgment of this court.  That order was not opposed by the defendant.  However, the question of interest and costs was the subject of considerable argument and, in the circumstances, the decision I reached requires explanation.

2. The starting point is a chronology.  The plaintiffs and the defendant entered into a contractual arrangement the terms of which are not presently relevant.  The agreement contained an arbitration clause.  The parties fell into dispute and a notice of arbitration was issued on 7 June 2012.  Three arbitrators were appointed – Peter John Hannan, Philip George Clifford and Kelvin Lord.  From 18 March 2013 Mr Lord took no part in the arbitration proceedings.  On 18 November 2016 Mr Hannan and Mr Clifford provided their reasons for making an award.  On 21 November 2016 Mr Clifford confirmed the reasons were final. 

3. On 9 December 2016 the defendant issued an originating summons seeking to set aside the award.[1]  In essence, the defendant argued there had been misconduct by Mr Lord in not participating in the arbitration, and the award ought be set aside.  The matter was heard by Martin CJ and on 22 December 2017 his Honour concluded all three arbitrators had heard and determined the dispute and the award ought stand:  Structural Monitoring Systems Ltd v Tulip Bay Pty Ltd [2017] WASC 379.

   [1] In the Supreme Court of Western Australia ARB 7 of 2016 Structural Monitoring Systems Ltd v Tulip Bay Pty Ltd.

4. On 11 January 2018 a notice of appeal was filed against his Honour's decision.  On 9 April 2018 an originating summons was filed by the plaintiffs for leave to enforce the award.  An application for a stay of the leave to enforce the award was granted by Acting Master Strk on 1 June 2018.  On 29 January 2019 the Court of Appeal dismissed the appeal.[2]  Although they found there had been misconduct on the part of Mr Lord, they were not satisfied it provided a basis for setting aside the award.  The corrected final award was signed by Mr Hannan on 8 February 2019. 

   [2] Structural Monitoring Systems Ltd v Tulip Bay Pty Ltd [2019] WASCA 16.

5. On 7 February 2019 the plaintiffs attempted to obtain an order allowing for enforcement of the award.  Counsel for the defendant objected to the application being heard on a number of grounds.  First, counsel sought to have the matter delayed until the time for an application for special leave to appeal to the High Court had passed.  Second, there were proceedings in the District Court which, on counsel's submissions, were inconsistent with granting leave to enforce the award.  It is not presently necessary to detail these District Court proceedings.  It is sufficient to say that by the time orders were eventually made those proceedings had been discontinued.  The matter was adjourned to 19 February 2019.

6. The orders that I made required the defendant to pay interest on the amount of the award at the rate of 6% per annum from 23 January 2017 until the date of final payment.  I also ordered the defendant to pay the plaintiffs' costs of this application to be taxed if not agreed. 

7. It was the defendant's position that it should not be liable for interest from the date of publication of the award because it was not the defendant who delayed the making of this order.  Rather, it was the misconduct of the arbitrator Mr Lord which was the root cause of the difficulty.

8. With respect, that argument is without substance.  Once an award is made the amount found to be owing should be paid.  Any alleged defects in the award do not amount to grounds for a stay of execution.  That is effectively what the defendant argued should occur. 

9. Arbitration is a process of dispute resolution which stands outside the court system.  Once an award is made there can, in certain limited circumstances, be recourse to the courts to have the award overturned.  But the parties have agreed to submit their disputes to arbitration.  They have done so in the knowledge that the award of the arbitrator in and of itself cannot be enforced in the same way a judgment of the court can be enforced.  If payment is not made there has to be an application to the court which allows for enforcement of the award in the same way a judgment can be enforced.  But it is a necessary part of the arbitration process that once an award is made it should be paid.  It should not be necessary for a party in whose favour an award is made to go to the court seeking leave to enforce.  Of course it would be open to a party against whom an award is made to seek a stay for one reason or another.  But unless that step is taken it should make payment of the award. 

10. On that basis it is clear the defendant in this case did not comply with its obligations under the process of arbitration.  That being so there is every reason why it should pay interest on the outstanding award. 

11. Much the same reasoning applies in relation to costs.  It is true that from time to time the defendant was successful in delaying an order being made allowing for enforcement of the award.  But each time that was done it was an indulgence to the defendant.  There was no right to have such an order made.  Ultimately, given the Court of Appeal decision, it is clear from the outset there were no grounds for refusing to make payment of the award.  That being so the costs of the plaintiffs attempting to obtain leave to enforce the award are properly to be met by the defendant.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

DG
Associate to Master Sanderson

17 APRIL 2019