Varnsdorf Pty Ltd v Fletcher Constructions Australia Ltd

[1999] VSC 9

SUPREME COURT OF VICTORIA
PRACTICE COURT	Do not Send for Reporting
Not Restricted

No. 8125 of 1998

VARNSDORF PTY. LTD.	Plaintiff
v.
FLETCHER CONSTRUCTIONS AUSTRALIA LIMITED	Defendant

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JUDGE:	BEACH, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	1 FEBRUARY 1999
DATE OF JUDGMENT:	1 FEBRUARY 1999
CASE MAY BE CITED AS:	VARNSDORF PTY. LTD. v. FLETCHER CONSTRUCTIONS AUSTRALIA LIMITED
MEDIA NEUTRAL CITATION:	[1999] VSC 9

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CATCHWORDS: COMMERCIAL DISPUTE - Application for extension of time to give notice of dispute - Commercial Arbitration Act 1984, s.48 - Application granted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms. S. Crennan Q.C. with Mr. J. Coleson and Mr. N. Paine	Minter Ellison
For the First Defendant	Mr. C. Connor with Mr. F. Tiernan and Mr. B. Shnookal	Phillips Fox
For the Second Defendant	Mr. C. Harrison with Mr. N. Foxcroft	Freehill Hollingdale & Page

HIS HONOUR:

1. I have an application by Command Energy Pty. Ltd. (Command) for an extension of time within which to give notice of a commercial dispute to Fletcher Constructions Australia Ltd (Fletcher).

1. Command and Fletcher are parties to an agreement related to the design and construction of a scheme described as the Victorian Hospitals Co-generation Scheme.  The agreement is referred to in the material filed in the Court as the collateral agreement.

1. Clause 13.1 of the agreement provides:

"(a)Disputes arising between the parties either during the progress of the works under the Construction Agreement or under the Operating Agreement, or after the termination, abandonment or breach of this Agreement as to the interpretation of this Agreement or as to any matter arising under, or relating to the Agreement must be resolved by:

(i)agreement;  or

(ii)arbitration.

(b)The party raising a dispute must give written notice of the dispute to the other party within 30 days of the date of the event giving rise to the dispute.  That notice must contain:

(i)detailed particulars of the dispute;  and

(ii)the contractual or other basis of entitlement alleged."

1. Command gave a notice of dispute to Fletcher on 9 December 1998.  Fletcher contends that the notice of dispute was given out of time and that it is invalid.

1. Command seeks an extension of time pursuant to the provisions of s.48 of the Commercial Arbitration Act 1984. That section reads:

"48.     Extension of time

(1)Subject to sub-section 3, the Court shall have power on the application of a party to an arbitration agreement or an arbitrator or umpire to extend the time appointed by or under this Act or fixed by the agreement or by an order under this section for doing any act or taking any proceeding in or in relation to an arbitration. 

(2)The Court may make an order under this section although an application for the making of the order was not made until after the expiration of the time appointed or fixed for doing the act or taking the proceeding. 

(3)An order shall not be made under this section extending the time within which arbitration proceedings might be commenced unless -

(a)the Court is satisfied that in the circumstances of the case undue hardship would otherwise be caused;  and

(b)the making of the order would not contravene the provision of any enactment limiting the time for the commencement of arbitration proceedings."

1. The matter has a degree of urgency by reason of the fact that tomorrow there is to be a directions hearing in two arbitrations which are fixed for hearing on 16 March next, the parties to which are Varnsdorf Pty. Ltd. (Varnsdorf) which is the head contractor to the Victorian Hospitals Co-generation Scheme and Fletcher on the one hand and Varnsdorf and Command on the other.

1. The issues insofar as this application is concerned are clearly identified by Command and Fletcher in the outline of submissions presented to me by their counsel and which I shall place on the Court file.  I do not propose to rehearse them in my reasons for judgment, nor do I propose to set out the factual background to those issues.  Such matters have been fully dealt with in the affidavit material on the Court file and in particular the affidavit of Peter Megens sworn 29 January 1999 and the exhibits to that affidavit.

1. Having regard to the time constraints I face today and the imminence of the hearing before the arbitrator, I propose to do no more than state my conclusions. 

(1)In my opinion Command has identified in its notice of dispute the date upon which its dispute with Fletcher arose, namely 28 August 1998.  That was the date upon which Varnsdorf gave its notice of dispute to Command. 

Fletcher had given notice of its dispute with Varnsdorf on 19 December 1994.  On 21 August 1998 Fletcher provided witness statements to Varnsdorf in connection with the arbitration of that dispute.  Those statements contained allegations against Command.  By virtue of that fact Varnsdorf then gave its notice of dispute to Command.  It was only by reason of the attack made upon it first by Fletcher in its arbitration with Varnsdorf and then by Varnsdorf in its arbitration with Command that Command had any cause to give a notice of dispute to Fletcher. 

If that view of the matter is correct, as I believe it is, then Command was approximately nine weeks late in giving its notice of dispute to Fletcher. 

(2)In my opinion the issues raised by Command in its notice of dispute with Fletcher are inextricably woven together with the issues in the other arbitrations.  One has only to have regard to the nature and extent of the issues between the parties to appreciate that fact. 

(3)The amount at stake in these arbitrations is large.  Some measure of that is to be gained from the fact that according to Megens' affidavit Varnsdorf has already expended some $3 million in legal and other costs in preparing for the arbitrations and Fletcher has already expended the sum of approximately $2 million.  Clearly great prejudice could be caused to Command if it was precluded from pursuing its claim against Fletcher only by reason of the fact that it failed to serve its notice of dispute in time. 

(4)It is not premature for Command to make its application to the Court, nor is it appropriate in the circumstances of this case that the arbitrator be called upon to determine the matter.  It was Fletcher which first contended that Command's notice of dispute was served out of time.  Prudence would dictate that Command have the issue resolved before the directions hearing tomorrow. 

(5)Command or its then solicitor - and I hasten to add that the solicitors presently acting for Command only came into the matter a comparatively short time ago - is solely responsible for the delay in serving the notice and there can be no valid justification for its or his failure in that regard.  But it has not been contended that that delay has caused any prejudice to Fletcher, nor in my opinion could it have been. 

(6)To issue a summons in the proceeding on foot between Varnsdorf as plaintiff and Fletcher and Command as defendants ostensibly pursuant to the leave reserved to the parties in that proceeding by Mandie, J. on 21 December 1998 was not the appropriate course to adopt in the matter.  The orders his Honour made that day did not bear upon the present dispute between Command and Fletcher, nor for that matter does the proceeding itself.  The course Command should have followed was to file an originating motion in the Court pursuant to Order 9 of Chapter 2 of the Rules. 

1. But counsel for Command has given an undertaking that that will be done.  In view of the time factor I accept his undertaking in that regard and will proceed on the basis that such a proceeding is now on foot.

1. I give special leave to Command to make its application to a judge of the Court rather than a Master.

1. I am satisfied that in the circumstances of the case undue hardship would be caused to Command if the application was refused.  I am also satisfied that the making of an order would not contravene the provisions of any enactment limiting the time for the commencement of arbitration proceedings.  Finally, and as I have already stated, I am satisfied that Fletcher will not be prejudiced by the making of an order in Command's favour.

1. I extend the time within which Command may give notice of dispute to Fletcher pursuant to the collateral agreement to 10 December 1998.

1. As Command has been forced to seek the indulgence of the Court in the matter it must pay Varnsdorf's and Fletcher's costs of the application and I so order.

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