Viterra Operations Ltd (T/A ABB Grain Storage & Handling) v Ewing International Limited Partnership

[2011] SASCFC 13

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court: Permission to Appeal in Private)

VITERRA OPERATIONS LTD (T/A ABB GRAIN STORAGE & HANDLING) v EWING INTERNATIONAL LIMITED PARTNERSHIP

[2011] SASCFC 13

Reasons for Decision of The Full Court

(The Honourable Chief Justice Doyle, The Honourable Justice White and The Honourable Justice Peek)

11 March 2011

APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - BY LEAVE OF COURT - GENERALLY

ARBITRATION - THE AWARD - APPEAL OR JUDICIAL REVIEW - PROCEDURE - APPLICATIONS FOR APPEAL OR JUDICIAL REVIEW

Application for permission to appeal in private – appeal from an interlocutory judgment – whether open to the Judge to conclude that there was a manifest error of law on the face of the award – application for permission to appeal refused.

Commercial Arbitration and Industrial Referral Agreements Act 1986 (SA) s 38; Supreme Court Civil Rules 2006 (SA) r 288(1)(a)(i), r 291(4)(a), referred to.

VITERRA OPERATIONS LTD (T/A ABB GRAIN STORAGE & HANDLING) v EWING INTERNATIONAL LIMITED PARTNERSHIP
[2011] SASCFC 13

Full Court:  Doyle CJ, White and Peek JJ

1. THE COURT:      The Court has before it applications for permission to appeal to the Full Court against a decision by a single Judge of the Court.

2. The applications for permission are made on the basis that the judgment under consideration is an interlocutory judgment given by a Judge, and accordingly requires permission under r 288(1)(a)(i) of the Supreme Court Civil Rules 2006 (Rules).  The applications have been considered by the Full Court pursuant to r 291(4)(a) of the Rules, without hearing oral argument from any party.

3. The judgment the subject of the applications is a judgment granting permission to the respondent, pursuant to s 38 of the Commercial Arbitration and Industrial Referral Agreements Act 1986 (SA) (the Act), to appeal against an award by an arbitrator. In the same judgment the Judge refused to grant permission to the applicant to appeal against the same award.

4. Accordingly, while the provisions of the Act governed the grant of permission to appeal by the Judge, and those provisions are relevant when this Court considers the application made to it, nevertheless this Court is in the position of considering, in the ordinary way, an application for permission to appeal against an interlocutory judgment.

5. The Court is always cautious about granting permission to appeal against an interlocutory judgment, and that caution is relevant to this case.  As well, there is every reason why applications for permission to appeal under the Act should be considered and disposed of as quickly as possible.  Once permission to appeal is granted, it is desirable that the appeal be heard and disposed of as quickly as practicable.

6. We turn briefly to the facts.  In 2006 Ewing International Limited Partnership (Ewing) entered into a contract with Viterra Operations Limited (we will refer to it under its former name of “Ausbulk”) to construct eight grain silos for Ausbulk.  While the silos were being constructed deformations in the structure appeared, giving rise to a risk that the structures would collapse.  The work was suspended.  Disputes arose out of this.  Ausbulk terminated the contract in June 2007.  Ewing claimed that the termination was unlawful.  The parties were in dispute, and the dispute went to arbitration.

7. In the first interim award the arbitrator found that Ewing was not entitled to damages from Ausbulk for breach of contract, that Ausbulk was not entitled to damages from Ewing for the additional cost of completing the work, and that Ausbulk was not entitled to damages for the additional cost of certain modifications to the silos.  The arbitrator deferred further argument on the question of whether Ausbulk was entitled to the return of certain money claimed by it in its counter-claim and the cost of replacing an identified component or part of the silos.

8. In a second interim award the arbitrator found that Ewing was entitled to the return of retention monies paid by it to Ausbulk, less a specified amount owing to Ausbulk.  The arbitrator found that Ausbulk was not entitled to damages for breach of the original agreement, nor for costs in respect of a claim relating to “Bisalloy Cones”.

9. Ausbulk applied for permission to appeal against the award.

10. Ausbulk claimed that there was an error of law on the face of the award in that it had proceeded before the arbitrator on the basis that in the first interim award the arbitrator had found that Ausbulk was entitled to damages, but then in the second interim award had made the opposite determination.  In the arbitrator’s reasons the arbitrator acknowledged that the manner in which he expressed himself in his reasons for the first interim award was ambiguous, but concluded nevertheless that he had not made a decision that Ausbulk was entitled to damages.  The arbitrator found that Ausbulk’s reliance on the relevant part of his reasons was “misconstrued”.  Ausbulk complained before the Judge that the arbitrator failed to give warning or notice to Ausbulk that its approach to his first interim award was wrong, and that in fact it needed to prove its entitlement.

11. Before the Judge Ewing resisted this submission, arguing that Ausbulk was aware that Ewing was arguing to the contrary and that Ausbulk had failed to meet this argument.

12. The Judge granted permission to appeal.  The Judge said:

    [32]Upon reading the first interim award, there appears to have been a decision by the arbitrator that Ausbulk was entitled to the cost of the replacement of the cones, and that the only issue for further argument was whether that loss survived his findings as to breach and causative loss.  At the very least, that interpretation was open.  The arbitrator acknowledged that there may have been ambiguity in his conclusions at para [270] of the first interim award.

    [33]The conclusions in the second interim award appear to relate to the failure of Ausbulk to prove its loss.  It seems to me that the contention of Ausbulk that there is a manifest error on the face of the award is sustainable and I would, therefore, grant permission.

13. Ewing submits that earlier in his reasons the Judge erroneously stated that Ausbulk sought permission to appeal against the first interim award.  In that respect the Judge was in error, but in our opinion nothing turns on this.  The decision in relation to the second interim award involves consideration of the first interim award.

14. Ewing now complains that the Judge has relied on matters not apparent on the face of the award.  They include the manner in which Ausbulk understood the first interim award and its complaint that at the second hearing it had been denied natural justice.  Ewing also contests Ausbulk’s approach to the meaning of the first interim award.

15. We consider that permission to appeal should be refused.  As we have already noted, for reasons that need not be expanded upon, the Court should be slow to grant permission to appeal against a grant of permission to appeal under the Act in relation to an arbitration.  It is highly desirable that appeals against arbitrator’s awards be disposed of promptly.  In our opinion it was open to the Judge to conclude that there was a manifest error of law on the face of the award.  The complaints raised by Ausbulk are based on matters that appear on the face of the award.  We accept that the investigation of those complaints may involve considering other matters, when the appeal is argued.  We consider that the error complained of could amount to a manifest error on the face of the award.  Moreover, the interests of justice support a refusal of permission to appeal on this ground.

16. The Judge gave a further reason for the grant of permission.  It related to a report on which Ausbulk relied for proof of its loss.  The arbitrator did not accept that the report could be used in the manner in which Ausbulk wished to use it.  Referring to the report in question, the Judge said:

    [42]Ausbulk submits that the arbitrator, having permitted cross-examination of witnesses in respect of the Currie and Brown Report, and having permitted the expert accountants to rely on the Currie and Brown Report should have admitted the report for all purposes.  It further submits that the report, once relied upon for a limited purpose, should have been admitted for all purposes. 

    [43]On the other hand, Ewing submits that, at all times, it was clear that Ewing objected to the admission of the report, and that Ausbulk’s counsel elected not to call evidence in the full knowledge that the report was being dealt with during the arbitration subject to Ewing’s objection.  It submits that there is no manifest error of law on the face of the award.  It submits that there was always an issue about Ausbulk’s failure to call the author of the report.

    …

    [46]I conclude that Ausbulk should be granted permission to appeal.  On the face of the award, it is unclear to me exactly how the arbitrator determined to deal with the Currie and Brown Report on a limited basis.  In my view, the argument by Ausbulk that it was denied the opportunity to argue the admissibility of the report has merit.  I accept that, once permission to appeal has been granted, it will be necessary for me to consider the submissions of both parties to the arbitrator, and that may throw greater light on both parties’ contentions.  In my view, the arbitrator’s decision to admit the report on a restricted basis, without hearing full argument, demonstrates a manifest error of law on the face of the award.

17. We refuse permission to appeal against the Judge’s decision on this point.  We refer again to our general comments above.  There is again some force in Ewing’s point that the complaint by Ausbulk involves consideration of matters not apparent on the face of the award.  It is not so easy to identify a manifest error on the face of the award.  But it is not sufficient that Ewing’s ground of complaint is reasonably arguable.  Bearing in mind the more general considerations to which we referred above, we consider that this is not an appropriate case for a grant of permission to appeal.

18. The Judge refused to grant to Ewing permission to appeal (by cross-appeal) against the award.  Ewing claimed that there was a manifest error of law by the arbitrator in construing an agreement between the parties in partial settlement of the dispute.  The relevant agreement, reached in February 2007, provided for the appointment of an independent consultant to value work carried out by Ewing under the contract.  This clause resulted in preparation of the report which is referred to above, the “Currie and Brown Report”.  The question is whether the conclusion in that report bound Ewing if the assessment of the amount due was lower than the total previously certified, or whether the assessment was for the purposes only of determining whether Ewing was entitled to amounts in addition to what had already been certified.

19. The context in which that agreement was entered into is obviously important.  The context and the terms of the agreement indicate that the parties were attempting to resolve their dispute, and tends to support a conclusion that the result was to be binding on both parties.  We agree in general with the Judge’s reasons.  This is not to say that the meaning of the relevant clause is beyond argument.

20. For these reasons we refuse to grant permission to appeal against the decision by the Judge to grant permission to appeal to Ausbulk, and we refuse to grant permission to appeal against the decision by the Judge to refuse to grant permission to appeal to Ewing.

21. Although the Court refuses permission to appeal, it is appropriate in all the circumstances to extend the time for the making of the application by extending that time to 25 January 2011.