Westfield Design & Const v LR & M Const & Anor No. Scgrg-96-1550 Judgment No. S319

WESTFIELD DESIGN & CONSTRUCTION PTY LTD (Respondent)
v LR & M CONSTRUCTIONS PTY LTD (Appellant); CSR LTD (TRADING AS THE READYMIX GROUP (REG’D)), Third Party
[1999] SASC 319

Full Court: Olsson, Mullighan and Nyland JJ

OLSSON J

Background

This is an appeal against the decision of a Master, whereby he dismissed an application to strike out the points of claim filed by the respondent in arbitration proceedings between it and the appellant pursuant to the provisions of the Commercial Arbitration Act, 1986 (SA) (“the CAA”). Those points of claim had been adopted as the statement of claim in this action, by order of the learned Master dated 20 March 1998.
The contention between the parties derived from a contract dated 22 November 1988 (“the contract”), entered into between the appellant and the respondent. This related to the performance of work associated with the construction of the North East Bus Interchange and Eastern Access Road as well as Car Park 8.
The respondent was the principal contractor for the overall Busway Project and the appellant was a subcontractor to it. The third party supplied relevant materials to the appellant in relation to the subcontract works. It was not represented on the appeal.

The Contract between the Parties

The contract contained a clause expressed in the following terms:-
“10.   DISPUTES AND DIFFERENCES AND ARBITRATION
(a).... Disputes and differences between the Company and the Contractor will be dealt with unless otherwise agreed in writing by both parties, in accordance with the Arbitration Clauses stated herein.
(b)In case any dispute or difference shall arise between the Company and the Contractor either during the progress of the Works or after the termination abandonment or breach of this Agreement as to the construction of the same or as to any matter or thing whatsoever arising thereunder or in connection therewith either party may give notice in writing to the other party of such dispute or difference and at the expiration of three days unless it shall have been otherwise settled such dispute or difference shall be and is herein submitted to arbitration in accordance with the Arbitration Act 1902-1957 in one of the following manners:-
(i)If the dispute or difference shall involve an amount in excess of $10,000 or there is doubt as to whether more or less than $10,000 is involved, it shall be submitted to the arbitration of the person or persons named in the First part of the Seventh Schedule hereto, or if no persons shall be named therein or if all the persons so named are unable or unwilling to act then the sole Arbitrator shall be the President for the time being of the Royal Australian Institute of Architects S.A. Chapter, or his nominee, and if one named in the said part of the said Schedule shall be willing to act and another person named therein shall be unable or unwilling to act then the said President or his nominee shall be substituted for the person so unable or unwilling to act, or
(ii)If the dispute or difference shall involve an amount of $10,000 or less or if notwithstanding that it does exceed $10,000 the parties shall agree that dispute or difference shall be submitted to the arbitration of the person named in the second part of the Seventh Schedule or in the event of no person being named therein or in the event of the person named therein being unable or unwilling to act then to the arbitration of the President for the time being of the Royal Australian Institute of Architects S.A. Chapter, or his nominee.
The Award made by the said Arbitrators, Arbitrator or any Umpire appointed by them as the case may be shall be final and binding on both the Company and the Contractor and neither party shall be entitled to commence or maintain any action upon any such dispute or difference until such matter shall have been referred and determined as hereinbefore provided and then only for the amount of relief to which the Arbitrators, Arbitrator or Umpire by their or his Award finds either is entitled.
In serving notices of dispute or difference and demand for arbitration the party serving such shall provide evidence that he has deposited with the Master Builders’ Association of S.A. or the Royal Australian Institute of Architects S.A. Chapter, the sum               further sum or sums that may be directed to be lodged as security for costs and expenses           said proceeding shall be applied in accordance with the direction from time to time                   Arbitrators, Arbitrator or Umpire as the case may be.
(c)If it be reasonably possible work under this Agreement shall continue during arbitration proceedings and no payment due or payable by the Company not relating to matters in                   shall be withheld on account of the arbitration proceedings.”

[Note: Some text has been omitted from subparagraph (b) and (c) above in the copying of the contract.]

No persons were nominated in the first or second Parts of the Seventh Schedule.
The contract was entered into in this State, the appellant had its registered office and place of business in this State and the contract works were, of course, to be executed here. In the event of a dispute it contemplated nomination of an arbitrator by the President of the South Australian Chapter of the Royal Australian Institute of Architects.
The contract appears to have consisted of a completed, out-of-date, printed form prepared and used by the respondent, whose registered office is stated to have been in Sydney, New South Wales.
The reference in Clause 10 to the “Arbitration Act, 1902-1957” is to a New South Wales statute which had been repealed, as at the date of the contract, and replaced by the Commercial Arbitration Act, 1984 (NSW). The transitional provisions of the latter provided, inter alia, that “a reference in an arbitration agreement to the Arbitration Act 1902, or a provision of that Act, shall be construed as a reference to” the Commercial Arbitration Act, 1984 (NSW) or to the corresponding provision of it.
The lastmentioned statute is largely in pari materia with the South Australian CAA.
Moreover, the Scott v Avery type provision in Clause 10(b) of the contract was in conflict with and unenforceable by reason of s 55 of the South Australian statute or its counterpart in s 55 of the New South Wales enactment, dependent upon which was applicable in the circumstances.

Contract Performance

The appellant duly performed the relevant works. These included the construction and backfilling of certain so-called “crib”, or curtain wall, units.
It was not long thereafter that problems began to manifest themselves with the crib walls. It is alleged by the respondent that the dolomite backfill degraded and disintegrated, causing the fill to slump and wash out at various locations. There was also said to be a failure of the relevant lower crib wall caused by settlement and consequent slumping of the fill. The concrete tie‑backs within the crib walls were exposed and it was alleged that there was a deterioration of the structural components of the crib walls.
These problems led to a site inspection on 5 May 1989. This was attended by representatives of the appellant, the respondent and a representative of a firm of consulting engineers.
On 8 May 1989 the respondent wrote a letter to the appellant requiring it to make good the apparent defects prior to acceptance of the wall construction under the contract. On one view of the facts this notification could be taken as constituting the date on which any relevant “cause of action”, based on the contract arose between them.

A dispute arises

The documentation before the Court suggests that some remedial work may well have been executed by the appellant after receipt of the above letter. However, I will, in due course, return to that aspect in greater detail.
Another site inspection clearly occurred in July 1990, consequent upon a further subsiding and washing out of back fill, following rain. A dispute arose as to the responsibility for rectification of that situation, it being said by the appellant that there were inherent design problems, having regard to the shedding of water from an adjacent site after rain.
On the material before this Court it is not clear what occurred for some time subsequent to July 1990.
However, on or about 1 July 1996, the respondent served a document dated 28 June 1996 titled “Notice of Disputes” on the appellant. Having, in effect, recited the foregoing background, albeit in somewhat greater detail and with rather more particularity, it concluded as follows:-
“19.. As a result of the Breaches and the Defects, substantial Remedial Work will have to be carried out to the Subject Works (‘the Remedial Works’).

Particulars of Remedial Works
19.1 The proposed Remedial Works are described in:-
19.1.1.. Specification R15777-1;
19.1.2.. Drawings R15777-1, sheets 1 to 7; and
19.1.3.. Tender conditions
19.2The estimated costs of the Remedial Work is $438,229.00.

Loss and Damage
20.... By reason of the matters aforesaid the Company will have to employ another contractor to remedy the Defects by carrying out the Remedial Works and the Company will thus be put to trouble, inconvenience and expense and has and will continue thereby to suffer loss and damage.
Notification of Claims

The Company has made demand on the Contractor to either carry out the Remedial Work or pay others so to do or to reimburse the Company for the cost thereof but the Contractor has failed refused and neglected so to do.
Dispute or Difference
By reason of the contractor’s refusal neglect and failure aforesaid the Company maintains that a dispute and difference has now arisen and by virtue of the provisions of clause 10 of the Lump Sum Contract the Company is entitled to give notice of the dispute and difference that has arisen between the Company and the Contractor, and the Company hereby gives notice of such dispute and difference and further hereby gives notice that unless at the expiration of three days from the date of this notice it shall have been otherwise settled such dispute or difference shall be and by the said clause 10 is submitted to arbitration in accordance with the Arbitration Act (NSW) 1902-1957.”

The appellant reacted to that document by serving on the respondent a response, dated 3 July 1996, to the notice of dispute, expressed as follows:-
“WHEREAS the Company by Notice of Disputes dated the 28th June, 1996 and served 1st July, 1996 (‘the said Notice’) gave notice of disputes to the Contractor but the Contractor does not admit that the said Notice is a valid notice complying with the provisions of Clause 10 of the Lump Sum Contract and therefore after the expiration of three (3) days from the giving of the said Notice the disputes are as a consequence submitted to arbitration BUT RESERVING and without prejudice to the Contractor’s rights the Contractor responds as set out hereunder AND WHEREAS the Contractor does not deny disputes have arisen between the Company and the Contractor and that same are as at the date of this Response unresolved THEREFORE the Contractor, subject to the above reservation, does not oppose the disputes being submitted to arbitration for resolution.
The Contractor avers
1...... That the place of such arbitration should be Adelaide on the grounds:
a.The contract was called and let in South Australia by the Company from their Marion S A site office;
b.The work was executed in South Australia by S A consultants, sub-contractors and suppliers;
c.The work was designed and supervised by S A based consultants;
d.The material in dispute was supplied by a local S A quarry;
e.All investigation work has been carried out by S A contractors and laboratories;
f.All relevant witnesses are S A based.
2...... That the Contractor’s contractual obligations did not include the selection of the dolomite fill as asserted in paragraph 14.2 of the said Notice.
3.That the subject works are not defective or deficient as a consequence of the Contractor failing to compact back fill during construction to specification as asserted in paragraph 18.14 of the said Notice.
4...... That a third party namely C.S.R. Readymix Group of 255 Port Road, Hindmarsh S.A. should be a party to the arbitration being the supplier of the dolomite fill claimed to be defective or deficient as asserted in paragraph 18.4 of the said Notice or that same had a high pyrites content as asserted in paragraph 18.8 of the said Notice.
5.That a fourth party namely Kourkourou & Partners of 42 Fullarton Road, Norwood S.A. should be a party to the arbitration being the engineers responsible for the design of the subject works.
6...... That a fifth party namely Theta Development Pty Ltd then of Edwardstown S.A. should be a party to the arbitration being the sub-contractor responsible for the construction of the crib wall including compaction of the specified dolomite fill during construction of the subject works.
Should the Company elect to proceed to arbitration relying on the matters pleaded in the said Notice, then upon such election, the Contractor reserves the right to plead to each and every allegation in detail. Should the Company serve a formal Points of Claim then the Contractor reserves the right to serve a formal Points of Defence in answer to such Points of Claim.”
A further substantial delay then occurred, for reasons which do not readily appear.
In the meantime, on 12 July 1996, the appellant had commenced the present action against the Third Party claiming that it was liable to the appellant in respect of any sums found to be payable by the latter to the respondent. It was asserted that the dolomite supplied by the Third Party had been defective, or was otherwise unsuitable for its intended use.
On or about 22 May 1997 the respondent served on the appellant a document in this form:-

“NOTICE OF REFERRAL TO ARBITRATION
WESTFIELD DESIGN & CONSTRUCTION PTY LTD
AND
L R & M CONSTRUCTIONS PTY LTD
TO: L R & M Constructions Pty Ltd
c/- Mr Malcolm Fricker
Scammell & Co
86 Franklin Street
Adelaide SA 5000

TAKE NOTICE that 3 days have now elapsed since the date of service on you of the Notice of Disputes dated the 28th day of June 1996, and as the Builder’s claims have not been settled the Builder now requires the disputes and differences referred to in the Notice of Disputes to be referred to arbitration pursuant to Clause 10 of the Lump Sum Contract.
The Builder has deposited the sum of $100.00 by way of security for costs of the arbitration proceedings.
By virtue of this Notice and the Notice of Disputes dated the 28th day of June 1996, all the disputes and differences referred to in the Notice of Disputes are hereby referred to arbitration.
DATED the 22nd day of May 1997.
WESTFIELD DESIGN & CONSTRUCTION PTY LTD
by its solicitors and agents
Goldberg & Co
per: (signed)
146 Gilles Street
ADELAIDE SA 5000.”

It also served full formal Points of Claim, bearing the same date, on the appellant.
On the same date as the Notice of Referral to Arbitration, the solicitors for the respondent forwarded a copy of the Notice of Disputes and a cheque for $100 security deposit to the President, Royal Australian Institute of Architects SA Chapter and requested appointment of an arbitrator.
By letter dated 27 May 1997, Mr Earle Scott, an arbitrator nominated by the President, wrote to the parties and advised that a provisional preliminary conference would be held on 12 June 1997.
On 11 June 1997 the appellant made application to the Court to join the respondent as a second defendant to this action. It also sought a stay of the arbitration proceedings.
By order dated 8 August 1997 the respondent was joined as a second defendant and directions were given to file pleadings in the arbitration.
That order was superseded by a further order dated 20 March 1998, made nunc pro tunc to 8 August 1997. The effect of the later order was that the respondent became the plaintiff in the present action, the appellant became the defendant and the original defendant became the Third Party.
It is not entirely clear as to what occurred at the time when the order of 20 March 1998 was made, as no reasons for decision were apparently published at that time. A perusal of the file reveals that the order was ultimately made by consent.
The formal order reads as follows:-
“The Court orders:-
1...... That L R & M Constructions Pty Ltd be disjoined as plaintiffs in these proceedings.
2.That Westfield Design & Constructions Pty Ltd be disjoined as the second defendant in these proceedings;
3...... That Westfield Design & Construction Pty Ltd be joined as a plaintiff in these proceedings;
4.That CSR Limited (trading as The Readymix Group (Reg’d)) be disjoined as the first defendant in these proceedings;
5...... That L R & M Constructions Pty Ltd be joined as a defendant in these proceedings with leave to issue and serve within 28 days third party proceedings against CSR Limited (trading as The Readymix Group (Reg’d));
6.That the orders in this action made on the 8 August 1997 by Master Kelly and in particular paragraph 1 of the Order is hereby revoked;
7...... That the orders and in particular paragraphs 1 - 5 of this order be made nunc pro tunc to the 8 August 1997;
AND NOW BY CONSENT the plaintiff and the defendant confirm:-
1...... That the plaintiff did on the 22 May 1997 refer to arbitration certain disputes and differences which had arisen between the plaintiff and the defendant under the terms of a written contract entered into between the plaintiff and the defendant and dated 22 November 1988 (‘the arbitration proceedings’).
2.That the plaintiff has delivered points of claim in the arbitration proceedings (‘the points of claim’).
3...... That the arbitration proceedings commenced by the plaintiff maintain that the plaintiff has a cause of action against the defendant for breach of contract and/or negligence.
4.That by this action the defendant had prior to this order claimed that CSR Limited (trading as The Readymix Group (Reg’d)) (‘CSR’) under a separate contract entered into between the defendant and CSR, had agreed to supply material to be used in connection with the work to be undertaken under the contract entered into between the plaintiff and the defendant (‘the main contract’) and the defendant claimed that the material so supplied was defective and unsuitable.
5...... That the points of claim in the arbitration proceedings were adopted as the plaintiff’s statement of claim in this action.
6.That the plaintiff and the defendant have agreed and consent to the following procedures being adopted:-
6.1That the plaintiff and the defendant as the parties in the arbitration proceedings apply to this Court pursuant to section 39(1)(b) of the Commercial Arbitration Act 1986 as amended to have this Court determine as a matter of law whether or not the plaintiff’s reference to arbitration on the 22 May 1997 and the points of claim filed in the arbitration proceeding are to be struck out by reason of the plaintiff having failed to refer to arbitration the disputes and differences arising under the contract within the period of limitation prescribed under section 35 of the Limitation of Actions Act 1936-1994;
6.2That in the event that should this Court determine that the plaintiff has failed to refer to arbitration all of its disputes and differences arising under the main contract within the period of limitation prescribed for such proceedings under the Limitation of Actions Act 1936-1994 the plaintiff shall have liberty to apply seeking an extension of time in which it might file its points of claim or statement of claim in this action pursuant to section 48 of the Limitation of Actions Act 1936-1994.
6.3If this Court determines that Section 35 of the Limitation of Actions Act 1936-1994 does not apply to the plaintiff’s reference to arbitration, the defendant will not raise any limitation defence in this action.
7...... The defendant formally apply in this action to have the question of law referred to in subparagraph 6.1 of paragraph 6 hereof determined by this Court and the application be made in the form of the application attached hereto.
8.That both the plaintiff and the defendant have submitted arguments on a prior application dated 8 September 1997 both in support and against the question of law hereby submitted for determination of this Court and the plaintiff and the defendant consent to those arguments as previously submitted being treated as the submissions and arguments in support and against the question of law hereby submitted under subparagraph 6.1 of paragraph 6 hereof save that both parties reserve the right to make further submissions in the event that this Court shall raise further issues on the question of law submitted or, alternatively, require the parties to make further submissions in respect of any matter or issue which might arise as a consequence of the referral of this question of law to the determination of this Court.”

As I understand what transpired, the order appears to evidence an arrangement whereby, at the very least, the parties have consented, pursuant to s 39 of the CAA, to this court hearing and determining the question of law related to the limitation issue.
To the extent to which the present action purports to litigate wider issues of merit which were the subject of the reference to arbitration (together with the third party proceedings) I simply do not understand how, jurisdictionally, that situation has properly come about. However, that is a question for another day. I merely comment that it seems to me to be quite inappropriate to seal and enter, as a formal order of this Court, what are no more than minutes of order. These have been roughly amended in ink and contain verbiage the status of which, within a formal order, is quite equivocal and uncertain in effect.
Be that as it may, an issue which arises in limine is whether s 39 of the CAA has, or can have any application to the present situation at all.

The legislative environment

Moreover, a question arises as to the nature of any arbitration proceedings arising from the contract between the appellant and the respondent, whenever those proceedings may have been initiated.
Given that the contract had a natural nexus with South Australia as to all aspects save for the principal place of business of the respondent, I reiterate that Clause 10, in terms, required submission to arbitration in accordance with a stipulated statute of the New South Wales legislature, which had long since been repealed and replaced with the New South Wales counterpart of the CAA.
That counterpart legislation provides that a reference in an arbitration agreement to the Arbitration Act 1902-1957 (NSW) shall be construed as a reference to its 1984 superseding legislation. However, absent any specific term of the contract that it was to be construed by reference to New South Wales law, it is difficult to see how that statute could be applicable to a contract made in this State. This is the more so as the contract had been called and let in South Australia from the respondent’s Marion site office and its terms of (including all other statutory references) are pitched at South Australian criteria and requirements.
It is difficult to avoid the conclusion that the reference to the Arbitration Act 1902-1957 (NSW) was left in the document per incuriam.
The CAA is expressed, in quite general terms, to apply “to an arbitration agreement (whether made before or after the commencement of [the CAA]) and to an arbitration under such an agreement”. That is apt to encompass any such agreement made in this State and thus falling within the territorial ambit of operation of the CAA, unless there is an express reference in the contractual arrangements to the law of another State.
I am therefore content to accept that the CAA is applicable to the contractual arrangements between the parties.

Application to Strike Out

It will be recalled that the points of claim delivered by the respondent in the arbitral proceedings were also filed in these proceedings, by direction of a Master, in lieu of a statement of claim.
By application filed on 17 April 1998, the appellant sought an order that such points of claim be struck out “by reason of ... [the respondent] ... having failed to refer the disputes or differences to arbitration within the period of limitation prescribed for such an action” under the provisions of the Limitation of Actions Act 1936 (SA) (“the LOAA”). It was, in effect, contended that both the arbitration reference and the respondent’s claim in the instant proceedings were statute barred.
In written reasons published by him on 19 August 1998, as qualified in supplementary reasons published on 31 August 1998, the learned Master dismissed the appellant’s application.
In essence the learned Master held that the LOAA was applicable to the arbitration proceedings. However, those proceedings, and thus this action, were not statute barred because the notice of disputes dated 28 June 1996, but actually served on 1 July 1996, effectively initiated the arbitration, in terms of Clause 10 of the contract between the parties. He was of opinion that this was so, notwithstanding that steps were not taken to perfect the appointment of an actual arbitrator until a much later stage.
That being so, he held that it was fairly arguable that the respondent’s action, being founded on simple contract, had been commenced within six years after the cause of action accrued and was not statute barred.
I take him to have accepted that it was at least arguable that the cause of action accrued as late as 6 July 1990, this being the date of exchange of correspondence between the parties, wherein the appellant rejected responsibility for the problems with the crib wall which were then evident on inspection. He further accepted that the arbitration was commenced by the notice dated 28 June 1996 served on 1 July 1996 (ie just within the six year time limit).

Issues on Appeal

The first point which arises for consideration on this appeal is whether it is fairly arguable that, on the facts which are not in dispute, the provisions of s 35 of the LOAA do not operate in relation to the respondent’s claim. If so it would have been inappropriate to make a summary order striking out its points of claim in any event.
The logical commencement point is a consideration of the relevant portion of s 35 of the LOAA. This stipulates that:-
“35. The following actions namely:-
(a)actions founded on any simple contract express or implied, or upon any award where the submission is not by specialty;
...
...
......... shall, save as otherwise provided in this Act, be commenced within six years next after the cause of action accrued and not after.”
The word “action” is defined, in s 3 of the same statute, as including “legal proceedings of all kinds.”
It follows that the limitation expressed above applies to what are, potentially, two quite separate situations, namely:-
actions deriving from simple contract; and
actions [relevantly] founded on an award (as to which compare the discussion in Agromet Motoimport Ltd v Maulden Engineering Co (Beds) Ltd [1985] 2 All ER 436).
I take the latter category to be actions for enforcement, of the nature contemplated by s 33 of the CAA. It is difficult to envisage what other proceedings could constitute the second category.
The initial question which must, therefore, be addressed under s 35 of the LOAA is whether a reference to arbitration under legislation such as the CAA, can for the purposes of the LOAA, so far as it may be applicable, properly be categorised as a “legal proceeding” founded on a simple contract.
In my opinion the answer to that question is to be found in the judgment of King CJ in Alliance Petroleum Australia NL & Ors v The Australian Gas Light Company (1983) 34 SASR 215 at 236 - 237. He was there focusing attention on the phrase “civil or criminal ... proceeding”, as found in s 16(1) of the Service and Execution of Process Act 1901-1974 (Cth). An issue arose as to whether an arbitration pursuant to the then Arbitration Act 1891-1974 was such a proceeding.
In the course of his reasons for decision King CJ pointed out that arbitration is a regular procedure recognized by statute for the resolution of legal claims, differences or disputes between parties.
He went on to say:-
“Rules of law are prescribed by statute for the conduct of arbitrations. Statutory powers are conferred on arbitrators. The jurisdiction of the courts is invoked in aid of the arbitration procedure. Attendance of witnesses may be compelled, witnesses may be sworn, and wilfully false evidence before an arbitrator constitutes the crime of perjury. The procedure results in an award which is enforceable at law. Arbitration is clearly recognized by the statute as a method of resolving legal disputes alternative to litigation in the courts. I think that in the ordinary use of language such a procedure would be included in the description ‘civil proceedings’. There is no authority to the contrary.
I do not think that one can distinguish for this purpose between arbitrations pursuant to an order of a court and arbitrations pursuant to a submission. Both are authorized by statute and both possess the characteristics to which I have referred. Nor do I think that the nature of the question to be decided by the arbitrator can affect the characterization of the arbitration as a civil proceeding. If the question is not one which may be lawfully submitted to an arbitrator, there is no valid submission to arbitration and, of course, no civil proceeding. If the question is one which may be lawfully submitted to arbitration, it seems to me that the arbitration must be a civil proceeding irrespective of the nature of the question. The arbitration is a civil proceeding because the law makes the question a proper subject of arbitration and the arbitration procedure possesses the characteristics referred to above which render it a civil proceeding.”
In so concluding he drew support from what fell from Barwick CJ in Ammann v Wegener & Anor (1972) 129 CLR 415 at 423. The learned Chief Justice there commented that (relevantly) the statute essentially directed its attention, inter alia, to proceedings for the establishment of legal rights.
Applying the reasoning of King CJ, proceedings of the nature here under consideration are “legal proceedings”, because they constitute a formalised process, recognised by statute, which finally determines legal rights in a manner which can ultimately be enforced through the courts. I therefore conclude that s 35 of the LOAA does have potential application to such proceedings, in the sense that proceedings of that nature are plainly an “action” which must be “commenced within six years next after the [relevant] cause of action accrued.”
The next issue which arises is as to when an arbitration may properly be said to have been “commenced” within the meaning of s 35.
As to this attention was drawn by both counsel to the decisions of single judges in Vosnoc Ltd v Transglobal Projects Ltd [1998] 2 All ER 990 (“Vosnoc”) and Allianz Versicherungs AG & Ors v Fortuna Co Inc [1999] 2 All ER 625 (“Allianz”).
The former case concerned a dispute which arose in respect of damage to goods in transit under a contract of affreightment. The contract contained an arbitration clause which required initiation of any relevant proceedings within one year of delivery of the goods.
The goods were in several separate shipments, delivery being made on a series of dates in September, October and November 1994. Some correspondence passed between the parties between 30 September 1994 and 23 March 1995 concerning the claims, but this was inconclusive.
On 16 September 1995 Vosnoc sent a letter fax to Transglobal seeking an extension of time within which to commence suit. This elicited no immediate response.
On 19 September 1995 Vosnoc then sent Transglobal a further fax expressed as follows:-
“KARRATHA ... You are referred to the Contract of Affreightment between our respective companies and made on 23 August, 1994. Pursuant to that Contract of Affreightment you were responsible, inter alia, to load ... During loading, stowage and the voyage and the unloading of the pipes serious damage was caused to the pipes in consequence of which this company has suffered loss and damage and has become liable to the owner and consignee of the pipes, Pilbara Energy Pipeline Company Pty Limited. Under the Contract of Affreightment, pursuant to Clause 17.8 thereof, it is provided that all disputes between our respective companies shall be referred to the Arbitration of three persons in London. By this letter the dispute between our respective companies is referred to the Arbitration of three Arbitrators in London pursuant to the provisions of Clause 17.8 of the Contract of Affreightment such Arbitration to be conducted in accordance with the Rules of the London Arbitrators.”

Transglobal did not respond to the fax.

Neither side took any further step, at that stage, to appoint arbitrators. It was not until 6 March 1997 that Vosnoc initiated the appointment of an arbitrator and called on Transglobal to nominate its appointee.

The learned trial judge in Vosnoc held that, having regard to the law then applicable in England (including specific provisions of the relevant enactments), a notice merely referring a dispute to arbitration was not sufficient to commence arbitration proceedings. The notice had to both require the recipient to arbitrate and also to appoint an arbitrator. Vosnoc was held to be out of time, because this had not occurred in September 1995.
It is not the situation that the decision in Vosnoc was the direct reflection of statutory provisions which have a counterpart in the statutory provisions applicable to this case. It is therefore of no real assistance for present purposes.
In so saying I do not ignore the provisions of s 3(5)(b)(iii) of the CAA. However, this has no application to the facts of the instant case. It is simply portion of a transitional provision. The deemed “commencement” referred to is clearly that adverted to in s 3(3) of the same statute.
The trial judge in Allianz declined to follow the decision in Vosnoc. He did so in the context that the relevant statutory provisions then in force differed from those applicable at the time at which Vosnoc was decided.
In Allianz goods in transit were found to have been damaged when they were unloaded from a ship in Rotterdam. Unloading was completed on 10 January 1996. On 9 January 1997 solicitors for the insurers of the cargo wrote to the insurers of the vessel and stated that they had appointed an arbitrator under the arbitration clause in the relevant bills of lading. The insurers of the vessel later took the point that the letter of 9 January 1997 had been ineffective to commence arbitration proceedings, within the prescribed twelve month limitation period, because it did not specifically call on them to take action to nominate their arbitrator.
Moore-Bick J pointed out that the events, the subject of the proceedings before him, had occurred prior to the enactment of s 14 of the Arbitration Act 1996 (UK) (in force at the time of Vosnoc) and that, accordingly, it did not bear on the proper resolution of the matter. He drew comfort from what fell from Lord Denning MR in Nea Agrox SA v Baltic Shipping Co Ltd [1976] QB 933 at 944 - 945. He arrived at the conclusion that a notice in writing which, read in context, made it clear that the sender was invoking the relevant arbitration agreement and was requiring the recipient to take steps in response to enable a tribunal to be constituted, was sufficient to commence an arbitration.
The learned judge adopted the conceptual reasoning of Lord Denning MR, when the latter said:-
“It seems to me that a notice which says: ‘I require the difference between us to be submitted to arbitration’ is sufficient to commence the arbitration; because it is by implication a request to agree to the appointment of an arbitrator ... ”
With respect, it seems to me that such an approach accords with plain common sense.
In the instant case the notice relied on specifically stated that “... unless at the expiration of three days from the date of this notice it [ie the identified disputed] shall have been otherwise settled such dispute or difference shall be and by the said clause 10 is submitted to arbitration ... ” (The emphasis is mine.)
I consider that this was the plainest possible statement that, absent any prior settlement, the arbitration agreement was being invoked, according to its tenor, with effect from 5 July 1996, that is, after the expiration of 3 days from service of the notice of dispute. It seems to me that the later notice of referral dated 22 May 1997, served by the respondent on the appellant, did nothing to alter that situation. The early notice of disputes was expressed in terms which were self executing, when no satisfactory response was forthcoming from the respondent.
In my opinion the learned Master was undoubtedly correct when he rejected the respondent’s reliance on authorities such as Board of Trade v Cayzer, Irvine & Co Limited [1927] AC 610. These do not erect the blanket concept that a cause of action cannot arise until an award is handed down. This was only, historically, the case in circumstances in which, in accordance with the bargain struck between the parties, resort to arbitration was a condition precedent to a cause of action arising.
It is to such a situation that the final portion of s 35(a) of the LOAA, inter alia¸ may well have been directing its attention prior to enactment of s 55 of the CAA. I agree with the learned Master’s conclusion that the arbitration was effectively commenced as of 5 July 1996. The other steps such as payment of the security deposit and request to the President of the Institute were not conditions precedent to the effective submission to arbitration and, thus, the actual commencement of legal proceedings within the meaning of s 35 of the LOAA.
As noted earlier in these reasons, the learned Master was of the view that, because it was at least reasonably arguable that the cause of action arose as late as 6 July 1990, then it could not conclusively be contended that the respondent had commenced the relevant action outside the six year limitation period.
It appears to me that the only really debatable issue raised by the notice of appeal in this case is as to whether, on those facts which are presently before the Court, it cannot fairly be contended that the relevant cause of action arose on 6 July 1990. Whether or not, on the evidence as finally led at trial, that is held to be the case is not to the point.
Whilst the situation is not entirely clear on the material before the Court, the documentation filed is reasonably open to the prima facie construction that the relevant sequence of events was as follows:-
It is clear that, in May 1989, some problems with the crib walling were observed.
It is open to the inference that, following a site inspection on 5 May 1989, the appellant did in fact carry out some remedial works. That implication is consistent with the tenor of the final paragraph of the letter written by the respondent to the appellant on 8 May 1989, which is reproduced at p77 of the Appeal Book. It is also in accord with paragraph 16 of the Notice of Disputes and paragraph 27 of the respondent’s points of claim, although those paragraphs are somewhat equivocal as to who executed the remedial works referred to and when. Moreover, the letter written by the appellant to the respondent on 6 July 1990 (AB 80 - 81) specifically refers to the earlier re-building of the relevant wall (presumably by it) “under close scrutiny”. This is, presumably, a reference to activity following 8 May 1989.
The exchange of correspondence between the appellant and the respondent on 6 July 1990 prima facie infers that, following earlier remedial works, the crib walling had again exhibited signs of distress, following what was referred to as “recent rain”.
It is both unnecessary and impossible, at this time, to make any final, definitive, factual findings as to these matters. However, the material before the Court is at least open to the reasonable inference that the relevant wall had been re-built in 1989, but that the rebuilt structure had exhibited distress as of 6 July 1990. The technical issues are referred to in the letter of that date written by the appellant to the respondent.
It follows that the learned Master must be correct in holding that, on the state of the file, the appellant was unable to demonstrate an unanswerable case for striking out the respondent’s points of claim.
It is trite to say that the learned Master would only have been justified in striking out the respondent’s points of claim if it was clear that its claim was patently untenable by virtue of the provisions of s 35 of the LOAA, absent any application for an extension of time. In considering such an issue the file had to be accepted as it was, drawing all reasonable inferences which could fairly be said to arise in favour of the respondent.

The appellant was simply unable to negative the reasonable proposition, on the documentation, that the arbitration had been commenced within time. Whether that remains the situation at the end of the day, when all evidence is in, is beside the point.
The decision of the learned Master has not been shown to be wrong. I would dismiss this appeal.

MULLIGHAN J I agree that the appeal should be dismissed and substantially for the reasons given by Olsson J. Like him, I accept that the notice dated 28th June 1996 from the respondent to the appellant is sufficient to commence the arbitration: see Nea Agrex SA v Baltic Shipping Co Ltd & Anor [1976] QB 933 per Lord Denning MR at pp944-945; at the latest from 5th July 1996, consequently, legal proceedings commenced at that time.
Clearly, a dispute had arisen and the respondent had taken a step contemplated by the Contract with a view to referring the dispute to arbitration: s3(5)(b)(iii) of the Commercial Arbitration Act 1986. I do not agree that this provision is only a transitional provision. S3, including subs(5), is also an application provision.
It will have to be determined upon evidence when the cause of action arose. If the cause of action arose on 8th May 1989 when the respondent wrote to the appellant informing it of alleged failure to contain parts of the works, then the Notice of Disputes on 28th June 1996 was given out of the period of limitation.
NYLAND J I agree that the appeal should be dismissed for the reasons expressed by Olsson J.

[1999] SASC 319

6 August 1999