WMC Resources Ltd v Leighton Contractors Pty Ltd

[2000] WASCA 388

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   THE FULL COURT (WA)

CITATION:   WMC RESOURCES LTD -v- LEIGHTON CONTRACTORS PTY LTD [2000] WASCA 388

CORAM:   MALCOLM CJ

OWEN J
PARKER J

HEARD:   16 NOVEMBER 2000

DELIVERED          :   16 NOVEMBER 2000

FILE NO/S:   FUL 172 of 2000

BETWEEN:   WMC RESOURCES LTD

Appellant (Plaintiff)

AND

LEIGHTON CONTRACTORS PTY LTD
Respondent (Defendant)

Catchwords:

Arbitration - Arbitrator - Reasonable apprehension of bias - Action to remove arbitrator for non-disclosure of past association with respondent - Whether appellant should have leave to amend motion to include failure of respondent to disclose the alleged association - Reasonably arguable that respondent's failure relevant to issue of removal

Legislation:

Commercial Arbitration Act 1985 (WA) s 44

Result:

Leave to appeal granted
Appeal allowed

Representation:

Counsel:

Appellant (Plaintiff)      :     Mr C L Zelestis QC & Mr G M Murphy

Respondent (Defendant) :     Mr W S Martin QC & Mr A F Mizen

Solicitors:

Appellant (Plaintiff)      :     Clayton Utz

Respondent (Defendant) :     Mallesons Stephen Jaques

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

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170

Aussie Airlines Pty Ltd v Australian Airlines Pty Ltd & Anor (1996) 65 FCR 215

Giustiniano Nominees Pty Ltd v Minister for Works (1996) 16 WAR 87

In re the Will of F B Gilbert (Dec) (1946) 46 SR (NSW) 318

Najjar v Haines (1991) 25 NSWLR 224

Wilson & Ors v Metaxas [1989] WAR 285

Case(s) also cited:

Jones v Dunkel (1959) 101 CLR 298

S&M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358

1. MALCOLM CJ:  This is an application for leave to appeal from an order made by Murray J on 26 October, 2 November 2000 by which his Honour refused an application for leave to amend the amended notice of originating motion by adding a par 15 which would allege that:

   "(a)prior to the appointment of the arbitrator there had been a connection, contact or association between the arbitrator and the defendant;

   (b)prior to the appointment of the arbitrator the defendant, in breach of its duty of disclosure, did not disclose to the plaintiff the nature and extent of the connection, contact or association which the arbitrator had had with the defendant;

   (c)following the arbitrator's appointment the defendant continued in breach of that duty to fail to disclose that connection, contact or association and did so when it had received or been provided with correspondence in which:

   (i)the arbitrator had originally failed to actively and fully disclose to the plaintiff the connection, contact or association which the arbitrator had or had had with the defendant;

   (ii)the plaintiff had sought further disclosure from the arbitrator;

   (iii)the arbitrator had continued not to make accurate and full disclosure to the plaintiff."

2. In refusing the amendment Murray J said:

   "I am of the view, Mr Zelestis, that I should not make the amendment to add par 15. It seems to me that the issues relevant to the application in respect of s 44 of the Commercial Arbitration Act in the way in which it is mounted is well ventilated by the other paragraphs of the originating motion as amended and I am unable to see that any relevant factual area which ventilates and illuminates the nature of the relationship and the circumstances of the arbitrator relevant to the issues to be developed under s 44(a) and (c) are in any way foreclosed.

   On the other hand, it does seem to me that the relevant argument which has been put is one which is appropriate.  I make my decision on that ground and not upon the basis that the process of trial or the readiness for trial may be prejudiced in any way by having regard to any of the matters contained in what I regard as a rather odd affidavit which Mr Ainslie has sworn.  The costs then of the application in its entirely should be in the cause, I think -"

   Orders were made accordingly, but not about costs.  The costs were granted to the respondent.

3. In the context of an application to remove an arbitrator s 44 of the Commercial Arbitration Act 1985 provides that:

   "Where the Court is satisfied that:

   (a)there has been misconduct on the part of an arbitrator or  umpire or

   (b)an arbitrator or umpire has misconducted the proceedings, the undue influence has been exercised in relation to an arbitrator or umpire or

   (c)an arbitrator or umpire is incompetent or unsuitable to deal with the particular dispute, the Court may, on the application of a party to the arbitration agreement, remove the arbitrator or umpire."

4. The issue which has been raised in relation to the proposed amendment is an issue whether in addition to any non‑disclosure by the arbitrator of relevant material relating to a past association with Leighton Contractors there has been relevant non‑disclosure by Leighton Contractors, the case is that not only the arbitrator but also Leighton Contractors were under a duty of disclosure with respect to past association.

5. The relevance of the proposed amendment is that it is said to be material to the issue of the unsuitability of the arbitrator if not only has the arbitrator acted in breach of his duty to disclose past association, but also a party, namely, the respondent Leighton Contractors, has failed to disclose past association.

6. It is at the least arguable that there is a duty to make such disclosure on the part of a party. The question is whether and to what extent such non‑disclosure is relevant to the suitability of the arbitrator for the purposes of s 44(c). For present purposes it is enough to say that in my opinion it is reasonably arguable that such non‑disclosure is so relevant. This is a matter which does go to the due administration of justice in the context of arbitration proceedings under the Commercial Arbitration Act 1985.

7. I take account of the fact that this application to amend is made in the context of expedited proceedings and that the date of trial has been fixed to commence on 11 December 2000.  However, having regard to the importance and significance of the matter, notwithstanding the possibility raised that there is a real risk that the proceedings may not be able to be tried on the dates which have been fixed, the amendment is of sufficient substance and importance to overcome the kinds of problems which I have mentioned.

8. This is of course an interlocutory appeal and the onus is on the applicant for leave to show that the decision at first instance was wrong or at least attended by sufficient doubt to justify the grant of leave and, in addition, that substantial injustice would be done by leaving that decision unreversed :  Wilson & Ors v Metaxas [1989] WAR 285 at 294 per Malcolm CJ. Naturally, leave is reluctantly granted in such a case for the reasons which have been stated in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; and see In re the Will of F B Gilbert (Dec) (1946) 46 SR (NSW) 318 at 323.

9. In my view a reasonable bystander would consider it relevant to the question of an apprehension of unsuitability in a situation where both a party and an arbitrator were under a duty of disclosure, if that what is ultimately held, and each were in breach of that duty, if that was also held.  The inference of a reasonable apprehension of unsuitability may more readily be drawn in those circumstances: cfAussie Airlines Pty Ltd v Australian Airlines Pty Ltd & Anor (1996) 65 FCR 215 at 220 to 221; and Najjar v Haines (1991) 25 NSWLR 224 at 228 -229. I note that the latter decision in relevant part was approved generally by this Court in Giustiniano Nominees Pty Ltd v Minister for Works (1996) 16 WAR 87 at 93 per Ipp J, although that case was not concerned with a failure to disclose past business relationships with a party, but rather communications and dealings between the arbitrator and a party while the arbitration was on foot.

10. For those reasons, I would grant leave to appeal, allow the appeal and set aside the order dismissing the application and in lieu thereof

substitute an order granting leave to amend by the insertion of the proposed par 15 in the amended statement of claim.

1. OWEN J:  To the extent that the order of Miller J is ineffective, I too would grant leave to appeal and make the additional orders to which the learned Chief Justice has referred.  I do so with more than the usual degree of reluctance because this is a matter within the Expedited List and the likely consequences of the order for the proper and due resolution of the dispute which is the subject of the matter in the Expedited List.

2. It seems to me that the question of disclosure is of obvious importance in matters of this nature.  It cannot be doubted, I think, that both the necessity for disclosure and the ability of parties to obtain the requisite information lies primarily with those who possess the information rather than those who are seeking it.

3. It also cannot be doubted, I think, that questions both in relation to bias or apprehended bias itself and in questions of suitability in a broader context fall to be determined in accordance with all of the relevant circumstances.

4. Once you get to that stage and given that in the peculiar circumstances of this case no fault can be attributed to the applicant appellant for not having or not obtaining the requisite information prior to discovery in these proceedings - once that stage is reached and bearing in mind also, as the Chief Justice has said, that this is a matter that goes to the heart of the administration of justice, if there are consequences for the proper and efficient disposal of the dispute then they are matters which will have to be dealt with by orders other than a refusal of leave to appeal.  For those brief reasons and adopting the reasons announced by the learned Chief Justice, I would grant leave to appeal to the extent that it is necessary and allow the appeal.

5. PARKER J:  I agree with the orders proposed by the Chief Justice and with the reasons he has given.