ZUPAN & ZUPAN

[2019] FCCA 454

FEDERAL CIRCUIT COURT OF AUSTRALIA

ZUPAN & ZUPAN [2019] FCCA 454

Catchwords:
FAMILY LAW – Arbitral Awards – Abridgment of time for registration of Arbitral Awards – Errors in Arbitral Awards.

Legislation:

Family Law Act 1975 (Cth), s.13K
Federal Circuit Court of Australia Act 1999 (Cth), s.42
Family Law Regulations 1984, regs.67Q(3), 67Q(4) 67F
International Arbitration Act 1974 (Cth)
Arbitration Act 1996 (UK), s.57
Commercial Arbitration Act, RSC 1985, art 33
Arbitration Act 1996 (NZ), Art 33, Sch.1

United Nations Commission on International Trade Law (UNCITRAL) Model Law (as adopted by the United Nations Commission on International Trade Law on 21 June 1985, and as amended by the United Nations Commission on International Trade Law on 7 July 2006).

Cases cited:

Unifam Counselling & Mediation & Harkiss & Anor [2011] FamCAFC 159

NKT Cables A/S v. SP Power Systems Limited, 2017 CSOH 38

Applicant: MS ZUPAN

Respondent: MR ZUPAN

File Number: PAC 1874 of 2016

Judgment of: Judge Harman

Hearing date: 27 February 2019

Date of Last Submission: 27 February 2019

Delivered at: Parramatta

Delivered on: 27 February 2019

REPRESENTATION

No appearance by the Applicant

Solicitors for the Respondent: Mr Khan of CK Lawyers

ORDERS

1. Grant leave to the parties to make a joint and oral application pursuant to s.13K Family Law Act to vary the arbitral award dated 9 October 2018 and registered by this Court 22 October 2018.

2. Dispense with any rule, regulation or requirement that would preclude that application being listed before me today and heard and determined today.

3. Vary the Arbitral Award dated 9 October 2018 so as to replace any reference within the award to the property “Property A1” with reference to “Property A” as such that the arbitral award should be read with these orders to achieve that purpose and effect.

4. Remove all issues from the list of cases awaiting hearing.

IT IS NOTED that publication of this judgment under the pseudonym Zupan & Zupan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PARRAMATTA

PAC 1874 of 2016

MS ZUPAN

Applicant

And

MR ZUPAN

Respondent

REASONS FOR JUDGMENT

1. These proceedings come before the court today in response to a joint request of the parties to relist the matter following the registration of an Arbitral Award.  What is, in effect, before the Court, is an oral application to vary or amend the Arbitral Award.

2. An application to vary an Arbitral Award would, ordinarily, be made by the filing of a Form 7.  However, in the circumstances, I am conscious that the filing of the form and the need for that level of formality thereof is not required.  That is so by reference to:

   a)The reality that both parties jointly seek the amendment and concede that it is necessary and appropriate; and,

   b)By reference to section 42 of the Federal Circuit Court Act 1999 the Court is required to act informally.

3. Leave is granted, to the parties jointly, to make an oral application for variation of the award pursuant to section 13K of the Family Law Act 1975. 

The substantive proceedings

1. By Order made 16 November 2017, the proceedings were referred to arbitration.  That arbitration has occurred.  An Arbitral Award was made 9 October 2018.

2. The Arbitral Award was the subject of an application for registration filed 22 October 2018.  An order registering the agreement was made the same day.  As would be readily apparent, a period of 28 days had not passed following the filing and service of the application to register the Arbitral Award as required by Regulation 67Q Family Law Regulations 1984 (what might be referred to as the “objection period”).

3. An appearance occurred on 22 October, 2018.[1]  The matter was mentioned by consent on behalf of both parties.  The Court was advised that no objection to registration was or would be raised by either party.  As a consequence, and with the consent of the parties, time was, as it were, abridged and the award registered forthwith.

   [1] Following upon the order referring the matter to Arbitration the proceedings had been adjourned to allow the Arbitration to conclude and an Arbitral Award made.  The listing 22 October, 2018 arose on this basis.

4. Regulation 67Q(3) provides that a party may, within 28 days after service of an application for registration of an Arbitral Award, object to registration of the Arbitral Award by bringing to the attention of the Court any reason why the Arbitral Award should not be registered and by the Court then hearing and determining that objection.  However, Regulation 67Q(4) provides that if nothing is brought to the Court's attention then the Court must register the award. 

5. As both parties clearly joined in the application to register the Arbitral Award and as each was clear that no objection was raised I am content that the objection period can be waived and that, absent objection, the Arbitral Award must be registered.  The objection period is permissive and there is nothing within its terms which would preclude this course.

6. The difficulty that has arisen, and the basis upon which variation of the Arbitral Award is sought, is a typographic error contained within the Arbitral Award. 

7. It is common ground between the parties that the property adjustment proceedings between them dealt with a number of assets including a parcel of real estate at Property A.  The Arbitral Award deals with and determines all controversies between the parties.  However, the Arbitral Award defines and refers to the Property A property incorrectly as Property A1. 

8. The parties have made a request of the arbitrator to amend the Arbitral Award to correct this error.  The arbitrator has indicated their view that they are, as it were, functus officio and thus unable to assist as requested. 

9. The issue that arises, pursuant to section 13K Family Law Act 1975, is whether the Court might now vary the award.

10. Section 13K is headed “Family Court or Federal Circuit Court may set aside registered awards”.  It is clear, however, that neither party seeks to take the step of setting aside the Arbitral Award.  The body of the section is somewhat at odds with and broader than this heading. 

11. Section 13K invests the Court with authority to affirm, reverse or vary an arbitral award or agreement. Subsection (2) provides the bases upon which this might occur.

Amendment of an Arbitral Award

1. Before returning to section 13K, it is germane to consider the bases upon which an Arbitral Award might be amended. Amendment may occur on one of three bases.

2. Firstly, the power to amend the Arbitral Award may be created by Statute or Regulation. What is readily apparent is that no power to amend an Arbitral Award arises under the Family Law Act, the Family Law Regulations or Family Law Rules. The Act, Regulations and Rules make no reference to what might be generally described as a “slip rule” or power to amend.  That is in contradistinction to comparable Arbitration legislation, particularly the United Nations Commission on International Trade Law (UNCITRAL) model law, the International Arbitration Act 1974 (Cth), State and Territory Arbitration Acts, as well as corresponding jurisdiction such as England and Wales,[2] Canada[3] and New Zealand.[4]

   [2] Section 57 Arbitration Act 1996

   [3] Article 33 Commercial Arbitration Act 1985 and corresponding provisions in Provincial Acts

   [4] Art 33 Sch 1 Arbitration Act 1996

3. Article 33 of the UNCITRAL model law provides that within 30 days of receipt of the Arbitral Award a party may request the Arbitral Tribunal to correct the Arbitral Award so as to address any errors in computation or any clerical or typographical errors or errors of a similar nature. Clearly what has occurred in this award is a typographical error.

4. In the absence of a clear statutory provision within the Family Law Act 1975, investing an arbitrator with a power to amend their Arbitral Award, I would be loath to suggest that the arbitrator has any statutory power to amend or correct.

5. Secondly, there is the potential that an arbitrator has an inferential or inherent power to correct errors.  There is some uncertainty in this regard and no universally accepted, settled position. 

6. Courts have the inherent power to correct and amend their orders.  This can be done so as to address errors or other matters, such as an order being improperly obtained.  It is unclear whether such a power would vest in an arbitrator although, ultimately, I need not determine the issue.  Some support is lent to the existence of a limited, inherent power to amend (see for example the Scottish decision of NKT Cables A/S v. SP Power Systems Limited, 2017 CSOH 38).

7. The third basis of jurisdiction for the arbitrator to address a clerical or administrative error would arise from the contractual arrangement between the parties and the arbitrator contained within the Arbitration Agreement. 

8. The scope of the Arbitral process the powers of the Arbitrator under the Family Law Act 1975, consistent with arbitration in all comparable jurisdictions including England and Wales, Canada and New Zealand, is largely founded in contract.  The parties submit contractually and consensually to the determination of their controversy by an independent Arbitrator.  The terms by which the arbitrator is engaged and retained are set out in an arbitration agreement.

9. Curiously, Regulation 67F of the Family Law Regulations provides that the parties to an Arbitration may (emphasis added) make an agreement in relation to the arbitration.  One would think, as a matter of best practice, that it would be highly advisable, if not required, that the parties and arbitrator enter into an Arbitration Agreement.  This is so as the Arbitration Agreement not only creates the powers that are vested in the arbitrator but defines the Arbitration, what issues will be addressed and how the Arbitration is to be conducted. 

10. In this case, the parties did, in fact, enter into an Arbitration Agreement. The Arbitration Agreement is in accordance with the standard Australian Institute of Family Law Arbitrators and Mediators (AIFLAM) model agreement.  That agreement invests in the Arbitrator a power analogous to the Slip Rule in that the Arbitrator is authorised to affect the very amendment that has been requested of the arbitrator. 

11. Clause 42 of the Arbitration Agreement provides:

    When the arbitration is terminated by the delivery of a final award, if either party identifies a minor mathematical or other mistake [And for present purposes I accept that the misdescription of the parcel of real estate would fall under the nomenclature of “other mistake] …which can be cured under the slip rule which is applied to legal proceedings, such party may bring the matter to the attention of the arbitrator and all other parties to the dispute.  If the arbitrator agrees that an award can be so rectified, he/she may deliver a supplementary award by which the final award is varied.

12. That clause has not been successful in achieving the amendment sought for two reasons.  Firstly, as regards the final sentence thereof (“if the arbitrator agrees that an award can be so rectified”), the Arbitrator has clearly signalled their belief that they have no power, statutory, inherent or contractual, to effect the variation.  Secondly, the Arbitrator has, for whatever reason, formed the view that they have no power to amend the Arbitral Award notwithstanding that clause 42 of the Arbitration Agreement would appear to clearly vest that power in the arbitrator. 

13. I am conscious that the language of clause 42 is permissive.  The Arbitrator is vested with the power to amend the Arbitral Award.  But, it is a matter for the Arbitrator as to whether they choose to issue an amended Arbitral Award.  On that basis I am satisfied that the logic applied in Unifam Counselling & Mediation & Harkiss & Anor [2011] FamCAFC 159 should apply such that it would be inappropriate for the Court to dictate to the Arbitrator as to how their discretion might be exercised.

The Court’s power to vary the Arbitral Award

1. That, however, leaves the parties in the position whereby their Arbitral Award is ineffective in concluding all controversies between them and is, in effect, unenforceable.  The parties have sought to comply with the Arbitration Agreement and have sought to do that which is required to effect compliance therewith. 

2. The parties have experienced the rejection of the transfer prepared with respect to the property A on the basis that the Arbitral Award refers to a different property, namely, Property A1.  I am satisfied that this misdescription is clearly a typographical error, an error that would fall very much within the domain of the arbitrator’s discretion to issue an Amended Arbitral Award. Accordingly, that course was open and available to the Arbitrator although rejected. 

3. Section 13K permits the variation of the award as already described above. However, the power to vary the Arbitral Award is subject to the requirements of subsection (2) such that a Court may only make a decree setting aside, affirming or varying the award if satisfied that one of the grounds therein exists.

4. There are four grounds set out, namely:

   a)The award was obtained by fraud.  It is not suggested that this applies;

   c)Circumstances have arisen, since the award was made, that renders it impractical for the Arbitral Award to be carried out.  This does not apply.  A circumstance has not arisen since the Arbitral Award was issued.  It is a simple error within the Arbitral Award itself;

   d)The arbitration was affected by bias or a lack of procedural fairness.  It is not suggested that that applies. 

5. Thus, the parties and the Court are left with subparagraph (b) which I am satisfied enables the Court to affect the variation. 

6. Subparagraph (b) authorises variation of the Arbitral Award if the Arbitral Award is void, voidable or unenforceable.  I do not, for one moment, suggest that the award is rendered void by the error contained within it being the misdescription of a property.  Clearly, it was the intention of the arbitrator to deal with the totality of the controversy between these parties including adjustment of interests in the property that the parties had identified as Property A.  Nor is the Arbitral Award voidable. 

7. The Arbitral Award, with the misdescription of the property, is unenforceable.  The parties cannot do that required of them to enable compliance with the award.  The aware requires that certain actions be taken and that upon the completion of those actions that the husband transfer to the wife his interest in the misdescribed property.  The property described within the award is not a property of the parties.  That which is the property of the parties is misdescribed. 

8. I am satisfied that the Arbitral Award, in its present form and without the amendment sought, is unenforceable.  Accordingly, I am satisfied that the Court’s jurisdiction is enlivened to proceed to vary the Arbitral Award by directing that any reference to Property A1 be replaced by and taken as being a reference to Property A. 

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge Harman

Date: 13 May 2019