Carr v Gallaway Cook Allan

IN THE SUPREME COURT OF NEW ZEALAND

 SC 27/2013
[2014] NZSC 75

BETWEEN

EWAN ROBERT CARR
First Appellant

BROOKSIDE FARM TRUST LIMITED
Second Appellant

AND

GALLAWAY COOK ALLAN
Respondent

Hearing:	28 November 2013
Court:	Elias CJ, McGrath, William Young, Glazebrook and Arnold JJ
Counsel:	D J Goddard QC, P J Dale and A J Wicks for Appellants C A McLachlan QC, A V Foote and J L W Wass for Respondent D A R Williams QC and S E Fitzgerald for Intervener
Judgment:	20 June 2014

JUDGMENT OF THE COURT

AThe appeal is allowed and the judgment of the High Court setting aside the award of 9 May 2011 is reinstated.

B         The respondent must pay to the appellants costs in this court of $25,000 together with reasonable disbursements. 

CThe order for costs in the Court of Appeal is set aside and the respondent is to pay the appellants’ costs in that Court and the High Court to be fixed by those courts.

____________________________________________________________________

REASONS

Para No
Elias CJ, McGrath, William Young and Glazebrook JJ	[1]
Arnold J	[89]

ELIAS CJ, McGRATH, WILLIAM YOUNG AND GLAZEBROOK JJ

(Given by McGrath J)

Table of Contents

Para No

Introduction

[1]

Background

[4]

The agreement to arbitrate

[8]

Recourse to the courts under the Arbitration Act

[10]

The present proceeding

[15]

High Court decision

[19]

Court of Appeal decision

[24]

Purposes and principles of the Arbitration Act

[29]

The “arbitration agreement”

[33]

The parties’ submissions

Our evaluation

Severance of void contractual provisions

[35]
[38]
[47]

Introduction

[47]

The approach in Carney v Herbert

[50]

The Humphries approach

[55]

The United States approach

[56]

Summary of principles

[62]

A subjective inquiry?

[63]

Application of principles to the present case

[67]

Exercise of the art 34 discretion

[73]

The parties’ submissions

[73]

Our evaluation

The relevance of art 34(2)(a)(iv)

Exercise of the discretion in this case

[76]
[81]
[86]

Conclusion

[87]

Introduction

1. The appellants were in dispute with the respondent, a firm of solicitors, which they had instructed to act for them on the settlement of a commercial transaction.  The settlement did not take place on the due date and the other party to the transaction cancelled the contract.  The appellants contended that this outcome was the fault of the member of the respondent firm who had acted on the settlement and claimed that the respondent was liable for damages for professional negligence. 

2. The parties agreed to arbitrate this claim.  It was a term of their agreement that each should have a right of appeal to the High Court on any question of law or fact arising out of the arbitrator’s award.  The applicable rules for the conduct of arbitration under the Arbitration Act 1996 include an optional provision that permits an appeal to the High Court on any question of law arising out of an award.  In their agreement, the parties purported to amend this provision by extending the right of appeal to apply to questions of fact as well as of law.  It…