Home Builder Bop Ltd v Forman
[2017] NZHC 2155
•31 October 2017
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TAURANGA MOANA ROHE
CIV-2017-470-86 [2017] NZHC 2155
UNDER the Arbitration Act 1996 IN THE MATTER
of an Arbitral Award dated 10 May 2017
BETWEEN
HOME BUILDER BOP LTD Applicant
AND
NIGEL KELVIN FORMAN AND CLARE LESLEY TURNER AS TRUSTEES OF THE NK FORMAN FAMILY TRUST
Respondents
Hearing: 23 August 2017
(Heard at Hamilton)
Counsel:
T J Conder for Applicant
J Delaney for RespondentsJudgment:
31 October 2017
JUDGMENT OF BREWER J
This judgment was delivered by me on 31 October 2017 at 4:00 pm pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Holland Beckett (Tauranga) for Applicant
Harris Tate (Tauranga) for Respondents
HOME BUILDER BOP LTD v FORMAN & TURNER [2017] NZHC 2155 [31 October 2017]
Introduction
[1] The applicant and the respondents have a long running dispute arising from renovations to a property owned by the respondents. The applicant contracted with the respondents to carry out the renovations. The respondents say they were overcharged and they are due refunds. The applicant denies this. The dispute turns on the interpretation of the parties’ construction contract.
[2] The parties decided to resolve their dispute by arbitration. They appointed Mr Derek Firth, MNZM as sole arbitrator. Mr Firth is a barrister and a very experienced arbitrator. He has particular experience as arbitrator of construction disputes.
[3] The parties agreed a procedure that would not require an oral hearing. In accordance with this procedure, they provided Mr Firth with the documents, including submissions, they thought he would need to determine their dispute.
[4] On 10 May 2017, Mr Firth made an interim award on liability. He found for the respondents. Quantum was left to be agreed by the parties in the light of the interim award, and failing that the parties could engage Mr Firth to decide quantum in a final award.
[5] I note that the sum claimed by the respondents at the arbitration was
$97,609.57 and the applicant had a counterclaim for $29,212.69.
[6] The applicant now seeks leave to appeal Mr Firth’s interim award.
Issues
[7] There are two issues I must decide: (a) Is there a question of law?
(b) Should leave to appeal be granted?
Questions of law?
[8] The applicant wishes to have the following questions determined on appeal:
(a) Did the arbitrator err in interpreting the contract by failing to conclude that the $38 rate for builders’ labour in the contract was a fixed price, not an estimate;
(b)Did the arbitrator err in interpreting the contract to mean that the 9 per cent margin did not apply to the labour of Mr Stuart Wood, the director of the applicant;
(c) Did the arbitrator err in concluding that claims in relation to payment claims 1-9 were brought within time; and
(d)Did the arbitrator err in failing to give reasons for his conclusions in subparagraphs (a) to (c) above.
[9] Only questions of law are appealable. Clause 5(10) of sch 2 of the
Arbitration Act 1996 (“the Act”) defines a question of law:
For the purposes of this clause, question of law—
(a) includes an error of law that involves an incorrect interpretation of the applicable law (whether or not the error appears on the record of the decision); but
(b) does not include any question as to whether—
(i) the award or any part of the award was supported by any evidence or any sufficient or substantial evidence; and
(ii) the arbitral tribunal drew the correct factual inferences from the relevant primary facts.
[10] Here, the first two questions address issues of interpretation of the contract between the parties.
[11] A challenge to a decision-maker’s interpretation of a contract per se is not a challenge on a question of law. The applicant acknowledges that. But, in reliance on
New Zealand Air Line Pilots’ Assoc Inc v Air New Zealand Ltd,1 the applicant submits that “questions of interpretative principle” are questions of law. Accordingly, the applicant makes its challenge on the basis that Mr Firth misapplied the law of contractual interpretation as set out in the well-known case of Vector Gas Ltd v Bay of Plenty Energy Ltd.2
[12] It is contentious whether a mixed question of fact and law is a question of law and is thus appealable. There are conflicting decisions of this Court.3 The following passage in Williams & Kawharu on Arbitration illustrates that point:4
In some cases, the High Court has regarded a question of mixed fact and law as a question of law capable of founding an appeal under cl 5, that is, essentially, a question whether the facts satisfy the legal test relevant to the dispute. This has particular significance in disputes over the construction of contracts, as these disputes are usually resolved against a background of relevant facts. The position is not free from doubt, however, as there is also judicial support for the view that only pure questions of law may be appealed.
There are arguments both for and against allowing appeals in respect of
mixed questions of fact and law …
(Citations omitted)
[13] Justice Williams recently commented on the issue in respect of interpretation of contracts:5
[57] … Findings of fact, one might expect, will routinely underpin the court’s perspective on the meaning of contractual terms. This will then require courts hearing applications for leave to appeal from arbitral awards, to give careful consideration to whether the real matter in issue is the meaning of the contract, or the facts upon which that meaning is wholly or partly based. The former may raise a question of law. The latter will not. So, a debate about whether a fact said to affect meaning is proved, will not raise a question of law. Nor, to my mind, will a debate about whether a proved fact is capable of supporting an inference going to contractual intention. Such issues are, in the first place, really factual, and in the second place, excluded by the terms of cl 5(10)(b)(ii).
1 New Zealand Air Line Pilots’ Assoc Inc v Air New Zealand Ltd [2017] NZSC 111.
2 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444.
3 Trustees of Rotoaira Forest Trust v Attorney-General [1998] 3 NZLR 89 (HC); Todd Petroleum
Mining Co Ltd v Vector Gas Trading Ltd [2017] NZHC 1166 at [49]-[54]; Nixon v Walker HC Auckland CIV-2007-404-1372, 12 December 2008 at [13]-[18]; Stanaway Real Estate Ltd v Cooper & Co Real Estate Ltd HC Auckland CIV-2010-404-8007, 18 May 2011 at [7].
4 David Williams and Amokura Kawharu Williams & Kawharu on Arbitration (2nd ed, LexisNexis, Wellington, 2017) at 531-532.
5 Todd Petroleum Mining Co Ltd v Vector Gas Trading Ltd, above n 3.
[14] The Judge concluded:
[51] In New Zealand in light of cl 5(10)(b), the correct articulation of the position may well be that where the application of the appropriate principle to the facts would admit of only possible result or a number of possible results within a reasonable range, it can only be inferred that the wrong test was applied when the Tribunal comes to a different result or a result outside the reasonably available range, even if the principle was, in the words of the award, correctly articulated.
[15] The respondents raised, but did not pursue, this issue. The concentration of submissions was on the interpretation of the contract. I think that was appropriate. I am going to proceed on the assumption that the questions are questions of law because due to my findings on the merits, I do not need to resolve the issue.
[16] The third and fourth questions do not fall within the point of contention. They are clearly questions of law.
Leave to appeal
[17] Leave is required because cl 5(1)(c) of sch 2 of the Act applies.6 This restricts appeals to questions of law arising out of an award. Further:7
The High Court shall not grant leave under subclause (1)(c) unless it considers that, having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of 1 or more of the parties.
Approach to applications for leave to appeal
[18] Clause 5 is a threshold provision and crossing it does not justify the granting of leave. As the Court of Appeal said in the leading case on this point, cl 5 is “designed to ensure that disputes will not be referred to the High Court if, as between the immediate parties, the matter is largely academic”.8
[19] If the cl 5 threshold is crossed, then the Court should consider, in the exercise of its discretion, the factors set out in Gold & Resource Developments (NZ) Ltd v
6 This is because the parties did not agree to an appeal right before the making of the award and the respondents did not consent to the appeal after the award was made.
7 Arbitration Act, sch 2, cl 5(2).
8 Gold & Resource Developments (NZ) Ltd v Doug Hood Ltd [2000] 3 NZLR 318 (CA) at [11].
Doug Hood Ltd.9 The factors were formulated against the recognition that Parliament, in enacting the Act, “has made clear its intention that parties should be made to accept the arbitral decision where they have chosen to submit their dispute to resolution in such manner”.10 Justice Keane also commented:11
[16] The Arbitration Act 1996 insists that when parties arbitrate they are bound by their choice. They are fixed with the award made, subject to appeal on point of law. They are not entitled to a fresh start. The threshold for leave to appeal is high …
[20] In this case the cl 5 threshold has been crossed. The questions of law go to the heart of the dispute between the parties. Accordingly, I will consider the factors going to the exercise of my discretion.
Consideration of the discretionary factors
[21] The Court of Appeal in Doug Hood listed the factors to be considered as follows:12
(a) The strength of the challenge/nature of point of law; (b) How the question arose before the arbitrators;
(c) The qualifications of the arbitrators;
(d) The importance of the dispute to the parties; (e) The amount of money involved;
(f) The amount of delay involved in going through the Courts;
(g) Whether the contract provides for the arbitral award to be final and binding;
and
(h) Whether the dispute before the arbitrators is international or domestic.
9 Gold & Resource Developments (NZ) Ltd v Doug Hood Ltd, above n 8, at [54](1)-[54](8).
10 At [52].
11 Nixon v Walker, above n 3.
12 At [54](1)-[54](8).
[22] The most important factor is the strength of the applicant’s argument that
there has been an error of law and the nature of that point:13
… If it is a one-off point, in the sense that it is unlikely to occur again and cannot be seen as having any precedent value, either generally or to the parties on another occasion, then unless there are very strong indications of error leave should rarely be given. In other cases, the Court will be looking for a somewhat less stringent assessment. In those cases a strongly arguable case would normally be required for leave to be granted. The existence of conflicting decisions will also be relevant …
[23] As I have said, the first two questions address issues of interpretation of the contract between the parties. They are one-off points and cannot be seen as having any precedent value. I would need to find very strong indications of error before I would consider giving leave to appeal on them.
[24] The second two questions of law address issues of more general significance. Determining them would have precedent value. I will assess them somewhat less stringently than the first two questions and consider granting leave to appeal if I find a strongly arguable case.
The first question
[25] The first question challenges the arbitrator’s decision that the $38 per hour rate for builders’ labour in the contract was an estimate and not a fixed price. The relevance being that if builders contracted by the applicant were charging the applicant less than $38 an hour,14 then the applicant could nevertheless charge the respondents $38 an hour for the builders’ labour, plus a margin of nine per cent.
[26] As noted earlier, Mr Firth applied the law of contractual interpretation as set out in Vector Gas.15 Essentially, the modern approach to contractual interpretation requires the Court to ascertain the objective meaning of the contract in light of its factual matrix.16 The overall aim is to ascertain “the meaning which the document
would convey to a reasonable person having all the background knowledge which
13 At [54](1).
14 As I infer must have been the case for the applicant to pursue the point.
15 I note that the decision of the Supreme Court in Vector Gas was later clarified in Firm PI 1 Ltd v
Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432.
16 Vector Gas Ltd v Bay of Plenty Energy Ltd, above n 2. See also Firm PI 1 Ltd v Zurich
Australian Insurance Ltd, above n 15.
would reasonably have been available to the parties in the situation in which they were at the time of the contract”.17
[27] As long as the reasonable person would regard the background or factual matrix as relevant, there is no conceptual limit on it.18 It includes the commercial purpose of the contract, the origins of the contract, the context of the contract, the history of dealings between the parties and the relative states of knowledge and experiences of the parties. Subsequent conduct is also admissible as an aid to interpretation.19
[28] The applicant submits that Mr Firth failed to determine the objective meaning of the contract between the parties in light of its factual context. In particular, Mr Firth should have had regard to an estimate that, it submits, forms part of the contractual documentation. This estimate, it is submitted, was referred to in the contract and invoices were prepared and paid, without demur, as provided for in the estimate. Mr Conder, for the applicant, argued before me that Mr Firth did not consider the estimate, the contract, and further agreed terms together to determine the objective intention of the parties with regard to charging for builders’ labour, and this was an error of law. Especially given the subsequent conduct of the parties.
[29] Mr Firth set out the relevant provisions of the contract, and referred to the further terms. He referred also to the estimate:
An estimate dated 22 June 2009 is produced. The Respondent insists there were earlier estimates but I am not sure that matters.
In the 22 June 2009 estimate, it makes it quite clear that it is an estimate and also that [its] cost price is “GST exclusive”. This was not challenged and is relevant post-contract conduct.
It provides for construction labour at $38.00 an hour and project management $38.00 an hour; also vehicle expenses 60 cents per kilometre and a margin of 9%. GST is then added to the detailed estimate total.
17 Firm PI 1 Ltd v Zurich Australian Insurance Ltd, above n 15, at [60]; citing Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (HL) at 912 per Lord Hoffmann.
18 Firm PI 1 Ltd v Zurich Australian Insurance Ltd, above n 15, at [60].
19 Wholesale Distributors Ltd v Gibbons Holdings Ltd [2007] NZSC 37, [2008] 1 NZLR 277 at
[60].
[30] Mr Firth referred specifically to Vector Gas and said he applied its “well-
known principles of construction”.
[31] In my view, there is no clear indication that Mr Firth did not interpret the contract in accordance with accepted principles. I have examined the contract, the estimate, and the further terms to see whether his ruling is so obviously wrong that error of application of legal principles might be inferred. My finding is that I cannot say that the ruling was wrong. There are ambiguities in the documents and this experienced arbitrator resolved them.
[32] It follows that I do not find an indication of error on the first question, let alone a very strong indication. Leave is refused.
The second question
[33] The second question challenges Mr Firth’s ruling that the nine per cent margin provided for in the contract did not apply to the labour of the applicant’s director, Mr Stuart Wood.
[34] The same approach to what would constitute an error of law on a matter of interpretation of a contract applies.
[35] In his interim award, Mr Firth refers to the contract’s provision for the nine
per cent margin. He refers to it again in the context of the estimate and concludes:
It seems quite clear that Mr Wood’s agreed labour rate of $38.00 an hour
(GST exclusive) would not have any margin added to it.
[36] Mr Conder submits that the proper application of Vector Gas required Mr Firth to consider the estimate when determining the margin provisions in the contract. Since Mr Firth does not say he did that, legal error can be presumed.
[37] It is clear that Mr Firth, when deciding this matter, referred to both the estimate and the contract. Again, I have examined these documents to see whether his ruling is so obviously wrong that error of application of legal principles might be inferred. I do not find that Mr Firth’s ruling was obviously wrong. There is some
ambiguity in the documents and Mr Firth resolved it in a way which was open to him.
[38] It follows that I do not find an indication of error on the second question, let alone a very strong indication. Leave is, again, refused.
The third question
[39] The third question is whether Mr Firth erred in concluding that claims in relation to payment claims 1-9 were brought within time. As I understand it, it is common ground that if the respondents’ cause of action arose for each invoice when it was paid, then the respondents were out of time when they brought their claim. For each invoice, the six years limitation period specified in s 4(1)(a) of the Limitation Act 1950 had expired. However, Mr Firth ruled that the limitation period did not begin to run until the date when the contract came to end.
[40] In his interim award, Mr Firth addressed the issue as follows:
… those issues, in my opinion, cease to be relevant or applicable because I [accept] the submission on behalf of the Claimant that the limitation period did not commence to run until after it became evident that the Respondent would not return.
Although not indicative in itself of the legal position, I have never before even heard an argument raised that time limits run from particular points during the contract works. That is a novel approach induced, I suspect, by the provisions of the Construction Contracts Act 2002.
I am well aware of the principles relating to the time when a cause of action accrues and the identification of that time from when all relevant material is available, but that is not an argument I have ever heard having been applied to periodic payments during a construction contract. Many construction contracts last for many years and it has been accepted around the world in domestic and international arbitrations that limitation periods do not commence to run until the end of the contract.
Otherwise there would be havoc on large projects outlasting the limitation period.
Accordingly, all claims are within time.
[41] The critical question was when time began to run in relation to payment claims 1-9 for the purposes of the Limitation Act.
[42] The respondents submit, and Mr Firth accepted, that time either began to run when the contract was concluded or when there was a net overpayment for the final time.20
[43] The applicant submits that the cause of action accrued either on the date when payment of those invoices was due or the date on which payment was actually made. The subsequent payments and invoices are irrelevant.
[44] I must pause here to observe that I have not seen the way in which the case was put before the arbitrator. However, since an overpayment on a contract is not a breach of contract, I will proceed on the basis that to recover the respondents must rely on the common law action of money had and received.
[45] The common law cause of action based on money had and received is well recognised in New Zealand.21 The action will lie where the plaintiff has voluntarily paid money to the defendant and the money would not have been paid but for a mistake of fact made by the plaintiff.22 As the Court of Appeal commented:23
[19] … all that is necessary is, first, the payment of money by A to B and, second, proof that the money would not have been paid but for a mistake of fact A made. When these two essentials are shown, an action will lie in quasi-contract for money had and received, and all that is left by way of defence is estoppel or the defence provided by s 94B of the Judicature Act
1908.
…
[21] … The claim for money had and received is a personal claim, not a proprietary or in rem claim. It does not depend on proof of any wrongdoing or impropriety on the part of a recipient. It does not turn on the continued existence or retention of the money received. Although unjust enrichment may be seen as underpinning a claim for money had and received, there is no actual requirement of unjust enrichment.
(Citations omitted)
[46] The cause of action is, therefore, complete when the money is received.
20 Either conclusion results in the claims being brought in time.
21 Napier v Torbay Holdings Ltd [2016] NZCA 608 at [18].
22 Thomas v Houston Corbett & Co [1969] NZLR 151 (CA) at 161. See Kelly v Solari (1841) 9 M
& W 54 (Exch of Pleas) at 58.
23 Napier v Torbay Holdings Ltd, above n 21. I note that s 182(2) of the Senior Courts Act 2016 has now repealed s 94B of the Judicature Act 1908.
[47] The payment claims in this case are governed by the Limitation Act 1950.24
The Limitation Act 2010 provides an express limitation for an action for money had and received.25 But the Limitation Act 1950 did not. It instead provided:
4Limitation of actions of contract and tort, and certain other actions
(1) Except as otherwise provided in this Act or in subpart 3 of Part 2 of the Prisoners’ and Victims’ Claims Act 2005, the following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued, that is to say,—
(a) actions founded on simple contract or on tort: (b) actions to enforce a recognisance
(c) actions to enforce an award, where the submission is not by a deed:
(d) actions to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture.
[48] The English courts have held in relation to their equivalent historical legislation26 that an action for money had and received is an action ‘founded on simple contract’.27 An action is ‘founded upon simple contract’ if it is necessary for the plaintiff to rely on the contract to establish a cause of action.28
[49] Graham Virgo approves of the English courts’ approach:29
No specific provision is made in the Limitation Act 1980 for restitutionary claims which are founded on the reversal of the defendant’s unjust enrichment. Consequently, it might be argued that no limitation period should be applicable to such claims. But, as a matter of policy, the claim should fail when sufficient time has lapsed to remove the injustice of the defendant retaining the benefit which was received from the claimant.
24 See Limitation Act 2010, ss 2 and 59.
25 Section 11(1) provides that it is a defence to a money claim if the defendant proves that the date on which the claim is filed is at least 6 years after the date of the act or omission on which the
claim is based. Section 12(1) defines a money claim as meaning a claim for monetary relief at common law, in equity, or under an enactment.
26 Limitation Act 1939 (UK) 2 & 3 Geo 6 c 21, s 2(1)(a). The Limitation Act 1980 (UK) is their equivalent of the Limitation Act 2010.
27 Re Diplock [1948] 2 All ER 318 (CA) at 326. See also Laws of New Zealand Restitution (online
ed) at [14].
28 Hearle v Bennie [1926] NZLR 113 (SC). See also Laws of New Zealand Limitation of Civil
Proceedings: Limitation Act 1950 (online ed) at [59].
29 Graham Virgo The Principles of the Law of Restitution (3rd ed, Oxford University Press, Oxford, 2015) at 735.
Therefore, some limitation period is necessary, bearing in mind that the equitable doctrine of laches is generally inapplicable to such claims since it only applies where the claimant seeks equitable relief. A limitation period must be identified therefore by analogy with one of the categories of claim for which the Limitation Act does make specific provision.
By section 5 of the Limitation Act 1980 actions which are founded on contract are barred after six years. The predecessor of this provision was interpreted by the Court of Appeal in Re Diplock as covering actions for money had and received, although ‘the words used cannot be regarded as felicitous’. This conclusion was affirmed by Hobhouse J in Westdeutsche Landesbank Girozentrale v Islington LBC on the ground that such actions should be treated as akin to ones relating to contract and so a limitation period of six years is applicable. This is artificial and harks back to the implied contract theory, but, since no specific provision is made for this type of restitutionary claim under the Limitation Act, it is the best solution available. It is certainly better than concluding that such restitutionary actions are subject to no limitation period at all …
… Consistency demands that a similar limitation period should apply to all claims founded on the reversal of unjust enrichment, regardless of the ground of restitution on which the claimant relies.
(Citations omitted)
[50] In Suisse International Ltd v Monk, the Court of Appeal found that the High Court Judge was correct to dismiss the plaintiff’s claim for money had and received because there was no evidence of a mistaken payment.30 This meant that it was not strictly necessary for the Court to consider a limitation issue under the Limitation Act 1950. But the Court, without resolving the issue, commented:
[49] During the hearing we questioned whether the time limit for a claim for money had and received in consequence of a mistake was the six year period under s 4(1)(a) of the 1950 Act … Counsel continue to agree that the six year time limit under s 4(1)(a) applies. Mr Keall referred us to the learned authors of the well-known text Goff and Jones: The Law of Unjust Enrichment for the proposition that actions for money had and received are to be treated as actions founded on simple contract in terms of s 5 of the Limitation Act 1980 (UK), a provision in materially similar terms to s 4 of our 1950 Act. Two authorities were cited for this proposition. The first was the judgment of the English Court of Appeal in Re Diplock. The second was the judgment of Hobhouse J in Kleinwort Benson Ltd v Sandwell Borough Council.
[50] It appears that, although the analogy with “simple contract” may be regarded as infelicitous, the English courts have nevertheless been willing to treat a claim for unjust enrichment as falling within that phrase. As Hobhouse J explained in Kleinwort Benson Ltd, the word “simple” is used to
30 Suisse International Ltd v Monk [2015] NZCA 46 at [44].
exclude an action upon a speciality for which the time limit is 12 years from the date the cause of action accrues.
[51] Mr Dalkie has also provided helpful submissions in which he traced the history of the conceptual basis for the doctrine of money had and received. That is now firmly based on the concept of unjust enrichment as earlier noted. Mr Dalkie also referred us to the judgment of the House of Lords in Kleinwort Benson Ltd v Lincoln City Council. It appears there was no challenge to the proposition that a six year limitation period applied. Rather, the question in the House of Lords on the limitation point was whether the equivalent of our s 28 applied to claims for money had and received on the basis of mistake. On this point, three of their Lordships agreed that the s 28 equivalent applied so as to postpone the limitation period of six years otherwise applicable.
[52] We are aware that texts on limitation have taken the view that claims for money paid under mistake of fact do not fall within s 4(1)(a) of the 1950
Act or its English equivalent. We note too that the Law Commission has
expressed the view that no time limit applies under the 1950 Act to proceedings seeking restitutionary relief. If that is so, it is not easy to follow why Parliament referred in s 28 to actions for relief from the consequences of a mistake in an unqualified way.
[53] We do not need to determine this issue since we have found that Suisse's claim must fail on the merits. We note too that the claim in the present case would clearly fall within ss 11 and 12 of the Limitation Act
2010 which has replaced the 1950 Act. So the issue for the future has been resolved.
(Citations omitted)
[51] This is not a question I can, or should, rule on in an application such as this. For the purposes of this application, I find it is strongly arguable that a six year limitation period applies.
[52] I now turn to examine whether the limitation period has expired in this case. This involves determining when the cause of action accrued.
[53] A cause of action is seen to accrue when every fact exists which it would be necessary for the plaintiff to prove in order to obtain judgment.31
[54] As the cause of action for money had and received becomes complete when the money is received, the limitation period began when the applicant received the overpayments. It appears counter-intuitive to suggest that in a case where there is a
staged contract with obligations to be performed over time and incremental
31 Williams v Attorney-General [1990] 1 NZLR 646 (CA) at 678.
payments due, a party would have to wait until the contract was concluded before it could litigate a refusal of a request for its money back if it overpaid on one of those incremental payments.
[55] I accept there may be practical difficulties with such an approach in terms of construction contracts (with which Mr Firth was undoubtedly concerned). But, in my preliminary view, there is a strongly arguable point of law that the limitation period had expired.
[56] The applicant has a strongly arguable case on the third question. Leave to appeal is, therefore, granted on this question.
The fourth question
[57] The fourth question is whether Mr Firth erred in failing to give reasons.
[58] Article 31(2) of sch 1 of the Act provides that an award must state the reasons upon which it is based.32 Lord Justice Donaldson defined a reasoned award as follows:33
All that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in the light of what has happened, they have reached their decision and what that decision is.
[59] The Court of Appeal has elaborated:34
[89] First, it is clear that the reasons given by an arbitral tribunal must not be so economical that a party is deprived of having an issue of law dealt with by the Court if necessary … the requirement in art 31(2) of the First Schedule that an award shall state the reasons upon which it is based. We agree that this is wider than merely ensuring that any legal issues can be identified.
[90] We do not consider, however, that there is a requirement for arbitrators to give elaborate reasons for each and every component of the award … We consider that Rogers CJ … set out the correct principles:
32 Unless the parties have agreed otherwise - which they have not done here.
33 Bremer Handelsgellschaft v Westzucker (No 2) [1981] 2 Lloyd’s Rep 130 (EWCA) at 132-133.
See also Williams and Kawharu, above n 4, at 406-410.
34 Casata Ltd v General Distributors Ltd [2005] 3 NZLR 156 (CA).
Elaborate reasons finely expressed are not to be expected of an arbitrator. Further, the Court should not construe his reasons in an overly critical way. However, it is necessary that the arbitrator deal with the issues raised … and make all necessary findings of fact …
.The reasons must not be so economical that a party is deprived of having an issue of law dealt with by the Court.
[91] We observe that the English Court of Appeal in Flannery stressed the differing extent of the duty to give reasons, depending on the nature of the case …
(Citations omitted)
[60] Justice Moore has also recently observed:35
[109] Other cases have also emphasised that an arbitrator’s reasoning should not be scrutinised critically and should be read fairly and as a whole. Awards should not be vitiated by fine points. The modern approach is in favour of sustaining awards where that can be done fairly rather than destroying them.
…
[111] … it has also been held that so long as the relevant issues are addressed there is no need for the arbitral tribunal to deal with every possible argument. It is also unnecessary for it to set out each step by which it reached its conclusion or to explain why it attached more weight to some evidence than to other evidence. Likewise, it has been held that where the award contains a clear and unambiguous conclusion on a relevant question of fact, the need for further clarification does not arise.
(Citations omitted)
[61] In my view, Mr Firth has given sufficient reasons. He produced an award consisting of nine pages to justify his conclusions. He acknowledged the existence of the estimate and adopted conclusions which were open to him given the ambiguity of the contract. Leave is, therefore, denied.
Conclusion
[62] I have considered the other Doug Hood factors. Their application would not change the conclusions I have reached and so I will not discuss them.
[63] Leave to appeal is granted solely in respect of the third question of law.
35 Ngāti Hurungaterangi v Ngāti Wahiao [2016] NZHC 1486, [2016] 3 NZLR 378.
Costs
[64] I am inclined to leave costs where they lie given the outcome. If the parties demur, the applicant may file submissions by 14 November 2017 and the respondent
by 28 November 2017.
Brewer J
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