Re An Arbitration Fergus Weir v Denia Lubiejewski [1988] ACTSC 11 (4 March 1988)

SUPREME COURT OF THE ACT

IN THE MATTER OF AN ARBITRATION FERGUS WEIR v. DENIA LUBIEJEWSKI
S.C. No. 56 of 1988
Arbitration

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Kelly J.(1)

CATCHWORDS

Arbitration - Award - Application for leave to appeal against - Whether question of law arose out of award.

Commercial Arbitration Ordinance 1986 (A.C.T.) - s.38.

HEARING

CANBERRA
4:3:1988

ORDER

The Respondent's application for leave to appeal made by notice of motion dated 18 February 1988 be dismissed.

The Respondent, Denia Lubiejewski, pay the costs of the Applicant, Fergus Weir, of and incidental to the application.

DECISION

Fergus Weir, to whom I will refer as the builder, agreed with Denia Lubiejewski, to whom I will refer as the owner, to build additions to the family room of her residence on land known as Block 4, Section 115, Division of Wanniassa, Canberra. Differences arose between the parties. By an agreement for arbitration (the agreement) made 1 October 1987 they referred those differences to a single arbitrator, Mr Peter Enders, for determination.

2. The agreement recited that the arbitrator should enter on the reference in accordance with the agreement made between the parties and with the provisions of the Commercial Arbitration Ordinance 1986 (the Ordinance).

3. Paragraph (iii) of Clause 8 of the agreement was as follows:-

"Subject to Clause 8(v) hereof and unless

otherwise stated in the Award, the Award made
by the Arbitrator shall, subject to this
Agreement, become final and binding on the
parties to the Agreement on the tenth day
following the date of publication unless
otherwise stated in the Award."

Paragraph (v) of Clause 8 provided that where the award contained a clerical mistake, an error or omission, a material miscalculation of figures, a material mistake in descriptions of various kinds or a defect of form, the arbitrator might correct and vary the award upon application by the parties or upon his own initiative.

4. Clause 12 of the agreement provided that the parties should have the right to appeal in accordance with the provisions of the Ordinance to a Court of law situated in the Australian Capital Territory to set aside any decision or award made by the arbitrator where:-

(a) There had been misconduct on the part of the
arbitrator or the arbitrator had misconducted the
proceedings;

(b) Undue influence had been exercised in relation to
the arbitrator; or

(c) The arbitrator was incompetent or unsuitable to
deal with the particular dispute.

5. The precise question or questions submitted to the arbitrator do not appear from the agreement. In the circumstances, therefore, the inference to be drawn is that all matters in dispute between the parties were referred to him.

6. The award contains what the arbitrator described as "Outline of Case". He noted the entry into the relevant building contract on 3 June 1987 and that notwithstanding delays occasioned in the completion of the works the contract remained in force. The nub of the dispute is set out in paragraph 3 of the Outline of Case:-

"Monies are claimed by the (builder) to be
owed to (him) by the (owner) in connection
with the said alterations and additions to
the residence. The Works were commenced
about the middle of June 1987 and were
nearing completion on 18 August 1987 at which
time a dispute arose between the parties and
work was virtually suspended."

7. The arbitrator made reference to "a further dispute . . . over a cash payment of $4,000" (paragraph 9 of the Outline of Case). It would seem that that dispute, too, was referred to him for decision. He found the payment to have been made by the owner. He listed a number of items to be completed under the contract and costed those items. He made some comments about some other items, comments which were obviously material to his final decision.

8. The arbitrator also made some comment about the plans under the heading "Documentation". He described the history of the disputes which had taken place between the parties. He made a general finding that both parties had generally adhered to the terms and conditions of the building contract.

9. Under the heading "Valuation of Works" the arbitrator said:-

"The original Contract Sum amounts to
$17,200.00. Considering the work involved
this sum would have been exclusive of
painting notwithstanding the fact that such
specific exclusion was not included under
Annexure A of the Contract although the
intent of actually writing it in may have
been there as an Item 6 on Page 11 of the
Contract is indicated but not completed.

When taking it into account the other
exclusions, namely supply of roofing
materials by the Owner and supply of
insulation material as well as the painting,
the Contract Sum stands as fair and
reasonable. It is from the calculation made
by myself as to the full value of the Works
less the exclusions that I am able to justify
the Contract Sum on the basis that the
Builder would have been and should be in a
position to complete the Works in a proper
and workmanlike manner without loss.

This also confirms the First Party's claim
for extras relating to electrical
installations and the implied condition that
all light fixtures would be supplied by the
Second Party.

It furthermore explains the actions taken by
the Builder to vary certain structural
aspects of the designs on which he contracted
and for which he submitted an amended plan to
the Building Section on 12/6/87 without the
counter signature of the Lessee/Owner on the
Application Form which accompanied the
submission of the amended plan."

10. Thereafter the arbitrator dealt with a number of extras to the building contract. Under the heading "Conclusion" he made some criticisms of the work carried out by the builder. He then went on to say:-

"Certain obligations have existed prior to
the signing of the Contract as well as during
the execution of the Works which have either
not been clearly understood by the parties or
have been neglected to be attended to in the
proper manner and at the proper time. This
particularly refers to the plans which did
not sufficiently take into account the
conditions that existed on site. Hence they
are not adequately representing or specifying
the work to be executed to enable the Builder
to work to these plans without problems.

Equally the (builder) took it upon (himself)
to have amended plans drawn up and lodged
with the Building Section without proper
reference to the (owner) and to make this
situation worse even the amending plan
supplied by the Builder was not adhered to."

At paragraph H.16 of his award, the arbitrator said:-

". . . termination of the Contract is done by
mutual consent for practical purposes to
avoid further acrimony between the parties."

This may serve as some explanation of what at first sight appears to be a most peculiar feature of the actual award, namely:

"that the contract between the parties be
terminated as of the date of this Award
subject to the Builder being paid the
Settlement Sum in full within seven (7) days
of the Builder furnishing four (4) copies of
the amended architectural plan to the (owner)
as referred to in H.17 hereof;

that (the owner) pay (the builder) the sum of
FIVE THOUSAND NINE HUNDRED & EIGHT DOLLARS
($5,908.00) within seven (7) days of receipt
of the amended architectural plan, correctly
drawn."

11. The builder has applied under s. 33 of the Ordinance for leave to enforce the award of $5,908.00 made in his favour. He has sought also that he have leave to enter judgment for the amount in question, the judgment to date from 16 November 1987 or, alternatively, that such judgment as may be entered in his favour should bear interest pursuant to s. 53A of the Supreme Court Act 1933 from 16 November 1987. This is obviously an attempt to deal with the fact that the arbitrator did not include in his award any order in respect of interest pursuant to s. 31 of the Ordinance.

12. On 18 February 1988 the solicitors for the owner filed a notice of motion seeking that leave be given her to appeal from the arbitrator's award of 16 November 1987 pursuant to s. 38 of the Ordinance. That section reads:-

"(1) Without prejudice to the right of
appeal conferred by sub-section (2), the
Court shall not have jurisdiction to set
aside or remit an award on the ground of
error of fact or law on the face of the
award.

(2) Subject to sub-section (4), an appeal
shall lie to the Supreme Court on any
question of law arising out of an award.

(3) On the determination of an appeal under
sub-section (2) the Supreme Court may by
order -

(a) confirm, vary or set aside the award; or

(b) remit the award, together with the
Supreme Court's opinion on the question
of law which was the subject of the
appeal, to the arbitrator or umpire for
reconsideration or, where a new
arbitrator or umpire has been appointed,
to that arbitrator or umpire for
consideration.

and where the award is remitted under
paragraph (b) the arbitrator or umpire shall,
unless the order otherwise directs, make the
award within 3 months after the date of the
order.

(4) An appeal under sub-section (2) may be
brought by any of the parties to an
arbitration agreement -

(a) with the consent of all the other
parties to the arbitration agreement; or

(b) subject to section 40, with the leave of
the Supreme Court.

(5) The Supreme Court -

(a) shall not grant leave under paragraph
(4) (b) unless it considers that, having
regard to all the circumstances, the
determination of the question of law
concerned could substantially affect the
rights of one or more of the parties to
the arbitration agreement; and

(b) may make any leave which it grants under
paragraph (4) (b) conditional upon the
applicant for that leave complying with
such conditions as it considers
appropriate.

(6) Where an award of an arbitrator or
umpire is varied on an appeal under
sub-section (2), the award as varied shall
have effect (except for the purposes of this
section) as if it were the award of the
arbitrator or umpire."

13. The application for leave to appeal is not consented to by the builder.

14. The question of law upon which the application is based is said to arise in this way. In her affidavit of 18 February 1988 the owner agreed that on 9 November 1987 she was handed by the applicant certain drawings but denied that they were those required by paragraph H.17 of the arbitrator's award. She said:-

"There were many respects in which the plans
do not reflect the work as executed. Annexed
hereto and marked "A" is a true copy of a
report on the building works carried out by
Aistrope Engineers. Pages 10 to 11 detail
some respects in which the plans do not
reflect the work as executed."

Without deciding whether it is strictly admissible, I set out what seems to me to be the most important part of the pages just referred to:-

"In Paragraph H.17 of the Award, the
Arbitrator directed the Builder to prepare an
amended architectural plan which truly
reflects the work as executed. Copies of an
amended drawing have been forwarded to the
Owner however in several respects the drawing
does not accurately show what has been
built."

Whether or not the drawings handed over on 9 November 1987 reflected accurately the works as varied from the original plan or plans seems hardly a question of law. In any event, having regard to the way that the arbitration was apparently conducted and decided the question of itself can hardly form the basis of any challenge to what the arbitrator did. He simply required that the builder should hand over drawings which correctly reflect the works as varied and receive in return the sum of $5,908.00. It was plainly a condition precedent to the payment that the drawings should be correct and proof that they were is obviously necessary before the award may give rise to a judgment in favour of the builder under s. 33 of the Ordinance.

15. Peculiarly enough, the arbitrator referred to the exclusion from the building contract of painting work as implied yet made it plain in the list of work to be carried out that it was the builder's responsibility.

16. Some reference was made during the course of argument to the possibility that the arbitrator had misconducted himself. Section 42 of the Ordinance deals with misconduct on the part of an arbitrator. It says:-

"(1)Where -

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

(b) the arbitration or award has been
improperly procured,

the Court may, on the application of a party
to the arbitration agreement, set the award
aside either wholly or in part.

(2) Where the arbitrator or umpire has
misconducted the proceedings by making an
award partly in respect of a matter not
referred to arbitration pursuant to the
arbitration agreement, the Court may set
aside that part of the award if it can do so
without materially affecting the remaining
part of the award.

(3) Where an application is made under this
section to set aside an award, the Court may
order that any money made payable by the
award shall be paid into court or otherwise
secured pending the determination of the
application."

17. "Misconduct" is defined in s. 4 of the Ordinance to include corruption, fraud, partiality, bias and a breach of the rules of natural justice but the word is obviously intended to encompass more than just those things since s. 42(2) indicates that an arbitrator may misconduct himself by making an award in respect of matter not referred to arbitration pursuant to the arbitration agreement. There is no suggestion of corruption, fraud, partiality, bias or a breach of the rules of natural justice. However, there are indications in the material before me that the arbitrator may have been guilty of misconduct of the kind referred to in s. 42(2) of the Ordinance. I refer to those parts of his award quoted above from the passages headed "Valuation of Works" and "Conclusion".

18. It seems quite clear that the builder varied the contract unilaterally in a respect or respects which was or were so material as to require the lodgment of fresh plans in respect of the variation with the Building Section. Whether this constitutes such a material variation under the terms of the Building Contract as to render the arbitrator's direction in respect of it an award in respect of matter not referred to arbitration does not appear from the material before me.

19. Because the application for leave to appeal was heard first and a decision on that application was reserved, submissions were not heard on the application for the entry of judgment. As I understood the situation, however, the plans which were handed over on 9 November 1987 are conceded not to be what the arbitrator had directed should be handed over.

20. The only other matter to which I wish to make reference is paragraph (iii) of Clause 8 of the agreement. It may be, but I very much doubt, that the parties have by that clause agreed that any right of appeal or to seek leave to appeal should be deemed to have been abandoned on the tenth day following the date of publication of the award but in the view I take of the application for leave to appeal it is not necessary to decide that question.

21. In the event I have no evidence before me sufficient to say that a question of law in respect of which leave ought to be granted under s. 38 of the Ordinance has arisen nor to say that the arbitrator has misconducted himself.

22. The application for leave to appeal is refused.