Re Leighton Contractors Pty Limited v Hooker Corporation Limited and Ernest Edward Morris [1989] FCA 309 (10 August 1989)

FEDERAL COURT OF AUSTRALIA

Re: LEIGHTON CONTRACTORS PTY LIMITED
And: HOOKER CORPORATION LIMITED AND ERNEST EDWARD MORRIS
No. ACT G10 of 1989
FED No. 448
Contract

COURT

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
Jenkinson(1), Neaves(1) and Von Doussa(1) JJ.

CATCHWORDS

Contract - Arbitration - dispute or difference arising in connection with a lump sum building contract - whether arbitrator validly appointed in default of exercise of a power of appointment - construction of the arbitration clause - clerical errors and omissions - uncertainty whether parties intended to designate an arbitrator or give a power of appointment and if so to whom and uncertainty as to who could be appointed - whether the clause could be construed as a valid submission to arbitration by severing the uncertain part about the appointment of an arbitrator - whether party challenging the appointment estopped from denying validity by concessions made by its counsel at an interlocutory hearing.

Commercial Arbitration Act, 1986 (ACT) ss.3, 4, 8 & 10

HEARING

CANBERRA
10:8:1989

Counsel for the appellant: Mr G. Masterman Q.C., and Mr T. Higgins Q.C. with Mr R.C. Refshauge

Solicitor for the appellant: Macphillamy Cummins & Gibson

Counsel for the respondent: Mr P. Dent Q.C. with Mr M. Castle

Solicitor for the respondent: Messrs John Faulks & Co.

ORDER

The appeal be dismissed.

The appellant pay the first respondent's costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

This is an appeal from a decision of the Supreme Court of the Australian Capital Territory. On an originating summons taken out by the first respondent, Hooker Corporation Limited, the Court declared that, upon the true construction of an agreement between the appellant and the respondent made on 26 June 1985 and in the events that had occurred, the purported submission by the appellant of an alleged dispute or difference between the parties to Ernest Edward Morris, the second respondent, for arbitration was invalid. The Court restrained the appellant from proceeding with the purported submission.

2. The agreement was a lump sum construction contract for a building project in Canberra. We shall refer to the appellant as the contractor and the first respondent as the proprietor, these being the descriptions given to the parties by the agreement. The practical completion date was 27 October 1987. On 30 March 1988 the contractor made claims for variations and for additional costs incurred in the execution of the works. The proprietor denied liability. On 6 July 1988 the contractor served a Notice of Dispute on the proprietor. By its terms the notice alleged that the agreement provided that any unresolved dispute or difference be "submitted to an arbitration by the Australian Institute of Architects, A.C.T. Chapter", and stated that if the disputes or differences over the contractor's claims were not settled within one week they "shall be and are submitted to arbitration". The claims were not settled, and the contractor then took a series of steps which it now asserts led to the appointment of Mr Morris as arbitrator.

3. It is convenient at this point to refer to clause 10 of the agreement. It is apparent that in the typing of the agreement errors and omissions occurred. To make the clause intelligible, it needs correction. Counsel for the contractor concedes that this is so, but submits that the intention of the parties is clear enough so that the clause should be read and construed by the interpolations and amendments which we include in brackets in the clause as follows:

"10(a) In case any dispute or difference shall
arise between the Proprietor and the
Contractor either during the progress of
the Works or after the determination
abandonment or breach of the Contract as
to the construction of the same of
(substitute "or") as to the (substitute
"any") matter or thing whatsoever arising
thereunder or in connection therewith then
either party may give to the other (insert
"notice") in writing of such dispute or
difference and at the expiration on
(substitute "of") one (1) week unless it
shall have been settled such dispute or
difference shall be and is hereby
submitted to an arbitration by an (insert
"architect member appointed by the Royal")
Australian Institute of Architects - ACT
Chapter.
(b) In serving notices (substitute "notice")
of dispute or difference the party serving
such notice shall provide evidence that he
has deposited with the said Chapter the
sum of Five Hundred Dollars ($500.00) by
way of security for costs and expenses of
arbitrations (substitute "the
arbitration") proceedings which said sum
and any further sum or sums that may be
lodged as security for costs and expenses
shall be applied in accordance with the
directions from time to time of the
arbitrator either during the continuance
or after the determination of the
arbitration.
(c) The award made by the said arbitrator
shall be final and binding on both the
Proprietor and Contractor and neither
party shall be entitled to commence or
maintain any action upon any such dispute
or difference until such matter shall have
been referred and determined as herein
before provided and then only for the
amount of relief, to which the arbitrator
by his (insert "award") finds either party
is entitled and the costs of the
submission reference and award shall be in
the discretion of the said arbitrator."

4. Although the Notice of Dispute recited that the agreement provided for arbitration by the Australian Institute of Architects, ACT Chapter, the steps taken by the contractor to appoint Mr Morris were as follows: by letter dated 19 July 1988 the contractor gave notice of the dispute to the Royal Australian Institute of Architects in Canberra requesting the Royal Australian Institute of Architects - ACT Chapter ("the Chapter") to nominate an arbitrator for the dispute. The Chapter declined to do so on the ground that in its view clause 10(a) of the agreement did not empower the Chapter to nominate an arbitrator. After further correspondence between solicitors for the parties, and with the Chapter, the contractor gave notice on 1 September 1988 pursuant to s.8 of the Commercial Arbitration Ordinance 1986 proposing that Mr Morris be the arbitrator in the event of default in the exercise of the alleged power of appointment by the Chapter. By virtue of s.5 of the Self Government (Citation of Laws) Act 1989 (A.C.T.) the correct short title of that enactment is now the Commercial Arbitration Act 1986, and we shall refer to it as "the Act". It is common ground that the Act could have application as the alleged dispute or difference arose after the commencement of the Act: see para.3(3)(a), sub.s.3(7) and Qantas Airways Limited v. Dillingham Corporation & Ors (1985) 4 NSWLR 113 at 116. The Chapter did not nominate an arbitrator. It replied saying that:

"In the instant case the parties have chosen to use
a non-standard form of contract which contains a
seemingly defective arbitration clause ... The
Institute has declined in the present
circumstances to nominate an arbitrator because of
the defective arbitration clause".

On 13 September 1988 the contractor wrote to the proprietor saying that Mr Morris was now appointed arbitrator pursuant to s.8. The proprietor immediately notified Mr Morris that it disputed his appointment, but notwithstanding this the contractor contended before Mr Morris that the arbitration should proceed.

5. On 29 September 1988 the originating summons which commenced this proceeding was taken out. It sought firstly a declaration that no dispute or difference within the meaning of the agreement had occurred, and secondly a declaration that the purported submission by the contractor of an alleged dispute or difference to Mr Morris for arbitration was invalid. Consequential injunctive relief was also claimed.

6. On 7 October 1988 the proprietor moved the Court for interlocutory injunctive relief on the ground that no dispute or difference within the meaning of the agreement had arisen between the parties. The Court refused the order sought on the ground that, contrary to the proprietor's contention, a dispute or difference had arisen between the parties.

7. A further hearing occurred before Mr Morris on 10 October 1988. The minutes of that hearing record that the proprietor continued to assert the invalidity of "the submission to arbitration clause" and the appointment of Mr Morris as arbitrator. Further hearing of the arbitration was then adjourned to allow the remaining issues raised by the originating summons to be resolved.

8. When the originating summons came on for hearing on 15 February 1989 the proprietor argued that the wording of clause 10 created an absurdity and it was not possible to deduce what the parties meant by the clause. The contractor submitted otherwise, and also contended that the proprietor was estopped from advancing the absurdity argument because counsel for the proprietor in argument before the Court on 7 October 1988 had conceded the validity of the appointment of Mr Morris pursuant to s.8 of the Act. The learned trial judge upheld the absurdity argument and rejected the estoppel argument. The contractor now appeals against those decisions. At the trial, Mr Morris indicated that he would abide the order of the Supreme Court. He has not appeared before this Court.

9. The contracting parties are agreed that the amendments and interpolations made to clause 10 by the words included above within the brackets, other than the words "architect member appointed by the Royal" are necessary to express the obvious intention of the parties. The errors which it is agreed should be corrected appear to be clerical errors. The further insertion of the word "Royal" before the words "Australian Institute of Architects - ACT Chapter" is not in dispute. It is common ground that the only body that could answer the description in clause 10(a) is the Royal Australian Institute of Architects - ACT Chapter. We were informed from the bar table that the parties agree that the Royal Australian Institute of Architects is a body corporate. However the ACT Chapter is not separately incorporated and there is no agreement about its status. The contractor argues that the ACT Chapter is an unincorporated body comprising the members of the Chapter.

10. The issue between the parties turns on the contractor's assertion that the words "architect member appointed by the" should be read into clause 10(a) before the words "(Royal) Australian Institute of Architects - ACT Chapter". The contractor contends that unless these words are inserted the only construction which could be given to clause 10(a) would be that the parties agreed to submit any dispute or difference to the arbitration of the Royal Australian Institute of Architects - ACT Chapter (this construction also involving amending as another clerical error the word "an" to "the" in the phrase "arbitration by an (Royal) Australian Institute of Architects - ACT Chapter"); and that this construction would give rise to an absurdity as it would require the submission of a dispute or difference to the arbitration of an unincorporated body, which would have to act either through its committee or in general meeting. The contractor contends therefore that the intention of the parties must have been to give a power of appointment to the Chapter, and furthermore a power to appoint an architect member. Reliance is placed upon the following statement of principle in Watson & Anor v. Phipps (1986) 60 ALJR 1 at 3 where the parties true intentions are obvious but the words used give rise to an absurdity:

"The function of a court of construction is to
ascertain what the parties meant by the words
which they have used. For this purpose the
grammatical and ordinary sense of the words is to
be adhered to, unless they lead to some absurdity
or to some repugnance or inconsistency with the
rest of the instrument, in which case the
grammatical and ordinary sense of the words may be
modified so as to avoid that absurdity or
inconsistency, but no further."

In support of the argument it is said that the additional words would explain the use of the indefinite article "an" ahead of the words to be inserted; would be consistent with the notion apparent in clause 10(b) that the Chapter to whom the deposit is payable is a different entity to the arbitrator; and would be consistent with the words "arbitrator by his (award) finds ..." in clause 10(c).

11. Whilst the courts will modify the language used so as to avoid absurdity or inconsistency where the intention of the parties is obvious, and will strive to give meaning to the language used by the parties in a commercial agreement, it is not possible to do so where "the language used was so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention": G. Scammell & Nephew, Limited v. H.C. & J.G. Ouston (1941) AC 251 per Lord Wright at 268, cited with approval by Barwick C.J. in The Council of the Upper Hunter County District v. Australian Chilling & Freezing Co. Limited [1968] HCA 8; (1968) 118 CLR 429 at 437.

12. We agree with the learned trial judge that it is possible sensibly to construe clause 10(a) to mean that any dispute or difference will be submitted to an arbitration by the Royal Australian Institute of Architects - ACT Chapter. Although there may be practical difficulties in implementing the clause so understood, this construction does not produce absurdity or uncertainty. Even if the designation of the Chapter refers to an unincorporated body (and on this we express no view) a dispute may be validly referred to an unincorporated body. The reference will be treated as being to the members of that body at the time when the dispute comes up for decision: see Russell on Arbitration, 20th Ed., p 106 and Parish of Rathven v. Parish of Elgin (1875) LR 2 HL (Sc.) 535. However, whilst this is one sensible construction, the practical difficulties in the implementation of the clause and the minor textual inconsistencies which this construction creates with sub-clauses 10(b) and (c), do not make the construction so compelling that it should be preferred to other possible constructions.

13. The practical difficulties and textual inconsistencies referred to would be avoided by adding the words contended for by the contractor which assume that the intention of the parties was to give a power of appointment, not to designate an arbitrator. However they would also be avoided by adopting one of the possible constructions suggested by the proprietor which is to read the relevant part of the clause as meaning "hereby submitted to an arbitration by the President of the (Royal) Australian Institute of Architects - ACT Chapter." This construction has the clause nominating a particular officer of the Chapter rather than the Chapter itself.

14. It is not obvious to us that clause 10(a) was intended to give a power of appointment but we agree that this is another construction possibility; but even if it is assumed that the clause was intended to give a power of appointment, it is not apparent whether the power of appointment is to be vested in the Chapter, or in a nominated member of the Chapter. In argument counsel for the contractor drew attention to the language of clause 32(a) of the Edition 5b form of lump sum contract used under the sanction of the Royal Australian Institute of Architects and the Master Builders Federation of Australia Inc.: see Brooking on Building Contracts, 2nd Ed. by D.M. Bennett Q.C., at p 176. It was suggested that the wording of this clause, which was in common use in the building industry, indicated the likelihood that the parties intended to give a power of appointment. However the terms of clause 32(a) serve to demonstrate that the possibilities are innumerable. The relevant words of the clause read:

"...hereby referred to the arbitration of an
architect member of the Royal Australian Institute
of Architects being the President for the time
being of the Chapter or Area Committee of that
institute in the State or Territory in which the
Contract is made, or his nominee, and a member of
the Master Builders' Association being the
President for the time being of the Master
Builders' Association of the State or Territory in
which this Contract is made or his nominee."

This language raises the possibility that the parties may have intended by clause 10(a) to give a power of appointment not to the Chapter, but to the President of the Chapter. Apart from the uncertainty as to who is to exercise the power of appointment, if the intention of the clause were to give such a power, the language also leaves uncertain whether the appointee is to be an architect, an architect member of the Chapter, or any person whom the appointee sees fit to appoint.

15. In our opinion it is not possible from the provisions of the agreement, apart from clause 10, or from the circumstances surrounding the execution of the agreement insofar as they have been made known to the Court, to conclude whether or not the parties intended to appoint a particular person or body as arbitrator, or to give a power of appointment. In the latter event it is not possible to determine whether a power of appointment would require the appointee to be a person of any particular class. We agree therefore with the learned trial judge that it is not possible to deduce what the contractor and the proprietor intended by the concluding words set out in clause 10(a).

16. In the event that we were of this opinion, the contractor contended in this Court that clause 10(a) should be construed as being in two parts: the first as expressing a clear agreement between the parties to submit any dispute or difference to arbitration, and the second as their attempt, which in the event failed, to agree about the appointment of an arbitrator. It was submitted that the two parts of clause 10(a) should be considered as independent; that the second part being incapable of precise meaning should be severed; and that the balance of the clause should stand as an arbitration agreement within the meaning of s.4 of the Act, that is, as an "agreement in writing to refer present or future disputes to arbitration". It was said that paras.10(a) and (b) of the Act would in terms apply to empower the Supreme Court to appoint an arbitrator. Section 10 reads:

"10. Where there is a vacancy in the office of
arbitrator or umpire (whether or not an appointment
has previously been made to that office) and-
(a) neither the provisions of the arbitration
agreement nor the provisions of this Act
(other than this section) provide a method for
filling the vacancy;
(b) the method provided by the arbitration
agreement or this Act (other than this
section) for filling the vacancy fails or for
any reason cannot reasonably be followed; or
(c) the parties to the arbitration agreement agree
that, notwithstanding that the provisions of
the arbitration agreement or of this Act
(other than this section) provide a method for
filling the vacancy, the vacancy should be
filled by the Court,
the Court may, on the application of a party to
the arbitration agreement, make an appointment to
fill the vacancy."

17. The contention has some attraction, particularly having regard to clause 10(c) which reads as a Scott v. Avery clause (see Scott v. Avery [1856] EngR 810; (1856) 5 HL Cas 811). However upon reflection we have concluded that to so construe clause 10(a) would amount to the Court reforming the contract to impose on the parties a compromised position when it is not clear that either party intended to agree to arbitration regardless of the status or identity of the arbitrator. It is not for the Court to frame a clause that the parties might well have made, but did not make: Putsman v. Taylor (1927) 1 KB 637 at 639-640. A party to a building contract might well be prepared to agree to the resolution of a future dispute by a nominated Chapter of the Royal Australian Institute of Architects, or by an architect member thereof nominated by a particular person, but might be quite unwilling to submit to arbitration by whoever might be appointed by the Court, for example by a master builder or a lawyer. The qualification of the arbitrator may be fundamental to the submission to arbitration: See Jungheim, Hopkins & Co. v. Foukelmann (1909) 2 KB 948 at 956 and Rahcassi Shipping Co. S.A. v. Blue Star Line Ltd (1969) 1 QB 173. In E.J.R. Lovelock Limited v. Exportles (1968) 1 Lloyd's Rep 163 a contract between Russian sellers and English buyers for the sale of timber c.i.f. Liverpool contained a long arbitration clause, the first part of which made provision for "Any dispute" to be referred to arbitration in London, but the second part of which provided that "Any other dispute" was to be referred to the Arbitration Commission in Moscow. The Court of Appeal held that the arbitration clause was ambiguous and uncertain to the extent of being meaningless. Diplock L.J. at p 167 concluded his judgment by saying:

"I can find no common intention expressed by the
parties. The clause is of course severable and
in the result the dispute between them must take
the ordinary course, that is to say it is for the
Courts to decide it."

There was no suggestion that only part or parts of the clause should be severed so that what remained would provide for arbitration, leaving it to the law of the contract to provide for the appointment of an arbitrator and for the procedure to be followed. In that case, the structure of the clause did not lend itself to any simple blue pencil textual deletion and the two modes of arbitration mentioned were very different. It is not surprising that the whole clause was held to be meaningless. However the case provides an illustration of the importance in the notion of arbitration to be attached to the manner in which the arbitration is to occur. In the instant case the parties have failed to unambiguously express their agreement on a matter which could be of central importance to the kind of arbitration which each intended.

18. Finally, it is necessary to consider the submission of the contractor that the proprietor is estopped from denying the validity of the appointment of Mr Morris as arbitrator. The alleged concession by counsel for the proprietor on which this contention is based was made in the course of argument before the Supreme Court on 7 October 1988. At that hearing the proprietor was seeking an interlocutory injunction on the ground that no dispute or difference had arisen under the agreement. The thrust of the argument was that no dispute or difference had arisen "either during the progress of the Works or after the determination abandonment or breach of the Contract". In the course of argument the following exchange took place. Mr Higgins QC was counsel for the contractor and Mr Byrne was counsel for the proprietor:

"MR HIGGINS: As your Honour pleases. Your
Honour, the first defendant contends that the
plaintiff's application is inappropriate, and
perhaps I will just put in summary form the
reasons for making that statement. The first is
that the reference of a matter to an arbitrator it
being not an issue that the appointment of the
arbitrator was made according to the Commercial
Arbitration Ordinance 1986.
HIS HONOUR: Would you say that again. I did
not quite follow that.
MR HIGGINS: It not being objected that the
formal appointment of the arbitrator is in any way
lacking. In other words, there is no contention
that the procedures required by section 8 of the
Arbitration Ordinance have not been complied with.
MR BYRNE: That is so, your Honour.
MR HIGGINS: The question then is one which comes
down to this. As I understand the contention, it
is that the - first of all the arbitration clause
is too limited in its term as to comprehend this
dispute, and that it follows from that that the
dispute is not one which may be referred to
arbitration, albeit that if it were otherwise, the
arbitrator is validly appointed. ..."

19. The learned trial judge held that the concession was not an unequivocal concession that the contractor had validly appointed Mr Morris as arbitrator pursuant to s.8. It was no part of the proprietor's case for injunctions to contend that Mr Morris had not been validly appointed. The learned judge went on to say:

"Even if I am wrong in that respect and that the
plaintiff could be regarded as having made some
sort of concession, it was no more than the
adoption of an assumed state of affairs for the
purpose of an argument that no dispute or
difference had arisen. It could not have been
regarded, and I did not regard it, as a concession
made for all purposes."

The learned trial judge was in an unique position to judge the scope of the concession made by counsel. We are not persuaded that the learned trial judge incorrectly interpreted the concession. On the contrary we share his view that the concession cannot be given any wider meaning than that the proprietor adopted an assumed state of affairs for the purposes of the argument then before the Court.

20. In this Court the contractor also relied on another concession made by counsel for the proprietor later in his submissions. Mr Byrne, in the course of a lengthy submission dealing with an authority which had been cited said:

"But in any event, your Honour, the thing really
that is being submitted to the arbitrator in the
first instance in this case, is the question or
not of whether or not there has been a breach of
contract. Now, the arbitration clause, before you
start getting into the general things concerning -
taking my friend's rewriting of it, with which I
would not wish to disagree:
As to the construction of the same or as to any
matter or thing whatsoever arising thereunder
or in connection therewith -
that being the wide catchall provision in
condition 10 to the contract that we are dealing
with here, nevertheless, only arises after there
has been a breach. It is not suggested that
there has been a determination or abandonment, it
only arises after there is a breach..."

It was contended that counsel conceded that clause 10(a) should be read in its entirety as the contractor contends. That contention cannot be accepted. Mr Byrne made it quite clear what part of the rewriting of clause 10(a) he was not disagreeing with. He quoted the words to which he was referring. The concession then made in respect of those words cannot be construed as a concession that the proprietor accepted all the amendments suggested to clause 10(a), including the amendments which were irrelevant to the argument then before the Court.

21. The contractor alleged that it made an assumption from the concessions made by counsel on 7 October 1988 that the proprietor accepted that Mr Morris was properly appointed and that the arbitration was proceeding subject to a review of whether or not the dispute fell within clause 10. The contractor contended that its conduct at the preliminary hearing before Mr Morris on 10 October 1988, as recorded in the minutes of that hearing, shows that it relied upon those concessions.

22. We are unable to accept the view that there was any reasonable ground for believing that anything which counsel for the proprietor said in the course of argument on 7 October 1988 amounted to a representation that the proprietor accepted that the arbitrator was properly appointed or that the arbitration was proceeding subject to a review of whether or not the dispute fell within clause 10. The time and place for the preliminary hearing which occurred on 10 October 1988 had been fixed prior to the hearing on 7 October 1988. The occurrence of the hearing was in no way dependent upon any concession or representation by the proprietor. The minutes of the meeting upon which the contractor relies are divided into sections each relating to a different topic. Each topic is introduced by a heading in block print. The first topic records the representation of the parties. The next topic in the minutes reads:

"REFERENCE TO ARBITRATION
1. The Parties agreed that the submission to
arbitration, which was produced, and which is
included in an agreement between the parties
dated 26th June, 1985 was in order.
2. The Parties agreed that the nomination of the
Arbitrator was in order, and no objection were
(sic) taken to the appointment.
NOTE: This clause was agreed to by the
Respondent, only if the submission to
arbitration clause of the contract, was valid,
which they dispute."

Counsel for the contractor argued his case on the footing that the NOTE qualified only paragraph 2 in the above portion of the minutes. As a matter of strict construction it is not clear whether the words "this clause" at the commencement of the note is intended to apply only to the preceding paragraph numbered 2, or whether it is intended to apply to the portion of the minutes appearing under the heading REFERENCE TO ARBITRATION. However whatever the strict grammatical construction, it is in our view quite clear that the reservation by the proprietor recorded in the note must qualify the validity of the submission to arbitration, that is, clause 10 of the agreement.

23. The contractor also relied upon the minutes recorded under the last topic of business. That section of the minutes reads:

"GENERAL BUSINESS
The applicable law is that of the Australian
Capital Territory.
Mr. J. Byrne for the respondent stated he may call
upon the arbitrator to decide the following points
of law:-
1. Was the works still in progress on the date on
which the notice of dispute was served.
2. Was there a prior determination or abandonment
of the works before the issue of the notice of
the dispute.
3. Was there a prior breach of contract before
the issue of the notice of dispute.
Mr. Dorter for the claimant stated that the Court
had already decided these issues and challenged
the respondent to accede to the now valid
arbitration or to again put its case before the
Court.
The arbitrator's view is that there is still an
originating summons in existence, and the above
issues of law and the parties disagreement may
well be determined by the Court's treatment of
this summons."

24. On 10 October 1988 the position was that the proprietor had taken proceedings in the Supreme Court seeking declarations first that no dispute or difference had arisen within the meaning of the agreement, and secondly that upon the true construction of the agreement the purported submission by the contractor of the alleged dispute or difference to Mr Morris was invalid. The questions agitated at the hearing on 7 October 1988 concerned only the first of the matters raised by the originating summons. It must have been clear that the proprietor still sought to argue the invalidity of the submission to arbitration. That intention was stated before the arbitrator at the outset of the meeting on 10 October. Towards the end of the meeting when Mr Byrne indicated that there were points of law which the arbitrator might be required to decide, the contractor's solicitor stated that the Court had already decided those issues, that is the issues generally encompassed by the first declaration sought in the originating summons. If that were the attitude of the contractor at that stage, the live issue that remained in the proceedings before the Court was the one raised by the second declaration sought. In our view there was no room for misunderstanding as to the fact that the proprietor on 10 October 1988, and indeed throughout, continued to dispute the validity of the appointment of Mr Morris on the ground that his appointment was not authorised by clause 10(a). There is nothing in the papers to support the suggestion that the contractor was misled to think otherwise by anything which was said by counsel for the proprietor on 7 October 1988. On the contrary, the papers suggest that the contractor embarked on a course of conduct which attempted to force the proprietor into arbitration before there was time for the Court to consider the construction question raised by the originating summons.

25. For these reasons we agree with the conclusion reached by the learned trial judge. In our opinion the appeal should be dismissed with costs.