Leighton Contractors Ltd v Western Australian Government Railways Commission [1966] HCA 58; (1966) 115 CLR 575 (21 September 1966)

HIGH COURT OF AUSTRALIA

LEIGHTON CONTRACTORS LTD. v. WESTERN AUSTRALIAN GOVERNMENT RAILWAYS COMMISSION
[1966] HCA 58; (1966) 115 CLR 575

Arbitration

High Court of Australia
Barwick C.J.(1), McTiernan(1) and Owen(1) JJ.

CATCHWORDS

Arbitration - Costs - Partially successful claimant - Exercise of arbitrator's discretion - Order for each party to bear own costs - Misconduct.

HEARING

Perth, 1966, September 20, 21. 21:9:1966
APPEAL from the Supreme Court of Western Australia.

DECISION

September 21.
The judgment of the Court was delivered by BARWICK C.J.: -
This matter has been fully canvassed, we have had an opportunity to consider

2. A railway construction (schedule of rates) contract between these parties contained a provision for the settlement of disputes arising between them in connexion with the carrying out of the contract works by arbitration under the provisions of the Arbitration Act, 1895 of the State of Western Australia (the Act). By dint of that Act and cl. 9 of the first schedule thereto - "The costs of the reference and award shall be in the discretion of the arbitrator or umpire who may direct to and by whom and in what manner those costs or any part thereof shall be paid and may settle or direct the taxation by the Master of the Supreme Court of the amount of costs to be so paid or any part thereof and may award costs to be paid as between solicitor and client." (at p577)

3. The appellant made in all ten claims, which it particularized in points of claim and to which the respondent set up a number of defences set out in points of defence. The arbitrator made an award by which he made a specific finding as to each of the ten matters in dispute, awarding in each instance in which he found for the appellant a stated sum of money. These amounts awarded totalled $152,200. As to costs, the award provided - "I award and direct that the costs of this my award which I tax and settle at the sum of two thousand four hundred and sixty dollars ($2,460.00) shall be paid by the said parties in equal shares and that each party shall pay his own costs of and incidental to the arbitration." (at p577)

4. The arbitrator referred in his award to the appellant's ten points of claim and to the respondent's points of defences. For present purposes, we assume that these documents formed part of the award, or at any rate were documents accompanying the award. From a perusal of them, it is possible to gather the range of the dispute between the parties, and, as has been pointed out by counsel, in particular, the nature of the dispute in respect of claim number eight (8), "Excavation of Rock", which involved a dispute as to whether or not a reasonable rate rather than the scheduled rate should be paid. (at p577)

5. From a comparison of the points of claim and the specific findings made by the arbitrator in his award, the monetary relationship between the two can be seen as follows -

Claim No. Amount of Amount of
Claim Award
1. Sub-ballast 10180 Nil
2. Drawing and Design changes and
variations 28276 19000
3. Bill 1 Increase 25000 9000
4. Insurance 4680 2800
5. Northam Bridge Flooding 11006 8000
6. Northam Bridge Supervision 5600 Nil
7. Northam Bridge Formwork for
precast units 2162 Nil
8. Excavation of Rock 422590 109600
9. Stripping of Topsoil 3062 3060
10. Excavation for Bridge abutments 3510 740
$516066 $152200 (at p578)

6. The appellant, pursuant to s. 13 of the Arbitration Act, 1895, moved the Supreme Court of Western Australia to set aside the award upon the ground that the arbitrator had misconducted himself. The misconduct was said to consist of an error of law appearing on the face of the award, treating the points of claim and of defence as part of the award. The Supreme Court dismissed the appellant's motion from which dismissal the present appeal is brought. (at p578)

7. The error of law which the appellant submits is apparent upon the face of the award is that the arbitrator without reason failed to award costs to a successful claimant. The appellant rightly concedes that the Court in considering whether or not there is an error of law is confined to the award and its accompanying documents. A court is not entitled in such a matter as the present to look at the record of the proceedings before the arbitrator. All that can be gleaned from the award and its accompanying documents is that the appellant failed entirely as to several of its points of claim, and was only partially successful in all but one of the remainder of them. In one it succeeded substantially for the amount of its claim. But the extent to which time and effort may have been expended in resisting claims upon which the claimant failed wholly or partially cannot be discerned from these documents. (at p578)

8. The appellant submits that the discretion to award or not to award costs must be exercised judicially according to well settled principles. Unless there be reasons of a recognized kind for providing otherwise, a successful litigant, according to such principles, should have his costs: and the appellant points out that in Western Australia the amount of the professional fees allowable is determined by Order LXV of the Supreme Court Rules which scales the allowance of the major items according to the amount recovered and not according to the amount claimed. Thus an award for costs to a partially successful claimant results in an appropriate recovery of professional fees according to Order LXV and its schedule. So much may be conceded. But none the less, where, as here, there are a number of claims upon some of which the claimant succeeds wholly or partially and upon some of which he fails altogether, it may well be a judicial exercise of the discretion to order each party to bear its own costs throughout. It cannot be said that in such a case the claimant must be given his costs or some part of them. It may be in general he would. But, if he is given costs, it is the result of the exercise of a discretion and not by rule of law. In short, the face of the award does not suggest, let alone demonstrate, a total lack of circumstance in the conduct or result of the arbitration upon or in respect of which the arbitrator could properly exercise his discretion by awarding each party to pay its own costs. In our opinion, it is not made to appear from the award that there was no tenable reason for the arbitrator to depart from the course of awarding costs to the successful party. No doubt there must be such a reason for making the award as to costs which the arbitrator made in this case. The warnings to arbitrators in this respect have been many, see for example the two cases cited here by the appellant's counsel: Smeaton Hanscomb & Co. Ltd. v. Sassoon I. Setty, Son & Co. (No.2) (1953) 2 All ER 1588, at pp1589, 1590 ; Lewis v. Haverfordwest Rural District Council (1953) 2 All ER 1599 . (at p579)

9. But the comparison of the amounts claimed and the amounts awarded and of the points of claim with the points of defence, whilst they may not disclose the reason adopted by the arbitrator for the course he has taken, certainly do not suggest that he could not have had a valid reason for taking it. (at p579)

10. The appellant submitted that the provisions of Order LXV and its schedule in substance made the appellant, for present purposes, a wholly or substantially successful claimant so as to attract the reasoning of such cases as Glasheen v. Taylor (1949) 23 ALJ 483 . But, in our opinion, the Order and its schedule have no such effect. They only operate when an order for costs has been made. (at p579)

11. Consequently, in our opinion, no error of law appears on the face of the award and its accompanying documents. No other misconduct on the part of the arbitrator is suggested, nor any other ground shown for disturbing his award. In our opinion, the appeal should be dismissed. (at p580)

12. The order of the Court will be: the appeal will be dismissed with costs. (at p580)

ORDER

Appeal dismissed with costs.