Carr v Wodonga Shire [1924] HCA 15; (1924) 34 CLR 234 (29 May 1924)

HIGH COURT OF AUSTRALIA

Carr Appellant; and The President, Councillors and Ratepayers of the Shire of Wodonga Respondent.

H C of A

On appeal from the Supreme Court of Victoria.

29 May 1924

Knox C.J., Isaacs, Rich and Starke JJ.

Latham K.C. (with him Hogan), for the appellant.

Owen Dixon K.C. (with him Ham and Russell Martin), for the respondent.

Hogan, in reply.

The following written judgments were delivered:—

May 29

Knox C.J. and

Starke J.

An order was made by Schutt J. in the Supreme Court of Victoria, directing arbitrators, appointed pursuant to the provisions of a contract between the appellant and the respondent dated 21st January 1920, to state, in the form of a special case for the opinion of the Supreme Court, certain questions of law. This order was made pursuant to the provisions of the Arbitration Act 1915 Vict., sec. 19; and by special leave an appeal from it has been brought to this Court (cf. In re Knight and Tabernacle Permanent Building Society[1]). It was argued that there was no jurisdiction to make the order, and, even if there were, that the learned Judge had wrongly exercised his discretion in making it.

The former argument was based upon the contention that sec. 19 only concerned questions of law arising in the course of the reference, and did not extend to questions of law specifically submitted to the arbitrators (Kelantan Government v. Duff Development Co.[2]). But it must be remembered that the jurisdiction given by sec. 19 is "consultative only" (In re Knight and Tabernacle Permanent Building Society[3]) and that the words of the section are extremely wide. Any question of law arising in the course of the reference may at any stage of the proceedings be voluntarily stated by the arbitrators. If the arbitrators voluntarily require the assistance of the Court upon a question of law specifically submitted to them, why should they not have that assistance? The question of law does in that case arise in the course of the reference. And if the arbitrators could voluntarily state the question submitted to them, then there is no reason, except as a matter of discretion, why the Court may not require them to do so. Further, the questions which Schutt J. required to be stated in the form of a special case were not, as a matter of fact, specifically submitted to the arbitrators, but arose incidentally during the proceedings before them. We feel no doubt, then, that the learned Judge had jurisdiction in the present case to require the arbitrators to state questions of law in the form of a special case for the opinion of the Supreme Court. And we think that, as a matter of discretion, some order was expedient and even necessary.

The conduct of the case before the arbitrators by the learned counsel who then appeared for the appellant was, we regret to say, most unfortunate. He would never define the basis of the appellant's claim, and, in our opinion, inaccurately stated the law in relation to the powers and duties of arbitrators, and the effect of an award. In consequence the arbitrators might have been, and probably were, misled in the proper performance of their duties, and we therefore think Schutt J. exercised his discretion wisely in ordering a case to be stated.

We cannot, however, agree to the precise questions formulated by him, because they usurp, in many respects, the functions of the arbitrators, both as to fact and law. Thus, to take question 6, by way of example, the Court cannot decide what award should be made, but can simply advise the arbitrators on questions of law. And, with the assistance of the parties, this Court has framed two questions which will cover the whole ground and in nowise usurp the function of the arbitrators. Consequently the questions directed by the order of Schutt J. must be set aside, and the following substituted:—"(1) Are any and which of the items set forth in Exhibit G (Exhibit E.H.C. 2a) referable to arbitration under the contract between the parties dated the 21st day of January 1920? (2)Is there any evidence proper, on recognized legal principles, to go to the arbitrators upon the claim of the contractor in respect of any and which of the items set forth in Exhibit G (Exhibit E.H.C. 2a) which are referable to arbitration under the said contract?" Otherwise the order is affirmed. The parties will abide their own costs of this appeal.

Isaacs and Rich JJ.

We are of opinion that the order of Schutt J. was correct, and should be affirmed, with an alteration in the form of the questions to which the statement of the case is to be directed. That alteration does not in any way affect the real meaning and intent of the learned primary Judge in making the order appealed from. It is simply the result of the discussion before us in condensing the points he aimed at.

The appellant contended that in the circumstances the Court had no jurisdiction to order a case to be stated because the points to be considered were the very ones submitted to the arbitrators, and, if it had jurisdiction, it ought not in the proper exercise of judicial discretion to have made the order. The power is clear. The nature of the Arbitration Act 1915, under sec. 19 of which the present questions arise, may be shortly described as a legislative provision for giving greater binding effect to agreements for arbitration, and incidentally to determinations of arbitrators, special referees and umpires, than they had before. But, while making the determinations of these non-judicial tribunals more effective legally, the Legislature took care also to provide some special means of guarding against plain or possible departure from the law of the land, and other injustice. Two principles relevant to this case are discernible, and they have to be adjusted: the first is that, where parties have agreed to refer a question to arbitration, the arbitral decision is to bind them unless they agree to the contrary (sec. 4 (2) and Second Schedule); the other is that, if on the way it appears to the arbitrators or to the Court a proper case for curial assistance, means are provided (sec. 19). Other legislative safeguards exist, but are irrelevant.

The words of sec. 19 are so broad and general, and in relation to a matter so clearly calling for an interpretation based on the full natural meaning of the words, that it is impossible to doubt the jurisdiction in all cases during the progress of the reference, that is, before award (Tabernacle Permanent Building Society v. Knight[4]). Lord Halsbury L.C. in that case said[5], as to sec. 19, that its object was "to hold a control over the arbitration while it was proceeding by the Courts, and not to allow the parties to be concluded by the award, when, as it is said, parties may be precluded by the arbitrator's bad law once the award is made." Lord Field said[6]: "Upon the party going before a Judge and showing that the case is one involving some question of law (upon which two opinions may possibly exist) the Judge has power to compel the arbitrators to state a case."

One special circumstance in relation to sec. 19 should be mentioned. It includes a reference under order of the Court, and in such a case it would be absurd to argue any want of power in the Court to act under sec. 19 at its discretion. But as the section must have the same jurisdictional content to whatever kind of reference it is applied, the objection as to power cannot be maintained.

But though the power of the Court to intervene under sec. 19 is undoubted, it is not intended thereby to supersede the authority of the arbitrator. The Court's opinion is not a decision; it is not a judgment or order. It is not appealable, and it is and remains an opinion only, to guide the arbitrator. The arbitrator still remains the final judge of law and fact, as to the matters submitted (Tabernacle Society's Case[7]). This, however, must not be misunderstood. It is because the Legislature has not made the opinion a judgment or order. But, on the other hand, let it be clearly understood, the Legislature has not made that opinion finally binding as the law of the case; and therefore there comes into play a very deeply rooted principle of the common law, not displaced by the legislation. If it appears on the face of the award that the law embodied in the opinion has been acted on, it may be challenged, and if necessary corrected (British Westinghouse Electric and Manufacturing Co. v. Underground Electric Railways Co. of London[8], Attorney-General for Manitoba v. Kelly[9] and the Kelantan Case[10]).

As to discretion, we think that the order was well made on the ground and the principle stated by Schutt J. There were two reasons advanced before us for the exercise of discretion. Both relate to the conduct of the case. The first was that referred to by Schutt J., namely, that no distinct legal grounds or principles were stated to the arbitrators for their assistance, so as to enable them, as far as the selected tribunal could, with all the light reasonably available, to arrive at a just conclusion in accordance with law. The magnitude and intricacy of the claims and the sum involved made such assistance particularly desirable. Arbitrators are not selected to act despotically or illegally if that can be reasonably prevented. The case was therefore obviously one for the exercise of the discretion of the Court in the manner and for the reason stated by the learned primary Judge.

The other reason had reference to the conduct of the case by counsel for the contractor at the time when the arbitrators were requested to state a special case. As to this, it is unnecessary, in the view we take of the first point, to say anything, and, having regard to the absence in this appeal of that learned counsel, we say nothing about it.

We agree to the order suggested.

Order appealed from varied by striking out the questions directed to be stated and substituting those set out in the judgment of Knox C.J. and Starke J. Otherwise order affirmed. Parties to abide their own costs of the appeal.

Solicitors for the appellant, Maddock, Jamieson & Lonie.

Solicitor for the respondent, V. J. Whitehead.

[1] (1891) 2 Q.B. 63; (1892) A.C. 298.

[2] (1923) A.C. 395.

[3] (1892) 2 Q.B. 613 (C.A.).

[4] (1892) A.C. 298.

[5] (1892) A.C., at p. 302.

[6] (1892) A.C., at p. 308.

[7] (1892) 2 Q.B. 613.

[8] (1912) A.C. 673.

[9] (1922) 1 A.C., particularly at p. 281.

[10] (1923) A.C., particularly at p. 411.