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High Court of Australia |
GOLD COAST CITY COUNCIL v. CANTERBURY PIPE LINES (AUST.) PTY. LTD. [1968] HCA 3; (1968) 118
CLR 58
Arbitration - Appeal
High Court of Australia
Barwick C.J.(1), McTiernan(2), Kitto(3), Menzies(4) and Windeyer(5) JJ.
CATCHWORDS
Arbitration - Award - Setting aside - Error of law on face of award - What constitutes - Documents delivered at time of award - What constitutes the award - Point of error of law first taken in High Court on hearing of appeal from Supreme Court of a State.Appeal - Application to Supreme Court of a State to set aside award - Appeal therefrom to High Court - Ground first taken in High Court - Discretion of High Court.
HEARING
Sydney, 1967, October 26, 30, 31; November 1; 1968, February 2. 2:2:1968DECISION
1968, February 2.2. 'I award and direct . . .'" and then follows the substance of the award. (at p62)
3. A global sum of $478,478 was awarded and costs. No reference of any kind is to be found in the award to the reasons therefor nor to the elements of which the global sum was compounded. (at p62)
4. The Full Court of the Supreme Court of Queensland was moved by the Council for an order setting aside the award on the ground that a number of errors of law appears on its face, as well as upon a number of other grounds relating to the conduct of the arbitration. After the notice of motion had been filed, the Council made an application to the Full Court of the Supreme Court of Queensland to amend the notice of motion by extensively altering the grounds of the application. The Court after argument held that it had power to allow the amendment and gave the requisite leave to amend generally on condition that the amendments be made on or before 12th December 1966. Amendments were made in pursuance of this leave. But the propriety of the inclusion in the computation set out in the arbitrator's "reasons" of an amount of $16,180 for interest at seven per cent for a period of six months on the amount otherwise awarded was not challenged either by the notice of motion as amended or in argument thereon. After a careful consideration of all the points raised by the Council the Full Court dismissed the motion to set aside the award. (at p62)
5. The Council now appeals to this Court upon a notice of appeal to which there are a great number of grounds, none of which challenge the lawfulness of the inclusion in the sum awarded of an amount for interest. Generally the grounds of appeal relate to suggested errors of law said to appear on the face of the award, treating the preceding fourteen pages of the bundle of sheets of paper as incorporated into and forming part of what is set out on the fifteenth page, i.e., treating the whole as the arbitrator's award. (at p63)
6. Of all these grounds none, in my opinion, as a supposed error of law merits specific attention in these reasons even if they were all open for consideration by the Court. Most were disposed of in the course of the argument and others are in my respectful opinion disposed of in the reasons for judgment prepared by my brother Menzies, which I have had the privilege of reading. (at p63)
7. However, after the dismissal of the motion by the Supreme Court of Queensland and the filing of the notice of appeal to this Court, the Council gave the contractors notice that upon the hearing of this appeal it would seek to argue that the inclusion of the amount of interest in the amount awarded was an error of law apparent on the face of the award. This Court allowed discussion of the point as part of its consideration whether leave to amend the notice of appeal so as to raise it should be given. (at p63)
8. After such argument and further consideration, I have come to the clear conclusion that the inclusion by the arbitrator of a sum for interest upon the amount he proposed otherwise to award was not warranted by the contract between the parties, the terms of reference or the statue law of the State of Queensland. In this connexion I agree with the reasoning of my brother Menzies and have nothing I would wish to add. (at p63)
9. But there remain two fundamental questions, namely, did the error as to the inclusion of a sum by way of interest appear on the face of the award and, if it did, ought the appellant now to have the benefit of that error? (at p63)
10. It is quite settled that the error of law for which the Court may set aside the award of the arbitrator must appear on the face of the award: that is to say the award must ex facie be founded upon an error of law, including of course in that expression, the construction of a statutory provision or a written instrument. The award is the arbitrator's product and it must follow, in my opinion, that that which constitutes his award is what the arbitrator intended or must necessarily be taken to have intended should constitute it. It is said by high authority, and I respectfully agree, that the award will include all documents which are incorporated in it: see Hodgkinson v. Fernie [1857] EngR 940; (1857) 3 CBNS 189 (140 ER 712) and Champsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. (1923) AC 480 . That means, in my opinion, that those documents which the arbitrator intended to form part of his award, and with respect to which he has sufficiently evidenced or effectuated that intention, are part of his award. I do not read Lord Dundein's expressions at pp. 487, 488, of the report of the last-mentioned case to go further than this. It is not, in my opinion, the physical appending of a note to the award which determines the question whether or no the note forms part of the award. It is the intention of the arbitrator in appending it which is definitive. That intention of course might have to be inferred from acts, such acts including the physical acts attendant on the delivery of the award: but it is not the incidental but the intentional which will be relevantly significant: for example, in Melbourne Harbour Trust Commissioners v. Hancock [1927] HCA 26; (1927) 39 CLR 570 there could have been no doubt as to the intention with which the arbitrator "bound up" his reasons with the award: see per Irvine C.J. as quoted at p. 576 of the Commonwealth Law Reports. The decision of the Court of Appeal in Giacomo Costa Fu Andrea v. British Italian Trading Co. Ltd. (1963) 1 QB 201 and the cases dealing with the extent to which a reference in the award to a document incorporates it so as to present its whole content to be examined by the Court, in my opinion, conform to this analysis: cf. Blaiber & Co. Ltd. v. Leopold Newborne (London) Ltd. (1953) 2 Lloyd's Rep 427 . (at p64)
11. In this connexion, I am unable to accept the decision in Kent v. Elstob (1802) 3 East 18 (102 ER 502) as settling the proposition that as a matter of law a mere contemporaneous delivery of reasons for the making of the award incorporates them into the award: in other words, I cannot accept that as a matter of law the conclusion that the arbitrator intended to make his reasons part of his award necessarily and inevitably follows whenever reasons are delivered contemporaneously with the award; or for that matter when they are appended to the award. It must be remembered that Kent v. Elstob (4) was decided in a case where the reference to arbitration was made in an action in the Court and at a time when the Court apparently held the view that if it could authentically ascertain the reasons of the arbitrator for making his award, it could set aside the award if any errors of law fundamental to the award could be discovered in those reasons: see Price v. Jones [1828] EngR 394; (1828) 2 Y & J 114, at p 115 [1828] EngR 394; (148 ER 855) . Further, it is not clear from the report in Kent v. Elstob (1802) 3 East 18 (102 ER 502) precisely what the arbitrator intended by his contemporaneous delivery of his reasons and the question whether or not he did intend to incorporate them was not the subject of challenge or debate. (at p64)
12. But more significantly the law as to arbitration has been greatly altered since 1802. Now if either party requires the decision of the Court upon a point of law not itself specifically committed to the decision of the arbitrator, the statement of a case for the opinion of the Court may be required. If the arbitrator desires to submit a question of law to the Court he can state a case or make his award in the form of a stated case. Consequently, the expression in the arbitrator's award of a matter of law bearing upon the substantive award he intends to make is a matter of his choice. It is not for the Court to seek opportunity to correct his errors of law: on the contrary, in my opinion, it is for the Court to favour the finality of an award by an arbitrator of the parties' choice, or at any rate of their contriving. If satisfied that he intended to expose his reasons for making it as part of his award, the Court will set the award aside if error of law fundamental to the award then appears. Such an intention may of course be inferred from surrounding acts and circumstances, or by construction of the award itself. But I cannot regard the physical circumstances attendant on the delivery of the instant award as determining what comprises the award. That the arbitrator's reasons are delivered at the same time as the award or even that they are bound up with the award in one bundle of consecutively numbered pages does not, in my opinion, necessarily mean that the arbitrator intended thereby to expose his reasons as part of his award. But it may be that on balance the proper inference from all the facts, including the manner of expression of those reasons, is that he has intended to do so. As to this particular case, no doubt opinions may vary but with due respect to those who hold a contrary view, I am not prepared myself to draw the inference from all the available material in this case that the arbitrator intended to incorporate his reasons in his award. That he desired to inform the parties of his comments, observations, reasons and calculations is quite evident. If he wished to do so, as he did, the natural time for such a communication would be the time when he published his award. Undoubtedly he expressed them in the manner in which and at the time at which he did so that the parties might understand why he awarded a particular global sum, and so that they should be apprised of the constituents of that sum. But these conclusions do not mean to my view that he intended his award to comprise all these comments, observations, reasons and calculations. Nothing in the award harks back to the reasons. Indeed, the choice of a global sum as the amount of the award, rather than awarding a series of sums appropriate to various headings of claim tends in my mind against the conclusion that he intended his reasons to be part of the award itself. I would not be prepared therefore to decide that the contents of the first fourteen pages formed with the contents of the fifteenth page part of the arbitrator's award. It follows that, in my opinion, there was no error of law apparent on the face of the award. (at p66)
13. However, as there has been considerable discussion of the matter, I shall express my view as to the second question, namely, whether if there be error of law on the face of the award by the inclusion of an amount for interest within the global sum, the appellant ought to have any benefit of it. (at p66)
14. I have already mentioned that the point now sought to be raised does not appear to have been debated before the arbitrator, was not a ground of the notice of motion before the Supreme Court and was not a ground of appeal to this Court. Though a substantial sum, the amount included for interest is a very small fraction of the total award. In all these circumstances I am convinced that if the matter rests in our discretion this Court ought not to allow the ground to be taken. I hold this view, whether or not power exists to enable the award to be remitted to the arbitrator on the one question of the inclusion in the amount awarded of a sum for interest (see s. 21 of The Interdict Act of 1867). Consequently I find no need to express any view on the question whether, having regard to the order made by the Supreme Court as to the amendment of the notice of motion, from which there has been no appeal, this Court has power now to make an order for the addition of a further ground to the notice of motion in order to open the way for an amendment of the notice of appeal to this Court. But it is clear to my mind that this Court cannot now remit the award to the arbitrator pursuant to s. 21 of The Interdict Act, no application in that behalf having been made to the Supreme Court. (at p66)
15. In my opinion, the appeal should be dismissed. (at p66)
McTIERNAN J. I take the same view of this case as the Chief Justice and do not wish to add anything. I agree that the appeal should be dismissed. (at p66)
KITTO J. The facts of this case are stated in the judgment prepared by my brother Menzies in whose opinions upon the questions involved I agree. There are only two matters upon which I wish to add anything for myself. (at p66)
2. The first is the question whether an error of law appearing in the first
document, which set out the arbitrator's explanatory
observations on the case,
is to be considered an error of law on the face of the award, or whether, on
the contrary, only the second
document which the first described as "the
formal award", is to be looked at as the award. If the latter had referred to
the former
as setting forth the considerations upon which the arbitrator had
based his decision, the two documents would have had to be considered
as
together constituting the award. So much is clear from a long line of
authorities of which the most recent that have been cited
to us are Giacomo
Costa Fu Andrea v. British Italian Trading Co. Ltd. (1963) 1 QB 201, at pp
213, 216 and Aktiebolaget Legis v. V.
Berg & Sons Ltd. (1964) 1 Lloyd's Rep
203 . But in fact the only internal connexion between the documents was in a
section of
the
first document, a section numbered 12 and headed "Decision on
Payment". At the end of this section the following appeared:-
"The grand total of the award is therefore
$462,298
16,180
--------
$478,478
The formal Award follows immediately hereafter." (at p67)
3. This seems to me to make the formal document part and parcel of the other
as surely as if it had followed on the same piece of
paper and as an
additional paragraph of section 12. To regard the formal document as a
self-contained and separately operating instrument
would be to do what the
arbitrator himself indicated by his words and by his physically joining the
documents together that he was
not intending should be done. (at p67)
4. The appellant contends that the portion of section 12 that I have quoted, and indeed the very fact that the arbitrator added a second and (in terms) self-contained statement of his decision at all, show that he intended each document to perform its own separate function without aid from the other. Section 12, it is said, should not be construed as more than a foreshadowing of that which the formal document was to do of its own independent force. The submission is by no means without substance, but I think it misinterprets section 12. The meaning of the final paragraph, including its heading, read in the light of the simultaneous delivery and physical attachment of the documents, seems to me to be that the making of the award is to consist in the delivery of both documents as a single act of adjudication. In Melbourne Harbour Trust Commissioners v. Hancock [1927] HCA 26; (1927) 39 CLR 570, at p 586 Isaacs J., with the Champsey Bhara Case (1923) AC 480 before him, said that "an error of law appearing on a document bound up with the award is an error appearing on the face of the award itself". It may be going too far to adopt this statement as true in all possible circumstances, but in the circumstances of many cases, of which the present seems to me an example, it must, I think, be true that the physical uniting of the two documents is a manifestation of intention that they shall together form one operative instrument in the sense that there shall be no making of an award save by the delivery of them both as an aggregate. Accordingly to grant relief in this case on the ground of an error of law appearing only in the first document is, in my opinion, not to take the forbidden course of going behind the award. (at p68)
5. The other question concerns the proper course to be taken in view of the appearance on the face of the award of an error in law as to the inclusion of the $16,180 for interest. I agree with Menzies J. that if anything were to be set aside by reason of this error it would have to be the award as a whole. Of course where an award contains several operative provisions which are in their nature severable from one another, the invalidity of some of those provisions does not necessarily infect the others. The English authorities on this proposition, from Storke v. De Smeth (1737) Willes 66 (125 ER 1059) onwards, may be found in Russell on Arbitration, 17th ed. (1963), pp. 347-349, and a reference may be added to In re Bailey and Hart (1883) 9 VLR (L) 311, at p 317 . Where provisions that are bad are severable from others that are good the course usually followed is to dismiss the proceedings to set aside the award, leaving the bad provisions to be ignored as simply void. But here the award, according to both the documents, is for a single sum of $478,478; and the fact that in point of law the reasons given by the arbitrator justify only an award of that sum less the interest does not make the award severable into two provisions, one awarding the interest and the other the balance. All that is before us, however, is an appeal against a decision of the Supreme Court refusing to set aside the award on grounds other than the inclusion of the interest. Of that the appellant made no complaint to the Supreme Court, and in my opinion the proper course is to affirm the decision appealed from as having been correctly given. We could not, I think, take upon ourselves the jurisdiction under s. 21 of The Interdict Act of 1867 (Q.) to remit the matter to the arbitrator for reconsideration and redetermination, with a view to the removal of the interest from the amount awarded, for no application under s. 21 was before the Supreme Court in the proceedings out of which this appeal has arisen. It may be that such an application may yet be made, and I express no opinion as to what may or ought to be done if it is. (at p69)
6. I would therefore dismiss the appeal. (at p69)
MENZIES J. By an award made on 8th November 1966 an arbitrator awarded the respondent $478,478 with costs against the appellant. The arbitration arose out of a contract dated 14th November 1964 for the construction by the respondent of sewers and house drains at Surfers Paradise and Southport for the appellant. An application was made by the appellant to have the whole of the award set aside. This was dismissed by the Full Court of the Supreme Court of Queensland. An appeal against that decision has been brought to this Court. The principal ground for impeaching the award is that there is error of law upon its face. An initial problem is therefore to identify the award. (at p69)
2. What the arbitrator did was to hand to the parties a document consisting
of fifteen pages stapled together and each numbered
consecutively. The
document was headed "In the matter of an Arbitration between Canterbury Pipe
Lines (Aust.) Pty. Limited. (The
Contractor) and The Council of the City of
Gold Coast (The Principal)". The first part of this document consisted of
fourteen pages
each initialled by the arbitrator. The last of these, i.e., p.
14, ended as follows: "The formal Award follows immediately hereafter".
The
second part of the document beginning at p. 15 was headed as follows:
"IN THE MATTER OF AN ARBITRATIONA number of recitals were followed by the following operative provision:
BETWEEN
CANTERBURY PIPE LINES (AUST.) PTY. LIMITED
The Contractor
AND
THE COUNCIL OF THE CITY OF GOLD COAST
The Principal
AWARD"
"NOW BE IT KNOWN that I the said F. W. Laws make my
award of and concerning the matters so referred to me as
follows, that is to say:
1. I AWARD AND DIRECT that the said Council of the City of
Gold Coast shall pay to the said Canterbury Pipe Lines
(Aust.) Pty. Limited the sum of four hundred and
seventy-eight
thousand four hundred and seventy-eight dollars
($478,478).
2. I AWARD that the said sum of four hundred and
seventy-eight
thousand four hundred and seventy-eight dollars
($478,478) be paid and accepted in full satisfaction of all
claims by each of the said parties against the other and of
all matters in difference between them.
3. As to costs I AWARD AND DIRECT that the said Council of
the City of Gold Coast shall pay to the said Canterbury
Pipe Lines (Aust.) Pty. Limited its costs of and attending the
said arbitration and shall also pay the costs of this my
Award.
DATED the eighth day of November 1966.
(Sgd.) F. Laws
F. W. LAWS, B.E., M.I.C.E., M.I.E.A., M.Inst.T.
Arbitrator" (at p70)
3. In the course of argument before the Court there was a disposition to
refer to the first part of the arbitrator's document as
his reasons for his
award but the arbitrator does not so describe this part of his document. It is
worthwhile transcribing par. 12
to show that such a description would be
hardly accurate:
"12. Decision on Payment.
I have decided that
(a) The work done by the Contractor was inadequately
recompensed by the schedule rates forming part of the
Contract.
(b) The Contractor was justified in stopping work.
(c) The Principal was not justified in refusing approval for
the Contractor to start work in Southport.
(d) The Principal was not justified in cancelling the Contract.
There remains to be settled now the question of payment.
In this respect the Contractor's Counsel has set out four
alternative methods of payment. This is about the only
information I have. The Principal has not assisted very much
in helping me to assess any new values assuming a change.
Under such circumstances I must be guided solely by the
terms of the Contract.
I am loath to accept the Contractor's new rates. The
alternative (says Clause 22f of the General Conditions of
Contract) is day labour or else the Arbitrator fixes new rates.
The Arbitrator has insufficient information to fix new rates.
Therefore recourse must be had to the day labour principle.
I therefore accept as proved
(a) The Contractor's claim as set out in exhibit YY in the
sum of 100,121 pounds.7.3 ($200,242.72).
(b) The Contractor's claim as follows
(i) For loss of profit on balance of
Surfers Paradise 10,653 pounds
(ii) For loss of profit on Southport 65,762 pounds
(iii) Loss of use of plant at Surfers
Paradise 28,233 pounds
(iv) Loss of use of plant at Southport 26,880 pounds
_________
Total 131,528 pounds
or $263,056
(c) I agree to a deduction from the Contract price in the sum
of $1,000 - (see par. 6).
Total of (a) & (b) is $463,298
less (c) $ 1,000
________
Net total $462,298
It is not proposed to allow any additional payment for
overhead.
Clause 35c of the General Conditions of Contract says that
the Contractor is entitled to interest on moneys owing to him
and the rate is set out at 7%.
Interest is therefore to be paid at this rate on the net total
shown in (c) for a period of six (6) months that is an amount of
462,298 X 7
___________ = $16,180.
100 X 2
The grand total of the award is therefore $462,298
$ 16,180
________
$478,478
The formal Award follows immediately hereafter." (at p71)
4. The respondent contended that the award consisted only of the second part
of the document and the first part neither formed any
part of the award, nor
was it incorporated in the award. Were this contention to be accepted that
would be an end of the substantial
point of this appeal for no error of law
could be detected in either the recitals or the operative words to which I
have already
referred. In my opinion, however, the respondent's contention
must be rejected. I am satisfied that the whole of his document is
the
arbitrator's award and that the description of the second part as the "formal
Award" which follows "immediately hereafter" shows
clearly enough that the
second part was intended simply as a formal statement of what is stated with
less formality in the preceding
part of the award, viz. par. 12. The only new
element to be found in this "formal Award" is the award of costs. (at p72)
5. In my opinion the case for treating the whole of the arbitrator's document as his award is very much stronger than what was indicated as constituting an award by the Privy Council in Champsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. (1923) AC 480 . There Lord Dunedin said: "Now the regret expressed by Williams J. in Hodgkinson v. Fernie [1857] EngR 940; (1857) 3 CB NS 189 (140 ER 712) has been repeated by more than one learned judge, and it is certainly not to be desired that the exception should be in any way extended. An error in law on the face of the award means, in their Lordships' view, that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous" (1923) AC, at pp 487, 488 . It is to be observed that "a note appended by the arbitrator stating the reasons for his judgment" is spoken of as incorporated to the award to which the note is appended. (at p72)
6. Indeed to reject the first part of the arbitrator's document as forming no part of his award would be to depart altogether from Kent v. Elstob (1802) 3 East 18 (102 ER 502) , which has stood for nearly 170 years as the leading authority on this branch of the law and which has often been cited but never criticized beyond the "regret" of Williams J. expressed in Hodgkinson v. Fernie [1857] EngR 940; (1857) 3 CB NS 189 (140 ER 712) . In Kent v. Elstob (1802) 3 East 18 (102 ER 502) the Court of King's Bench - Grose, Lawrence and Le Blanc JJ. - treated an arbitrator's reasons as part of his award for the purposes of determining whether or not there was error on the face of the award. Thus Grose J. said: "The award is clearly wrong, considering it to be founded upon the reasons stated by the arbitrator in the paper delivered with it (which altogether must be taken as one instrument); for it appears from thence that he proceeded upon a ground which cannot be supported in our law" (1802) 3 East, at p 20 (102 ER, at p 503) . Le Blanc J. said: "The paper in question was delivered, together with the award, by the arbitrator, as containing his reasons for coming to the conclusion, which he did; we must therefore take them to be such, as much as if they were inserted in the award itself . . ." (1802) 3 East, at p 21 (102 ER, at p 504) . From what has already been said it is apparent that there is more reason for treating the first part of the arbitrator's document here as part of his award than there was for treating the reasons for the award as incorporated in it as was done in Kent v. Elstob (1802) 3 East 18 (102 ER 502) . Accordingly I reject the contention that the Court cannot examine the whole of the arbitrator's document to determine whether or not there is error on the face of his award. (at p73)
7. Looking therefore at the document as a whole; listening to the criticisms
to which it is obviously open as an exercise in reasoning
- the Full Court not
unfairly stigmatized it as "discursive, somewhat didactic, and, one suspects,
in parts quite irrelevant"; and
reading the judgment of the Full Court dealing
with the objections to it, I have reached the conclusion that it is only as to
three
matters that any case of error of law upon the face of the award has
been made which is of sufficient weight to warrant anything
more than a
statement that a number of points were made and disposed of sufficiently in
the course of argument. The first matter
requiring further consideration is
the adoption by the arbitrator of "day labour" as the basis for his
calculation of the amounts
which the respondent became entitled to recover
after the appellant's wrongful cancellation of the contract - something which
the
arbitrator found to have occurred. In reaching his conclusion to adopt the
"day labour" basis the arbitrator did make a reference
to a provision of the
contract which seems to me to be not very much in point, but despite this
reference I see no reason why in
all the circumstances the arbitrator was
prevented by law from adopting "day labour" as the basis for his calculation
although it
might be thought to have produced an over-generous award. The
second matter of criticism related to the allowance of 28,233 pounds
and
26,880 pounds as "Loss of use of plant" in addition to the allowance in full
of the contractor's claim in Ex. YY and to substantial
sums for loss of
profit. It was argued by the appellant that the arbitrator had duplicated some
items and maybe he did. My doubt,
however, whether or not the arbitrator made
an error of calculation is not enough to support a finding of error of law
upon the face
of the award. This brings me to the third matter and I have come
to the conclusion that an error of law does appear upon the face
of the award
in the arbitrator's award of a sum of $16,180 interest. The arbitrator said:
"Clause 35c of the General Conditions of
Contract says that the Contractor is
entitled to interest on moneys owing to him and the rate is set out at 7%.
Interest is therefore
to be paid at this rate on the net total shown in (c)
for a period of six (6) months 462,298 X 7
that is an amount of ----------- = $16,180." General 100 X 2
Condtion 35 (c) is as follows: (at p73)
8. "(c) Contractor entitled to interest. The Contractor shall be entitled
to interest on all moneys payable to him, but
unpaid, from the date on which payments become due, andThis condition, however, obviously provides no warrant for the award of interest which was made, i.e., interest upon the sum awarded including items of damages such as loss of profit and loss of the use of plant. (at p74)
such interest shall be calculated at twice the maximum ruling
rate of interest of the Commonwealth Savings Bank of Australia
on deposit accounts. This rate of interest shall be applicable
to the whole of the moneys due to the Contractor."
9. The effect of the error which I have found upon the face of the award remains for consideration. In the first place the respondent contended that the error was immaterial because the determination whether the contract provided for interest upon all sums recoverable upon its wrongful cancellation was a matter specifically submitted to the arbitrator by cl. 41 which submits "Any question, difference or dispute whatsoever" arising "between the Principal and the Contractor . . . upon or in relation to or in connection with the contract which cannot be resolved by the contracting parties to their mutual satisfaction". It was contended therefore that the construction of condition 35 having been submitted to the arbitrator his award could not be impeached simply because his construction of that condition was otherwise than in accordance with law. However, this mistakes the nature of the submission. This is not a submission of a specific question of law, viz. the construction of the contract or of condition 35 of the contract; it is rather a general submission of matters in which the question of the construction of the contract will no doubt be material but the basis of the submission is that the contract will be construed according to law. The distinction that is relevant was drawn in F. R. Absalom Ltd. v. Great Western (London) Garden Village Society Ltd. (1933) AC 592 . There Lord Russell of Killowen, with the concurrence of Lord Buckmaster and Lord Tomlin, said: "My Lords, it is, I think, essential to keep the case where disputes are referred to an arbitrator in the decision of which a question of law becomes material distinct from the case in which a specific question of law has been referred to him for decision. I am not sure that the Court of Appeal has done so. The authorities make a clear distinction between these two cases, and, as they appear to me, they decide that in the former case the Court can interfere if and when any error of law appears on the face of the award, but that in the latter case no such interference is possible upon the ground that it so appears that the decision upon the question of law is an erroneous one" (1933) AC, at p 607 . Lord Wright, in referring to the rule that error of law upon its face invalidates an award, said: "The rule in truth applies to the ordinary case where, in the words of Lord Dunedin (1923) AC, at pp 488, 489 , the submission refers 'to the arbitrator the whole question whether it depends on law or on fact'. To be contrasted with such cases there is the special type of case where a different rule is in force, so that the Court will not interfere even though it is manifest on the face of the award that the arbitrator has gone wrong in law. This is so when what is referred to the arbitrator is not the whole question, whether involving both fact or law, but only some specific question of law in express terms as the separate question submitted; that is to say, where a point of law is submitted as such, that is, as a point of law, which is all that the arbitrator is required to decide, no fact being, quoad that submission, in dispute" (1933) AC, at p 615 . (at p75)
10. It was next pointed out that the objection to the award of interest had first been taken in this Court and was not taken in the notice of appeal which is the basis of the proceedings here. This belated reliance upon what I do regard as an error of law on the face of the award raises what seems to me a difficult problem. Could effect be given to what I regard as a well-founded objection in law to that part of the award which entitles the respondent to interest, without quashing the award as a whole, I would be disposed to think that we ought to exercise a discretion in favour of the appellant and allow an amendment to the notice of appeal to cover the objection now taken. It is a matter of some significance that in a very substantial award an item of $16,180 has been wrongly included by reason of error of law. It seems to me, however, that if we were to uphold the objection which is now taken, our only course would be to quash the award of $478,478 made more than a year ago and set all parties back where they were when the contract was cancelled. Upon the whole I do not think we should exercise our discretion in this way. I would therefore decline to allow the appellant to take this objection at this stage. (at p75)
11. The appellant also sought to impeach the award on the ground that the arbitrator had technically misconducted himself. It became apparent however that the misconduct relied upon was no more than that the arbitrator had made mistakes. Errors, which are not errors of law upon the face of an award, cannot be relied upon as evidencing misconduct justifying the quashing of an award. (at p76)
12. I would therefore dismiss the appeal. (at p76)
WINDEYER J. I consider that this appeal should be dismissed. I shall state my reasons briefly. I need not elaborate them as the law on this topic appears to me to be now settled, although not always easy to apply. Of the numerous authorities to which we were referred by counsel I am satisfied to mention one only, Giacomo Costa Fu Andrea v. British Italian Trading Co. Ltd. (1963) 1 QB 201 . The judgments of the Court of Appeal in that case are, I would respectfully say, the most useful and recent pronouncement of the relevant law. (at p76)
2. I take the main principles which must govern the present case to be as follows. (at p76)
3. Except where the parties have submitted a particular question of law to an arbitrator and have agreed to be bound by his decision, a court can and should set aside an award of an arbitrator if an error of law appears on the face of it. That rule, first stated in Kent v. Elstob (1802) 3 East 18 (102 ER 502) , seems to have been established originally in cases in which a question arising in an action at law has been remitted to an arbitrator. In cases of that kind the court, naturally enough, could not countenance the arbitrator departing from the law which it would have applied in the action. However, the rule that an award is examinable for error of law seems now to have a wider scope, and to be applicable to any dispute which parties submit to arbitration in accordance with the statutory provisions in that behalf. What then is an award the face of which can be examined for error of law? An award is very often a document which announces only the arbitrator's ultimate finding on the matter submitted for his determination. This finding may be no more than that a specified sum of money is payable by one party or the other. But the arbitrator may put more into his award than that. He may incorporate a statement of his reasons or make some other document part of his award. Whether he has done so does not depend simply upon mechanics such as the pinning of documents together or on the mere fact of a reference or allusion in one document to some other document. The question is rather did the arbitrator incorporate his reasons with his conclusion to the intent that the whole should form his award. That is to say, was his award equivalent to a "speaking order"? That descriptive phrase was, it seems, first used by Lord Cairns in Overseers of the Poor of Walsall v. London and North Western Railway Co. (1878) 4 App Cas 30, at p 39 . It is now familiar in the law concerning certiorari: see R. v. Northumberland Compensation Appeal Tribunal; Ex parte Shaw (1952) 1 KB 338 . It provides a convenient analogy to the present question. If an arbitrator makes his reasons part of his award, and expressly or impliedly makes his conclusion depend upon the validity of a particular hypothesis of law, then if that hypothesis be erroneous a court will quash the award. (at p77)
4. I have come - not, I confess, assuredly and certainly regretfully - to the conclusion that in this case the reasons set out in the earlier pages of the document which the arbitrator handed down were meant by him to be part of his award, to the intent that the correctness in law of the reasons should determine the validity of the conclusion. The reasons are thus examinable for error of law. But this does not warrant an excursion by the Court into all the matters to which counsel for the appellant sought to go - the terms of the contract, the arguments of counsel before the arbitrator and so forth. An error on the face of an award is not to be discovered by looking behind its back. It is not permissible to treat the limited jurisdiction by which a court ensures that an arbitration is conducted in accordance with law as if it were the equivalent of an appeal from an arbitrator's decision. (at p77)
5. In the present case it is not without significance that, by documents in the form of pleadings by which the parties formulated the matters in issue, the arbitrator's attention was invited to particular terms of the contract. The parties apparently debated in argument before him the bearing of those terms on the matters he had to decide. Neither party asked that he state a case for the opinion of the Supreme Court. Both sides seem to have been ready to leave any question of the effect of the terms of the contract to the arbitrator as incidental to the matters submitted for his determination. (at p77)
6. I have said that I think, although with no great confidence, that we were entitled in this case to treat the arbitrator's reasons as part of his award. We in fact did so. Whether that course was right or wrong is not in the result a critical matter, because no error in law vitiating the award appeared in these reasons, except in so far as the arbitrator erroneously allowed a sum for interest, purporting to do so pursuant to a clause in the contract. The other complaints of the appellant were on examination shewn to be without substance as errors in law. I do not wish to add anything to what my brother Menzies has said for that conclusion. The sum for interest mistakenly included in the award does however create a difficulty. No complaint as to this was raised by the notice of appeal. It is thus a matter for the discretion of this Court whether this complaint should now be entertained at all. If it be entertained and upheld, it is suggested that the award cannot be rectified, but must be altogether quashed. I doubt that. There is old authority that an award may be good in part and bad in part if the bad part be distinct and severable: Stone v. Phillipps [1837] EngR 1026; (1837) 4 Bing NC 37, at p 41 [1837] EngR 1026; (132 ER 702, at p 704) : and I think the award could be remitted to the arbitrator to be amended by his eliminating from the sum awarded so much as was attributable to interest. That course appears to be permissible having regard to s. 21 of The Interdict Act (Q.): see In re Morris's Arbitration [1856] EngR 12; (1856) 6 El & Bl 383 (119 ER 908) . I would therefore be inclined to return the award to the Supreme Court so that it might, at the cost of the appellant, be remitted to the arbitrator with a direction to amend it accordingly. But, as the point was not raised in the proper way, I am content to concur in the opinion of other members of the Court as to this. In all other respects the appeal should, I consider, be dismissed with costs. (at p78)
ORDER
Appeal dismissed with costs.Solicitors for the appellant, Primrose & Couper, Southport, by Thynne & Macartney.
Solicitors for the respondent, Morris, Fletcher & Cross.
M. G. M.
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