Shoalhaven City Council v Firedam Civil Engineering Pty Limited [2011] HCA 38

HIGH COURT OF AUSTRALIA

FRENCH CJ,

GUMMOW, HEYDON, CRENNAN, KIEFEL AND BELL JJ

SHOALHAVEN CITY COUNCIL APPELLANT

AND

FIREDAM CIVIL ENGINEERING PTY LIMITED RESPONDENT

Shoalhaven City Council v Firedam Civil Engineering Pty Limited

[2011] HCA 38

5 October 2011

S216/2010

ORDER

1. Appeal allowed.

2. Set aside the order of the Court of Appeal of the Supreme Court of New South Wales made on 19 April 2010 and, in place thereof, order that the appeal to that Court be dismissed with costs.

3. The respondent pay the appellant's costs of the appeal to this Court.

On appeal from the Supreme Court of New South Wales

Representation

D F Jackson QC with J A Steele for the appellant (instructed by TressCox Lawyers)

Submitting appearance for the respondent

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Shoalhaven City Council v Firedam Civil Engineering Pty Limited

Contract – Construction – Dispute resolution clause – Parties to contract agreed to expert determination of claims for damages for breach of contract – Expert contractually obliged to give reasons – Whether inconsistency in expert's reasons – Whether court has power to review expert's determination made under contract.

Words and phrases – "expert determination", "inconsistency", "issue", "valid and sufficient reasons".

Commercial Arbitration Act 1984 (NSW), ss 24, 28, 33, 44.

Corporations Act 2001 (Cth), s 500(2).

FRENCH CJ, CRENNAN AND KIEFEL JJ.

Introduction

1. A person ("the Expert"), appointed under the provisions of a construction contract ("the Contract") to provide an expert determination of issues in dispute between the principal and the contractor, made a determination which the contractor contended was not binding on it. The contractor sought a declaration to that effect in the Supreme Court of New South Wales. The contractor's complaint related to the Expert's refusal to allow certain extensions of time which it claimed as of right arising out of variations to the works. That refusal was said to be inconsistent with the Expert's use of a contractual discretion, conferred on the principal, to extend the time for completion of the works. The discretionary extension was used by the Expert, in assessing the principal's claim for compensation for the contractor's delays, to allocate responsibility for delays between the principal and the contractor. The contractor contended that the Expert's reasons for his determination, burdened with an unexplained inconsistency, meant that the determination did not accord with the requirements of the Contract and was therefore not binding on the contractor. 2. The contractor's summons for a declaration was dismissed by Tamberlin AJ[1]. However, an appeal against that decision was allowed by the Court of Appeal of the Supreme Court of New South Wales (Beazley, Campbell and Macfarlan JJA)[2]. The orders made by Tamberlin AJ were set aside and a declaration made that the Expert's determination was not binding on the parties. Special leave to appeal to this Court against the judgment and orders of the Court of Appeal was granted on 3 September 2010 by Gummow, Heydon and Kiefel JJ. The contractor was wound up by resolution of its creditors on 26 November 2010. The appeal is continued pursuant to leave granted by McDougall J in the Supreme Court of New South Wales on 10 December 2010. The contractor was not represented at the hearing of the appeal. 3. The Expert's use of the principal's discretion to extend time as a device for allocating responsibility for delay caused by the principal was adequately explained and was not inconsistent with his refusal to allow the contractor's claimed extensions of time. The appeal against the decision of the Court of Appeal should be allowed and the orders of Tamberlin AJ reinstated.