Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd [1985] HCA 13

High Court of Australia Mason, Wilson, Brennan, Deane and Dawson JJ. Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd [1985] HCA 13

ORDER Appeal dismissed with costs.

Cur. adv. vult.

The Court delivered the following written judgment:—

1985, March 12 Mason, Wilson, Brennan, Deane and Dawson JJ.

The appellant, Construction Engineering (Aust.) Pty. Ltd. ("Construction"), is a builder. On 17 November 1981 it entered into a building contract with Tambel (A/asia) Pty. Ltd. ("Tambel") for the construction of a home unit building upon land in the Sydney suburb of Edgecliff ("the Edgecliff land"). In that contract, Tambel was referred to as "the proprietor" and Construction was referred to as "the builder". The contract contained an arbitration clause (cl. 20) which provided that, if any dispute or difference concerning the agreement should arise "between the proprietor, or the architect on his behalf, and the builder", "either party may give to the other notice in writing thereof and at the expiration of one week unless it shall have been otherwise settled such dispute or difference shall be and is hereby submitted to the arbitration of" an arbitrator or arbitrators appointed in the manner provided by the clause.

In time, there was dispute between the parties to the building contract on the question of Construction's entitlement to payment. On 20 June 1983, Construction gave notice in writing of the dispute to Tambel. This was followed by a further notice dated 25 August 1983 which Construction gave to both Tambel and to the respondent Hexyl Pty. Ltd. ("Hexyl"). The basis upon which Construction sought to give notice to Hexyl pursuant to the arbitration clause in the building contract was that that contract had been made by Tambel on behalf of a partnership between Tambel and Hexyl and that both Tambel and Hexyl were liable under it as principals. Thereafter, Hexyl instituted proceedings in the Equity Division of the Supreme Court of New South Wales seeking a declaration that it was not a party to the building contract and that it could not, without its consent, be joined as a party to an arbitration pursuant to the terms of that contract. It also sought consequential injunctive relief against Construction and the two persons who had been nominated as arbitrators and who were joined as defendants. For its part, Construction cross-claimed for declarations that Hexyl and Tambel carried on in partnership "the business of construction" of the building, that Tambel entered into the building contract as agent for Hexyl and itself and that Hexyl and Tambel were "jointly and severally bound by the provisions" of the building contract. The nominated arbitrators entered submitting appearances.