DUNCAN'S HOLDINGS LIMITED v HARRIS-DAISHOWA (AUSTRALIA) PTY LTD [1989] NSWCA 70

DUNCAN'S HOLDINGS' LIMITED v _ HARRIS-DAISHOWA (AUSTRALIA) PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

Hope, MAHONY and MEAGHER JJA 27 June 1989, 21 July 1989

[1989] NSWCA 70

CONTRACT — construction — contract for supply of pulpwood chips — price for chips to be agreed by parties and to be reviewed annually — discussions to be held between the parties and any variation to chip price to be applicable from 1st January each year — clause referred to arbitration (same as otherwise provided by the contract) any dispute or difference which either party considered arose out of or relating to the contract or the breach thereof which could not be settled amicably by the parties — chip price variations agreed for a number of years — Failure to agree for year 1988 — notice given by supplier referring difference to arbitration — no issue that contract was entered into by parties — Provision for termination of contract on 2 year notice from ensuing 1st January — Further provision for right to request a review of any clause of contract on an annual basis — Right to determine contract on 1 year notice if parties could not reach agreement on any major variation to terms and conditions which had been requested by one of the parties — Claim by buyer of chips that arbitration claim was inapplicable and that failure to agree on 1988 price was a failure to reach agreement on a major variation of a term of the contract entitling it to give 1 year's notice of termination — Held: 1. Failure to agree on 1988 price was a difference falling within the terms of the arbitration clause. 2. Price to be determined by the arbitrator was a reasonable price. 3. The lack of any stated formula or standard in the agreement did not render the task of the arbitrator impossible in practice. Eric J Hart Pty Ltd v Dermide (Australia) Pty Limited CA Unreported; 19.3.67 and Whitlock v Brew (1968) 118 CLR 445 distinguished. Foley v Classique Coaches Limited [1934] 2 KB 1; FG Sykes (Wessex) Limited v Fine Fare Limited (1967) 1 Lloyds List Reports 53; Attorney General v Barker Brothers Limited [1976] 2 NZLR 495 and Hillas and Company Limited v Arcos Limited (1932) 147 LT 503; 43 LI.LR 359 discussed. (a) Failure to agree on price did not fall within term of contract as to failure to agree on a major variation sought at one party's request. (b) Supplier was accordingly entitled to refer failure to agree on 1988 price to arbitration. Appeal allowed. ORDERS 1. Appeal allowed 2. Declarations and orders made by Rogers CJ of CD set aside. 3. Declarations made in accordance with paragraphs 1 and 2 of plaintiff's summons. 4. Declared further that a failure to agree to a variation of price was not a failure to agree to a major variation of the terms and conditions of the agreement for the purposes of CL2 thereof. 5. Defendant's cross-summons dismissed. 6. Defendant to pay the costs of the appeal and of the summons and cross-summons and to have a certificate under the Suitors Fund Act in respect of the costs of the appeal if otherwise qualified.