CJ AND R LIESCHKE v BR TURNER SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MAHONEY JA and Hope AJA 9 March 1992, 9 March 1992 [1992] NSWCA 135 ARBITRATION — BUILDING DISPUTE — ARBITRATOR'S AWARD — DATE OF "PRACTICAL COMPLETION" — MEANING OF — CLAIM FOR LOSS AGAINST BUILDER — FINDING BY ARBITRATOR ON FACTS — HELD: LEAVE TO APPEAL REFUSED. ARBITRATION — commercial arbitration — appeal to Supreme Court — appeals limited to leave in cases of manifest error of law on face of the award — building dispute between proprietors and builder — whether builder liable for water damage — whether builder liable after determined date of practical completion — date thereof — Giles J refuses to grant leave — proprietors apply by summons for leave to appeal to Court of Appeal — held (dismissing summons): The case was not one suitable for leave. Observations by Kirby P on the "purpose of Parliament that leave should not be granted except in the comparatively rare circumstances of a manifest error of law". Commercial Arbitration Act, 1984 s38(5). ORDERS Summons dismissed with costs. Kirby P By s38(5) of the Commercial Arbitration Act, 1984 Parliament has provided for cases to which this summons for leave to appeal applies. The subsection provides, relevantly: s38(5) The Supreme Court shall not grant leave under the subsection unless it considers: (b) there is (i) a manifest error of law on the face of the award" Giles J, before whom the summons for leave to appeal first came from the arbitrator, concluded, for reasons stated by him on 14 February 1992, that there was no such error of law. Two such errors were alleged by the claimants who were the proprietors in the subject building dispute before the arbitrator. The summons before us is an application for leave to appeal from his Honour's decision, wherein he decided that the summons before him should be dismissed with costs. The claimants have reargued in this Court the contentions which they unsuccessfully urged upon Giles J. Of the two suggested errors of law argued before his Honour, the first was that the arbitrator, on the face of the reasons given and attached to his award, had erred in the way he dealt with a claim of the proprietors in respect of the repair or replacement of the claimants' chattels arising from water damage resulting from a storm in December 1988. At that time the subject premises were in the course of construction by the opponent, the builder. It is true that the reasons given by the arbitrator on this point are somewhat confusing. There is a comparatively lengthy discussion by him of the issue of insurance. This was irrelevant to the issue to be decided. However, at the end of his reasons on this point, the arbitrator came to what Giles J felt to be his real reason for dismissing this aspect of the proprietors' claim. The arbitrator said: 2 UNREPORTED JUDGMENTS "The Respondents initial refusal to allow the chattels to be stored elsewhere; their inaction when they observed water pouring into the house, and their inattention to the water damaged items when finally stored in an outbuilding, discloses a lack of concern for their property. In addition I have noted the Claimants obligation to prevent water penetration to the building but this is met by the unforeseeable and violent nature of the storm". It is pointed out that in the specifications agreed between the claimants and the opponent the builder promised to "at all times [keep] existing buildings watertight". It may also be pointed out that, by CL14.1 of the subject building contract, the builder was rendered liable by the contract to indemnify the proprietor "against any legal liability, loss, claim or proceeding... due to the negligence, omission or default of the builder". The claimants' case was that the water damage suffered by them was a loss due to the builder's negligence. Giles J interpreted the arbitrator's award to mean that the "true cause" of the loss which the claimants suffered was the unforeseeable and violent nature of the storm and the failure of the proprietors to take steps to protect their own property. I agree with his Honour's interpretation. I accept this interpretation as the true construction of what the arbitrator said. But if this is so, it represented a finding of fact and nothing more. It does not constitute a "manifest error" on the face of the award, still less an "error of law" which would attract leave to appeal from Giles J, particularly given the imperative instructions of Parliament in s38(5)(b) to which I have referred. For this reason, there is no such error on the part of Giles J as would attract leave in this Court. On the contrary, I consider that on this point his Honour's approach was correct. It is clearly the purpose of Parliament that leave should not be granted except in the comparatively rare circumstances of a manifest error of law. That leaves the second argument for the claimants. This relates to the date of "practical completion" of the contract, after which the claimants' relevant entitlements terminated. This point concerns CL16.1 of the contract. That clause, put generally, provides a mechanism whereby, in the event of a dispute, the date of practical completion can be determined by a procedure of written notice. In this case, it was common ground that no such written notice was ever given. Nor was a decision of the architect made. Accordingly, the "date of practical completion" was a question of fact to be decided by the arbitrator. It was not determined by the exceptional procedure envisaged by CL16.1. The arbitrator approached the resolution of the question by referring to matters such as the laying of carpet in the premises, the cleaning of the premises and the painting of the premises. Clearly, these were matters relevant to his determination. They do not indicate an error of law in the approach which he adopted. Nor do they indicate a manifest misapplication of CL16.1 in the contract, assuming that to constitute an error of law. It was not for the proprietors, by the date of their actual re-occupation of their premises, to determine conclusively when the premises was "reasonably fit for use", as the contract provides. To the extent that the proprietors' assertion is that they were entitled to have the actual date of their occupation accepted uncritically as the date of such "reasonable fitness", I would reject their argument, as the arbitrator did and as Giles J did as well. Accordingly, the two errors of law which were urged upon this Court are not such as to attract the intervention of the Court. In my view, Giles J was correct in the decision which he made. Accordingly, his decision must stand. URJ CJ AND R LIESCHKE v BR TURNER (Hope AJA) 3 The order in this Court should be: the summons for leave to appeal should be dismissed with costs. Mahoney JA In my opinion, this is not an appropriate matter for leave to appeal. I would dismiss the summons for leave to appeal with costs. Hope AJA I agree. The orders of the Court are: KIRBY P: 1. Summons dismissed; and 10 2. The claimants to pay the opponent's costs. Counsel for the appellant: OG Watt Solicitors for the appellant: Fleming Muntz 15 Counsel for the respondent: EM Olsson Solicitors for the respondent: Gibney and Gunson