New South Wales Supreme Court CITATION : Bovis Lend Lease Pty Limited v WGE Pty Limited [2002] NSWSC 939 FILE NUMBER(S) : SC 55013/02 HEARING DATE(S) : 4/10/02 JUDGMENT DATE : 4 October 2002 PARTIES : Bovis Lend Lease Pty Limited (Plaintiff) WGE Pty Limited (Defendant) JUDGMENT OF : Einstein J COUNSEL : M R Gracie (Plaintiff) T Davie (Defendant) SOLICITORS : Freehills (Plaintiff) Colin Biggers & Paisley (Defendant) CATCHWORDS : Practice and Procedure - Arbitration award - Remittal of issues to arbitrator - Appeal from arbitration allowed and matter remitted to arbitrator for determination of certain issues - Notice of motion seeking to remit additional points of claim to arbitrator - Additional points of claim sought to be remitted never initially before arbitrator - Whether court has jurisdiction to remit additional points of claim - Whether width of s43 of Commercial Arbitration Act 1984 (NSW) permits further remittal of issues LEGISLATION CITED : Commercial Arbitration Act 1984 Supreme Court Rules Commonwealth of Australia v Cockatoo Dockyards Pty Ltd (1994) 35 NSWLR 704 King v Thomas McKenna Ltd [1991] 2 QB 480 Hashman v Downie (1996) 39 NSWLR 169 CASES CITED : Imperial Leatherware Co Pty Ltd v Macri and Marcellino Pty Ltd (1991) 22 NSWLR 653 Mutual Shipping Corp v Bayshore Shipping Co Ltd [1985] 1 WLR 625 South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1990) 55 SASR 327 Sabemo Pty Ltd v Malaysia Hotel, (Australia) Pty Ltd (unreported, NSWSC, 4 June 1992, BC 9201836) DECISION : The notice of motion filed on 12 September 2002 is dismissed. Order that the defendant pay the plaintiff's costs of that motion. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST Einstein J Friday 4 October 2002 ex tempore Revised 9 October 2002 55013/02 BOVIS LEND LEASE PTY LIMITED v WGE PTY LIMITED JUDGMENT 1 Proceedings 55013 of 2002 were commenced by summons. Orders were sought pursuant to s 38(4)(b) of the Commercial Arbitration Act 1984 granting the plaintiff leave to appeal from the interim award of the arbitrator dated 28 February 2002 on grounds that there was a manifest error of law in the face of the award and that the proper determination of the arbitrator's error of law would substantially affect the rights of the plaintiff in the arbitration proceedings. 2 The proceedings regularly came before Bergin J on 3 June 2002 and on 26 June 2002. Her Honour handed down a judgment. The judgment is self-explanatory. The judgment describes the subcontract of 11 August 1999 whereunder the defendant agreed to perform certain works for the plaintiff at the Sydney International Terminal Expansion Project ("the works") at Kingsford Smith Airport, Mascot. 3 The judgment describes the dispute and describes the plaintiff's claims that the award contained manifest errors on its face in respect firstly of what was referred to as the subcontract issue and secondly as to what was referred to as the transport issue. 4 Leave to appeal on the subcontract issue was granted and the appeal on the subcontract issue was upheld. The subcontract issue was remitted to the arbitrator for determination requiring the arbitrator to consider the variation claims on the basis that particular drawings formed part of a letter of 8 January 1999 and of the subcontract of 11 August 1999. Leave to appeal from the award on the transport issue was refused. 5 There is presently before the court a notice of motion filed on 12 September 2002 brought by the defendant which seeks the following order, "In addition to the orders made by Bergin J on 26 June 2002 the claims for misleading and deceptive conduct pleaded at paras 28(a) and (b) of the amended points of claim be remitted to the arbitrator for assessment of the relevant damages, if any, and any other orders which the Court may deem fit". 6 Submissions taken from both parties have closely addressed the authorities dealing with the ambit of s 43 of the Commercial Arbitration Act 1984. That section provides: "Subject to s 38(1) the Court may remit any matter referred to arbitration by an arbitration agreement together with any directions it thinks proper to the arbitrator or the umpire for reconsideration or, where a new arbitrator or umpire has been appointed, to that arbitrator or umpire for consideration". 7 S 38(1) provides, "Without prejudice to the right of appeal conferred by subsection 2 the Court shall not have jurisdiction to set aside or remit an award on the ground of error of fact or law on the face of the award." 8 Authorities which have dealt with the question of the width of s 43 in relatively recent times include Hashman v Downie, 39 NSWLR 169 [Rolfe J], Sabemo v Malaysia Hotel, 4 June 1992 [Giles J]. Imperial Leatherwear Company v Macri and Marcellino (1991) 22 NSWLR 653, Commonwealth of Australia v Cockatoo Dockyard (1994) 35 NSWLR 704 and on appeal before the Court of Appeal (1995) 36 NSWLR 662. 9 Giles J in Sabemo said inter alia: "But the proprietor admitted that there was nonetheless no power to remit the matter pursuant to s 43 of the Act. In its submission there could not be a remission pursuant to s 43 unless it was first found that there was an error of law arising out of the award, leave to appeal in respect to that error was granted under s 38 of the Act and the appeal was upheld. I am unable to agree. A successful appeal may be the occasion for remission but it is not the only occasion. Remission may follow the setting aside of an award for misconduct pursuant to s 42 of the Act or it may be ordered in other circumstances as what has been described as the ultimate safety net. Remission pursuant to s 43 should not be used as a backdoor method of circumventing the restrictions on a Court's power to intervene in arbitral proceedings but that does not mean that there can be no remission in the absence of a successful application for leave to appeal and success in the appeal." 10 Giles J further dealt with what was referred to as the ultimate safety net theory which concept stems from s 22 of the English legislation and referred to a statement by Rogers J in Imperial Leatherwear Co v Macri and Marcellino that the jurisdiction to remit is usually to be invoked in relation to procedural mishaps or understandings but was not limited to those circumstances. He quoted from Rogers J at 669: "Ultimately though the situation appears to me to be this, the Act relevantly provides three gateways for court participation, to use a neutral phrase, in arbitrations. The principal one, subject to exclusion by agreement of the parties, is the highly circumscribed provision for appeal on questions of law provided by s 38. The second is the opportunity to remit matters under s 43 where it is necessary to correct some injustice in the sense explained by Lord Donaldson in M F King. The third is the removal of an arbitrator for misconduct." 11 The reference to M F King was a reference to a judgment of Lord Donaldson in King v Thomas McKenna Ltd (1991) 2 QB 480 where his Lordship said at 489 of the United Kingdom equivalent of s 43, citing from his own judgment in the Montan (1985) 1 WLR 625 at 632: "S 22 empowers the Court to remit an award to an arbitrator for reconsideration. It provides the ultimate safety net whereby injustice can be prevented but it is subject to the consideration that it cannot be used merely to enable the arbitrator to correct errors of judgment, whether on fact or law, or to have second thoughts, even if they would be better thoughts. In the instant case the arbitrator has accidentally made a major error which if uncorrected would lead to the charterers paying the owners, when it is the owners who should be paying the charterers. No Court could lend the power of the State to the enforcement of such award and no Court could stand by when it has power to correct such an accidental error, and I stress the word' accidental'." 12 As Rolfe J pointed out in Hashman v Downie many forms of injustice can be imagined. 13 In Cockatoo Dockyard at 672 – 673 Kirby P said inter alia: "The reference to s 38(1) is not present in the equivalent English provision. It ties s 43 back to a section which is designed strictly to limit judicial review of arbitral awards. It makes the provision of the relief envisaged by s 43 subject to the limitations contained in s 38. Reading the two sections together as the opening words of s 43 require, it is plain that the purpose of s 43 is to enlarge the powers which the Court may exercise when, in conformity to s 38, it decides to intervene. But that limits the intervention, relevantly, to correction of arbitral awards. It is unnecessary to consider whether such an approach is incompatible with what Giles J decided in Subemo Pty Ltd v Malaysia Hotel (Australia) Pty Ltd (Giles J, 4 June 1992, unreported). In that case an award had been made. In this case, indubitably, it had not. I regard the Commonwealth's argument to the contrary as hopeless. The "award" of the kind contemplated by the Act is the final step in the arbitration. It is certainly not a mere procedural order on the way to the "award". In order to have a "matter" to remit, the Supreme Court must have that "matter" properly before it. It is not necessary in this case to determine the scope of such a "matter": cf South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1990) 55 SASR 327 at 343, per Bollen J. It is enough to say that, in this case, because s 43 effectively incorporates s 38, and because that section refers only to process following an award, there was no "matter" of that character before the Court which could occasion the exercise of the s 43 power. Certainly, s 43 of the Act is not a power at large to remit to the arbitrator, with directions or otherwise, a proceeding which is brought in the Supreme Court. Such a proceeding is only given its legitimacy by the proper invocation of the jurisdiction of the Supreme Court. The opening words of s 43 make it plain it is an adjunct to the disposal of proceedings in the Supreme Court concerning an award." The instant application 14 Turning to the particular application the subject of the notice of motion presently before the Court, a number of matters are required to be made clear. 15 WGE is presently seeking the Court's intervention by the s 43 route to, in effect through a remitter procedure, have the arbitrator deal with matters which were never raised before the arbitrator. So much appears from the fact that the claims of misleading or deceptive conduct pleaded in paragraphs 28(a) and (b) of the amended points of claim were restricted to: (i) alleged representations that information supplied from BLL would be sufficient to enable shop detailing to proceed according to contract programs. (ii) alleged representations that design drawings for off site fabrication would be forwarded to WGE immediately after 8 January 1998. 16 The issues before Bergin J did not treat with those particular allegations. 17 There are two relevant elements to a consideration of the way in which the arbitrator dealt with the conduct pleaded at paragraphs 28(a) and (b) of the amended points of claim. 18 Firstly the matters, the subject of the alleged representations were claimed by WGE in its variation claim 22.00, which variation claim was not the subject of any challenge by any party to this Court in relation to the proceedings before Bergin J. 19 Secondly those variation claims that were the subject of challenge and dealt with by Bergin J were variation claims that never raised any issue of misleading or deceptive conduct as pleaded in paragraphs 28(a) and (b) of the amended points of claim. Variation Claim 22.00 20 The alleged claims of misleading or deceptive conduct contained at paragraphs 28(a) and (b) of the amended points of claim were the subject of a specific claim for damages as part of WGE's variation claim 22.00 in the sum of $3,227,196 million. The arbitrator awarded WGE the sum of $2,709,556 for that claim. The first two pages of the claim submission for variation claim 22.00 submitted to BLL which was also in evidence before the arbitrator are appended to this Judgment. 21 The "Description" and "Basis of Claim" at pages 1 and 2 of that submission by WGE dealt with the very matters, the subject of the first alleged representation at paragraph 28(a) of the amended points of claim. There is a specific reference to the first alleged representation (paragraph 28(a)), namely, "insufficient information from BLL" that prevented shop detailing to proceed according to the contract program. 22 The second pleaded representation at paragraph 28(b) of the amended points of claim, namely that design drawings for off site fabrication would be forwarded to WGE immediately after the letter of acceptance/intent of 8 January 1998, is also dealt with at page 1 of the WGE claim submission. The design drawings referred to in the amended points of claim were the same as the project manager's working drawings and the architectural and mechanical drawings that were progressively issued by BLL referred to in the claim submission. 23 A copy of paragraph 124 of WGE's submissions to the arbitrator alleging misleading or deceptive conduct raised by paras 28(a) and (b) of the amended points of claim in the context of variation claim 22.00 is appended to this judgment. 24 WGE in the present notice of motion seeks that those variation claims, the subject of BLL's appeal and the Bergin J judgment, be reviewed by the arbitrator on the basis of alleged misleading and deceptive conduct, notwithstanding that misleading or deceptive conduct was never alleged by WGE in its submissions in relation to those variation claims before the arbitrator but was alleged only for variation claim 22. 25 An extract of WGE's submissions to the arbitrator in relation to each of those variation claims, the subject of BLL's appeal to Bergin J, namely variations 22.5, 22.7, 22.15, 22.18, 22.19, 22.20 and 22.26, (see paragraph 11 of the summons) is appended to this judgment. 26 None of the variations the subject of her Honour's judgment were part of WGE's "consolidated" variation claim 22.00. None of those variations were presented by WGE as a claim arising in relation to any allegedly misleading or deceptive conduct. Every claim was submitted as a variation claim or a claim for extra work by reason solely of a dispute between the parties as to whether WGE was obliged to perform works shown on the tender versus the contract drawings. The arbitrator found in favour of WGE on the basis that the works shown by the contract drawings constituted a variation because WGE's contact was said to be based on the tender documents. It was that matter and those variations against which BLL successfully appealed to her Honour. 27 WGE's submissions of misleading and deceptive conduct before her Honour were responded to by Mr Bathurst QC, counsel for BLL. A copy of the transcript page 19.11 to 19.32 is appended to this judgment. The matter was dealt with by her Honour at paragraph 43. 28 The exercise of the Court's discretion in relation to remitting of matters to the arbitrator, even assuming a relatively wide construction be given to s 43, mandates the dismissal of the notice of motion. Amongst the many reasons which mandate as it seems to me that the notice of motion be dismissed are the following: · Having failed before Bergin J in terms of her Honour's upholding of the appeal and remitter of the award to the arbitrator to deal with contractual issues, WGE now and against the event that it may be unsuccessful upon that remitter, seeks by Court order under s 43, to have the arbitrator directed to consider the issue in a completely different way to that in respect of which WGE conducted its initial case in terms of the allegedly misleading or deceptive conduct. · WGE seeks to have remitted to the arbitrator an approach to the matters the subject of the arbitration in respect of which no application by the defendant to the arbitrator for the same findings had ever been made. · There is no relevant injustice as it seems to me suggested or shown by the defendant. · There is no error by the arbitrator in terms of having dealt with the arbitration in the manner in which the respective parties put matters to the arbitrator suggested or shown. · There is no appeal if there be such error, which appeal would necessarily have required to be regularly before the Court under s 38. 29 There is then the circumstance that Bergin J's judgment includes the following: "It is apparent from paragraph M15 of the Award that the Arbitrator concluded that if the representations were made they were deemed to be part of the contract. The Arbitrator recorded his earlier conclusion that the representations were made "though possibly not completely to the extent" that the defendant contended (M16). There does not appear to me to be any finding that the plaintiff made any representations that were misleading or deceptive in respect of the subcontract issue. I reject the defendant's submission that the plaintiff's rights would remain unaffected." [Paragraph 43 of the judgment of Bergin J of 26 June 2002]. 30 The whole of the principles which inform the proper approach of the Supreme Court to the provisions within the Commercial Arbitration Act permitting judicial review of awards is based upon the significance of a relatively short period of time in which to invoke the jurisdiction of the Court [see part 72A rule 5 of the Supreme Court Rules], and is based upon the elementary proposition that the Court has a discretion in relation to the occasions when it may remit matters whether pursuant to s 38(3) on the determination of an appeal under s 38(2) or whether pursuant to s 42 or whether pursuant to s 43. 31 As I read the authorities to which I have referred, the interests of justice are untrammelled in the exercise of the Court's discretion insofar as s 43 is sought to be relied upon as the foundation for a remitter order. However of crucial significance, even where s 43 only is in focus, is the obvious necessity that a s 43 remitter be grounded upon some fundamental injustice generally in the sense explained and already referred to by Lord Donaldson. 32 The circumstances presently before the Court in relation to the subject notice of motion fall very far wide of satisfying me that there is any form of injustice at all, let alone a fundamental injustice in terms of the manner in which the subject arbitration was regularly dealt with by the arbitrator and in terms of the case put to the arbitrator by both parties and most particularly by the defendants. 33 The defendant's written submissions are appended to this judgment. 34 Paragraph 4 of the defendant's written submissions are incorrect. Whilst it may be that "particulars of damage at paragraph 25 are referred to at paragraph 22" of the amended points of claim (which refers to each and every variation claim listed at paragraphs 5 and 22 of the amended points of claim), as I have already said, on the materials presently before the Court, WGE did not conduct its case on the basis of any allegedly misleading or deceptive conduct as pleaded at paragraphs 28(a) and (b) of its amended points of claim other than in relation to variation claim 22.00. 35 Paragraphs 31, 32 and 33 of the plaintiff's written submissions are of substance and read as follows: "As to paragraphs 5 and 6 of WGE's written submissions, the findings of the arbitrator as to "representations" could only be representations pleaded by WGE in paragraph 28 (a) and (b) of the Amended Points of Claim. No other representations were ever pleaded by WGE. If the arbitrator was making findings in relation to "different representations" to those pleaded by WGE, as is now possibly suggested in paragraph 6 of WGE's written submissions, then any reliance by WGE on those representations as "findings" by him would constitute a manifest error of law by the arbitrator. At the time that these proceedings were before her Honour for determination, no party had expressed any doubt that the arbitrator made findings other than in accordance with the case pleaded and conducted by WGE. As to paragraph 8 of WGE's written submissions, WGE is seeking to advance an "alternative basis on which the arbitrator may be satisfied that certain WGE claims should succeed", by (i) suggesting an ambiguity in the arbitrator's findings; (ii) raising a possible "alternative basis" which WGE had never pleaded or suggested; (iii) seeking the Court to in effect order the arbitrator to deal with matters which would otherwise constitute an error of law on his part." 36 Paragraphs 9, 10 and 11 of WGE's written submissions are, I accept, the subject of a holding summons for leave to appeal filed by WGE. It is not appropriate to deal with that matter presently. 37 I accept as pervasive the plaintiff's submissions that WGE is seeking an order from the Court to effectively compel the arbitrator to rewrite his award to accommodate a new claim made by WGE raised for the first time only after her Honour's judgment, as a backdoor means of appealing that judgment, which should not be permitted. 38 As I have understood the context, WGE having now been faced with Bergin J's judgment, and the arbitrator having had remitted to him an obligation to deal with the subcontract issue, WGE, against the event that it may fail before the arbitrator, wishes to re-litigate a matter which, if permitted, may have the result of outflanking the arbitrator's decision in terms of the contract issues now remitted to the arbitrator. 39 The notice of motion filed on 12 September 2002 is dismissed. I order that the defendant pay the plaintiff's costs of that motion. I certify that paragraphs 1 - 39 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on Friday 4 October 2002 ex tempore and revised 9 October 2002 ___________________ Susan Piggott Associate 9 October 2002 Last Modified: 10/30/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.