Energy Australia v Active Tree Services P/L [2004] NSWSC 1156

New South Wales Supreme Court

CITATION : Energy Australia v Active Tree Services P/L [2004] NSWSC 1156 HEARING DATE(S) : 24/11/04 JUDGMENT DATE : 2 December 2004

JUDGMENT OF : White J DECISION : 1. Summons dismissed; 2. Plaintiff to pay the defendant's costs; 3. Exhibits may be returned after 28 days.

CATCHWORDS : Application to seek leave to appeal from arbitrator - Question decided by arbitrator whether obligation placed on defendant to maintain one metre clearance of cables was an obligation imposed by law or by plaintiff - No manifest error of law by arbitrator - Resolution of issues not to add substantially to certainty of commercial law - Leave to appeal refused - No question of principle. Commercial Arbitration Act 1984 (NSW) LEGISLATION CITED : Construction Safety Regulations 1950 Electricity (Workers' Safety) Regulation 1992 CASES CITED : Promenade Investments Pty Ltd v State of New South Wales (1992) 26 NSWLR 203 Pioneer Shipping Ltd v B T P Tioxide Ltd (The Nema) [1982] AC 724 Energy Australia PARTIES : v Active Tree Services Pty Limited FILE NUMBER(S) : SC 55037/04 COUNSEL : Plaintiff: Mr P H Greenwood SC & Mr P Jones Defendant: Mr F C Corsaro SC & Mr S Goldstein SOLICITORS : Plaintiff: Minter Ellison Respondent: Colin Biggers & Paisley

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

WHITE J

Thursday, 2 December 2004

55037/04 Energy Australia v Active Tree Services Pty Limited JUDGMENT 1 HIS HONOUR: The plaintiff seeks leave pursuant to s 38(4)(b) of the Commercial Arbitration Act 1984 to appeal on certain questions of law arising out of an award of Mr Robert Hunt delivered on 7 July 2004. Background 2 On 28 June 1995 the plaintiff accepted the defendant's tender dated 10 May 1995 for the maintenance of tree clearances around the plaintiff's electricity supply system in the Northern Region of the Sydney Electricity District. The contract was for a period of three years from 1 July 1995 to 30 June 1998. The defendant was required to trim the branches of trees around the plaintiff's electricity poles and wires. 3 The principal issue which brought the parties to arbitration arose from the installation of Optus and Telstra cables which were slung from pole to pole along the plaintiff's electrical distribution network. That cabling was installed from about August 1995 to December 1996 in the Northern Region where the defendant was carrying out its tree trimming. 4 Initially the parties treated the Optus cables as being "dead", that is, as carrying a voltage of less than 32 volts. That was the point at which the applicable Regulations would require the defendant to take safety measures to guard against the hazards posed by electrical apparatus. However in correspondence from the plaintiff to the defendant on 31 May 1996 the plaintiff said that such cable should be treated as having an "earth potential" and on 13 March 1997 it advised that the Optus and Telstra cables should be treated as being "live" at all times. The effect of treating the cables as "live" was that the tree-cutters had to maintain a clearance of one metre from those cables when cutting trees. The Arbitrator's Findings 5 The defendant made a claim upon the plaintiff for the extra costs involved in tree-cutting and for loss of productivity arising from the changed working practices which it adopted following receipt of the plaintiff's correspondence and instructions to treat the cables as live. There were many grounds of claim. One was that the cable rollout involving the presence of one or more of Optus and Telstra's cable systems on the plaintiff's power poles constituted physical conditions on the Site or its surroundings which differed materially from the physical conditions which would reasonably have been anticipated by the defendant at the time of tender. This was known as the "Latent Conditions" claim. Where the defendant became aware of a Latent Condition it was required to give written notice of it to the superintendent. If a Latent Condition caused the defendant to carry out additional work or incur extra cost which it could not reasonably have anticipated at the time of tendering, a valuation was required to be made under clause 40.2 of the General Conditions of Contract. 6 The arbitrator found that the cable rollout was a Latent Condition, but that the defendant was not entitled to have the extra cost valued as a variation under GCC clause 40.2 because it failed to give written notice forthwith upon becoming aware of the Latent Condition. 7 However the defendant succeeded on two other grounds. The first was that the letters from the plaintiff of 31 May 1996 and 13 March 1997 to treat the Optus and Telstra cables as "live" rather than "dead" constituted a variation to the work under the contract within the meaning of GCC 40.1 to be valued under GCC 40.2. The arbitrator found that the direction to treat the cables as "live" was a change in the character or quality of work and a direction to execute additional work. It increased the work which the defendant was required to perform by necessitating the maintenance of a safety clearance of one metre from the cables. 8 The second ground upon which the defendant succeeded was under clause 14.1 of the General Conditions of Contract. It relevantly provided that: "The Contractor shall comply with the requirements of - …. (c) Ordinances, regulations, by-laws, orders and proclamations under the Acts and Ordinances. … If a requirement necessitates a change to the Works …… or method of working as may be specified in the Contract, the superintendent shall order a variation under clause 40.1" 9 The arbitrator found that the minimum approach distances required by Table B of the Workcover Authority Certificate of Exemption No. 5099 was a requirement imposed under an Act or Regulation of the State of NSW, the compliance with which necessitated a change to the Works, by the issue of the direction contained in the plaintiff's letters of 31 May 1996 and 13 March 1997 to treat the cables as "live". 10 The arbitrator found that the defendant was entitled to be paid $2,627,100 in respect of the "live wire" claim plus interest giving a total award in respect of that claim to 7 July 2004 of $4,088,605.14. The Requirement for Leave 11 An appeal lies to the Supreme Court only on questions of law arising out of the award and, unless the defendant consents, only if leave to appeal is given. (Commercial Arbitration Act s 38(2) and (4)). The defendant did not consent to an appeal being brought. 12 Sub-section 38(5) provides: "38 Judicial review of awards ……