New South Wales Supreme Court CITATION : Vasp Group Pty Limited v Service Stream Limited [2008] NSWSC 1182 HEARING DATE(S) : 24 October 2008 JUDGMENT OF : Hammerschlag J EX TEMPORE JUDGMENT DATE : 24 October 2008 DECISION : Proceedings stayed. Plaintiff to pay defendant's costs of the motion CATCHWORDS : ARBITRATION - application for stay of proceedings on the basis that dispute which has arisen is within provision in agreement that disputes or differences arising out of or in any way in connection with the agreement is to be referred to arbitration - whether dispute is susceptible to the provision - stay opposed on ground that defence to claim of plaintiff might raise liability of concurrent wrongdoers and result in multiplicity of proceedings Commercial Arbitration Act 1984 No 160 NSW LEGISLATION CITED : Civil Liability Act 2002 (NSW) Trade Practices Act 1974 (Cth) Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 CASES CITED : IBM Australia Ltd v National Distribution Services Pty Ltd (1991), 22 NSWLR 466 Savcor Pty Ltd v State of New South Wales (2001) 52 NSWLR 587 Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110 PARTIES : Vasp Group Pty Limited ACN 072 732 604 Service Stream Limited ACN 072 369 870 (formerly Total Communications Infrastructure Limited) FILE NUMBER(S) : SC 55055/2008 COUNSEL : N.J.Kidd (Plaintiff) N.A. Nicholls (Defendant) SOLICITORS : Curwoods Lawyers (Plaintiff) Mills Oakley Lawyers (Defendants) - 3 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST HAMMERSCHLAG J 24 OCTOBER 2008 55055/2008 VASP GROUP PTY LIMITED ACN 072 732 604-v- SERVICE STREAM LIMITED ACN 072 369 870 (formerly TOTAL COMMUNICATIONS INFRASTRUCTURE LIMITED) EX TEMPORE JUDGMENT 1 HIS HONOUR: This is an application for a stay of proceedings commenced by the plaintiff by summons issued on 8 July 2008, seeking a declaration that the defendant holds $2,538,316.40 on trust for it, and an order that the defendant pay that sum to it. 2 In its Technology and Construction List Statement the plaintiff avers that it and the defendant made an Installation Services Agreement ("the agreement"), for the provision by the plaintiff of telecommunications installation services at approximately 1028 sites in Queensland. It claims that it suffered damages in the nature of delay costs as a result of the defendant's failure to hand over sites at the times required under that the agreement. It claims further that the defendant claimed the abovementioned sum from the head contractor, Ericsson Australia ("Ericsson") on the basis that it had a liability to pay that sum to the plaintiff for delay costs, and that that sum has been received by the defendant from Ericsson and is held on trust for the plaintiff ("the trust claim"). It complains that the defendant has failed to pay it any of the amount received. It pleads, in the alternative, a claim of breach by the defendant of the Trade Practices Act 1974 (Cth). 3 The agreement was entered into on 30 December 2005 with a commencement date of 14 December 2005 and a completion date of 30 June 2006 (see schedule 5 to the agreement). It contains a dispute resolution provision in the following terms: "23. DISPUTE RESOLUTION 23.1 If a dispute or difference arises between TCI and the Contractor in respect of any fact, matter or thing arising out of, or in any way in connection with this Agreement, this clause 23 must be complied with before a Party can commence any court proceedings except where that Party seeks urgent interlocutory relief. 23.2 Where a dispute or difference arises, either Party shall give notice to the other party in accordance with Clause 20 of this Agreement setting out the particulars of the dispute or difference and the position which the Party believes is correct. 23.3 Within 7 days of either Party receiving notice in accordance with Clause 20, a representative of each of the Parties shall meet, and in good faith, attempt to resolve the dispute or difference. 23.4 If the dispute or difference is not resolved within 14 days of the meeting in Clause 23.3, the matter shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, in Australia, by three (3) arbitrators appointed in accordance with the said Rules. All awards may if necessary be enforced by any court having jurisdiction in the same manner as a judgement in such court. 23.5 Each Party shall bear the costs of arbitration in equal parts except where otherwise awarded by the arbitrators pursuant to Clause 23.4." 4 The defendant seeks a stay of the proceedings on the basis that the plaintiff's claims are susceptible to that dispute resolution provision. It relies on s 52(1) of the Commercial Arbitration Act 1984 No 160 NSW which is to the following effect: (1) If a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to subsection (2), apply to that court to stay the proceedings and that court, if satisfied: (a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement, and (b) that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration, may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit. 5 Section 53.2 of the Act is in the following terms: (2) An application under subsection (1) shall not, except with the leave of the court in which the proceedings have been commenced, be made after the applicant has delivered pleadings or taken any other step in the proceedings other than the entry of an appearance. 6 From the affidavit evidence it seems clear that the defendant will assert as a fact that any delay which was occasioned to the plaintiff and from which it suffered loss was caused by the contractors with it not providing it timely access to sites. The defendant has already made a delay claim against Ericsson on that basis. 7 The plaintiff opposes the stay on two grounds. 8 The first is that the trust claim is not one which arises out of or is in any way in connection with the agreement and accordingly is not susceptible to the dispute resolution provision. 9 That submission may be disposed of briefly. The Courts have repeatedly held that words such as 'arising out of' or 'in any way in connection with' or 'connected with' have a wide ambit and that when commercial parties choose a forum for the resolution of disputes which may arise between them, such provisions should be liberally construed so as to further their ultimate intent, namely, that their disputes should be susceptible to the forum which they have chosen. See Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160; IBM Australia Ltd v National Distribution Services Pty Ltd (1991), 22 NSWLR 466. 10 In Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd at 165 Gleeson CJ said: "When the parties to a commercial contract agree, at the time of making contract, and before any disputes have yet arisen, to refer to arbitration any dispute or difference arising out of the agreement, their agreement should not be construed narrowly. They are unlikely to have intended that different disputes should be resolved before different tribunals, or that the appropriate tribunal should be determined by fine shades of difference in the legal character of individual issues, or by the ingenuity of lawyers in developing points of argument." 11 The trust claim clearly bears sufficient relationship to the agreement. Accordingly, I do not accept the plaintiff's first submission. 12 The second ground is that stay should be refused on discretionary grounds because the agreed alternative dispute resolution mechanism agreed will give rise to a multiplicity of proceedings with a risk of inconsistent concurrent findings. The presence of such circumstances has been considered in the authorities to be a powerful factor when determining whether or not to compel adherence to an alternative dispute resolution procedure; see Savcor Pty Ltd v State of New South Wales (2001) 52 NSWLR 587 at 600; Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110. 13 Mr Kidd of counsel, who appeared for the plaintiff, relied strongly on s 34 and pt 6A (s 87CB and following) of the Civil Liability Act 2002 (NSW) and pt 6A of the Trade Practices Act. 14 His proposition was that the plaintiff's claim is susceptible to the proportionate liability provisions of those two legislative enactments and that the defence would avail the defendant that others (concurrent wrongdoers) were responsible for all or some of the economic loss which the plaintiff claims. 15 Mr Nicholls of counsel for the defendant put that the claim as currently framed left no scope for the application of those provisions on the basis that no other relevant party owed any duty of care which might enliven them. 16 It is not necessary for current purposes to determine whether or not that is so, because Mr Nicholls made it clear (in a manner that will bind the defendant in the conduct of the arbitration proceedings) that it will not assert that the proportionate liability provisions of either the Civil Liability Act or the Trade Practices Act will apply and will also not assert that if the plaintiff is otherwise entitled to recover damages, any component of any damages suffered by it is susceptible to reduction by virtue of the conduct of any concurrent wrongdoer. That concession was made on the basis of the claim as currently framed in the summons. 17 The arbitration has not progressed beyond the point of a Notice of Dispute. Given the clear statement of the defendant's position on concurrent liability I consider that the discretion of the Court should not be exercised against the stay. There is in my view no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement. That discretion is, of course, exercised on the basis of the material before me presently. 18 It is, of course, conceivable that the forensic landscape may change. That will need to await the formulation of the claim in the arbitration and any defence which is raised by the defendant. The plaintiff will not be precluded from moving the Court for an order that the stay be dissolved if circumstances later warrant that course. 19 I make it clear that that course may well be properly open to the plaintiff at some later point if the possibility of fragmentation (as referred to by the Full Court in Western Australia in Paharpur Cooling Towers Pty Ltd v Paramount (WA) Ltd) becomes a reality or a distinct possibility. 20 Accordingly, in the particular circumstances of this case it seems to me that the proceedings should be stayed as prayed. There will accordingly be an order in terms of cl 1 of the Motion dated 10 September 2008. 21 The defendant sought costs of the motion on an indemnity basis. I do not consider that there are reasonable grounds for that submission. 22 The motion was, however, successful, albeit that during the course of submissions counsel for the defendant gave the confirmation that pt 4 of the Civil Liability Act and the equivalent provisions of the Trade Practices Act would not be relied on. It was put that that was a basis for denying the defendant its costs. 23 It seems to me, however, that as early as 13 August 2008 it was the plaintiff who sought confirmation from the defendant that pt 4 of the Civil Liability Act did not apply and the defendant gave that confirmation in a response from its solicitors of 3 September 2008. Not only did this not satisfy the plaintiff but the confirmation given during the hearing also did not, the plaintiff maintaining that it was not sufficient. 24 In the circumstances the fair and just exercise of my discretion is to order the plaintiff to pay the defendant's costs of the motion. ********** 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.