John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451

Supreme Court New South Wales

Medium Neutral Citation: John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 Hearing dates: 5, 9, 17 March 2015 Decision date: 22 April 2015 Jurisdiction: Common Law Before: Hammerschlag J Decision: Plaintiff and first defendant referred to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2010 (NSW).

Plaintiff's action against second defendant stayed. Catchwords: COMMERCIAL ARBITRATION – Commercial Arbitration Act 2010 (NSW) ss 5, 7(1) and 8(1) – arbitration agreement requiring disputes or differences arising out of or relating to the performance or breach of the agreement to be negotiated and if they cannot be resolved by negotiation the parties to confer to ascertain whether they agree that the dispute shall first be subject to an alternative dispute resolution process – further contractual provision that the agreement cannot be varied other than in writing – party A (plaintiff) brings an action in respect of a dispute with party B (first defendant) arising out of or relating to their contract or its breach but also has factually related disputes with non-parties – request by party B under s 8(1) that the parties be referred to arbitration – whether the dispute between the parties to the arbitration agreement is arising out of or relating to their agreement or its breach – CONTRACT – party A claims an oral agreement that the dispute be resolved by court action – whether such an agreement is established - CONTRACTUAL CONSTRUCTION – whether, if established, the agreement is for resolution of the dispute by an alternative dispute resolution process - EQUITY - estoppel - whether party B is estopped from denying the asserted oral agreement or has waived its right to rely on the arbitration agreement HELD - that the dispute between the parties is one arising out of or relating to the agreement or its breach - no oral agreement as alleged established - Court proceedings are not an alternative dispute resolution process - no estoppel established - no waiver established. COMMERCIAL ARBITRATION - arbitration agreement requiring parties first to negotiate any dispute then have expert determination as a condition precedent to arbitration - party A brings an action against party C (second defendant) in respect of a dispute with party C arising out of or in connection with their contract or its breach but also has factually related disputes with non- parties - party C seeks a stay of the action alternatively makes a request under s 8(1) that the parties be referred to arbitration - whether the dispute between the parties to the arbitration agreement is arising out of or in connection with their agreement or its breach - CONTRACT - whether arbitration agreement is void for uncertainty - EQUITY - whether party C has waived its right to rely on the arbitration agreement - STATUTORY CONSTRUCTION - whether the arbitration agreement is inoperative within s 8(1) for lack of fulfilment of the condition precedent. HELD: that the dispute between the parties is one arising out of or in connection with the agreement or its breach – arbitration agreement not void for uncertainty - no waiver established - negotiation is a precondition to arbitration - precondition not yet fulfilled - arbitration agreement presently inoperative - referral to arbitration refused - stay granted. Legislation Cited: Commercial Arbitration Act 2010 (NSW) Limitation Act 1969 (NSW) Cases Cited: Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 IBM Australia Ltd v National Distribution Services Pty Ltd (1999) 22 NSWLR 466 Paharpur Cooling Towers Ltd v Paramount (Wa) Ltd [2008] WASCA 110 Rhinehart v Welker [2012] NSWCA 95 Briginshaw v Briginshaw (1938) 60 CLR 336 Helton v Allen (1940) 63 CLR 691 Rejfek v McElroy (1965) 112 CLR 517 Watson v Foxman (1995) 49 NSWLR 315 Commonwealth v Verwayen (1990) 170 CLR 394 Austotel Pty Ltd v Franklins Self-serve Pty Ltd (1989) 16 NSWLR 582 Upper Hunter County District Council v Australian Chilling and Freezing Co Limited (1968) 118 CLR 429 Pipeline Services WA Pty Ltd v Atco Gas [2014] WASC 10 PMT Partners v Australian National Parks and Wildlife Service (1995) 184 CLR 301 Savcor Pty Ltd v State of New South Wales (2001) 52 NSWLR 587 Tricontinental Corporation Limited v HDFI Limited (1990) 21 NSWLR 689 Texts Cited: Paterson, Robertson, and Duke, Principles of Contract Law, (4th ed 2011, Thomson Reuters). J W Carter, Contract Law in Australia, (6th ed 2013, LexisNexis Butterworths). Category: Principal judgment Parties: John Holland Pty Limited - Plaintiff Kellogg Brown & Root Pty Ltd - First Defendant Atlantis Corporation Pty Ltd - Second Defendant Representation: Counsel: P.S. Braham SC and B.C.A. Bradley - Plaintiff T.J. Breakspear - First Defendant I. Faulkner SC - Second Defendant