Lieschke v Lieschke [2022] NSWSC 1705

Lieschke v Lieschke [2022] NSWSC 1705

Supreme Court

New South Wales

Medium Neutral Citation:Lieschke v Lieschke [2022] NSWSC 1705
Hearing dates:13 October 2022; final submissions 14 October 2022
Date of orders:16 December 2022
Decision date:16 December 2022
Jurisdiction:Equity – Commercial Arbitration List
Before:Rees J
Decision:Set aside arbitral award.
Catchwords:COMMERCIAL ARBITRATION – conduct of arbitral proceedings – Commercial Arbitration Act 2010 (NSW), s 18, “reasonable opportunity of presenting the party’s case” – Commercial Arbitration Act 2010 (NSW), ss 34(2)(a)(ii), 34(2)(b)(ii) – principles at [4]-[28]. COMMERCIAL ARBITRATION – ARBITRAL AWARDS – dissolution of family farming partnership – father and son each retain accounting experts – issue whether farms were gifts or held on trust for partnership – directions for interim award on trusts – interim award in favour of son – father retains new lawyers – father seeks to broaden attack on partnership accounts – arbitrator declines – father retains new accounting expert – arbitrator restricts arbitral process to existing experts – arbitrator prohibits experts from communicating with new expert – whether “unable to present the party’s case – whether award in conflict of public policy – award set aside – interim award stands. COMMERCIAL ARBITRATION – SET ASIDE OR SUSPEND – Commercial Arbitration Act 2010 (NSW), ss 34(4) – principles at [147]-[155] – whether Court should set aside suspension of setting aside order and remit to arbitrator to correct defects – whether arbitrator can continue in fair manner – arbitrator made extremely critical remarks – no suspension of setting aside order.
Legislation Cited:Arbitration Act 1996 (UK)Commercial Arbitration Act 2010 (NSW), ss 1(1), 1C, 2A, 5, 18, 19, 33D, 34(1), 34(2)(a)(ii), 34(2)(a)(iii), 34(2)(b)(ii), 34(3), 34(4), 34A, 34A(7)(d)International Arbitration Act 2010 (Cth), s 18CUNCITRAL Arbitration Rules (15 December 1976, UNGA Res 31/98, UN Doc A/RES/31/98), art 15(1)UNCITRAL Model Law on International Commercial Arbitration (as adopted by the United Nations Commission on International Trade Law, 21 June 1985, as amended on 7 July 2006), art 18
Cases Cited:AKN v ALC [2015] SGCA 18
Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd [2016] VSC 326
Cameron Australasia Pty Ltd v AED Oil Ltd [2015] VSC 163
Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd [2015] NSWSC 735
Corporacion Trans Nacional de Inversiones SA de CV v STET
International SpA (1999) 45 OR (3d) 183
Dongwoo Mann+Hummel Co Ltd v Mann+Mann GmbH [2008] 3 SLR(R) 871
FE Hookway & Co Ltd v Alfred Isaacs & Sons [1954] 1 Lloyds Rep 491
Grand Pacific Holdings Ltd v Pacific China Holdings Ltd (in liq) [2012] HKCU 971
Hagop Ardahalian v Unifert International SA, The Elliser [1984] 2 Lloyds Rep 84
Hui v Esposito Holdings Pty Ltd [2017] FCA 648; (2017) 345 ALR 287
Ivankovic v West Australian Planning Commission [2020] WASC 401
Joint Stock Company ‘Aeroflot-Russian Airlines’ v Berezovsky [2013] EWCA Civ 784
Lloyd Del Pacificio v Board of Trade (1930) 37 Ll L Rep 103
Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2018] 1 Qd R 245; [2017] QSC 87
Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2018] QCA 39
Nuance Group (Australia) Pty Ltd v Shape Australia Pty Ltd [2021] NSWSC 1498; (2021) 395 ALR 720
Pacific China Holdings Ltd (in liq) v Grand Pacific Holdings Ltd [2012] 3 HKC 498; [2012] HKCU 971
Pacific China Holdings Ltd v Grand Pacific Holdings Ltd [2011] HKCFI 424
PBO v DONPRO [2021] EWHC 1951
Sino Dragon Trading Ltd v Noble Resources International Pte Ltd [2016] FCA 1131
Spaseski v Mladenovski [2019] WASC 65
TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 232 FCR 361; [2014] FCAFC 83
WCX M4-M5 Link AT Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd (No 2) [2022] NSWSC 505
Texts Cited:Binder, Peter, International Commercial Arbitration and Mediation in UNCITRAL Model Law Jurisdictions (4th ed, 2019, Wolters Kluwer)
Broaches, Aron, Commentary on the UNCITRAL Model Law on International Commercial Arbitration (1990, Springer)
Holtzmann, Howard M and Joseph E Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Kluwer Law, 1989)Mustill, Michael J and Stewart C Boyd, Commercial Arbitration (2nd ed, 1989, Butterworths)
Revised Explanatory Memorandum, International Arbitration Bill 2010 (Cth)UNCITRAL, Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration: Report of the Secretary-General (25 March 1995, UN Doc A/CN.9/264)
Category:Principal judgment
Parties:Errol Lieschke (Plaintiff)
Malcolm Lieschke (First Defendant)
Michelle Lieschke (Second Defendant)
John McGruther (Third Defendant – submitting appearance)
Mr G Burton SC / Mr J O’Sullivan (Plaintiff)
Dr CJ Birch SC / Mr J Mack (First and Second Defendants)Solicitors:
Jarratt Webb & Barrett (Plaintiff)
Walsh Blair (First and Second Defendants)
File Number(s):2022/119891


  1. HER HONOUR: This is an application to set aside an arbitral award on the basis that the plaintiff was unable to present his case and the arbitral award was in conflict with the public policy of this State: sections 34(2)(a)(ii) and 34(2)(b)(ii), Commercial Arbitration Act 2010 (NSW). The arbitration concerned the dissolution of a family farming partnership.


  1. Before turning to the particular problem, it is important to consider the legislative regime and its limits. The Act applies to domestic commercial arbitrations: section 1(1). Section 1C bears repetition:

Paramount object of Act

(1)   The paramount object of this Act is to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense.

(2)   This Act aims to achieve its paramount object by:

(a)   enabling parties to agree about how their commercial disputes are to be resolved (subject to subsection (3) and such safeguards as are necessary in the public interest), and

(b)   providing arbitration procedures that enable commercial disputes to be resolved in a cost effective manner, informally and quickly.

(3)   This Act must be interpreted, and the functions of an arbitral tribunal must be exercised, so that (as far as practicable) the paramount object of this Act is achieved.

  1. The Court may only intervene in a domestic arbitration in the circumstances provided by the Act: section 5. Recourse to the Court against an arbitral award may only be made by an application to set aside the award under section 34(2) and (3) or by an appeal under section 34A: section 34(1). That is, the grounds for the courts to intervene are narrowly circumscribed. I will return to the grounds relied upon in this case at [14].

Conduct of arbitral proceedings

  1. It is also necessary to consider the extent of an arbitrator’s power to determine their own process. Part 5 of the Act, “Conduct of arbitral proceedings”, commences with section 18:

18   Equal treatment of parties

(cf Model Law Art 18)

The parties must be treated with equality and each party must be given a reasonable opportunity of presenting the party’s case.

Note  This section differs from the Model Law to the extent that it requires a party to be given a “reasonable”, instead of “full”, opportunity of presenting the party’s case.

  1. The Model Law is the UNCITRAL Model Law on International Commercial Arbitration as adopted by the United Nations Commission on International Trade Law (UNCITRAL) on 21 June 1985 with amendments as adopted by that Commission on 7 July 2006. In interpreting the Act, the Court may take into consideration the travaux préparatoires of the Model Law: section 2A(3). The travaux préparatoires reveal that during the drafting of the Model Law, the draft article that eventually became Articles 18 and 19 was considered the ‘Magna Carta of arbitral procedure’ and “the most important provision of the model law”: UNCITRAL, Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration: Report of the Secretary-General (25 March 1995, UN Doc A/CN.9/264) at page 44[1] (the Analytical Commentary). As Dr Peter Binder observes, Article 18 constitutes a “fundamental principle … applicable to the entire arbitral proceedings” and a pillar of the Model Law, where guaranteeing the parties equal treatment and an opportunity to present their cases is the basis of a fair trial: International Commercial Arbitration and Mediation in UNCITRAL Model Law Jurisdictions (4th ed, 2019, Wolters Kluwer) at page 330.
  2. Article 18 requires the parties to be given a “full opportunity” of presenting their case and was modelled on Article 15(1) of the 1976 UNICTRAL Arbitration Rules (15 December 1976, UNGA Res 31/98). Of the former Article 15(1), UNCITRAL observed that the right of the party to have “a full opportunity” of presenting its case “does not entitle a party to obstruct the proceedings by dilatory tactics and, for example, present any objections, amendments or evidence on the eve of the award”: UNICTRAL Analytical Commentary at page 46[a]. As learned scholars Howard M Holtzmann and Joseph E Neuhaus note in A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Kluwer Law, 1989), “full opportunity [is] to be interpreted reasonably in regulating the procedural aspects of the arbitration. While, on the one hand, the arbitral tribunal must provide reasonable opportunities to each party, this does not mean that it must sacrifice all efficiency in order to accommodate unreasonable procedural demands by a party”: at page 551.
  3. As considered in the case law, the purpose of the “full opportunity” standard is to protect a party from egregious and injurious conduct by an arbitral tribunal, not to protect a party from its own failures or strategic choices: Corporacion Trans Nacional de Inversiones SA de CV v STET International SpA (1999) 45 OR (3d) 183 at [73] (where the party refused to participate in the arbitration). “Full opportunity” does not mean that a party is entitled to present any case it pleases, any time it pleases, no matter how long the presentation should take: Pacific China Holdings Ltd (in liq) v Grand Pacific Holdings Ltd [2012] 3 HKC 498; [2012] HKCU 971 at [95].
  4. The “Note” to section 18 of the Act is not unimportant. The reason why the legislature pared back the Model Law from requiring each party to be given a “full” opportunity to present their case to requiring that each party be given a “reasonable” opportunity was explained by the Minister introducing the International Arbitration Bill 2010 (Cth), being the corresponding Commonwealth legislation (passed as the International Arbitration Act 2010 (Cth)). The Revised Explanatory Memorandum explained that a key purpose of arbitration is to provide an effective alternative to judicial consideration at [95]-[96]: (emphasis added)

To ensure that this is the case, tribunals need a wide degree of discretion to manage proceedings and even truncate them where this would be in the interests of the parties by achieving a speedy resolution of their dispute. The requirement in Article 18 that parties be given a “full opportunity” to present their case poses a potential impediment to the effective management of the proceedings by the arbitral tribunal.

  1. Section 18C was introduced into the International Arbitration Act to provide that, for the purposes of Article 18, a party is taken to have been given a full opportunity to present its case if the party is given a reasonable opportunity to do so. In any event, “full opportunity” in Article 18 and “reasonable opportunity” are considered to impose the same standard: Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd [2016] VSC 326 at [28] (per Croft J); Cameron Australasia Pty Ltd v AED Oil Ltd [2015] VSC 163 at [142] (per Croft J).
  2. If arbitral proceedings are conducted in a way that contravenes section 18 of the Act, the arbitral award may be set aside on the ground that a party was unable to present its case, pursuant to section 34(2)(a)(ii) of the Act, or as in conflict with the public policy of this State under section 34(2)(b)(ii), to which I will return shortly: see, eg, Grand Pacific Holdings Ltd v Pacific China Holdings Ltd (in liq) [2012] HKCU 971 at [84] (per Tang VP); Aron Broaches, Commentary on the UNCITRAL Model Law on International Commercial Arbitration (1990, Springer) at page 105 (observing that “it is not open to doubt that any breach of the obligation imposed by Art 18 is covered by subpara 2(a)(ii) as well as subpara 2(a)(iv)”).
  3. Section 19 of the Act provides: (emphasis added)

Determination of rules of procedure

(cf Model Law Art 19)

(1)   Subject to the provisions of this Act, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.

(2)   Failing such agreement, the arbitral tribunal may, subject to the provisions of this Act, conduct the arbitration in such manner as it considers appropriate.

(3)   The power conferred on the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

  1. As earlier indicated, Article 19 forms part of the ‘Magna Carta of arbitral procedure’: Analytical Commentary at page 44[1]. The Article has the purpose of establishing procedural autonomy by recognising the parties’ freedom to lay down the rules of procedure and by granting the arbitral tribunal, failing agreement of the parties, wide discretion as to how to conduct the proceedings: page 44[1].

Setting aside an arbitral award

  1. An arbitral award may only be interfered with by a court of competent jurisdiction on strictly limited grounds. Section 34(2) of the Act, which reflects Article 34 of the Model Law, relevantly provides: (emphasis added)

An arbitral award may be set aside by the Court only if:

(a)    the party making the application furnishes proof that:

(ii)    the party making the application … was … unable to present the party’s case …

(b)   the Court finds that:

(ii)    the award is in conflict with the public policy of this State.

  1. In exercising this power, the courts must not interfere in the merits of the arbitral award and must instead exercise “significant judicial restraint… in considering and determining an article 34 challenge”: Sino Dragon Trading Ltd v Noble Resources International Pte Ltd [2016] FCA 1131 at [73] (per Beach J); PT Central Investindo v Franciscus Wongso [2014] SGHC 190 at [101] (per Belinda Ang Saw Ean J). As Menon CJ explained in AKN v ALC [2015] SGCA 18 at [39]:

… the grounds for curial intervention … generally concern process failures that are unfair and prejudice the parties or instances where the arbitral tribunal has made a decision that is beyond the scope of the arbitration agreement. … the parties to an arbitration do not have a right to a “correct” decision from the arbitral tribunal … Instead, they only have a right to a decision that is within the ambit of their consent to have their dispute arbitrated, and that is arrived at following a fair process.

  1. Consistently with the “pro-enforcement bias” of the legislation, the onus of establishing the basis for the appropriate exercise of the Court’s discretion to set aside an award is on the party seeking to attack the award: Pacific China Holdings Ltd v Grand Pacific Holdings Ltd [2011] HKCFI 424 at [88] (per Saunders J).

Unable to present your case

  1. The plaintiff contends that he was unable to present his case within the meaning of section 34(2)(a)(ii). As Chan Seng Aoon J explained in Dongwoo Mann+Hummel Co Ltd v Mann+Mann GmbH [2008] 3 SLR(R) 871 at [55]:

Whether a party was or was not able to present its case at the arbitration is very much a question of fact and degree, and it necessarily focuses on the overall conduct of the proceedings with particular attention paid to the conduct of the tribunal and the parties themselves.

  1. Dongwoo was followed in Amasya at [30]. There, Croft J observed that whether a party has been given a reasonable opportunity to present their case is highly context dependent and must be assessed in light of all of the circumstances of the case, including the way in which the arbitration had been conducted until the issue was raised, the nature and apparent complexity of the issue raised and the time and resources required to prepared an adequate response: at [82].
  2. Amasya is an example of the application of these principles in the context of a procedural ruling by an arbitral panel. Amasya complained that the arbitral award was based on an issue which was not pleaded, not opened, not developed and not argued. On closer review, however, Croft J observed that Asta’s Reply did raise the issue, as did Asta’s closing written submissions provided three days before the final arbitral hearing. His Honour concluded that Amasya had made a strategic choice not to address the issue. The reason for Amasya’s choice was irrelevant; “All that is relevant for present purposes is that the issue was raised and that the Amasya parties therefore had an opportunity to present their case”: at [75].
  3. Another example is Cameron v AED Oil, where Cameron sought to set aside an arbitral award on the basis of two procedural rulings. First, Cameron sought to rely on an expert report where the expert would not be called as a witness and would not be able to be cross-examined by AED. The tribunal directed that, if Cameron did not elect to call the expert, it could not rely on his report and must remove references to the report from its opening submissions. Cameron advised the tribunal that it would not call the expert and sought full reasons from the tribunal for its decision to exclude the expert evidence. The tribunal gave reasons for the decision in the award: at [56].
  4. Croft J considered that the challenge to the arbitral award on this ground was an appeal against a ruling of the tribunal “dressed up” as a breach of procedure: at [59]. Although the tribunal was not, by its rules, bound by the rules of evidence, the tribunal refused to admit the expert report “in a considered and reasoned manner, in circumstances where there was no suggestion that the parties did not have a full or reasonable opportunity to put their arguments, their cases, with respect to the [expert] evidence”: at [55].
  5. The second challenge arose from an application by Cameron, after the conclusion of the arbitral hearing, to re-open its case and withdraw an admission. Cameron had conducted the arbitration on the basis that it owed a duty of care. As a result of this submission, AED Oil abandoned its contractual claim on the first day of the hearing. At the time of the hearing, there was a decision of the Court of Appeal that held that a duty of care existed, but the High Court had granted special leave to appeal the decision. After the close of the arbitral hearing, the High Court overturned the Court of Appeal’s decision. Cameron sought to re-open the hearing to withdraw its admission of a tortious duty and to make positive submissions that it did not owe a duty of care.
  6. Whilst Croft J noted that Cameron may well now regret the course adopted at the arbitral hearing, it nonetheless had the opportunity to present its case as required by section 18: at [42]. His Honour concluded that Cameron was also given an opportunity to present its case on its application to re-open the arbitral hearing, when the tribunal heard the application and later delivered a ruling. Whether or not the tribunal’s refusal to re-open the hearing was correct or not was not to the point, where the Court could not undertake a merits review. His Honour concluded that there was no basis for suggesting that Cameron was denied a “full” or “reasonable” opportunity of presenting its case to the tribunal in seeking to re-open the hearing or that there was otherwise some failure to accord procedural fairness or natural justice: at [49].

Public policy

  1. The plaintiff also contends that the award was contrary to public policy. Section 34(2)(b)(ii) of the Act provides: (emphasis added)

An arbitral award may be set aside by the Court only if:

(b)    the Court finds that:

(ii)    the award is in conflict with the public policy of this State.

  1. In TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 232 FCR 361; [2014] FCAFC 83, the Court reviewed the drafting history of the Model Law and concluded that “public policy” does not invoke any idiosyncratic national approach of the rules of natural justice in Australia. Rather, at [73]:

… there is nothing technical or domestically particular about the requirement that an arbitration be conducted fairly. The conceptions of fairness and equality are deeply powerful. They lie at the heart of the constitutional conception of due process. They are inhering elements of law and justice that inform and bind any legal system and legal order.

  1. The Court considered that the interpretation of public policy in the Model Law is limited to fundamental principles of justice and morality of the state, recognising the international dimension of the arbitration context: at [76]. The touchstone is fairness, which is essentially a practical concept: at [86], [108]. At [109]-[110]:

109   … The appropriate balance between swift enforcement and legitimate testing of grounds under Arts 34 and 36 is critical to maintain; essential to it is courts acting prudently, sparingly and responsibly, but decisively when grounds under Arts 34 and 36 are revealed. An important part of that balance is the protection by the courts of the fundamental norms of fairness and equality embodied in the rules of natural justice within the concept of public policy.

110   … The real question is whether an international commercial party has been treated unfairly or has suffered real practical injustice in the dispute and litigation context in which it finds itself. Formalism in the application of the so-called rules is not the essence of the matter: fairness and equality are. How unfairness is revealed or demonstrated in any particular case will depend on the circumstances. …

  1. The Court emphasised the need for “real unfairness or real practical injustice in the litigation context of international commercial arbitration”: at [141]. In most, if not all, cases, a party should be able to demonstrate that it has suffered such unfairness or injustice without a detailed re-examination of the facts, “Unfairness or practical injustice in the conduct of international commercial arbitration should, if it exists, be able to be expressed shortly and, likewise, demonstrated tolerably shortly”: at [113].
  2. Although TCL Air Conditioner considered international commercial arbitration, the concepts apply similarly to a domestic commercial arbitration: Amasya at [35], [42]-[43] (per Croft J). See likewise Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd [2015] NSWSC 735 at [46]-[47] (per Hammerschlag J, as his Honour then was); Spaseski v Mladenovski [2019] WASC 65 at [59]-[67] (per Martin J); Ivankovic v West Australian Planning Commission [2020] WASC 401 (per Martin J).
  3. Further, Croft J considered in Amasya that the rationale behind section 18 was different to that of the common law and there was no requirement that the objecting party show procedural prejudice. Rather the denial of natural justice is assumed where the parties are not treated with equality or where each party does not have a reasonable opportunity to present their case. Whether or not the arbitrator might have arrived at a different conclusion had the arbitration played out differently is irrelevant: at [55]. Unfairness in the relevant sense does not arise because it might have been possible to persuade the arbitrator of a different conclusion had the arbitration been conducted fairly: at [56].


  1. The plaintiff, Errol Lieschke, has been a farmer for many years, initially in partnership with his parents and brother Reginald on his parents’ land. Errol and his brother dissolved their partnership, following which Errol went into partnership with his wife Glenys. Errol and Glenys conducted the partnership on various properties near Henty in New South Wales.
  2. Errol and Glenys had four children being Warren, the first defendant Malcolm, Tracy and Melissa. Warren is married to Jade. Malcolm is married to the second defendant, Michelle.
  3. As I understand it, in 1993, Errol and Glenys purchased a farm called Eagles Nest from Errol’s mother, Barbara. The farm was purchased for $130,000 using debt finance. The farm, however, was transferred to Errol and his son Warren in equal shares. In 1997, Errol and Glenys purchased a farm called Hazelglen from Errol’s brother. The property was registered in Warren’s name. In 1998, Andrew Lea became the partnership’s accountant.
  4. In March 2006, Errol and Glenys acquired a property for the partnership called Waverly for $1,130,675. The purchase was funded by a loan of $1.66 million in the name of Warren. The property was put in Warren’s name as Errol and Glenys were concerned that estate duties would be reintroduced and wished to avoid the possibility of this occurring by putting legal ownership in the name of one of their sons.
  5. In 2006, Glenys passed away. Glenys left farming lands known as Erlsridge to Malcolm. Glenys left her interest in the farming partnership to her husband. Errol continued as a sole trader.

Partnership agreement

  1. On 4 July 2007, Errol entered into a partnership agreement with Malcolm and Michelle. Clause 8 of the partnership agreement provided:

ANY capital now owned or acquired by the partnership after the commencement of the partnership and the net profits of the said business shall belong to the said partners in the proportion set forth opposite their respective names in the First Schedule hereto and the parties shall bear any partnership losses in the like shares …

  1. The First Schedule provided that the partners’ shares were 50% for Errol, 25% for Malcolm and 25% for Michelle. Clause 24 of the agreement required the partners to refer any disputes to arbitration.
  2. The partners agree that, at the commencement of the partnership, all stock and equipment were provided by Errol. As I understand it, Errol ‘rolled’ the assets and liabilities of his farming business into the new partnership. A journal entry was made in the accounts of the new partnership which effectively duplicated the final balance sheet of the farming operation conducted by Errol after his wife’s death. As such, the assets and liabilities of the new partnership were recorded at their historical cost to the partnership conducted by Errol and his wife, being book value. As recorded, liabilities exceeded assets. Assets included the Waverly property, together with cattle and sheep.
  3. In 2011, Errol entered into a Deed of Family Arrangement with Warren and Jade and Malcolm and Michelle. The recitals recorded:
  1. Errol owned Hilltop and a one half share of Eagles Nest;
  2. Warren owned WaverlyHazelglen and a one half share of Eagles Nest; and
  3. Malcolm owned Erlsridge.

It will be immediately noted that Warren was said to be the owner of Waverly whilst the property was recorded in Errol’s balance sheet as at 30 June 2007 as an asset of his farming business.

  1. The recitals noted that Warren had borrowed $550,000 from Suncorp Metway whilst Errol and Malcolm had borrowed some $1.2 million. The parties had provided guarantees and third party mortgages to secure each other’s debts. The parties wished to rearrange their assets and liabilities to separate their financial affairs.
  2. The deed provided that, on Errol and Malcolm paying $340,000 to Warren, Warren would transfer his interest in Hazelglen and Eagles Nest to Errol and Malcolm or their nominee. Each would refinance their current Suncorp Metway debts so that the debt was not guaranteed by, nor secured over the property of, the other, in particular, Errol and Malcolm would ensure that their Suncorp Metway debt was not secured over Waverly. In addition, Warren and Jade acknowledged that they had no claim or interest in any of the assets of the partnership, nor any claim or entitlement on Errol’s estate.
  3. The partnership paid Warren and Jade the $340,000 from the partnership’s bank account. The partnership borrowed $300,000 while the remaining $40,000 was paid from the partnership’s cash. Warren transferred Hazelglen and Eagles Nest to Malcolm, noting the consideration as “natural love and affection”.
  4. Erls RidgeHazelglenHilltop and Eagles Nest continued to be farmed by the partnership. The trial balance for the partnership for the 2013 financial year continued to record Hazelglen as a partnership asset. Waverly and Eagles Nest were not included.
  5. In an affidavit later relied upon before the arbitrator, Errol said he did not intend that the transfer of Warren’s interests in Hazelglen and Eagles Nest to Malcolm would be a gift but rather that he would hold these assets for the benefit of the partnership. Errol said the purpose of transferring the property to Malcolm was to avoid the payment of stamp duty. Where the properties were acquired using partnership funds, Errol intended and understood that the partnership was paying Warren for the transfer of title of the properties for the benefit of the partnership.

Dissolution of partnership

  1. In 2017, Errol gave notice under the partnership agreement of his intention to dissolve the partnership. Clause 20 of the partnership agreement provided for a general account to be taken after the determination of the partnership, with all outstanding debts owed to the partnership to be collected and all assets of the partnership to be sold and distributed between the partners.
  2. Following dissolution of the partnership, the partnership stock and equipment was valued. The values attributed to the equipment were agreed by the parties and the equipment was split between the partners. Errol continued to farm Hilltop and Eagles Nest whilst Malcolm and Michelle farmed Erls Ridge and Hazelglen. According to a report later provided by the partnership’s external accountant, Mr Lea:

After lengthy negotiations an amicable split was agreed, and heads of agreement were drawn up by J Carrol. Prior to final implementation of this agreement Malcolm and Michelle withdrew stating “difficulty in obtaining finance” as the reason for the withdrawal. This was surprising and disappointing as finance had been agreed with Andrew Hannaford of the Suncorp Banking Group. Andrew Hannaford denied withdrawing finance. The only explanation was that Malcolm and Michelle were possible no longer willing to proceed for other reasons, which was entirely a matter for them.

Further offers were made in November 2017 by Malcolm and Michelle but in my view, they were unrealistic in view of the partners equity position.

In 2018 a further offer was made by Malcolm and Michelle. This offer was supported by a spreadsheet prepared by their accountants. Malcolm and Michelle’s accountant did not contact me or obtain any information from me at the time and the report contains several fatal inaccuracies which rendered it unsatisfactory for the purpose of determining partnership equity.

In 2018 after receiving the report I advised Errol Lieschke to obtain a proper independent report into the partnership equity position. …Errol’s solicitor appointed an expert accountant, Peter Haley, to prepare a report.

Accountants’ reports

  1. According to the letter of instruction to expert accountant, Mr Haley, Errol was concerned that the partnership accounts did not accurately record the position. In particular, Errol’s contribution to the partnership in 2007, being stock and equipment, was recorded at book value, which significantly understated the value of these assets. Further, transactions following the Deed of Family Arrangement had not properly recorded his and Malcolm’s interest in the family farms, nor their liabilities. Hazelglen was transferred from Warren to Malcolm, funded by partnership borrowings, but title to Hazelglen was recorded in Malcolm’s name only. Likewise, Warren’s interest in Eagles Nest was transferred to Malcolm, funded by a partnership loan, and Errol’s interest in the transferred share was not recorded. The loan obtained to facilitate Warren’s exit from the partnership was recorded solely against Errol rather the partnership as a whole.
  2. In March 2018, Mr Haley provided his report, opining that Errol’s contribution to the partnership in 2007 was understated in the accounts by $166,500. Further, when the Waverly property was removed from the partnership balance sheet in the 2012 financial year, it was treated as a negative contribution by Errol for the full amount of $1,181,180. Mr Haley considered that this should have been treated as a negative contribution posted equally to Errol and Malcolm’s capital accounts. As such, Errol’s capital account was understated by $590,590 while Malcolm and Michelle’s capital account was overstated by the same amount. Further, Mr Haley considered that title to Hazelglen should be recorded as 50% to Errol and 50% to Malcolm and Michelle, while title to Eagles Nest should be recorded as 75% to Errol and 25% to Malcolm.
  3. On 29 March 2018, Mr Haley provided a second report on his opinion as to the value of Errol’s entitlement in the partnership, concluding that Errol was entitled to $2,287,206. Mr Haley took into account an agreed schedule of the value of stock, inventory, properties and machinery as at 28 February 2018 and made adjustments based on his first report in respect of Errol’s initial contribution to the partnership, which had been understated by $166,500, and the fact that the removal of the Waverly property from the partnership balance sheet had been offset entirely against Errol’s capital account.
  4. In November 2018, Mr Haley provided a third report as to the value of the partners’ entitlements as at 30 June 2018. By now, the partners had agreed on the values of stock, inventory, properties and machinery. The net assets of the partnership as at 28 February 2018 were $4,282,951. Mr Haley amended the balance sheets to take into account the opinions expressed in his first report and the adjusted values of stock, inventory, properties and machinery. Taking into account transactions post 28 February 2018, the livestock, plant and machinery taken by each partner and the agreed values of the real properties and mortgages, Mr Haley concluded that Errol’s entitlement in the partnership as at 30 June 2018 was $1,261,519.
  5. In March 2019, Mr Lea provided a report, agreeing with Mr Haley’s findings subject to minor adjustments in respect of some sheep. In particular, Mr Lea observed that Errol’s assets were contributed to the partnership at written down book values, “these values were used in order to access the Capital Gain Tax Balancing charge rollover relief”, but distorted the true value of the assets which he brought to the partnership. In addition, while the Suncorp loan to purchase assets from Warren was treated as a loan by Errol, “This was a request of the Suncorp Bank at the time as Malcolm … and Warren … had no credit history at the bank.” Mr Lea updated Mr Haley’s calculations to 31 January 2019 with the result that Errol was obliged to pay $196,695 to Malcolm and Michelle to balance the partnership accounts. Mr Lea suggested that this be done by Errol forfeiting his share of the cash at bank.
  6. In May 2019, Errol’s solicitor proposed that the dispute be referred to arbitration, having received no reply to an open offer.


  1. In June 2019, the matter was referred to arbitration. The Law Society of New South Wales appointed John McGruther as arbitrator. In due course, the parties signed an arbitration agreement. The agreement was brief and did not contain any agreement on the procedure to be followed by the arbitral tribunal in conducting the proceedings, save to note that the arbitrator was not bound by the rules of evidence but may inform himself in relation to any matter in such manner as the arbitrator thinks fit: clause 6(f).
  2. On 1 August 2019, a preliminary conference took place. The arbitrator directed the parties to provide an agreed statement of facts, points of claim, response points and submissions. When providing their submissions, each party was to signal whether other evidence was anticipated and, if so, when. The arbitral process was then anticipated to be substantially on the papers and on the basis of written submissions. Further discussion as to the arbitral process and evidentiary matters would be discussed at the next conference scheduled for 11 October 2019.
  3. On 2 September 2019, Malcolm and Michelle obtained an expert accountant’s report from Geoff Gardner. Mr Gardner’s instructions as to the history of the acquisition and funding of each of the farms appears to have been different, in particular, in respect of Waverly. Mr Gardner’s instructions were that Warren had purchased the property in 2005 for $1,300 an acre. The purchase was funded by Suncorp Bank, with Warren borrowing $550,000 and Errol and Glenys borrowing the remainder of some $650,000. Waverly was not a partnership asset. Whilst Mr Gardner agreed that Errol’s initial contributions to the partnership in terms of livestock and machinery had been understated and the accounts should be adjusted accordingly, Mr Gardner disagreed with the suggested adjustment in respect of the Waverly property and considered other adjustments to the accounts were also appropriate to remove loans by Errol to his children. In the result, Mr Gardner considered that Errol owed the partnership $868,845.
  4. On 6 September 2019, the arbitrator made further directions as the statement of agreed facts had not been completed. The timeframes for each of the steps earlier directed was extended.
  5. On 12 September 2019, Errol served a supplementary report by Mr Lea, updating his calculations to 30 June 2019. On Mr Lea’s calculations, Errol was owed $1,152,695.45 by the partnership. As Errol had agreed to take a higher proportion of the assets than his partnership share represented, Mr Lea suggested that the remaining bank funds be transferred to Malcolm and Michelle ($84,896.88) together with a further payment from Errol of $152,261.88.
  6. A second preliminary conference took place on 11 October 2019, when the arbitrator amended his earlier directions to provide additional time to the parties. On 28 October 2019, a statement of agreed facts was provided.

Emergence of trusts issue

  1. On 15 November 2019, Errol served points of claim. In particular, Errol contended:

1.8   Despite the Partnership funding the purchase of the properties known as Hazelglen and Eagles Nest:

(a)   the half share of Eagle’s Nest and the whole of Hazelglen were registered in Malcolm’s sole name; and

(b)   the liability obtained in order to finance the purchase pursuant to the Family Agreement was recorded solely against Errol, and not the partnership as a whole.

  1. In addition, Errol contended that the sale of the Waverly property should have been apportioned equally between Errol and Malcolm and not solely to Errol’s capital account. At the conclusion of the points of claim, Errol noted “Evidence to be submitted”, being four reports of Mr Haley, a statement from Mr Lea and a statement in reply from Errol.
  2. On 3 December 2019, Malcolm and Michelle provided a Response to the Points of Claim. Waverly property was said to have nothing to do with the partnership; the property was never a partnership asset or liability and the inclusion of the cost of this property in the accounts of the partnership was an accounting error. Further:

There is no accounting nor legal basis to suggest that any trust at any time has ever been created whereupon Malcolm would hold his interests in the properties known as “Hazelglen” and “Eagles Nest” on either for the partnership or Errol.

As to evidence to be submitted, Malcolm and Michelle proposed to rely on a report of accountant, Geoff Gardner.

  1. On 5 December 2019, Mr Haley completed his fourth report, commenting on the report of Mr Gardner. In particular, Mr Haley did not agree with Mr Gardner’s treatment of the Waverly property, nor his treatment of family loans to the children nor the $300,000 Suncorp loan. However, assuming that the real properties did not constitute partnership assets, Mr Haley amended his calculations. Whilst, in his third report, Mr Haley had calculated Errol’s entitlement as $1,261,519, on the assumption used by Mr Gardner, Errol owed the partnership $243,831 as at 30 June 2018. Obviously enough, whether the farms constituted partnership assets made a huge difference to the bottom line.
  2. On 12 December 2019, the parties attended a preliminary conference with the arbitrator, who directed the parties to provide the evidence referred to in their Points of Claim and Response by 24 January 2020, followed by a Statement of Central Issues by 31 January 2020, final submissions by 7 February 2020 with the next conference scheduled for 13 February 2020. The parties had liberty to apply to the arbitrator for further directions “only if requisite and economic to the process”. The arbitrator also noted various matters for potential further discussion at the next conference including:

C.   Any mutual Accountants/Expert’s “hot tub” or conjoint report process (or examination) can be presently stood aside subject to issues emerging

D.   The process going forward … is for further discussion at the 13 February 2020 Telephone conference, illustratively whether as to any formal Hearing … or Arbitral Determination fully on the papers and submissions as put and/or Mediation … AND/OR any Arbitration limited to determination upon any mutually agreed discreet “legal” issues subject to which any “Accountancy” issues could then be resolved/applied …

  1. On 22 January 2020, Malcolm and Michelle served an affidavit of Mr Gardner, attaching his report of 2 September 2019. On 24 January 2020, Errol served an affidavit of Mr Lea, attaching his two reports, together with an affidavit of Mr Haley attaching his four reports.
  2. On 7 February 2020, Malcolm and Michelle served their final submissions, contending that Errol owed Malcolm $290,989.94, “Our clients do not agree that there should be any adjustment … for any trust or trusts that have not or do not exist.”
  3. On 10 February 2020, Errol served his affidavit sworn on 7 February 2020, which essentially set out the facts on which Mr Haley’s reports were based. In respect of the transfer of the Hazelglen property from Warren to Malcolm following the Deed of Family Arrangement, Errol deposed that it was his intention to transfer the property to one of his children as a generational consideration, as he had done with other properties when an opportunity arose to transfer an asset to one of their children, to avoid having to transfer the property again on his passing. “Despite putting the property into Malcolm’s name it was never intended that the property would be Malcolm’s without any consideration and/or adjustments being made for my entitlements in the property in the future. There was no gift of the property; the title was to be held by Malcolm for the benefit of the family business, operating through the Partnership.” Despite the transfer of the property into Malcolm’s name alone, partnership borrowings were used to fund the acquisition, together with the transfer of Warren’s half share in Eagles Nest to Malcolm. Errol considered that half of the share of the properties transferred should be apportioned to himself.
  4. On 12 February 2020, Errol served a Statement of Central Issues and his final submissions.
  5. On 13 February 2020, the parties attended a preliminary conference with the arbitrator. The arbitrator noted his desire, in the mutual and economic interests of all, that any final arbitral determination, whether on the papers or at any hearing, to be limited and confined, as was inherent in many directions made thus far. Errol’s solicitor proposed a “hot tub” with the three accountants, to take place prior to any hearing. The arbitrator deferred this to the next preliminary conference on 24 March 2020, together with the process to determine whether “confined issues” could be dealt with on the papers or otherwise. The arbitrator noted that the Court has jurisdiction under section 27J of the Act to determine any finite question of law, if the party applied with the consent of the arbitrator or the parties, and with leave of the Court.
  6. The existence or non-existence of a trust was discussed at the conference. The arbitrator sought clarification of this contention and directed Errol to provide a brief summation of any factual or legal argument surrounding the contention as to the existence of a trust, by 3 March 2020, with Malcolm and Michelle to respond by 17 March 2020. Adopting the same timeframes, Errol was to provide a brief Statement of Confined Issues for Decision and a brief statement as to what “final amount” was owed, to which Malcolm and Michelle were to respond.
  7. On 4 March 2020, Errol served an Amended Points of Claim said to contain a brief statement of the issues for decision. As for the brief statement as to the final amount owed, Errol’s solicitors were of the view that this was a matter to be determined by the accountants in their evidence as opposed to submission by lawyers. The points of claim now pleaded the provisions of the Deed of Family Arrangement and the steps taken by the parties following that agreement. In particular, Errol contended that, prior to the transfer of Hazelglen and Eagles Nest properties into Malcolm’s name, Errol received advice from Mr Lea and Andrew Williams that the properties should be transferred into Malcolm’s name as this would not incur stamp duty. In the events which unfolded, and on the proper construction of clause 8 of the partnership agreement, it was said that Malcolm acquired his interest in Hazelglen and Eagles Nest on behalf of the partnership in the same proportions as his and Errol’s interest in the partnership such that Hazelglen was now held by Errol (50%), Malcolm and Michelle (50%) and Eagles Nest was held by Errol (75%) and Malcolm and Michelle (25%).
  8. Alternatively, title to Hazelglen and 50% of Eagles Nest was transferred to Malcolm without any intention of giving Malcolm a beneficial interest in the properties and, in the circumstances, Malcolm held his interest subject to a resulting or constructive trust in favour of Errol as to 50% (for Hazelglen) and as to 25% (for Eagles Nest). Alternatively, it was said that title was transferred to Malcolm on the common assumption or convention that title was being transferred into Malcolm’s name for stamp duty purposes only and Malcolm would hold the properties for and on behalf of the partnership. Malcolm was said to be estopped from asserting that he was the sole beneficial owner of his interest in Hazelglen and Eagles Nest.
  9. As in Errol’s initial Points of Claim, Errol relied on Mr Haley’s expert reports and, in addition, contended that the partnership accounts ought be adjusted in accordance with paragraph 4.1.2 of Mr Haley’s third report or in such other amount as the arbitrator thought fit. The “Evidence to be Submitted” portion of the Points of Claim remained unchanged, citing Mr Halley and Mr Lea’s reports and Errol’s statement in reply.
  10. The Amended Points of Claim now added “Relief Claimed”, seeking construction of clause 8 of the partnership agreement and its application to Malcolm’s acquisition of an interest in Hazelglen and Eagles Nest, alternatively, a determination or finding that Malcolm held these properties on resulting or constructive trust in favour of Errol or, alternatively, was estopped from asserting that he was the sole beneficial owner of his interest in these properties. In addition, a determination or finding was sought from the arbitrator that the partners’ accounts be adjusted in accordance with Mr Haley’s third report or in such other amount as the arbitrator thought fit.

Interim award

  1. On 24 March 2020, a preliminary conference was held. As the arbitrator later reported in his letter to the parties:

1.1   It was agreed that the question of the existence, or nature, of any “Trust or Trusts” needs to be pre-emptively determined prior to any “Accounting Conference or the like”. In this regard, it was noted that essentially for the first time in the process thus far, the “Relief Claim” … elicited, in very brief format, references to any such pleaded “Relief” based on the question of “Trust”.

1.2   Accordingly, the Teleconference agreed, and it is accordingly directed, that:

(a)   [Errol] is to provide … by 1 May 2020 Submissions specifically and singularly directed at the contentions as to the Factual Background (and Legal basis for) the argument as to “Trusts” in terms of the … “Relief” claimed …

(b)   … supported by any pertinent Affidavit or Statutory Declaration material or content;

(c)   [Malcolm and Michelle] is to submit its Reply Submissions … by 1 June 2020 … support[ed] … by reference to any Affidavits or Statutory Declaration content singularly relative to the same “Trusts” contended issue…

  1. The arbitrator noted that there had been no substantive facts collated by either side in respect of the question of trusts. Further: (emphasis added)

2   The following further Notations are made:

(a)   The Teleconference agreed that the Accounting issues and interpretations must be stood over necessarily pending any determination, or agreement upon, the question of “Trusts” as above;

(b)   Any brief Statement from either side as to what is contended as to a “Final Amount” as owing … is equally to stand over;

(d)   The arbitration process going forward, in all respects including as to the argument as to “Trust” … remains for the next Teleconference …

  1. On 29 April 2020, Errol served a second affidavit sworn on 27 April 2020 in respect of the existence of trusts.
  2. On 4 May 2020, Errol served submissions and ten documents in respect of the preliminary issues as to trusts. Errol submitted that Hazelglen and Warren’s half share of Eagles Nest were acquired by Malcolm but beneficially owned by the partnership. Alternatively, Malcolm held his interest in these properties subject to a resulting trust in accordance with the partners’ respective shares in the partnership. Whilst the relationship of father and son gave rise to the presumption of advancement, any such assumption had been rebutted. The properties had been purchased using partnership funds, not Errol’s own funds.
  3. Alternatively, it was said to be unconscionable for Errol to contribute via the partnership to the acquisition of the properties and the ongoing mortgage payments and expenses and yet to have no interest in the properties. A constructive trust was said to arise. Malcolm was said to be estopped from contesting otherwise. In that event, Mr Haley’s calculations should be accepted where Mr Gardner had not proffered an alternate calculation if the properties were partnership assets. Errol’s written submissions then turned to “residual accounting issues”, addressing each of the different accounting treatments proposed by Mr Gardner and why these should not be accepted.
  4. On 28 May 2020, Malcolm swore an affidavit, saying that the transfer of Hazelglen and Eagles Nest to himself was part of the family succession plan where Errol had, on numerous occasions, said that the properties would pass to him. Likewise, Waverly was acquired by Warren as part of the normal family succession plan, was not farmed by the partnership and should not have been incorporated in its financial records. Errol had told Malcolm on repeated occasions that Warren had received his inheritance and the rest of the property was all going to Malcolm. Whilst all expenses for Hazelglen and Eagles Nest were paid by the partnership, this was because the partnership was farming the properties.
  5. Malcolm also provided submissions. As Eagles Nest and Hazelglen were acquired by Malcolm and not by the partnership, clause 8 of the partnership agreement did not apply. The presumption of advancement applied and the evidence relied upon by Errol was said to be insufficient to discharge the presumption. Nor were there circumstances which would give rise to a constructive trust, nor an estoppel. As to “Residual Accounting Issues”, Malcolm submitted that these issues should await the findings of the arbitrator in relation to the equitable issues raised.
  6. Errol rejoined with a reply affidavit and submissions. Errol agreed with Malcolm’s submission that the parties were bound by the accounts, but submitted that the accounts established Errol’s case where it was the partnership which borrowed $300,000 to fund acquisition of the land from Warren and, after completion of the property transfer, the land was farmed by the partnership. Where the partnership’s accounts recorded the purchase of the land, the payment of expenses by the partnership and the division of income derived from the properties through the partnership, it was said to be untenable that the properties were beneficially acquired by Malcolm. Malcolm rejoined with a further affidavit.
  7. On 11 June 2020, the parties attended a preliminary conference. After dealing with the materials supplied by the parties somewhat late and giving Malcolm a further opportunity to respond, the arbitrator then proposed to proceed as follows: (emphasis added)

3    Procedurally, and as mutually affirmed by the Parties at the Teleconference, the matter will be addressed by:

(a)   An interim arbitral determination on the “Trust/equitable” issues, and that determination (or interim determination) will be singularly dealt with by me on the papers as thus far received by me and as referred to herein;

(b)   Concurrently with, or after, that interim determination in (a) above, presently I would be proposing to seek submissions from the Parties as to the Accounting/Partnership accounts or residual accounting or adjustment matters which, if any, might inherently flow from the determination in (a) above.

  1. The manner in which the arbitrator was then proceeding in respect of “Residual Accounting Issues” appears to have been more confined than anticipated at the preliminary conference on 24 March 2020: see [73]. In any event, the arbitrator proposed to seek submissions from the parties as to how to proceed in respect of accounting issues after the interim award on the trust issues.
  2. On 10 December 2020, the arbitrator made an interim award in respect of the trust issues, in Malcolm’s favour. As such, Malcolm was the legal and beneficial owner of Hazelglen and of a one half share of Eagles Nest.
  3. Although the interim award was only to deal with trust issues, the arbitrator proceeded to examine each of the accounting reports and the parties’ submissions on Residual Accounting Issues. The arbitrator referred to these observations as digressions “for abundant completeness” and acknowledged, “Much of this is perhaps potentially reserved for later accounting adjustments or analysis” following the interim award. The arbitrator considered, however, that his observations “may be pertinent to, or conjointly helpful to the parties on, any of their own subsequent deliberations as to any mutual resolution of residual accounting adjustments.” Whilst noting that the “residual accounting issues [were] set aside perhaps for later resolution”, the arbitrator interposed a brief observation on the parties’ submissions, “I tend to agree” with Malcolm and Michelle’s submissions. The arbitrator noted the contents of the accountants’ reports, again acknowledging that “other matters, perhaps understandably, lie for later Accountancy adjustment or readjustment”. In conclusion, the arbitrator observed, “The residual accounting or other adjustment factors have been stood over pending this Interim Determination”: interim award at [245].
  4. The bifurcated awards initially proposed by the arbitrator’s directions do appear to have been somewhat muddied in the interim award where the arbitrator proceeded, at least on a preliminary basis, to express his views on accounting issues without necessarily having received all of the material which the parties may have wished to advance on the issue.

Further directions

  1. On 20 January 2021, the parties attended a preliminary conference, at which directions were made by agreement to provide a copy of the interim award to the parties’ respective accountants, being Mr Haley, Mr Lea and Mr Gardner. Further:

2.   In light of the Interim Determination, including the findings within Part IX, each Accountant is to adjust/readjust their final dissolution Partnership Accounts/Reports in a Report to reflect their view as to:

(i)   such readjusted Accounts as at the date of dissolution, viz 28 February 2018;

(ii)   as at the end of last financial year, viz 30 June 2020 as to any adjustments/readjustments between the Parties as at that date. [NOTE: This may be subject to any later final (accrued/accruing) readjustments as ongoing]; and

(iii)   to set out within each such Report in their view how (and the quantum of) any final balance adjustment(s)/entitlements between the Parties are to be achieved.

  1. The accountants were to provide their figures by 28 February 2021. The arbitrator encouraged the parties to resolve any remaining points of difference and foreshadowed that, in the event that any final material accounting or related differences and adjustments remained unresolved, it may necessary to refer these matters for the report and opinion of an independent accounting expert at additional cost to the parties.
  2. On 24 February 2021, Mr Gardner’s partner, Neil Brown, updated the firm’s calculations on behalf of Malcolm and Michelle, with the result that Errol was to pay $1,016,554. Mr Brown noted that obtaining bank finance to pay this amount was likely to be problematic, where he understood that Suncorp was “not looking to continue as debt financier of either party.” Where Eagles Nest was now owned 50% each by Errol and Malcolm, and the property was currently pledged as joint security with Suncorp, the situation did not allow the parties to conduct their affairs separately. It would be beneficial to partition Eagles Nest into two lots for bank finance purposes. “Ultimately, if it’s not possible to obtain bank finance by all parties then asset sales would need to be entertained in order to meet their obligations. The updated calculations were served on 1 March 2021.
  3. On 11 March 2022, Mr Haley provided a supplementary report following the arbitrator’s determination, noting that there was now no material difference between the accountants, save for the treatment of the $300,000 paid by the partnership to Warren. Mr Haley agreed with Mr Brown’s comments that “if refinancing is not possible assets sales will be required to extinguish the Suncorp debt.”
  4. On 15 March 2021, Errol served Mr Haley’s further report and confirmed that a report from Mr Lea was awaited. Errol’s solicitors advised, “We anticipate that it would be the least expensive option to let the Accountants progress things before further legal costs are accrued.” Errol’s solicitor also sought a further adjournment of four weeks, noting that the difference between the two accounting reports was not great and it was submitted that it would be more cost effective for the accountants to reconcile their differences and identify the remaining further issues for determination.
  5. On 15 March 2021, the arbitrator acceded to this request on the basis that Mr Lea’s report be immediately made available to himself and Malcolm’s solicitors, with the accountants to be at liberty to liaise with each other as required in an endeavour to economically reconcile accounting differences, including identifying any remaining issues. The end of the arbitral process was in view.

Errol retains new solicitors

  1. On 31 March 2021, Errol’s solicitor informed the arbitrator that he had ceased to act; Errol was engaging alternative legal representation. The arbitrator wrote to Errol’s former solicitor and Malcolm’s solicitor setting out what needed to be done before the next preliminary conference on 16 April 2021, in particular, encouraging the accountants, in the interests of economy, to reconcile, limit or narrow any accounting differences, “any Submissions from each party necessarily will need to stand by (in the interests of both parties) pending the Accountants’ measures/steps previously outlined …” That is, the arbitrator wished Errol’s new legal representatives to complete the arbitral process in the manner envisaged by existing directions.
  2. Errol’s new solicitor was Robert Jarratt. On 13 May 2021, Mr Jarratt wrote to the arbitrator requesting an adjournment until after 11 June 2021, as Errol was considering whether to challenge the enforceability of the interim award on the basis that the determination of equitable interests fell outside the arbitration clause and the arbitration agreement. If that was incorrect:

… then the Interim Award appears to have overlooked the question as to whether in allocating a beneficial interest in any land to any party, this should carry with it a proportionate share of the burden of owning such land, being liability for loans secured by mortgages used to finance purchase of the lands.

  1. At the preliminary conference on 14 May 2021, Errol’s new counsel advised that the partnership’s accounts needed to be revisited. The arbitrator appears to have regarded this with some scepticism, noting in his letter to the parties:

(Stated at its briefest) Mr O’Sullivan’s reference to “new information on instructions” touching upon contended antecedent Partnership accounts histories (including antecedent to the subject Partnership here) suggested to attract “revisiting”, including in the stated emphasised context of a potential Account resolution. I merely note, but do not necessarily (procedurally or otherwise) accept this very late reference.

  1. In any event, the preliminary conference was adjourned by consent to 26 July 2021. The accountants were encouraged in the meantime to continue their work to reconcile any accounting differences. The arbitrator again foreshadowed that it may be necessary to refer any unresolved accounting matters to an independent accounting expert.
  2. By July 2021, it had become apparent to Errol’s new solicitor that there may be further errors in the partnership’s accounts and significant amendments may be required. Mr Jarratt understood from the two-stage process of the arbitration that amendments to the accounts following the interim award were anticipated. The details of these adjustments were outlined in an email from Mr Jarratt to counsel on 22 July 2022, including as a consequence of the inclusion and then removal of the Waverly property from the accounts, together with the inclusion of Hazelglen property. Mr Jarratt suggested, “As there is an award that the properties are not held on trust, there is a significant amount of add backs that have to be calculated, for the partnership has made significant contribution to the improvements to properties that are no longer considered to be held by and between the partners, rather they are to be held by … Malcolm”. Further, if the Hazelglen property was not a partnership asset, “then the partnership was entitled to be refunded all of the payments it has made and for Malcolm and Michelle to refinance the property. [The same] goes [for] the Waverly property. … The accounts have to be corrected so that they truly reflect the position of the partners and the value each has in the partnership.”
  3. In advance of the preliminary conference, Errol’s counsel proposed directions, including that Errol would have permission to apply to the Court on the issue of subpoenas to the solicitors acting on the transfer of the various properties to Malcolm, together with the accountants and bookkeepers who prepared the partnership accounts from time to time. In addition, Errol proposed that the parties provide discovery of bank statements, receipts, annual returns and any other documents reasonably required by Errol’s accountant to conduct the accounting of the partnership from 1 July 2007 until dissolution. It would appear that Errol was seeking to obtain the materials necessary to analyse the partnership’s accounts from inception.
  4. At the preliminary conference on 26 July 2011, the arbitrator declined to make the directions sought by Errol. Instead, the arbitrator directed: (emphasis in original)

In the light of, and in the context of, all of their Accounting Reportage in this Arbitration to date each of the Accountants, specifically Messrs Gardner Brown and Vincents (Haley) are to confer, meet and/or liaise to discuss any material differences in their final dissolution of Partnership Accounts/Reports, in particular as and since and arising from the Interim Determination herein of 10 December 2020, with every good faith and strident endeavour to agree or concur on the figures that can be reasonably arrived at (in respect of any such material differences), and having regard to:

•   re-adjusted accounts as at the date of dissolution, namely 28 February 2018;

•   as at 30 June 2020; and

•   any accrued/accruing re-adjustments as may, or may not, be applicable post 30 June 2020.

  1. That is, there would be no re-opening of the partnership accounts but, rather, adjustments made to the existing partnership accounts strictly along the lines anticipated by the existing experts in their existing reports and in light of the interim award. So far as the arbitrator’s letter confirming his directions reveals, the reason for this decision was because this had been the process agreed by Errol’s previous solicitors after the interim award had been handed down, and the parties had been in the process of implementing these directions before Errol appointed new lawyers.
  2. In addition, it appears that Malcolm’s solicitor had earlier exchanged an email on 12 May 2021 offering to ‘split the difference’ between the accounting experts. The arbitrator directed Malcolm’s solicitor to re-supply the email to Errol’s new solicitors as “potential constructive assistance to the Accountants mutually in the above exercise”. Indeed, in each of the arbitrator’s letters to the parties, the arbitrator encouraged the parties in the strongest terms to resolve their differences without the need for a final arbitral award.

Errol retains a new expert

  1. Notwithstanding the arbitrator’s refusal to make directions to assist Errol’s efforts to analyse the partnership accounts, Errol’s solicitors obtained the partnership financial statements from inception from Mr Lea, together with reports from the cashbook showing all entries posted into the cashbook from the bank statements and the categories into which they were posted. In addition, Mr Lea provided ledger entries report comprising all the journals posted to the ledger to prepare the financial statements, including any corrections to the cashbook.
  2. On 12 August 2021, Errol’s solicitor instructed Guy Hamond to provide an expert accounting report. The letter of instruction contained an extensive history of the acquisition of the various farms by Errol and Glenys and the subsequent partnership between Errol, Malcolm and Michelle. The letter of instruction reviewed the financial statements for the new partnership in each year after inception. Mr Jarratt advised that Errol was required by the arbitrator to deal with Malcolm and Michelle’s accountant in order to seek agreement as to the rectification of the partnership financial statements. Mr Hammond was asked to review the financial position of the partnership “seeking to identify errors in the accounts that adversely impact [on Errol].”
  3. That is, notwithstanding that the arbitrator had made plain that he was not interested in Errol re-opening the partnership accounts more broadly than had been suggested by Mr Haley, Mr Lea or Mr Gardiner (now Mr Brown), Errol’s new solicitor was pursuing his efforts, no doubt in accordance with his instructions, to see whether there was anything to be gained by this line of inquiry, including obtaining source materials and retaining an expert accountant. There was nothing wrong with Errol expending his resources in this endeavour. The difficulty would be deploying the product of these investigations in the arbitral process, given the arbitrator’s clear rejection of submissions made by Errol’s counsel when introducing the issue at the preliminary conferences on 14 May 2021 and 26 July 2021.
  4. On 18 August 2021, Mr Hammond provided a series of questions to Errol’s solicitor. Mr Hammond observed that the properties owned by Errol, Malcolm and Michelle did not appear as assets in the financial statements of the partnership, whilst the full amount of the Suncorp debt did appear. Further instructions were provided to Mr Hammond on 23 August 2021. Extensive further details were provided in respect of the acquisition of each of the properties and accompanying finance. Mr Jarratt also observed that Errol was not entitled to appeal the arbitrator’s interim decision “so in order to rectify this award the only recourse we have is to seek amendments to the partnership accounts to accommodate for the loss Errol has suffered from the loss of the property.”
  5. Later that day, Mr Hammond provided a draft accounting opinion to Mr Jarratt, expressing the view that the opening balances used by both Mr Haley and Mr Gardner had been extracted from financial statements which were incorrectly prepared and contained significant errors. In his opinion, the only way to correctly calculate a fair and equitable distribution of partnership assets was to agree on the asset and debt values as at 28 February 2018, including land assets owned by the parties, and to then ensure that the assets and debts of the partnership were apportioned to deliver the same total net assets to the partners. It was said to be an incorrect accounting treatment to exclude the properties but include the loans secured by the properties. This accounting treatment was said to have severely distorted the equity accounts and financial statements. In Mr Hammond’s view, Malcolm and Michelle would need to pay Errol $77,068.50 and take over the remaining Suncorp debt of $1,246,431.50. This obviously presented the possibility of changing fortunes for Errol.
  6. On 24 August 2021, Errol’s solicitor and counsel participated in a telephone conference with Mr Haley and Mr Hammond. Mr Haley said that if any of the issues raised by Mr Hammond were true and correct, then Mr Haley’s interim report provided to the arbitrator was incorrect and the accounts of the partnership would need to be re-done from inception as all of the assumptions in the financial records and reports were incorrect and could not be relied upon.
  7. As I understand it, where the arbitrator had rejected Errol’s requests to broaden the examination of the partnership accounts, the product of Mr Hammond’s work was sought to be put to Mr Haley and, if accepted by Mr Haley, taken into account when expressing his views when conferring with Mr Brown.

Arbitrator excludes Errol’s new expert

  1. On 25 August 2021, Malcolm and Michelle’s solicitor advised that their accountant, Mr Brown, had made contact with Mr Haley in accordance with the arbitrator’s directions. Mr Haley had advised that he was not in a position to discuss the differences “which he agreed were not substantial, because he had been awaiting another accountant’s report.” This was said to be not in accordance with the arbitrator’s directions; objection would be taken to any other accountant’s material being relied upon by Errol. It was suggested that Errol comply with the arbitrator’s directions. The arbitrator also promptly replied to the parties:

My Directions of 30 July specifically facilitated and directed that only the Accountants Gardner Brown and Vincents (Haley) were to liaise and report as set out in items 2 and 5 of those Directions.

Those Directions did not and do not encompass any liaison with them, at the behest of either party, from any third or other accountant.

Accordingly no “other accountant” report is to be submitted to or discussed with Mr Haley (or Gardner Brown). Any such (if submitted) is to be ignored by them for the purposes of the Directions as made.

Accountant’s material and liaison are singularly confined to the mutual contributions of Gardner Brown and Vincents (Haley) in accordance with the Directions referred to.

  1. Shortly afterwards, Mr Hammond completed his report, which was provided to Mr Jarratt, essentially in the same terms as the draft report already described. Mr Hammond suggested that the matter should be resolved on the basis of Malcolm transferring 50% of Eagles Nest to Errol, as well as the parties taking over their respective debts from Suncorp.
  2. Mr Jarratt also promptly replied to the arbitrator’s email: (emphasis added)

We have forwarded a copy of [your email] to Mr Haley and advised him to comply with your further directions. However, we do so under protest.

The Applicant does not intend to submit any report from a third party accountant. Rather, it was intended that Mr Haley would consult with Mr Guy Hammond, a specialist forensic accountant for the purposes of preparing himself to confer with Mr Gardner and drafting any further reports. In our view, there is nothing improper about an expert informing him or herself however the expert sees fit in order to form an opinion, including consulting with third parties with relevant expertise, provided that the basis for the expert’s opinion and any material relied upon are disclosed. Accordingly, we ask you to reconsider your direction to Mr Haley so as to permit him to consult with Mr Hammond.

  1. The arbitrator did not agree, responding on 26 August 2021: (emphasis in original)

My Direction 2 of 30 July is and remains for the Accountants, namely Gardner Brown and Vincents (Haley) only, to discuss/liaise themselves mutually, and quite specifically, in the context of “…all of their Accounting Reportage in this arbitration to date.” Further, this clear Direction (and its related Direction 5) were made after full discussion was had at the Teleconference, including your counsel’s then referring to your party obtaining a new “forensic accountant’s report”. As a unilaterally announced measure, it was immediately objected to by the other party and, then and now, declined by me as Arbitrator.

To reiterate, the above is clear and inherent within the Directions as specifically made.

Further for abundant completeness, in the immediate context of this matter, respectfully, the proposition expressed in your second last sentence commencing “In our view…” is incorrect and runs counter to specific Arbitral Directions. In brief, the nominated Accountants as above are to move ahead with their designated mutual exercise as per Directions, and in which exercise I express continued appreciation. They are to do so without any intervention or interposition of any third or other party.

I do not propose to communicate further on this topic …

  1. On 27 August 2021, the parties attended a preliminary conference. An extension of time was granted to permit Mr Haley and Mr Brown to confer in accordance with the arbitrator’s directions already made. In the arbitrator’s letter to the parties, he recorded:

2.   The submission (by counsel for [Errol]) for Mr Haley (in the above exercise) to be approachable by, or for any contribution by, a third or other party, (accountant or other) was objected to by [Malcolm and Michelle]. The submission was and is declined.

3.   For abundant certainty … no third or other party or intermediary (accountant or other) is to interpose, liaise with, report to, or make contact with either of the directed Accountants, nor vice versa.

  1. Later that day, Mr Hammond provided his analysis of the partners’ drawings to Mr Jarratt. Mr Hammond provided further observations to Mr Jarratt on 31 August 2021 and 7 September 2021.
  2. On 13 September 2021, Mr Jarratt sent a letter of instruction to Mr Haley “identifying issues that we believe create issues regarding the appropriate dissolution of the partnership and your expert’s report.” The letter of instruction is similar to that earlier sent to Mr Hammond and, presumably, incorporated the analysis and observations made by Mr Hammond. Indeed, some of the attachments to the letter of instruction appear to have been the work of Mr Hammond. That is, although the arbitrator had expressly forbidden Mr Haley consulting with anyone other than Mr Brown, Mr Jarratt was incorporating Mr Hammond’s work in a letter of instruction to Mr Haley.
  3. A further preliminary conference took place on 17 September 2021, at which the arbitrator adjourned the matter to permit the completion of Mr Haley’s report. In his report to the parties on the conference, the arbitrator stated: (emphasis in original)

2.   The conjoint exercise of the Accountants remains for completion, specifically and only, namely that of Gardner Brown and of Vincents (Haley) as singularly and specifically prescribed within items 2 and 5 of my Directions of 30 July 2021, and as within Directions 1-6 of my Directions of 30 August 2021, other than for the extensions of time as to that exercise herein granted. The specific parameter of that exercise from each Accountant, and as to their joint report, as inherent within the above antecedent Directions is again emphasised.

  1. On 13 October 2021, Mr Haley and Mr Brown signed a joint report based on the financial statements for the partnership that had been provided to them. Essentially, the experts agreed that the differences between them were immaterial and it was reasonable to adopt the mid point. Mr Haley noted that he had been provided with a letter of 7 September 2021 from Mr Jarratt, which asked him to consider various items not properly accounted for in the financial statements. Mr Haley had also been provided with Mr Hammond’s opinion as to the incorrect accounting in the preparation of the financial statements. In light of the arbitrator’s direction that no other accountant’s report was to be submitted or discussed with Mr Haley, the experts noted that their reports had been prepared on the financial statements of the partnership and no consideration had been given to the validity of the issues raised by Mr Hammond or in Mr Jarratt’s letter of 7 September 2021.
  2. On 20 October 2021, the parties participated in a preliminary conference with the arbitrator. The following directions were made: (emphasis in original)

1.   Each party is to submit to me in writing within twenty one (21) days of this date (17 November 2021) brief submissions:

(a)   on what Orders or Award, in clearly expressed terms, should be made in the final determination as an Award in the matter based singularly and only on the Joint Accountant’s Report; and

(b)   that those submissions, including as to the clearly expressed terms of a final Award, be cast singularly upon the Joint Accountant’s Report (“Partners Capital Accounts”) position as at 30 June 2021 ( as set out within paragraph 2.4 of that Report); …

  1. Malcolm and Michelle’s solicitor expressed concern as to the potential breach of arbitral directions, which appears to have been a concern shared by the arbitrator. In his letter reporting to the parties, the arbitrator noted that his various directions had confined the accountants’ conclave and liaison as being strictly and only between Mr Haley and Mr Brown; these directions had potentially been offended by Mr Jarratt’s letter of 7 September 2021 and the provision of Mr Hammond’s opinion to Mr Haley. Fortunately, “and creditably to the Accountants”, Mr Haley and Mr Brown had provided their joint report uninfluenced by “any non-directed or unsolicited material”. The arbitrator requested a statutory declaration from each of Mr Jarratt and Errol’s counsel explaining “how such apparent unilateral interventions occurred”.
  1. On 2 November 2011, Malcolm and Michelle’s solicitor provided final submissions, submitting that the partnership accounts be calculated in accordance with the joint expert report such that Errol was obliged to pay the partnership $1,034,686 whilst Malcolm was to pay $416,735. In addition, Errol should pay Malcolm and Michelle’s costs of the arbitration.
  2. On 19 November 2021, Errol provided his final submissions. As a consequence of the arbitrator’s directions, the arbitrator was said to have rendered Errol “unable to present its case” within the meaning of section 34(2)(a)(ii) and section 36(1)(a)(ii) of the Act such that recognition of the award was liable to be refused and the award was liable to be set aside. It was submitted that the arbitration had miscarried and the arbitrator should decline to make any orders. Under protest, Errol submitted that if the arbitrator was to make orders or an award based only on the joint expert report, then the orders proposed by Malcolm and Michelle, including as to costs.

Final award

  1. On 28 January 2022, the arbitrator delivered his arbitral award. The bulk of the award was devoted to the issues now before this Court. The arbitrator described Errol’s attempt to introduce his new case as an attempt “to abruptly put the Arbitration into reverse gear”: at [17]. This was said to be, “in effect, an attempt to go underneath or to circumvent this Arbitration itself, that is, to attempt to “restart” it, or to “rerun” it on some brand new basis”: at [20].
  2. The plaintiff’s submission that it was unable to present its case was said to “def[y] any reliable credence, foundation or reality.” The plaintiff’s submissions were said to imply a “resurrection threat” for the proceedings to restart on a brand new basis, said to be offensive to the arbitral process which had been conducted in defiance of the arbitrator’s directions and contrary to the administration of justice. The plaintiff was said to have had every opportunity to fully ventilate his case but was now urging an intrusion into the arbitration of a last minute argument implying certain “account pre-history” not previously advocated or pleaded. It was said to be contrary to public policy to entertain any “re-run” of the arbitration on an implicit, entirely different or latter day “reconstructed” accounting basis. The plaintiff’s complaint was said to be “thoroughly groundless and without foundation”.
  3. Further, the plaintiff’s submission was said to be unmeritorious and without substance. There could be no sensible or reliable suggestion that both parties did not have a full opportunity to ventilate their case across an extensive period. The suggestion that the plaintiff was not able to present his case was said to be “entirely without any justifiable grounding, and indeed offends the entirety of the extensive conduct of this matter.” The plaintiff’s submission was said to run counter to the principles and ethics as to the economy of litigation before the courts of this State. There was said to be no justification or foundation where the arbitration had been conducted comprehensively and equitably and was now at its conclusion.
  4. The plaintiff’s conduct was said to be “somewhat contemptuous” of the extensive arbitration process “indeed, respectfully, the only potential abuse of process or any theoretical suggestion of some ‘miscarriage’, could only have singularly emanated from the corner of the [plaintiff].” Fortunately, the arbitrator was able to “halt a potential ‘miscarriage’ by intervening to prevent the unannounced and unilateral intrusion, at the instance of the [plaintiff] of process offending material”. Otherwise, the whole arbitral process “might well have been utterly frustrated at this point, a loss of over 2.5 years of arduous arbitral work and participation, to then, of the Parties and Representatives, and indeed also of the (2) Expert Accountants.”
  5. The efforts of the plaintiff’s new solicitor and counsel was said to represent “a very real danger of irreversibly infesting, or of interference with, the joint report of Mr Haley and Mr Brown “without disturbance or intrusion by or from an ‘third party’.” Where the plaintiff had, until that point, proceeded on the basis that the partnership’s historic accounts, the “process breaching material” was said to be “process offensive, not only to this Arbitration has already comprehensively conducted, but also contrary to the fundamental purposes and ethoses of the Act … It is also contrary to the administration of justice at large”.
  6. The arbitrator moved to accept the position reached by the experts and made the orders sought by Malcolm and Michelle. On 27 April 2022, these proceedings were commenced.


  1. Errol seeks to set aside the final award on the basis that he was “unable to present his case”. Errol was denied, for inadequate reasons, the opportunity to adduce expert accounting evidence by Mr Haley to make good his contention that the partnership accounts were fundamentally flawed so that they did not form a proper basis for accounting between the partners on dissolution of the partnership. Further, Errol was denied the opportunity to have the existing accounting experts consult with Mr Hammond, prior to the expert conclave. Mr Hammond had formed the view that the partnership accounts were fundamentally flawed. If accepted after assessment by Mr Haley and Mr Brown, those accounts could not form a proper basis for an accounting between the partners on dissolution of the Partnership. The Award was also “in conflict with the public policy of this State” as Errol was denied procedural fairness and natural justice by the arbitrator’s conduct and the arbitrator’s inadequate reasons for such conduct.
  2. Errol submitted that all issues with respect to the partnership accounts remained “at large” following delivery of the interim award and pending delivery of the final award. After the preliminary conference on 20 January 2021, the defendants served an accounting report of Mr Brown, rather than Mr Gardner. The arbitrator gave no reason as to why it was permissible for Mr Brown to opine as to Mr Gardner’s report whilst subsequently prohibiting the parties’ experts from taking into account Mr Hammond’s opinions or assessing any report from him. Nor did the defendants or the arbitrator object to Mr Haley consulting another accountant, Mr Lea. The arbitrator gave no reason as to why that the parties’ experts should be permitted to confer with Mr Lea (who had prepared the partnership accounts) but should be precluded from assessing the opinion of Mr Hammond, who impugned the methodology used by Mr Lea. The inconsistency was said to be self-evident and unreasoned, particularly where Mr Hammond identified fundamental problems with the accounts.
  3. Errol submitted that the arbitrator denied the plaintiff procedural fairness by precluding the independent experts from consulting with an appropriate further source, being Mr Hammond. This interfered with what independent experts are intended to do in formulating their opinions. The interference was unjustifiable where the arbitrator had made no other direction to prevent the experts from consulting other accountants, being Mr Lea and Mr Gardner’s partner, Mr Neil Brown. As a consequence, the plaintiff was unable properly to present his case and was denied procedural fairness. No adequate reasons were provided for this preclusion by the arbitrator. There were no previous directions that mandated the preclusion. Bifurcating the proceedings deferred accounting issues after delivery of the interim award but did not support a restructive decision governing the entire conduct of the arbitration leading to the final award. The Interim Award determined ownership of some assets. It did not speak to the accounting treatment in respect of those assets, and liabilities in respect of them, that stemmed from those assets’ relationship with the partnership, whoever owned the asset.
  4. Errol submitted that Mr Hammond’s accounting opinion did not challenge the Interim Award. Mr Hammond concluded “It is an incorrect accounting treatment to exclude the properties but include the loans secured by those properties. This accounting treatment has severely distorted the equity accounts in the financial statements”. In other words, as a matter of accounting principle, if the defendants were to get a property, they should also have to take responsibility for repayment of the loan secured by a mortgage over that property. If Mr Hammond were correct, that would result in adjustment in the plaintiff’s favour of at least $1.2 million. The fact that the arbitrator forbade the parties’ experts from even considering Mr Hammond’s opinion as to such a financially significant issue, where the experts had not themselves identified or opined as to that issue, was a grave denial of procedural fairness with drastic financial consequences.
  5. The defendants submitted that Mr Hammond’s report was a collateral attack upon the matters determined in the interim award.  Until the plaintiff changed solicitors, he had agreed to a bifurcated proceeding, then proposed that the small difference in expert opinion be determined by a joint report.  When the plaintiff changed solicitors after almost a year of arbitral proceedings, an attempt was made to revisit the interim award under the guise of new third party expert evidence.  To have permitted the new third party expert evidence of Mr Hammond would have been to work a serious unfairness on the defendants.  Mr Hammond’s report was said to be replete with unfounded assumptions and unsupported assertions concerning what would have been a “fair and equitable distribution between the parties” of the partnership assets.  The arbitrator was correct to prevent the plaintiff from pursuing that course.
  6. The defendants submitted that Mr Hammond’s report cavilled with the findings of the interim award. The arbitrator was justified in giving directions that prevented the plaintiff from re-contesting the ownership of Hazelglen and Eagles Nest. The arbitrator was wise not to permit the other experts engaged in the final accounting process to consult with Mr Hammond or view his report in circumstances where substantial portions of it ought be rejected. The arbitrator’s decision not to permit the re-arguing of matters that had already been determined did not prevent the plaintiff from properly presenting his case. This submission, with respect, over-stated the matter where, as I read the contemporaneous correspondence, Mr Jarratt accepted that the issue of trusts had been determined by the interim award, leaving Errol to try and improve his lot by agitating the remaining accounting issues.
  7. The defendants submitted that it may well have been possible that there were accounting issues that might have been raised by the plaintiff consistently with the determinations already made in the interim award, and that could have been legitimately agitated.  However, Mr Hammond’s report could not have been a vehicle for that approach. The defendants’ senior counsel submitted that the independent accountants were then “inches away from resolving the entire matter”. The plaintiff was attempting to bring a fresh case but in an illegitimate way by introducing Mr Hammond’s report through Mr Haley rather than by openly seeking to amend the Points of Claim and to bring fresh evidence. The plaintiff should have made an application to amend its claim, seeking to attack the historical accounts and to adopt Mr Hammond’s methodology.


  1. I have set out the relevant principles at [2]-[28]. In some ways, the commentary and cases regarding commercial arbitration may be thought inappropriate to the dispute in this arbitration, which was essentially a family matter between a father and his son and daughter-in-law. Nonetheless, that was their chosen dispute resolution procedure, to which the applicable legislation and principles must be applied. Important in this regard, the functions of the arbitral tribunal must be exercised, so far as is practicable, to achieve the paramount object of the Act, being to facilitate the fair and final resolution of the dispute impartially without unnecessary delay or expense: section 1C(1), Commercial Arbitration Act.
  2. In respect of section 19, the focus here is on the arbitrator’s exercise of power under section 19(2) to conduct the arbitral proceedings “in such manner as it considers appropriate”, where the parties did not agree on the procedure to be followed by the arbitral tribunal: see [51]. The power, in section 19(3) to determine the admissibility of evidence did not fall to be exercised where the arbitrator, by his directions, limited the accounting experts who could give evidence and the manner in which they were to confer and provide their conclusions.
  3. As to whether the plaintiff was given a reasonable opportunity of presenting his case, the question arises in circumstances where Errol clearly wished to change his case. Returning to how it all began, the parties, the accountants and the arbitrator identified during the first year of the arbitral process that it was sensible to first determine whether particular properties were partnership assets or not. The arbitrator gave directions which envisaged that, following the interim award, the parties would turn their attention to how the arbitrator’s conclusions should be reflected in a final accounting for the partnership.
  4. The interim award was delivered. It would be unremarkable for the parties, on determination of an interim award, to consider the implications of the arbitrator’s findings and conclusions for the remaining issues and to re-calibrate their case, including by adducing additional evidence, to improve their chance of achieving some measure of success in the final award. That was apprehended by the two-stage process as initially established by the arbitrator and the parties. Notwithstanding the two-stage approach, the arbitrator appears to have begun to consider the second stage in the interim award, perhaps pre-empting what the parties may have wished to submit to him as to the way forward following that award and also perhaps reaching some preliminary views in respect of accounting issues.
  5. Obviously enough, Errol was unhappy with the result of the interim award, as evidenced by his change of solicitors. Until then, Errol had largely proceeded on the basis that the partnership accounts had been correctly prepared by Mr Lea and, indeed, his solicitor had earlier submitted that the parties were bound by the accounts: at [79]. Adjustments were to be made to those accounts, as suggested by either Mr Haley and Mr Lea, or by Mr Gardiner and his successor, Mr Brown.
  6. Following the interim award, the arbitrator made directions for the accounting experts to complete their task, based on their earlier reports and his findings: see [85]. No direction was made by the arbitrator, either before or immediately after the interim award, limiting Errol or Malcolm and Michelle to specific experts. Rather, there appears to have been an assumption, not unreasonably made, that the parties would continue to use the experts retained to date. Over the next two months, the parties and their accounting experts implemented the arbitrator’s directions, save for the arbitrator acceding to a request to extend further time for provision of Mr Lea’s report. So far as the parties and the arbitrator would have been concerned, the end of the arbitral process was in sight.
  7. However, with the assistance of new legal representation, Errol now wished to examine and likely challenge the partnership accounts more broadly, such that more substantive adjustments may be sought than had been proposed by Mr Haley. No direction was sought by Errol’s counsel, at the first or second preliminary conference which he attended in May or July 2021, to amend the Points of Claim which, it will be recalled, sought an adjustment of the partnership accounts on the basis of Mr Haley’s third report. Presumably, at that stage, further investigations as to the partnership accounts were sought to be undertaken but no amendment to the pleadings or further expert report was then in view. Indeed, records had yet to be collated and any request to amend would have been premature: see [100]-[101].
  8. Fairly obviously, this new case was not welcomed by the arbitrator, who had been progressing the arbitral process for two years and was now in the ‘home straight’. Nor was it welcomed by Malcolm and Michelle, where they had been the successful parties under the interim award, could soon expect finality with a substantial payment from Errol and where Errol’s new case was unlikely to advance their interests. But that was now the case which Errol wished to advance and the question is whether, in the circumstances of this arbitration, he was given a reasonable opportunity to present it.
  9. It also appears that Errol’s new solicitor and counsel did not endear themselves to the arbitrator in prosecuting their client’s cause. I do not wish to cavil with the arbitrator’s views in that regard. Of course, however exasperating a party’s legal representatives may be, it is the party who must be given a reasonable opportunity to present their case.
  10. Errol’s new case was not sought to be advanced on the eve of, mid-way through, or after the close of an arbitral hearing but in the course of the second phase of the arbitral process. There is no doubt that the arbitral process, as defined by the arbitrator’s directions, would be well and truly disrupted if Errol were permitted to advance his new case. More time would be needed. More money would be spent by the parties on experts’ reports and arbitrator’s fees. A final award would be delayed. Against that, the implications for the parties were also significant where, if Mr Hammond’s views were accepted, Malcolm and Michelle would need to pay Errol some $77,000 and take over the Suncorp debt of some $1.2 million whilst, if the existing accountants’ views were simply implemented, then Errol would be obliged to pay the partnership some $1 million. There was no suggestion that Malcolm and Michelle could not meet Errol’s new case, if required to do so. Presumably, Mr Brown could consider any additional accounting adjustments proposed. The arbitrator’s power to make costs order permitted any additional costs to be awarded appropriately at the conclusion of the process.
  11. I accept the submission of the defendants’ senior counsel that Errol could have sought to amend the Points of Claim and to bring fresh evidence, presumably after Mr Hammond’s report was to hand, but I do not accept that “Nothing said or done by the Arbitrator foreclosed any reasonable opportunity of the Plaintiff to bring forward further, even late, evidence”. It is clear that the arbitrator was determined to complete the arbitral process as it had been defined by directions made before the plaintiff’s change of legal representatives, come what may. Whilst the approach taken by the plaintiff’s legal representatives may have been sub-optimal, it was likely the by-product of being frustrated in their efforts to advance Errol’s case directly.
  12. This case is not dissimilar to PBO v DONPRO [2021] EWHC 1951, where the plaintiff changed lawyers prior to the close of arbitral proceedings and the new lawyers sought to amend the plaintiff’s case. The amendments were refused and the plaintiff challenged the decision under the Arbitration Act 1996 (UK) on the basis that it was not given a reasonable opportunity to put its case: at [107]. After considering the reasons given by the arbitral tribunal, Bryan J concluded that the tribunal failed to grapple with the merits of the proposed amendment and to consider or apply the principles concerning whether amendments should be allowed: at [117]. The tribunal focussed unduly on whether the plaintiff should have changed its lawyers earlier “and failed to identify that the change of representation could itself be a good reason by the amendments were only being made at this stage”: at [117(4)]. Further, at [117(5)]: (emphasis added)

… the Tribunal failed to focus on the fact that little if any delay would result, that disputes are best determined on their true merits, and that there would be little if any prejudice to the Respondents (in a relevant sense) other than a very short delay, that interest would be running in the meantime, and that if necessary any prejudice to the Respondents could ameliorated by an appropriate costs order, whereas if the amendment was refused there was the potential for very great prejudice to PBO if it was shut out from making the proposed amendments.

  1. Here, of course, the arbitrator was not dealing with an application to amend the Points of Claim: the arbitrator’s directions made in May and July 2021 effectively precluded Errol from embarking on even the investigations which may lead to an application to amend. But similar deficiencies in the arbitral tribunal’s approach are evident. As set out in the final award, the arbitrator focussed almost solely on the need to hold the parties to their bargain, made at earlier stages of the arbitration and progressively confirmed and refined by subsequent directions. The arbitrator did not consider the practical injustice that may be occasioned if the plaintiff instructed a new expert or was precluded from relying on such evidence, how that injustice could be remedied, or whether the views of a new expert came too late such that Malcolm and Michelle could not meet it. Nor does the arbitrator appear to have taken into account that “disputes are best determined on their true merits”.
  2. The parties to an arbitration, or court proceedings, may well seek to change course following the instruction of new lawyers. It is unremarkable for a party to re-calibrate their course following an adverse finding. The question is whether the extent that any practical injustice caused by such a change in course can be met or otherwise remedied by, say, a costs order. Insisting on the continuation of a particular course, agreed to when advised by one’s former lawyers, can obviously be done, but subject always to ensuring that the fair process requirements of the Act are satisfied.
  3. I am left with considerable disquiet as to how the second stage of this arbitral process unfolded. Accepting that the arbitrator had a wide discretion to conduct the arbitration in such a manner as he considered appropriate, this was subject to safeguards as are necessary in the public interest, including those provided in section 18. I do not consider that Errol was seeking to “obstruct the proceedings by dilatory tactics” but, rather, to improve the prospects of achieving a more palatable final award if he could. The arbitrator was entirely resistant to the widening of issues in respect of the partnership accounts and the adjustments which should be made to those accounts following the interim award.
  4. This resistance pre-dated the arbitrator’s reaction to news that Errol’s new legal representatives had been seeking to introduce Mr Hammond’s view to Mr Haley. To some extent, the arbitrator’s response to those communications overshadows the core problem; Errol was not being permitted an opportunity to advance a case which he now understood, with the benefit of new lawyers, may improve his chance of some degree of success in the arbitration. The arbitrator did not turn his mind to the different factors which should have been taken into account in deciding that no deviation in the arbitral process would be permitted. In the circumstances of this arbitration as a whole, I do not consider that Errol was given a reasonable opportunity to present his case and the award ought to be set aside under section 34(2)(a)(ii) and 34(2)(b)(ii).


  1. The plaintiff only seeks, by his summons, to set aside the final award. As to whether setting aside the final award affects the interim award, the Act envisages that the Court may set aside part or all of an award: section 34(2)(a)(iii) and 34A(7)(d). Where an award is severable and part is set aside, the valid part remains as an effective adjudication: Michael J Mustill and Stewart C Boyd, Commercial Arbitration (2nd edition, 1989, LexisNexis) at page 566, citing Lloyd Del Pacificio v Board of Trade (1930) 37 Lloyds L Rep 103 at 110. As such, I consider that setting aside a final award does not, of itself, have the result that the interim award no longer stands. The defendants did not suggest otherwise.
  2. Section 34(4) of the Act provides: (emphasis added)

The Court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside of proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside.

  1. In Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2018] 1 Qd R 245; [2017] QSC 87, Jackson J reviewed the operation of section 34(4). On an application to set aside an interim or final award, the Court may suspend the proceeding and give the arbitral tribunal an opportunity to resume, in which case the arbitral tribunal may revisit the subject matter of the award: at [29]. Otherwise, if the Court proceeds to set aside an award, then nothing in section 34 expressly provides for a remitter or a new hearing in respect of the award that is set aside: at [30], following the Court of Appeal of the High Court of Singapore in AKN v ALC [2015] SGCA 63); not considered on appeal in Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2018] QCA 39; followed in Hui v Esposito Holdings Pty Ltd [2017] FCA 648; (2017) 345 ALR 287 at [257] (per Beach J). The effect of an order to set aside an award is that the arbitral proceedings are set at naught but parties may be able to refer the dispute to arbitration again: at [35]. (It should be noted that my summary of Mango Boulevard in Nuance Group (Australia) Pty Ltd v Shape Australia Pty Ltd [2021] NSWSC 1498; (2021) 395 ALR 720 at [147] was incorrect.)
  2. For his part, Errol requested that the final award be set aside and that there be no suspension of the setting aside under clause 34(4). This will enable the parties to appoint a new arbitrator under clause 24 of the partnership agreement. The plaintiff’s senior counsel submitted that, with all due respect to a very experienced arbitrator, he was “very set” in his view on this point and a fresh mind should be brought to bear on the accounting question.
  3. The defendants submitted that, if the Court concluded that directions ought not to have been made by the arbitrator restricting Mr Haley or Mr Gardner from consulting with Mr Hammond, then the Court ought suspend any setting aside order to permit the arbitral proceeding to continue. It was said to be a straightforward matter for the arbitrator to amend his orders to permit such consultation with Mr Hammond. It followed that the arbitrator in such a situation was able to amend or alter his award in consequence of the further proceeding. It must also follow that once the correction is made, and consultation permitted, the arbitral proceeding would “resume” and continue with parties at liberty to advance any further submissions and applications which are precipitated by the correction. A suspension of this would avoid the need for the parties to commence the process afresh.
  4. As Jackson J explained in Mango Boulevarde, the alternatives are between suspending the setting aside of proceedings under section 34(4) for a time to give the arbitral tribunal, being Mr McGruther, the opportunity to resume the arbitral proceedings and make a further award, or setting aside the award and returning the parties to the point of referring their dispute to arbitration before a new arbitral tribunal in respect of the subject matter of the final award: at [51]. Section 34(4) makes plain that the decision is a discretionary one, where the Court “may” suspend the setting aside of proceedings “where appropriate”.
  5. Self-evidently the Court would not suspend the setting aside of proceedings to give the arbitral tribunal an opportunity to “eliminate the grounds for setting aside” unless the Court considered that the arbitral tribunal could or would remedy the process failures that led to the arbitral award coming to the attention of the Court. As observed in Mango Boulevard, the power to suspend the setting aside of proceedings under section 34(4) is to give the arbitral tribunal an opportunity to resume the arbitral proceedings; it is not a power to substitute or appoint a new arbitrator: at [47]. It follows that the question whether the Court should exercise the power to suspend the setting aside of proceedings under section 34(4) is loosely analogous to the exercise of a power by a court of appeal to remit proceedings on appeal to a differently constituted court: at [50].
  6. As Mustill and Boyd observe at page 563: (citations omitted)

Plainly, the nature of the arbitrator’s default will be an important consideration. Serious error or miscarriage of justice will lead to setting-aside. Conversely, where further findings are required, it will almost always be sensible to send a case back to the arbitrator who has already seized of the evidence …

Where the case lies between these extremes the courts will tend, if possible, to avoid the additional expense of setting aside, by remitting the award if confident that the arbitrator can be relied upon to conduct the renewed reference in a fair manner. But there will be no remission if a further hearing would be pointless, e.g. where the arbitrator is bound to find for the respondent … or where there is a risk that the arbitrator might show a disposition to favour one party.

  1. Whilst this passage refers to setting aside or remission, the same considerations apply, I think, where the choice is between setting aside the award or suspending the setting aside until the arbitral tribunal has had an opportunity to fix the underlying problem. The learned authors also observe that, when assessing the arbitrator’s ability to continue the arbitral proceedings in a fair manner, the test is not whether the party complaining of the arbitrator’s conduct has lost confidence in the arbitrator but whether that would be the reaction of a reasonable person, citing Hagop Ardahalian v Unifert International SA, The Elliser [1984] 2 Lloyds Rep 84. The fact that the attitude of one party may have provoked the tribunal into showing a degree of irritation, or even hostility, is not in itself a sufficient ground for choosing to set aside rather than remit: citing FE Hookway & Co Ltd v Alfred Isaacs & Sons [1954] 1 Lloyds Rep 491 at 515.
  2. With respect, the plaintiff’s senior counsel’s summary of the firmness of the arbitrator’s views in the final award was a kind and significant understatement. The arbitrator was extremely critical of the plaintiff’s position; his remarks were incandescent. If I were to suspend the final award to permit the arbitrator to continue the arbitral process, no reasonable person in the plaintiff’s position would expect that the arbitrator would treat him fairly.


  1. Both parties sought to be heard in respect of the costs of the arbitration if the award was set aside, having regard to section 33D of the Act. For these reasons, I made the following orders:
  1. Pursuant to section 34(2) of the Commercial Arbitration Act 2010 (NSW), set aside the arbitral award dated 28 January 2022.
  2. Direct the plaintiff to provide any evidence or submissions in respect of the costs of these proceedings, of the costs of the arbitration, by 27 January 2023, and to advise whether the plaintiff is content for the issue of costs to be determined on the papers or requires a further hearing.
  3. Direct the defendants to provide any evidence or submissions in respect of the costs of these proceedings, of the costs of the arbitration, by 10 February 2023, and to also advise whether the defendants are content for the issue of costs to be determined on the papers or requires a further hearing.
  4. Stand the matter over for further hearing in respect of costs at 9.30am on Friday 17 February 2023, which date will be vacated if the parties are content for costs to be decided on the papers.