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SUPREME COURT OF WESTERN AUSTRALIA
D & M AMONINI PTY LTD
NEIRIN PTY LTD
SUE JEANETTE RIGG
CORAM: Martin CJ
HEARD: 8 December 2015
DELIVERED: 8 December 2015
FILE NO: ARB 7 of 2015
CATCHWORDS: Application for extension of time to seek leave to appeal from award of arbitrator – Application brought outside time specified by court order and by Rules of the Supreme Court 1971 (WA) – No satisfactory explanation given for substantial delay – Conditions which must be satisfied for grant of extension of time
RESULT: Application dismissed
(This judgment was delivered extemporaneously on 8 December 2015 and has been edited from the transcript.)
1 These proceedings were commenced on 7 August 2015. D & M Amonini Pty Ltd (Amonini) applies for an extension of time within which to apply for leave to appeal from the award of an arbitrator delivered on 14 February 2014 and from an amended award delivered by the arbitrator on 26 June 2014. The amendment to the award previously delivered was relatively minor and affected only some $300 or thereabouts of the amount awarded. Amonini also applies for leave to appeal against a further award delivered on 17 July 2015, which was limited to the costs of the arbitration.
2 The arbitration which resulted in the award to which this application relates was governed by the Commercial Arbitration Act 1985 (WA) (the Act). Because arbitrations governed by the Act are no longer specifically covered by the Rules of the Supreme Court 1971 (WA) (the Rules), and in particular are not covered by O 81D of the Rules, the general provisions of the Rules relating to appeals to the General Division apply. They are to be found in O 65. Order 65 r 9 requires an appeal coming within the scope of that Order to be commenced within 21 days.
3 It follows that the application for leave to appeal in respect of the award of costs made on 17 July 2015 is within time. However, the application for leave to appeal from the amended award delivered on 26 June 2014 is more than a year out of time, and the application for leave to appeal in respect of the substantive award delivered on 14 February 2014 is more than 16 months out of time.
4 The application for an extension of time must also be viewed in the context of earlier litigation between these parties. On 7 March 2014, the respondent to the arbitration and the first respondent to this application, Neirin Pty Ltd (Neirin), applied for leave to appeal from the award of the arbitrator delivered on 14 February 2014. That application was brought within time. On 26 March 2014, Amonini filed a notice indicating that it intended to cross-appeal against the award of the arbitrator.
5 At a directions hearing held in those proceedings on 4 June 2014, counsel appearing for Amonini advised the court that no crossappeal would, in fact, be brought. However, out of an abundance of caution, I ordered that any application by Amonini for leave to appeal from the arbitrator’s award had to be filed and served no later than 11 July 2014. The reasons behind that order are relatively obvious, and they take into account the considerations identified in O 1 r 4A and O 1 r 4B of the Rules, which focus upon the need for the efficient utilisation not only of the time and resources of the parties, but also the efficient utilisation of the limited resources of the court. It would plainly be an inefficient utilisation of all of those limited resources if there were to be sequential arguments with respect to a single award, and the purpose of my order was to prevent that from occurring.
6 As a result of Amonini bringing these proceedings more than a year after the time limited by my order, the very thing that I tried to avoid has come to pass. No representative of Amonini has given evidence explaining or attempting to justify the delay. The closest thing provided to any evidence attempting to explain or justify the delay is a hearsay affidavit filed by the solicitor for Amonini.
7 The solicitor deposes that he is informed by Mrs Margaret Amonini and believes:
(a) that Amonini initially did not wish to appeal the award, as the order requiring the payment of $94,190.92 to Neirin was significantly lower than the amount Neirin sought at the hearing, namely $1,287,416.65;
(b) that as Amonini had satisfied the demand, Mrs Amonini understood that the arbitration was at an end;
(c) that between January 2014 and June 2014, Mrs Amonini and her husband Mr David Amonini were otherwise engaged with the construction of a commercial property in Bunbury which consumed a significant amount of their available time and resources;
(d) that Mr Amonini was working on the construction of three other buildings in Harvey, Australind and Bunbury, which also consumed significant amounts of his available time;
(e) that Mrs Amonini was working 20 hours a week at Linmac Bearings Equipment in Bunbury, in addition to attending to the bookwork for Amonini and managing Amonini’s commercial properties including the bookwork for each property; and that she did not have sufficient time or capacity to consider, or dedicate to, an appeal of the award;
(f) that after the award was delivered, Mr and Mrs Amonini wished to focus their attention back on their flooring business and their commercial investment properties, including the premises which were the subject of a lease in the arbitration proceedings;
(g) that in light of the initial order that each party was to bear its own costs of the arbitration, Amonini did not wish to appeal the award;
(h) that both Mr and Mrs Amonini did not have the capacity in March 2014 to continue with the dispute, and had to dedicate their available time and resources to their business and other commercial pursuits referred to above; and
(i) that the subsequent costs award has given Amonini the impetus to pursue an application for an extension of time to appeal the award.
8 In my view, even if accepted, none of those matters satisfactorily explains or justifies the very substantial delay in bringing this application. The application is not only well outside the time specified in the Rules, but also well outside the time within which I specifically ordered that any such application had to be brought. The evidence before me in relation to the delay suggests that Amonini treats an appeal from an arbitral award like a book that can be placed on the shelf, left on the shelf for as long as Amonini chooses, and then taken down at a time that is convenient to Amonini. In my view, Amonini has displayed contumelious disregard for the orders of the court and the Rules specifying the time within which these proceedings were to be commenced, as well as the need for expedition evident in the Rules and in the order which I made.
9 Neirin submits that Amonini should be taken to have waived its entitlement to apply for an extension of time within which to obtain leave to appeal or, alternatively, is bound by an estoppel preventing it from bringing this application. I do not accept either of those submissions for reasons that I do not need to detail because I have arrived at essentially the same conclusion through the exercise of discretion with respect to the extension of time sought, taking into account all the considerations that appear to me to be relevant to the exercise of that discretion.
10 Those considerations include the following. First, the scheme of finality which is evident in the Act: it is clear from the Act’s provisions that its objectives include ensuring that parties to arbitral proceedings achieve a degree of finality when an award is delivered.
11 Second, parties to arbitral proceedings are entitled to order their affairs in reliance upon the expectation that they will be entitled to receive and enjoy the benefits of their award.
12 Third, the arbitral and judicial systems are each brought into disrepute and commercial confidence weakened if indulgences in the form of extensions of time, which would enable proceedings of this kind to drag on indefinitely, are granted. That would be the effect of the indulgence which is sought by Amonini in this case.
13 The fourth matter which must be taken into account is the length of delay, which in this case has been lengthy and substantial.
14 The fifth matter which must be taken into account is the proferred reasons for the delay. As I have already observed, in my view Amonini’s proferred reasons do not provide any reasonable justification or explanation for the very substantial delay in bringing these proceedings.
15 The sixth matter that must be taken into account is what I have found to be the contumelious disregard of Amonini for the need to comply with each of the time limits specified by the Rules and the specific order of the court with respect to the commencement of these proceedings.
16 The seventh matter that I must take into account concerns the question of prejudice to the respondents if time were to be extended. General prejudice to a respondent to an application of this kind can be inferred from lengthy delay, and I draw that inference. Further, in this case there is evidence of specific prejudice contained in the affidavit of Ms Rigg which I have received in evidence. I accept the assertions made in that affidavit and note that there is no evidence to the contrary, nor was Ms Rigg required to attend for crossexamination.
17 It is clear from Ms Rigg’s affidavit that she has been compelled by these proceedings to defer her ambition to wind up Neirin and to wind up the affairs of the Sue Rigg Family Trust, of which Neirin is the trustee. She has been precluded from taking those steps because of the uncertainty and delay occasioned by this application and the sequence of events preceding this application.
18 Ms Rigg deposes to the fact that costs have been incurred as a consequence of her inability to wind up Neirin and the Sue Rigg Family Trust, which stands behind the company. She also deposes, and I accept, that the uncertainty with respect to the finalisation of these proceedings has caused stress to her and to her husband in ordering their lives and their financial affairs.
19 The final matter that I must take into account in relation to the exercise of the discretion to extend time is the fact that the grant of leave under s 38(4)(b) of the Act is itself discretionary. Accordingly, the various factors to which I have referred would be relevant to the exercise of the discretion in relation to the grant of leave to appeal if an extension of time were allowed, and would militate strongly against the grant of leave to appeal.
20 Taking all of those considerations into account, the grant of any extension of time to appeal against the awards made in 2014 would be exceptional, and in my view could only be justified in the interests of justice if three conditions were satisfied. First, it would have to be established that the question of law in respect of which leave to appeal was sought could, if resolved in the manner in which Amonini contends, have a substantial effect on Amonini’s rights. Second, it would have to be established that there is a strong case for the proposition that the arbitral award caused injustice. Third, it would have to be established that there is a strong case for the grant of leave to appeal. It is now necessary therefore to refer, albeit briefly, to the argument advanced in support of the propositions that Amonini has suffered injustice as a consequence of the arbitral award, and that there is a case for the grant of leave to appeal.
21 It is appropriate in that context to refer to s 38(5) of the Act which provides that leave to appeal from an arbitral award can only be granted if the court considers that, first, having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more parties to the arbitration agreement; and second, there is either a manifest error of law on the face of the award or, alternatively, strong evidence that the arbitrator or umpire made an error of law and that the determination of the question of law may add, or may be likely to add, substantially to the certainty of commercial law.
22 The last limb of s 38(5) can be immediately excluded from further consideration. If leave to appeal were granted, there is no issue or question of law that stands to be determined that could be said to add substantially to the certainty of commercial law. Counsel for Amonini did not contest the proposition that the issues that arise in this case are entirely idiosyncratic to these parties and to this particular arbitration, and that there is no general principle or issue of law that would have any application beyond these parties or this particular arbitration.
23 It follows that leave to appeal could only be granted if, first, Amonini establishes that the determination of the questions of law in respect of which leave to appeal is sought could substantially affect the rights of one or more parties to the arbitration; second, that there is a manifest error of law on the face of the award; and third, that the circumstances of this case justify the exercise of a discretion to grant leave to appeal in favour of Amonini.
24 I note that in Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd I addressed the question of the meaning to be given to the expression ‘manifest error of law on the face of the award’ and concluded, consistently with the decision in Westport Insurance Corporation v Gordian Runoff Ltd, that the expression did not limit the grant of leave to appeal to errors of law on the face of the award that could be described as facile, and exclude from consideration errors of law that could be described as complex and which required lengthy exposition in argument. Nevertheless, there is a requirement that the error of law be manifest in the sense of apparent to a reader on the face of the award.
25 That question, in turn, requires the court to determine the documents which constitute the award for the purposes of ascertaining manifest error. I have dealt with this issue in other cases, including Murray & Roberts Australia Pty Ltd v G B Lifestyles Pty Ltd. It is clear from the previous cases that, where given, an arbitrator’s reasons are taken to be incorporated in the award, and can be reviewed for the purpose of ascertaining whether the award reveals manifest error.
26 Whether or not any other document is included within the award depends upon the intent of the arbitrator, inferred from the terms of the award including the reasons given. Where it is asserted that an arbitrator has, by referring to a document, manifested an intention to incorporate that document into his or her award by reference, that question will be determined by asking whether the award, including the reasons given, requires reference to the document in order to comprehend what has been said by the arbitrator.
27 For the reasons which I expressed during the course of interchange with counsel for Amonini, in my view, although the arbitrator makes reference to other documents in the course of the reasons for his award, he does not do so in circumstances which would necessitate incorporation of those documents by reference. His reasons are entirely explicable and comprehensible on their face; there is no need to refer to additional documents in order to comprehend the essential basis of the reasoning explained in his award. For that reason, the award in which error must be manifest in this case is limited to the award itself, including the reasons given by the arbitrator.
28 I turn to ground 1 of the proposed grounds of appeal. This ground complains of a procedural issue that was addressed at the commencement of the arbitration. It is asserted that the arbitrator erred by ordering Amonini to lead evidence when he should have concluded that it was for Neirin to lead evidence first, because the rent had been paid in full. If there is a question of law evident in this ground, plainly, it is not a question of law the determination of which could substantially affect the rights of one or more parties to the arbitration. The order in which the evidence was adduced was a procedural issue dealt with by the arbitrator in the course of the hearing before him and, on the face of this ground, had no impact upon its outcome.
29 Ground 2 is allied to ground 1 and asserts that the arbitrator erred in law by finding that the monies paid by Neirin to Amonini were paid pursuant to the dispute resolution clause of the lease. For the same reasons I have given in relation to ground 1, if there is a question of law inherent in this ground, which is doubtful, the only impact of the question resolved by the arbitrator was upon the order in which the parties presented their evidence. That is not a question of law the determination of which could substantially affect the rights of one or more parties to the arbitration.
30 Ground 3 complains that the arbitrator erred in law by permitting Neirin to lead evidence of mistake and rescission, and by concluding that he had the jurisdiction to consider the relief of equitable restitution sought by Neirin. This ground is entirely incapable of giving rise to any question of law that could substantially affect the rights of one or more parties, because the arbitrator did not, in fact, make findings in favour of Neirin in relation to mistake or rescission, nor did he grant equitable restitution.
31 Ground 4 asserts that the arbitrator erred in law by failing to find that Neirin was bound by the terms of the lease to pay annual rent to Amonini in the amount of $96,828. It is difficult to understand this ground in a context in which it is clear from the terms of the award that the arbitrator found precisely that that was a term of the lease, and that Neirin was obliged to pay rent in that amount and did, in fact, pay rent in that amount.
32 What the arbitrator did, however, find is that the provision in the lease concerning rent payable was occasioned by a misrepresentation by Amonini as to the cost of construction of the leased premises. The parties had agreed that rent would be calculated through the application of a formula. As a result of Amonini’s misrepresentation, the formula produced an amount in excess of the amount that would have been payable had the true cost of construction been disclosed. Ground 4 goes nowhere because it does not address the fundamental reasons developed by the arbitrator in his award for granting the relief that he granted as a result of the misrepresentation which he found. In any event, there is no manifest error of law evident on the face of the award in respect of this ground.
33 Ground 5 asserts that the arbitrator erred in law by failing to find that the agreement to lease had merged with the lease. This ground misses the point of the arbitrator’s reasons and his award. Irrespective of whether the agreement to lease merged with the lease, the arbitrator found that Amonini had misrepresented the cost of construction of the building; and that, as a consequence of the misrepresentation, the rental specified in the lease had been miscalculated.
34 Ground 6 adds nothing of any significance to ground 5. It asserts that, despite the terms of the lease, Neirin was awarded $94,000. The particulars given in support of that ground assert that there was an erroneous finding that the agreement to lease and the building construction costs were relevant to the determination of the rent payable pursuant to the lease.
35 If there is a question of law raised by this ground, which is very doubtful, it is not a question which has any prospect of success, because it misconceives the basis of the arbitrator’s award. As I have already stated, the arbitrator’s award was based upon his finding that Amonini misrepresented the cost of constructing the building, resulting in the rental payable under the lease being inflated.
36 Ground 7 asserts that the arbitrator erred in law in finding that Amonini was fraudulent and denied Amonini the right to procedural fairness when there was no plea of fraud made by Neirin in the proceedings. There are a number of reasons why this ground could not succeed. First, the arbitrator’s reference to fraud is not apparently beyond the issues contested by the parties evident from the face of the award. For the reasons I have given, the pleadings exchanged by the parties are not to be taken as incorporated by reference into the award, and so it cannot be seen from the face of the award that there was no allegation of fraud as between the parties.
37 Second, in any event and perhaps more significantly, it does not, with respect, matter for the purposes of the arbitrator’s reasoning whether the misrepresentation by Amonini is characterised as fraudulent; or as constituting misleading and deceptive conduct, which plainly was in issue between the parties; or whether it is characterised as a mutual mistake induced by Amonini’s representation which led to the miscalculation of the rent. This ground could not substantially affect the rights of the parties, even if there was a question of law involved and even if that question of law was resolved in favour of Amonini.
38 I do not overlook the impact which a finding of fraud could have upon Amonini’s reputation. However, the award was of course private as between the parties, and it is only Amonini’s belated attempt to invoke the jurisdiction of the court which has brought this aspect of the arbitrator’s reasons into the public domain.
39 I next turn to those grounds in respect of which it is unnecessary to obtain an extension of time, namely the grounds related to the arbitrator’s award on the question of costs. There is no substantive difference between those grounds. Each of them asserts that the arbitrator erred in law by failing to give adequate reasons for the manner in which he exercised his discretion with respect to costs. That assertion has no reasonable prospect of success and, in my view, is unarguable.
40 The arbitrator gave reasons for his costs award. I will not set them out in full, but, in essence, the course of the reasoning which he adopted is clear enough. He found that Neirin obtained a degree of success by obtaining an award of $94,190.92 in its favour. However, as he observed, there were a number of issues brought into the arbitration by Neirin which added to its costs, but upon which Neirin failed, being, essentially, issues with respect to mistake and rescission. As a consequence, the arbitrator departed from the usual order that costs follow the event and awarded Neirin 70% of its taxed costs rather than 100%.
41 That process of reasoning is, with respect, quite evident from the face of the award and reveals no inadequacy. It is entirely conventional and is the type of reasoning enunciated by this court when it comes to the apportionment of costs in circumstances of partial failure on issues introduced by an otherwise successful party. In that context, this court has repeatedly held that these are matters of impression rather than science and, therefore, detailed mathematical calculation is not necessary to sustain the exercise of the discretion in relation to the apportionment of costs.
42 For these reasons, in my view, the application for leave to appeal has no prospect of success, even if an extension of time within which to bring the application were granted. There is nothing in the strength of the grounds of appeal which would overcome the very powerful considerations against the grant of an extension of time, having regard to the various considerations to which I earlier referred. For those reasons, this application will be dismissed.