LIVERPOOL CITY COUNCIL V CASBEE PTY LTD & ANOR  NSWSC 590
Supreme Court of New South Wales – 24 June 2005
Liverpool City Council (‘the Council’) entered into two contracts with Casbee Pty Ltd (‘Casbee’) for drainage construction work at Hinchinbrook creek and stormwater pond construction work at Riverside Park, Chipping Norton. Casbee claimed $1,668,671.80 for delay and disruption costs. The Council rejected this claim and 20 months later Casbee notified the Council of the dispute and referred the matter to arbitration under clause 47 of the general conditions.
Thereafter the matter proceeded with “glacial speed”, the slowness of which was attributed to in part to the loss of documents in a flood, and to the disorganized state in which many documents were returned from an inquiry by the Independent Commission Against Corruption (‘ICAC’).
Due to the delay, the Council sought orders from the Supreme Court pursuant to section 46 of the Commercial Arbitration Act 1984 (‘the Act’) that the arbitration between them be terminated, alternatively that the dispute be removed into court for determination. The Council also submitted that there the delay had caused a substantial risk of prejudice due its inability to call some witnesses as their employment had been terminated following a finding by ICAC of conflicts of interest.
Section 46(2) of the Act imposes a duty on each party to an arbitration agreement to exercise due diligence in prosecuting a dispute referred to arbitration. Further, under section 46(3) a court will not terminate an arbitration for delay unless it is satisfied that the delay has been inordinate and inexcusable and will give rise to a substantial risk of prejudice to the other
Whether the arbitration should be terminated.