Openyd Limited v Lawrence [2019] NZHC 46 (31 January 2019)

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2018-485-446
[2019] NZHC 46

OPENYD LIMITED
(Applicant)

V

GARY JOHN LAWRENCE, DIANE SHERYL LAWRENCE, KERRY MARK TRUBSHOE AND JASON PETER SILK
(Respondents)

 

UNDER:  section 261 of the Property Law Act 2007, Part 19 of the High Court Rules 2016
IN THE MATTER OF: an application for an order that the lessors renew the lease granted by Deed made on 5 April 2011
HEARING DATE: 21 November 2018
JUDGMENT: 31 January 2019

 

Introduction

[1] Openyd holds the lease over premises from which several dentists practice at Raumati Beach. The practice is known as the Raumati Dental Centre. The landlord is the respondent, the Lawrence Family Trust (the Trust). In response to the Trust’s refusal to renew the lease Openyd has filed this proceeding (the underlying proceeding). Openyd seeks an order requiring the Trust to renew the lease granted by deed on 5 April 2011.

[2] The Trust says an arbitration clause in the lease operates to exclude the High Court’s jurisdiction to hear and determine the underlying proceeding. The Trust has filed an interlocutory application for an order dismissing or staying the underlying proceeding to enable arbitration to take place. Openyd opposes the interlocutory application. Openyd says the arbitration clause is inoperative as the Trust waived compliance. Therefore, the High Court has jurisdiction to hear and determine the underlying proceeding.

[3] The contested interlocutory application gives rise to two primary issues:

(a) Did the Trust waive compliance with the arbitration agreement thereby rendering the agreement inoperative in terms of art 8(1) of sch 1 of the Arbitration Act 1996?

(b) If “yes” does the High Court have jurisdiction to hear and determine the underlying proceeding?

Background in overview

[4] This is the fourth proceeding filed in the past 12 months concerning disputes between dental practices operating as the Raumati Dental Centre at Raumati Beach. A brief description of the relevant background is all that is required in the context of this judgment. The narrative that follows is taken largely from the three previous decisions of the High Court.

[5] Dr Gary Lawrence is a director of G J Lawrence Dental Ltd (Lawrence Dental). Dr Lawrence established a dental practice at Raumati Beach in 1980. In 1996, he sold a third of the practice to each of two other dentists. Since that time the three-party arrangement has operated as the Raumati Dental Centre.

[6] Simon France J summarised the position:

[2] The operation model has generally been three individual entities with an association agreement between them covering matters such as organisation, staff and common costs. The three individual entities have for some time each formed companies through which to offer their professional services. When the practice became three, a joint company was formed, Openyd, as a holding and administration company. Ownership of one-third of Openyd, and directorship, generally transferred with each sale of a third. There were rules covering transfer of shares if one entity acquired two of the three units. Dr Lawrence has been a constant presence throughout the period. The other thirds have changed.

[3] In 2012 Dr Ibrahim bought out an existing third. Like others before her, she formed her own company. So, in 2012 there were four companies:

(a) Openyd – the administration company;

(b) G J Lawrence Dental Ltd (Lawrence Dental) – Dr Lawrence’s practice;

(c) Creative Dentistry Ltd (Creative) – Dr Al-Sabak’s practice;

(d) Alusi Ltd (Alusi) – Dr Ibrahim’s practice.

A fresh deed of association was entered into between the three practices.

[7] On 1 November 2017 Creative sold its practice to Alusi, and gave Alusi control of Openyd by way of a power of attorney over Openyd’s two-thirds shareholding.

[8] Lawrence Dental contested (and continues to contest) the transaction as being inconsistent with the deed of association which, it is said, requires Creative’s shares in Openyd to be transferred to Lawrence Dental and Alusi equally.

[9] Lawrence Dental gave notice of an intention to retire from the association. The notice triggered rights in the other entities (practically speaking, by this time, only Alusi as owner of two-thirds) to seek to purchase Lawrence Dental. Alusi chose not to do so.

[10] Lawrence Dental sought unsuccessfully to sell to a third party. Dr Lawrence says there was strong interest from three parties but a sale did not proceed because no party wished to be embroiled in the disputations within the association.

[11] At what Dr Lawrence describes as a “purported special meeting of Openyd shareholders” on 25 January 2018, and against his protest, he was removed as a director and the chair of Openyd. Mr Abdulah Abdulqadir (the son of Dr Ibrahim) was appointed as a director.

[12] On 14 February 2018 Lawrence Dental filed two sets of proceedings:

(a) CIV-2018-485-117 (CIV-117) — an application for declarations
concerning the status of the deed of association and an application that a receiver be appointed.

(b) CIV-2018-485-118 (CIV-118) — an application that Openyd be put into liquidation.

[13] Both proceedings were stayed. The stay was to allow CIV-117 to be resolved by arbitration. As well, Simon France J was satisfied the correct course was to stay 118 because of the link between the two proceedings.

[14] On 27 February 2018 Openyd gave notice to Lawrence Dental terminating its statutory tenancy at the premises. Lawrence Dental sought an interim injunction to prevent any further action by Openyd and Alusi. The application was heard by Grice J on 14 March 2018. The “substantial tensions” in the relationship between Lawrence Dental and Alusi were apparent to Grice J but she was not satisfied an injunction in the terms sought by the plaintiff should be granted. The defendants had provided an undertaking in the following terms:

The respondents, Openyd Limited and Alusi Limited, undertake that no steps will be taken to enforce the termination of the statutory tenancy of G J Lawrence Dental Limited pending the High Court’s determination of an application for an order for possession under the Property Law Act 2007.

[15] Weighing up all the factors, including the undertaking not to enforce termination of the statutory tenancy as well as an undertaking as to damages, Grice J assessed the balance of convenience and overall justice of the case as favouring refusal of the interim injunction as it had been framed.

[16] The third set of proceedings was commenced in April 2018 when Openyd filed an originating application against Lawrence Dental. Openyd’s central proposition was that it holds the lease granted by the Trust. Lawrence Dental has a sub-lease terminable at will under s 201(2) of the Property Law Act and can be required to leave. Lawrence Dental successfully applied to stay the proceeding to enable arbitration to take place.

[17] Openyd commenced this fourth proceeding, the underlying proceeding, by filing on 19 June 2018, an originating application for an order requiring the Trust to renew the lease, pursuant to s 261 of the Property Law Act 2007.

The present interlocutory application

[18] The Trust responded to Openyd’s originating application by filing a notice of appearance under protest to jurisdiction. The filing of that protest to jurisdiction on 6 July 2018 was followed, on 10 July 2018, by the filing of the present interlocutory application. Specifically, the Trust applies for orders:

(a) dismissing or staying the underlying proceeding to enable arbitration to take place on the basis the Court lacks jurisdiction to hear and determine the proceeding by virtue of r 5.49 of the High Court Rules and art 8(1) of Schedule 1 to the Arbitration Act 1996;

(b) alternatively, and without prejudice to the first order, staying the underlying proceeding until such time as the substantive issues in CIV- 117 and CIV-118 (the proceedings stayed by Simon France J) are determined.

[19] Openyd opposes the interlocutory application to dismiss or stay the underlying proceeding. Openyd contends the Trust waived the clause in the lease by which the parties agreed to submit their disputes or differences to arbitration. Consequently, the arbitration agreement is inoperative.

Did the Trust waive the arbitration clause?

The Trust’s position

[20] In support of its argument that the proceeding should be dismissed because the High Court lacks jurisdiction the Trust made the following submissions:

(a) Openyd made a request to renew its lease. By notice issued under ss 262 and 263 of the Property Law Act the Trust refused to renew on the grounds Openyd was in breach of the lease. Openyd disputed, and still disputes, the refusal.

(b) Clause 44.1 of the lease contains an arbitration clause requiring the dispute (unless it is resolved by mediation or other agreement) to be submitted to arbitration.

(c) A dispute between parties to a lease, in respect of the renewal of a lease, is arbitrable under s 261 of the Property Law Act.

(d) Unless an arbitration agreement is null and void, inoperative, or is incapable of being performed, or there is no dispute in fact between the parties, then a proceeding commenced in respect of matters which are properly the subject of an arbitration agreement must be dismissed under r 5.49(6)(a) of the High Court Rules for want of jurisdiction.

(e) In response to Openyd’s contention that the Trust waived compliance with the arbitration agreement the Trust submits the agreement is not inoperative, and the communication Openyd relies on in support of its contention cannot be construed as an unequivocal waiver of compliance with the arbitration agreement, nor as an election of the High Court as the forum for the dispute.

(f) Openyd cannot claim detrimental reliance because, once the dispute had arisen, the Trust made it clear the dispute should be referred to arbitration.

Openyd’s position

[21] Openyd’s opposition to the orders the Trust seeks is grounded in its assertion that the Trust waived the arbitration agreement. It is said that an email sent by the Trust’s solicitors on 5 February 2018, following Openyd’s request on 31 January 2018 for renewal of its lease, contained a “clear and unequivocal” communication constituting waiver. Citing Wang v Y & P New Zealand Ltd, Mr Griggs argued the only question is whether letters sent to Openyd’s solicitors on 13 and 15 June 2018 constituted a valid retraction of the waiver.

[22] Mr Griggs highlighted recent aspects of the backdrop to the parties’ disputes, namely, the unsuccessful settlement negotiations, and that the initial phases of two separate arbitrations are underway before the arbitral tribunal, Hon Paul Heath QC. Despite the availability to it of the waiver argument, Openyd says it elected to take a sensible and pragmatic approach by seeking (through counsel’s memorandum of 15 November 2018) to have the proceeding stayed to enable arbitration to take place and a direction that Openyd’s originating application be treated for all purposes, including s 262(b) of the Property Law Act “as having been made within the period prescribed in that provision”.

[23] Mr Griggs submitted that the Trust’s argument that the Court must dismiss the proceeding if it lacks jurisdiction, is contrary to precedent. Simon France J upheld a protest to jurisdiction yet entered a stay to allow the dispute to be resolved by arbitration. Accordingly, a stay is the proper order to be made if the arbitration agreement is found to be operative and capable of being performed.

[24] As to the question whether the arbitration agreement is capable of being performed, Mr Griggs highlighted aspects of natural justice entitlements under the New Zealand Bill of Rights Act 1990. Lawson v Gawith, upon which the Trust relies, fails to consider the impact of NZBORA and was wrongly decided on grounds which Mr Griggs elaborated.

Analysis

[25] Under a heading, “Arbitration” the following clauses appear in the lease:

44.1 Unless any dispute or difference is resolved by mediation or other agreement, the same shall be submitted to the arbitration of one arbitrator who shall conduct the arbitral proceedings in accordance with the Arbitration Act 1996 and any amendment thereof or any other statutory provision then relating to arbitration.

44.3 The procedures prescribed in this clause shall not prevent the Landlord from taking proceedings for the recovery of any rent or other monies payable hereunder which remain unpaid or from exercising the rights and remedies in the event of such default prescribed in clause 28.1 hereof.

[26] It is cl 44.1 which Openyd argues has been waived. The key facts, and the primary events leading to the communication said to constitute the waiver, are these:

(a) The lease (effective from 8 January 2011) was for a term of seven years with two rights of renewal on 8 January 2018 and 8 January 2025. Under the deed of lease renewal was to be effected by the tenant, at least three calendar months before the end of the term, giving to the landlord written notice to renew. Thus, if the lease was to be renewed after the first term of seven years, Openyd was required, no later than 8 October 2017, to give written notice of renewal to the Trust. Openyd did not do so.

(b) On 11 January 2018, the Trust’s solicitor, Mr Butler, wrote to Openyd. Much of the letter concerned the delivery of a courier pack to the Trust on Saturday 23 December 2017. The contents of the pack concerned a proposed shareholders’ meeting scheduled for 17 January 2018, the purpose being to remove Dr Lawrence as a director. Beyond Mr Butler’s discussion of the implications of that proposed move, Mr Butler observed Openyd occupied the premises at that point under a periodic tenancy terminable on 20 working days’ notice. Unless the proposal to remove Mr Lawrence as a director was immediately withdrawn, the Trust reserved its entitlement to issue a notice of intention to cancel the lease pursuant to the Property Law Act.

(c) On 12 January 2018, the Trust issued a notice of intention to cancel the lease on the grounds Openyd was in breach of the lease provision governing changes in legal or beneficial ownership of an unlisted corporate tenant. The particulars of the breach were detailed in the notice of intention to cancel. The breach could be remedied by Openyd satisfying the Trust any change in the legal or beneficial shareholding of Openyd had not altered the effective management or control of Openyd and that Dr Lawrence remained a director of Openyd. The notice stated that if the breach were not remedied within ten working days, the Trust may seek to cancel the lease in accordance with s 244 of the Property Law Act.

(d) On 31 January 2018 Openyd sought to renew the lease (or, as Mr Butler described the request to renew in subsequent correspondence, “the purported directors of Openyd Ltd” sought to renew the lease).

(e) On 2 February 2018, Openyd’s solicitor, Mr Reardon, wrote to Mr Butler:

It is now over a week since we wrote to you nominating Mr John Greenwood as the arbitrator for the renewal of lease arbitration. This dispute is based on your client’s position that there is a mere periodic tenancy and it reserves its right to terminate at any time: that is, it will not renew. We have had no reply, notwithstanding the receipt of a number of emails from you expressing you client’s opinions on other topics over that period. As you know, time [sic] the limitation period is tight. With respect we cannot see what the objection to Mr Greenwood could be.

Our client intends to approach the Law Society on Monday 5 February to make the appointment.

(f) Mr Butler replied on 5 February 2018. On Openyd’s case, it is this letter that contains the Trust’s “clear and unequivocal” waiver of the agreement to arbitrate. First, Mr Butler referred to his letter of 17 January in which he pointed out to Mr Reardon that Mr Reardon did not act for Openyd and that neither Mr Reardon nor his client was in a position to exercise the right of renewal; that Mr Reardon did not act for Openyd on 25 January 2018 when the request for arbitration was made, and there had been no request for arbitration since Mr Abdulqadir took control of the company through a change of directorship. Mr Butler continued:

…As late as Wednesday 31 January 2018 the purported directors of Openyd Limited sought to renew the lease… Although we do not recognise the authority of those presently acting for Openyd Limited that latest request, sent to Mr Gary Lawrence, has been forwarded to the trustees for consideration.

Against that background, the request for a renewal of lease made last week supersedes the unauthorised request purported to be made by you earlier. Questions of arbitration and the appointment of anyone including Mr Greenwood are prematureIn that regard

I note that in any event relief against forfeiture is for an application to the court and not to arbitration.

(g) Mr Reardon replied on Friday 9 February 2018. The letter concluded with the following paragraph:

You say that any application for relief should be in the High Court, and not pursuant to the arbitration clause. In reliance on your client landlord’s election of the High Court as the forum, Openyd Limited will be applying to the High Court.

[27] For the following reasons, I conclude that the 5 February 2018 letter did not communicate a waiver of the parties’ agreement to arbitrate or otherwise “elect” the High Court as the forum to which the parties should take their dispute.

[28] On its face, the 5 February letter contains no clear, unequivocal representation by the Trust that it does not insist on performance of the arbitration clause in the lease. The letter does not contain, or constitute, a waiver. The emphasised words communicate clearly the Trust’s view that discussing arbitration was premature. It was premature because:

(a) The request for renewal had only recently been received and forwarded to the Trust.

(b) The Trust had yet to respond to the request.

(c) As at 5 February 2018 (the date of the ostensible waiver) no dispute arose from the request to renew.

(d) Therefore, questions of arbitration were premature.

(e) And, in any event, relief against forfeiture was for application to the court not arbitration.

[29] In relation to the last point, Mr Skelton submitted that the Trust’s solicitor was stating no more than what is stated in the relevant provisions of the Property Law Act. I agree with the position the Trust takes: that the final sentence of the 5 February 2018 letter did not amount to an election of the High Court as the forum for a dispute.

[30] Returning to the waiver argument, two key points emerge:

(a) The penultimate sentence of the 5 February 2018 letter states only that “Questions of arbitration … are premature” not that the agreement to arbitrate is waived; and

(b) The rental renewal dispute had not, in any event, arisen at that stage.

[31] That no (relevant) dispute existed as at 5 February 2018 is confirmed by subsequent correspondence between the parties’ legal advisers. On 20 March 2018 Mr Reardon wrote to ask Mr Butler for confirmation of the Trust’s decision with respect to Openyd’s notice to renew. The dispute did not arise until 6 June 2018. The Trust issued a notice of refusal to renew dated 24 May 2018. The dispute crystallised on 6 June 2018 when Mr Reardon wrote to advise:

Your clients’ right to refuse the renewal of the lease is disputed and an application for relief will shortly be filed pursuant to sections 261, 262 and 264 of the Property Law Act.

… We seek your undertaking … that the lessor will not take any steps to evict or otherwise interfere with our client’s possession of the premises, other than filing an application for an order for possession, until our client’s application for relief has been finally determined.

[32] On 13 June 2018, the Trust replied through its solicitor (not Mr Butler). The Trust took the view that all matters, including the refusal to grant renewal of the lease, should be determined by a single arbitration. The Trust would give the undertaking Openyd sought in the 6 June 2018 letter if Openyd agreed to pay outstanding rent and agreed to refer to a single arbitration its foreshadowed application for relief, together with the proceedings filed in CIV 117, 118 and 267.

[33] The Trust’s solicitor wrote again on 15 June 2018 (in reply to a letter from Openyd on 14 June which was not before the Court) resisting the suggestion the issues arising from the various disputes were separate and distinct and restating the Trust’s view that all matters should be referred to a single arbitration for resolution. I regard the correspondence in June 2018 as putting beyond any doubt the Trust’s stance on arbitration.

Retraction of waiver

[34] If I am wrong in my conclusion and the 5 February letter did constitute a waiver, I am nevertheless satisfied that the June correspondence constituted a valid retraction of the waiver. Mr Griggs does not dispute the possibility of a party retracting a waiver at any time with reasonable notice, unless it would be inequitable to do so. In fact, Mr Griggs submitted that the only question before me is whether the Trust’s letters of 13 and 15 June 2018 constituted a valid retraction of the waiver. I am satisfied that the 13 and 15 June letters stated the Trust’s ambiguous preference for arbitration, and sought Openyd’s agreement to that course as a condition of granting the undertaking which Openyd wanted. Any previous waiver was validly retracted by those letters.

[35] One further matter must be addressed. To establish waiver Openyd must show the Trust’s representation induced Openyd to rely and act upon it.If Openyd relied on a representation by the Trust that it waived its legal rights, and that reliance was to Openyd’s detriment, then a retraction might not be available to the Trust. Openyd says it did rely on the Trust’s representation of waiver. In support, Openyd points to the final sentence of Mr Reardon’s letter of 9 February 2018 in which Mr Reardon stated:

In reliance on your client landlord’s election of the High Court as the forum, Openyd Limited will be applying to the High Court.

[36] I do not think the argument can stand. Notwithstanding that on 9 February Openyd foreshadowed an application to the High Court, no application was made until after 6 June when Openyd advised the Trust its refusal to renew the lease “is disputed and an application for relief will shortly be filed pursuant to sections 261, 262 and 264 of the Property Law Act”. Following Openyd’s notification of dispute on 6 June the Trust made it clear in its two letters of 13 and 15 June 2018 that any application for relief by the applicant should be made in arbitration proceedings in accordance with cl 44.1 of the lease.

[37] In the face of the Trust’s letters, Openyd commenced proceedings on 19 June 2018. Openyd cannot say it relied on a waiver given in February 2018 when it filed its application in the High Court in June 2018 in the face of the Trust’s clear communication, the preceding week, of its commitment to arbitration.

[38] I have concluded the Trust did not waive the arbitration clause by its communications in February 2018. If it did, there was no detrimental reliance on the waiver by Openyd and the waiver was validly retracted by the Trust’s 13 and 15 June letters. The result is that the dispute as to renewal of the lease is a dispute falling squarely within the terms of the arbitration clause.

[39] As there was no waiver (or, if there was, it was validly retracted) the arbitration clause is not, as Openyd argues, inoperable. The existence then, of a functioning arbitration clause, raises the next issue which concerns the jurisdiction of the Court in light of the parties’ agreement to arbitrate their disputes.

Jurisdiction?

[40] The question is whether the Court has jurisdiction to hear and determine the underlying proceeding. If the answer is “yes” it will then be necessary to go on to consider the second of the orders which the Trust seeks, namely, whether the proceeding should be stayed pending arbitration. That question will not arise if I find the Court lacks jurisdiction to hear the underlying proceeding.

[41] I have already set out the parties’ respective submissions. Mr Griggs relies on G J Lawrence Dental Ltd v Alusi Ltd as demonstrating the flaw in the Trust’s approach. Mr Griggs raises that decision as an example of the Court upholding a protest to jurisdiction yet entering a stay to allow the dispute to be resolved by arbitration rather than dismissing the proceeding.

[42] As Mr Griggs observed, Simon France J granted the application for a stay. It had been argued that, by participating in interlocutory proceedings prior to the hearing of the stay application, Alusi had thereby submitted to jurisdiction. Simon France J examined the steps which Alusi had taken and considered the authorities bearing on the issue of submission to jurisdiction. Consistent with the decisions which His Honour cited he did “not consider Alusi’s participation in the interim injunction proceedings constitute[d] submission to jurisdiction”. It was open to Lawrence Dental to claim the arbitration agreement applied and accordingly, pursuant to art 8(1) of sch 1 of the Arbitration Act, the matter required to be stayed.

[43] I am not concerned in this case with questions about whether or not a party has submitted, or purported to submit, to jurisdiction. Rather, I must assess the competence of the Court to decide the underlying proceeding. In Commissioner of Inland Revenue v Redcliff Forestry Venture Ltd the Supreme Court described r 5.49 of the High Court Rules as expressing an unqualified right to challenge a court’s jurisdiction to hear and determine proceedings and that the rule should be given its ordinary meaning. The Supreme Court quoted Diplock LJ’s classic expression of the meaning of “jurisdiction” in Garthwaite v Garthwaite:

In its narrow and strict sense, the “jurisdiction” of a validly constituted court connotes the limits which are imposed upon its power to hear and determine issues between persons seeking to avail themselves of its process by reference (1) to the subject-matter of the issue or (2) to the persons between whom the issue is joined or (3) to the kind of relief sought, or to any combination of these factors.

[44] There is also a wider sense in which jurisdiction is often used:

… that although the Court has power to decide the question it will not according to its settled practice do so except in a certain way and under certain circumstances.

[45] The House of Lords observed those comments were endorsed by Lord Diplock in Garthwaite v Garthwaite.

[46] Rule 5.49 permits a defendant, who objects to the jurisdiction of the court to hear and determine a proceeding, to file and serve an appearance stating the objection and the grounds for the objection instead of filing a statement of defence. One of the bases for protesting the Court’s jurisdiction is where jurisdiction is precluded by contract. An agreement between parties to refer disputes to arbitration is one such example. I do not see the resolution of this jurisdictional issue as lying within the terms of art 8(1) upon which the Trust relies for its dismissal application. Article 8(1) provides:

8 Arbitration agreement and substantive claim before court

(1) A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting that party’s first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed, or that there is not in fact any dispute between the parties with regard to the matters agreed to be referred.

[47] Applications such as the application before me, which assert the primacy of an arbitration clause, concern a critical balance between the courts and the arbitral process. On one side, it is national law that upholds the arbitration agreement and national courts are the enforcement agency for the arbitral process. On the other side is party autonomy and the principle of non-intervention. In choosing arbitration, parties have manifested their intention to create continuing legal relations.

[48] Lord Mustill (writing extrajudicially) emphasised the role of the courts as being to support, not supplant the arbitral process:

The balance is maintained by a recognition by the courts that just as arbitration exists only to serve the interests of the community, so also their own powers are conferred only to support, not supplant, the extra-judicial process the parties have chosen to adopt.

[49] I appreciate Lord Mustill was speaking of the role of the courts in the arbitral process and that the parties are not at that stage with regard to this particular dispute. The point is, the parties have contracted to refer their disputes to arbitration and it is the proper function of the court to support that election.

[50] I refer also to the authorities to which Cooke J referred in Openyd Ltd v G J Lawrence Ltd. In Marnell Corrao Associates Inc v Sensation Yachts Ltd Wild J referred to the general principle that:

… Courts should uphold arbitration, by striving to give effect to the intention of parties to submit disputes to arbitration, and not allow any inconsistencies or uncertainties in the wording or operation of the arbitration clause to thwart that intention. That is stated in Redfern & Hunters Law and Practice of International Commercial Arbitration (3rd ed), 1999, pp 172-173. To similar effect is Russell on Arbitration (21st ed) 1997, para 2-006, citing the Privy Council’s decision in Queensland Electricity Generating Board v New Hope Colleries Pty Ltd [1989] 1 Lloyds Reports 205. Their Lordships’ opinion was delivered by Sir Robin Cooke, who said (at p 210):

At the present day, in cases where the parties have agreed on an arbitration or valuation clause in wide enough terms, the Courts accord full weight to their manifest intention to create continuing legal relations.

[51] Cooke J referred also to the related principle of “one-stop adjudication” sourced to the decision of Lord Hoffmann in Fiona Trust & Holding Corp v Privalov. Lord Hoffmann was cited also by Simon France J in Tamihere v Media Works Radio Ltd:

[23] The second principle is the “one stop” idea, which takes as a starting point that parties to a commercial contract would not ordinarily be expected to submit only some of their disputes to the jurisdiction they have selected:

[13] In my opinion the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction.

[24] Ultimately the task is to interpret the scope of the arbitration agreement contained within the parties’ written contract. Consistent with my earlier conclusion, if there is a prima facie case to say the subject matter of these claims is covered by the agreement, a stay should be entered and the parties referred to arbitration.

[52] In this case, I consider that to accept jurisdiction to hear and determine the underlying proceeding would be to effectively render meaningless the arbitration clause in the lease by which the parties contracted to refer their disputes to arbitration. I note further that the arbitration clause is spectacularly wide. The parties have not confined or defined the dispute which is to be referred to arbitration but rather, “any dispute or difference … shall be submitted to [arbitration].”

[53] I do not consider that in this case it would be proper for me to exercise the court’s jurisdictional competence to hear and determine the underlying proceeding.

[54] Importantly, I am satisfied that my conclusion does not create issues of access to justice. In upholding the principle of party autonomy, and by recognising that the parties have chosen to resolve their dispute through private means, the parties are free to do so. I see no impediment to the parties pursuing the arbitration process to attempt to resolve the dispute raised by the underlying proceeding. Mr Skelton summarised the various disputes which have already been referred to the arbitration process. I see no impediment to the matters already within the jurisdiction of the arbitrator including this dispute.

[55] Section 262 of the Property Law Act requires an application for relief against refusal to renew a lease to be filed within three months of the refusal. That timeframe is immutable. But that timeframe applies to the commencement of proceedings in a court. There is no similar, immutable, timeframe for the reference of a dispute to arbitration unless, of course, the parties have agreed to any such restriction. I am not aware of any such limitation applying in this case.

[56] Importantly also, in terms of the “justice of the case”, although originally resisting arbitration, arbitration is the very means by which Openyd now wishes to resolve the dispute about renewal of the lease. And, for its part, the Trust’s alternative position was that if not dismissed, the underlying proceeding should be stayed to enable the parties to attempt to arbitrate their dispute.

Result

[57] The respondents’ interlocutory application for an order dismissing the underlying proceeding for want of jurisdiction is granted.

[58] The respondents have succeeded. Costs follow the event.