JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CORAM : KENNETH MARTIN J
HEARD : 20 SEPTEMBER 2013
DELIVERED : 27 SEPTEMBER 2013
FILE NO/S : CIV 1873 of 2013
BETWEEN : JAMAC CONSTRUCTION GROUP PTY LTD
DE MOL INVESTMENTS PTY LTD
Arbitration – Stay application – Partial or full stay – Discretionary consideration – Turns on own facts
Commercial Arbitration Act 1984 (WA), s 47
Temporary stay of arbitration
Plaintiff : Mr J A Thomson SC
Defendant : Mr C G Colvin SC
Case(s) referred to in judgment(s):
2 By its originating summons commencing this action on 31 May 2013 the plaintiff (Jamac) seeks that this court either by s 47 of the Commercial Arbitration Act 1984 (WA) or, in its inherent jurisdiction, strike out or permanently stay aspects of the defendant’s (De Mol) points of defence and counterclaim in the arbitration.
3 Jamac’s strikeout or stay application is pursued on the basis that aspects of the arbitration (raised by De Mol by its points of defence and counterclaim in the arbitration), present issues which have already been raised before this court in CIV 2192 of 2010 (the Rodgers litigation). This has arisen in circumstances where both Jamac and De Mol are defendants and essentially crossclaimants against each other in the Rodgers litigation. The Rodgers litigation has been case managed in my CMC list since 2010.
4 The Rodgers litigation concerns claimed physical and economic damage to a building in Beaufort Street, Mount Lawley, arising from sheet piling work (and the consequent vibrations) carried out from the immediately adjacent land, together with the removal of support for the Rodgers land by reason of the adjacent land’s deep excavation.
5 The property development works upon the adjacent land in Beaufort Street was De Mol’s project. To that end, it had engaged Jamac under a head contract of 14 January 2010, effectively as its head contractor.
6 In turn, Jamac had engaged (in excess of 40) subcontractors. One of which, GFWA Pty Ltd (GFWA), was engaged by Jamac to carry out sheet piling work. It is said this sheet piling work was problematic in its 2010 implementation, particularly concerning vibration and the adverse physical effects for the adjacent Rodgers property.
7 GFWA has been added as a third party in the Rodgers’ action, together with several other parties. That 2010 action has not yet progressed to a sufficiently advanced state to be entered for a trial.
8 Within the arbitration De Mol has sought to raise under its points of defence (and under its counterclaim) many crossgrievances against Jamac. De Mol contends these answers would undermine Jamac’s claims against it for liquidated monetary amounts that Jamac claims are due to it for its work done under the head contract.
9 According to senior counsel at the hearing, Jamac claims approximately $1.2 $1.3 million in the 2012 arbitration, against De Mol, for work carried out in the period prior to the head contract being terminated.
10 Jamac and De Mol both accept that their head contract, in terms of future obligations of performance on each side, came to an end around June 2011. The head contract is said to have been frustrated by reason of a distinct problematic issue, concerning unexpected and ongoing dewatering problems which arose at the site.
11 Dewatering issues have not been live (at least to date) in the Rodgers litigation.
12 Jamac and De Mol agree that their head contract has ended under these dewatering events of frustration. However, Jamac still claims, as accrued entitlements, the contract payment amounts from De Mol which it argues fell due (to it) prior to the termination of performance of the head contract under events of frustration in 2011. In that respect, a clause within the head contract conditions explicitly envisages a monetary claim being made by the head contractor, notwithstanding circumstances of a frustration of the contract, and notwithstanding the future performance of the head contract ending (cl 45, see annexure JGA1 of the affidavit of John Giovanni Ambrusci filed 31 May 2013).
13 On the application before me, there also appeared to be no dispute as between Jamac and De Mol, that:
(a) within the Rodgers litigation, this court has been and is presently seized of the task of resolving issues (including as between Jamac and De Mol) relating to the allegedly problematic sheet piling work (with its adverse vibration consequences) at the building site. These are issues (if validly raised by De Mol in the arbitration) that would overlap with and intersect aspects of the arbitration defence and counterclaim now sought to be raised by De Mol;
(b) there is acknowledged power for this court, either under s 47 of the Commercial Arbitration Act, or within the court’s inherent jurisdiction, to either temporarily or permanently stay all or part of the arbitral proceedings;
(c) it would be appropriate to grant a stay of some description if there were a realistic prospect of an intersection of issues arising as between common parties in the Rodgers litigation and the arbitration. A prospect of inconsistent findings upon overlapping issues, as between the litigation and the arbitration, is an outcome that ought be avoided, if at all possible;
(d) nevertheless, as between Jamac and De Mol, the arbitration raises some wider issues than the Rodgers litigation. That is so, particularly concerning Jamac’s claims for accrued contractual money payments falling due prior to the head contract becoming frustrated and, (from De Mol’s point of view), the grievances De Mol seeks to raise concerning areas of alleged inadequate performance and delay by Jamac as its head contractor. Within the arbitration De Mol points to cl 47 in the head contract (see annexure JGA1 to the affidavit of John Giovanni Ambrusci). De Mol argues that clause is applicable to deny claimed extensions of time to Jamac, in the event of the underlying delay events relied on being found to be attributable to dewatering issues, as De Mol contends;
(e) Jamac’s claims in the arbitration to contractual payments said to be due to it prior to the head contract becoming frustrated and De Mol’s denial of extensions of time to Jamac, by reason of an applicability of a dewatering nonextension of time clause (cl 47), are not presently live issues in the Rodgers litigation.
14 As I listened senior counsel address to their respective written submissions at hearing, the essential conceptual divide between the parties, seemed to me to ultimately distil to being quite narrow. In essence, the real issue of dispute is whether I should now grant a stay in respect of only aspects (effectively, as to sheet piling issues) of the arbitration or, (as is advocated by De Mol), I should stay the whole arbitration pending my determination of the issues in the Rodgers litigation.
15 Towards the latter alternative, there is a correlative issue as to whether, in order to assist an overall resolution under litigation, Jamac or De Mol might then commence additional proceedings in this court. Those proceedings would deal with Jamac’s claims to contractual payments and De Mol’s answering position concerning extension of time issues by reference to dewatering. Should that occur, the prospect of that additional action being consolidated with, or at least being heard together with, the Rodgers litigation presents as an accompanying alternative.
16 The fundamental issue, however, is whether I should presently stay only aspects of the arbitration, (as Jamac contends), or the whole arbitration, (as De Mol contends).
17 I am of the view that there should be a temporary stay of the whole arbitration pending determination of the Rodgers litigation. I reach that view for these reasons:
(1) On my assessment of the arbitral points of claim and defence (and counterclaim), the evaluation of Jamac’s payment claims and the responses to those claims by De Mol, does raise some prospect of an issue crossover in relation to sheet piling and vibration issues. During argument this potentiality was illustrated by reference to attachment C to the arbitral claim advanced by Jamac seeking contractual sums (see annexure JGA8 to the affidavit of John Giovanni Ambrusci). In the end, I was left concerned there may be potential for prejudice to De Mol by the attempted drawing of a bright line segregation as between sheet piling and vibration issues on the one hand and the pursuit by Jamac of its claim for contractual payments (and the evaluation of relevant defences by De Mol against that claim) on the other hand. In my view, a pure segregation of these issues from each other is not as easy or as clear as might otherwise first present.
(2) There is no real disagreement that this court should be the primary forum in which all sheet piling and consequent vibration issues are finally resolved, rather than in the arbitration. A necessary consequence, is that this court should be rendered in a position to consider all correlative issues associated with that exercise, (a task of which it has been first seized since 2010). To the extent that there are any crossover issue areas arising as to what should or can be properly before this court and not the arbitrator, doubt must be resolved on the basis of affording this court the fullest opportunity to first resolve such issues.
(3) The capacity for Jamac or De Mol to commence fresh proceedings and have them either consolidated with or arranged with and thereby heard and resolved in harmony with the Rodgers litigation, does present as a realistic option. Thus, residual aspects of their disputes could be resolved in this court as well. Subject to hearing all the Rodgers parties about a consolidation or joint hearing outcome, that approach, prima facie would seem to be a sensible course.
(4) ‘Cherry picking’ limited issues out of the arbitration at a distance, does not present to me to be a safe or viable option, especially in the context of a dispute which is not that large, at least in terms of its financial dimensions.
(5) Potential resolution of the Rodgers litigation in future under an agreed settlement presents to me to be assisted and more likely if all aspects of the underlying disputes between parties in that litigation are resolved together at the one time and in one forum. In the circumstances, that consideration, optimistic as it may be, tends to favour a stay of the entirety of the arbitration.
(6) Jamac presented a subsidiary argument at the hearing to the effect De Mol had not properly given or raised any notice of dispute itself, as to disputed issues for that arbitration. Hence, it was said that any theoretical issue crossover problem as to arbitral issues from the Rodgers litigation, in effect, was not really a problem as any potential overlapping issues were not, in point of law, as yet legitimately or properly raised by De Mol in the arbitration. Whatever the ultimate merits of this argument, my view is that if there is currently such a problem for De Mol in the arbitration, it would likely be fixable by De Mol, longer term in that arbitration. At this time, I prefer to take a wider and less legalistic view towards hopefully achieving a viable, overall potential solution for the parties regarding all their disputes.
18 In the circumstances, I am persuaded it is appropriate there be a temporary stay of the arbitration in its entirety, at this time.
19 Should correlative proceedings be commenced out of this court as foreshadowed under (3) above, it may be the temporary stay would then be upgraded to permanent. That is a matter for another day.
20 In the circumstances, I will issue a temporary stay of ARB 3654.
21 I will resolve on the papers, if necessary, resulting orders and costs in light of these reasons which will be published to the parties. There should first be conferral between senior counsel as to orders and costs, followed by the submission of a consent minute, if possible. In the absence of agreement as to orders and costs, I would receive the defendant’s submissions within 14 days, followed by the plaintiff’s submissions within a period of 14 days thereafter. Any remaining dispute can thereafter be resolved on the papers if necessary.