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Court of Appeal of Fiji |
IN THE COURT OF APPEAL, FIJI
ON APPEAL FROM THE HIGH COURT OF FIJI
CIVIL APPEAL NO. ABU 0041 OF 2016
(High Court No: HBC 57 of 2011)
BETWEEN:
HOUSING AUTHORITY OF FIJI
Appellant
AND:
BULILEKA HIRE SERVICES LIMITED
Respondent
Coram : Chandra, RJA
Counsel : Mr V Maharaj for the Appellant
Mr A Pal for the Respondent
Date of Hearing : 30 January, 2019
Date of Ruling : 27 June, 2019
RULING
[1] This is an application for leave to appeal and stay pending appeal by the Defendants-Appellants pursuant to Section 12(2)(f) of the Court of Appeal Act and Rule 34(1) of the Court of Appeal Rules.
[2] The leave to appeal application is regarding the Ruling of the learned High Court Judge made on the 19th January 2016 regarding an application made by the Defendants-Appellants to stay the proceedings and directing the parties to refer the dispute for arbitration. The Defendants-Appellant pursued their leave to appeal and stay before the High Court in the first instance.
[3] The application for leave to appeal and stay was supported by an affidavit deposed to by Isikeli Navuda, the Acting Chief Executive Officer of the 1st Defendant- Appellant.
[4] The proposed grounds of appeal which the Defendants-Appellant intended to rely on were set out in the notice of appeal as follows:
“1. The learned trial Judge erred in law and in fact in:
(a) holding that referring a dispute for arbitration is not a compulsory requirement;
(b) putting a very narrow construction on the word ‘may’ and in any event interpreted out of context clause 13.2.1 and 13.2.4 and overlooked the General Provision of Dispute resolution under Clause 3.1.2 of the NEW ZEALAND CONDITIONS OF CONTRACT FOR BUILDING AND CIVIL ENGINEERING CONSTRUCTION NZ53910, which provision when read together with 13.2.1 and 13.2.4 makes it mandatory by use of the word ‘shall’ that every dispute or difference shall be dealt with by ARBITRATION;
(c) holding that it was a pre-requisite to refer any dispute either to expert of consent of the Contractor and the Principal or otherwise for the engineer to make a decision and then only the parties are entitled to refer any dispute for arbitration;
(d) failure to follow and/or misapplied the principles enunciated in previous decisions with similar facts in, BRUCE LTD V/S J STRONG (1951) 2 KB 447, FAI INSURANCE (FIJI) LTD V/S CONSORT SHIPPINGLINELTD (1999) FJCA 10; FIJI BUILDERS LTD V/S TIP TOP ICE CREAM CO(FIJI) LTD (1966) FJSC 6 (per MILLS-OWENS CJ) in determining whether the dispute should be referred to Arbitration;
(e) failure to hold that the parties were bound by the Contract that they had entered into between Principal (Appellant) and the Contractor Respondent and the notices given by the Appellant on 28th September 2010 and again on 14th October 2010 pursuant to the said contract for the parties to go to arbitration to resolve the dispute to which the Respondent failed to respond or comply culminating thereafter to the termination of Contract by the Principal (Appellant);
(f) in the context of any delay as to the stage of otherwise when the application had been made to refer the matter to Arbitration the learned judge failed to consider that at the Pre-Trial Conference held pursuant to Order 34 of the High court Rules between the parties legal representatives the parties had agreed that one of the “agreed issues” for determination by the Court was whether the Contract stipulated that any dispute between the parties were to be determined through arbitration and whether the Respondent (original Plaintiff) had refused to comply;
(a) notwithstanding the commencement of the within proceedings by the Respondent (Plaintiff) whether the Appellant (First Defendant) at all relevant times was ready and willing to do all things necessary for the conduct of the arbitration;
(b) is contrary to the decisions referred to in paragraph 1(d) above;
(c) whether the matter in dispute between the parties is substantially technical, arising on differing views of parties and their engineering experts as to the proper or best method of achieving the desired result in the conditions existing at the time as to the adequacy or otherwise of various tests carried out pertaining to the nature of workmanship in the context of design and specifications and, therefore, pre-eminently suited to the determination by an Arbitration by an Arbitrator or Arbitrators with an Engineering background.
(d) erred in failing to rule that the Appellant and the Respondent have chosen for themselves by means of a written contract to have all disputes determined by arbitration and therefore a prima-facie duty is and upon the Court to act upon the agreement.”
[5] The application for leave to appeal and stay made in the first instance to the High Court was refused by the learned High Court Judge by his Order dated 23rd January 2017.
[6] The Defendants-appellants have renewed their application for leave to appeal and stay before the Court of Appeal regarding the interlocutory order made by the learned High Court Judge on 19th January 2016.
[7] The Plaintiff-Respondents by writ of summons instituted action against the Defendants-Appellants on 2nd March 2011 claiming damages for breach of contract and for illegally possessing its plant and machinery.
[8] The parties had entered into a construction contract and the New Zealand conditions of Contract for Building and Civil Engineering construction NZS 3910 was the applicable standard of contract.
[9] The Defendants-Appellants had filed their statement of defence on 14th April 2011 where they made a counter-claim from the Plaintiffs-Appellants. A reply to the counter-claim and defence had been filed on 11th August 2011 and on 17th January 2012 the Defendants-Appellants filed an inter partes notice of motion seeking leave to file amended statement claim and counterclaim. The Pre-Trial Conference minutes had been filed on 14th January 2014.
[10] The trial had been fixed for 2nd November 2015, however, the parties had informed Court on 6th July 2015 that they had agreed to nominate an engineer to go through the reports filed of record and to give his opinion but the parties had not been able to agree on an engineer to obtain an independent opinion on the reports.
[11] On 22nd November 2015 on an application made by the parties the Plaintiff-Respondent and the Defendants-Appellants had been granted time to file amended statement of claim and amended statement of defence. On the same day a preliminary objection had been taken by the Defendants-Appellants that the Plaintiff-Respondent could not maintain the action without referring the dispute for arbitration.
[12] The Court heard both parties on the objection raised and by Ruling dated 19th January 2016 overruled the objection raised and refused the application for staying further proceedings.
Consideration of the present application
[13] There is a general reluctance to grant leave to appeal against interlocutory orders or decisions. In Kelton Investments Ltd v Civil Aviation Authority of Fiji & Anr [1995] FJCA 15; ABU 34d/95s (18 July 1995) it was held that:
“The Courts have thrown their weight against appeals from interlocutory orders or decisions for very good reasons and hence leave to appeal are not readily given ......”
[14] Justice Sir Moti Tikaram in that case quoted the following passages from Applicants Counsel’s submissions which set out the basis of granting leave to appeal in respect of interlocutory orders:
“5.2 The requirements for leave is designed to reduce appeals from interlocutory orders as much as possible (per Murphy JK in Niemann v Electric Industries Ltd [1978] VicRp 44; (1978) VR 431 at 441-2) The legislature has evinced a policy against bringing of interlocutory appeals except where the Court, acting judicially, finds reason to grant leave (Décor Corp v Dart Industries [1991] FCA 655; 104 ALR 621 at 623 lines 29-31).
5.3 Leave should not be granted as of course without consideration of the nature and circumstances of the particular case (per High Court in Ex parte Bucknel [1936] HCA 67; (1936) 56 CLR 221 at 224).
5.4 There is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. The appellant contends the Order of May 1995 determines substantive rights.
5.5. Even “if the order is seen to be clearly wrong this is not alone sufficient. It must be shown, in addition, to effect a substantial injustice by its operation” (per Murphy J in the Niemann case at page 4412). The appellant contends the Order of 10 May 1995 determines substantive rights.
5.6 In Darrel Lea v Union Assurance (169) VR 401 at 409 the Full Court of the Supreme Court of Victoria said:
“We think it is plain from the terms of the judgment to which we have already referred that the Full Court was stating that error law in the order does not in itself constitute substantial injustice, but that it is the result flowing from the erroneous order that is the important matter in determining whether substantial injustice will result.”
[15] The Defendants-Appellants in their written submissions have cited several decisions to support their grounds of appeal and have thereafter submitted as to how the law as set out in their submissions would apply to the present case.
[16] They have taken up the position that the facts in the present case are similar to the facts in the cases referred to by them. They state further that the parties had entered into a written agreement where they had incorporated an arbitration clause as a means of resolving all their disputes and thereby the parties had chosen for themselves a forum and mode of resolving their dispute and a prima facie duty is cast upon the Court to act upon that agreement. Referring to the manner in which the Plaintiff-Respondent had dealt with the various stages leading up to the hearing of the case they submit that the dispute is eminently suited to be resolved by way of Arbitration. They also submitted that they were ready and willing to proceed to arbitration at the time that they made the application for a stay of the proceedings and sought the Court’s permission to refer the dispute for arbitration. They further stated that these matters present at least an arguable case of novel question pertaining to Arbitration Law.
[17] It is to be noted that after the institution of the action on 2nd March 2011 a period of over 4 years had passed when the Defendants-Appellants took up the preliminary objection on 22nd November 2015 regarding the maintainability of the action without referring the dispute for arbitration which led to the learned High Court Judge giving his Ruling on 19 January 2016 refusing the application for stay and referral for arbitration.
[18] It was argued strenuously by Counsel for the Defendants-Appellants relying mainly on the decision of Bruce Ltd v Strong (Supra) to show that his clients were ready and willing to proceed to arbitration when they made the application to Court. He sought support from the fact that on 28/9/2010 and 14/10/10 they had formally invited the Plaintiff-Respondent to proceed to arbitration to resolve their dispute which was refused and led to the termination of the contract. It would be seen that till 22nd November 2015 there was no further attempt by them to proceed to arbitration. They had in fact submitted to the jurisdiction of the Court when the Plaintiff-Respondent had instituted action by filing their statement of defence and making a counter-claim and even thereafter when the pleadings were sought to be amended.
[19] They were relying on the decision in Bruce Ltd v Strong (supra) which interpreted Section 5 of the Arbitration Act to the effect that it is not so much at what stage a party makes an application to refer the matter for arbitration but rather the readiness and willingness of the parties at all relevant times to go to arbitration, .
[20] The nature of the Arbitration clause in Bruce Ltd v Strong was mandatory and Somerville L.J at p.458 stated:
“...in this particular case the parties have intended, if they lawfully can, to make the decision of their domestic tribunal conclusive and independent of any act by a court of law; and secondly, - and that is the matter which weighs most with me – an arbitration is necessary, whatever view is taken, because an award by the arbitrators is a condition precedent to the defendants’ rights to recover that sum of money to which they claim to be entitled.” ..... (Emphasis added).
[21] In the present case the arbitration clause that was the subject of consideration was Sub-Clause 13.4.1 of the New Zealand Conditions of Contract for Building and Civil Engineering construction NZS 3910 which provides as follows:
“If either:
(a) The Principal or the Contractor is dissatisfied with the Engineer’s decision under 13.2.4; or
(b) No decision is given by the Engineer within the time prescribed by 13.2.4;
then either the Principal or the Contractor may by notice require that the matter in dispute be referred to arbitration. (Emphasis added)
[22] The learned High Court Judge concluded that referring the dispute for arbitration was not a compulsory requirement. It is clear from the wording that the reference to arbitration was not mandatory. On this basis the present case is distinguishable from the decision in Bruce Ltd v Strong.
[23] The Defendants-Appellants relied on the cases referred to in their proposed grounds of appeal paragraph 1(d) (cited at paragraph 4 above). In those cases too the reference to arbitration was mandatory and clearly distinguishable from the present case. The learned High Court Judge referred to these cases in his Ruling. I see no error in the conclusion arrived at by the learned High Court Judge that the reference to arbitration was not a compulsory requirement.
[24] The Defendants-Appellants argued that Section 5 of the Arbitration Act as interpreted in Bruce Ltd v Strong was in their favour to overcome the position that though they had not resorted to arbitration at an early stage, that it did not matter if they were ready and willing to proceed to arbitration.
[25] The learned High Court Judge in dealing with the application for stay stated that it is clear that the party who seeks a stay of proceedings under this section must make an application in that regard before delivering any pleading or taking any other steps in the proceedings. After discussing the decisions in Bruce Ltd v Strong and FAI Insurance Ltd v Consort Shipping Line Ltd (supra) he concluded that in those cases the clause relating to reference to arbitration was mandatory and therefore the circumstances under which the decisions were arrived at in those cases were different from the circumstances in the present case and those decisions were not relevant to the present case.
[26] I see no error in the conclusion arrived at by the learned High Court Judge regarding the application of Section 5 of the Arbitration Act.
[27] The Defendants-Appellants’ submitted that the dispute between the parties is a kind of dispute “eminently suited to be resolved by way of arbitration”. They cited the High Court Ruling in Roadworx Fiji Limited v Fletcher Construction (Fiji) Limited – HBC 108 of 2016 ( 20.10.2016) in support of that proposition.
[28] This proposition that the dispute is “eminently suited to be resolved by way of arbitration” has not been referred to in the Ruling that is being challenged and it would appear that no submission had been made regarding such a proposition for the learned Judge to deal with same.
[29] A perusal of the conclusion in Roadworx Fiji Ltd shows that it was a case where the application for stay had been made with reference to section 5 of the Arbitration when the defendant had after appearance and before delivery of any pleadings or taking other steps in the proceedings had applied to the court to stay the proceedings. In those circumstances The learned High Court Judge had in that case been satisfied that the defendant had been ready and willing to do all things necessary to the proper conduct of the arbitration. Therefore this decision has no relevance to the present case.
[30] The Defendants-Appellants in their proposed grounds of appeal have laid down grounds 1 and 2 with several sub-paragraphs which relate to the matters that I have dealt with above and I have taken into consideration those matters in arriving at the conclusion that they are not arguable.
[31] In the grounds of appeal urged by the Defendants-Appellants and in the submissions, oral and written, there was no mention of any substantive rights being determined, this being a pertinent matter for consideration. Nor has there been any ground referring to any substantial injustice being affected as a result of the refusal by the learned High Court Judge regarding the application of the Defendants-Appellants. (Vide Kelton Investments Ltd v Civil Aviation Authority of Fiji (Supra).
[32] The Defendants –Appellants in the affidavit supporting the application for leave to appeal has not set out any exceptional circumstances, nor set out any matters relating to any prejudice or harm that would be caused to them if leave is not granted.
[33] For the reasons set out above the application for leave to appeal of the Defendants-Appellants is refused.
[34] Since the application for leave to appeal is refused, the consideration for the granting of a stay does not arise.
Orders of Court:
Hon. Justice Suresh Chandra
RESIDENT JUSTICE OF APPEAL
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