S. for the Applicant/Defendant
D.P. Sharma for the Respondent/Plaintiff
Dates of Hearing: 9th, 11th December 1997
Date of Interlocutory Judgment: 20th May 1998
INTERLOCUTORY JUDGMENT
This is an Interlocutory Summons for an order that enforcement of an Award made by an Arbitrator dated the 10th of October 1997 and
delivered on the 15th of October 1997 be stayed pending the outcome of an application to set aside the Award made by Originating
Motion on the 13th of November 1997. The Summons is dated the 18th of November 1997.
Tendered to me on the hearing of the Summons were two voluminous files comprising an affidavit by Emosi Varea, Manager Corporate and
Legal Services of the Applicant sworn on the 30th of October 1997 and a mass of other documents consisting of the Arbitrator's decision
or Award and all other documents including invoices, interrogatories and answers by both parties, submissions of counsel to the Arbitrator,
various affidavits by employees of Ports Authority, and a Licence Agreement for the Provision of Pilot Boat and Pilot Boat Services
in Suva dated the 28th of May 1993, two memorandums of the Acting Deputy Solicitor-General to the Permanent Secretary for Public
Works and Infrastructure and many other documents comprising invoices, accounts and correspondence which were before the Arbitrator
for the purpose of his preparing his Award.
Also included, I hasten to add, were the pleadings in the action delivered to the Arbitrator. I say here that it would have helped
my humour when considering all these documents, as I have had to, if at least counsel could have prepared for me a book of pleadings
instead of simply including them at various places in the two bundles of documents. This would have saved me the time and annoyance
of having to go from one volume to the other to find the Statement of Claim, Defence and then Reply to Defence.
The Award concerns three matters:
(a) C & T Marketing Limited's claim for $75,000.00 being the costs of complying with the requirement on the part of the Ports
Authority of Fiji to give a valid Bill of Sale over the vessels MV Anonyma and MV Seniceva.
(b) C & T Marketing Limited's claim for $49.000.00 being charges for services rendered by C & T Marketing Limited to Ports
Authority of Fiji.
(c) C & T Marketing Limited's claim for damages for the repair of MV Anonyma and MV Seniceva amounting to $16,441.00. It is alleged that such repairs became necessary as a result of services performed for and on behalf of Ports Authority
of Fiji. It is further alleged that such services were rendered outside the scope of normal Piloted services.
These were referred to the Arbitrator pursuant to an Agreement dated 13th February 1996 concerning the sale of two Pilot Boats by
the Applicant to the Respondent and charges for services rendered by the Respondent to the Applicant in connection with a fire on
the motor vessel "Archer" in Suva Harbour and repairs to both vessels which the Respondent alleges became necessary as
a result of the services it rendered.
In his Award the Arbitrator allowed the Respondent's claims other than damage to the Pilot Board "Anonyma" but did not assess
the quantum of damages because he said he required the assistance of both parties to enable him to do so. Basically it is this failure
of the Arbitrator so far to decide the amount of damages which has led to the present application.
The Applicant submits that the Award -
(a) did not deal with all the matters in dispute;
(b) shows that the Arbitrator did not make a conclusive and final determination of the dispute;
(c) is therefore not enforceable; and
(d) is not in accordance with the evidence by the Arbitrator in not taking into account relevant or admissible evidence, or taking into account irrelevant or inadmissible evidence which is highly prejudicial and of no probative value.
In these circumstances, the Applicant submits that the Award and the Arbitration should be stayed until a final determination is made
on the application to set aside the Award.
The Applicant claims that in thus making his Award the Arbitrator was guilty of misconduct within the meaning of that word in Arbitration
law.
In the ordinary sense "misconduct" conjures up suggestions of fraud, malice and other impropriety rather than what it is
in Arbitration law namely an error by the Arbitrator in conducting the reference. It was said in Wilson v. Glover (1969) NZLR 365 that in general, matters which may constitute misconduct justifying setting aside an award are those capable of causing a substantial
miscarriage of justice and numerous examples appear in case law, particularly in England, Australia and New Zealand. I will refer
to a few of these in the course of this judgment. I shall now deal with the grounds submitted by the Applicant in their order beginning
with:
The Arbitrator did not deal with all the matters in dispute
It is said that the Arbitrator was required to deal with both liability and quantum. He has not dealt with quantum and so has not
reached a decision on the evidence. It is said therefore there is no further evidence to be given and that therefore he should have
dismissed the Applicant's claim.
Reliance is placed by the Applicant on the decision of the Victorian Full Court in S & S Constructions Pty Ltd v. Fulop [1966] VicRp 57; (1966) VR 401, wrongly cited to me as (1996).
The headnote to this case reads as follows:
"Where an arbitrator made findings in favour of both parties on various items in a building dispute but did not quantify value
of all items and did not determine a balance owing one way or the other,
Held, there was no final award determined by the arbitrator, and, therefore, no award to enforce; accordingly, an action, seeking
to enforce the arbitrator's findings was properly struck out under the inherent jurisdiction of the Court on the ground that the
action lacked substantial foundation, and was vexatious and an abuse of the process of the Court.
Dey v. Victorian Railway Commissioners (1949), 78 C.L.R. 62, at pp. 84, 91, 109; [1949] A.L.R. 333, considered.
General Steel Industries Incorporated v. Commissioner for Railways (N.S.W.) [1964] HCA 69; (1964), 112 C.L.R. 125; [1965] A.L.R. 636. applied."
I was also referred to Halsbury's 4th Edition Volume 2 paragraph 610 which says:
"An award which does not decide the difference referred to arbitration is bad and unenforceable."
Several cases are then cited to support this statement. But first I shall comment on Fulop's case. I regard this case as authority for its own facts. As I understand those facts from the judgment of the Court the Arbitrator
apparently did not consider it necessary to take further submissions from the parties on the question of amount although it would
appear he could have done so. In the instant case the Arbitrator readily concedes that he wanted further submissions on the question
of quantum because he considered he needed clarification of the evidence. At paragraphs 18 to 19.1. of his Award he said this:
"18.0 Having allowed the Plaintiff's claims (other than the damages to the "Anonyma") it is now a matter of assessing
the quantum of the claims. The Plaintiff has spelt out in some detail how much it is claiming and provided bundles of invoices and
statements which it says supports it claim. Through interrogatories further information has been provided. The Defendant has provided some evidence, for example the Peckham Affidavit confirms the normal tug rate. While these are
helpful I do not find they cover the quantum issue fully. The Defendant has queried some of the details provided.
I could take the approach as the Plaintiff, quoting authority, invites. That is to make an assessment in each case on what is before
me and on general principles particularly as indicated by the courts. It would be quicker and it may be a sort of rough justice could be effected. However I am not prepared to do this for the reasons
given in the next paragraph. Unless of course both parties insist.
19.0 I consider I need the assistance of both parties to enable me to better consider the matter of quantum.
19.1 The Defendant has made it clear it would need to be heard on the matter of quantum and has raised reasonable doubts on the relevance
of some invoices
I therefore hold that Fulop's case is distinguishable on its facts from those in the present case. There is nothing in Fulop nor in
any of the various cases I have been cited by counsel nor in my own research into the question which precludes an Arbitrator refraining
from making a finding on liability but refraining from making a finding on quantum until he has heard further evidence.
This accords with the general rule that any tribunal is the master of its own procedure. This was stated by Diplock J. (as he then
was) in London Export Corporation Ltd. v. Jubilee Coffee Roasting Co. Ltd. (1958) 1 WLR 271 at p.280 where he said:
"Rather should the courts start with the presumption that, in confiding their disputes, not to the courts of law, but to an arbitral
tribunal of their own choice, the parties intended to confer upon that tribunal a discretion as to the procedure it should adopt
to arrive at a just decision; and the court will not lightly assume a limitation on that discretion, unless the mode of exercising
it tends, or appears to tend, to an unjust result."
I do not consider that the course proposed by the Arbitrator in this case will lead to an unjust result or that the course he proposes
can not be justified in law. Thus in Bristol Corporation v. John Aird & Co. [1913] UKLawRpAC 9; (1913) AC 241 at p.261 Lord Parker of Waddington said:
"My Lords, I should like to add one thing more. I do not think it is advisable that any doubt should be thrown upon what I personally
know to be the practice of the Courts below, and in particular of the Chancery Division, with regard to exercising their discretion
under the Arbitration Act. It is, I know, a common thing to stay an action as to one matter in dispute and at the same time to allow it to proceed as to another,
notwithstanding that both matters are within the reference; and I think it is obviously a desirable course in many cases, for this
reason, that very often the matters subject to the reference include both the question of the true construction of the instrument
containing the submission, and also various matters of detail, and it may be of account."
Arbitrator did not make a conclusive and final determination of the dispute
On the evidence this cannot be denied but for the reasons I have just given I consider this does not render the Award invalid or unenforceable.
There is no doubt that by submitting their claims to arbitration, the parties confer upon the Arbitrator an authority conclusively
to determine them - Dobbs v. National Bank of Australasia Ltd. [1935] HCA 49; (1935) 53 CLR 643 at p.653.
I therefore agree that in respect of quantum but, only of that, the Award at present is not enforceable.
It is claimed by the Applicant that the Arbitrator accepted the Respondent's affidavit material although objection had been taken
by the Applicant that this did not comply with Order 41 of the High Court Rules which I take it is a reference to the affidavit of
Sovea Tabua the principal executive of the Respondent sworn in support of the Respondent's claim before the Arbitrator.
The submission by the Applicant to the Arbitrator in this regard is interesting.
Rules 5 and 6 of Order 41 deal with the contents of affidavits. Rule 5(1) states that an affidavit may contain only such facts as
the deponent is able of his knowledge to prove.
Rule 6 allows the Court to strike out off any affidavit any matter which is scandalous, irrelevant or otherwise oppressive. Apparently
the Applicant objected to the whole of the Respondent's affidavit material on the ground that it did not comply with Order 41.
The Arbitrator referred to this in paragraph 2 of his Award when he said:
"The Defendant's statement is not particularly helpful as it does not particularise what in the Plaintiff's affidavit, ought
to be struck out or ignored."
The affidavit in question was sworn by Sovea Tabua one of the shareholders of the Plaintiff who states that he was engaged in the
negotiations with the then Director-General of the Respondent and deposes that the Respondent only entered the Sale and Purchase
Agreement after assurances by the Director-General that the Applicant would pay for the cost of the repairs to both vessels. In my
view much of Mr. Tabua's affidavit is based on his personal knowledge of the matters in question. It is true that he transgresses
Rule 5(1) to some extent by making submissions on the law and facts rather than confining himself to the facts. But I agree with
the Arbitrator there is nothing specific alleged in this regard by the Applicant in its submission to the Arbitrator. Any lawyer
worth his salt knows that he must draw to the attention of the tribunal particulars of any material on which his client wishes to
rely and this was not done by the Applicant in this case. I therefore agree with the Arbitrator that he found nothing in the submission
to persuade him on this question. I therefore find no substance in this objection.
Finally under this heading the Applicant submits that the Award should be set aside on the ground of misconduct and cites London Export Corporation Ltd v. Jubilee Coffee Roasting Co. Ltd. (supra) in support but especially at p.277. Here Diplock J. stated:
"Where the award has been made by the arbitrator in breach of the agreed procedure, the applicant is entitled to have it set
aside, not because there has been necessarily any breach of the rules of natural justice, but simply because the parties have not
agreed to be bound by an award made by the procedure in fact adopted."
It is submitted that the Arbitrator has committed a breach of natural justice. This appears to be because he allegedly did not follow
the agreed procedure which the Applicant alleges is set out in paragraphs 6 and 7 of the affidavit of Emosi Varea sworn on the 30th
of October 1997. Those paragraphs read:
"6. Apart from the relaxation of the rule that evidence was to be taken orally the Defendant had insisted that the Plaintiff
prove its case strictly. If this was not acceptable to the Plaintiff or the Arbitrator then that should have been raised. I was present
at some of the preliminary meetings when objection was made to the Plaintiff proving its claim by the mere submission of documents.
7. As to the evidence by affidavit material the Plaintiff knew or ought to have known that compliance with the High Court Rules Order
41 was necessary. The Defendant objected to the whole of the Plaintiff's affidavit material as this did not comply with the said
rule. Further, objection had been raised on copies of the invoices being submitted as proof. This too appears to have been ignored
by the Plaintiff and the Arbitrator."
I have already dealt with paragraph 7 of the affidavit. If as is alleged the Arbitrator wrongly accepted "the mere submission
of documents" and to the fact that copies of invoices were submitted as proof then I reject this submission. Furthermore the
Arbitrator also had answers to interrogatories by both sides, in the case of those delivered to the Respondent all directed to the
quantum of the Respondent's claim, and all referring to particular invoices. No objection was ever taken by the Applicant to these
answers being unsworn nor was any request made to the Arbitrator for leave to cross-examine any representative of the Respondent
on these answers. The Arbitrator was therefore entitled to assume in my judgment that the Applicant was satisfied with the Respondent's
answers.
The Arbitrator had before him a wealth of material relating to the Respondent's claim. If the Applicant objected to copies of invoices
then it would have been a simple matter to have asked the Arbitrator to order production of the originals which obviously was not
done. In my judgment this submission too must fail.
Award not according to the evidence
It is submitted that because the Arbitrator freely admitted that he cannot reach a decision on the evidence the normal rule is that
the claim must fail. There is nothing to displace the normal rule according to the Applicant.
I do not agree. The Arbitrator has already reached a decision on liability on the evidence; all he seeks now are further submissions
and evidence on the question of quantum and for reasons I have already stated I see no ground for refusing to allow him to consider
such further material.
Errors on the face of the Award
It is submitted that there is clearly a conflict between clauses 3, 5, and 6 of the contract. These clauses read thus:
"3. In exchange for payment of the purchase money the Authority shall furnish the Purchaser with a legal bill of sale of the
Pilot vessels and or all papers necessary to effect a legal transfer of the pilot vessels.
5. The pilot vessels with everything belonging to them shall be at the Authority's risk and expense until they are delivered to the
Purchaser but, subject to the conditions of this contract, the pilot vessels with everything belonging to them shall be delivered
and taken over as they are at the time of delivery, after which the Authority shall have no responsibility for possible faults or
deficiencies of any description.
6. The Purchaser having made inspection of the pilot vessel shall take them as is and shall not be entitled to reject or refuse them
for any cause whatsoever and the Purchaser hereby agrees that the Authority shall be free from all liability for defects or deficiencies
howsoever and whensoever arising in the pilot vessels their tackle apparel furniture boats and other equipment."
The Arbitrator recognised this in paragraphs 6.2 to 8.3 of his Award and as much has been said about this by the Applicant I quote
verbatim paragraphs 7 to 8.3 of the Award and say simply that I agree with all the Arbitrator says there.
"7.0 There is then a conflict of interpretation of the pilot boat sale contract. The law generally is that in such circumstances
reference can be made to matters outside the written contract to help explain the meaning of the written agreement or any part of
it.
"Although extrinsic evidence cannot be admitted to vary or contradict the written agreement, it is admissible in some circumstances
to explain it. The rule on this subject was stated by Tindal C.J. in Shore v Wilson (1842) 9 Cl & Fin. 355, 565:
"..where the wording or phraseology is susceptible of more than one meaning, evidence of surrounding circumstances, i.e. the
circumstances known to the parties at the time of contracting and the facts about which they negotiating, may be admitted to explain
which meaning was intended. .. in Reardon Smith Line Ltd. v. Yngvar Hansen Tangen (1976) 1 W.L.R. 989, 995 - 996 Lord Wilberforce said: "In a commercial contract it is certainly right that the court should know the commercial
purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the
market in which the parties are operating."".
8.0 The following matters are relevant:
8.1 Documents relating to the tendering are included as attachments in several places but the Defendant's Documents numbered 1 to
8 conveniently assembles them in one place. I refer to both the original tender and the subsequent re-tender. The tender notices
include in the one notice both the call for tenders for sale and the tender for pilot boat services. They are considered together
in arriving at the decision to award the tender.
The Defendant's letter of acceptance dated 19 April 1993 (annexure "A" Statement of Claim) also includes both the pilot
boat services contracts as being awarded. When the Defendant forwarded the contracts for signing they were forwarded together by
letter dated 28 May 1993 for execution (doc. 11 of the Defendant's Documents). Both were signed at the same time, 28 May 1993.
The Defendant in selling the pilot boats was clearly seeking to ensure that the pilot boat service would continue. It is clear for
example from reading the assessment of the tenders and the re-tenders (see documents No. 4 and 7 of the Defendant's Documents) that
the Defendant was particularly anxious to have the pilot boat services. The wording of the Assessment (doc. No. 4 referred to) for
example says
"Tenders were invited from prospective tenderers for the provision of pilot boat services namely the ferrying of PAF pilots to
and from vessels at pilot station, at the Port of Suva. Prospective tenderers were also requested to submit, as part of the tender
requirements, prices of the sale and purchase of the pilot boats, Anonyma and Seniceva."
This is in line with the Defendant's statutory functions under s. 10 Ports Authority Act for which it is specifically empowered under
s. 11(1) (f) (vi) of the same Act.
8.2 The pilot boats were being sold so that they could continue to provide pilot boat services at Suva Port. As indicated by the Defendant
in answer to the Plaintiff's interrogatories (third interrogatories) the purpose of the sale "one of the reasons was to free
PAF of the costs of running the service".
Also the Varea Affidavit paragraph A1.2 confirms that the Defendant was seeking to divest itself completely from the cost of maintaining
the pilot boats and running them.
The whole nature of what transpired was: that the Defendant was getting out of the business of running of pilot boats and pilot boat
services; the Defendant wanted to sell the boats to someone who would take over the operation of the boats and the services; that
the Defendant be left free of the cost but still regulating the provision of port services.
The Plaintiff was aware of this. Sovea Tabua was one of the Directors of the Plaintiff. He was at the time employed by the Defendant.
This was well known to the Defendant and in this letter accepting the Plaintiff's offer the Defendant made it conditional upon Sovea
Tabua resigning his position with the Defendant.
The Plaintiff then also understood that the main purpose of the exercise was to transfer the responsibility for maintaining the pilot
boats and providing the pilot boat services away from the Defendant to a third party. The Plaintiff in tendering was not therefore
just tendering to buy pilot boats but was tendering to buy the boats to be used in the pilot boat services contract.
There was then clearly an implied term that the pilot boats were indeed fit for the provision of pilot boat services which pilot boat
services were to commence simultaneously with the delivery of the pilot boat and before the sale had been completed."
It is vital to note that not only did the Arbitrator have the contract before him but he also had all relevant correspondence. I consider
his finding was not based on isolated clauses but on all the material he had before him and I add for completeness that in my opinion
the Arbitrator produced an excellent Award. It is very well researched and he has obviously drawn on his 20 years' experience as
a lawyer in preparing it. I therefore reject the Applicant's submissions under this heading also.
Prejudice to the Applicant
Here the Applicant submits that as the Respondent company is now in the process of being wound-up, if the Award is not stayed or the
Arbitrator is allowed to proceed further and subsequently enforced, but the Applicant succeeds on appeal, the appeal will be rendered
nugatory. On the other hand the Applicant is a Statutory Authority and is not likely to disappear.
The general rule is that no successful party should be denied the fruits of his judgment. As I have said on the material before me
I am not prepared to hold that the Arbitrator has shown any misconduct in the sense I have described. In my opinion he must be allowed
to complete his Arbitration and I therefore dismiss the Applicant's Summons and order that the matter be referred back to the Arbitrator
to allow him to complete his findings on quantum of damages. Because the application was strongly opposed by the Respondent I order
the Applicant to pay the Respondent's costs which I fix at $700.00.
JOHN E. BYRNE
JUDGE
Authorities and legislation referred to in judgment:
High Court Rules 1998.
Halsbury's 4th Edition Volume 2 Paragraph 610.
Bristol Corporation v. John Aird & Co. [1913] UKLawRpAC 9; (1913) AC 241.
Dobbs v. National Bank of Australasia Ltd. (1935) 53 C.R 643.
London Export Corporation Ltd. v. Jubilee Coffee Roasting Co. Ltd. (1958) 1 WLR 271.
S & S Constructions Pty Ltd v. Fulop [1966] VicRp 57; (1966) VR 401.
The following additional legislation and cases were cited in argument:
Arbitration Act Cap. 38.
Czarnikow & Co. Ltd. v. Roth Schmidt (1922) 2 K.B. 478.
Civil Aviation Authority of Fiji v. Nirbhai Gurucharan Singh HBJ0013 of 1996L - unreported ruling of Lyons J. dated 15th August 1997.
Lithgow City Council v. Construction Services Pty. Ltd. (No. 2) (1957) S.R. (N.S.W.) 619.
Lury v. Pearson [1857] EngR 197; 1 C.B. (N.S.) 639.
Hbc0480d.97s
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