Contrapac Pty Ltd, Re; Re Aust Wool Realisation Commission [1992] QSC 256

-"-' . ~ TRANSCRIPT OF PROCEEDINGS V.~r~'v\\ State Reporting Bureau, 4th Floor, The Law Courts, George Street, / - BRJSBANE. 0. 4000 Tel. (07) 227.4360 (Copyright in this transcript is vested in the Cro'Wil. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND . CIVIL· JURISDICTION ( RYAN J o.s. No 590 of 1992 IN THE MATTER OF THE COMMERCIAL ARBITRATION ACT 1990 (COMMONWEALTH) IN THE MATTER OF A CONTRACT IN WRITING MADE ON OR ABOUT THE I, ) 3RD DAY OF FEBRUARY 1986 BETWEEN CONTRAPAC PTY LTD (FORMERLY BRISMAR PTY LTD) AND THE AUSTRALIAN WOOL REALISATION COMMISSION (FORMERLY THE AUSTRALIAN WOOL CORPORATION) IN THE MATTER OF A CONTRACT IN WRITING MADE ON OR ABOUT THE 28TH DAY OF FEBRUARY 1986 BETWEEN CONTRAPAC PTY LTD (FORMERLY BRISMAR PTY LTD) AND THE AUSTRALIAN WOOL REALISATION COMMISSION AND THE AUSTRALIAN WOOL REALISATION .COMMISSION (FORMERLY THE AUSTRALIAN WOOL CORPORATION) BRISBANE .. DATE 17/7/92 JUDGMENT 1 -- 1 of 17 -- 170792 JUDGMENT HIS HONOUR: I consider that I should not stay the application by Contrapac for the declarations as to the parties to the two contracts. I consider that this issue should be determined forthwith. I shall allow the respondent to place before me any evidence on that issue and to make such submissions as it considers appropriate in relation to it. However, I consider the proceedings in relation to the declaration sought as to arbitration of matters referred to in paragraphs 202 and 203 of the amended points of claim should be stayed. I publish my reasons. HIS HONOUR: I will adjourn the further hearing of this matter until 4 o'clock on Monday. I reserve the question of costs. 2 10 0 30 0 40 0 50 60 -- 2 of 17 -- IN THE SUPREME COURT OF QUEENSLAND O.S. No. 590 of 1992 IN THE MATTER of Commercial Arbitration 1990" - and - "The Act IN THE MATTER of a contract in writing made on or about the 3rd day of February, 1986 between Contrapac Pty. Ltd. (formerly Brismar Pty. Ltd.) and the Australian Wool Realisation Commission (formerly the Australian Wool Corporation) - and - IN THE MATTER of a contract in writing made on or about the 28th day of February, 1986 between Contrapac Pty.Ltd. (formerly Brismar Pty. Ltd.) and the Australian Wool Realisation Commission (formerly the Australian Wool Corporation) JUDGMENT - RYAN J. Delivered the Seventeenth day of July, 1992 Counsel: R. Holt of Counsel for the Applicant J. Doyle, Solicitor for the Respondent Solicitors: McCrea Jones t/a for Carter Green & Co., Solicitors for the Applicant Doyles Solicitors for the Respondent Hearing Dates: 30th June, 6th and 8th July, 1992. -- 3 of 17 -- ( \ IN THE SUPREME COURT OF QUEENSLAND o.s. No. 590 of 1992 IN THE MATTER of Commercial Arbitration 1990" - and - "The Act IN THE MATTER of a contract in writing made on or about the 3rd day of February, 1986 between Contrapac Pty. Ltd. (formerly Brismar Pty. Ltd.) and the Australian Wool Realisation Commission (formerly the Australian Wool Corporation) - and - IN THE MATTER of a contractin writing made on or about the 28th day of February, 1986 between Contrapac Pty.Ltd. (formerly Brismar Pty. Ltd.) and the Australian Wool Realisation Commission (formerly the Australian Wool Corporation) JUDGMENT- RYAN J. Delivered the Seventeenth day of July, 1992 An application has been made on behalf of the respondent, the Australian Wool Realisation Commission, that the proceedings commenced by originating summons No. 590 of 1992 be stayed, and that the matters raised in it be referred to the arbitrator for determination. -- 4 of 17 -- 2 The originating summons filed on 17 June 1992 on behalf of Contrapac Pty. Ltd. seeks:- ( 1 ) A declaration that upon the proper construction of an agreement in writing made on or about 3 February, 1986, Contrapac Pty. Ltd. (formerly Brismar Pty. Ltd.) ( "Contrapac") and the Australian Wool Realisation Commission (formerly the Australian Wool Corporation) ("AWRC") were parties to the said agreement. ( 2) A decla~ation that upon the proper construction of an agreement in writing made on or about 28 February 1986, Contrapac and the AWRC were parties to the said agreement. (3) A declaration that upon the proper construction of a notice of dispute dated 27 June 1991 from Alpha Plumbing Supplies to the AWRC, the applicant is entitled to arbitrate in the now pending arbitration the matters referred to in paragraphs 202 and 203 of the amended points of claim dated 6 May, 1992. Mr. Foggo, a director of Contrapac, has deposed that Contrapac changed its name from Brismar Pty. Ltd. on 25 November, 1991. Annexed to his affidavit is a copy of a contract between Australian Wool Corporation as proprietor and Alpha Plumbing Supplies Pty. Ltd. as trade contractor dated 24th June, 1986 (referred to as the Store 1 contract). There is also annexed a copy of a contract between the same parties dated 24 June 1986 (referred to as the Store 2 contract). Mr. Foggo states that Alpha Plumbing Supplies Pty. Ltd. is not and never has been a company incorporated in Queensland or any State of Australia. At the time the contracts were entered into there was no business 0 0 0 0 -- 5 of 17 -- 3 name registered in the name of Alpha Plumbing Supplies either in Queensl-and or in any state of Australia. "Alpha Plumbing Supplies" was a name adopted by Brismar Pty Ltd. in its operations. He states that he had proposed to change the name of Brismar Pty. Ltd. to Alpha Plumbing Supplies Pty. Ltd. prior to the contracts being entered into and he caused an application for reservation of name to be lodged. The application by Brismar Pty. Ltd. was unsuccessful due to the name's similarity to a name (~I of a company then incorporated in the Australian Capital ( -~ \. ) Territory. The contractor was required, under cl. 8.07 of the contracts, to take out workers' compensation insurance in respect to any person employed by the trade contractor in the execution of the work. Workers compensation insurance was taken out in respect to the works in the name of Brismar Pty. Ltd. An income tax exemption was granted in respect to the work being carried out under the contracts in the name of Brismar Pty. Ltd., and copies of the exemption forms were forwarded to the construction manager employed by AWRC. A copy of a deduction variation certificate issued to "Brismar Pty. Ltd. t/a Alpha Plumbing Supplies" is annexed to Mr. Foggo's affidavit. A bank guarantee issued by National Australia Bank in respect to the contracts was taken out·by Brismar Pty. Ltd. t/a Alpha Plumbing Supplies in lieu of ·cash retention by the proprietor from the trade contractor. This is retained by AWRC. A bank guarantee was issued also by Westpac Banking Corporation which was taken out by Brismar Pty. Ltd. t/ a Alpha Plumbing Services. -- 6 of 17 -- ------- ------------------------ 4 During the currency of the works carried out under the terms of the contract, bank accounts were held styled Brismar Pty. Ltd. trading as Alpha Plumbing Supplies. Cheques drawn by AWRC in payment of the contract price payable under the terms of the contract were drawn in favour of "Alpha Plumbing Supplies" and were banked to this account. Mr. Foggo has deposed that on 13 May, 1991 he caused a lengthy letter of 21 pages dated 10 May, 1991 to be sent to B.M. Culley & Associates Pty. Ltd. That company is deposed to be the c=) construction manager employed by AWRC, and is signed by D.J. Foggo for Brismar Pty. Ltd. trading as Alpha Plumbing Supplies. The letter outlines the nature of the dispute which Brismar Pty. Ltd. alleged had arisen under the terms of the contracts. A receptionist, Miss Little, has deposed after reviewing the mail book that this letter was sent to B.M. Culley & Associates on 13th May, 1991. c=) On 27 June, 1991, Mr. Foggo caused a letter to be sent to c=) the Australian Wool Corporation advising of a dispute having arisen under the terms of each of the contracts, and requesting that the matter be referred to arbitration. On 23 December, 1991, Mr. Wilson was nominated as arbitrator to arbitrate a dispute in respect to the contracts. On 4 February 1992, a preliminary conference was held before Mr. Wilson as arbitrator and in the presence of representatives of Brismar Pty. Ltd. and AWRC, at which a timetable for the conduct of the arbitration was agreed. A Points of Claim was delivered to the solicitors acting on behalf of AWRC on 25 February 1992. On 24 March 1992, a request 0 -- 7 of 17 -- () 5 for particulars of the Points of Claim was delivered by the solicitors for AWRC. On 26 March 1992, notification was sent by the solicitors for the applicant to the solicitors for AWRC advising them of its intention to amend the claim to incorporate variations to the contract alleged to have been agreed but not made. It appears that the variation claims were not referred to in the notices of dispute. On 7 April 1992 the applicant's solicitor notified the respondent's solicitors of its intention to refer these matters to a separate arbitrator. However, on 13 April 1992, the applicant's solicitor wrote to the respondent's solicitors, claiming that the variation schedules formed part of the basis of the notice of dispute, and hence that it was not necessary to extend the terms of the arbitration or alternatively to proceed with a separate arbitration. The letter in reply of 27 April, 1992 claimed that the notices of dispute were defective. - / 1 The solicitor for the applicant has deposed that on 11 May 1992 he caused to be delivered to the respondent's solicitors an amended Points of Claim dated 6 May, 1992. On 21 May, 1992, he caused to be sent to them a letter, enclosing a draft of the affidavits of Mr. Foggo and Miss Little. It was submitted for Contrapac in relation to the application for a stay that the question of the identity of the parties was a matter which was fundamental to the arbitrator's jurisdiction, and only the Court had power to grant the relief sought. It was claimed that the declaration regarding the scope of the dispute was also a matter going to the jurisdiction of the arbitrator, and that in any event the convenient course was for -- 8 of 17 -- - - ---~-- ------- ------- 6 the court to determine the matter. It was said also that the court had power to correct a misnomer by construction. The power of the Court to grant the declarations was said to be provided by s. 6A of the Commercial Causes Act 1910-1972, and 0. 64, r.1A. For the respondent, it was submitted that the question was not one of construction, but was one as to which were the contracting parties. The Court would have to decide which among several possible persons was the one which entered into the contract. It was claimed that this was not a case of a construction summons and that the determination of the issue as to which were the parties should be determined on proper evidence. Section 6A(4) of the Commercial Causes Act 1910-1972 provides that where it is necessary in the determination of a commercial dispute to decide any question of fact, the Judge may decide the question forthwith or settle the issues for trial and give any consequential directions as if the matter was a commercial cause. I suggested to the parties that the matters in dispute might be clarified if the applicant's witnesses were made available for cross-examination on their affidavits. This course was followed, and Mr. Foggo and Miss Little were cross-examined by Mr. Doyle, who appeared for the respondent. Mr. Foggo admitted that he was a director of seven companies in February, 1986. They were all separate companies, and there was no holding company. He was a shareholder and director in all these companies, and the other shareholder and director was his wife, his mother or one John Waning who had been his partner. Mr. Foggo was the executive director of most of the companies. 0 0 0 0 -- 9 of 17 -- 7 He said that Brismar was the company which used to run Alpha Plumbing Supplies. It was the only company in the group that did plumbing and drainage work and plumbing supplies. He applied for the name Alpha Plumbing about February 1986. The application would have been signed in the name of Brismar Pty. Ltd., because at that time Brismar was actually trading as Alpha Plumbing Supplies and it was their intention to retain the name of then change it to Alpha Plumbing Supplies Pty. Ltd. He said that the contract of 24 June 1986 was signed in the name of Alpha Plumbing Supplies Pty. Ltd. because books had been ordered with the letterhead Alpha Plumbing Supplies Pty. Ltd. because it was his intention to run Brismar Pty. Ltd. as that company. Miss Little said that when she prepared her affidavit in May 1992, she checked the original copy of the letter sent to B.M. Culley & Associates against Ex. G to the affidavit of Mr. Foggo. Mr. Vines, who was employed by B.M. Culley & Associates and acted as representative for AWRC stated that he had checked the letter dated 10 May, 1991 which was received from Brismar Pty. Ltd. against ex. G to the affidavit of Mr. Foggo. He has set out in a document a comparison of the . two which reveals some discrepancies. A letter sent by Mr. Foggo for Alpha Plumbing Supplies to the Australian Wool Corporation headed Notice of Dispute and dated 27 June 1991 is in these terms:- Notice of Dispute Store 1 Contract That variations to the Trade Contract for Store No. 1, totalling $267,795.84 have not been paid by the Australian Wool -- 10 of 17 -- 8 Corporation to Alpha Plumbing in accordance with the said contract, as detailed to B.M. Culley and Associates, as agents for the Australian Wool Corporation, as per Alpha Plumbing correspondence dated the 10th May, 1991. Another letter of the same date relates to Store 2 contract, and alleges that variations to the Trade Contract for Store No. 2 totalling $306,368.73 have not been paid. The respondent's solicitors wrote to the applicant's solicitors on 27 April, 1992 claiming "it is now apparent that your client is relying upon variations referred to in the attachments to the letter to B.M. Culley & Associates Pty. Ltd. (of 1 0 May 1991 ) which were not served with the Notices of Dispute. It appears that the Notices of Dispute are accordingly defective." Points 202 and 203 of the amended points of claim are in these terms: 202. Further: (a) from time to time during the construction of the store l and store 2 works, BMC instructed the Contractor to carry out variation work pursuant to cl. 5.04 of the store 1 and store 2 contracts; (b) the contactor carried out the said work as instructed; (c) subsequent to the contractor's carrying out the said work, BMC approved payment to the Contractor for such work. Particulars STORE 1 Original contract sum $272,242.82 0 0 0 0 -- 11 of 17 -- 9 ADD approved variations (see schedule 3 hereto) LESS amount paid AMOUNT OUTSTANDING STORE 2 Original contract sum ADD approved variations (see schedule 4 hereto) LESS amount paid AMOUNT OUTSTANDING $ 81878.59 $281,121.41 $2731240.00 $ 7 I 881 o 41 $542,765.00 $ 151242.41 $558,007.41 $5451886.00 $ 121121.41 203. The Principal has failed to pay to the contractor the total sum of $201 002.82 despite demand having been made. AND the Contractor claims: (a) each amount claimed in schedules 1 and 2 hereto for each item of work therein described as the reasonable price of carrying out the said item of work; (b) the amount of $20~000.82 pursuant to para. 202 hereof; (c) interest on each of the said amounts claimed pursuant to the Common Law Practice Act 1867 (as amended): IN THE ALTERNATIVE to (a): (d) each of the amounts claimed in schedules 1 and 2 hereto for each item of work therein described as damages for breach of contract; -- 12 of 17 -- ,/ 10 ( ~) compound interest on each of the said amounts claimed. After I had heard submissions in respect to the course I should follow, I reserved my decision. Subsequently, I gave an opportunity to the parties to make submissions, if they wished to do so, as to the applicability if any of s. 39 of the Commercial Arbitration Act. It was submitted for the respondent that:- (a) An arbitrator can and should determine any challenge as to c=) his jurisdiction. Such a decision is reviewable for error pursuant to s. 38 or s. 39 of the Commercial Arbitration Act 1990. (b) It is preferable that a supervising court normally exercise its discretion in favour of allowing, or if necessary, requiring an arbitrator to determine jurisdictional facts. (c) Once an arbitrator intends to conduct a jurisdictional inquiry and the party seeks to restrain him therefrom, that party must show a real likelihood or danger of the wrongful assumption of jurisdiction. (d) A dispute as to the identify of a party to an agreement containing an arbitration clause is one which, if and when necessary, should be raised under s. 39 of the Commercial Arbitration Act 1990. It is unnecessary to consider (c), as no attempt is being made to restrain the arbitrator. In relation to (d), I was referred by the solicitor for the respondent to Koteff v. Lloyd, an unreported decision of Needham J. (No. 4255 of 1986, Supreme Court of N.S.W.). In that case, the arbitrator had given his c=) 0 0 -- 13 of 17 -- 1 1 consent to the Court determining certain questions of law, namely (1) who were the parties to a building contract; and (2) whether the arbitrator had power to substitute one party for another in the circumstances of that case. The application to have the declarations made was made by one of the parties. The Court had jurisdiction therefore to determine the application pursuant to s. 39. The decision does not, in my view, support proposition (d). I was referred also to Funq Sang Trading Ltd. v. Kai Sun () Ltd. Products & Food Co. Ltd. (1992} D.R. Reps 80, 661, but that decision turned upon a specific provision in the UNCITRAL Model ) Law relating to international arbitration. The position is, I consider, accurately stated in the judgment of Fullagar J. in Robertson v. Asva Holdings (No. 3394 of 1989, Supreme Court of Victoria), in which he summarised the relevant cases as showing that an arbitrator has power to decide all questions of fact upon which his alleged authority to proceed ( as an arbitrator must depend. He quoted the following passage from Halsbury's Laws of England, 4th ed., Vol. 1, p. 61: "Where the jurisdiction of a tribunal is dependentupon the existence of a particular state of affairs,that state of affairs may be described as preliminary to, or collateral to the merits of, the issue. If at the inception of an enquiry by an inferior tribunal a challenge is made to its jurisdiction, the tribunal has to make up its mind whether to act or not and can give a ruling on the preliminary or collateral issue, but that ruling is not conclusive." His Honour added that the cases also show that the attitude of the supervising court will normally lean strongly in favour of requiring the arbitrator to decide those questions. -- 14 of 17 -- 12 In Thirteenth Talfit Pty. Ltd. v. Dowsett & Ors. (1991) 1ADRB 800-006, (Supreme Court of Victoria) Phillips J. accepted four submissions made on behalf of the defendants in that case. Included among these was a submission that it is preferable that a supervising court normally exercise its discretion in favour of allowing, or if necessary, requiring an arbitrator to determine jurisdictional facts. Whether the court will exercise its discretion by leaving it to an arbitrator to determine jurisdictional facts, or will c=) determine the issue of jurisdiction itself, must depend on the circumstances in a particular case. In this regard, I refer to a statement of Mackay L.C. in Metal Scrap Trade Corporation Ltd. v. Kate Shipping eo. Ltd. (1990) 1 W.L.R. 115 at p. 117:- "I believe it is highly desirable that the question whether or not there was a concluded contract and if there was, whether or not there was an arbitration clause included in it, should be decided before costs are incurred in the arbitration." An arbitrator obtains his jurisdiction solely from the agreement for his appointment. He cannot confer jurisdiction upon himself by deciding in his own favour some preliminary point c=) c=) upon which his jurisdiction depends. May v. Mills (1914) .30 TLR c=) 287. I consider it proper for the question of the parties to the contract to be decided before the arbitrator proceeds further. A declaration is sought that upon the proper construction of the agreements, the parties were Brismar Pty. Ltd. (now Contrapac) and AWRC. The issue is. whether it should be concluded on admissible extrinsic evidence that . the contracts were made between Brismar Pty. Ltd. and AWRC. That is a matter which I may determine forthwith or send for trial. Material has been placed -- 15 of 17 -- 13 before me which indicates that the contracts were made between these parties. Nothing has been adduced to challenge that material. It was submitted for the respondent that the opportunity should be afforded to have discovery and carry out inspection of documents, from which I understood it to be suggested that something might turn up if that process was carried out. But after cross-examination of the applicant 1 s witnesses, nothing has turned up to suggest that the position is (-) other than as stated by Mr. Foggo. I consider that I should not stay the application by Contrapac for the declarations as to the parties to the two contracts. I consider that this issue should be determined forthwith. I shall allow the respondent to place before me any evidence on that issue, and to make such submissions as it considers appropriate in relation to it. The position is different in relation to the notice of dispute. There are disputes as to the facts revealed in the material placed before me, namely whether certain matters were included in the letter of 10 May, 1991. I consider that these are matters which can and should be determined by the arbitrator. The court may, by making a declaration, define the limits of an arbitrator 1 s jurisdiction: Gold Coast Council v. The Rutherford Group [1980] Qd.R. 275; Brisbane City Council v. Wood Hall Ltd. [1983] 1 Qd.R. 503 at p. 571. But where an arbitrator has entered upon the arbitration, I consider that the determination of factual issues arising in the course of the arbitration should generally be resolved by the means selected by the parties, namely by the arbitrator appointed according to their contract. -- 16 of 17 -- 14 Accordingly, I consider that the proceedings in relation to the declaration sought as to arbitration of matters referred to in paras. 202 and 203 of the amended Points of Claim should be stayed. 0 0 0 0 -- 17 of 17 --