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- Notable Unreported Decision
SUPREME COURT OF QUEENSLAND
Hampton Irrigators Pty Ltd v Toowoomba Regional Council (No 2)  QSC 345
HAMPTON IRRIGATORS PTY LTD
ACN 064 888 633
TOOWOOMBA REGIONAL COUNCIL
ABN 99 788 305 360
BS No 11921 of 2020
Supreme Court at Brisbane
20 November 2020
12 November 2020
The proceedings be stayed until further order.
PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS – TO STAY OR DISMISS ORDERS OR PROCEEDINGS GENERALLY – where the applicant and respondent entered into an agreement for the supply of water – where a dispute arose about which agreement binds the parties and the operation of clause 22 of that agreement – where the respondent gave the applicant notice of a dispute pursuant to the dispute resolution clause – where the applicant applied to the court for directions to determine the issues – where the respondent, relying on the dispute resolution clause of the agreement, seeks an order staying the applicant’s application – where the dispute resolution clause provides for a three-stage dispute resolution process – whether the applicant has met the onus to refuse the stay
Hampton Irrigators Pty Ltd v Toowoomba Regional Council  QSC 272
Hooks Enterprises Pty Ltd v Sonnenberg Pty Ltd  1 Qd R 116, followed
Onslow Salt Pty Ltd v Buurabalayji Thalanyji Aboriginal Corporation  FCAFC 118, applied
Sanders & Anor v Bennett  St R Qd 7, distinguished
Zeke Services Pty Ltd v Traffic Technologies Ltd  2 Qd R 563, applied
D Cooper QC for the applicant
D O’Brien QC and D Favell for the respondent
Creevey Russell Lawyers for the applicant
Clayton Utz for the respondent
- The relationship between Hampton Irrigators Pty Ltd (HI) and the Toowoomba Regional Council (TRC) has been troubled of late.
- I will repeat, to give some history of the parties, what I said in Hampton Irrigators Pty Ltd v Toowoomba Regional Council:
“ Hampton Irrigators Pty Ltd (HI) was established in 2001 to conduct a private irrigation scheme to, among other things, provide irrigation to farms in the Hampton area. It established a bore at Kleinton and, on 14 March 2008, entered into an agreement with the Crows Nest Shire Council (CNSC) whereby HI would sell bore water to CNSC and CNSC would sell raw dam water to HI (the Water Supply Agreement).
 After the CNSC amalgamated with a number of other local authorities to become the Toowoomba Regional Council (TRC) there was, on 10 August 2016, a variation of the Water Supply Agreement with HI. It changed from being a water purchase agreement to a water swap agreement.
 The water flowed peacefully until July 2019 when, for the first time, TRC raised a concern about the levels of radionuclides in the water from the Kleinton Bore. Radionuclides can occur naturally in water and there are accepted levels for the safe consumption of water containing them.
 On 2 September 2019, TRC purported to terminate the agreement. The basis advanced was that the water from the bore was ‘no longer safe … owing to the presence of excessive radionuclides’. It was asserted that the agreement had become ‘frustrated and unenforceable due to unforeseeable excess of contaminants in the bore water making it unfit for potable use’.”
- Another dispute has arisen - this time about the exact agreement which constitutes the water supply agreement and the operation of clause 22 of that agreement.
- HI asks the court to make declarations which would determine these issues:
- (a)the precise water supply agreement which both parties agree currently binds them,
- (b)the terms of that water supply agreement,
- (c)whether cl 22 is a term of that water supply agreement, and
- (d)whether TRC is in breach of that term.
- TRC relies upon cl 15 of the water supply agreement, and seeks an order staying HI’s application. For the reasons which follow, that stay should be granted.
- TRC has given notice to HI that a dispute has arisen in accordance with cl 15 of the water supply agreement. That clause provides:
“15. DISPUTE RESOLUTION
15.1. A dispute will have arisen between the parties when a party gives notice to that effect to the other party.
15.2. Parties will endeavour in good faith to resolve the dispute within 14 days or an alternative period as agreed between the parties.
15.3. If the dispute is unable to be resolved within 14 days, the parties by agreement will appoint a mediator.
15.4 If the parties fail to agree as to the appointment of a mediator within 7 days after a dispute arises, a mediator will be appointed by the President of the Queensland Law Society.
15.5. Subject to clause 15.2, the dispute in relation to this Agreement will be subject to mediation for a period of 14 days (or a longer period as agreed between the parties) from the date that a mediator is appointed.
15.6. The cost of any mediation is to be borne by each party equally. Each party will bear its own legal costs incurred in mediation.
15.7. If mediation of a dispute between the parties is not successful, the dispute may be referred by any party to the President of the Queensland Law Society to nominate an independent and suitably qualified expert to resolve the dispute. The decision of the expert shall be final and binding on the parties and the costs of the expert shall be borne as determined by the expert or equally if the expert does not make a determination as to costs.
15.8. Unless clause 19 applies, each party will continue to perform its obligations under this Agreement during the existence of a dispute.”
- The following observations about cl 15 are not contentious:
- (a)the clause allows either party to merely assert that a dispute exists in order to enable the dispute resolution process,
- (b)the clause does not make compliance with the clause a precondition of commencing proceedings, in other words, it does not act as a bar to the commencement of proceedings prior to the conclusion of the alternative dispute resolution procedure.
Dispute resolution clauses - principles
- The principles which apply in cases such as this have been examined in many decisions including Zeke Services Pty Ltd v Traffic Technologies Ltd (“Zeke Services”), Hooks Enterprises Pty Ltd v Sonnenberg Pty Ltd (“Hooks Enterprises”), and Onslow Salt Pty Ltd v Buurabalayji Thalanyji Aboriginal Corporation (“Onslow Salt”).
- The principles may be summarised as follows:
- (a)the court has an inherent discretionary power to stay a proceeding where the parties have contracted for disputes to be subject to a dispute resolution procedure,
- (b)the discretion is wide,
- (c)in determining whether or not to grant a stay, the court takes into account that parties should be held to their agreement, unless good reason be shown,
- (d)the onus of showing such good reason is on the party opposing the stay and that onus is a heavy one,
- (e)ordinarily, that onus would be discharged only by showing that in view of the procedure for which the parties have contracted and the qualifications of any expert appointed, the dispute was not amenable to resolution by the mechanism they had chosen.
- HI opposed the stay on the following bases:
- (a)cl 15 does not evidence an agreement that the dispute resolution process is to be the exclusive or only way in which disputes between the parties of whatever nature must be determined,
- (b)when a dispute involves an issue of law, that dispute is more conveniently and satisfactorily resolved by a court of law rather than by an informal process,
- (c)the issues raised by this application must be resolved by the court - they may be incapable of informal resolution,
- (d)the clause is not a condition precedent to the right to bring this application,
- (e)the existence of a dispute resolution procedure does not deprive this court of power to grant declaratory relief in respect of the dispute, and
- (f)TRC gives no explanation for the delay in making the application.
- In support of the argument that a dispute which involves issues of law is more conveniently resolved by a court, HI relies upon a decision of Sanders & Anor v Bennett. That decision, now more than 80 years old, is not authority for the proposition advanced. The decision of EA Douglas J was that he did not have jurisdiction to grant the stay which was sought in that case. He did, though, express the obiter view that if he did have a discretion, then, where the question was one of law it would be more conveniently tried before a magistrate than before two arbitrators and an umpire. Notwithstanding whether the decision is one which establishes any particular principle, it falls within that category of “old case” identified in Onslow Salt. The Full Court of the Federal Court said, about those cases:
“ … As to these cases, some care needs to be taken in view of the modern approach of the courts which recognises the advantage of encouraging and supporting the resolution of disputes through a range of alternative mechanisms that parties may agree to follow before commencing court proceedings as well as processes for the actual determination of disputes outside the courts.”
- The Full Court went on to say:
“ A stay may be granted until an agreed process of conciliation, mediation or good faith negotiation has been completed even if the outcome will not be a binding determination of the dispute.”
- Clause 15 is broadly similar to the clause considered by Daubney J in Hooks Enterprises.
- The words of cl 15 demonstrate an agreement between the parties to submit the dispute to a three step process: an attempt to resolve it between themselves, mediation, and then resolution by an expert.
- Like the clause in Hooks Enterprises, cl 15 is couched in permissive language. A party who asserts the existence of a dispute can give notice of that dispute and then the parties are to take reasonable steps to resolve the dispute within the time frame set out. If that is not successful, then the dispute may be referred by either party to an independent expert.
- Similar to the clause in Hooks Enterprises, cl 15 does not expressly provide a bar to the commencement of legal proceedings.
- As Chesterman J said in Zeke Services, there is a heavy onus on the party opposing a stay to show why the justice of the case is against staying the proceeding. An argument advanced by HI was that these issues are incapable of informal resolution. There is nothing which prevents parties to an agreement reaching an agreement about the application of the terms of an agreement. But it is more to the point that the parties have committed to attempt to do that. And they have agreed that a final determination, by an expert, will result in a formal resolution to which the parties will be bound.
- The question which is at the heart of the dispute is a legal one involving construction of documents and consideration of correspondence. There is no legal reason which would prevent the parties, if they wished, from reaching an agreement about the application of cl 22 and recording that in a deed. If that fails, then the resolution of the legal issues is within the competence of a suitably qualified lawyer which, I am content to assume, would be the subject of appointment by the President of the Queensland Law Society.
- I consider that HI has not met the heavy onus necessary to refuse the stay. I see no reason to differ from the determination of Daubney J in Hooks Enterprises with respect to a similar clause. The respondent had bargained for disputes to be resolved in the format outlined in cl 15 and there is no good reason why it should not be held to that agreement.
- I order that the proceedings be stayed until further order.
- I will hear the parties on costs.
- Published Case Name:
Hampton Irrigators Pty Ltd v Toowoomba Regional Council (No 2)
- Shortened Case Name:
Hampton Irrigators Pty Ltd v Toowoomba Regional Council (No 2)
 QSC 345
20 Nov 2020
- White Star Case: