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- Unreported Judgment
- Appeal Determined (QCA)
Lee v Lin QCA 140
SUPREME COURT OF QUEENSLAND
Lee v Lin & Anor  QCA 140
Appeal No 612 of 2022
SC No 11347 of 2021
Court of Appeal
General Civil Appeal
Supreme Court at Brisbane –  QSC 336 (Martin J)
5 August 2022
20 July 2022
Morrison and Dalton JJA and Kelly J
ARBITRATION – CONSTRUCTION OF ARBITRATION AGREEMENT OR REFERENCE – GENERALLY – where the parties entered into a contract whereby the appellant agreed to provide services as a migration agent to the respondents – where the respondents commenced proceedings against the appellant – where the appellant contends that the dispute resolution clause within the contract is an arbitration agreement within the meaning of s 7 of the Commercial Arbitration Act 2013 (Qld) – whether the dispute resolution clause is an arbitration agreement – whether the court must refer the parties to arbitration and grant a stay pursuant to s 8(1) of the Commercial Arbitration Act
Commercial Arbitration Act 2013 (Qld), s 7, s 8
Cheshire Contractors Pty Ltd v Civil Mining & Construction Pty Ltd  QCA 212, cited
Jemena Gas Networks (NSW) Ltd v AGL Energy Limited  NSWCA 266, considered
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104;  HCA 37, cited
Mulgrave Central Mill Company Ltd v Hagglunds Drives Pty Ltd  2 Qd R 514;  QCA 471, considered
PMT Partners Pty Ltd v Australian National Parks & Wildlife Service (1995) 184 CLR 301;  HCA 36, considered
M J Henry for the appellant
R A Kipps for the respondents
Sungdo Lawyers for the appellant
Irish Bentley Lawyers for the respondents
- MORRISON JA: I have had the advantage of reading the reasons for judgment of Dalton JA. I agree with those reasons and with the orders proposed by her Honour.
- DALTON JA: The dispute between the parties, the relevant legislation and the relevant contractual clause are all set out in the judgment of the primary judge:
- “In 2014, the plaintiffs and the defendant entered into a contract (‘the contract’) whereby the defendant agreed to provide services as a migration agent to the plaintiffs.
- In September 2021, the plaintiffs commenced proceedings against the defendant alleging, among other things, breach of contract and negligence (‘the proceeding’).
- In October 2021, the defendant filed a conditional notice of intention to defend.
- By this application, the defendant seeks orders that:
- (a)the parties be referred to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2013 (‘the Act’), and
- (b)the proceeding be stayed pursuant to r 16(g) of the Uniform Civil Procedure Rules 1999.
- The basis for the application is that the defendant has activated, what he argues is, an arbitration clause within the contract.
The relevant legislation
- Section 7 of the Act provides the definition of arbitration agreement used in the Act:
‘7 Definition and form of arbitration agreement (cf Model Law Art 7)
- (1)An arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
- (2)An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
- (3)The arbitration agreement must be in writing.
- (4)An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract was concluded orally, by conduct or by other means.
- (5)The requirement that an arbitration agreement be in writing is met by an electronic communication if the information contained in it is accessible so as to be useable for subsequent reference.
- (6)In this section—
data message means information generated, sent, received or stored by electronic, magnetic, optical or similar means, including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.
electronic communication means any communication that the parties make by means of data messages.
- (7)Furthermore, an arbitration agreement is in writing if it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.
- (8)The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract.
This section is substantially the same as Option 1 set out in Art 7 of the Model Law.’
- Section 8 of the Act provides for the reference to arbitration:
‘8 Arbitration agreement and substantive claim before court (cf Model Law Art 8)
- (1)A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party’s first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
- (2)Where an action referred to in subsection (1) has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.’
The relevant clauses in the contract
- The defendant argues that cl 11 of the contract constitutes an arbitration agreement within the meaning of the Act:
‘11. RESOLUTION OF DISPUTES
- a.If a dispute arises—out of or relating to this agreement, or the breach, termination, validity, or subject matter thereof, or as to any related claim in restitution or at law, in equity or pursuant to any statute—the parties agree to discuss the dispute with the aim of reaching an agreement that is acceptable to both sides. The agreement will be documented in writing, dated and signed by both the Agent and the Client.
- b.If one party requests an opportunity to discuss the dispute, the parties should attempt to reach an agreement within 21 days of that request (or a longer period if agreed between the parties).
- c.If the parties cannot reach an agreement within 21 days, the parties agree to refer the dispute to the Australian Commercial Disputes Centre (ACDC) for final settlement by a single arbitrator appointed in accordance with the Rules of the ACDC, or by another dispute resolution process suggested by ACDC and accepted by the parties. It is expected that any fees payable to ACDC or to the person appointed by ACDC will be paid by the parties equally.
- d.If the parties have been unable to resolve their dispute through ACDC, either party may commence Court proceedings but not before the expiry of 28 days from the date of referral to ACDC.
- e.A Client may vary the procedure set out in this clause if the Client can establish that DIAC may require the Client to depart Australia.’” (my underlining).
- There is only one issue before this Court. The appellant contends that the primary judge was wrong in deciding that cl 11 was not an arbitration agreement within the meaning of s 7 of the Commercial Arbitration Act 2013 (Qld). The primary judge’s reasoning was as follows:
- “It should be noted that cl 11 does not provide that the parties have agreed that a dispute is, upon the conditions in cl 11(a) and (b), to be submitted to arbitration. Rather, it refers to the reference of the dispute for ‘final settlement by a single arbitrator’. The use of the word ‘arbitrator’ is relied upon by the defendant as the foundation of the argument that cl 11 is an arbitration agreement.
- The current rules of the ADC were exhibited to one of the affidavits read by the defendant. The rules in existence at the time of the contract were not provided. It was not contentious that there are two ways in which an arbitration can conclude:
- (a)by the making of an award, or
- (b)by the parties settling the matter before an award is made.
- Clause 11(d) provides that either party may commence Court proceedings if they ‘have been unable to resolve their dispute through ACDC’. That is inconsistent with a requirement that the parties submit to arbitration which, by the definition in the ACDC rules, must result in a resolution. But, it is consistent with the parties having agreed to the use of alternative methods of dispute resolution (e.g., mediation) which may come to an end without a final resolution.
- For the following reasons, I find that cl 11 is not an arbitration agreement:
- (a)it does not require that the parties submit to an arbitration,
- (b)it does not require that the ‘single arbitrator’ engage in an arbitration,
- (c)it contemplates other dispute settlement methods being agreed upon by the parties, and
- (d)it contemplates the possibility (cl 11(d)) that the parties are unable to resolve their differences through the ACDC.
- Section 7 of the Act defines an arbitration agreement as one where the parties have agreed to submit a dispute to arbitration. A generous reading of cl 11 might lead to the conclusion that arbitration is an option available, but it goes no further.
- A clause which provided that parties who had failed to resolve a dispute would submit to mediation administered by ACDC ‘before having recourse to arbitration or litigation’ was held not to be an arbitration agreement in Jemena Gas Networks (NSW) Ltd v AGL Energy Limited. I respectfully adopt what was said by the Court about the requirement for submission:
- ‘While there may be some doubt as to what is meant by the reference in s 7(1) of the Commercial Arbitration Act to an agreement to submit “certain disputes” to arbitration, that phrase should not be read to refer to an agreement which merely identifies the possibility of arbitration without any express or implicit agreement to submit all disputes or any class of disputes to arbitration, as opposed to litigating. The purpose of s 8 of the Act is to provide a mechanism to ensure that an agreement to arbitrate is enforceable and excludes the power of the court to permit litigation to proceed in the face of such an agreement. It would not assist that purpose to accept that any contractual arrangement which contemplated the possibility of arbitration, without any express agreement in writing to submit a particular category of disputes to arbitration, should result in the unilateral power to enforce arbitration in relation to all disputes.’ (emphasis added)
- Clause 11 contemplates the possibility of arbitration but there is no express agreement to submit a dispute to arbitration.” (footnotes omitted).
- In my view, cl 11(c) is an arbitration agreement. It does require the parties to refer their dispute to the Australian Commercial Disputes Centre (ACDC) for final settlement by a single arbitrator. It is true that the clause would be clearer had it used words such as “for determination by an award made by a single arbitrator”, rather than the words employed, which I have underlined above. I construe the words “for final settlement” as meaning to finally determine or end the dispute between the parties. Commercial contracts must be construed in a business-like way. In addition to this general principle, I am cognisant of the dicta in Mulgrave Central Mill Company Ltd v Hagglunds Drives Pty Ltd: “This is an area of the law where the making of subtle verbal distinctions is not to be encouraged, and where it is desirable that standard conditions and uniform legislation should, as far as possible, be given the same meaning in jurisdictions throughout Australia.” – per McPherson JA. And further, to similar effect that, “The paramount object of the [Commercial Arbitration Act] is ‘to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense’ (s 1AC(1)).”
- Clause 11(c) contemplates that once the parties approach the ACDC they might, by further agreement, employ a dispute resolution process other than arbitration. The possibility for this further agreement does not detract from the fact that, unless and until such an agreement is made, the parties have agreed to refer their disputes to the ACDC for arbitration.
- The clause dealt with in Jemena Gas Networks (NSW) Ltd v AGL Energy Limited was quite different to the clause here. That clause was as follows:
- (a)In the event that discussions under clause 30.4 fail to resolve the Dispute, each Party expressly agrees to endeavour to settle the Dispute by mediation administered by the Australian Commercial Disputes Centre (ACDC) before having recourse to arbitration or litigation.
- (b)The mediation shall be conducted in accordance with the ACDC Guidelines for Commercial Mediation (Guidelines) which are operating at the time the matter is referred to ACDC.
- (c)The Guidelines set out the procedures to be adopted, the process of selection of the mediator and the costs involved.
- (d)The terms of the Guidelines are hereby deemed incorporated into this Agreement.
- (e)Clause 30 shall survive termination of this Agreement.”
- That clause was an agreement by the parties to mediate before taking other steps available to them, such as arbitration or litigation. It created an obligation to mediate, but did not create an obligation either to litigate or arbitrate. As the Court of Appeal said, “The effect of cl 30.5(a) is merely to recognise that arbitration and litigation are options available once mediation has failed.” – .
- In my view, cl 11(c) is within the class of cases discussed in Mulgrave Central Mill Company Ltd (above) and PMT Partners Pty Ltd v Australian National Parks & Wildlife Service. That is, the words in cl 11(c) oblige the parties, if they cannot settle their dispute by discussion, to have it determined by the award of a single arbitrator employed by the ACDC and appointed under the rules of the ACDC.
- Something must be said about cl 11(d). At first glance it seems to contradict the idea that the parties are obliged to have an arbitrator bring in a final award to resolve this dispute, for it operates in circumstances where the parties “have been unable to resolve their dispute through ACDC”. However, cl 11(c) contemplates that the parties might, by subsequent agreement, agree on a different method of dispute resolution provided by ACDC. If there were a subsequent agreement say, to mediate the dispute, but the mediation failed, the parties would have agreed to abandon arbitration, and then have become “unable to resolve their dispute through ACDC”, leaving them free to commence Court proceedings.
- I would:
- (a)allow the appeal;
- (b)order that the parties are referred to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2013 (Qld);
- (c)stay proceeding BS11347/21, and
- (d)order that the respondents pay the appellant’s costs of this proceeding, both in the trial division and on appeal.
- KELLY J: I agree with the reasons of Dalton JA and with the orders proposed by her Honour.
- Published Case Name:
Lee v Lin
- Shortened Case Name:
Lee v Lin
 QCA 140
Morrison JA, Dalton JA, Kelly J
05 Aug 2022