Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd
[2010] QSC 97
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- Unreported Judgment
- Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd[2010] QSC 97
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Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd[2010] QSC 97
Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd[2010] QSC 97
SUPREME COURT OF QUEENSLAND
CITATION: | Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd [2010] QSC 97 |
PARTIES: | NORTHBUILD CONSTRUCTION PTY LTD |
FILE NO/S: | 785 of 2010 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court |
DELIVERED ON: | 31 March 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 3 March 2010 |
JUDGE: | A Lyons J |
ORDER: | The application for a stay of the proceeding is refused |
CATCHWORDS: | CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – OTHER MATTERS – where a building contract between a developer and builder exists – where disputes arising under contract can be referred to expert determination or arbitration – where disputes arose and both resolution processes were employed – where findings in arbitration award were made – where builder seeks declarations that the developer be estopped from contending otherwise than in accordance with the arbitration award findings – where developer seeks a stay of the builder’s proceedings seeking declarations – whether the contract provides a dispute resolution process for the dispute –whether the dispute should be determined by the court. Homepace Ltd v Sita South East Ltd [2007] EWHC 629 Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd [2007] QSC 206 Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd [2008] QCA 160 Zeke Services Pty Ltd v Traffic Technologies [2005] 2 Qd R 563 |
COUNSEL: | D Savage SC and C Wilkins for the applicant/respondent B Porter for the respondent/applicant |
SOLICITORS: | DLA Phillips Fox for the applicant/respondent Clayton Utz for the respondent/applicant |
A LYONS J:
Background
- In May 2003 Northbuild Constructions Pty Ltd (Northbuild) as the builder and Discovery Beach Project Pty Ltd (DBP) as the developer entered into a contract to redevelop the property known as “Surfair” on the Sunshine Coast near Marcoola, Queensland. By May 2004 the parties were in dispute. The parties remain in dispute about numerous matters and there has been protracted litigation over the last six years. Those disputes have resulted in a number of applications and trials before this Court as well as a number of appeals to the Court of Appeal.
- The latest dispute concerns findings made in an arbitration by an arbitrator Mr Fischer in June 2009. That arbitration process was provided for by the contract. Expert determination is also provided for by the contract. The issue which arises relates to the relevant interrelationship between the arbitration and the expert determination process and the extent to which findings made by the arbitrator bind the experts. In particular, the dispute relates to findings made as to the constitution and terms of a building contract and whether the parties are precluded from seeking to re-agitate those issues in the expert determination.
- By its originating application filed on 25 January 2010, Northbuild seeks declarations that DBP is estopped from contending, other than in accordance with the matters contained in the 17 extracts in the reasons given in an award in the Waves Arbitration on 8 June 2009 by arbitrator Mr Fischer. The Commercial List Statement provided in support of that application stated that the issues which arise in that proceeding could be summarised as follows:
- the ability, generally, of a finding made in an arbitration to create an issue (or Anshun) estoppel;
- identification of the specific findings made by the arbitrator as to the constitution and terms of the building contract;
- whether those findings created estoppels which preclude re‑agitation of issues about the constitution and terms of the building contract in the forthcoming expert determination.
- The current application filed on 29 January 2010 by DBP, seeks a stay of those Northbuild proceedings seeking those declarations.
- The contract, therefore, needs close examination to ascertain the dispute resolution process which the parties agreed was to apply.
The contract
- A contract for the redevelopment was signed on 23 May 2003. It was a Master Builders Australia “Design and Contract- Lump Sum” DECON 2-1988 with amendments.[1] In general terms, it provided for the redevelopment of Surfair into three towers with construction of certain beach houses (the North East beach house and the South East beach house) and of various landscaping and other works for a guaranteed maximum price. Following entry into the contract, further negotiations led to a series of further agreements in respect of the works dated 11 December 2003 (the December agreement)[2], 19 August 2004, 30 September 2004 and 7 June 2005. DBP also contends for the existence of an oral agreement with different terms to the written agreement.
- Clause 13 of the contract dealt with dispute resolution. It provided for the issuing of a Notice of Dispute followed by a conference to resolve a dispute and failing resolution, for the dispute to be referred to arbitration “unless the party giving the Notice of Dispute informs the other party in writing within 28 days that it elects to have the dispute determined by expert determination”. During the course of construction disputes arose. Some of those disputes were referred to arbitration and in some other disputes there was an election to have the matter referred to expert determination. There have also been numerous court proceedings previously referred to.
The arbitrations
- Clearly then, the contract provided for arbitration as the initial dispute resolution process if the conference failed. It is also clear that the contract provided that arbitration was to be utilised unless there was an election to have the dispute determined by expert determination.
- Clause 13 relevantly provides:
“13.3 ARBITRATION
Arbitration will be effected by an arbitrator nominated by the President or Chief Executive officer of the organisation specified in Item 1 of Schedule 26.”
- Two references to arbitration before Mr Fischer were made in 2005 and those references related to whether Variation Orders (VO) and Defect Omission Notices (DON) were valid and whether that meant deductions were to be made to the contract price. The arbitration in relation to those issues is known as the Waves Arbitration. The arbitration was ultimately heard before Mr Fischer over 13 weeks and in June 2009 he made various declarations in relation to those issues. The arbitrator identified how the building contract between the parties was made and what its terms were.
- After submissions, a further award on quantum was made on 3 September 2009 whereby Northbuild was ordered to pay $1,146,644.80 million to DBP. Northbuild sought leave to appeal that award or to have it set aside for technical misconduct in proceedings S10086/2009. That application was heard by Martin J and is currently reserved.
- The other dispute resolution process provided for in the contract was reference to an expert determination. That expert determination process commenced in 2004 and is currently in its sixth year.
The Categories Expert Determinations
- Clause 13.4 relevantly provides:
“13.4 EXPERT DETERMINATION
13.4.1Expert determination will be –
.1effected by an expert nominated by the president or Chief Executive Officer of the Organisation in Item 1 of Schedule 26
.2In accordance with the process in Schedule 26
13.4.2Except to the extent that the Process in sub-clause 13.4.1 provides otherwise:
.1each party will bear its own costs and contribute one half of the expert’s fee;
.2all aspects of every expert determination except the fact of occurrence will be privileged;
.3the expert must as a condition of its appointment agree to issue a written determination of the dispute within the number of days from the appointment of the expert specified in Item 3 of Schedule 26, unless otherwise agreed between the parties;
.4the expert will not act as arbitrator; and
.5the determination of the expert will be final and binding on the parties.”
- Clause 13.6 under the heading “Summary Relief” provides that “Nothing in this section prejudices the right of a party to institute proceedings to enforce payment due under this agreement or to seek injunctive or urgent declaratory relief”.
- Schedule 26 identifies the Queensland Law Society as the nominating organisation to appoint the expert and also sets out the process for the expert determination in the form of rules. Rules 1, 3 and 5 provide for procedural matters. Rule 4 provides that the parties will be bound by the determination of the expert and Rule 6 provides for the conduct of the expert and the requirement that the expert act independently and impartially. There have also been a number of variations of the rules which are to apply to those determinations.
- Pursuant to s 13 of the contract and schedule 26, the parties agreed in June 2004 that certain disputes were referred to expert determination. This has become known as the “Categories Determination Process”. That categorisation is set out in the Minutes of a meeting of the parties dated 17 September 2004, which divides the disputes into six categories. The current experts who are appointed for the Category 1 and 2 disputes are barrister Mr Ryan and surveyor Mr Callaghan.
- Clearly the critical issues in the expert determination are the terms of the building contract and the construction of that contract. Category 1 is divided into four separate disputes and they arise out of a letter dated 19 May 2003 and the December agreement and comprise:
- A dispute about Future Savings which relates to Northbuild’s entitlement to $91,000 paid on account of additional future savings pursuant to the December Agreement.
- A dispute about the South Tower Beach House provisional sum and whether prior to claiming any adjustment of the provisional sum works to the value of $500,000 would be undertaken on the Beach House fitout.
- A Project Contingency dispute about the value of the unused contingency of $341,500 and DBP entitlement to a variation deduction in accordance with the 19 May 2003 letter.
- A Profit Contribution dispute which relates to an agreement that DBP pay an additional $638,400 in profit contribution.
- Category 2 relates to disputes over valuations and has been divided into two sub categories:
- Category 2.1 which relates to variation claims and legal issues.
- Category 2.2 which comprises the remainder of the Category 2 claims.
- At a meeting between the experts and the parties on 1 April 2005 the Minutes noted:
“1.Mr Ryan referred to section 13 and schedule 26 of DECON 2-1998 noting that inasmuch as his appointment agreement provided that legal issues should be referred to him by the solicitors for the parties-
(a)there was no notice of dispute which adequately identified and provided details of any legal issue pursuant to clause 13.1;
(b)rule 1 in schedule 26 referred to written notification by the expert that he had been requested by a party to determine a ‘dispute’.
2.Clause 13.4.2.4 of section 13 provided that the expert would not act as an arbitrator.
3.At the meeting between the parties and the experts held on 17 September 2004 the parties indicated that the disputes in category 2.1 contained legal issues which should be determined prior to the quantum issues being address.
4.The category 2.1 issues identified on 17 September 2004 which are presently the subject of the Scott Schedule submitted by the parties:
(a)involve questions of fact, questions of mixed law and fact and questions of law;
(b)do not contain any agreed statement by the parties of the legal issues to be determined by the legal expert.
5.Mr Ryan said that the procedure agreed upon in the contract for the appointment of an expert appeared to have been departed from so far as the legal expert was concerned and that in order to determine the legal issues arising with respect to the various items in the scot (sic) schedule:
(a)there would have to be decisions made with respect to questions of fact;
(b)that may involve judgments being made as to the credit of witnesses;
(c)the expert (or the experts jointly) would therefore be acting as arbitrators in all but name.
6.The parties advised Mr Ryan and Mr Callaghan that:
(a)they accepted that the process now being undertaken was not in accordance with the expert determination provisions of the contract between the parties referred to in Mr Ryan’s appointment agreement; …”
- The Minutes of Conference also noted that it was clear that the disputes in Category 2.1 contained legal issues which should be determined prior to the determination of the legal issues being addressed. Ultimately the parties requested at para 7 of those Minutes that the experts determine the Category 1 issues first, then the Category 2.1 and 2.2 issues, with the remaining categories to follow. At para 11 it was noted:
“The parties indicated to the experts that they anticipated that the experts would extract from the Scott Schedule with respect to category 1 issues and the submissions referred to above the issues to be decided by them with respect to fact, law and quantum and that the parties contend that they should then proceed to determine those issues as experts and accepted that any such decision be binding on the parties.”
- A Scott Schedule was delivered by Northbuild. On 10 May 2005 the experts wrote to the parties, indicating that the Scott Schedule did not sufficiently identify the relevant issues and proposing a series of issues that were fundamental to the Category 1 claims. That letter stated:
“We have considered the material submitted to date by the parties. It seems to us that it cannot be said that the parties have submitted adequately identified legal issues for determination with respect to what might loosely be referred to as the Category 1 disputes.
At our conference with the parties on 1 April 2005 the parties said that they anticipated that we would extract such issues from the Scott Schedule and the submissions made to date by the parties. The parties also said that they were content that we should then proceed to determine those issues and that they would be bound by the determination.
Having examined the materials supplied to date we can extract, with respect to the abovementioned Category 1 disputes, any number of legal issues and issues of mixed fact and law, with varying outcomes on quantum.
Some of the legal issues – dealing with the content of the contract – are fundamental. Unless they are first determined it is pointless embarking on anything else.
We have set out below a statement of these fundamental issues. We have attempted to use language which might be acceptable to both parties. However the parties may wish to suggest amendments. A process for that follows the statement of issues.”
- The letter also asked the parties to agree “on the text of the preliminary contract issues and submit them to the experts by 4pm Tuesday 17 May 2005” and concluded:
“These are suggestions. We are in the hands of the parties. However, after carefully considering this matter we are of the opinion that we cannot assist the parties with any expert determinations unless the preliminary contract issues we have outlined are first decided. The text of the issues statement may perhaps be refined, but in substance these matters must be dealt with at the outset.”
- The parties then undertook, by consent, a court ordered mediation on 19 May 2005. The matter did not resolve at mediation. By letter dated 15 July 2005 DBP advised that they were happy to proceed on the basis of the letter from the experts dated 10 May 2005 and that the eight preliminary issues had been appropriately identified. In a Decision dated 30 September 2005, the experts set out the history of the reference to them. That decision states that in July 2005 Northbuild indicated that they did not intend to take any further part in the process before the experts. On 5 August 2005 the solicitors for Northbuild in a letter to the experts stated:
“Northbuild has reviewed the process proposed and will not embark upon it, particularly where the same legal and factual matters in issue, are also before the arbitrator Mr Fischer. The degree of overlap was made clear in our letter dated 12 April 2005, as was the fact that the expert determination cannot properly proceed while it depends on findings of the arbitrator”.
- The Decision of 30 September 2005 records the expert’s determination on that issue as follows:
“[70]In our view the process had commenced by agreement between the parties. Whether the same legal and factual matters are in issue in other proceedings is not our concern. We do not think it is correct to say that the proceedings which had commenced before Messrs Orange and Callaghan and which have continued before Messrs Callaghan and Ryan cannot properly proceed pending the outcome of an arbitration; it is difficult to see why it is that the expert determination process before Messrs Callaghan and Ryan ‘depends’ on findings of the arbitrator.”
- After an exchange of correspondence, the experts determined that there would need to be a cross-examination of witnesses before determining the Category 1 disputes. The parties varied their contract to permit this cross-examination. This led to an application by Northbuild that the experts were acting as arbitrators and therefore, those determinations should be joined with the existing arbitrations. That application was dismissed by Mullins J on 9 August 2007[3] who determined that there had not been a transformation of the expert determination into an arbitration in respect of the Category 1 disputes. As her Honour concluded that there had been no agreement between the parties and the experts for the experts to arbitrate in the Category 1 disputes, it was not necessary to consider the issue of consolidation with the Waves 1 and 2 Arbitrations before Mr Fischer. This decision was confirmed on appeal in 2008.[4] The Court of Appeal decision sets out in great detail the history of dealings between the parties.
- Cross-examination before the experts was to occur in September 2008 but has been delayed, with each side blaming the delay on the other.
- In April 2009 Northbuild made an application to be released from its implied undertaking to use certain documents in cross-examination in the Category 1 expert determination. Whilst that application was dismissed, Northbuild successfully appealed that decision to the Court of Appeal.
- None of the disputes referred to expert determination have been determined but are still in progress. Most recently DBP has submitted that, given the difficulties, cross‑examination should be dispensed with. The experts, on 5 February 2010, indicated that cross-examination was required and they indicated their willingness to proceed with the expert determinations.
- Northbuild contends that the experts should consider themselves bound by the evidence, law and findings of the arbitrator. DBP contend that no issue estoppels arise and that the experts are to make their own determinations. Northbuild alleges that the experts have asserted that findings made by Mr Fischer in the arbitration do not bind them and the memo from the experts dated 27 January 2009 states:
“We are not aware of what has occurred at such arbitration hearings nor of any expert determinations made by others.
We do not accept that expert determinations made by others are binding on us either with respect to the preliminary contract issues identified in our letter to the parties dated 10 May 2005 or with respect to Category 1 issues generally.”
- Northbuild’s proceeding was placed on the Commercial List on 29 January 2010 and the respondent in that application was given leave to bring this application in the applications jurisdiction. Directions were given in relation to the filing of material. Another proceeding between the parties seeking relief similar to the relief sought here (BS3620/2009) was placed on the Commercial List in September 2009 and concerns an expert determination before Mr Lee and Mr Callaghan. A trial of that proceeding was heard on 15 and 16 February 2010 and the decision is currently reserved.
The current dispute
- As I have indicated, the real issue in dispute is the interrelationships between the findings in the arbitration award and the extent to which they bind the ongoing expert determination process. The substantive question relates to the issue of estoppel and whether the issue estoppel Northbuild contends for exists. Should that dispute be determined by the court or is there, in fact, a process for the determination of that dispute which has already been provided for in the contract? If there has been a dispute mechanism provided under the contract, then the question is whether Northbuild’s application for the court to determine the issue should be stayed or whether the court should still proceed to determine the issue.
- It is important to understand the difference between arbitration and an expert determination, this was explained by Chesterman J in Zeke Services Pty Ltd v Traffic Technologies:[5]
“[23]There is a clear distinction between arbitration and expert determination. The former involves a more or less formal adjudication of the respective cases put before the arbitrator. The court exercises a degree of supervision over the conduct of arbitrations and arbitrators, and minimum standards of procedural fairness are required. There are no such safeguards with respect to expert determination. Lord Esher M.R. explained the ordinary case of an expert determination in In re an Arbitration between Dawdy and Hartcup (1885) 15 Q.B.D. 426 at 430:
‘… if a man is, on account of his skill … appointed to make a valuation, in such a manner that in making it he may, in accordance with the appointment, decide solely by the use of his eyes, his knowledge, and his skill, he is not acting judicially; he is using the skill of a valuer, not of a judge … (He has) to determine the matter by using solely (his) own eyes, and knowledge, and skill.’
Einstein J. (at [16]) in Heart Research Institute noted that ‘Expert Determination provides an informal, speedy and effective way of resolving disputes, particularly dispute which are of a specific technical character of specialised kind.’ The most common examples are where a valuer is appointed to fix the rent of demised premises or a man experienced in a particular line of business is called on to fix the price of stock in trade, or say where it is saleable.
[24]It follows that if a dispute is not of a kind which can be determined in an informal way by reference to the specific technical knowledge or the learning of the expert, it may be appropriate to refuse a stay. Complicated disputes of fact or of law may be of such a character.”
The relevant principles
- The court clearly has power to stay proceedings before it where the parties have, in fact, contracted that the dispute in question is to be determined by some other process, including by means of an expert determination process. The power is inherent and also arises under the general statutory power to stay. The essential issue is whether the justice of the case is against staying the proceedings. The principles relevant to an application for a stay were summarised by Chesterman J in Zeke Services Pty Ltd v Traffic Technologies:[6]
“[19]There is an undoubted jurisdiction to stay a legal proceeding where the parties have by contract agreed that their dispute shall be determined by means other than curial adjudication …
[21]The discretion whether or not to grant the stay is obviously wide. The starting point for a consideration of its exercise is that the parties should be held to their bargain to resolve their dispute in the agreed manner. This factor was emphasised by the House of Lords in Channel Tunnel, by the High Court in Dobbs and Huddart Parker Ltd v The Ship Mill Hill and Her Cargo [1950] HCA 43; (1950) 81 CLR 502 (an arbitration case) and by Gillard J in Badjin. However, a stay will not be granted if it would be unjust to deprive the plaintiff of the right to have his claim determined judicially or, to put it slightly differentially, if the justice of the case is against staying the proceeding. The party opposing the stay must persuade the court that there is good ground for the exercise of the discretion to allow the action to proceed and so preclude the contractual mode of dispute resolution. The onus is a heavy one. The court should not lightly conclude that the agreed mechanism is inappropriate.”
- There are essentially two issues that I need to determine:
- whether the originating application by Northbuild actually raises issues which are part of the disputes which have been referred to the experts for resolution;
- whether discretionary factors favour granting a stay.
Does the originating application raise issues which are part of the Categories Disputes
- It is relevant at this point to consider the declarations sought.
“A declaration that the Respondent is estopped from contending other than that.
- Agreements (referred to by the parties as the ‘Record of Agreements Reached’ (exhibit C7 in the arbitration between the parties) and the ‘Confirming and Amending Agreement’ (exhibit C8 in the arbitration) were made between the parties on 11 December 2003 amending an earlier agreement between the parties of 23 May 2003 whereby the Applicant was engaged by the Respondent to undertake the design and construction of the redevelopment of the Surfair Resort (the Contract).
- Pursuant to the Contract Northbuild, the builder, was to complete the (partial) refurbishment of the existing high-rise building (‘the Centre Tower’) along with the construction of two new high-rise towers located either side of the existing tower (the ‘North Tower’ and the ‘South Tower’) and associated underground car parking areas.
- The Contract required the construction of new (and refurbishment of existing) ground level facilities including resort, conference and retail facilities which link the Centre Tower and South Tower.
- The redevelopment included the construction of two smaller buildings referred to as the North East Beach Houses and South East Beach Houses and further provided for associated hard and soft landscaping and infrastructure.
- On 19 May 2003, the Respondent, Discovery Beach Project Pty Ltd (‘DBP’) wrote to the Claimant, Northbuild Construction Pty Ltd (‘Northbuild’), in respect of the Surfair development at Marcoola. That correspondence (exhibit C11 in the arbitration) purported to set out an agreement that had been reached in respect to a guaranteed maximum price (‘GMP’) contract to be entered into between the parties.
- On 23 May 2003, within the time and the price required to comply with the Financier’s requirements for the provision of a funding facility (exhibit C376 in the aforesaid arbitration), Northbuild and DBP entered into a Master Builders Australia Incorporated ‘Design & Construct Contract – Lump Sum’, DECON 2 – 1998 (exhibits C5 and C5A in the arbitration) with amendments (exhibit C6 in the arbitration), for the redevelopment of the Surfair Resort at Marcoola as described above.
- The Contract included various provisions which provided for finalisation of the Principal’s Project Requirements (scope of works) to achieve the GMP.
- Subsequent to signing the Contract the parties continued to work to confirm and agree the scope of the work included in the GMP and to identify further savings which might be available (Boddington, T1272.25 et seq, Williams, T1724 and T1780 et seq). When so doing they caused some evidence of their negotiations and agreements to be recorded, inter alia, on A3 drawings held in an A3 binder. That document became known between the parties as the A3 Binder (exhibit C25 in the arbitration).
- On 11 December 2003, the Claimant and Respondent executed two (2) further agreements, the ‘Record of Agreements Reached’ (exhibit C7) and the ‘Confirming and Amending Agreement’ (exhibit C8), referred to by the parties as the December Agreement.
- The Record of Agreements Reached addressed, inter alia, the A3 Binder which, at item 5.6, was confirmed to be superseded by the ‘Northbuild schedule of modifications to drawings dated 13/11/03’ which was agreed between the parties on 4 December 2003. That schedule was attached as Annexure No 4.
- The Claimant and Respondent entered into further agreements on 19 August 2004 (exhibit C9) referred to by the parties as the August Agreement and on 30 September 2004 (exhibit C10) referred to by the parties as the September Agreement.
- Annexure No 1 of the ‘Record of Agreements Reached’ includes references to an Attachment A, Attachment B, Attachment C, Attachment D, Attachment E and Other Variations Schedule.
- The ‘Attachments’ referred to in Annexure 1 are those identified by Northbuild.
- The Attachments to Annexure 1 are required to fully construe the December Agreement, particularly so in the case of attachments C and D.
- It was the intention of the parties that the ‘comments’ column of Annexure 4 to the December Agreement, the ‘Record of Agreements Reached’ was to be incorporated in and form part of this Agreement.
- The single line entry ‘Future Savings’ is insufficient to define the scope of work that the parties had agreed in respect of these savings, as no work is identified against that entry. Attachment C provides a list of some twenty (20) numbered items.
- The parties intended that the Attachments were to be incorporated in the December agreement.”
- It is clear that in the originating application Northbuild seeks declarations as to the existence of estoppels arising out of the June 2009 award reasons in broad terms and does not in fact seek to limit those estoppels to any particular later proceeding. Neither does that application identify whether the estoppels arise pursuant to the doctrine of issue estoppel or the doctrine of Anshun estoppel.
- DBP argues however that the Commercial List Statement indicates that Northbuild:
- invokes both issue estoppel and Anshun estoppel; and
- seeks to have declarations made in respect of issues arising in the categories claims expert determination.
- DBP also argues that the material filed by Northbuild in fact focuses on Category 1 and 2.1 and questions as to whether the Waves Arbitration reasons give rise to issue or Anshun estoppels in the “Categories Expert Determination”, are questions which actually arise in the disputes which the parties have already agreed will be resolved in the “Categories Expert Determination”. Accordingly, the respondent argues that the parties ought to be held to the agreement that those matters will be determined by the experts.
- DBP also argues that it is unclear how, if at all, the estoppels sought in the originating application are relevant to issues in the other Categories Disputes rather than just the Category 1 and 2 disputes which are already referred to the experts . In particular, it is argued that issue estoppel and Anshun estoppel are estoppels which bind a party in later proceedings in respect of issues in those proceedings which have been, or ought reasonably have been dealt with in an earlier proceeding. Those estoppels arise as matters of defence or reply in the later proceeding to an issue raised in that proceeding. DBP argues, therefore, that those issues are plainly within the scope of the disputes in which they are said to arise.
- DBP argues, therefore, that the obvious purpose of the originating application is to obtain declarations of the existence of estoppels which Northbuild seeks to rely upon to its advantage in the resolution by experts of the Categories Disputes. DBP submits that it is, therefore, plainly concerned with issues which are part of those disputes.
- It is necessary therefore to ascertain what has actually been referred to the expert for determination. In December 2004 Mr Ryan replaced Mr Orange as expert after his resignation. As outlined above he was appointed to determine “Legal issues with respect to those disputes known as the ‘Categories 1, 2.1 and 2.2 disputes’ which have arisen under the contract.” There were then meetings as well as correspondence between the parties where the scope of the matters referred to Mr Ryan was discussed.
- Having closely considered the Minutes of Conference of 1 April 2005, the contents of the letter of 10 May 2005 and the Notice of Decision of 30 September 2005, I am not satisfied that there is a clear indication that this specific issue was in fact referred by the parties to Mr Ryan for expert determination. I do not consider that the question of issue estoppel or even the interrelationship between the arbitrations and the expert determinations was never specifically discussed by the parties at the time when Mr Ryan was trying to obtain specific details as to what he was to consider.
- Mr Ryan was not appointed for all legal issues under the contract but rather the legal issues arising in respect of Category 1 and 2 disputes which were particular disputes about particular aspects of the contract. At the time Mr Ryan was appointed various matters had already been referred to arbitration. There had also been referrals to other experts.
- In my view, it would seem clear that there was no specific agreement between the parties that Mr Ryan was to determine whether an arbitral award would create estoppels that bound the parties in the categories claims expert determinations. In the Court of Appeal decision in 2008 Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd[7] Muir J stated:
“The object of contractual construction, of course, is to ‘ascertain and give effect to the intentions of the contracting parties.’ Such intentions, to be determined objectively, are ‘what a reasonable person would have understood [the words of a [contract] to mean.’ And care should be taken not to confuse ‘procedural manoeuvrings during the course of the process’ or the parties’ acquiescence in procedural arrangements with contractual variation. Moreover, sight should not be lost of the fact that the parties are free to include in their contract whatever terms they see fit. It is the meaning of those terms that must be ascertained, not the terms of a more harmonious and or workable arrangement they may have made with the advantage of greater thought and judgment.”
- Accordingly, I do not consider that a reasonable person would have considered that Mr Ryan was appointed to determine the question of issue estoppel as between the arbitration findings and the expert determinations. I am not satisfied that the question of issue estoppel was “an obvious part of the subject matter” of the dispute referred for expert determination.[8] Having considered the correspondence between the parties I am not satisfied that there was indeed certainty that this was an obvious part of the subject matter because Mr Ryan was in fact seeking such clarification as to what was the subject matter and it was not forthcoming .
- I do not consider that the parties have already agreed to resolve that dispute in a particular manner.
- Furthermore, I consider that the declarations sought by Northbuild in relation to the question of estoppels has a far wider scope of operation than just the Category 1 and 2 Expert Determinations as contended by DBP. I do not consider there is in fact a legal basis for reading them down as argued by DBP. I agree with Northbuild’s contention that the estoppels could in fact operate or have relevance in the expert determinations in Categories 3 to 6 where the only expert is the quantity surveyor Mr Callaghan. I agree with Mr Savage for Northbuild that the Commercial List Statement refers to the expert determinations to illustrate the utility of the declarations sought rather than to limit the scope of the declarations sought.
- In this regard I note the provisions of clause 13.6 which provided for summary relief and allowed the parties to seek injunctive or urgent declaratory relief. I do not consider that the reference to Mr Ryan in May 2005 was intended to cover complex legal questions which have arisen some five years later, particularly given the factual matters which have intervened in the meantime.
Discretionary factors
- DBP had also argued that the court, in its discretion, should grant the stay. Since this is not a case where a stay might be ordered, no occasion arises to discuss discretionary reasons to refuse such relief.
ORDER
The application for a stay of the proceeding is refused.
Footnotes
[1] Affidavit of DS Brackin, sworn 5 February 2010, pp 4 to 661.
[2] Affidavit of DS Brackin, sworn 5 February 2010, p 678.
[3] Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd [2007] QSC 206.
[4] Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd [2008] QCA 160.
[5] [2005] QSC 135.
[6] [2005] 2 Qd R 563 at 568.
[7] [2008] QCA 160 at para 84.
[8] Homepace Ltd v Sita South East Ltd [2007] EWHC 629 at [55]