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Hutson v Nerang Subdivision Pty Ltd[2021] QSC 323

Hutson v Nerang Subdivision Pty Ltd[2021] QSC 323

SUPREME COURT OF QUEENSLAND

CITATION:

Hutson v Nerang Subdivision Pty Ltd & ors [2021] QSC 323

PARTIES:

ROBERT HUTSON IN HIS CAPACITY AS ADMINISTRATOR OF THE ESTATE OF NANCY ULLMAN LOESKOW

(applicant)

v

NERANG SUBDIVISION PTY LTD ACN 129 469 254

(first respondent)

and

KANAYA HOLDINGS PTY LTD ACN 098 864 905

(second respondent)

and

PACIFIC VIEW FARM (QUEENSLAND) PTY LTD ACN 114 561 081

(third respondent)

FILE NO/S:

BS 12466 of 2021

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

7 December 2021

DELIVERED AT:

Brisbane

HEARING DATE:

22 November 2021

JUDGE:

Brown J

ORDER:

The order of the Court is that:

  1. The proceeding be stayed until the determination of the dispute referred to in the first and third respondents’ solicitor’s letter to the President of the Queensland Law Society dated 15 November 2021 pursuant to clause 12 of the Development Deed and clause 18 of the Development Lease (as those expressions are defined in paragraph 1 of the Originating Application (CFI 1)).
  2. The applicant pay the first and third respondents’ costs of the application.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – where the applicant, first respondent and second respondent entered into a development deed – where the development deed contemplated entry into a development lease including with the third respondent – where the applicant seeks directions that the form of contract proposed by the respondents is not consistent with the terms of a development deed and development lease – where the applicant seeks a declaration in the alternative that a tenant under the development lease is not entitled to a 10% increase in the amount payable to the tenant

PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS – TO STAY OR DISMISS ORDERS OR PROCEEDINGS GENERALLY – whether the proposed form of contract to be used for the sale of lots to third parties that has been proposed by the first and second respondents is consistent with the terms of the development deed and development lease – whether the directions sought should be made or whether the proceeding should be stayed and determined by an expert

Hooks Enterprises Pty Ltd v Sonnenberg Pty Ltd [2018] 1 Qd R 116, considered

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, cited

Nerang Subdivision Pty Ltd v Hutson [2020] QSC 225, considered

Re: Tooth & Co Limited (1978) 31 FLR 314, applied

Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563, considered

1144 Nepean Highway Pty Ltd v Abnote Australasia Pty Ltd (2009) 26 VR 551, cited

COUNSEL:

M May for the applicant

B O'Donnell QC with S Russell for the respondents

SOLICITORS:

Cooper Grace Ward for the applicant

Mills Oakley for the respondents

  1. [1]
    The present application requires the Court to determine whether a dispute, the subject of a proceeding in this Court, should be allowed to continue and whether directions should be made, or whether the proceedings should be stayed and the dispute determined by an expert pursuant to a contractual provision providing for alternate dispute resolution by an expert determination.
  2. [2]
    The executor of the estate of Nancy Loeskow entered into a Development Deed with the first and second respondents in September 2009 (“Development Deed”) in respect of the development of land that had been owned by the deceased, the sale of separate parcels of land created upon its subdivision and distribution of proceeds in accordance with a deed. The Development Deed contemplated that as stages of the development were approved, the owner of the land (the personal representative of the deceased) would enter into a Development Lease (“Development Lease”). There are two such leases that have been entered into between the applicants and the third respondent (as tenant).
  3. [3]
    Robert Hutson, in his capacity as administrator of the estate of Nancy Ullman Loeskow, seeks directions for the hearing of an originating application that:
    1. (a)
      the form of contract proposed by the respondents is not consistent with the terms of the Development Deed and the Development Lease (Contract Dispute); and
    2. (b)
      In the alternative to the order sought in paragraph 1, a declaration that, in respect of each and every contract between the applicant (as landlord under the Development Lease) and a third party purchaser in the form of the proposed contract, the amount that the tenant under the Development Lease is otherwise entitled to receive in respect of such sale under the Development Deed and the Development Lease is not to be increased by 10% on account of the tenant’s liability for GST by operation of clause 20.2 of the Development Lease or clause 15.6 of the Development Deed or otherwise (GST dispute).
  4. [4]
    The dispute between the parties as to how GST is to be dealt with between them has been the subject of dispute for some time.  A previous application was made before Justice Bond for a determination as to the allocation of GST which was rejected on the basis that his Honour considered that, at that stage, his Honour was being asked to give an advisory opinion in relation to a hypothetical and abstract set of circumstances.[1] The second declaration sought by Mr Hutson,  referred to as the GST Dispute, is further to that dispute. In simple terms, it is described as whether the amount that the first and second respondents, as the developer, are to receive from such sales is to be increased by 10% on account of GST by operation of clauses in the Development Deed and the Development Lease.
  5. [5]
    Since approximately February 2021 a further dispute has emerged as to whether the proposed form of contract to be used for the sale of lots to third parties that has been proposed by the first and second respondents, is consistent with the terms of the Development Deed and the Development Lease, which has resulted in the declaration being sought by Mr Hutson in the Contract Dispute.
  6. [6]
    Nerang Subdivision Pty Ltd and Pacific View Farm (Queensland) Pty Ltd, who are the first and third respondents[2] to the application made by Mr Hutson, make a cross-application for a stay of the proceedings in this Court.  The respondents referred what they describe as the Contract Dispute, namely whether the form of contract proposed by the first and third respondents conforms with the terms of the Development Deed, which mirrors the Contract Dispute raised by paragraph 1 of the originating application, to an expert referee, pursuant to the dispute resolution clause in clause 12 in the Development Deed and clause 18 in the Development Lease.  Clause 18 of the Development Lease is in substantively the same terms as clause 12 in the Development Deed, so I will refer only to clause 12 in these reasons only.
  7. [7]
    There is no dispute between the parties that the GST Dispute should be determined by this Court. Both parties agree that the outcome of the Contract Dispute as to the form of contract to be entered into with third parties will affect the GST dispute.
  8. [8]
    On 25 October 2021, the respondents’ solicitors wrote to the applicant’s solicitors outlining the Contract Dispute and indicating their intention to refer the matter to expert determination. The applicant contended the Court was more appropriate to resolve the dispute but after initially nominating different experts from the respondents. 
  9. [9]
    On the same day, but after the applicant filed and served its originating application, the respondents wrote to the President of the Queensland Law Society requesting she appoint a referee to determine the Contract Dispute under the Development Deed and Development Lease.  Mr Hutson applies for directions, while the respondents apply for a stay of the proceedings.

Issues for determination

  1. [10]
    The Court must determine whether to stay the originating application, failing which, it should make directions for the originating application to be heard. 
  2. [11]
    According to the respondents the originating application should be stayed because:
    1. (a)
      First, the parties have agreed to a process under a contract to resolve their disputes by expert determination and should be held to their bargain.
    2. (b)
      Secondly, the dispute is amenable to expert resolution and the selection of the expert is to be made by the President of the Queensland Law Society.
    3. (c)
      Thirdly, the commercial circumstances of the development are a discretionary factor in favour of the expert’s determination procedure on which the parties agreed.  The referee is required to determine the dispute within fourteen days whereas a decision on the originating application is likely to take significantly longer.  In that respect, the first and third respondents have produced evidence of the need to determine the contract dispute within a matter of weeks.
  3. [12]
    Mr Hutson, however, contends that the stay should be refused on the basis that:
    1. (a)
      The dispute resolution clauses in the Development Deed and Development Lease did not prevent Hutson from commencing this proceeding and does not prevent the determination of this proceeding.
    2. (b)
      It is common ground that the GST Dispute ought to be determined by the Court and that the two disputes are inter-related.  Thus, the consequences of staying these proceedings would be an undesirable multiplicity of proceedings with the possibility of inconsistent findings.
    3. (c)
      The applicant also submits that the dispute resolution process in the deed and lease is inept for resolution of the Contract Dispute, and that the respondents’ claim of urgency ought to be rejected.

Dispute resolution clauses do not prevent this proceeding

  1. [13]
    Turning first to the question of whether the dispute resolution clause in the Development Deed, clause 12 permits the matter to be referred for expert determination, once Court proceedings have been issued, for a determination of the same matter and whether the clause prevents Hutson from commencing this proceeding and the determination of the proceeding. 
  2. [14]
    Clause 12 of the Development Deed provides as follows: [3] 

Nature of Dispute

12.1 If a dispute arises between the Parties in relation to this document or the Project, then either Party may refer it to an independent expert (Referee) for determination.

Appointment of Referee

12.2 The Referee shall be such person appointed by the President of the Queensland Law Society Inc at the request of either Party.

How the Parties must act

12.3  When a dispute is referred to a Referee each Party must:

12.3.1 use its best endeavours to make available to the Referee all facts and circumstances which the Referee may need to know in order to determine the dispute; and

12.3.2 ensure that its employees, agents and consultants are available to appear at any hearing or enquiry called for by the Referee; and

12.3.3 give a copy of any written submission it makes to the Referee to the other Party at the same time as it gives the submissions to the Referee.

…

Role of the Referee

12.5 The Referee acts as an expert and not as an arbitrator. The Referee's decision is final and binding on the Parties. The Referee must give a written statement of reasons for the decision to both Parties

…

Bar to proceedings

12.7  No Party may:

12.7.1 commence any process in a court or seek to resolve the dispute by any other means (except by negotiation or in accordance with this clause);

12.7.2 purport to terminate this document because of a default (other than in respect of the occurrence of an Insolvency Event),

while the determination of the dispute under this clause is in progress.

  1. [15]
    Mr O'Donnell QC, on behalf of the respondents, submits that clause 12 provides for either party to unilaterally refer a matter for expert determination and that, once referred, it is binding on both parties.  This is reflected by the use of the word “must” in clause 12.3.  Further, Mr O'Donnell QC contends that once a matter is referred to a referee, the determination of the dispute under the clause is in progress and a party is precluded from continuing court proceedings.  This is said to have also been made clear by clause 12.7 which explicitly provides that no party can seek to resolve the dispute by any other means, other than by negotiation or in accordance with the clause.  He contends that the process under the clause is in progress once the dispute is referred to the Queensland Law Society President for an appointment of an expert.
  2. [16]
    Mr O'Donnell QC does not however rely on a contractual constraint arising from clause 12.7[4] to justify the stay, but rather the fact that the parties agreed on an expert determination process to resolve their disputes and should be held to their bargain.
  3. [17]
    Mr Hutson contends that the jurisdiction to grant a stay is not enlivened because the parties have not agreed that the dispute raised in this proceeding shall be determined by means other than curial adjudication.  Mr Hutson contends that clause 12 does not commit a dispute being referred to a referee if it is the subject of proceedings that were commenced prior to any appointment or request for appointment under clause 12.1 or 12.2 respectively.  Clause 12.1 is permissive in its terms. In this regard, Mr Hutson points to the use of the word “may” in clause 12.1.  Further, it submits that the bar on commencing proceedings in clause 12.7 is expressly limited to apply “while the determination of the dispute under this clause is in progress”.  In particular, he points to the word “while” as indicating that the bar does not operate if such determination is not in progress.  In the present case, Mr Hutson contends that there is no reference or dispute resolution in progress because the President of the Queensland Law Society has not yet appointed an independent expert. 
  4. [18]
    According to Mr Hutson, clause 12.7, on its correct construction, does not prevent a party from continuing a process in a Court that was commenced before the referral to an expert and the bar in clause 12.7 began to operate. 
  5. [19]
    Mr Hutson submits that by limiting the bar in clause 12.7 to the commencement of proceedings while contractual dispute resolution is in process, the clause permits the commencement of proceedings before contractual dispute resolution is in process. Given that, it further submits that the parties should not be taken to have intended that proceedings commenced in the court could be frustrated by a subsequent referral under clause 12 of the Development Deed.  Mr Hutson submits this approach provides a clear and symmetrical limitation on each process such that neither party can commence another type of proceeding once a party has elected to resolve it by the Court or through an expert determination. Whichever process commences first applies to the exclusion of the other.
  6. [20]
    According to Mr Hutson, the construction he contends for is supported by the fact that there are clauses within the Development Deed which provide that a dispute must be determined by a referee under clause 12,[5] as opposed to “may” in relation to a referral of other disputes.  The applicant also points to clause 15.14 of the Development Deed which provides that the parties submit to the jurisdiction of the Courts of Queensland in the determination of the rights and remedies of the parties under this document, thus demonstrating that the expert determination clause in clause 12 is not intended to be an exclusive way of determining the dispute and Development Deed also contemplates disputes being resolved by the Courts.  Further, he states that it would be an absurd result for the clause to permit a party to refer a matter for expert determination after Court proceedings have commenced and to frustrate the Court process.

Construction of Clause 12

  1. [21]
    Clause 12.1 provides for a voluntary referral of a dispute by either party for expert determination, but the Development Deed contemplates that disputes may also be dealt with by the courts.  It is only by operation of specific clauses in the Development Deed in relation to particular disputes that the referral of a dispute for expert determination is mandatory. Clause 12 does provide for the mandatory steps to be taken by the parties in 12.3.
  2. [22]
    While Clause 12.7 specifically bars the commencement of proceedings when a matter has been referred for expert determination, there is however, no explicit provision in the clause barring a referral to an independent expert once Court proceedings are commenced.. Given the inclusion of such an express provision by the parties banning the commencement of proceedings in clause 12.7, one would not readily imply a similar limitation into clause 12.1 banning a referral for expert determination when court proceedings have been commenced.
  3. [23]
    While Clause 12.7.1 does refer to there being a bar on the commencement of court proceedings where a matter is referred to an independent expert, it is in broader terms given it refers to “or seek to resolve the dispute by other means”.  While the respondents contend that would extend to the continuation of court proceedings if the dispute resolution is in process, I consider that is not the preferable construction given  “or seek to resolve the dispute by other means” is framed in the alternative to court proceedings, this seeking to exclude another form of dispute resolution outside of court proceedings or the expert determination provision. In providing the bar to the commencement of court proceedings where there has been a referral for an expert determination, the parties intend that the expert determination has some primacy in terms of dispute resolution.[6]
  4. [24]
    The proper construction of clause 12 is that there was no constraint on the issuing of the Court proceedings by the applicant, nor the respondents seeking to implement the expert referral process.
  5. [25]
    However, even if clause 12.7 does not bar the Court proceedings continuing that does not prevent the Court’s discretion for a stay being enlivened, given the provision for expert determination in the Development Deed and the Development Lease, as was made clear by Daubney J in Hooks Enterprises Pty Ltd v Sonnenberg Pty Ltd (Hooks Enterprises) if the applicant must participate in the process, on the basis that the parties should be held to their bargain.[7]
  6. [26]
    While each case must turn on its own facts, the clause considered in Hook Enterprises does bear similarity to the present case. However there was not a clause the equivalent of clause 12.7.
  7. [27]
    The expert determination clause considered by Daubney J in Hooks Enterprises[8]  did not provide that any dispute must be dealt with under the expert determination clause which was also clause 12.   In Hooks Enterprises, Daubney J found that only one party needed to assert that a dispute existed in order to bind the other party to the completion of the dispute resolution process, including an expert determination.[9]  That could be done at the election of either party, the clause not being in mandatory terms.  In determining whether or not the proceedings should be stayed, his Honour referred the decision of Chesterman J in Zeke Services Pty Ltd v Traffic Technologies Ltd (Zeke Services),[10] particularly where his Honour said that:[11]

“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) 81 CLR 502 (an arbitration case) and by Gillard J in Badgin.  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 differently, 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.”

  1. [28]
    In Hook Enterprises His Honour therefore considered that the plaintiff was bound to respond and participate in the procedure. That was notwithstanding court proceedings had been issued prior to the issuing of the notice of dispute triggering the expert determination process. In that case, the defendant’s solicitors sent a notice of dispute calling for the parties’ dispute to be referred to expert determination to the defendant’s solicitors after Court proceedings had issued and they had been sent the claim and statement of claim by email informing them the defendant would be served the following day. In Daubney J’s view, the notice of dispute had been given and the procedure embarked upon in circumstances where a response to the notice was mandatory, as indicated by the use of “must”.[12]    His Honour found that the expert determination clause provided for proper process to be followed and that a suitably qualified expert could determine the issues in dispute notwithstanding that there were issues of fact and law.

Has there been a referral under clause 12?

  1. [29]
    The respondents wrote to the President of the Queensland Law Society seeking the appointment of an independent expert on 15 November 2021 in respect of the contract dispute.[13] The President of the Queensland Law Society outlined the process that she intended to adopt and sought the parties’ consent in that regard. The applicant does not consent.
  2. [30]
    The respondents contend that once it seeks the appointment of an expert determination, the process is invoked. They further contend that once invoked, the applicant cannot frustrate the process by not agreeing to consent to the President’s proposed process for appointment of an independent expert.[14]
  3. [31]
    The applicant contends that the clause was not invoked until an independent expert is appointed and therefore the mandatory provision in clause 12.3 has not been involved. It was not until that point that the dispute was referred to the referee. In that respect they note that the process for expert determination in Hooks Enterprises was invoked by the issuing of the Notice of Dispute and had progressed to the point where parties had to take mandatory steps.  In Hooks Enterprises, a party only had to assert that a dispute existed to bind the other party to the process.[15]
  4. [32]
    The parties are not aided by a well drafted clause, which defines when a matter is referred to a referee. Clause 12.1 provides for one of the parties to refer a dispute to an independent expert. Clause 12.2 provides the mechanism for the independent expert to be appointed and clause 12.3 provides “When a dispute is referred to a Referee each party must…” While the mandatory steps in clause 12.3 is not operative until the independent referee is appointed, once the dispute is referred to the Queensland Law Society seeking an appointment, the deed provides that the independent referee shall be the person appointed by the President of the Queensland Law Society. There is no option for the parties in that regard. The process of appointment is not one of consultation, nor does it require the parties’ agreement. It is a matter for the President. Thus, once the dispute is referred to the Queensland Law Society President seeking the appointment, the process for the determination of the dispute is in progress.  Given clause 15.19 of the deed provides that “The Developer and the Owner must each execute all documents and do things reasonably requested by the other party to carry out and perform this document…” It may be open for the respondents to seek a mandatory injunction if the applicant does not agree to execute the terms proposed by the President of the Queensland Law Society if requested to do so by the developer,[16] even where the expert determination process is not mandatory but done at the election of one of the parties. Thus while the steps in clause 12.3 are not enlivened until the referee is appointed, clause 12 does provide for the commencement of the expert determination process at the point of referral to the Queensland Law Society President to appoint a referee which does not require the participation of either party.
  5. [33]
    As submitted by the respondents, consistent with Zeke Services[17] and Hooks Enterprises, if the parties have agreed by contract that their dispute shall be determined by means other than a curial adjudication, the Court has the jurisdiction to grant a stay. While in Zeke Services Chesterman J found that the parties would have been in breach by not engaging in the expert determination as agreed in the contract, Daubney J in Hooks Enterprises, did not consider that was a precondition to the Court having jurisdiction to grant a stay. In Hooks Enterprises, like the present case, proceedings had been instituted in the Court prior to the other party seeking to refer the matter to an independent expert. Nor did his Honour regard the fact that Court proceedings were not precluded under the expert determination clause did not result in the Court’s jurisdiction to grant a stay being enlivened. 
  6. [34]
    Under the Development Deed, Clause 12 does provide that the expert determination is final and binding so the parties have provided for a dispute to be determined by means other than curial adjudication (although it is not mandatory in all cases). In my view, the better construction is that once there is a referral of the dispute to appoint an expert under clause 12.1, the dispute resolution process is in progress given the terms of clause 12.2 do not rely on the agreement between the parties.
  7. [35]
    While the applicant was not precluded from instituting the proceedings by clause 12 of the contract, given the respondents have also referred the matter for expert determination, the Court’s jurisdiction to stay the proceedings is enlivened. According to Chesterman J there is a heavy onus on the party opposing the stay. However, in Zeke Enterprises his Honour did grant a stay given that he did not consider the nominated expert, namely an accountant, was suitably qualified to determine two of the five complaints, the latter two questions of mixed fact and law.[18] In light of that, his Honour considered that the lack of procedural rules became significant, particularly the lack of a requirement for procedural fairness,[19] and the fact that if the expert acts within the parameters of the contract the parties will be bound by the decision.[20] Given the expert could only determine some of the complaints and not others  his Honour stayed the proceedings on the basis that the same decision-maker should determine all disputes.[21]

Should a stay be granted in any event?

  1. [36]
    The applicant contends that the stay should be refused on the basis that the expert nominated under the contract is not suitably qualified, the procedures are wanting and that the Contract Dispute and GST Dispute are so inter-related that both should be determined together. Given there is no issue that the GST Dispute is appropriately determined by this Court, it contends therefore that the whole dispute should be heard by the Court.
  2. [37]
    Both parties agree that the outcome of the GST Dispute will be affected by the outcome of the Contract Dispute, as the form of contract will be an important consideration in determining the position with respect to GST. However, whereas the applicant submits that they are inextricably linked, the respondents submit that the GST Dispute remains hypothetical not only until the form of contract is decided, but in fact until a contract with a third party has settled. In that respect, the respondents point to the decision of Bond J in Nerang Subdivision Pty Ltd v Hutson[22] where the respondents, as opposed to Mr Hutson, had sought a declaration that, under the Development Deed and the Development Lease, the parties intended that the amount of any liability for GST on the owner’s taxable supply of a lot is to be met from the owner’s return and the amount of the developer’s return payable to the developer is exclusive of GST.  At that time, Mr Hutson opposed relief on the basis that it was hypothetical because “it is claimed in relation to circumstances that have not occurred and might never occur”.[23]
  3. [38]
    In his Honour’s consideration of the question, Bond J considered the various possibilities that could arise,[24] which caused his Honour to comment that the “actual direction of cash payments and how the contracts create debts and require them to be discharged could be significant in relation to GST”.[25]
  4. [39]
    Bond J found that the application was on the wrong side of the line which divides the hypothetical and the abstract from the non-hypothetical and the concrete.  Having noted that “mere futurity does not establish that the question is hypothetical in the relevant sense”,[26]  his Honour set out a number of circumstances which caused his Honour to consider that the application was, at that time, hypothetical.[27]  Some of those circumstances are now not relevant as the Development Lease has been entered into, the relevant approvals have been obtained and there is no possibility that they contain conditions affecting the viability of the project.  The circumstances that remain relevant are those identified in sub-paragraph (e) and (f) which are:

“…(e) And even if the identity of the Tenant were known, the Tenant’s obligation under cl 5.3 of the Lease to pay a money sum and the Tenant’s entitlement under cl 5.4 of the Lease to receive a money sum come into existence for the first time only after –

  1. (i)
    the Owner/Landlord grants the Tenant a Lease;
  1. (ii)
    the Tenant negotiates a contract of sale on behalf of the Owner; and
  1. (iii)
    a contract of sale settles and a third party purchaser pays monies pursuant to its terms.

…

“(f) At present, neither the terms of any contract of sale nor the parties can be identified. And because the terms of the contract cannot be identified, the payer and payee of monies under the contracts cannot be identified.’

  1. [40]
    It is clear that the form of the contract will be relevant to the question of resolution of the GST Dispute.
  2. [41]
    While I do not consider that the GST Dispute would necessarily be hypothetical, until there has been a settlement of a contract with a third party, the form of contract does need to be resolved, before it could be determined and would not otherwise be hypothetical. The applicant contends that part of its argument in relation to the form of contract not being consistent relies, at least in part, on the clauses in the Development Deed and the Development Lease and how the question of GST is to be dealt with between the parties. That has been set out in some detail by the applicant and I accept that the clauses in the Development Deed and the Development Lease with respect to GST have relevance to the Contract Dispute, at least from the applicant’s point of view. The applicant contends that having the Contract Dispute determined by the parties and the GST Dispute dealt with by the Court could result in inconsistent findings. The respondents however contend that it is speculative whether the expert would take the approach propounded by the applicant which it states would require the expert to work backwards from clause 20.2 to determine the form of contract. Whether or not the GST dispute is a hypothetical question now or would be after the Contract Dispute is determined, noting the Originating Application frames the declarations as alternative, is finely balanced. However, while the clauses in the Development Deed and Development Lease with respect to GST may well be relevant considerations for an expert determination as to the Contract Dispute, the determination of the Contract Dispute may result in the GST Dispute not having to be determined at all. That is supported by the fact that the Originating Application frames the declaration in respect of the GST Dispute in the alternative to the Contract Dispute.  They also may not be regarded by the expert as determinative of the form of the contract.
  3. [42]
    Although the expert determination is final and binding upon the parties, it would not be binding upon the Court in the determination of the GST Dispute.    In my view, it is unlikely that the determination of the Contract Dispute would result in inconsistent findings.  The Contract Dispute is a matter which requires determination prior to the GST Dispute and relates to the form of contract to be adopted, albeit that the clauses as to GST may affect the outcome of the Contract Dispute.  Given the Contract Dispute must be determined prior to the GST Dispute there is not the risk of multiplicity of proceedings by the expert determination of the Contract Dispute proceedings prior to any Court proceedings in respect of the GST Dispute.  It is not, in my view, necessary, nor in the interests of expediency or consistency, that the two disputes be determined at the same time.  The present case is quite different from the situation considered in Zeke Services.
  4. [43]
    I do not accept the contention by the applicant that the expert determination procedure provided for by clause 12 of the Development Deed is not appropriate for the resolution of the Contract Dispute.  Clause 12 provides for the appointment of an independent expert by the President of the Queensland Law Society. The expert chosen will obviously be someone with legal qualifications. The dispute is one which is plainly a legal dispute requiring consideration of the obligations under the Development Deed and the proposed form of contract to determine whether the latter is inconsistent with what, if anything, is required under the Development Deed.  It is a reasonably narrow issue which, on the face of it, does not require the calling of factual evidence but relies on an analysis of the Development Deed.  The clause does not set out any procedural requirements or set out a requirement of procedural fairness although it does contemplate a power to determine factual matters. Clause 12.3 provides for each party using their best endeavours to make available to the referee all facts and circumstances which the referee may need to know in order to determine a matter, ensuring potential witnesses are available to appear at a hearing and for each party to deliver submissions to each other at the same time as the referee. Clause 12.5 provides for the referee to give a written statement of reasons. Given it provides for each party to provide submissions to the referee as well as providing the facts and circumstances needed to make the decision, which in this case would essentially be the Development Deed, Development Lease and proposed form of contract, a person with the appropriate legal expertise is suitably qualified to determine the Contract Dispute. While the decision is binding upon the parties, the fact that the agreement provides for the expert to be a legally qualified person would also be cognisant of only deciding the dispute before them and issues of procedural fairness that may arise. The parties have nominated commercial silks and a retired judge who would be appropriately qualified. While the President of the Law Society is not bound by the nominations there is no reason to expect that she would not appoint an appropriately qualified and experienced lawyer to determine the matter.
  5. [44]
    Finally, as to the contention by the respondents that urgency requires the matter to be determined and justifies the granting of the stay, there has been significant delay by the respondents in providing the proposed terms of contract and responding to the concerns raised by Mr Hutson as to the form of contract.  I am unpersuaded that the resolution is necessarily urgent to take advantage of the market conditions and not lose buyers given that the development has progressed and been marketed in the absence of the form of contract being agreed and at least some buyers appear to have reserved lots with many more potential buyers having expressed interest, far in excess of the number of the lots. However, while there have been delays it is clearly a matter which has to be determined with some expedition. At present, it may be determined marginally quicker by an expert than the Court although availability of an expert may well be an issue given the Christmas period.
  6. [45]
    While the present dispute is significant, the provision for expert determination is however an expeditious and economical mechanism for the determination of the Contract Dispute by a legally qualified expert in an informal way which supports the granting of a stay.  It is a mechanism the parties have agreed for resolution of disputes although not exclusively. While the expert determination clause contained in clause 12 does not provide for the matter to necessarily be resolved within fourteen days of referral, but rather “14 days after the date of submission that the dispute for determination or within any longer period which the referee reasonably determines,” it does provide for a reasonably expeditious process.
  7. [46]
    In all the circumstances, I do consider it is appropriate that the parties be held to their bargain. I consider it is appropriate that a stay be granted pending determination of the Contract Dispute by an expert. I will grant the respondents’ application. Both parties sought costs in the event that they were successful. There is no reason that costs should not follow the event. I therefore order that the applicant pay the respondents’ costs of the application.

Footnotes

[1]Nerang Subdivision Pty Ltd v Hutson [2020] QSC 225.

[2]I will refer to the first and third respondents collectively as “the respondents.”

[3]Clause 12 of the Development Deed is mirrored in clause 18 of the Development Lease.

[4]Although he submitted that if it mattered it would act as a bar to the proceedings.

[5]See for example clause 4.5, clause 6.16A.

[6]It would not prevent court proceedings being issued and a stay being sought.

[7][2018] 1 Qd R 116.

[8][2018] 1 Qd R 116 at 123.

[9] [2018] 1 Qd R 116 at [26].

[10][2005] 2 Qd R 563.

[11][2005] 2 Qd R 563 at [21].

[12][2018] 1 Qd R 116 at [32].

[13]Affidavit of P Armit sworn 19 November 2021 at page 14.

[14]Affidavit of P Armit sworn 19 November 2021 page 30-31.

[15][2018] 1 Qd R 116 at [26].

[16]See 1144 Nepean Highway Pty Ltd v Abnote Australasia Pty Ltd (2009) 26 VR 551 at [38] and [39] although dealing with a different clause.

[17][2005] 2 Qd R 563 where clause 7.6(e) provided that a party may refer a matter to the President of the Institute of Chartered Accountants, although the process to be adopted for warranty claims in clause 7 was in mandatory terms and to not abide by the process would have been a breach.

[18][2005] 2 Qd R 563 at [27]-[31].

[19][2005] 2 Qd R 563 at [32].

[20][2005] 2 Qd R 563 at [31]-[36].

[21][2005] 2 Qd R 563 at [37].

[22][2020] QSC 225.

[23][2020] QSC 225 at [9].

[24][2020] QSC 225 at [26].

[25][2020] QSC 225 at [29].

[26][2020] QSC 225 at [43] quoting Re: Tooth & Co Limited (1978) 31 FLR 314 at 332.

[27][2020] QSC 225 at [50].

Close

Editorial Notes

  • Published Case Name:

    Hutson v Nerang Subdivision Pty Ltd & Ors

  • Shortened Case Name:

    Hutson v Nerang Subdivision Pty Ltd

  • MNC:

    [2021] QSC 323

  • Court:

    QSC

  • Judge(s):

    Brown J

  • Date:

    07 Dec 2021

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Hooks Enterprises Pty Ltd v Sonnenberg Pty Ltd[2018] 1 Qd R 116; [2017] QSC 69
6 citations
Jump To
Cite 1 - [2018] 1 Qd R 116
Cite 2 - [2018] 1 Qd R 116
Cite 3 - [2018] 1 Qd R 116
Cite 4 - [2018] 1 Qd R 116
Cite 5 - [2018] 1 Qd R 116
Cite 6 - [2018] 1 Qd R 116
Huddard Parker Ltd v T he Ship Mill Hill (1950) 81 CLR 502
1 citation
Jump To
Cite 1 - (1950) 81 CLR 502
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104
1 citation
Jump To
Cite 1 - (2015) 256 CLR 104
Nepean Highway Pty Ltd v Abnote Australasia Pty Ltd (2009) 26 VR 551
2 citations
Jump To
Cite 1 - (2009) 26 VR 551
Cite 2 - (2009) 26 VR 551
Nerang Subdivision Pty Ltd v Hutson [2020] QSC 225
8 citations
Jump To
Cite 1 - [2020] QSC 225
Cite 2 - [2020] QSC 225
Cite 3 - [2020] QSC 225
Cite 4 - [2020] QSC 225
Cite 5 - [2020] QSC 225
Cite 6 - [2020] QSC 225
Cite 7 - [2020] QSC 225
Cite 8 - [2020] QSC 225
Re: Tooth & Co Limited (1978) 31 FLR 314
2 citations
Jump To
Cite 1 - (1978) 31 FLR 314
Cite 2 - (1978) 31 FLR 314
Zeke Services Pty Ltd v Traffic Technologies Ltd[2005] 2 Qd R 563; [2005] QSC 135
8 citations
Jump To
Cite 1 - [2005] 2 Qd R 563
Cite 2 - [2005] 2 Qd R 563
Cite 3 - [2005] 2 Qd R 563
Cite 4 - [2005] 2 Qd R 563
Cite 5 - [2005] 2 Qd R 563
Cite 6 - [2005] 2 Qd R 563
Cite 7 - [2005] 2 Qd R 563
Cite 8 - [2005] 2 Qd R 563

Cases Citing

Case NameFull CitationFrequency
Mineralogy Pty Ltd v Adani Mining Pty Ltd [2022] QSC 154 2 citations
1

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