Exit Distraction Free Reading Mode
- Selected for Reporting - See Editor's Note
- Clarke Energy (Australia) Pty Ltd v Power Generation Corporation[2025] QSC 64
- Add to List
Clarke Energy (Australia) Pty Ltd v Power Generation Corporation[2025] QSC 64
Clarke Energy (Australia) Pty Ltd v Power Generation Corporation[2025] QSC 64
SUPREME COURT OF QUEENSLAND
CITATION: | Clarke Energy (Australia) Pty Ltd v Power Generation Corporation (Trading as Territory Generation) and Robert Holt KC [2025] QSC 64 |
PARTIES: | CLARKE ENERGY (AUSTRALIA) PTY LTD (applicant) v POWER GENERATION CORPORATION (Trading as Territory Generation) (first respondent) And ROBERT HOLT KC (second respondent) |
FILE NO/S: | BS No 13350 of 2023 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 31 March 2025 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 15-17 April 2024; 7 May 2024 |
JUDGE: | Kelly J |
ORDER: |
|
CATCHWORDS: | ARBITRATION – RECOURSE AGAINST AWARD – GROUNDS FOR REMITTING OR SETTING ASIDE – MISCONDUCT – DENIAL OF NATURAL JUSTICE – where the applicant seeks an order to set aside an arbitral award under s 34 of the Commercial Arbitration Act 2013 (Qld) – whether the award is in conflict with the public policy of the State of Queensland – whether the applicant suffered real unfairness or real practical injustice in how the arbitration was conducted or resolved by reference to established principles of natural justice or procedural fairness. Commercial Arbitration Act 2013 (Qld) ss 1AC, 2A, 34 International Arbitration Act 1974 (Cth) AKN v ALC [2015] 3 SLR 488, cited Alstom Ltd v Yokogawa Australia Pty Ltd & Anor [2012] SASC 49, cited Ascot Commodities NV v Olam International Ltd [2002] CLC 277, cited BZV v BZW [2022] 3 SLR 447, cited BZW v BZV [2022] 1 SLR 1080, cited CAJ v CAI [2021] SGCA 102, cited CDM v CDP [2021] SGCA 45, cited CKG v CKH [2021] SGHC(I) 5, cited CKH v CKG [2022] SGCA(I) (4), cited Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd [2015] NSWSC 735, cited DBL v DBM [2024] SGCA 19, cited Lieschke v Lieschke [2023] NSWCA 241, cited Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2018] QCA 39, cited Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2018] 1 Qd R 245, cited Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255, cited PT Prima International Development v Kempinski Hotels SA [2012] 4 SLR 98, cited Sauber Motorsport AG v Giedo van der Garde BV (2015) 317 ALR 786, cited Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86, cited TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 232 FCR 361, cited The Nuance Group (Australia) Pty Ltd v Shape Australia Pty Ltd [2021] NSWSC 1498, cited TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186, cited Trustees of Rotoaira Forest Trust v Attorney-General [1999] 2 NZLR 452, cited Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14, cited |
COUNSEL: | P Dunning KC with S McNeil and S Parvez for the applicant A Wyvill SC with M Trim for the first respondent |
SOLICITORS: | Piper Alderman for the applicant MinterEllison for the first respondent |
An application to set aside an arbitral award
- [1]The applicant (“Clarke”) and the first respondent (“TG”) are parties to arbitral proceedings. TG, the major electricity producer in the Northern Territory, owns and operates the Owen Springs Power Station (“Owen Springs”) and the Tenant Creek Power Station (“Tenant Creek”). Clarke specialises in the sale, engineering, installation and maintenance of power plants that use gas engines.
- [2]On 22 December 2015, Clarke, as the contractor, and TG, as the owner, entered into separate contracts in relation to Owen Springs and Tenant Creek. The terms of each contract were relevantly identical. The contract concerning Owen Springs (“the Owen Springs contract”) involved the installation of a gas fired spark ignition reciprocating engine power station adjacent to an existing power station. The contract concerning Tenant Creek (“the Tenant Creek contract”) involved the upgrade and replacement of a diesel generation plant with a new gas fired and diesel generation plant. I have referred to the Owen Springs contract and the Tenant Creek contract together as the “the contracts”. The contracts were turnkey EPC lump sum contracts. Clarke was obliged to perform the whole of the Works. The Scope of Works were essentially described as comprising the turnkey design, engineering, procurement, factory inspections and testing, delivery to Site, construction, start-up, commissioning and testing of all plant and equipment.
- [3]Disputes arose under the contracts in relation to extensions of time and variations. Each contract contained an arbitration clause (clause 43). By that clause, a dispute could be referred to arbitration by either party upon notice to the other party. The arbitration was to be conducted in accordance with the ACICA Arbitration Rules (“the ACICA Rules”). If the ACICA Rules did not deal with an issue arising in connection with the conduct and procedure of the arbitration, the issue was to be resolved under the governing law and jurisdiction of the Northern Territory. By cl 43.8, the parties agreed that any arbitral award would be final and binding upon them and, to the fullest extent permitted by law, waived their rights to any form of appeal or other similar recourse to a court of law.
- [4]On 19 July 2019, Clarke gave to TG notices of arbitration under the contracts. The second respondent (“the arbitrator”) was nominated as the sole arbitrator. On 10 September 2019, the arbitrator made directions to the effect that the arbitrations were to be case managed together and heard and determined at the same hearing.
- [5]On 21 July 2023, the arbitrator delivered a partial award (“the award”). Pursuant to the award, the arbitrator:
- in the Owen Springs arbitration:
- dismissed all of Clarke’s extension of time claims;
- dismissed all of Clarke’s variation claims save for two, POO7 (which was awarded $12,068.00) and P014 (which was awarded $1249.50);
- in respect of TG’s counterclaim for load banks declared that the sum of $522,561.31 (ex GST) was due and payable by Clarke and that TG was entitled to set off that amount against the contract price;
- in respect of TG’s counterclaim for liquidated damages declared that the sum of $5,890,214.72 was due and payable by Clarke and that TG was entitled to set off that amount against the contract price;
- in the Tenant Creek arbitration:
- dismissed all of Clarke’s extension of time claims;
- dismissed all of Clarke’s variation claims;
- in respect of TG’s counterclaim for load banks declared that the sum of $425,138.33 (ex GST) was due and payable by Clarke and that TG was entitled to set off that amount against the contract price;
- in respect of TG’s counterclaim for performance liquidated damages declared that the sum of $396,000 was due and payable by Clarke and that TG was entitled to set off that amount against the contract price;
- in respect of TG’s counterclaim for non-compliant compaction declared that TG was entitled to set off the sum of $26,784.70 plus GST as damages for the costs of investigations caused by Clarke’s breach of contract and, to the extent that sum had not been set off, it was due and payable by Clarke as damages;
- in respect of TG’s counterclaim for delay liquidated damages declared that the sum of $2,449,993.93 was due and payable by Clarke and that TG was entitled to set off that amount against the contract price.
- [6]On 20 October 2023, Clarke started a proceeding in this Court for an order setting aside the award under s 34 of the Commercial Arbitration Act 2013 (Qld) (“the Act”). The sole ground relied upon by Clarke is that contained in s 34(2)(b)(ii) of the Act, which provides that the court may set aside an award only if the court finds that the award is in conflict with the public policy of the State of Queensland. Clarke contends that the requisite conflict has arisen because of a denial of natural justice. Relevantly, Clarke contends that the content of natural justice in the arbitrations required compliance with what was referred to as the hearing rule. The asserted non-compliance involved the arbitrator failing to consider or address an issue which was said to have been put before him “from the notice[s] of arbitration forward”.[1]
Distillation, and approach to the resolution of, the real issues in dispute
- [7]Before identifying the real issues on this present application, it is first necessary to outline some principles relevant to the application of s 34(2)(b)(ii) of the Act.
- [8]The Act follows commercial arbitration legislation enacted in other Australian jurisdictions. The Act includes sections which in their headings reference the “Model Law”. Those sections are substantially the same as the provisions of the UNCITRAL Model Law on International Commercial Arbitration.[2] The paramount object of the Act is to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense.[3] Subject to that paramount object, the interpretation of the Act involves regard being had to the need to promote, so far as practicable, uniformity between the application of the Act to domestic commercial arbitrations and the application of the provisions of the Model Law to international commercial arbitrations and the observance of good faith.[4]
- [9]In TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd,[5] the Full Court of the Federal Court observed:
“… it is not only appropriate, but essential, to pay due regard to the reasoned decisions of other countries where their laws are either based on, or take their content from, international conventions or instruments such as … the Model Law. It is of the first importance to attempt to create or maintain, as far as the language employed by Parliament … permits, a degree of international harmony and concordance of approach to international commercial arbitration. This is especially so by reference to the reasoned judgments of common law countries in the region, such as Singapore, Hong Kong and New Zealand.”
- [10]
“Procedural fairness, as such, is not an express ground to set aside an arbitral award under s 34. Not surprisingly, however, it is considered to be a factor that may engage the ground that a party was unable fairly to present their case or the ground that an award is in conflict with the public policy of the State.
However, it is necessary to bear in mind that those statutory grounds under s 34 are not satisfied, per se, by a failure to accord procedural fairness or any breach of the rules of natural justice as applied in other fields of discourse of the law. The context here is whether a statutory ground to set aside an arbitral award based on the Model Law is made out. In particular, s 18 of the [Act] provides:
‘The parties must be treated with equality and each party must be given a reasonable opportunity of presenting the party’s case.
Note –
This section differs from the Model Law to the extent that it requires a party to be given a ‘reasonable’, instead of ‘full’, opportunity of presenting the party’s case’.”
- [11]On the appeal in Mango Boulevard Pty Ltd v Mio Art Pty Ltd,[7] Fraser and McMurdo JJA agreed with these observations.
- [12]In TCL,[8] the Court considered a challenge to an arbitrator’s award under the equivalent provisions of the International Arbitration Act 1974 (Cth). The Court considered the public policy ground under Article 34(2)(b)(ii) of the Model Law and said that the rules of natural justice “fall within the conception of a fundamental principle of justice (that is within the conception of public policy) being, as they are, equated with, and based on, the notion of fairness”.[9] The Court went on to observe that fairness incorporates the underlying requirement of equality of treatment of the parties and the incorporation of the rules of natural justice into the Commonwealth Act embodied a fundamental principle contained within public policy, namely, fairness and equality of treatment of the parties which is at the heart of the arbitral process in article 18.
- [13]In Mio Art on appeal, McMurdo JA (with whom Fraser JA agreed) made the following observations about TCL:[10]
“But the Court said that “the weight of authority is clearly to give a narrow meaning to public policy” in this context. Amongst the many authorities to which the Court referred were the judgments of Bokhary PJ and Sir Anthony Mason, sitting in the Court of Final Appeal of Hong Kong, in Hebei Import & Export Corporation v Polytek Engineering Co Ltd. In a passage which was quoted in TCL, Bokhary PJ said that ‘the award must be so fundamentally offensive to [a] jurisdiction’s notions of justice that, despite its being a party to the Convention, it cannot reasonably be expected to overlook the objection.’ In another passage quoted in TCL, Sir Anthony Mason said that the public policy ground is limited to cases where the award is ‘contrary to the fundamental conceptions of morality and justice’ of the forum. As the primary judge in the present case discussed, that narrow view of the public policy ground has been applied to a domestic award under the equivalent Victorian Act in Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd.
In TCL, the Court said that an award should not be set aside under article 34 of the Model Law unless there was ‘demonstrated real unfairness or real practical injustice in how the international litigation or dispute resolution was conducted or resolved, by reference to established principles of natural justice or procedural fairness’. That statement was endorsed by the Victorian Court of Appeal in Sauber Motorsport AG v Giedo van der Garde BV & Ors. It was applied to a domestic arbitration in Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd, by the same judge (Croft J) in Blanalko Pty Ltd v Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Constructions) and Cameron Australasia Pty Ltd v AED Oil Ltd and by Hammerschlag J in Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd.”
- [14]Hence, McMurdo JA spoke in terms of whether there had been, on the facts in Mio Art, “such a denial of procedural fairness that a ground is established for setting aside the award”.[11] Clarke accepted that to succeed on this application, it was required to demonstrate that it had suffered “real unfairness or real practical injustice in how the [arbitration] was conducted or resolved by reference to established principles of natural justice or procedural fairness”. It was uncontroversial that the ground in s 34(2)(b)(ii) of the Act is “not concerned with mere procedural imperfections but with a negation of rights which our legal system recognises as being fundamental and therefore matters of public policy”.[12]
- [15]The present application before this Court was conducted by reference to pleadings. Those pleadings reveal that an important clause of the contracts is clause 38, which deals with extensions of time.
- [16]It is convenient to set out the following parts of clause 38:
“Notice
38.1 The Contractor must immediately give notice to the Owner of all incidents, circumstances or events (Events) of any nature affecting or likely to affect the progress of the Works which might be reasonably expected to result in a delay to the Works achieving Commercial Operation by the Date for Commercial Operation.
Further notice
38.2 Within 10 Business Days after the date of the notice issued under Clause 38.1, the Contractor must give a further notice to the Owner which must include:
- the material circumstances of the Event including the cause or causes;
- the nature and extent of any delay caused by the Event;
- the corrective action already undertaken or to be undertaken;
- the effect on the critical path noted on the Program;
- whether in its opinion, the Event qualifies as one which entitles the Contractor to an extension of time to the Date for Commercial Operation under Clauses 38.5 and 38.6;
- the period, if any, by which in its opinion the Date for Commercial Operation should be extended; and
- a statement that it is a notice under the Clause 38.2.
Continuing Events
38.3 Where an Event has a continuing effect or where the Contractor is unable to determine whether the effect of an Event will actually cause delay to the progress of the Works so that it is not practicable for the Contractor to give notice under Clause 38.2, a statement to that effect with reasons together with interim written particulars (including details of the likely consequences of the Event on progress of the Works and an estimate of the likelihood or likely extent of the delay) must be submitted by the Contractor in place of the notice required under Clause 38.2. The Contractor must then submit to the Owner, at intervals of 20 Business Days or less, further interim written particulars until the actual delay caused (if any) is ascertainable, at which time the Contractor must as soon as practicable but in any event within 20 Business Days give a final notice to the Owner including the particulars specified in Clause 38.2.
Determination by Owner
38.4 Within 30 Business Days after receipt of the notice in Clause 38.2 or the final notice in Clause 38.3 (as the case may be), the Owner must issue a notice notifying the Contractor’s Representative of its determination as to whether the relevant Event qualifies as one which entitles the Contactor to extension to the Date for Commercial Operation under Clauses 38.5 and 38.6, and if it does, the period, if any, by which the Date for Commercial Operation is to be extended. In making its determination, the Owner must act fairly and reasonably.
38.5 Subject to the provisions of this Clause 38, the Contractor is entitled to an extension of time to the Date for Commercial Operation as the Owner assesses where a delay to the achievement of Commercial Operation is caused by any of the following events, whether occurring before, on or after the Date for Commercial Operation:
- any act, omission, breach or default by the Owner or its Personnel;
- a Latent Condition, provided that the Contractor has complied with the requirements specified in Clause 35;
- a Variation, except where that Variation is caused by an act, omission or default of the Contractor or its Personnel;
- a suspension of the Works under Clause 40, except where that suspension is caused by an act, omission or default of the Contractor or its Personnel;
- an Event of Force Majeure; or
- a Qualifying Change in Law.
…
Extensions of time
38.7 Despite any other provisions of this Clause 38 and notwithstanding that the Contractor is not entitled to or has not claimed an extension of time to the Date for Commercial Operation, the Owner may, in its absolute sole and unfettered discretion, at any time grant an extension of the Date for Commercial Operation. The Owner has no obligation to grant, or to consider whether it should grant, an extension of time and is not required to exercise this discretion for the benefit of the Contractor.
Conditions precedent
38.8 If the Contractor fails to submit the notices required under Clauses 38.1, 38.2 and 38.3 within the times required, or fails to comply with any other notice requirement under this Contract regarding the event (including, in the case of a Force Majeure Event, the notice under Clause 36.4) then:
- the Contractor has no entitlement to an extension of time; and
- the Contractor must comply with the requirements to perform the Works by the Date for Commercial Operation.”
- [17]Clauses 46.15 and 46.16 are also noteworthy and relevantly provided:
“46.15 If the Contractor considers that it is entitled to any extension of the Date for Commercial Operation, a Variation or any other Claim under this Contract, the Contractor must:
- where the Contract specifies notice requirements and time frames for provision of such notices, strictly adhere to those notice requirements;
- where the Contract is silent on the provision of notices, then the Contractor must give notice to the Owner, describing the event or circumstance giving rise to the Claim, which shall be given as soon as practicable and no later than 15 days after the Contractor became aware, or should have become aware of the event or circumstances.
46.16 If the Contractor fails to comply with the requirements set out in Clause 46.15:
- the Date for Commercial Operation should not be extended; and/or
- the Contractor shall not be entitled to a Variation; and
- the Owner shall be discharged from all liability in connection with the Claim.”
- [18]Variations were dealt with by clause 37 of each contract.
- [19]In its statement of claim in this application, Clarke styled clauses 38.1 to 38.4 as “operative terms”. Clarke alleged that it was obliged to comply with the requirements contained in clauses 38.1 to 38.3[13] and that, following the receipt of a notice under either of those clauses, clause 38.4 obliged TG to determine, and notify Clarke, whether a relevant event qualified to entitle Clarke to an extension of time and, in making such a determination, to act fairly and reasonably.[14]
- [20]Clarke then, (by paragraph 9 of its statement of claim in this application) deployed its own defined expression “the Fairly and Reasonably Requirement” in the following way:
“The obligation to act fairly and reasonably, in the exercise of its determinative function contained in clause 38.4 of the Contracts, at a minimum, required [TG] to exercise a judgment as to whether the matter the subject of the claimed EOT was an event that qualified for an entitlement to an extension by reference to the following considerations:
- to have regard to all facts, matters or things which it knew or could reasonably bring within its knowledge in determining [Clarke’s] EOT claims, which included the matters set out in (b) below;
- to assess:
- whether [Clarke] had done the best it could to comply with the requirements of clauses 38.1, 38.2 and 38.3 of the Contracts;
- whether or not [TG] had contributed to any inability suffered by [Clarke] to provide notice in accordance with the requirements of clauses 38.1, 38.2 and 38.3 of the Contracts; and
- whether [Clarke] had been prevented from providing notice in accordance with the requirements of clauses 38.1, 38.2 and 38.3 of the Contracts by [TG’s] conduct; and
- thereby not to make the determination only by reference to whether the terms of clause 38.2 and 38.3 had been met or not, but even if they had not been met, whether the circumstances qualified the Event as one which entitled [Clarke] to an extension of the Date of Commercial Operation when that determination was made fairly and reasonably (the Fairly and Reasonably Requirement).”
- [21]Clarke (by paragraph 29 of its statement of claim in this application) alleged that, having regard to the notices of arbitration and the pleadings within the arbitration “there was an issue joined between the parties in each of the Arbitrations as to whether, even if [Clarke] had not met the preconditions in clause 38 of the Contracts (particularly clause 38.2), [TG] was obliged in the exercise of its determinative function regarding the claim for an EOT in accordance with the Fairly and Reasonably Requirement to grant the extension, and had failed to do so (the Fairly and Reasonably Requirement Issue)”.
- [22]Hence, by its statement of claim in this application, Clarke framed the issue joined between the parties in the arbitrations by reference to another one of its defined expressions, the Fairly and Reasonably Requirement Issue. I shall adopt that defined expression in these Reasons. The defined expression, the Fairly and Reasonably Requirement Issue, incorporates Clarke’s other defined expression, the Fairly and Reasonably Requirement.
- [23]The Fairly and Reasonably Requirement Issue is the issue which the arbitrator is said to have not considered, constituting such a denial of procedural fairness to establish the ground in s 34(2)(b)(ii) of the Act.
- [24]In its defence, TG adopted the following terminology:
“Clarke’s ‘the Fairly and Reasonably Requirement’ as to the true construction of clause 38.4 of the Contracts and as defined in paragraph 9 of its Statement of Claim is referred to as ‘the Fairly and Reasonably Requirement’.
Clarke’s ‘the Fairly and Reasonably Requirement Issue’ as to the true construction of clause 38.4 of the Contracts and, if that construction is accepted, its application to the facts in the Arbitrations as defined in paragraph 29 of its Statement of Claim is referred to as ‘the Fairly and Reasonably Requirement Issue’.”
- [25]TG’s terminology was “admitted” by Clarke’s reply. TG sought to place significance upon this admission. I interpret this aspect of the reply as indicating Clarke’s agreement with the propositions that the Fairly and Reasonably Requirement involved the construction of clause 38.4 and, if its construction argument were accepted, the application of that accepted construction to the facts involved the Fairly and Reasonably Requirement Issue. Perhaps more significantly, by its defence in this application, TG alleged, with respect to paragraph 9 of Clarke’s statement of claim, that “with respect to what Clarke alleges was ‘the Fairly and Reasonably Requirement’, the substance of Clarke’s proposition in this respect is based on the decision in Alstom Ltd v Yokogawa Australia Pty Ltd & Anor [2012] SASC 49 and most particularly the passage at [1427] of the Reasons.” By its reply, Clarke admitted that allegation. I have referred to this authority as Alstom.
- [26]In advance of the hearing of this application, written submissions were progressively delivered. Clarke went first and later replied. By the time of the hearing of this application, Clarke, referencing the “benefit of exchange of pleadings and extensive written submissions”, was content to distil the real issues in dispute on this application to the following three issues:[15]
“Issue one – whether the Fairly and Reasonably Requirement Issue arose for determination before [the arbitrator] …
Issue two – if the issue did arise for determination, did the [arbitrator] determine the issue …
Issue three – if the [arbitrator] failed to determine the issue, whether that resulted in Clarke suffering practical injustice such that the [award] should be set aside.”
- [27]During the hearing in this Court, Clarke identified its essential proposition as being that the arbitrator “did not consider the pleaded and litigated contractual obligation under sub-clause 38.4 to assess an out of time EOT fairly and reasonably” (underlining added).[16]
- [28]It should not be lost sight of that Clarke framed these issues in a context where it was ultimately asserting that there had been such a denial of procedural fairness that the award should be set aside as being in conflict with the public policy of the State of Queensland. In that context, Clarke recognised[17] that, in its seeking to demonstrate “real unfairness or real practical injustice” (citing TCL), it faced an “overriding requirement” to demonstrate that “a reasonable litigant in its shoes would not have foreseen the possibility of reasoning by the arbitrator of the type that [was] revealed in [the] award” (citing New Zealand and Singaporean authorities).[18] The Court of Appeal of Singapore has observed of that overriding requirement that it “ … is only in these very limited circumstances that the arbitrator’s decision might be considered unfair”.[19]
- [29]
“ … the inference – that the arbitrator indeed failed to consider an important pleaded issue – if it is to be drawn at all, must be shown to be clear and virtually inescapable. If the facts are also consistent with the arbitrator simply having misunderstood the aggrieved party’s case, or having been mistaken as to the law, or having chosen not to deal with a point pleaded by the aggrieved party because he thought it unnecessary (notwithstanding that this view may have been formed based on a misunderstanding of the aggrieved party’s case), then the inference that the arbitrator did not apply his mind at all to the dispute before him (or to an important aspect of that dispute) and so acted in breach of natural justice should not be drawn.”
- [30]
- [31]
“In order to establish that the enforcement of an award would be contrary to public policy by reason of a breach of natural justice what must be shown is real unfairness and real practical injustice. Courts should not entertain a disguised attack on the factual findings or legal conclusions of an arbitrator ‘dressed up as a complaint about natural justice’. Errors of fact or law are not legitimate bases for curial intervention.”
- [32]Turning to the three real issues ultimately identified by Clarke, the first issue speaks in terms of whether the Fairly and Reasonably Requirement Issue “arose for determination”. The Fairly and Reasonably Requirement Issue was variously described by Clarke’s submissions as “an important issue”, “one of the central issues raised by [Clarke]” and as “a crucial issue”. That use of language, at some level, though not precisely, provides an insight into the burden of persuasion undertaken by Clarke in seeking to set aside the award on the basis that the arbitrator failed to consider the issue. The arbitrator was not required to deal with every argument on every point made in the arbitrations. It has been recognised that it is neither practical or realistic to impose such an obligation on an arbitrator.[24] Rather, the award was required to deal with all of the “essential issues”.[25]
- [33]In TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd,[26] Chan Seng Onn J relevantly said:
“What then is considered essential? This is not easy to define … arbitral tribunals must be given fair latitude in determining what is essential and what is not. An arbitral tribunal has the prerogative and must be entitled to take the view that the dispute before it may be disposed of without further consideration of certain issues. A court may take a contrary view ex post facto, but it should not be too ready to intervene.”
- [34]That statement was referred to with approval by the Court of Appeal of Singapore in DBL v DBM,[27] the Court there noting that an arbitral tribunal “is only required to deal with the essential issues, with the tribunal being accorded fair latitude to determine what is essential”.
- [35]There is some tension in the authorities as to the extent to which a court hearing this present kind of application should descend into the detail of the award and the arbitral process.
- [36]In TCL, the Court spoke of a “grave danger” that the international commercial arbitral system would be undermined by judicial review in which the factual findings of an arbitral tribunal are re-agitated and gone over in the name of natural justice, in circumstances where the hearing or reference has been conducted regularly and fairly.[28] The court went on to state:[29]
“That danger is acute if natural justice is reduced in its application to black-letter rules, if a mindset appears that these rules can be ‘broken’ in a minor and technical way and if the distinction between factual evaluation of available evidence and a complete absence of supporting material is blurred. All these things occurred in the argument in this case. Their presence persuaded or required the judge to spend three days reviewing the award that was the product of a 10-day reference. That should not be how such a review takes place … The application was a disguised attack on the factual findings of the arbitrators dressed up as a complaint about natural justice.”
- [37]The concern of the court in TCL, is reflected in the following observations of Chan Seng Onn J in TMM:[30]
“Arbitrations are meant to be an efficient alternative to court litigation. This has, unfortunately, not been the case. In these proceedings, TMM provided a compendious record of the Arbitration by way of two affidavits which ran into about 3,200 pages across eight volumes. Excluding oral submissions captured in more than 1,300 pages of transcripts, TMM also tendered several rounds of written submissions which totalled 241 pages from cover to cover. I find this to be both unnecessary and unsatisfactory. Especially for challenges against an award founded on the breach of natural justice, the court’s role is, in very general terms, to ensure that missteps, if any, are more than arid, hollow, technical and procedural ... Any real and substantial cause for concern should be demonstrably clear on the face of the record without the need to pore over thousands of pages of facts and submissions. Otherwise, curial recourse against an award will be used (and abused) as an opportunity to invite the court to judge the full merits and conduct of the arbitration. As a further aside, an over-zealous scrutiny of the arbitral tribunal’s decision will also encourage parties to, via the statutorily permitted mechanism of curial recourse, tactically frustrate and delay the enforcement of the arbitral award.”
- [38]However, in BZW v BZV,[31] the Court of Appeal of Singapore made the following, more qualified, statement:
“…. While generally speaking an assertion of a breach of the fair hearing rule does not require the degree of study of the Award and the record that the Judge undertook in this case, the allegations here that the impugned portions of the Award had no nexus to the case as actually presented to the Tribunal, required the exercise that the Judge undertook. If it takes time to make sense of an Award to ascertain whether an important point was overlooked or addressed at all or whether the tribunal decided on a point that the parties did not have the opportunity to address, then the Judge will have to look at the award, the pleadings, the submissions and any other documents that may throw light on what happened in the arbitral proceedings and what cases the parties were running. Then the judge will have to analyse the award in some depth in order to decide whether the allegations made by the party seeking to impugn the award on the basis of breach of natural justice have substance.”
- [39]The hearing of the present application has followed the course discouraged by the Court in TCL. The Court Book is some 20 volumes, the submissions (written and oral) have been extensive and the hearing has taken some 4 days. TG acquiesced in that process. In the present case, I formed the view that it was necessary to look at the award and other documents that throw light on what happened in the arbitral proceedings to determine whether the allegations made by Clarke in relation to the asserted denial of natural justice have substance. I have reached that conclusion for essentially three reasons.
- [40]First, the Fairly and Reasonably Requirement Issue was substantively based upon Alstom. Although the issue was styled by Clarke as “important”, “central” and “crucial”, Alstom was first cited to the arbitrator in Clarke’s written closing submissions in reply delivered on 13 August 2022. The hearing before the Arbitrator commenced on 15 July 2021 and had finished on 26 August 2021. On 1 June 2021, the arbitrator had made directions that opening submissions were to be in writing, with no oral opening submissions. Clarke was directed to serve its opening written submissions and any list of authorities in respect of its claims on TG and the arbitrator by 28 June 2021. Clarke did not refer to Alstom at all in its opening written submissions and it was not identified as a relevant authority. Clarke made no reference to Alstom in its closing written submissions. The arbitrator had directed that any written closing submissions in reply were to be “strictly in reply”. There were no closing oral submissions. It was in that context that, Clarke first made reference to Alstom in its closing written submissions in reply. It will be recalled that Clarke admits for the purposes of the present application that its self-styled “Fairly and Reasonably Requirement” is in substance based on Alstom. Clarke’s very late reliance upon Alstom in the arbitrations is not easily reconcilable with Clarke’s submission to this Court that the Fairly and Reasonably Requirement Issue was before the arbitrator “from the notice of arbitration forward”.[32] That submission requires scrutiny, which can only be undertaken with reference to some understanding of what happened in the arbitral proceedings.
- [41]Secondly, Clarke styled the alleged breach of natural justice as involving a “wholly atypical”, “unusually stark” example of a breach of the hearing rule involving a failure to consider. Focusing upon one paragraph of the award, which comprises more than 3000 paragraphs, Clarke submitted that the arbitrator had made it clear that he was not considering the issue. The relevant paragraph of the award, paragraph 188, appears under a heading “Overriding Objective- Whether to Consider All Submissions”. Under that heading the following paragraphs appear in the award:
“185. The overriding objective is expressed in the ACICA Rules. I shall repeat it for convenience:
“3.1 To provide an arbitration that is quick, cost effective and fair, considering especially the amounts in dispute and complexity of issues or facts involved.
3.2 By invoking these Rules the parties agree to accept the overriding objective and its application by the Arbitral Tribunal.”
- Clarke has submitted that when considering its various claims, I should consider all of its submissions. The closing submissions occupy almost 1200 pages and the reply submissions occupy about 830 pages. The submissions go to general matters, the substance of each claim and also address to some extent compliance with the notice provisions under the Contract. To consider all of the submissions would therefore require consideration of submissions relating to compliance with provisions of the Contracts expressed to be conditions precedent to entitlement as well as submissions on the substantive claims.
- [TG] has submitted, with respect to almost the entirety of Clarke’s EOT claims and Variation claims, that Clarke has not complied with mandatory notice provisions under the Contracts and that, as these provisions are expressed to be conditions precedent to entitlement, there is no need to further consider Clarke’s claims if it be found that the conditions precedent have not been satisfied. This would require a consideration of whether notices required to be given under the Contracts were given within the prescribed times and/or alternatively whether they complied otherwise with the requirements of the Contracts.
- The approach I shall adopt is that, to give effect to Rule 3.1 of the ACICA Rules, I shall consider, as preliminary questions, whether Clarke has complied with the notice requirements under the Contract. If, with regard to a claim for an EOT or a Variation, I find that Clarke has not complied with an applicable notice provision which is a condition precedent to entitlement or if a condition precedent has not otherwise been satisfied, I shall not consider the merits of the claim. Clearly, there would be no point in doing so as the claim would have failed. In regard to Clarke’s EOT claims, I shall also consider the evidence of delay analysis.”
- [42]Clarke submitted that the “actual language” in paragraph 188 was decisive and could not be “explained away or diluted by pointing to passages elsewhere in the award”. Clarke ultimately put the position in terms that “the matter ends where [Clarke] started its case, [paragraph 188].” By the time of its oral submissions to this Court, Clarke characterised the failure to consider as being a “refusal” to determine the issue[33] and described its challenge to the award as centring on the “refusal to determine this issue”.[34] At one point, Clarke orally submitted that the arbitrator was to be “commended” for making it clear what the position was. However, elsewhere in its writing, Clarke submitted that the arbitrator had “failed to … identify the issue”. These submissions are not easily reconcilable. It is one thing to say that an arbitrator failed to identify an issue, it is another thing to say that an arbitrator refused to decide an issue. A refusal will usually be the result of a process of reasoning. The equivocation inherent in Clarke’s submissions, and its resolute focus upon paragraph 188 of the award, makes it more, not less, imperative to have regard to other parts of the award to fully understand what the arbitrator meant and intended by that paragraph.
- [43]Thirdly, Clarke’s complaints are that the Fairly and Reasonably Requirement Issue was “in terms” raised in the Notices of Arbitration and in its statement of claim,[35] but also was litigated having regard to the parties’ evidence and closing submissions.[36] TG sought to defend those latter complaints by descending into some of the detail of the arbitrations.
Throwing light on what happened in the arbitration
- [44]The starting point is the notices of arbitration and the pleadings in the arbitration.
- [45]The notices of arbitration each characterised the dispute which required determination as follows:[37]
“(a) whether and to what extent the delays in reaching Commercial Operation were due to the actions of [TG] or [Clarke] and therefore (after receipt of [Clarke’s] Notices under clause 38 of the Contract) to what date [TG] ought to have extended the Date for Commercial Operation;
- whether [TG] breached any provisions of the Contract;
- what amount [was] owed to [Clarke] by way of the Contract price;
- whether certain works done by [Clarke] were outside the scope of the Contract; and
- if so whether expenditure incurred in undertaking those works should form part of the amount owed to [Clarke].”
- [46]In the Owen Springs Notice of Arbitration, Clarke relevantly stated:[38]
“[Clarke] issued 14 valid extension of time notices (EOT Notices) under clause 38 of the Contract which extends the Date for Commercial Operation to 14 December 2018. [Clarke] says the EOT Notices have been rejected invalidly under the Contract by [TG] and that [TG] has breached Clause 38.4 of the Contract in failing to act fairly and reasonably in making such decisions.”
- [47]In the Tenant Creek Notice of Arbitration, Clarke relevantly stated:[39]
“[Clarke] issued 13 valid extension of time notices (EOT Notices) under the Contract which extends the Date for Commercial Operation to no earlier than 14 December 2018. [Clarke] says the EOT Notices have been rejected invalidly under the Contract by [TG], and that [TG] has breached Clause 38.4 of the Contract in failing to act fairly and reasonably in making such decisions.”
- [48]It may be noted from Clarke’s notices of arbitration that “EOT Notices” was a defined term in each notice of arbitration which only referenced valid extension of time notices.
- [49]In its answers and counterclaims to the notices of arbitration, TG stated, inter alia, that Clarke’s disputed claims for variations and extensions of time failed to meet various contractual pre-conditions or other requirements including “as to the timeous notification of circumstances giving rise to possible claims and as to the making of the claims themselves including under cl 38.1, 38.2, 38.3”.
- [50]At a preliminary conference on 10 September 2019, the arbitrator directed that the parties serve pleadings. Pursuant to rr 25 and 26 of the ACICA Rules, the statement of claim was to contain particulars including “a statement of the facts supporting the claim”, “the points at issue” and “the relief or remedy sought.” A statement of defence was to reply to those particulars. Rule 27 provided that during the arbitral proceedings either party might amend or supplement its statement of claim or defence unless the arbitrator considered it inappropriate to allow such an amendment having regard to the delay in making it or prejudice to the other party or any other circumstances considered relevant.
- [51]At an early stage of the arbitral process, on 3 April 2020, the arbitrator made an interim award. The arbitrator made the following statements in that interim award, which sheds some light upon the particular importance of the pleadings in these arbitrations:
“The amounts involved in this dispute are significant and there are many issues in dispute. On any view, given the nature of the claims being extension of time claims and variation claims, there will be complex factual issues. This arbitration should not proceed with a paucity of detail in the pleadings in respect of the claims and counterclaims and matters of defence.
In Ralph M Lee Pty Ltd trading as Ralph M Lee Queensland v Gardner & Naylor Industries Pty Ltd. Moynihan J referred to the necessity for the Statement of Claim to establish ‘an agenda for trial’. This was done he said by pleading or particularising ‘material facts’. Those comments are consistent with Rule 25.2 which requires a Statement of Claim in the arbitration to state the facts supporting the claim or claims.
Clearly the facts must be stated in such a way in the Statements of Claim that the claims may be readily understood and in order that [TG] may reply to them. If the claim is not stated or particularised in such a way, there is no agenda for the hearing and indeed no agenda for further interlocutory steps … In this complex matter the statement of facts should be sufficiently pleaded to permit a meaningful reply to be made to the claims which are pleaded or particularised by [Clarke] as giving rise to liability in [TG]. Without such particularisation, [TG] may know, in a general way, the case being made against it but not the necessary particularisation lying behind the generalised claim.”
- [52]In its statements of claim, Clarke followed a formulaic approach to its various extension of time claims. Relevantly, in relation to each claim for delay, Clarke alleged that it had been delayed, the causes of the delay, that the delay was of a kind for which it was entitled to an extension of time under cl 38.5, the impact of the delay on the critical path and the cost of the delay. In respect of each claim, Clarke alleged that it had given notice to TG under the contract and that its notices were valid and issued under cls 38.1 to 38.3 of the contract. In the premises of that form of plea for each claim, Clarke alleged that “in breach of clause 38.4”, by rejecting, or failing or refusing to approve, the claim, TG did not act fairly or reasonably.
- [53]An earlier part of each statement of claim in the arbitrations, contained general allegations about the extension of time notices. Relevantly:
- In the statement of claim delivered in the Owen Springs arbitration, Clarke materially alleged that it had issued 14 claims for extension of time, which had been rejected.
- At paragraph 46 of that statement of claim, Clarke then alleged:
“46 Those … notices;
46.1 were each valid and ought to have been approved by [TG];
46.2 each … was issued under clause 38.1 to 38.3 of [the Owen Springs contract];
46.3 (Alternatively), to the extent any such [notice] may be found not to have been issued in accordance with clauses 38.1 to 38.3 there was no prejudice thereby suffered by [TG];
46.4 [Clarke] made all reasonable attempts to comply with timeframes set out in clauses 38.1 to 38.3;
46.5 The subject of [the notices] was (variously) within the compass and operation of clause 38.5 of [the Owen Springs contract];
46.6 Each of [the notices] sought an extension of time to the Completion Date for delay to the Works which was on the critical path in accordance with clause [38].13 of [the Owen Springs contract]; and
46.7 Delays the subject of [the notices] were caused (variously) by acts, omissions, breaches or defaults by [TG] or its Personnel within the compass of clause 38.5(a) and/or 38,5(c) as detailed in paragraphs 47 to 220 below and as particularised in the Scott Schedule d. 12 June 2020.”
- In the statement of claim delivered in the Tenant Creek arbitration, Clarke materially alleged that it had issued 12 claims for extension of time, which had been rejected.
- At paragraph 50 of that statement of claim, Clarke then alleged:
“50 Those … notices;
50.1 were each valid and ought to have been approved by [TG]
50.2 each … was issued under clause 38.1 to 38.3 of [the Tenant Creek contract];
50.3 (Alternatively), to the extent any such [notice] may be found not to have been issued in accordance with clauses 38.1 to 38.3 there was no prejudice thereby suffered by [TG];
50.4 [Clarke] made all reasonable attempts to comply with timeframes set out in clauses 38.1 to 38.3;
50.5 The subject of [the notices] was (variously) within the compass and operation of clause 38.5 of [the Tenant Creek contract];
50.6 Each of [the notices] sought an extension of time to the Completion Date for delay to the Works which was on the critical path in accordance with clause 38.13 of [the Tenant Creek contract]; and
50.7 Delays the subject of [the notices] were caused (variously) by acts, omissions, breaches or defaults by [TG] or its Personnel within the compass of clause 38.5(a) and/or 38,5(c) as detailed in paragraphs 48 to 179 below and as particularised in the Scott Schedule d. 3 July 2020.”
- [54]In each arbitration, TG’s defences expressly pleaded the terms of the relevant contract which specified conditions precedent for an extension of time, including cls 38.1, 38.2 and 38.3 and alleged that unless those condition precedents were satisfied Clarke had no entitlement to an extension of time.
- [55]TG’s general defensive plea in each arbitration was in these terms:[40]
“the preconditions for an entitlement to an extension of time were:
- notice under clause 38.1 ‘immediately’ of the relevant Event;
- notice under clause 38.2 within 10 Business Days of the notice under clause 38.1 dealing with each of the 7 matters set out in clause 38.2;
- where because the Event has a continuing effect notice under clause 38.2 is not practicable, notice under clause 38.3 in lieu of notice under clause 38.2, further notices at intervals of 20 Business Days or less and then a final notice dealing with each of the 7 matters set out in clause 38.2;
- [Clarke] ‘is or actually will be prevented’ from achieving Commercial Operation by the Date for Commercial Operation by the relevant Event.
- ‘the relevant delay is demonstrable on an assessment of the actual and then current critical path to achieving Commercial Operation by the Date for Commercial Operation’;
unless the preconditions for an extension of time were satisfied, [Clarke] had no entitlement to:
- an extension of time; and
- claim or recover any additional cost or expense, or adjustment to the contract price”.
- [56]That general defensive plea was consistent with the clear language of cls 38.8, 46.15 and 46.16 of the contracts.
- [57]With respect to each of Clarke’s extension of time claims, TG then specifically pleaded the preconditions, including the notice provisions in cls 38.1, 38.2 and 38.3, which were alleged to have not been satisfied.
- [58]Clarke’s replies in the arbitration did not plead any positive case in response to any of these allegations in TG’s defences. Rather, in one paragraph of each reply, Clarke was content to join issue with “each matter in the Defence unless expressly stated in this reply.” Notably, confronted with TG’s patently clear, general defence to the effect that unless the preconditions were satisfied, Clarke had no contractual entitlement to an extension of time, Clarke did not plead any positive case, either by way of amendment to its statements of claim or in its replies, to the effect that in a case where the preconditions were not satisfied or the notices were not valid, a contractual entitlement to an extension of time could still be determined under clause 38.4. That is, it did not plead a case to the effect that there was a contractual obligation under clause 38.4 to assess an out of time extension of time claim fairly and reasonably.
- [59]More particularly, Clarke never pleaded a positive case to the effect that:
- in circumstances involving non-compliance with clauses 38.1 to 38.3, Clarke could still rely upon, and did rely upon, a contractual entitlement to an extension of time premised upon TG’s obligation to act fairly and reasonably as contained in clause 38.4;
- the obligation to act fairly and reasonably as contained in cl 38.4, required TG in the exercise of its determinative function, to exercise a judgment as to whether a claimed extension of time was an event that qualified for an entitlement having regard to all facts, matters or things known by TG, or which TG could reasonably bring within its knowledge in determining the extension of time claim, including whether Clarke had done the best it could to comply with cls 38.1 to 38.3, TG had contributed to any inability by Clarke to provide notices in accordance with the requirements of cls 38.1 to 38.3 and Clarke had been prevented from providing notice in accordance with the requirements of cls 38.1 to 38.3 by TG’s conduct;
- where the terms of cls 38.2 and 38.3 had not been met, TG was required to make the determination contemplated by cl 38.4, not only by reference to whether the terms of cls 38.2 and 38.3 had been met but by reference to whether the circumstances qualified the delay event as one which entitled Clarke to an extension of the Date of Commercial Operation when that determination was made fairly and reasonably;
- Clauses 38.8, 46.15 and/or 46.16, properly construed, had some kind of modified operation inconsistent with their clear language.
- [60]It may also be noted that, had any such case been pleaded, it would necessarily have been fact sensitive in that the pleader would have been required to identify TG’s actual and constructive knowledge of circumstances (facts, matters or things) relevant to determining each extension of time claim, including whether, in the circumstances of each claim, Clarke had done the best it could to comply with cls 38.1 to 38.3, TG had contributed to any inability by Clarke to provide notices in accordance with the requirements of cls 38.1 to 38.3 and Clarke had been prevented from providing notice in accordance with the requirements of cls 38.1 to 38.3 by TG’s conduct. The facts to be pleaded were necessarily concerned with the cause of Clarke’s inability to comply with notice requirements and were separate and distinct from whether TG had caused any claimed delays. Further, each determination which should have been made by reference to the particular facts relevant to each claim should have been pleaded. Clarke’s pleadings in the arbitrations, to the extent they alleged a breach of cl 38.4, made no allegations of facts, matters or things known by TG in relation to Clarke’s inability to give timely notices and did not allege that TG had impermissibly determined claims only by reference to compliance with the preconditions.
- [61]In the course of the arbitrations, the arbitrator made a direction for Scott Schedules. In oral submissions before this Court, Clarke’s counsel accepted that the detail in the Scott Schedules did not concern any case advanced by reference to cl 38.4.
- [62]In this proceeding, Clarke alleged that the Fairly and Reasonably Requirement Issue, and necessarily the Fairly and Reasonably Requirement, were raised by Clarke’s pleadings in the arbitrations “via [Clarke’s] allegations of breaches by [TG] of cl 38.4 which, properly construed, imposed the Fairly and Reasonably Requirement on [TG]”. Clarke further alleged in its reply in this proceeding that “alternatively, the Fairly and Reasonably Requirement, the Fairly and Reasonably Requirement Issue, or any combination of facts from which those issues could be established were not required to be expressly pleaded because they were raised necessarily by [Clarke’s] notices of arbitration and pleadings of alleged breaches by [TG] of cl 38.4 which, properly construed, imposed the Fairly and Reasonably Requirement on [TG].” By the time of its oral submissions in reply in this proceeding,[41] Clarke described the Fairly and Reasonably Requirement Issue as having been “at large” in the arbitrations because TG had not sought particulars of the allegation that there had been a breach of cl 38.4 and had otherwise put the allegation in issue. Clarke’s oral submissions in reply in this proceeding, styled the issue said to have been “at large” in the arbitrations as an issue which required a “careful analysis of what a construction of the contractual obligation of fair and reasonable under clause 38.4 meant, viz, operating to delimit the operation of clauses 38.1 to 38.3, 38.8, 38.13, 46.15 and 46.16”.[42] The arbitrator was criticised for not having undertaken that required, careful analysis.
- [63]I reject these allegations and submissions. Clarke and TG were substantively in agreement as to the legal principles relevant to the role of pleadings in arbitrations.[43] One agreed principle was that the paramount object contained in s 1AC(1) of the Act (“to facilitate the fair and final resolution of commercial disputes ... without unnecessary delay or expense”) is furthered by requiring parties to plead their case and thereby define the issues in dispute.[44] Notably, r 25.2 of the ACICA Rules required the statement of claim to “include the following particulars … (b) a statement of the facts supporting the claim; (c) the points at issue; and (d) the relief or remedy sought”. In Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd,[45] the Full Court of the Supreme Court of Western Australia considered an appeal from a decision dismissing an application to remove an arbitrator for misconduct. The arbitration was conducted under the Commercial Arbitration Act 1985 (WA). Section 14 of that Act empowered an arbitrator to conduct proceedings in such a manner as he or she saw fit. The arbitrator had ordered pleadings. Ipp J said of the arbitrator’s order that, given the complexity of the issues that arose between the parties, “that was a sensible ruling”. That ruling having been made in the arbitration, his Honour then said:
“… both parties were entitled to assume that, for the purposes of preparing for and conducting the proceedings, the issues in the arbitration were only those identified by the pleadings and that the pleadings would furnish a sufficiently clear statement of the issues to allow each party a fair opportunity to deal with them”.
- [64]I consider that Ipp J’s statement has application to the arbitrations conducted before the arbitrator in that it is generally reflective of the intent of r 25.2. Further, where r 25.2 speaks of particulars of “the points at issue”, it is reasonable to understand that expression as extending to points of law, such as an issue concerning the proper construction of a contract. Pleadings in arbitrations ordinarily raise issues of fact and law. In PT Prima International Development v Kempinski Hotels SA,[46] the Court of Appeal of Singapore, after noting that the pleadings in an arbitration provide a convenient way to define the jurisdiction of the tribunal, went on to observe:
“… in order to determine whether an arbitral tribunal has the jurisdiction to adjudicate on and make an award in respect of a particular dispute, it is necessary to refer to the pleaded case of each party to the arbitration and the issues of law or fact that are raised in the pleadings to see whether they encompass that dispute”.
- [65]
- [66]In its written submissions before this Court, Clarke submitted that “[a]s the ordinary rules of pleading applied to the Arbitrations, [Clarke] was only required, indeed entitled, to plead the material facts necessary to establish a cause of action”.[48] In support of that submission Clarke cited two first instance decisions which did not concern pleadings in arbitrations. Clarke submitted that it had “pleaded the clause that was breached (clause 38.4) and was not required to plead the arguments it would ultimately rely on as those matters are more appropriately addressed by submissions”.[49] In its oral submissions, Clarke described its pleading obligation as being to “identify the contractual provision, identify the basis upon which it was breached”.
- [67]Clarke’s relevant pleading obligation was not just to plead and include particulars of the material facts but to plead and include particulars of the points at issue. In its argument before this Court, Clarke submitted that by reason of having identified clause 38.4 and asserted a breach of that clause, it had raised as points at issue or live issues in the arbitrations, the Fairly and Reasonably Requirement, a point of construction, and the Fairly and Reasonably Requirement Issue, which involved Clarke’s point of construction being accepted and then applied to facts. To make the Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue, points at issue or live issues in the arbitrations, Clarke was required to do more than merely allege a breach of clause 34. Any case based upon the Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue sought to advance a nuanced construction of cl 34 and other clauses in the contract and involved a factually sensitive case. To facilitate a fair resolution of any such dispute, the nuanced construction of the contracts should have been pleaded as a point at issue. Further, the material facts required to establish a breach of cl 38.4 on Clarke’s nuanced construction were required to be pleaded but were not.
- [68]The Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue were not “at large” on the pleadings in the arbitrations, they were never raised by those pleadings. These arbitral hearings were not hearings in which the parties were to be ambushed or taken by surprise in respect of material facts or important points at issue. The arbitrator had directed pleadings for the purpose of setting the agenda for the hearing and ensuring that Clarke stated the material facts in such a way in its statements of claim, that its claims might be readily understood. On no fair reading of the notices of arbitration and the statements of claim in the arbitrations could it be understood that Clarke was propounding the Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue in relation to the determination of its claims for extensions of time. There was no fair indication in Clarke’s pleadings that the operation of a suite of contractual clauses was to be “delimited” or that unparticularised knowledge actually or constructively held by TG was germane to the affected operation of those clauses. In Clarke’s oral submissions in reply to this Court, it was said that the promise to act fairly and reasonably in cl 38.4 “necessarily picks up a plea that you were not entitled to strictly rely on cl 38.1 to 38.3”.[50] That submission had no regard to the existence in the contracts of cls 38.8, 46.15 and 46.16. I accept TG’s submission to the effect that the references in Clarke’s pleadings to its having made all reasonable attempts to comply with timeframes set out in clauses 38.1 to 38.3 (without any attribution to TG of knowledge of those attempts), when read with Clarke’s allegation that no prejudice had been suffered by TG, were objectively intended to suggest that there had been requisite or sufficient compliance with those clauses.
- [69]TG’s written opening in the arbitrations materially stated “Clarke’s various claims for Extensions of Time fail by reason of the … preconditions in cl 38 not being met”. TG’s opening went on to state “… it is important to note by way of context … that Clarke does not challenge the existence or enforceability of the clauses and, by extension, the conditions which must be satisfied before additional entitlements would arise. Rather, its case is that it has complied with them”. In my consideration, that was a fair and accurate summary of Clarke’s relevant case as it appeared from Clarke’s pleadings. I find that the notices of arbitration and Clarke’s pleadings in the arbitrations did not place into issue the Fairly and Reasonably Requirement or the Fairly and Reasonably Requirement Issue.
- [70]Beyond the notices of arbitration and the pleadings, Clarke submitted that the Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue were “litigated” in the arbitrations. I have found that the Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue were not pleaded. Clarke’s submissions to the effect that the Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue were litigated falls to be considered in the context of my finding. In CKH v CKG,[51] the Court of Appeal of Singapore observed:
“The pleadings are the first place in which to look for the issues submitted to arbitral decision. But matters can arise which are or become within the scope of the issues submitted for arbitral decision, even though they are not pleaded. Whether a matter falls or has become within the scope of the agreed reference depends ultimately upon what the parties, viewing the whole position and the course of events objectively and fairly, may be taken to have accepted between themselves and before the Tribunal.”
- [71]It is difficult to conceive of an exemplar case involving an arbitral hearing which, because of its complexity, required pleadings, where a substantial issue was not pleaded and a party could still demonstrate real unfairness or real practical injustice in the conduct or resolution of the arbitration by reason of that issue not having been decided. As will become apparent, no such example is found in the conduct or resolution of these arbitrations.
- [72]In its reply in this application, Clarke admits that, putting the notices of arbitration and pleadings aside, none of the schedules and documents it produced in the lead up to the arbitral hearing suggested that Clarke would be adducing evidence and asking the arbitrator to make findings to the effect that:
- Clarke had “done the best it could to comply with the requirements of cl 38.1, 38.2 and 38.3 of the contracts”;
- [TG] “had contributed to any inability suffered by (Clarke) to provide notice in accordance with the requirements of cl 38.1, 38.2 and 38.3 of the contracts”; and\or
- Clarke “had been prevented from providing notice in accordance with the requirements of cl 38.1, 38.2 and 38.3 of the contracts by [TG’s] conduct”.
- [73]Prior to the arbitral hearing, Clarke obtained leave to issue subpoenas to Power and Water Corporation (“PWC”) and Aurecon Australasia Pty Ltd (“Aurecon”). Clarke submits that the “fact that the Fairly and Reasonably Requirement Issue” was being litigated was apparent from that application and its outcome. In applying for leave to issue the subpoenas, Clarke made written submissions to the arbitrator which emphasised that the test for relevance was whether the documents sought by the proposed subpoenas had apparent relevance to the issues in the arbitrations. With reference to authority, those submissions emphasised that apparent relevance was “a relatively undemanding requirement” and meant that the documents “must relate to the subject matter of the proceedings”. The application was supported by two affidavits which addressed the relevance of the material sought from PWC and Aurecon. In granting leave to issue the subpoenas, the arbitrator delivered a written decision. The decision noted that the supporting affidavits had identified categories of documents and stated the relevance of requested documents in each category and the paragraphs of the statements of claim in each arbitration which the deponent said bore upon each category. The arbitrator noted that the description of relevance was “not detailed” and did not go to “actual relevance”. The arbitrator ultimately found that, on the application, Clarke was not required to establish actual relevance.
- [74]In granting permission for Clarke to file with this Court an application under s 27A(1) of the Act to issue subpoenas to PWC and Aurecon, the arbitrator was ultimately satisfied that the categories of documents had “apparent relevance to the issues” in the arbitrations. The arbitrator did not go through each category of documents but noted that he had “considered the categories and the pleadings” in forming a view about apparent relevance. Hence, the arbitrator’s decision on the subpoenas was informed by the pleadings and, on no view, can be read as a permission for Clarke to litigate un-pleaded issues. Further, to the extent that Clarke’s submissions in support of the application made references to TG’s knowledge of PWC’s testing requirements it referenced paragraphs of the statement of claim that made no reference to clause 38.4 of the contract. Clarke’s submissions in relation to the proposed subpoena to Aurecon relevantly sought correspondence between Aurecon, PWC and Clarke “in relation to each of the extension of time and variation claims pleaded and particularised in [the arbitrations] which Clarke contends were not approved and should have been”. That description can hardly be said to have revealed an intention to litigate the Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue.
- [75]On 30 June 2021, Clarke served on the arbitrator and TG written openings in the arbitrations. Clarke’s openings expressly referenced notices which were said to have been given in compliance with cls 38.1, 38.2 or 38.3 of the contracts in support of Clarke’s extension of time claims. In this proceeding, TG’s defence alleged that Clarke’s openings did not suggest that:
- the Fairly and Reasonably Requirement was an issue in the arbitrations;
- the Fairly and Reasonably Requirement Issue was an issue joined between the parties in the arbitrations;
- Clarke would be adducing evidence and asking the arbitrator to find that:
- Clarke had “done the best it could to comply with the requirements of cl 38.1, 38.2 and 38.3 of the contracts”;
- [TG] ‘had contributed to any inability suffered by (Clarke) to provide notice in accordance with the requirements of cl 38.1, 38.2 and 38.3 of the contracts’; and\or
- Clarke “had been prevented from providing notice in accordance with the requirements of cl 38.1, 38.2 and 38.3 of the contracts by [TG’s] conduct”.
- [76]Clarke’s reply in this proceeding denied these allegations on the basis that Clarke’s written opening was “consistent with the reference to arbitration and the pleadings”. I have found that Clarke’s pleadings in the arbitrations did not raise the Fairly and Reasonably Requirement or the Fairly and Reasonably Requirement Issue.
- [77]The hearing of the arbitrations commenced on 15 July 2021, went for 28 days and concluded on 26 August 2021. On and from Monday, 8 August 2021, TG led evidence from its Project Managers of the Owen Springs contract and the Tennant Creek contract, Alistair McDonald and Rebecca McKenzie, inter alia, to explain the basis of the decisions they had made under cl 38.4 to reject Clarke’s claims for an EOT. Mr McDonald was cross examined for about 3 hours on 8 August 2021. Ms McKenzie was cross examined for about 1½ hours on 10 August 2021.
- [78]In its oral submissions before this Court, Clarke placed emphasis upon part of the cross examination of Mr McDonald over some 4 pages of the transcript from the arbitrations. During that part of the cross examination, it was suggested to Mr McDonald that his approach to the assessment of extension of time and variation claims had been to adopt a course that if he formed a view that there had not been timely notice, he did not go on to substantively assess the claim but had dismissed the claim on the basis of a lack of proper notice. It was suggested to Mr McDonald that he had adopted an approach whereby if he had considered a notice was wanting, he would reject a claim. It was suggested to him that he had adopted a two step process which was to the effect that if he formed a view that a notice was wanting, that was sufficient for him to reject a claim. Mr McDonald replied to that suggestion as follows: “So far as the contract’s concerned, yes, the contract does state that, but I think that’s a narrow view. I believe that’s a narrow view and that suggests that the claims weren’t assessed on the merits of the entire claim … Perhaps a way to explain it, I read the entire claim, everything that’s provided by Clarke and I take into account everything that is provided, not just notice requirements”. At one point Mr McDonald accepted that in some respects he had reserved to himself a discretion in relation to the treatment of claims. Mr McDonald did not accept any of the suggestions put to him by Clarke’s counsel at the arbitration in relation to his alleged sole focus on the notice requirements. He ultimately said that he adopted an approach which involved looking at the dates of notices, the particulars and the required conditions precedent for a claim. It was not suggested to Mr McDonald that clause 38.4 imposed a contractual obligation to assess an out of time extension of time claim fairly and reasonably. It was not suggested to him that if he had in fact been rejecting claims which were out of time without assessing their merits, that would have involved a breach of obligation. That is a synopsis of the relevant cross examination of Mr McDonald to which this Court was taken in oral submissions.
- [79]In its written submissions on this application, Clarke relied on specific sections of the cross examination of Mr McDonald, Ms McKenzie and other witnesses called by TG. I accept TG’s submissions that the fundamental content of the Fairly and Reasonably Requirement, as now defined by Clarke in this proceeding, was not put to any of TG’s witnesses in cross examination. The particular matters of actual or constructive knowledge held by TG which bore upon Clarke’s giving of notices were not put. Nor were the specific determinations allegedly required to have been made, having regard to the particular matters of knowledge.
- [80]In relation to the evidence of Mr McDonald about the discretion he reserved to himself, the arbitrator actually dealt with that evidence in the award as follows:
“911 Clarke refers to a matter raised in its principal closing submissions regarding Mr McDonald’s cross-examination concerning a discretion which he said he reserved to himself. Relevant passages are:
‘Q. Does that mean in practical terms that you reserve to yourself a discretion as to whether, and when, you could act adversely to Clarke on claims as regards notice?
A. I guess perhaps that’s true. If there’s merit in the claim, yes.
…
Q. So you are reserving to yourself a discretion to be able to decide when and whether you will ignore that consideration; is that how it works?
A. In some respects, yes, I guess that’s true.’
912 While Clarke, throughout its submissions, seeks to make much of this statement, I do not consider that it is particularly important. By cl.38.7, [TG] had an ‘absolute sole and unfettered discretion, at any time (to) grant an extension of the Date for Commercial Operation’.
913 I understood Mr McDonald’s evidence to be that if there were merit in the claim, he may exercise his discretion under cl.38.7 to disregard non-compliance with the notice provisions in the Contract.
914 I do not see anything particularly untoward in this evidence by Mr McDonald. I do not understand Mr McDonald to be saying that if there were a meritorious claim, where the conditions precedent had been satisfied, he would exercise a discretion against it and thereby act unreasonably and unfairly.”
- [81]It is apparent from this part of the award that the arbitrator understood that Mr McDonald was merely saying that he had a discretion under cl 38.7 to disregard non-compliance with the notice provisions in the Contract. Clause 38.7 recognised that “absolute, sole and unfettered discretion”, as existing despite Clarke having “no entitlement” to a claimed extension of time and “despite any other provision of … clause 38”. The giving of this evidence did not involve any concession, nor was it made in response to any suggestion, that clause 38.4 imposed a contractual obligation to assess an out of time extension of time claim fairly and reasonably. In fact, the evidence was entirely consistent with there being no such obligation.
- [82]Following the hearing, on 3 September 2021, the arbitrator made directions for the preparation and delivery of closing submissions (“the 3 September 2021 directions”).
- [83]The 3 September 2021 directions materially provided:
“Preamble
The presentation of evidence and cross-examination has proceeded in such a way that relevance is not always apparent. This is particularly so in respect of documents to which no reference at all has been made but have been tendered by lists and documents forming part of chronologies.
…
In these circumstances, it is important that closing submissions for each party must contain references to all documents and all parts of the witness statements, expert reports and the transcript relied upon by each party. The Tribunal will not have regard to any document not referred to by the parties in their closing submissions. To do otherwise would require all material to be read and considered in circumstances where no reference was made to much of the material during the hearing and the exercise in extracting the meaning of the documents would be speculation.
Accordingly, the following directions will apply:
Directions
- Each party must provide lists of the issues on which the Arbitrator is required to make positive findings. A list should be provided with respect to each item of claim or defence. Each party is required to state, with respect to the issues identified, and in respect of each claim, the order in which they are to be determined. For clarity, it may be that the determination of an issue one way or the other may obviate the necessity to decide other issues.
-
With respect to each issue identified by each party in the lists prepared by it, each party is to:
- Identify the documents on which it relies;
- Hyperlink those documents;
- Identify the relevant part or parts of the documents relied on;
- State the conclusions or inferences to be drawn from those parts of the documents;
- Identify the evidence including both lay evidence and expert evidence on which the party relies by reference to relevant witness statements and/or expert reports identifying the paragraphs or other parts on which reliance is placed;
- Identify the references in the transcript on which it relies and hyperlink those parts of the transcript;
- State the conclusions or inferences to be drawn from the witness statements, expert reports and or transcript references;
- Identify the relevant part of the pleadings, particulars, Scott Schedules and Schedules of Claims which relate to each issue identified in the lists.
…
- Where reliance is placed on decided authority … the relevant document or part of the document is to be hyperlinked in the submissions with the part relied on suitably identified or highlighted.
- By 4pm on … 22 October 2021:
- [Clarke] serve … written submissions in respect of [Clarke’s claims] and other materials in accordance with paragraphs [1-4] of these directions;
…
- By 4 pm on … 26 November 2021:
…
- [TG] serve … written submissions and other materials in accordance with paragraphs [1-4] of these directions in reply to [Clarke’s] written closing submissions served in accordance with Direction at paragraph 5(a).
- By 4pm on 28 January 2022:
- [Clarke] serve … any written submissions and other materials, in accordance with paragraphs [1-4] of these directions, strictly in reply to (TG’s) written closing submissions served in accordance with Direction at paragraph 6(b)”
- [84]On 20 October 2021, Clarke made an application to the arbitrator to have admitted into evidence a further 1,300 documents (reduced subsequently to 38 documents) which had not been tendered or referred to by Clarke’s witnesses and had not been put to TG’s witnesses.
- [85]After receiving written submissions from the parties in respect of this application, by email of 18 November 2021 the arbitrator wrote to the parties stating inter alia:
“[Clarke] submits that I have power to permit the tender of hundreds of documents which [Clarke] now seeks to be admitted. Whether I have this power is a question of law which I consider should be determined as a threshold question …
I consider that, insofar as [Clarke] seeks to reply on cl. 5.5 of each contract, it is raising a new cause of action based on a breach of that clause. Further, insofar as [Clarke] intends to show, by reference to some documents, that [TG] was the cause of delay by reason of other Projects it had, it is raising new matters which have not been pleaded or particularised and have not been the subject of evidence in chief or cross examination. [TG] has had no opportunity to consider or respond to these assertions. It will be necessary for [Clarke] to seek leave to amend its pleadings it if it be so advised. Any application to amend the pleadings will be heard as a matter of priority together with the question of which documents might be tendered should I determine that I have power to permit the tender.”
- [86]After receiving further written submissions from the parties in respect of this application, on 24 November 2021, the arbitrator wrote to the parties by email stating:
“I have considered the suggestions of the parties regarding further directions. It is important that this matter be not further delayed and accordingly I have decided at this stage, not to determine the threshold point identified by me…”
- [87]The arbitrator made the following directions:
“1. The documents referred to in paragraphs 1 and 2 of [Clarke’s] application of 20 October 2021, to the extent they are also documents identified in accordance with paragraph 1(a) below, be received as evidence provisionally on the basis that [Clarke], in its closing submissions will:
- identify the documents on which it intends to reply;
- identify the relevance of each document by reference to the pleadings and particulars;
- comply with the directions of 3 September 2021 and in particular direction 2 in respect of each document;
- Provide such submissions as it may be advised addressing the power of the Tribunal to unconditionally receive the documents into evidence.”
- [88]Clarke made no application to amend its pleadings.
- [89]On 17 December 2021, Clarke delivered its written closing submissions. TG submitted to this Court that Clarke’s written submissions did not provide or were not accompanied by a list of issues as contemplated by paragraphs 1 and 2(h) of the 3 September 2021 directions. That was not a fresh complaint. TG had made this complaint at the time it delivered its written closing submissions in the arbitration.[52] Clarke submitted that the arbitrator made no finding to that effect. It would seem clear that Clarke’s written closing submissions did not articulate an issue in terms of the Fairly and Reasonably Requirement Issue. Nor did they comply with paragraph 4 of the 3 September 2021 directions to the extent that Alstom was to be relied upon as providing the substantive content of the Fairly and Reasonably Requirement.
- [90]Clarke’s written closing submissions:
- asserted that Clarke had complied with the notice requirements in clauses 38.1, 38.2 and 38.3 of the Contracts in respect of Clarke’s extension of time claims;
- in response to TG’s contentions that Clarke had not satisfied the conditions precedent for establishing an entitlement to an extension of time claim including by delivering notices under cls 38.1,38.2 and 38.3, and by satisfying cl 38.13 by showing that there has been actual delay impacting on the critical path, asserted that these matters were “threshold issues which ignore the reality of the situation that [Clarke] suffered delay”;
- made no reference to Alstom.
- [91]On 29 April 2022, TG delivered its written closing submissions in response to Clarke’s written closing submissions.
- [92]In accordance with the 3 September 2021 directions, TG’s written closing submissions inter alia:
- With respect of each of Clarke’s extension of time claims and variation claims:
- provided lists of the issues on which TG contended the arbitrator was required to make positive findings;
- stated the order in which TG contended they ought to be determined; and
- identified those issues which TG contended the determination of which may obviate the necessity to decide other issues;
- particularly, with respect of each of Clarke’s extension of time claims:
- identified that compliance with conditions precedents for an extension of time in clauses 38.1, 38.2 and 38.3 were issues with respect to each claim;
- stated the positive finding which TG sought in this respect;
- identified the documents and other evidence upon which TG relied to support the making of those positive findings;
- stated that a finding that Clarke had not complied with these conditions precedent required the rejection of each of the claims for an extension of time for that reason alone;
- further, identified that Clarke’s failure to prove a delay to achieving Commercial Operation and to deal with the “shambles” of its programming and progress of the works was an issue with respect to each claim;
- stated the positive findings which TG sought in this respect;
- identified the documents and other evidence upon which TG relied to support the making of those positive findings;
- stated that a finding that Clarke had failed to prove a delay to achieving Commercial Operation and to deal with the “shambles” of its programming and progress of the works required the rejection of each of the claims for an extension of time for that reason alone;
- further, identified that Clarke’s impermissible globalisation of its delay claims was an issue with respect to inter alia its design change claims (Owen Springs EOT 1 and Tenant Creek EOT 2);
- stated the positive findings which TG sought in this respect;
- identified the documents and other evidence upon which TG relied to support the making of those positive findings;
- stated that a finding that Clarke had impermissibly globalised its design change claims (Owen Springs EOT 1 and Tenant Creek EOT 2) required the rejection of each of those claims for an extension of time for that reason alone;
- particularly, with respect of each of Clarke’s variations claims:
- identified that compliance with conditions precedents for a variation claim in cl 37.1 (proof of a direction by TG to do the claimed additional work) and 37.8 (preparation and submissions of a Variation Proposal within 10 working days of the direction) were issues with respect to each claim;
- stated the positive findings which TG sought in this respect;
- identified the documents and other evidence upon which TG relied to support the making of those position findings; and
- stated that a finding that Clarke had not complied with both of these conditions precedent required the rejection of the claim for a variation for that reason alone.
- [93]On 13 August 2022, Clarke delivered its written closing submissions in reply.
- [94]Clarke’s written closing submissions in reply were 831 pages in length with 3,274 paragraphs. Its written closing submissions in reply:
- were accompanied by a document entitled “List of Findings to be made by the Arbitral Tribunal in respect of the EOTs and Variations” (“List of Findings”); and
- were accompanied by a document entitled “Annexure ‘A’” (“Annexure A”) which contained chronologies in each arbitration totalling 45 pages which included references to facts and documents which were said to “demonstrate [TG’s] knowledge and awareness of matters which would affect [Clarke’s] works under the Contract”; and
- made reference to Alstom, which was the first time Alstom had been mentioned, or relied upon, by Clarke in the arbitrations.
- [95]On 16 September 2022, TG served on the arbitrator and Clarke a document entitled “Respondent’s Note of Objections to the Claimant’s Closing Submissions in Reply” with an attached Schedule of Objections. The note relevantly stated:
“… with respect to the construction of clause 38.4, [Clarke’s] contention that [TG’s] obligation to make a determination of a claim for an EOT under clause 38.4 is substantially more onerous than its words suggest, requiring [TG], it seems, to put to one side any failure of [Clarke] to comply with clauses 38.1, 38.2 and 38.3 even though clause 38.8 makes compliance with those clauses a precondition for an entitlement to an EOT, relying on the decision Alstom Ltd v Yokogawa Australia Pty Ltd & Anor (No 7) [2021] SASC 49. That authority has not been mentioned before by either party in these proceedings and, as a result, [TG] has not had the opportunity to make submissions about the principles for which it stands as authority and their application to the pleaded case and the evidence …”.
- [96]On 19 September 2022, the arbitrator wrote to both parties stating:
“I refer to the Note of Objections and the Schedule of Objections delivered by [TG].
I have briefly read the documents. I shall continue to prepare my award in the short term notwithstanding the objections.
Given that [Clarke] must have turned its mind to whether its submissions complied with directions issued by the Tribunal, in particular, the September directions, I consider that the following directions are appropriate:
- [Clarke] is to deliver to the arbitrator and [TG] a document or documents strictly in reply to the Note of Objections and the Schedule of Objections within 14 days from today;
- [Clarke’s] response is limited to 27 pages in total;
- [TG] is to provide submissions strictly in reply within 7 days from receipt of the document provided in response to direction 1.
I do not consider that a separate direction is required but I propose to deal with this matter when considering my award.”
- [97]On 4 October 2022, Clarke served the document referred to in paragraph 1 of the 19 September 2022 directions. By that document, in broad terms, Clarke’s substantive response was that its written closing submissions in reply were “properly submissions in reply”. In that document Clarke went on to state:
“… [TG] makes submissions, in effect, that [Clarke’s] case in relation to cl 38.4 and the submissions concerning the construction of cl 38.4 were made in support of an un-pleaded case. [Clarke] submits that this is not an un-pleaded case. In its Statement of Claim, [Clarke] pleaded in the case of each EOT that [TG] failed to fairly and reasonably assess the EOTs. In its Defence, [TG] pleaded its position on the construction of the Contracts ... and in its Reply [Clarke] joined issue … Further, [Clarke] submits that [Clarke’s written closing submissions] to which [TG] refers … is a construction which [Clarke] contends is available and should be accepted by the Arbitral Tribunal having regard to the authority of Alstom ...
… [TG] submits that it has not had an opportunity to comment on the decision in Alstom and the construction for which [Clarke] contends of clause 38.4 relying on Alstom would mean that the Arbitral Tribunal should overlook any asserted failure by [Clarke] to comply with clauses 38.1 to 38.3 of the Contracts. [Clarke] responds that a decision such as Alstom forms part of the common law of Australia and it is not something which needed to be raised in [Clarke’s] Primary Submissions or in respect of which [TG] requires an opportunity to reply. [Clarke] submits that an authority such as Alstom should be taken into account by the Arbitral Tribunal even in circumstances where [Clarke] did not refer to it in its Closing Submissions in Chief.”
- [98]Clarke concluded by stating that “the appropriate course is for the Arbitral Tribunal to take into account all of the Reply Submissions, subject to considerations of weight and natural justice.” Notably, Clarke did not indicate an intention to apply to amend its pleadings.
- [99]On 10 October 2022, TG’s solicitors wrote by email to the arbitrator and Clarke relevantly stating as follows:
“[TG] does not consider that the Tribunal will be assisted by a further set of submissions. [TG] considers it sufficient to state in reply that it presses its objections to the [Clarke’s] Reply submissions as explained in its Note of Objection of 16 September 2022 …”
- [100]During the oral submissions in this Court, Clarke’s counsel identified this point of the arbitrations, that is a point in time after Clarke’s written closing submissions in reply, as being the point in time when a dispute “crystallised” as to whether the Fairly and Reasonably Requirement Issue was pleaded.[53]
- [101]On 10 October 2022, the arbitrator sent a communication to Clarke and TG in these terms:
“… I do not require further submissions.
You will recall that a direction was made and vacated to the effect that a further hearing would take place, on a date to be advised where I would raise matters for clarification. The purpose of the hearing was not to receive further submissions. I presently do not consider that the hearing will be necessary. I have copious submissions before me and to date I have had no difficulty understanding them.
If this position changes, I shall inform you.”
- [102]No further communication was received by the parties from the arbitrator prior to the award.
- [103]Having regard to my finding that the Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue were not pleaded, Clarke’s submissions about the issues being litigated, involve the premise that without any application to amend its pleadings, Clarke, by reference to the conduct of the arbitrations, was entitled to expect, and was able to insist upon, a substantial issue which was beyond jurisdiction being decided by the arbitrator. There is no merit in this premise. If Clarke wished to have the Fairly and Reasonably Requirement Issue litigated, it should have applied to amend its pleadings to bring the issue within jurisdiction.[54] Nothing in the conduct of these arbitrations altered that basic requirement.
- [104]Some other matters may be observed about Clarke’s submissions that these issues were “litigated”. There is no suggestion that the arbitrator appreciated that the Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue were sought to be made a live issue in the arbitrations at any time prior to Clarke’s written closing submissions in reply. There is no suggestion that TG prepared its evidence, conducted its case and prepared its written submissions cognisant that Clarke sought to make the Fairly and Reasonably Requirement and the Fairly and Reasonably Requirement Issue, live issues in the arbitrations.
- [105]On the objective material, TG was clearly surprised by the belated way Alstom came to be raised, and was relied upon, as providing the substantive content of an un-pleaded construction of cl 38.4. As I have indicated, TG’s written opening had succinctly described Clarke’s case as being that Clarke had complied with the conditions precedent. TG’s written closing submissions had identified lists of issues in respect of Clarke’s extension of time claims. Those issues did not include the Fairly and Reasonably Requirement Issue. At paragraph 2.3(e) of TG’s written closing submissions, TG noted that a series of matters made it impossible for Clarke to establish that TG’s determination under cl 38.4 was unfair or unreasonable. TG’s counsel, in oral submissions to this Court, observed of that written submission “… we knew we were there to meet a case that we had breached clause 38.4 by not properly identifying an event under 38.5 and then by not granting an extension of time for the delay caused by that event. Nothing was flagged to us which suggested that we had to make any inquiry in respect of 38.4 as to the impact of our own knowledge and conduct on whether or not Clarke had complied with any, and if so which, of the paragraphs of 38.1, 2 and 3 and how that might impact on a fair assessment for the purposes of working out whether or not to engage 38.8 or the other preconditions. None of that was flagged and that’s why it was not addressed here".[55] That submission is borne out by the content of TG’s written closing submissions. Further, TG’s surprise is reflected in the contemporaneous document it delivered on 16 September 2022, “Respondent’s Note of Objections to the Claimant’s Closing Submissions in Reply”.
- [106]TG’s surprise is also acknowledged by the award. In the award at [908] and [909], the arbitrator stated:
“Unsurprisingly, [TG] has objected to the way in which Clarke has finally raised questions of law for the first time in its reply submissions denying [TG] the opportunity to deal with it.
Notwithstanding [TG’s] objections, as the issue is a matter of law, I shall have regard to the case. Of course, if I consider that there is an issue on which I require [TG] to respond I would ask [TG] to do so. As it is, I do not consider that such a course is necessary”.
- [107]When the arbitrator said in the award that he would have regard to “the case”, the “case” was a reference to Alstom. What the arbitrator was having regard to, was an authority, now admitted by Clarke as providing the substance of the Fairly and Reasonably Requirement. The arbitrator had regard to that authority for the purpose of deciding “a matter of law”, being the proper construction of clause 38.4.
Making sense of the award
- [108]
“… [the courts] do not approach [arbitral awards] with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults in awards and with the objective of upsetting or frustrating the process of arbitrations. Far from it. The approach is to read an arbitration award in a reasonable and commercial way …”
- [109]In the context of the fair hearing rule, the Court will read an award generously in order to remedy only meaningful breaches of natural justice which have caused actual prejudice.[58]
- [110]In the present case, the award is a detailed, reasoned award of very considerable length.
- [111]The arbitrator devoted an initial part of the award to considering the role of the pleadings. He had been met with submissions by TG to the effect that some matters raised by Clarke in its closing submissions did not arise out of the pleadings and should not be considered. Clarke, in essence, had submitted that in arbitral proceedings, pleadings were not definitive of the matters which should be considered by the arbitrator. The award mentions directions which had been made during the conduct of the arbitration and notes that the arbitral proceedings had been conducted in much the same way as if they were court proceedings. The award refers to the degree of complexity of the matter and states that “… it is not surprising that the parties chose to define the issues by reference to formal pleadings. An informal approach … would have made it impossible to manage. Of necessity, those matters within jurisdiction which were to be determined by the tribunal were required to be identified in the pleadings.”
- [112]The award then makes reference to the ACICA Rules and the leading authorities about the role of pleadings. Having conducted a careful and thorough analysis of the authorities, the arbitrator expressed this conclusion about the relevance of the pleadings:
“On the basis of these authorities, the pleadings, especially where formal and comprehensive pleadings are delivered, define the matters to be determined by the Tribunal. The role and importance of the pleadings, in the Arbitration before me, are apparent from the directions which have been made. The pleadings define the issues which are within jurisdiction and which are to be determined in the Arbitration.”
- [113]Clarke had submitted to the arbitrator that no weight should be given to TG’s “complaints” about failures to follow procedural matters concerning pleadings.[59] Clarke submitted that the notices of arbitration had referred to delays in reaching Commercial Operation being caused by the actions of TG such that alleged un-pleaded claims were in fact quite clearly within the jurisdiction of the arbitrator. The arbitrator dealt with that submission as follows:
“This submission, would, if accepted, lead to error. To repeat a passage from CAJ v CAI referred to earlier:
‘The scope of an arbitration agreement in the broad sense is not the same as the scope of the submission to arbitration. The former must encompass the latter, but the converse does not necessarily apply. Thus, only disputes which the parties chose to submit for arbitration will demarcate the jurisdiction of the tribunal in the arbitration proceedings between them.’
The fact that an unpleaded claim may generally fall within the Notices of Arbitration does not result in the Tribunal being required to determine the claim if it is not pleaded.
Clarke invokes the ‘paramount and overriding purpose of the rules and legislation’ in support of a submission that the Tribunal should ‘exercise its discretion to consider all of the arguments and evidence that have been put before it, including where the parties have led evidence in relation to those arguments and made submissions in respect of them.’
It is at the heart of this submission that the Tribunal has a discretion as to those matters it should determine. No authority is given by Clarke in support of this contention. It would be surprising if one existed. The exercise of a discretion does not arise. The Tribunal may only consider the claims and defences which have been pleaded. The pleadings cannot simply be ignored. If Clarke seeks to raise a claim for determination which has not been pleaded, the appropriate course is for Clarke to apply for leave to amend its pleading to include the claim. It made no such application.
Had such an application been made, the Tribunal would have had a discretion to permit Clarke to amend its pleadings to include the claim provided that the claim fell within the jurisdiction of the Tribunal as defined by the Notices of Arbitration. Consequential directions, including for the provision of further evidence, would probably be required.”
- [114]The award relevantly concluded about the pleadings as follows:
“On the basis of the authorities referred to earlier in this section, I find that the matters which are to be the subject of the Award are those contained in the pleadings. In this Arbitration the parties have adopted a formal procedure to resolve complex disputes.
The Tribunal may have wide discretionary powers over procedural matters but the existence of a discretion over such matters does not, as Clarke submits, give rise to a discretion in respect of the issues to be determined. It is trite that there cannot be such a discretion.”
- [115]It is apparent from the award that the arbitrator carefully and thoroughly considered Alstom. He did so on the basis that Alstom was being relied upon by Clarke as an authority “regarding the interpretation and application of the Contracts”.[60] In considering Alstom, the arbitrator noted that the parties had been directed to refer in their openings to all relevant authorities on which they relied. He found that notwithstanding that direction, Clarke had not referred to relevant authorities in its opening, or in its closing, submissions. He found that no reference to Alstom had been made until Clarke’s written closing submissions in reply “where it was relied upon extensively regarding the interpretation and application of the Contracts”.[61] The award notes that Clarke had made approximately 20 references to Alstom in its written closing submissions in reply. The award then states “in regard to a number of those references, Clarke has not referred to any particular part of Alstom but simply makes a submission which it contends is supported in some way by the decision”. The arbitrator remarked “unsurprisingly, [TG] has objected in the way in which Clarke has finally raised questions of law for the first time in its reply submissions denying [TG] the opportunity to deal with it”.
- [116]The judgment in Alstom comprised 461 pages. The arbitrator dealt with the judgment between paras [880] and [917] of the award. He carefully considered the facts of Alstom and distinguished those facts from the case before him. The arbitrator identified significant differences between the nature of the contractual relationship in Alstom and the contractual relationships between Clarke and TG. Relevantly, the award reasons as follows:
“891 Before turning to consider some of the issues raised by Clarke, it is to be observed that the facts of this case bear no resemblance to the facts of the matter before the Tribunal.
The case concerns a dispute between a head contractor and subcontractor where the head contractor had obligations under the head contract to perform the Works, including programming of the Works, to completion. The interrelationship between the work of the subcontractor and that of the head contractor is central to the dispute.
892 In the present case, there is no head contractor/subcontractor relationship. Clarke has entered into turnkey contracts with [TG] in relation to the [Owen Springs contract] and [the Tennant Creek contract].
893 Alstom is a decision based on the particular facts of the case and while his Honour may have considered obligations which might be implied into the contract, those obligations are implied into a contract which cannot be compared with that in the case before this Tribunal. Alstom is not a case of general principle and any matters of principle applied by his Honour must be reviewed against the contract and the facts of the matter before this Tribunal.
894 A particular example of this relates to the provisions of the contract regarding the giving of notice if the subcontractor sought to claim an extension of time. Under Article 4.3.4 of the contract before Bleby J, the subcontractor was required first, to give a notice to the contractor not later than seven business days after the cause of the delay first arose, in the form provided in Article 4.3.1, that it was of the opinion that delay had occurred or would occur and the subcontractor was required to provide necessary supporting documentation. Secondly, if the subcontractor gave a notice of, but not a claim for, an extension of time pursuant to Article 4.3.4(a), it was required to submit a claim for an extension of time within 17 business days after the cause of delay arose and then confirm the claim within 17 business days after the end of the delay.
895 Article 4.3.1 provided that if the subcontractor considered that it had been or was likely to be delayed it was required to give a written notice to the contractor ‘as soon within seven days’ (sic), specifying with as much detail as possible the nature, cause and likely extent of the delay and attaching the most recent version of the works program and demonstrating how the delay would impact on the works program and the achievement of Provisional Acceptance by the Scheduled Provisional Acceptance Date or the achievement of Acceptance by the Scheduled Acceptance Date (as the case may be).
896 These provisions are different from their counterparts in the Contracts before the Tribunal. Those Contracts do not contain a requirement that the contractor might specify ‘with as much detail as possible’. Further, the contract before Bleby J did not contain any provisions making compliance with Articles 4.3.4 and 4.3.1 conditions precedent to entitlement.”
- [117]At para 897 of the award, the arbitrator made specific reference to para 1427 of Alstom, which Clarke admits provides the substance of Clarke’s “Fairly and Reasonably Requirement”. As to that paragraph of Alstom, the arbitrator said:
“900 As to Clarke’s submissions, probably based upon paragraph 1427 of Alstom, that [TG] had itself contributed to any inability of Clarke to provide the prescribed notice, the facts of the case are different from the present.
901 In the case before Bleby J, WDRML was prevented from providing information regarding programming and delay by reason of the fact that Alstom, as a head contractor, whose obligation was to program all of the works including the subcontract works, did not advise WDRML of issues relating to the programming of the head contract works to enable WDRML to program its works. This affected its ability to provide the information required by the notices. Effectively, Alstom had prevented WDRML from complying with the contract.
902 In the present case, [TG] has no obligations in respect of the execution of the Works. Those obligations are entirely Clarke’s and Clarke bears the risk. There is no statement of general principle from Alstom in relation to this which is applicable to the present case.”
- [118]At paragraph 910 of the award the arbitrator set out arguments raised by Clarke in respect of the application and relevance of Alstom. The arbitrator noted that Clarke had argued that TG was obliged to determine claims for extensions of time notwithstanding that valid notices were not given under cls 38.2 and 38.3.[62] He noted that he had explained elsewhere in the award why that argument had no substance.[63] The arbitrator also noted the effect of Clarke’s submission as being that TG was not entitled to exercise its rights under the contracts to deny a claim not made in accordance with the contracts and in accordance with the conditions precedent. The arbitrator noted that there was “no substance to this argument”.[64] Ultimately, the arbitrator did not consider it necessary to call upon TG to make submissions in response to those made by Clarke regarding the application of Alstom.[65]
- [119]The construction of cl 38 of the contracts which was ultimately preferred by the arbitrator, can be discerned from a series of paragraphs in the award. The arbitrator construed cl 38.8 as a clause which created conditions precedent to entitlement. He found that if Clarke had failed to give the notices required by cls 38.1, 38.2 and 38.3, it had no entitlement to an extension of time.[66] He rejected Clarke’s submission that an obligation on TG arose under cl 38.4 in circumstances where no notice had been given under cls 38.2 or 38.3.[67] He then said at paragraph 924, “In the circumstances, where a claim had been made but the notice was defective in that it was not a valid notice under cll. 38.2 or 38.3, the effect of Clarke’s submission is that [TG] cannot simply act on the basis that the notice is not valid. Clarke says [TG] must determine the claim on some basis, presumably including information within its knowledge that is not included in a notice”.
- [120]The arbitrator further explained his preferred construction in the following paragraphs of the award:
“926 The question arising from Clarke’s submissions is whether [TG] may determine that a notice is not valid, rely on cl.38.8 and not determine the substance of a claim which might be made for an extension of time. This is a question of construction.
927 Under cl.38, [TG] is informed of the EOT claim by the notice given under cl.38.2 or cl.38.3. The notice must contain the information required to permit [TG] to be adequately informed in order that a determination may be made. Whether [TG] might also act on information it already holds is irrelevant to this question.
928 Within 30 business days after receiving the appropriate notice, [TG] is required to make a determination. It is implicit that the notice must be valid. If the notice were invalid, the effect of cl.38.8 is that Clarke would have no entitlement to an extension of time and would have no cause of action in regard to the claim.
929 It would result in commercial nonsense to construe cl.38.4 as requiring a determination to be made where no entitlement could arise because a notice was invalid. If Clarke’s submission were correct, [TG] would be obliged to make a determination regardless of the validity of the notice and if an extension of time were granted ignoring the fact that the notice was invalid, [TG] would then have to arbitrate the matter to have its determination set aside. To merely state this proposition is sufficient to expose its lack of commerciality. There could be no obligation to act fairly and reasonably if there were no valid claim.
930 Clarke’s submission that [TG] cannot determine whether a notice is invalid, should be rejected. It is a question of construction whether a notice complies with the Contract. While this question may ultimately be determined by dispute resolution, in the day to day administration of the Contract, [TG] is entitled to take a view whether a notice complies with the contractual requirements and decline to determine an EOT claim if it forms the view that it does not. If [TG’s] determination that a notice is invalid is correct, Clarke has no entitlement under cl.38.8. If [TG] is incorrect, it may be in breach of contract for not determining the claim under cl.38.4 and Clarke would then have a right to arbitrate its claim for an extension of time. Clarke would need to prove on the balance of probabilities that its notice was valid.
931 Further, where no determination has been made by [TG] with respect to a claim for an extension of time made by Clarke in this Arbitration, Clarke has the onus to prove that it gave valid notices under cll.38.2 and 38.3.
932 The giving of a valid notice is required by the Contract and is a matter which Clarke must prove to have a cause of action. [TG] is entitled to consider the validity of any notice given by Clarke regarding a claim under the Contract.”
- [121]Later in the award, the arbitrator returned to the construction of cl 38, noting that he had already referred to cl 38 in the context of notice requirements and conditions precedent and that it might prove necessary to repeat earlier observations he had made in the award. In this latter part of the award, the arbitrator found, as a matter of construction, that cl 38.4 operated after compliance with cls 38.2 and 38.3.[68]
- [122]In a separate part of the award the arbitrator considered the relationship between cls 38.1 to 38.4, 38.8, 46.15 and 46.16. Relevantly, the arbitrator reasoned as follows:
“1021 By cl.38.8 of each of the [Owen Springs] and [Tennant Creek] Contracts, it is provided that the Contractor has no entitlement to an extension of time and must comply with the requirements to perform the Works by the Date for Commercial Operation in the event that the Contractor fails to submit the notices required under cll.38.1, 38.2 and 38.3 within the times required, or fails to comply with an other notice requirements under the Contract regarding an event.
1022 By cl.46.15 of the Contract, it is further provided that if the Contractor considers that it is entitled to an extension of the Date for Commercial Operation, a Variation or any other Claim under the Contract, it must strictly adhere to notice requirements and timeframes specified under the Contract.
1023 By cl.46.16 of the Contract, if the Contractor fails to comply with cl.46.15, the Date for Commercial Operation should not be extended and/or the Contractor shall not be entitled to a Variation and the Owner shall be discharged form all liability in connection with the claim.
1024 [TG] has pleaded failures by Clarke to comply with the notice requirements of cl.38 for extensions of time and also under cl.37 for Variations as defences to Clarke’s claims. Clarke has not, in its pleading, its opening submissions or its closing submissions substantively dealt with these defences by reference to the proper construction of the Contracts. Indeed, Clarke has not sought to maintain that the provisions are invalid or do not have effect. Further, it does not plead any estoppel or waiver which would affect the operation of the provisions.”
- [123]As a matter of construction, the arbitrator concluded that the effect of cl 38.8 was that, unless Clarke provided the required notices within the specified times, it did not have a claim to an extension of time. He found that was also the effect of cls 46.15 and 46.16.[69]
- [124]The arbitrator considered and rejected construction arguments advanced by Clarke based upon its reliance on Alstom. Notably, the arbitrator provided this reasoning in the award:
“1033 Clarke submits that the trigger for [TG] to perform its obligation under cl.38.4 goes beyond the giving of notices given the requirement in cl.38.4 that [TG] make a determination ‘fairly and reasonably’. Clarke submits that [TG] is to take into account matters within its knowledge when determining an EOT claim. Therefore, notices under cll.38.2 or 38.3 need not be given for a determination by [TG] under cl 38.4.
1034 Clause 38.4 provides that “in making its determination, the Owner must act fairly and reasonably”. Significantly, that determination is directly linked to the giving of notices by Clarke. The clause provides that within 30 Business Days after receipt of the second notice or the third notice (as the case may be), “the Owner must issue a notice notifying the Contractor’s Representative of its determination as to whether the relevant Event qualifies as one which entitles the Contractor to an extension to the Date for Commercial Operation…”. The provision does not provide that there is an obligation on [TG] to make a determination notwithstanding that notices have not been given.
1035 A further impediment to Clarke’s argument is that by cl.38.8, the provision of the second or third notices is a condition precedent to entitlement. If [TG] had an obligation to determine an EOT entitlement in the absence of the notices, such an obligation would render cl.38.8 nugatory. Clarke does not address the effect of its argument on the operation of cl.38.8.
1036 Further, while [TG] could consider matters within its knowledge when determining a claim for an EOT, this does not excuse compliance with the conditions precedent.
1037 Clarke’s argument cannot succeed as a matter of construction.
1038 Further, Clarke submits that the question of whether a notice is valid is not a matter which [TG] has a discretion to determine prior to determining the merits of the claim under cl.38.4. Clarke submits that once a notice (whether valid or not) has been provided under cl.38.2 and/or cl.38.3, [TG] is required to assess the EOT claim under cl.38.4.
1039 I have dealt with this argument elsewhere. The argument fails, essentially, because the notices to be given prior to [TG’s] making a determination under cl.38.4 are required to comply with cll.38.2 or 38.3, as the case may be. If they do not, there is no entitlement by operation of cl.38.8. A determination must be made only where there are valid notices. This is a matter which [TG] must consider. If the notices are invalid there can be no entitlement and a determination of the merits of each claim is unnecessary.”
- [125]Beyond those findings in relation to the construction of the contracts, it is also significant to note that in relation to some particular submissions advanced by Clarke which were apparently related to Alstom and which involved the arbitrator being required to have regard to evidence and make findings of fact, the arbitrator relevantly determined that the claims to which those submissions were directed were not within jurisdiction. The arbitrator had previously explained, in a detailed and reasoned way, that a claim which had not been pleaded would not be considered by him to be within jurisdiction. Relevantly, the arbitrator identified that Clarke had made further submissions to the following effect:
“1040
…
- the Tribunal should take into account matters which [TG] knew and Clarke did not know when assessing whether Clarke was able to properly comply with cl.38.1 to cl.38.3 concerning the giving of notices and its ability to inform [TG] of the impact of a delay on the critical path as required by cl.38.13: Clarke’s reply submissions paragraphs [86.1]; [119]; [120]; [126]; [136.2]; [139]; [144].
- the Tribunal should take into account [TG’s] “other projects” as supporting why Clarke was unable to comply with the notice provisions of cll.38.1 to 38.3, particularly as Clarke was unaware of the extent of the impact of the other projects and how it impacted on Clarke’s Works and thus was unable to provide the proper details required: Clarke’s reply submissions paragraphs [34]; [86];
- its ability to comply with cll.38.1 to 38.3 was impacted by [TG’s] failure to comply with cl 5.5 of the Contract in relation to the communications between [TG] and a third party under the Project Agreements, namely PWC, which [TG] was required to provide to Clarke: Clarke’s reply submissions paragraphs [136]; [139];”
- [126]At paragraphs 1041(e) and (f) of the award, the arbitrator relevantly reasoned as follows:
“1041
…
- The statement in paragraph 1040(f) was raised for the first time in Clarke’s reply submissions. I do not allow it, on both a jurisdictional and discretionary basis. In any event it is of such a level of generality as to be meaningless. Clarke does not point to any particular delay or notice to which the submission applies or the specific knowledge of [TG] and how the knowledge should have been applied. Clarke does not explain what effect the application of that knowledge would have. Further, it is not explained how the Tribunal should take the matters into account.
- Similar comments made in regard to paragraph 1040(f) apply to paragraphs 1041(g) and (h).”
Determination of the real issues
- [127]Clarke’s application in this proceeding relied upon three grounds to establish the asserted breach of natural justice. Those grounds had been articulated in the statement of claim in this proceeding and may be outlined as follows:
- Ground 1 concerned the arbitrator’s alleged failure to determine the issue of whether TG acted fairly and reasonably when assessing Clarke’s extension of time claims;
- Ground 2 concerned the arbitrator’s alleged failure to determine the issue of whether there was a substantive and factual relationship between Clarke’s extension of time claims and its variation claims;
- Ground 3 concerned the arbitrator’s alleged failure to determine the issue of whether TG failed to assess Clarke’s ability or otherwise to comply with the contractual notice requirements for extension of time and variation claims.
- [128]
“ … the critical issue that arises in respect of ground 1 is this; the entitlement to an extension was conditioned on a condition precedent. So the conditions that had to be met were 38.1 to 38.3. The question is whether 38.4 had the consequence that, acting fairly, the principal might nonetheless be obliged to assess the extension of time even if there’d been non-compliance with those condition precedents … in relation to ground 2, as I’ve indicated, we say effectively the same thing: that there was this interrelationship, it was pleaded and it was obviously necessarily, not dealt with. If we’re good on our first point in relation to ground 1, that the arbitrator did not deal with the merits of the extension claims to the extent that there were variation claims dependent upon them, he was not in a position to do so … and to say, in many respects, ground 3 is, at a minimum, demonstrated by ground 1.”
- [129]At the commencement of the oral submissions in this Court, Clarke was content to distil the real issues on this application down to three issues. Each of those real issues rested upon the contention that the Fairly and Reasonably Requirement Issue arose for determination in the arbitrations. That is, grounds two and three as described above were not said to have any separate and distinct existence outside of the proposition that the Fairly and Reasonably Requirement Issue was an issue which arose for determination in the arbitrations.
- [130]As to ground 2 pleaded in the statement of claim, in the arbitrations Clarke had alleged that as a consequence of delays the subject of extension of time claims, Clarke was required to carry out additional work the subject of some variation claims. In its written submissions, Clarke used extension of time claim 2 and variation P030 as exemplars. The arbitrator understood that Clarke was claiming in addition to delay costs, a variation under which it carried out additional work.[72] The arbitrator considered variation P030 as a claim for a variation under cl 37 of the contract.[73] He rejected that claim. Clarke’s ground 2, as explained by its oral submissions to this Court, appears to have been premised on the contention that because the arbitrator failed to determine the Fairly and Reasonably Requirement Issue, he did not deal with the merits of extension of time claims and some variation claims were dependent upon, or interrelated with, those extension of time claims. In any event, as Clarke made abundantly clear at the time of its oral submissions in reply to this Court, “its case” was epitomised by the fundamental contention that the arbitrator did not consider the pleaded and litigated contractual obligation under clause 38.4 to assess an out of time extension of time claim fairly and reasonably.[74] I turn then to the three real issues.
- [131]The first issue was described by Clarke as “whether the Fairly and Reasonably Requirement Issue arose for determination before [the arbitrator]”. I have already decided that the Fairly and Reasonably Requirement Issue was not revealed by the Notices of Arbitration, not pleaded and did not come within jurisdiction by reason of the conduct of the arbitrations. Having regard to my reasons and finding, the Fairly and Reasonably Requirement Issue did not arise for determination in the arbitrations.
- [132]The second issue was described by Clarke as “If the Fairly and Reasonably Requirement Issue did arise for determination, did the [arbitrator] determine the issue”. Given my determination of the first issue, it is not strictly necessary to decide this issue because I have found that the Fairly and Reasonably Requirement Issue did not arise for determination. However, it is appropriate to address this issue, to demonstrate that, in any case, the arbitrator did consider the construction issue sought to be advanced by Clarke.
- [133]The Fairly and Reasonably Requirement Issue, as it was defined and framed by Clarke’s statement of claim in this application, was an issue said to have been joined between the parties in the arbitrations as to whether, even if Clarke had not met the preconditions in clause 38, TG was obliged in the exercise of its determinative function regarding claims for an extension of time “in accordance with the Fairly and Reasonably Requirement” to grant the extension and had failed to do so. That issue, as framed and defined by Clarke, embraced, or involved, two important sub- issues. First, there is what might be regarded as a threshold question of law, a construction point, as to whether TG was contractually obliged in the exercise of its determinative function regarding a claim for an extension of time which did not comply with the conditions precedent, to act in accordance with the Fairly and Reasonably Requirement. Secondly, if TG were so lawfully obliged, did a determination acting in accordance with the Fairly and Reasonably Requirement require the extension to be granted. Clarke effectively conceded that what I have identified as the first sub-issue involved a question of law, namely a question as to the proper construction of cl 34. Notably, in its written submissions before this Court, Clarke styled “the issue” raised by Clarke before the arbitrator as being “that on the proper construction of clause 38.4 it could be relieved of non-compliance with the conditions precedent in clauses 38.1 to 38.3”.[75] In its reply pleading in this Court, Clarke “admitted” that its defined term “the Fairly and Reasonably Requirement” was a requirement concerned with the proper construction of clause 38.4.
- [134]The arbitrator in fact considered, and decided against Clarke, what I have described as the first sub-issue being the threshold question of law as to whether TG was contractually obliged in the exercise of its determinative function regarding a claim for an extension of time to act in accordance with the Fairly and Reasonably Requirement. That consideration and determination is apparent from a fair reading of paragraphs 909 to 932, 991, 1021 to 1028 and 1033 to 1039 of the award. It is not the role of this Court to second guess or consider the merits of the construction preferred by the arbitrator. Further, the arbitrator considered and decided this construction question in circumstances where Clarke had made no reference to Alstom (now admitted to provide the substantive content of the Fairly and Reasonably Requirement) until Clarke’s written closing submissions in reply, “where it was relied upon extensively regarding the interpretation and application of the Contracts”.[76] Further, those submissions had “made approximately 20 references to Alstom” but a number of those references had “not referred to any particular part of Alstom”. By reason of the haphazard and belated way in which the question emerged, there is an acute need to afford the arbitrator fair latitude in his identification of the issue ultimately sought to be advanced by Clarke in relation to the construction of clause 38.4 In my consideration, the arbitrator fairly identified the construction issue and dealt with it. That puts an end to any suggestion that there was a breach of the hearing rule involving a failure to consider an essential issue.
- [135]In Clarke’s oral submissions in reply to this Court, it was variously submitted that the arbitrator never considered the topic of whether cl 38.4 might excuse compliance with cls 38.1 to 38.3,[77] took the view that there was no issue before him as to whether cl 38.4 might “relieve the 38.1 to 38.3 obligations,”[78] never turned his mind to the issue of construction as to whether the condition precedents might be “relieved of by fair and reasonableness in 38.4”[79] and never asked whether upon the proper construction of cl 38.4, it could operate to affect the requirements of the condition precedents in 38.1 to 38.3”.[80]
- [136]I reject these submissions. It is necessary to adopt a reasonable and commercial approach to the award. The award must be viewed with common sense against the background of the manner in which Alstom (the substance of the Fairly and Reasonably Requirement) came to be relied upon and how it was relied upon. The arbitrator is entitled to fair latitude in determining the essential issues. With this approach in mind, it is tolerably clear that the arbitrator was aware of and considered Clarke’s construction argument to the effect that clause 38.4 might operate to excuse compliance with the condition precedents in clauses 38.1 to 38.3. Notably:
- At paragraph 910(a), the arbitrator recorded the argument raised by Clarke “that [TG] is obliged to determine claims for extensions of time notwithstanding that valid notices were not given under cl 38.2 and 38.3”.
- At paragraph 910(a), the arbitrator noted the effect of Clarke’s submission as being that TG was not entitled to exercise its rights under the contracts to deny a claim not made in accordance with the contracts and in accordance with the conditions precedent.
- At paragraph 924, the arbitrator said “In the circumstances where a claim has been made but the notice was defective in that it was not a valid notice under cll. 38.2 or 38.3, the effect of Clarke’s submission is that [TG] cannot simply act on the basis that the notice is not valid. Clarke says that [TG] must determine the claim on some basis, presumably including information within its knowledge that is not included in a notice”.
- At paragraph 1033, the arbitrator noted Clarke’s submission that “the trigger for [TG] to perform its obligation under cl.38.4 goes beyond the giving of notices given the requirement in cl.38.4 that [TG] make a determination ‘fairly and reasonably’. Clarke submits that [TG] is to take into account matters within its knowledge when determining an EOT claim”.
- At paragraph 1035, the arbitrator made further reference to Clarke’s construction argument and said that a “further impediment to Clarke’s argument is that by cl.38.8, the provision of the second or third notices is a condition precedent to entitlement. If [TG] had an obligation to determine an EOT entitlement in the absence of the notices, such an obligation would render cl.38.8 nugatory. Clarke does not address the effect of its argument on the operation of cl.38.8”.
- At paragraph 1036, the arbitrator, still with reference to Clarke’s argument, reasoned against that argument by stating, “Further, while [TG] could consider matters within its knowledge when determining a claim for an EOT, this does not excuse compliance with the conditions precedent”.
- [137]The construction ultimately preferred by the arbitrator is apparent from paragraphs 922 to 932, 991, 1021 to 1024 and 1039. Essentially the arbitrator preferred a construction that the notices to be given prior to TG’s making a determination under cl 38.4 were required to comply with cls 38.2 or 38.3 as the case may be and if they did not, there was no entitlement by operation of cl 38.8. A determination under cl 38.4 was to be made only where there were valid notices. Having decided upon that proper construction of clause 38.4, the second sub-issue did not arise for determination. Further, the arbitrator made it tolerably clear that he did not regard the determination of a fact sensitive case based upon Clarke’s rejected construction of the contracts as within his jurisdiction to determine.[81] For the reasons, I have already explained, such a case had not been pleaded and the conduct of the arbitration had not brought such a case within the arbitrator’s jurisdiction.
- [138]There are two further matters which should be noted.
- [139]First, having regard to my findings about the pleadings and the conduct of the arbitration, the Fairly and Reasonably Requirement was not pleaded and was not an essential issue. As the issue only involved a question of law and was substantively based upon a consideration of Alstom and its relevance to the construction of the contracts, the arbitrator, at Clarke’s urging, and over the objection of TG, decided that question of law. In making the decision to proceed to decide the question of law, the arbitrator is to be afforded fair latitude in his decision making. TG, the party denied a hearing on that question, makes no complaint about the course of conduct pursued by the arbitrator.
- [140]Secondly, at paragraph 1039 of the award, the arbitrator decided that “the notices to be given prior to [TG’s] making a determination under cl 38.4 are required to comply with cls 38.2 or 38.3, as the case may be. If they do not, there is no entitlement by operation of clause 38.8”. Having decided that question of construction, the arbitrator then said in the same paragraph of the award “A determination must be made only where there are valid notices. This is a matter which [TG] must consider. If the notices are invalid there can be no entitlement and a determination of the merits of each claim is unnecessary”. This conclusion, based as it was on the arbitrator’s reasoned determination of the proper construction of the contracts, places the approach adopted by the arbitrator in paragraph 188 of the award into its proper and fair context. Properly construed, the approach in paragraph 188 of the award was an approach informed by the arbitrator’s consideration and determination of the proper construction of the contracts. The approach adopted by the arbitrator in paragraph 188 was one which the arbitrator considered gave effect to the overriding object of the ACICA Rules in the context of his determination of the proper construction of the contract. The approach was an eminently sensible approach.
- [141]
“In proposing that the issue should be determined in its favour, a party may submit different arguments that could operate cumulatively or independently. As long as one argument resolves the issue, there is no justification for insisting that the arbitral tribunal go on to consider the other arguments which have been rendered academic. In SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 (“SEF”), Judith Prakash J held (at [60]) that “[n]atural justice requires that the parties should be heard; it does not require that they be given responses on all submissions made.” I completely agree. It is the right to be heard and not a right to receive responses to all the submissions or arguments presented that is protected. Although SEF was about a curial review of an adjudicator’s decision under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed), I find that it applies equally to arbitrations.
It should be emphasised that an issue need not be addressed expressly in an award; it may be implicitly resolved. Resolving an issue does not have to entail navigating through all the arguments and evidence. If the outcome of certain issues flows from the conclusion of a specific logically prior issue, the arbitral tribunal may dispense with delving into the merits of the arguments and evidence for the former. Using a claim in tort as an example, if the arbitral tribunal has found that there is no duty of care, it follows of course that there can be no breach of a duty of care and consequently, damages. The arbitral tribunal is not obliged to pursue a moot issue and consider the merits of either the standard of care or the claim for damages.”
- [142]Natural justice did not require the arbitrator to determine issues as if he had accepted Clarke’s arguments. In AKN v ALC,[84] the Court of Appeal of Singapore referred with approval to the proposition that “no party to an arbitration had a right to expect the arbitral tribunal to accept its arguments, regardless of how strong and credible it perceived those arguments to be”. The Court went on to observe that:
“This principle is important because it points to an important distinction between, on the one hand, an arbitral tribunal’s decision to reject an argument (whether implicitly or otherwise, whether rightly or wrongly, and whether or not as a result of its failure to comprehend the argument and so to appreciate its merits), and, on the other hand, the arbitral tribunal’s failure to even consider that argument. Only the latter amounts to a breach of natural justice; the former is an error of law, not a breach of natural justice”.
- [143]Clarke has not established any breach of the hearing rule.
- [144]The third issue was described by Clarke as “If the [arbitrator] failed to determine the issue, whether that resulted in Clarke suffering practical injustice such that the [award] should be set aside.” My findings and determinations in relation to the first and second issues make it unnecessary to consider the third issue. There has been no failure by the arbitrator to determine any essential issue. At this point I am conscious of the cautions in the case law against a court on this kind of application being invited to judge the “full merits” of the arbitral process.[85] It has been observed that unfairness and practical injustice of the kind required to engage s 34(2)(b)(ii) of the Act ought to be “obvious”[86] and “be able to be expressed shortly and, likewise, demonstrated tolerably shortly” and without “a detailed re-examination of the facts”.[87] Part of TG’s submissions on this application tended to invite the Court to consider the prospects of success of a case to the effect that TG’s determinations in accordance with the Fairly and Reasonably Requirement would have required extensions of time to be granted. I do not think it is necessary or appropriate for this Court to engage in that kind of further consideration.
- [145]One matter that was relied upon by TG was a short point and involved Clarke’s failure to prove delay. Clarke’s expert had been instructed to make two important assumptions. First, that the causes of the delay the subject of the extension of time claims entitled Clarke to an extension of the date for Commercial Operation. Secondly, that Clarke had complied with the terms of clause 38 in submitting the extension of time claims. Those assumptions were significant because they effectively took out of play clauses 38.1 to 38.3 and 38.5 and left it to Clarke’s expert to opine as to whether delay had in fact been occasioned and the extent of the delay. The arbitrator, after detailed consideration and analysis, did not accept the opinions of Clarke’s expert. He found that Clarke’s expert’s opinion as to delay was hypothetical and was not an opinion of actual delay, as required by the contracts. The arbitrator found that Clarke had not satisfied the onus of proof regarding delay and the extent of delay. These findings are not the subject of any challenge. The findings are significant because they indicate that, even making assumptions in its favour regarding compliance with clauses 38.1 to 38.3 and satisfaction of clause 38.5, Clarke was unable to prove in the arbitrations that it had suffered any delay in achieving Commercial Operation. It is uncontroversial that under the Owen Springs contract, Clarke had not achieved Commercial Operation until 14 December 2018, 324 days late. Under the Tenant Creek contract, Clarke had not achieved Commercial Operation until 14 December 2018, 489 days late. By reason of the caps on liquidated damages in the contracts (10% of the contract price), Clarke required an extension of time of 226 days or more under the Owen Springs contract and of 308 days or more under the Tenant Creek contract before TG’s right to liquidated damages would be affected. Clarke did not provide any persuasive responsive submissions on this point. In my consideration, Clarke’s failure to prove delay provided an independent reason for concluding that, had there been a breach of natural justice, Clarke suffered no practical injustice warranting the setting aside of the award.
Orders
- [146]The originating application filed 20 October 2023 is dismissed.
- [147]I will hear the parties as to costs.
Footnotes
[1] T 1-8.02-05.
[2] As adopted by the United Nations Commission on International Trade Law on 21 June 1985 with amendments adopted by that Commission in 2006.
[3] Commercial Arbitration Act 2013 (Qld) s 1AC(1).
[4] Ibid s 2A; TCL Air Conditioner (Zhongshan) Company Ltd v Castel Electronics Pty Ltd (2014) 232 FCR 361, [75].
[5] (2014) 232 FCR 361, 383 [75] (‘TCL’).
[6] [2018] 1 Qd R 245, [84]-[85].
[7] [2018] QCA 39.
[8] (2014) 232 FCR 361.
[9] Ibid [73].
[10] [2018] QCA 39, [103]-[104].
[11] Ibid [107].
[12] Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd [2015] NSWSC 735, [46].
[13] Statement of Claim [7].
[14] Ibid [8].
[15] MFI A [9]-[12].
[16] MFI D [1].
[17] Applicant’s Written Outline of Submissions [79]
[18] Trustees of Rotoaira Forest Trust v Attorney-General [1999] 2 NZLR 452, 463; Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86, [65(d)].
[19] Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86, [65(d)].
[20] [2015] 3 SLR 488, [46].
[21] [2022] SGCA(I) (4), [13].
[22] Lieschke v Lieschke [2023] NSWCA 241, [25].
[23] (2015) 317 ALR 786, [8].
[24] TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186, [72].
[25] Ascot Commodities NV v Olam International Ltd [2002] CLC 277, 284.
[26] [2013] SGHC 186, [74].
[27] [2024] SGCA 19, [36]; see also BZV v BZW [2022] 3 SLR 447, 462.
[28] (2014) 232 FCR 361, 376 [54].
[29] Ibid.
[30] TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186, [126].
[31] [2022] 1 SLR 1080, [54].
[32] T 1-8.02-05.
[33] MFI A [2].
[34] Ibid [3].
[35] Applicant’s written outline of submissions [9].
[36] Ibid [44].
[37] Exhibit one, volume two, tab 13, page 1013 [20], tab 18, page 1107 [20].
[38] Exhibit one, volume two, tab 13, page 1014 [24].
[39] Exhibit one, volume two, tab 18, page 1108 [27].
[40] Defence in Owen Springs arbitration at paragraph 3(l)-(m); Defence in Tennant Creek arbitration at paragraph 4(l)-(m).
[41] MFI D [16]-[17].
[42] Ibid [32].
[43] First respondent’s written outline of submissions [31]; Applicant’s written outline of submissions in reply [6].
[44] Lieschke v Lieschke [2023] NSWCA 241, [17].
[45] [2000] WASCA 255, [32].
[46] [2012] 4 SLR 98, [33].
[47] [2021] SGCA 45, [20].
[48] Applicant’s written outline of reply [34].
[49] Ibid.
[50] T 4-33.19-20.
[51] [2022] SGCA(I) 4, [16].
[52] The Respondent’s written submissions [1.4], [1.5].
[53] T 1-34.01-25.
[54] CAJ v CAI [2021] SGCA 102, [40].
[55] T 2-61.43 to 2-62.05.
[56] CKG v CKH [2021] SGHC(I) 5, [7]
[57] [1985] 2 EGLR 14.
[58] BZV v BZW [2022] 3 SLR 447 at 462 [52(e)]
[59] Exhibit one, volume two, tab nine, page 536 [240].
[60] Award [908], [917].
[61] Ibid [908].
[62] Ibid [910(a)].
[63] Ibid.
[64] Ibid [916].
[65] Ibid [917].
[66] Ibid [922].
[67] Ibid [923].
[68] Ibid [991].
[69] Ibid [1028].
[70] T 1-6.01-.06.
[71] T 1-7.45 to T 1-8.12.
[72] Award [2886].
[73] Ibid [2886] to [2895].
[74] MFI D [1].
[75] Applicant’s written outline of submissions [10(a)].
[76] Award [908].
[77] T 4-37.47 to 4-38.05.
[78] T 4-55.10-15.
[79] T 4-55.17-23.
[80] MFI D [25].
[81] Award [1041(e) and (f)].
[82] TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186, [76]-[77].
[83] Ibid.
[84] [2015] SGCA 18, [47].
[85] TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186, [126].
[86] TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 232 FCR 361, [54]-[55].
[87] The Nuance Group (Australia) Pty Ltd v Shape Australia Pty Ltd [2021] NSWSC 1498, [139].