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IN	THE	MATTER of AN APPLICATION by PRECISION FABRICATION PTY LTD and IN THE MATTER of THE COMMERCIAL ARBITRATION ACT
of 1985

Supreme Court of the Northern Territory of Australia Asche J.
28 May and 29 July 1987 at Darwin

Commercial Arbitraton Act - Application for leave to enforce award summarily - S. 33(1) - leave refused where parties rights not fully determined by award itself

Commercial Arbitration Act - Circumstances in which leave granted pursuant to S. 33(1)

Commercial Arbitration - Distinction between arbitrator and valuer

Arbitration Agreement - Award condition precedent to other terms - distinction between award and agreement - award not concluding the dispute

Award - Dispute arising not as to meaning of award but whether award subsequently complied with - Arbitrator functus officio - inappropriate to remit under S. 43

Cases considered:-

In re Boks & Co & Peters Rushton & Co Limited (1919) 1 K.B. 491
Middlemiss & Gould v Hartlepool Corporation (1973) 1 All E.R. 712

Cases applied:-

In re Dawdy (1885) 15 Q.B.D. 426
In re Carus-Wilson & Green (1887) 18 Q.B.D. 7
Re Stringer & Riley Brothers (1901) 1 Q.B. 105 Sutherland & Co v Hannevig Bros Ltd (1921) 1 K.B. 336 Crane v Hegeman-Harris Co. Inc. (1939) 4 All E.R. 68 Margulies Brothers Ltd v Dafnis Thomaides & Co. U.K. Ltd
(1958) 1 All E.P.. 77 7

Cases referred to:-

Aitcheson v Cargey (1824) 2 Bing. 199
Manser v Heaver (1832) 3 B & Ad. 296
Stone v Phillips (1837) 4 Bing (N.C.) 37 Re an Arbitration between Bailey & Hart
(1883) 9 V.L.R.(L) 311
Selby v Whitbread & Co (1917) 1 K.B. 736
Rahcassi Shipping Co S.A. v Blue Star Line Limited (1969) 1 K.B. 173

Counsel for Applicant Solicitor for

Counsel for Respondent Solicitor

D. Francis

Mildren Silvester & Partners
Bradley ward Keller

asc870065a

•
asc870065

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY OF AUSTRALIA
No. 221 of 1987

IN THE MATTER of AN APPLICATION by PRECISION FABRICATION PTY. LTD.
AND

IN THE MATTER of THE COMMERCIAL ARBITRATION ACT OF 1985

CORAM:	Asche J.

REASONS FOR JUDGMENT

(Delivered the 29th day of July 1987)

On 16 August 1985 an agreement in writing was executed between Sunlighting Pty Ltd ("Sunlighting") and Precision Fabrication Pty Ltd ("Precision") whereby Precision agreed to execute certain work namely:

"To supply delivery and erection of structural steel and purlins and bolts as to drawring (sic) No. 2274-57 and 2274-S8.	Metal work not included."

The consideration for the contract was the surr, of

$63,600.

Disputes having occurred between the parties and the contract not having been completed they entered into an Arbitration Agreement dated 5 February 1986.	Clauses 1 and
2 of that agreement read as follows:-

,•	"l.	The parties hereto agree to determine the said agreement dated 16 August 1985 on the following terms:-

that Sunlighting will pay to Precision Fabrication the balance (if any) of the value of work done and materials supplied (being an appropriate proportion of the contract price) within fourteen (14) days of the said amount being determined by the Arbitrator appointed pursuant to this agreement;

Upon a payrrent of the said sum by Sunlighting to Precision Fabrication Pty. Ltd., Precisicn Fabrication will immediately deliver to Sunlighting all steel and other materials supplied by Sunlighting or Precision Fabrication pursuant to the said agreement.

{c)		Upon payment by Sunlighting and delivery by Precision Fabrication each of the parties will accept the same in full satisfaction and discharge of the others obligation and hereby releases the other from any and all claims arising between them pursuant to the said agreement.

2.		All questions and matters in difference between the parties hereto with regard to the value of work and materials supplied by Precision Fabrication pursuant to the agreement are hereby referred to the award and final determination of GEOFFREY BAMBER of Messrs King Harding & Partners, Quantity Surveyors of Darwin an Arbitrator agreed to by both the parties hereto and the costs of the Arbitrator shall be met equally by the parties prior to the award being handed down.	If either party refuses to pay the said costs, the other party may pay and recover the sum so paid as a debt."

On 10 February 1986 the arbitrator delivered his award.	That award first set out the calculations the arbitrator had made to ascertain what balance of the original contract sum was owing by Sunlighting to Precision.

He did this by subtracting frorr. the contract sum of $63,600 an amount of $12,000 already paid, an amount of $17,042 for material supplied by Sunlighting (presumably in lieu of material which should under the contract have been supplied  by Precision) and an amount of $23,197-90 representing outstanding items of work and labour necessary to have completed the contract.	He found a balance owing of
$11,360-10 and he made the following determination:-

"(a) Sunlight to pay to Precision Fabrication the balance of Eleven Thousand, Three Hundred and Sixty Dollars and Ten Cents ($11,360-10) within fourteen days (24/2/86).

(b) Upon payment of the said sum by Sunlighting to Precision Fabrication, Precision Fabrication will deliver steel held at their premises to Sunlighting at no cost to Sunlighting."

Although neither party has raised this matter in argument before me there is no doubt that the expression "will deliver steel held at their premises" is ambiguous and inexact.	Precision might well have a great deal of steel at its premises which would not be connected with any dispute between itself and Sunlighting.	It is plain, however, that the arbitrator was summarising clause l(b) of the
Arbitration Agreement, and in that context and on the basis of McCardie J.'s observation in Selby v Whitbread & Co (1917) 1 K.B. 736 at 748 that "the Court should approach an award with a desire to support rather than destroy it", I would have no hesitation in concluding that what was meant

by the expression "steel" was "all steel and ether materials supplied by Sunlighting or Precision Fabrication pursuant to the said agreement" which was held at Precision's premises.

In fact the arbitrator discharged his function and his only function within his first finding, i.e., the finding of the amount that was due from Sunlighting to Precision.	That was all that he was asked to do.	Clause 2 refers to "all questions and matters in difference between the parties as to the value of work and materials supplied by Precision Fabrication pursuant to the agreement".	After that, clause l(a) operated automatically; although the arbitrator did the sum for the parties.	Clause l(a) provided that Sunlighting would pay Precision, "the balance (if any) of the value of work done and materials supplied within 14 days of the amount being determined by the
arbitrator."	So the arbitrator was not really required to
go further than determine the amount because clauses l(a) and l(b) governed subsequent events.

The arbitrator stated in his finding that his assessment was based on:-

Assessment of current documents

Inspection of steel currently stored at Tait Place
Investigation of current costing of outstanding supply items.

1 can see nothing on the face of the documents before me to suggest that he acted incorrectly or improperly in this exercise despite the allegations now made by Sunlighting of "material mistakes and miscalculations".

He then made his assessment of amount.	His second direction was unnecessary and indeed beyond what he was asked to do.	The first direction was also strictly unnecessary insofar as it required Sunlighting to pay
$11,360-10 within 14 days, because that was already provided in the agreement.	All that the arbitrator was asked to do was find the value of the work done and materials supplied. There are cases which allow the Court in appropriate circumstances to sever the irrelevant parts from the arbitrator's determination.	See Manser v Heaver (1832) 3 B & Ad. 296; Stone v Phillips (1837) 4 Bing. (N.C.) 37 (per Coltman J. at p. 41); Re an Arbitration between Bailey & Hart (1883) 9 V.L.R. (L) 311.	In Aitcheson v Cargey (1824)
2 Bing 199 Best C.J. said at p. 204:

"It has been urged that the arbitrators have exceeded their authority in disposing of costs over which they had no control.	If that be so, it is an excess which does not vitiate the whole award: it is simply a decision on a matter not regularly before the arbitrators, and to that extent may be considered a nullity; but the rest of the award remains unimpeached.'

Once it is understood - in the light of the terms of the Arbitration Agreement - that the "Award" in the

context of this agreement is that the balance cf the value of the work acd materials supplied by Precision is
$11,360-10, the question is whether the Court should give leave, pursuant to s. 33(1) of the Commercial Arbitration Act that the award be enforced in the same manner as a judgment or order of the Court.		This is what Precision, in its summons dated 14 April 1987, has asked the Court to do. If the argument of Counsel for Precision were to prevail, the respective rights of action of the parties within the scope of the dispute to which the arbitration applies would become merged in the judgment.	Russell on Arbitration, 19th Edition - pp. 339-402.

Sunlighting raises two separate objections to the Court granting leave at this stage to enforce the award as a judgment.	One of these relates to the conduct of the arbitration itself; the other refers to events occurring after the award was made.

The first of these can be easily disposed of.	By affidavit sworn 29 April 1987 Mr Bayram, a Director of Sunlighting says that he intends to apply to the Court pursuant to s. 30 of the Act for tte award to be corrected. No such application has yet been made, although claims were made by Sunlighting's solicitor by a telex of 18 June 1986 that various items of steel which it was alleged Precision should have supplied Sunlighting were missing and that the

painting work dcne by Precision was defective.	By paragraph
18 of his affidavit, Mr Bayrarn states his belief that the award contains

"the following clerical mistakes, or material miscalculations:-

(a)

(b)

( C)

Under-estimate of the number of chen,sets required to complete the buildina

the first that the painting of the steel required complete re-rustproofing, not just touch-up, and

Under-estimate of the steel actually capable of delivery by the applicant."

The only other facts or allegations which Mr Bayram has so far put forward in his affidavit to support this contention appear in paragraphs 8 {and possibly 9) of his affidavit where he makes the bald statement that more chemsets and bolts were required for the building than allowed by the arbitrator.

Since no application has been made pursuant to
s. 30 I am unable to see in the circumstances of this case why I should delay the claim of Precision purely on a belief deposed to by a Director of Sunlighting and an announced intention to do something in the future.

I should also add that Mr Mccourt, a Director of Precision, has in his affidavit sworn 7 May 1987 specifically dealt with the matters raised by Mr Bayram.

It is possible, no doubt, that some material may have been put forward which would, in a proper application, be material upon which the Court could make an order correcting the award pursuant to s. 30; but all I can say is that no such material presently appears before me.	Nothing in the nature of a clerical mistake, an error arising from an accidental slip or omission, a material miscalculation of figures, a material mistake in description or a defect in form (and I have cited the categories set out ins. 30 under which correction can be made), appears on the face of the award or other other documents exhibited in the affidavits. In the circumstances I see no reason why I should automatically assume that Sunlighting has some sort of claim for correction of the award merely because a Director of that company says he believes sc.	Section 28 of the Act says that -

"Unless a contrary intention is expressed in an arbitration agreement, the award made by the arbitrator or umpire shall, subject to this Act, be final and binding on the parties to the agreement."

The award in the limited sense I have found it to be, namely a determination that a sum of money is owing from Sunlighting to Precision is in my view final and binding.

The second objection to granting leave pursuant to
s. 33(1) is based on events subse uent to the award.	It has to do with a dispute which has arisen between the parties as

to whether paragraph l(b) of the arbitration agreerrent has been carried out.	It is true that the arbitrator purported tc deal with this by providing that upon payment of
$11,360-10 by Sunlighting to Precision, Precision should deliver steel held at its premises to Sunlighting.	But, as I have already pointed out this was otiose to the award because it is part of the broader agreement between the parties as to what will occur after the award.	The agreement clearly contemplates three steps in chronological order: first the making of the award; second, the payment of the amount (if any) found by the arbitrator to be owing; thirdly, the delivery by Precision to Sunlighting of steel and other materials.	The completion of all three steps will constitute accord and satisfaction.	The arbitrator is concerned only with the first step.

Indeed clause l(b) may be said to go further than the arbitrator's direction in any case, since it refers to
.all steel and other materials supplied, whereas the arbitrator's purported directions refer only to steel held at Precision's prerr.ises.	There may be no practical difference but it serves to emphasise that the agreement really deals with two separate matters, namely the award, and what is to follow after the making of the award.

What has now occurred is a dispute of fact.
Precision says it has delivered all the steel supplied

pursuant to the origin2l contract.	Sur.lighting says it has not.	That has nothing to do with the award.	It has tc do with the agreement.	The confusion has occurred by both parties treating this dispute as appertaining to the award. It does not.

This confusion arose almost immediately when Sunlighting's solicitors wrote to Precision's solicitors and said they had $11,500-00 ready to pay Precision "immediately all steel is delivered to our client's site".		By doing this Sunlighting was really purporting to vary the terms of the agreement unilaterally because the agreement provided that the amount (of $11,360 rather than $11,500) having been determined was to be paid within 14 days.	That payment was not dependent on the delivery of the steel.	Sunlighting's solicitors prudently suggested that there be a joint count of the steel and the value of any shortages deducted from the funds held by them.	That was another unilateral variation of the agreement.	But no-one questioned it then. Steel was delivered by Precision; but not at a time when any officer of Sunlighting was present.	No mutual count was taken.	Each side blames the other for that.		Precision says it delivered all the steel it had to under the agreement.
Sunlighting denies that.	The issue is perfectly simple, though I expect it will take a great deal of tedious and detailed evidence to resolve if it has to be resolved.	But it is not something which can be returned to the arbitrator

unless under a new arbitration agreement or by Court Order pursuant to s. 43.	He is otherwise functus officio.
Sutherland & Co. v Hannevig Bros. Ltd. (1921) 1 K.B. 336;
Re Stringer &   Riley Brothers (1901) 1 Q.B. 105.	In the latter case the matter was remitted pursuant to the United Kingdom equivalent of s. 43 because the arbitrator did not in his first award deal with the matters really in dispute. That cannot be said here.	The arbitrator did what he was asked to do.	To remit this matter to him is to ask him an entirely different question.	See Crane v Hegeman-Harris Co.
Inc. (1939) 4 All E.R. 68.	It does not seem an appropriate
course for the Court to take in these circumstances.	That, however, does not preclude the parties, if they wish, to determine this factual question by a fresh arbitration.

Should the Court therefore give leave under s. 33(1) of the Commercial Arbitration Act for the summary enforcement of the award?	Since the award is only part of the agreement and only the first step in an agreement, which otherwise determines the obligations of the parties, this dces not seem the proper course to take.

S. 33(1) of the Northern Territory Commercial Arbitration Act is in the same terms ass. 26 of the English Arbitration Act and provides a method of summary enforcement of awards by leave of the Court.	(See Russell on Arbitration - 19th Edition - pp. 400-403).	In, In Re

,•
Boks & Co & Peters Rushton & Co. Limited (1919) 1 K.B. 491 the Court of Appeal held that where there are matters which gravely affect the validity of the award or the right to proceed under it it is proper that they should be dealt with by an action in which the facts can be fully ascertained and no order under the section should be made giving leave to proceed summarily with the award.	(See per Swinfen Eady
M.R. at 496-497).	Scrutton L.J. added that "the summary method of enforcing awards is only to be used in reasonably clear cases" (P.497).

However, in Middlemiss & Gould v Hartlepool Corporation (1973) 1 All E.R. 172, the Court of Appeal took a much wider view of this provision than was taken in
Re Boks v Peters Rushton & Co. Ltd. and was of the opinion that leave to enforce an award should only be refused where there was a real ground for doubting its validity.

Denning M.R. at p. 175 said:

"	Once an award has been made - and not challenged in the court - it should be entered as a judgrnent and given effect accordingly.	It should not be held up because the losing party says he wants to argue some point or other or wants to set up a counterclaim or anything of what sort.	Re would not be allowed to do so in the case of a judgment not appealed from.	Nor should he do so in the case of an award that he has not challenged.		I am in agreement with what Diplock J. said in Margulies Brothers Ltd v Dafnis Thomaides & Co. (UK) I,td:
'It would be contrary to the purpose of

s. 26 of the Arbitration Act, 1950, if, in a case where the validity of the award and the right to proceed on it is beyond doubt, it should be given less effect than a judgment,'

In this case the judge was impressed by Re Boks & Co and Peters, Rushton &   Co Ltd.	But in that case the validity of the award was doubtful - very doubtful I would say because of the illegality of the whole transaction.	Naturally enough, no leave was given.		But I think that Scrutton L.J. went a good deal too far.		He said that 'this summary method of enforcing awards is only to be used in reasonably clear cases.'		I would put it just the opposite.	I would say that it is to be used in nearly all cases.	Leave should be given to enforce the award as a judgment unless there is real ground for doubting the validity of the award."

See also the remarks of Edmund Davies L.J. at p. 176.

Unfortunately perhaps for Precision the award here does not conclude the dispute.	That is governed by the agreement which says that once the award has been made there must be payment of the amount awarded (clause l(a)) and delivery of the steel and other materials (clause l(b)) before there can be discharge and mutual release of claims (clause l(c)).	It must be remembered that clause l commences witJo the words that "the parties agree to determine the said agreement dated 18 August 1985 on the following terms".

It is of course true that the payment of the amount awarded comes before the delivery of the steel and to that extent Sunlighting can be said to be in breach cf contract as to clause l(a).	But the contract is not complete until

the steel is also delivered; and there appears to be a bona fide dispute about that.	The arbitrator's powers were to determine the amount owing but not to order payment.	That was left to the agreement.		The arbitrator exceeded his powers in going beyond clause 2 which sought the mere determination of what was owing.	In Rahcassi Shipping Co.
S.A. v Blue Star Line Limited (1969) 1 K.B. 173 at 190 Roskill J. said:-

"An arbitrator derives his power in the following way.	The contract from which his appointment derives is not, of course, in the first instance a contract of which he is a party.	The contract is a ccntract between between his principals and the other disputing party.	But those two parties have agreed in the arbitration clause how disputes will be resolved."

It is very tempting to take a pragmatic approach and give leave to enforce the award so far as payment is concerned and leave Sunlighting to bring such claims as it may make under clause l(b) for non-delivery.	But that would be, in effect, to enforce part of the agreement only; and since both parties are claiming breaches of the agreement it would be an incomplete determination, and would leave unresolved the ultimate question of whether there is or is not already a concluded discharge and release of all obligations.	To paraphrase the words of Diplock J. in Margulies Brothers Ltd v Dafnis Thomaides & Co. U.K. Ltd. (1958) 1 All E.R. 777 at 782 the right to proceed on the award is not beyond doubt in the sense that the award here

' .
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resolves only part of the agreement between the parties.	In
the above case Diplock J. felt justified in remitting the award because it could be amended to a form in which it could be enforced as a judgment.	That is not the case here, where the agreement determines the method of enforcement.
Agreeing with respect with all that Lord Denning has said in Middlemiss, that the summary procedure should be used in nearly all cases I am reluctantly of the opinion that this is an exceptional case where the cautions pronounced in
Re Boks must apply and it is proper that this matter be dealt with by action under the agreement where the facts can be fully ascertained.

This is not to say that I treat the arbitrator here as a "mere valuer".	In re Dawdy (1885) 15 Q.B.D. 426; In re Carus-Wilson &   Green (1887) 18 Q.B.D. 7.	In the latter case Lord Esher M.R. said at p.9:-

"The question here is, whether the umpire was merely a valuer substituted for the valuers originally appointed by the parties in a certain event or an arbitrator.	If it appears from the terms of the agreement by which a matter is submitted to a person's decision, that the intention of the parties was that he should hold an inquiry in the nature of a judicial inquiry, and hear the respective cases of the parties, and decide upon evidence laid before him, then the case is one of an arbitration.		The intention in such cases is that there shall be a judicial inquiry worked out in a judicial manner.	On the other hand, there are cases in which a person is appointed to ascertain some matter for the purpose of preventing differences from arising, not of settling them when they have arisen, and where the case is not one of arbitration but of a mere valuation.	There may be cases of an intermediate

kind, where, though a person is appointed to settle disputes that have arisen, still it is not intended that he shall be bound to hear evidence or arguments.	In such cases it may be often difficult to say whether he is intended to be an arbitrator or to exercise some function other than that of an arbitrator.		Such cases must be determined each according to its particular circumstances."

The circumstances cf this case are that a decision was made upon materials placed before a person asked to settle a dispute, and he inspected, assessed and investigated.	In other words he substantially acted as an arbitrator and his award is in my view a final award of that particular dispute within the meaning of s. 28 of the Act.
The fact that his award did not determine all questions arising under the arbitration agreement was due to the wording of the agreement which in my view was an agreement in two parts; one of which sought arbitration and an award; the other of which sought a determination of the dispute requiring the parties to do certain things as a result of the award.

In the event leave to enforce the award must be refused and the parties left to their rights under the agreement.

The summons is dismissed.	The plaintiff to pay the costs of these proceedings to be taxed in default of agreement.