Blacktown City Council v Statewide Civil Pty Ltd

By Summons filed on 9 September 2025, the Plaintiff, Blacktown City Council (the Council), commenced proceedings against Statewide Civil Pty Ltd (Statewide) seeking, inter alia:

The award resulted from findings by the Arbitrator of various defects in the construction of a tennis court complex owned by the Council (the Tennis Court Complex).

The claim was originally commenced in the Supreme Court and included a related claim against architects in relation to the design of the Tennis Court Complex. The Supreme Court proceedings against Statewide were stayed in favour of arbitration on Statewide’s application. The combined effect of cl 42.3 and item 32(b) of the Building Contract made on or about 28 January 2015 was that the arbitration was required to be conducted in accordance with Rules 5-18 of the Institute of Arbitrators & Mediators Australia, Rules for the Conduct of Commercial Arbitrations (the Rules).

Rule 10 of the Rules provides:

Rule 13.1 provides:

Rule 14.3 provides:

Statewide resists the enforcement of the Award under s 36(1)(b)(ii) and/or s 36(1)(a)(ii) of the Act on the basis that it was denied procedural fairness and or that the Arbitrator breached s 18 of the Act and that, to enforce the Award would be contrary to public policy. Section 18 requires that “the parties must be treated with equality and each party must be given a reasonable opportunity of presenting the party’s case.”

The essence of Statewide’s complaint is not that it was not heard on a particular issue or issues but that, prior to final submissions, the Arbitrator raised with the parties an alternative (and likely cheaper) means of rectifying defects in the Tennis Court Complex than that which had originally been advocated for by the Council. The Council had led evidence and put its case on the basis that the entire Tennis Court Complex needed to be dug up and replaced at a cost of in excess of $5 million.

Following the cross examination of both sides’ expert engineers, the Arbitrator, himself a structural engineer, formally raised with the parties that he would be assisted by further evidence relating to the method of rectification and cost of that alternative method.

The Arbitrator properly raised this possibility with both parties and heard argument from their counsel in relation to his proposed course. He published, if I might say so with respect, very clear reasons for his decision to call for further evidence and then, when Statewide asked him to review and revisit his decision, he did so, having heard further argument from both sides, and published further reasons.

That decision and those reasons led to a timetable by reference to which both sides were permitted to and did put on further evidence and made further submissions. As a result of that further evidence, the Arbitrator made an award of $835,854 (as opposed to the $5.25 million which the Council had originally claimed).

The nub of Statewide’s complaint is that it was procedurally unfair for the Arbitrator in effect to give the Council a “second chance” to state and quantify its case at a time when the evidence had otherwise been led and the Arbitrator had only been presented with a case that contemplated one form of remediation.

Although it was properly conceded that the Arbitrator had the power to call for further evidence and submissions on an issue, it was contended that doing so constituted unequal treatment of the parties within the meaning, and in breach, of s 18 of the Act in the circumstances of the case.

I disagree with Statewide’s argument and with its ultimate contention that to enforce the Award would be contrary to public policy or result in practical injustice to it.

The Arbitrator had a very broad discretion under Rule 13.1 of the Rules, subject to Rule 10, to “make such directions or rulings in respect of procedural and evidentiary matters as he or she sees fit” and was animated by the paramount object of the Act as stated in s 1C(1), namely to “facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense.” Moreover, as will be seen below, the authorities contemplate that an arbitrator may have a thought or opinion in relation to the resolution of a matter that has not been raised by the parties. The authorities properly insist that the arbitrator must expose that thought or reasoning if he or she is to act upon it and give the parties a fair opportunity to lead evidence and or make submissions in relation to it. There is no suggestion that such a disclosure did not occur in the current case, but the key point of this line of authority is its premise, namely that, subject to any prohibition in the arbitration agreement or the governing rules, it is open to an arbitrator drawing upon his or her expertise or experience to introduce a new argument or approach not taken by either party in the course of resolving the parties’ dispute. That is what occurred in the present case.

By paragraphs 8-13 of its Points of Claim, the Council contended:

The loss and damages claimed included the costs of rectification as follows:

On the opening morning of the hearing, the Arbitrator said, perhaps somewhat delphically, in response to an inquiry as to whether he intended the parties to commence closing submissions the following day (Tuesday) or on Wednesday:

Mr Byrne, who appeared for Statewide, opened his case briefly as follows:

The Arbitrator then asked Mr Byrne a further series of questions:

The two engineering experts were Professor Bradford and Mr Hoare. Following the end of their cross examination on the second day of the hearing (Tuesday), the Arbitrator engaged counsel in the following way:

The “Mr Lowe” referred to was a quantity surveyor called by the Council who was not cross examined and whose evidence had been admitted, over objection but subject to weight, given his qualifications. The Arbitrator identified those parts of Professor Bradford and Mr Hoare’s evidence suggesting an alternative and less extreme means of rectification than that proposed by Mr Lowe at [7] of his reasons which are relevantly reproduced at [29] below.

The Arbitrator’s intervention continued:

The parties rapidly identified their respective positions. Thus, Mr Byrne said:

Following the extract from the transcript set out immediately above, Ms Ashworth for the Council sought to be heard, submitting:

After an adjournment for the parties to consider their positions further, both re-iterated their initial stances. Ms Ashworth said upon returning:

Mr Byrne said immediately afterwards:

Ms Ashworth’s short response was that:

The Arbitrator reserved his decision overnight and at 10:04am the following morning, on 1 November 2024, issued a detailed written ruling. After referring to Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14 at 15 (Zermalt); OAO Northern Shipping Co v Remolcadores De Marin SL [2007] 2 Lloyd’s Rep 302 (OAO); Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2018] QCA 39 at [24] (Mango Boulevard); UDP Holdings Pty Ltd v Esposito Holdings Pty Ltd (No 2) [2018] VSC 741 at [24] (UDP), the Arbitrator set out his position as follows:

The Arbitrator then noted Statewide’s opposition to the proposed course and proceeded to give his reasons for rejecting that position. These were expressed with admirable clarity at [12]-[13] of the ruling:

On 5 November, Statewide’s solicitors communicated with the Arbitrator advancing further submissions on the ruling allowing the admission of further evidence, asking him to reconsider his decision and reserving their position to challenge his award. The Arbitrator then sought any responsive submissions from the Council before providing a further ruling on 13 November 2024, confirming his earlier ruling and citing further authorities in support of his position, including Thomas Borthwick (Glasgow) Ltd v Faure Fairclough Ltd [1968] 1 Lloyd’s Rep 16 at 29 (Thomas Borthwick); Interbulk Ltd v Aiden Shipping Co Ltd (The Vimiera) [1984] 2 Lloyd’s Rep 66 at 75; and Morgan Grenfell (Local Authority Finance) Ltd v Seven Seas Dredging Ltd (1990) 49 BLR 31 at 56. At [13] of his reasons, the Arbitrator said:

The Arbitrator recounted this procedural history in [210]-[217] of his Award. He noted that the experts were further cross examined on their supplementary written evidence on the third day of the hearing and concluded at [219]-[220] that:

A succinct outline of Statewide’s challenge to enforcement, as well as the context giving rise to it, has been set out at [8]-[32] above.

As outlined above, Statewide contended that the recognition or enforcement of the Award would be contrary to the public policy of New South Wales and so recognition and enforcement should be refused pursuant to s 36(1)(b)(ii) of the Act. Public policy is a very narrow basis for rejecting the enforcement of a domestic or international arbitral award, usually confined to awards which violate fundamental principles of justice and morality, although it has been recognised that the enforcement of an award which was reached following a denial of procedural fairness may breach public policy.

“The weight of authority is clearly to give a narrow meaning to public policy” (TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd (2014) 232 FCR 361; [2014] FCAFC 83 at [77] (TCL Air Conditioning)) and, for an award to be set aside, “real unfairness or real practical injustice in how the [dispute] was conducted or resolved, by reference to established principles of natural justice or procedural fairness” must be established: at [55]. This familiar statement of principle was followed and applied in the context of the Act in Colin Joss & Co Pty Ltd v Cube Furniture Pty Ltd [2015] NSWSC 735 at [45] (Colin Joss).

Statewide also relied upon s 36(1)(a)(ii) which permits the Court to refuse to recognise or enforce an award if the party against whom the award is invoked was “unable to present its case”. Statewide sought to link s 18 of the Act to this discretionary basis for non-recognition and enforcement. Indeed, a breach of s 18 of the Act, which requires the equal treatment of both parties and that each party must be given a reasonable opportunity of presenting the party’s case, may result in an award being set aside either on the basis that a party is “unable to present its case”, or that the award is contrary to public policy: Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd [2016] VSC 326 (Amasya) at [35].

Mr Hicks SC, who appeared on behalf of Statewide in this Court, very candidly accepted that his challenge to the enforcement of the Award hinged on his contention that s 18 of the Act had been breached.

Before turning to consider s 18 of the Act in a little more detail, a number of important concessions made or matters not challenged should be recorded, as they form part of the broader context in which Statewide’s complaint of denial of procedural fairness falls to be considered:

As noted above, s 18 of the Act, headed “Equal treatment of parties”, provides that “[t]he parties must be treated with equality and each party must be given a reasonable opportunity of presenting the party’s case.” Section 18 was modified from the equivalent article 18 in the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) which requires that parties be given a “full” (rather than a “reasonable”) opportunity to present their case, although “full opportunity” in article 18 of the Model Law and “reasonable opportunity” in s 18 of the Act have been treated as imposing the same standard: Amasya at [28], citing Cameron Australasia Pty Ltd v AED Oil Ltd [2015] VSC 163 at [42] (Croft J); see also Trustees of Rotoaira Forest Trust v Attorney-General [1999] 2 NZLR 452 at 459.

In Lieschke v Lieschke [2023] NSWCA 241 at [22]; (2023) 415 ALR 531 (Lieschke), Beech-Jones JA (as his Honour then was) (with whom Leeming JA and Payne JA agreed) observed in relation to article 18 of the Model Rules:

Howard M Holtzmann and Joseph E Neuhaus in A Guide to the UNCITRAL Model Law on International Commercial Arbitration, Legislative History and Commentary (1989, Kluwer), state at 550:

The purpose of article 18 of the Model Law was stated by Lax J in the Ontario Supreme Court of Justice in Corporacion Transnacional de Inversiones S.A. de C.V. v. STET International S.p.A (1999) 45 OR (3d) 183 at 204 (Corporacion Transnacional) (affirmed on appeal in Corporacion Transnacional de Inversiones S.A. de C.V. v. STET International S.p.A. (2000) 49 OR (3d) 414). Lax J, in dismissing the application to set aside an award for a breach of article 18 of the Model Law, stated that:

In Dongwoo Mann+Hummel Co Ltd v Mann+Hummel GmbH [2008] 3 SLR(R) 871 at 892 (Dongwoo Mann), Chan Seng Onn J observed:

Statewide contended that it was not given a “reasonable opportunity of presenting its case” because its case that the Council had not come up to proof in relation to scope and cost of rectification (and thus should be confined to nominal damages) was effectively sidelined and “cut off at the pass” by the Arbitrator’s decision to call for and consider further evidence and submissions in relation to that issue.

A consequence of the procedural course taken by the Arbitrator was not a denial of procedural fairness in any recognisable sense: Statewide was not deprived of an opportunity to oppose the course suggested by the Arbitrator, namely to request further evidence (indeed it sought and was given two opportunities to do so), nor was it deprived of an opportunity to advance further evidence or to challenge the further evidence advanced by the Council. If the course taken by the Arbitrator was open to him, which it plainly was, and if that had the consequence that an argument Statewide once had was no longer as effective as it otherwise may have been had the Arbitrator not taken the course he did, that no doubt may have generated a certain sense of grievance in relation to the way the arbitration developed but that did not entail any denial of procedural fairness or amount to “egregious and injudicious conduct by” the Arbitrator so as to amount to a violation of s 18: Corporacion Transnacional at 204.

It should not be overlooked that, when the Arbitrator first raised the possibility of further evidence and submissions, although Mr Byrne sought to emphasise Statewide’s case that the Council was only entitled to nominal damages, he did implicitly concede that it was open to the Arbitrator to award other than nominal damages: “if you did want to give substantive damages …”: see [20] above.

Both sides accepted that the present case was closely analogous to the decision of the Queensland Supreme Court in Rainbow Builders Pty Ltd v State of Queensland [2020] QSC 25 (Rainbow). In that case, which also arose out of an underlying dispute over construction defects, Rainbow Builders resisted the enforcement of two arbitral awards issued in August and September of 2019 under s 36 of the Commercial Arbitration Act 2013 (Qld) (the Queensland Act) on the basis that the arbitrator, following the oral hearing, issued interim awards and then sought further evidence and submissions from the parties before issuing further and final awards, which allowed the State to repair lacunae in its evidence, including by issuing a supplementary report from its quantity surveyor.

Rainbow Builders resisted enforcement partly on the basis of s 18 of the Queensland Act, submitting that “it was wrong for the arbitrator to defer a decision on quantum of the counter-claim for rectification costs of the wet areas in order to give the State the opportunity to put in further evidence and submissions”. Jackson J held that:

Plainly matters of degree and the circumstances of every case must be considered: Dongwoo Mann at 892. Statewide sought to distinguish Rainbow on the basis that the issues in relation to which the arbitrator in that case allowed further evidence and submissions were relatively discrete, whilst the alternative rectification scheme pursued on the Arbitrator’s initiative in the present case went to the “entirety of the case that we were being brought to the arbitrator to answer”. I do not consider that that was a valid point of distinction. Indeed, Rainbow was a case where the two further evidentiary rounds permitted by the arbitrator occurred after a 75 page interim award had been issued. No relevant interim awards were issued in the present case.

Moreover, the course taken by the Arbitrator in the present case was well within his power, as Mr Hicks SC candidly accepted (see [38](i) above). Furthermore, it has been said that “[a] trade tribunal is fully entitled to use its own knowledge of the trade. Indeed the fact that it has this knowledge is one of the reasons why it exists and performs a most useful purpose”: Thomas Borthwick at 29.

The authorities recognise that an Arbitrator may raise a new point for the parties’ consideration but, as noted at [15] above, properly insist that the Arbitrator must expose that thought or reasoning if he or she is to act upon it and give the parties a fair opportunity to lead evidence and or make submissions in relation to it: see Mango Boulevard at [24]; UDP at [24], quoting Terna Bahrain Holding Co WLL v Al Shamsi [2012] EWHC 3283 (Comm), in which Popplewell J at [85](4) said that:

In OAO, Gloster J at [21] quoted the following passage from Zermalt at 15:

That the Arbitrator expressly and repeatedly complied with the requirements set out in these authorities is perhaps no surprise in light of the fact that he cited many of them in his two detailed awards allowing further evidence and submissions (see [29], [31] above).

In essence, Statewide’s complaint in the present case is that the Arbitrator exercised a power he undoubtedly had in the way he did. As with the arbitrator in Rainbow, however, this was not an instance of unequal treatment of the parties (although it had consequences for the outcome of the dispute) but was an example of an exercise of powers which the parties had conferred on the Arbitrator and also, in part, a function of the very nature of arbitration itself.

The nature and indeed essence of arbitration is that it has a degree of procedural flexibility to it where formalism is eschewed or at least not insisted upon so long as fairness and equality are supplied in the process: see TCL Air Conditioning at [110]. Informality is referred to in s 1C(2)(b) of the Act as one of the means by which the paramount object of the Act, the facilitation of “the fair and final resolution of commercial disputes” was to be achieved. As Rogers CJ Comm Div observed many years ago, the aims of arbitral procedure “to a large extent, are made impossible of achievement if the procedures of a court are mimicked … What is required is that the parties enjoy the benefits of natural justice consistently with the requirements of arbitrators for dispensing with technicalities”: Imperial Leatherware Co Pty Ltd v Macri & Marcellino Pty Ltd (1991) 22 NSWLR 653 at 666.

Whatever resonance Statewide’s submission that the Council should have been held to its case (and not permitted to lead further evidence) may have had in a case being litigated in the Commercial or Technology and Construction Lists, for example, (as to which see Fraser Lyne Constructions Pty Ltd v Waba [2025] NSWSC 600 (at [68] to [70]) and Atlanta Building Pty Ltd v Abela (No 3) [2025] NSWSC 730 (at [21])), arbitration is a more flexible creature where the arbitrator typically enjoys a large measure of procedural autonomy and flexibility including not only the right to call for further evidence but also to appoint his or her own expert to assist under Rule 14.3: see [6] above.

The flexibility and relative degree of autonomy afforded to arbitrators as to the manner in which an arbitration is conducted is reflected in the notion that, subject to agreements between the parties, “the tribunal is master of its own procedure” (David St. John Sutton, Judith Gill and Matthew Gearing, Russell on Arbitration (24th ed, 2015, Thomson Reuters), at p 512 [8-096]) and that “the procedure should be tailored to meet the demands of the case”: Andrew Tweeddale and Masood Ahmed, Arbitration of Commercial Disputes: English and International Law and Practice (2nd ed, 2025, Oxford University Press) at [1.14].

So also the observations of Hammerschlag J in Colin Joss at [47] should be noted:

The flexibility and relative degree of autonomy afforded to arbitrators is also reflected in the policy of “minimal curial intervention in arbitral proceedings” referred to by Menon CJ in AKN v ALC [2015] SGCA 18 at [37].

Another way Statewide put its case was to contend that what had in effect occurred was that the Council had been permitted to re-open its case, and this was said to amount to a denial of procedural fairness. That characterisation of the course of the arbitration was not apt. As noted above, it was the Arbitrator and not the Council who said that he would be assisted by further evidence and submissions on the scope and cost of rectification. Even if Statewide’s characterisation of a notional re-opening were adopted, such a decision fell within the discretion of the Arbitrator, and was arrived at after hearing from both parties in a way which was the antithesis of any denial of procedural fairness.

For these reasons, I reject Statewide’s contentions. The Arbitrator did not treat the parties unequally within the meaning of s 18 of the Act and there was no “real unfairness or real practical injustice” in how the dispute was conducted and resolved.

All other pre-conditions to enforcement of the Award under the Act being satisfied, I will make the following orders:

The Council also sought orders to preserve the confidentiality of a series of documents relating to the arbitration in light of the confidentiality regime established under the Act. In addition to those orders identified at [62] above, I would also make the following orders:

In Hancock v Hancock Prospecting Pty Limited [2022] NSWSC 724 at [62]; (2022) 402, Ball J (as his Honour then was) made similar orders in proceedings arising from a dispute referred to arbitration under the Act. His Honour observed at [62] that:

His Honour was not, however, prepared to make a suppression order in respect of his reasons for judgment, noting at [63] that:

I take the same view as his Honour noting in addition that the same underlying dispute is the subject of non-confidential proceedings in the Technology and Construction List as between the Council and the architects on the project who were not bound by any arbitration agreement, and the nature of the dispute in question including as between the Council and Statewide did not involve any intellectual property or trade secrets or highly personal or sensitive information that may otherwise attract a suppression order. Although the Council sought an interim order suppressing the reasons for judgment for 7 days and then contemplated a further confidentiality regime, I do not think such an order is warranted and that, in all the circumstances, it would be inconsistent with s 56 of the Civil Procedure Act 2006 (NSW).

Statewide was agnostic as to the making of the Interim Suppression Order as between it and the Council. It opposed any suppression order being made in respect of the reasons for judgment. I agree.