Fiji Roads Authority v Stantec New Zealand Ltd [2019] FJHC 736; HBC227.2017 (26 July 2019)

IN THE HIGH COURT OF FIJI AT SUVA

CIVIL JURISDICTION

Civil Action No. 227 of 2017

BETWEEN

FIJI ROADS AUTHORITY a statutory body established under the

Fiji Roads Authority Decree No. 2 of 2012 as amended, of Fiji

Development Bank Building. Level 4, 360

Victoria Parade, Suva, Fiji.

PLAINTIFF

AND

STANTEC NEW ZEALAND LIMITED (NZBN 9429040356297) a company

incorporated in New Zealand and having its place of business at

Kadavu House, Level 2, 414 Victoria Parade,

Suva and having a Local Agent MWH.

FIRST DEFENDANT

AND

MICHAEL STEPHEN RUDGE of B 41/10 Ebor Street, Te Aro, Wellington,

New Zealand.

SECOND DEFENDANT

AND

BRUCE BUXTON of 324 Brighton Road, Waldronville, Dunedin, 9018,

New Zealand.

THIRD DEFENDANT

AND

ANDREW MACNIVEN CASELEY of Apartment li, Montreaux Apartment,

164 The Terrace, Welington, New Zealand.

FOURTH DEFENDANT

Counsel : Mr. Sharma D. with Mr. Deo for the plaintiff.

Mr. Salmon D. with Mr. Bulock & Ms. Low P for the

Defendants.

Date of Hearing : 01^st July, 2019

Date of Ruling : 26^th July, 2019

RULING

(On the application for leave to appeal and stay pending appeal)

[1] The government entered into an agreement with the 1^st defendant which was known at that time as MWH New Zealand Limited to give effect to the purposes of the Fiji Roads Authority on 27^th January 2012. On 23^rd September the 1^st defendant terminated the agreement.

[2] The plaintiff instituted these proceedings against the defendants seeking the following reliefs:

1. A declaration that the 1^st defendant unlawfully terminated the agreement.
2. A declaration pursuant to section 147 of the Commerce Commission Act 2010 that the agreement was void in whole or in part.
3. Return to the plaintiff of such amount found to have been excessively claimed and received by the 1^st defendant.

4. On the alternative, damages on or any or all of the following basis:

1. for fraudulent misrepresentation;
2. under section 146(1) of the Commerce Commission Act 2010; and
3. under section 147(1) of the Commerce Commission Act 2010.

[3] The defendants 12^th September, 2017 filed summons seeking the following orders:

1. The proceeding be stayed, pursuant to section 5 of the Arbitration Act, alternatively pursuant to inherent jurisdiction of the High Court.
2. In the alternative to Order1, the proceedings be stayed until after determination of Civil Action No. 324 of 2016 pursuant to Order 4 of the High Court Rules 1988, alternatively pursuant to the inherent jurisdiction of the High Court.
3. Costs.

[4] On 08^th December, 2017 the defendants filed another summons seeking leave to amend the summons for stay by adding the following prayer:

The proceedings be stayed and/or referred to arbitration, pursuant to section 12 of the International Arbitration Act [No. 44 of 2017], alternatively pursuant to the inherent jurisdiction of the High Court.

[5] The court on 01^st March, 2019 refused the orders sought by the defendants in the above summonses and the defendant on 13^th March, 2019 filed two summonses seeking leave to appeal the judgment of this court and to have the execution of the judgment stayed until the hearing and determination of the appeal.

[6] The defendant sought leave to appeal the said decision of this court on the following grounds:

1. The Learned Judge erred in law and fact in failing to refer to, and give effect to, clause 10.3 of the Agreement, which provides:

“10.3 Neither party may commence any other dispute resolution or legal proceedings with the exception of an application for an injunction for urgent relief until and unless the mediation process has been completed and the parties have failed to reach an agreement in settlement of the dispute. This application shall be made in the High Court of Fiji. “

2. The Learned Judge erred in law and fact in holding that, “there is no absolute requirement for the parties to refer any dispute for mediation or arbitration” (at [6]) when in fact clause 10.3 makes reference to mediation, and completion of the medication process, a mandatory precondition to the commencement of any other dispute resolution or legal proceeding (including in the High Court of Fiji, save for urgent relief).
3. The Learned Judge recognized that medication “has to be done of consent”(at[7]) but erred in law and fact by failing to recognized that:
   1. In clauses 10.2 and 10.3 of their Agreement the parties have consented to mediation;
   2. In clause 10.3 of the Agreement the parties have, by consent, made completion of the mediation a mandatory precondition to the commencement of any other dispute resolution or legal proceedings;
   100. Stantec has referred the dispute to mediation in accordance with the parties’ agreement, but the FRA has refused to facilitate the appointment of a mediator and has in fact obstructed that process;
   4. The FRA has filed HBC 227 of 2017 in breach of clause 10.3 of the Agreement because the mediation process has not been completed (or even initiated).
4. The Learned Judge erred in law and fact in finding that the word “may” in clause 10.2 and 10.4 means that “the court has no power to compel the parties refer a dispute for arbitration”(at[7]);
5. The Learned Judge erred in law and fact in refusing to grant a stay under the Arbitration Act [Cap 38], when:
   1. In clause 10.3 of the Agreement the parties agreed that they would not commence any legal proceedings until and unless the mediation process has been completed;
   2. The proceeding in HBC 227/2017 was filed before the mediation process has been completed and the mediation process has not been completed or even initiated;
   100. The proceedings should be stayed in order to enable the mediation process to be completed and then to enable either of the parties to elect to refer the dispute to arbitration.
6. The Learned Judge erred in law and fact in refusing to grant a stay under its inherent jurisdiction, when:
   1. In clause 10.3 of the Agreement the parties agreed that they would not commence bay legal proceedings until and unless the mediation process has been completed;
   2. The proceeding in HBC 227/2017 was filed before the mediation process has been completed and the mediation process has not been completed or even initiated;
   100. The proceeding should be stayed because it has been filed in breach of the parties’ agreement, and in order to enable the mediation process to be completed and then to enable either of the parties to elect to refer the dispute to arbitration.

[7] Section 12(2)(f) of the Court of Appeal Act provides that no appeal shall lie without the leave of the judge or of the Court of Appeal from any interlocutory order or interlocutory judgment made or given by a judge of the Supreme Court, except in the following cases, namely:-

(i) where the liberty of the subject or the custody of infants is concerned;
(ii) where an injunction or the appointment of a receiver is granted or refused;
(iii) in the case of a decision determining the claim of any creditor or the liability of any contributory or the liability of any director or other officer under the Companies Act in respect of misfeasance or otherwise; (Cap. 247.)
(iv) in the case of a decree nisi in a matrimonial cause or judgment or order in an Admiralty action determining liability;
(v) in such other cases as may be prescribed by rules of Court.

[8] On the question of whether the leave should be granted or not both parties relied on the decision in Khan v Suva City Council [2011] FJHC 272; HBC406.2008 (13 May 2011) where it was held:

It is trite law that leave will not generally be granted from an interlocutory order unless the Court sees that substantial injustice will be done to the applicant.

Further, in an application for leave to appeal, it is incumbent on the applicant to show that the intended appeal will have some realistic prospect of succeeding.

The court also made the following observations:

The Court's approach to interfere with interlocutory orders is succinctly stated by Tikaram J in Kelton Iinvestments Ltd & Tapoo Ltd and ...Civil Appeal No. ABU 0034 of 1995 as follows:

'The Courts have thrown their weight against appeals from interlocutory orders or decisions for very good reasons and hence leave to appeal are not readily given.

Again in Totis Inc. Sport (Fiji) Ltd & Another v. John Leonard Clark & Another, FCA No. 35 of1996 Tikaram J stated as follows:

'It has been long settled law and practice that interlocutory orders and decisions will seldom be amenable to appeal. Courts have repeatedly emphasized that appeals against interlocutory orders and decisions will only rarely succeed. The Fiji Court of Appeal has consistently observed the above principles by granting leave only in the most exceptional circumstances.'

[9] The learned counsel for the defendants submits that the order sought to be appealed will cause the 1^st defendant a substantial injustice for following reasons:

(a) Stantec agreed to a contract with the FRA which contained a mandatory dispute resolution procedure, included mediation followed by arbitration under the rules of the International Chamber of Commerce;
(b) Stantec entered in to the contract in good faith and in the expectation that the mandatory dispute resolution clauses would have the same binding effect given to such clauses in commercial contract all over the world;;
(c) The reason that mandatory mediation and arbitration are common in commercial contracts all over the world – especially between overseas companies and governments – is that they provide a mechanism for dispute resolution that is jurisdictionally either of the contracting parties;
(d) The order made by the Honourable Justice Mr Seneviratne on 1 March 2019 would require Stantec would require Stantec to proceed to have the dispute heard and determined in the Fiji courts, despite the parties’ agreement to do otherwise, and Stantec desire to have the disputes mediated and arbitrated in accordance with the contract; and
(e) The order made by Honourable Justice Mr Seneviratne on 1 March 2019 effectively validates breaches of contract by the FRA in refusing to follow the dispute resolution procedure agreed by the parties in Clauses 10.1 to 10.4 of the contract.

[10] Clauses 10.1, 10.2 and 10.4 of the agreement provides as follows;

10.1 In the event that any dispute or difference of any kind between the parties in connection with or arising out of this agreement arises (“Dispute”), the parties will attempt in good faith to settle such dispute by mutual discussion between the chief executive officers of each party held within 20 business days (or 10 business days if the Dispute relates to an invoice) after the date that the disputing party gives notice of the dispute to the other party identifying the dispute in reasonable detail and requesting consultations between the parties to resolve the Dispute.

10.2 If, at the end of such 20 business day (or, 10 business day) period, the Dispute is not resolved, either party may submit the Dispute for mediation. If the parties cannot agree a mediator within 5 business days of the submission of the dispute for mediation, a mediator will be chosen by the Chief Justice of Fiji. The mediator shall fix the time, place and procedure for mediation but in any event, the mediation shall commence within 10 business days of appointment of the mediator.

10.3 Neither party may commence any other dispute resolution or legal proceedings with the exception of an application for an injunction or urgent relief until and unless the mediation process has been completed and the parties have failed to reach an agreement in settlement of the dispute. This application shall be made in the High Court of Fiji.

10.4 If the dispute cannot be resolved within 15 business days of the commencement of mediation (or within any extended time agreed to in writing between the parties), the mediation shall cease and either party may submit the Dispute for Arbitration in accordance with the then existing rules and regulations of the Rules of conciliation and the Arbitration of the International Chamber of Commerce. Judgment upon the Arbitrator’s award shall be final and binding and may be enforced by any court of competent jurisdiction. The prevailing party in any action arising under this Contract shall be entitled to its costs of litigation, including reasonable legal fees.

[11] The main issue for determination in this application is whether the word “may” used in the agreement makes it compulsory for the parties to refer the dispute for arbitration or it is discretionary.

[12] The learned counsel for the defendants submits that the above clauses are mandatory and the parties are bound to refer the dispute for arbitration and in support of his argument the learned counsel cited the decision in Anzen Ltd v Herms One Ltd [2016] UKPC 1.

[14] In Anzen’s case the Privy Council held that the language of clause was permissive, leaving open to one party to commence litigation, but giving the other parties the option of submitting the dispute to binding arbitration, such option being exercisable (inter alia) applying for a stay.

[15] Section 5 of the Arbitration Act Provides:

If any party to a submission, or any person claiming through or under him, commences any legal proceedings in any court against any other party to the submission, or any other person claiming through or under him, in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings, and that court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings. (Emphasis added)

[16] From the provisions of section 5 of the Arbitration Act and the decision in Anzen’s case cited by the learned counsel for the defendants it is clear that before seeking the stay of proceedings pending arbitration the party who intends to resolve the matter by arbitration must first refer the dispute to arbitration. Section 5 of the Arbitration Act does not empower the court to stay the proceedings expecting the parties to refer the matter to arbitration.

[17] Section 5 of the Arbitration Act only confers a discretion on the court to stay proceedings one a dispute is referred to arbitration. It does not confer power on the court to compel the parties refer a dispute to arbitration.

[18] In the agreement between the parties like in many other contracts the word “shall” and “may” have been used. In clause 10 also the word “shall” has been used to indicate that those closes are mandatory and not directory. In interpreting the contract the court must give effect to the intention of the parties to the contract.

[19] The modern approach to the interpretation of contracts is neatly encapsulated in the speech of Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896 at 912-913.

(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax. (see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] UKHL 19; [1997] AC 749, [1997] 2 W.L.R. 945)
(5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in The Antaios Compania Neviera S.A. v. Salen Rederierna A.B. [1985] A.C. 191, 201:

". . . if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense."

[20] If the parties intended to make it imperative to refer disputes to arbitration they could have clearly indicated their intention in the agreement.

[21] Arbitration and mediation, as we all know, are processes of alternative dispute resolution which are considered expeditious and cost effective. Any referral to arbitration or mediation must be of consent of the parties and one party cannot compel the other party to refer a dispute to arbitration or mediation. In section 5 of the Arbitration Act it says that the referral must be done with consent of both parties.

[22] The learned counsel for the plaintiff submits that the orders sought in the statement of claim cannot be granted by an arbitrator. The orders sought in the statement of claim are as follows:

1. A declaration that the 1^st defendant unlawfully terminated the agreement.
2. A declaration pursuant to section 147 of the Commerce Commission Act that the agreement was void in whole or in part.
3. Return to the plaintiff of such amount found to have been excessively claimed and received by the 1^st defendant.

4) In the alternative, damages on any or all of the following basis:

1. for fraudulent misrepresentation;
2. under section 146(1) of the Commerce Commission Act 2010; and
3. under section 147(1) ) of the Commerce Commission Act 2010.

[23] The claims of the plaintiff is based mainly on the provisions of the Commerce Commission Act 2010 and the 2^nd relief prayed for is based on the interpretation of the terms of the agreement which has to be done by the High Court and not by an arbitrator.

[24] The learned counsel for the plaintiff raised an objection to application for stay pending appeal on the ground that it has been brought under the wrong provision of the High Court Rules 1988. This application was made by the defendants pursuant to Order 59 rule 11 of the High court Rules 1988 which provides that any application for leave to appeal an interlocutory order or judgment shall be made by summons with a supporting affidavit and served within 14 days of the delivery of the order or the judgment.

[25] Order 59 of the High Court Rules 1988 deals with the proceedings before the Master of the High Court and appeals from the decisions of the Master of the High Court. Order 59 rule 8 to Order 59 rule 21 makes provisions for the procedure to be followed in appeals from the decisions of the Master of the High Court.

[26] The procedure to be followed in applications for leave to appeal from the decisions of the High Court is found in Rule 26 of the Court Appeal Rules which provides:

(1) Every application to a judge of the Court of Appeal shall be by summons in chambers, and the provisions of the Supreme Court Rules shall apply thereto.
(2) Any application to the Court of Appeal for leave to appeal (whether made before or after the expiration of the time for appealing) shall be made on notice to the party or parties affected.
(3) Wherever under these Rules an application may be made either to the Court below or to the Court of Appeal it shall be made in the first instance to the Court below.

[27] The court is therefore, of the view that the procedure followed in bringing this application for leave to appeal is incorrect.

[28] The learned counsel for the defendants submitted that the provisions governing the applications for leave to appeal to the Court of Appeal are found in Order 59 rule 11 of the High Court Rules 1988 and the Court of Appeal Rules are only applicable to the matters before the Court of Appeal which is a total misconception.

ORDERS OF THE COURT

1. The application for leave to appeal is refused.
2. The defendants are ordered to pay the plaintiff $2000.00 as costs of this application.
   

Lyone Seneviratne

JUDGE

26^th July, 2019.