Drew v Towers Investments Pty Ltd [1973] PGSC 13; [1973] PNGLR 450 (15 September 1972)

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PRACTICE AND PROCEDURE - Step in proceedings - Endorsed consent to draft order - Arbitration clause - Application to stay proceedings - Arbitration Ordinance 1951, s. 8[dix]¹.

At the request of the solicitor for the plaintiff in an action for wrongful dismissal, the solicitor for the defendants endorsed his consent upon the draft of an order to be made upon the return of a summons for directions. Thereafter, the plaintiff’s solicitor attended before the Registrar and handed him the endorsed draft order, and the Registrar sealed an engrossed copy of the draft order without any alteration. The order so made provided for the delivery of the statement of claim, defence, reply, interrogatories and discovery. The defendants subsequently applied under s. 8 of the Arbitration Ordinance to have the proceedings stayed in order that the question at issue in the action might be submitted to arbitration, there being an arbitration clause in the contract of employment.

The defendants were not entitled to a stay of proceedings since, the endorsement of the consent on the draft order accompanied by the authority to present the draft order in that form to the Registrar constituted taking a “step in the proceedings” within the meaning of s. 8 of the Arbitration Ordinance.

The defendants sought a stay of proceedings pursuant to s. 8 of the Arbitration Ordinance 1951. The relevant facts, and the arguments of counsel, are set out in the judgment.

FROST SPJ: This is an application by all defendants except the first defendant for an order that the proceedings be stayed in order that the question at issue between the parties may be submitted to arbitration pursuant to a submission in an agreement between the parties. The application is brought pursuant to s. 8 of the Arbitration Ordinance 1951 which provides that if a party to a submission commences legal proceedings in any court against another party to the submission, in respect of the matter agreed to be referred, any party to these proceedings may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to that court to stay the proceedings.

The action was brought for damages for breach of contract made between the plaintiff and the defendants dated 20th May, 1970, whereby the defendants contracted to employ the plaintiff as a company secretary and accountant for the defendants. The defendants having duly appeared to the writ, on 1st August, 1972, the plaintiff took out a summons for directions for hearing before the Registrar on 8th August, 1972. On that day an order was made by consent by the Registrar, providing for the delivery of the statement of claim, defence, a reply and also that the plaintiff and the defendants be at liberty to deliver interrogatories and also for mutual discovery. The order thus enured for the benefit of both parties. The statement of claim was delivered also on 8th August, 1972, from which it appears that the cause of action is for damages for wrongful dismissal. The application is supported by affidavits from which it appears that the relevant words of the arbitration agreement are, “It is agreed as between the Group (i.e. the defendants) and Mr. Drew, that should any disagreement or dispute arise during the course of his employment, such disagreement or dispute be submitted to an independent arbitrator ...”.

Three questions have arisen in this application. The first is whether by reason of the action taken by the defendants upon the summons for directions they have “taken a step” in the proceedings, secondly, whether the arbitration clause was sufficient to cover the matters in dispute in the action, and thirdly, whether this is an appropriate case for the matter to be referred in accordance with the submission. The facts as to the making of the order for directions appear from the affidavit by the plaintiff’s solicitor, Mr. Andrews, who deposes that shortly before appearing before the Registrar, and acting in accordance with customary practice in such matters, he telephoned Mr. Train, a partner in the firm of solicitors for the defendants, that he then attended him in his office where in Mr. Andrews’ presence Mr. Train signed the foot of a draft order, under the words “I consent to the within order”. Shortly afterwards Mr. Andrews attended the office of the Registrar, handed to him the proposed order signed by Mr. Train and indicated that the plaintiff also agreed to the proposed order, whereupon the Registrar sealed an engrossed copy of the said draft order without any alteration.

Mr. Griffin contended that, although there had been no appearance on behalf of the defendants before the Registrar, the English authorities, which establish that a defendant attending the hearing on a summons for directions on which an order is made, takes a step in the proceedings, are applicable. The authorities are, The County Theatres and Hotels, Limited v. Knowles[dx]² and Richardson v. Le Maitre[dxi]³. In The County Theatre s and Hotels, Limited v. Knowles[dxii]⁴ which was an application for a stay of proceedings under the corresponding section of the English Arbitration Act 1889, the defendant attended at chambers on the hearing of a summons for directions taken out by the plaintiff, on which an order was made for pleadings etc. and that plaintiff and defendant respectively make discovery of documents. It was held that the defendant had taken a step in the proceedings and was, therefore, not entitled to a stay. In giving judgment, Collins M.R. said[dxiii]⁵ “That which Order XXX has done is to enable the parties to obtain on one summons an order, with respect to all interlocutory proceedings to be taken in the action, which they might, before this rule took effect, have obtained on several distinct summonses. The parties appear before the master with, as it were, a blank sheet on which he may make this inclusive order. When he does so, with the acquiescence of both parties, there is just as much a step in the proceedings by each of the parties as if an order had been made on his separate application. The defendant might have objected to the making of the order on the ground of the agreement to refer differences; but he did not do so, and is not in a position to ask for a stay under s. 4 of the Arbitration Act. The appeal must be dismissed”.

In Richardson v. Le Maitre[dxiv]⁶ it was held that attendance by a defendant before the master on a summons for directions, taken out by the plaintiff, and acquiescence, without protest, in a common form order for delivery of pleadings, is taking a step in the proceedings within the meaning of the corresponding provisions of the English Arbitration Act, and the defendant was thereby precluded from moving to stay proceedings under that section. The facts in the case were that the solicitor for the defendant attended the summons for directions before the master upon which the master gave the usual direction for delivery of pleadings, etc. but that on behalf of the defendant he did not press for delivery of pleadings, or any other matter arising on the summons for directions, simply leaving it to the master to deal with same. The only distinction drawn between The County Theatres and Hotels, Limited v. Knowles[dxv]⁷ and that case was that an order was made for mutual discovery in the earlier case, but Swinfen Eady J held that the case was covered by the earlier decision, and that attending the summons for directions without objection and without asking for an adjournment in order to make application for a stay, was taking a step in the proceedings within the meaning of the Arbitration Act. See also Ochs v. Ochs Brothers[dxvi]⁸.

In my judgment, to use the words of Swinfen Eady J, it would be “frittering away the decision of the Court of Appeal”, if I held that the procedure adopted by the solicitors in this case did not amount to taking a step in the proceedings. The purpose sought to be achieved by the defendants’ solicitor in endorsing his consent upon the draft order to be submitted to the Registrar, was precisely the same purpose as could have been achieved by attending before the Registrar and announcing his consent to the order, that purpose being to obtain an order by consent. In my opinion, as the same purpose was thus achieved, the endorsement by the defendants’ solicitor of his consent on the draft order accompanied by the authority he gave Mr. Andrews to present the draft order in that form to the Registrar, constituted taking a step in the proceedings within the meaning of s. 8 of the Arbitration Ordinance. Mr. Wood sought to distinguish the English cases on the ground that the applications therein were brought after the close of the pleadings when the issues were defined, but this submission was misconceived because the effect of the earlier O. 30, r. 1 which was in force at the date that these cases were decided, was that the summons for directions was to be taken out after appearance and before pleadings (r. 1 (b)). I would also add that, as a matter of substance, the defendants were made aware of the nature of the action by reason of the endorsement on the writ of summons which was sufficient to put them on notice as to their rights to have the action stayed. It is unnecessary for me to express any opinion on the other two issues. The application must be refused.

[dix]The effect of s. 8 is set out at p. 450-451.

[dx][1902] 1 K.B. 480.

[dxi][1903] 2 Ch. 222.

[dxii][1902] 1 K.B. 480.

[dxiii][1902] UKLawRpKQB 8; [1902] 1 K.B. 480, at p. 481.

[dxiv][1903] 2 Ch. 222.

[dxv][1902] 1 K.B. 480.

[dxvi][1909] UKLawRpCh 68; [1909] 2 Ch. 121.

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Supreme Court of Papua New Guinea

Drew v Towers Investments Pty Ltd [1973] PGSC 13; [1973] PNGLR 450 (15 September 1972)

Papua New Guinea Law Reports - 1973