FPM Constructions Pty Ltd & Anor v Australian Recreation Systems Pty Limited & Anor [2003] NSWSC 768

FPM Constructions Pty Ltd & Anor v Australian Recreation Systems Pty Limited & Anor [2003] NSWSC 768

Clause 7 authorised termination where Mr Bushby, acting reasonably, determined that a step in the arbitration was not in the interests of ARS or Mr Nicholas. Although several reasons relied upon by Mr Bushby were not legitimate or sufficient, there was no bad faith, and the legitimate concerns about ARS's potential exposure for costs and disbursements, including the architect's fees and Mr Bushby's monitoring fees, were enough to justify the conclusion that no further steps should be taken in the arbitration. The contractual power to terminate was therefore validly exercised.

Jurisdiction
Australia
Judgment Date
21 August 2003
Procedural Posture
Equity Proceedings Concerning the Validity of Exercise of a Contractual Power to Terminate an Arbitration / Final Judgment on Amended Summons and Cross Claim
Outcome
Cross-claimants were declared entitled to terminate the arbitration; defendants were released from undertakings; amended summons dismissed apart from costs.
Legal Topics
['construction of Contractual Termination Clause' 'reasonableness of Contractual Determination' 'injunction' 'declaratory Relief' 'unclean Hands' 'monitoring of Arbitration']
['contract Law' 'equity' 'arbitration' 'corporations'] ['construction of Contractual Termination Clause' 'reasonableness of Contractual Determination' 'injunction' 'declaratory Relief' 'unclean Hands' 'monitoring of Arbitration']

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 1 Authorities cited 2 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Procedural Posture

Equity Proceedings Concerning the Validity of Exercise of a Contractual Power to Terminate an Arbitration / Final Judgment on Amended Summons and Cross Claim

Legal Issues

  1. 1 ['Whether clause 7 of the Deed permitted ARS and/or Mr Nicholas to terminate the arbitration if Phillip Bushby International, acting reasonably, determined that any step in the arbitration was not in the interests of either Mr Nicholas or ARS.' 'Whether Mr Bushby acted reasonably in determining that continuation of the arbitration was not in the interests of Mr Nicholas or ARS.' 'Whether reliance on some reasons not legitimately open to Mr Bushby invalidated the determination under clause 7.' 'Whether the plaintiffs were disentitled to injunctive relief by reason of unclean hands.']

Ratio Decidendi

Clause 7 authorised termination where Mr Bushby, acting reasonably, determined that a step in the arbitration was not in the interests of ARS or Mr Nicholas. Although several reasons relied upon by Mr Bushby were not legitimate or sufficient, there was no bad faith, and the legitimate concerns about ARS's potential exposure for costs and disbursements, including the architect's fees and Mr Bushby's monitoring fees, were enough to justify the conclusion that no further steps should be taken in the arbitration. The contractual power to terminate was therefore validly exercised.

Court Disposition

Cross-claimants were declared entitled to terminate the arbitration; defendants were released from undertakings; amended summons dismissed apart from costs.

Orders

  • ["Declare that on the true construction of the Deed between the Cross-Claimants, the Cross-Defendants and Fyntray Constructions Pty Ltd made in or about January 2003, and in the events which have happened, the Cross-Claimants are entitled to terminate arbitration number 2060 between the First Cross-Claimant and...