Hui v Esposito Holdings Pty Ltd [2017] FCA 648

Hui v Esposito Holdings Pty Ltd [2017] FCA 648

The arbitrator exceeded the scope of the preliminary hearing as defined in the procedural orders by determining the availability and merits of set-off defences and the enforceability of the guarantee against the applicants, without adequate notice or opportunity to be heard. This denial of procedural fairness under art 18 and art 34 of the UNCITRAL Model Law, and the arbitrator’s prejudgment of substantive issues before hearing the parties, together constitute real unfairness and practical injustice, justifying the setting aside of the relevant parts of the awards and removal of the arbitrator.

Parties
Applicant in VID 1192 of 2016, Second Respondent in VID 1220 of 2016: William Yan Sui Hui; First Respondent in VID 1192 of 2016 and VID 1220 of 2016: Esposito Holdings Pty Ltd (ACN 079 763 303); Second Respondent in VID 1192 of 2016, First Applicant in VID 1220 of 2016: UDP Holdings Pty Ltd (ACN 167 100 692) (Receivers and Managers Appointed) (Subject To Deed of Company Arrangement); Third Respondent in VID 1192 of 2016, Second Applicant in VID 1220 of 2016: 5 Star Foods Pty Ltd (ACN 005 714 616) (Receivers and Managers Appointed) (Subject To Deed of Company Arrangement); Third Respondent in VID 1220 of 2016: [The Arbitrator]
Jurisdiction
Australia
Judgment Date
09 June 2017
Procedural Posture
Application to Set Aside Parts of Arbitration Awards and Remove Arbitrator / Judgment on Setting Aside Arbitral Partial Awards and Removal of Arbitrator
Outcome
Application granted; relief on setting aside parts of the arbitral awards and removal of arbitrator; precise form of orders to be settled by the parties or court on the papers.
Legal Topics
Setting Aside Arbitral Awards, Impartiality of Arbitrator, Procedural Fairness, UNCITRAL Model Law – Article 34, Set Off Defences, Guarantee Liability
Arbitration International Commercial Law Contract Law Setting Aside Arbitral Awards Impartiality of Arbitrator Procedural Fairness UNCITRAL Model Law – Article 34 Set Off Defences +1 more

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Parties

William Yan Sui Hui

Applicant in VID 1192 of 2016, Second Respondent in VID 1220 of 2016

Esposito Holdings Pty Ltd (ACN 079 763 303)

First Respondent in VID 1192 of 2016 and VID 1220 of 2016

UDP Holdings Pty Ltd (ACN 167 100 692) (Receivers and Managers Appointed) (Subject To Deed of Company Arrangement)

Second Respondent in VID 1192 of 2016, First Applicant in VID 1220 of 2016

5 Star Foods Pty Ltd (ACN 005 714 616) (Receivers and Managers Appointed) (Subject To Deed of Company Arrangement)

Third Respondent in VID 1192 of 2016, Second Applicant in VID 1220 of 2016

[The Arbitrator]

Third Respondent in VID 1220 of 2016

Procedural Posture

Application to Set Aside Parts of Arbitration Awards and Remove Arbitrator / Judgment on Setting Aside Arbitral Partial Awards and Removal of Arbitrator

Legal Issues

  1. 1 Whether the arbitrator exceeded his jurisdiction by determining issues beyond the scope of a preliminary hearing
  2. 2 Whether the parties were denied a reasonable opportunity to present their case (procedural fairness) under art 18 and art 34 of the UNCITRAL Model Law
  3. 3 Whether there was real unfairness or practical injustice suffered by the applicants

Ratio Decidendi

The arbitrator exceeded the scope of the preliminary hearing as defined in the procedural orders by determining the availability and merits of set-off defences and the enforceability of the guarantee against the applicants, without adequate notice or opportunity to be heard. This denial of procedural fairness under art 18 and art 34 of the UNCITRAL Model Law, and the arbitrator’s prejudgment of substantive issues before hearing the parties, together constitute real unfairness and practical injustice, justifying the setting aside of the relevant parts of the awards and removal of the arbitrator.

Court Disposition

Application granted; relief on setting aside parts of the arbitral awards and removal of arbitrator; precise form of orders to be settled by the parties or court on the papers.

Orders

  • The parties to file and serve proposed minutes of orders to give effect to reasons within designated timeframes.
  • The precise form of orders to be decided on the papers.