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Parties Dispute Registration of Arbitral Award

Wright & Rebane [2021] FedCFamC1F 154 (21 October 2021)

The parties are in dispute over the registration of an arbitral award.  The arbitrator made three versions of the award, two of which were said to amend certain details.  The husband applied to register the arbitral award but the wife contended that the arbitral award should not be registered.  The Court, in deciding whether or not the application for registration should be granted, considered the operation of the slip rule. 

Facts:

On 23 February 2021 orders were made pursuant to s 13E of the Family Law Act 1975 referring the proceedings to arbitration.   The arbitrator selected by the parties was and remains a member of the Inner Bar.  The parties were represented at the arbitration by Senior Counsel.  At 10:06am on 27 July 2021 the arbitrator published his award.  At 2:39pm the arbitrator purported to publish the revised version of the award, allegedly correcting typographical errors.  At 10:16am on 28 July 2021 the arbitrator purported to publish yet another revised version of the award, allegedly correcting other details of the award.

On 7 September 2021 the husband applied to register the arbitral award.  A degree of confusion confronted the wife because the version of the award attached to the application for registration form was the first version of the award.  In her response to the husband’s registration application filed 12 October 2021 the wife contended that the arbitral award should not be registered.  The applicant for registration made five principle submissions.

They were the relevant set of reasons were the last, styled by the arbitrator “further amended award”; the alterations made to those reasons were alterations properly characterised as being amenable to cure under the slip rule as applied in legal proceedings; it was inimical to the arbitration regime constituted under the Family Law Act for the award in this case to be refused registration in circumstances where the parties had each spent over $100,000 in legal fees to obtain the arbitrator’s award; contrary to the respondent’s contentions, there was no procedural unfairness in the arbitrator making the amendments he did to the final amended award; and the arbitrator was not functus officio upon publishing the first award. 

On behalf of the respondent, Mr Campton SC (as his Honour then was) submitted that the arbitrator was required to “make an award” at the end of the arbitration that is in accordance with Regulations 67P(2) and 67P(3) and which, in a single document, is supplied to persons prescribed in accordance with Regulation 67P(4); the making of the first award brought the arbitration to an end; the awards purportedly made thereafter were nullities; the amendments made to the awards were made in breach of the arbitration agreement; and, the registration of an arbitral award, where registration is contested, is not merely an administrative function and instead involves the exercise of a judicial function. 

Issues:

I. Whether or not any versions of the award by the arbitrator subsequent to the first were valid.

II. Whether or not the alterations made by the awards subsequent to the first award were properly characterised as enlivening the operation of the slip rule.

III. Whether registration of an arbitral award in a dispute over registration is the exercise of an administrative function or it is the exercise of a judicial function. 

Applicable law:

Family Law Act 1975 s 13H - provides that a party to an award made in section 13E arbitration or in relevant property or financial arbitration may register the award:

(a)  in the case of section 13E arbitration--in the court that ordered the arbitration; or

(b)  otherwise--in a court that has jurisdiction under this Act.

Family Law Regulations 1984 s 67P - requires, as a mandatory stipulation that
 
(a) at the end of the arbitration the arbitrator must make an award;

(b) the award must include a concise statement setting out the arbitrator’s reasons for making the award and the arbitrator’s findings of fact;

(c) the award must be contained in a single document; and

(d) the arbitrator must give a copy of the award to each party, and inform the court that the arbitration has ended and that an award has been made.
 
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 r 10.13 - provides that the court may at any time vary or set aside an order, if it was made in the absence of a party; obtained by fraud; is interlocutory; is an injunction or for the appointment of a receiver; does not reflect the intention of the court; if the party in whose favour it was made consents; if there is a clerical mistake in the order; or there is an error arising in the order from an accidental slip or omission.
 
Australasian Performing Right Association Ltd v Austarama Television Pty Ltd [1972] 2 NSWLR 467 - where the word “rectified” was not used in the same sense as applies to a body of law concerning rectification of instruments. 
 
Autodesk Inc v Dyason (No 2) [1993] HCA 6(1993) 176 CLR 300 - referred to the test of whether a mistake or omission was accidental which was applied by Lord Herchell in Hatton v Harris.
 
Entezam & Devi (2021) 62 Fam LR 637 - where the parties' attention were brought indicating that the debate should focus on the observations made therein.
 
Gould v Vaggelas (1985) 157 CLR 215 - provided that the purpose of the slip rule is to avoid injustice to litigants and that the jurisdiction to apply it should be exercised sparingly lest it puts at risk the public interest of the finality of litigation. 
 
Harris v Caladine [1991] HCA 9(1991) 172 CLR 84 - observed that if the application to register the award is the subject of consent, it is difficult to see that the court must conduct a full hearing to examine whether an order under s 79 is appropriately made on the basis that the arbitral award is just and equitable.
 
Hatton v Harris [1982] AC 547 - jurisprudence in respect of the concept “accidental slip or omission” is of considerable antiquity, emanating in the late 1800s in the Royal Court of Justice.
 
L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) [1982] HCA 59(1982) 151 CLR 590 - provided that the purpose of the slip rule is to avoid injustice to litigants and that the jurisdiction to apply it should be exercised sparingly lest it puts at risk the public interest of the finality of litigation.
 
Minister for Immigration, Local Government and Ethnic Affairs v Kurtovic(1977) 17 ALR 219 - provides that the concept underlying the doctrine of functus officio has been described in terms equating to the statutory function as having been spent and that the issue is in reality a matter of statutory construction of the statute that confers the power in issue.
 
R v Moodie; Ex parte Mithen(1977) 17 ALR 219 - where the doctrine of functus officio has been said to be preferable to the description or consequence of the performance of a function having regard to the statutory power or obligation to perform that function.
 
Storey & Keers Pty Ltd. v Johnstone (1987) 9 NSWLR 446 - held that an error in the judgment or order which is the product of a deliberate decision is not within the contemplation of the notion “accidental slip or omission”.
 
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52(2004) 219 CLR 165 - where any “rectification” of an award begins by either party identifying a “minor mathematical or other mistake in the award”. 
 
Whitlock v Brew [1968] HCA 71(1968) 118 CLR 445 - provides that a mistake or error will generally not be regarded as accidental if the amendment sought requires the exercise of an independent discretion.

Analysis:

Mr Thompson contended that all three versions of the award were valid because the second and third iterations did no more than effect inconsequential minor corrections of little moment, each correction being properly made pursuant to what is colloquially called “the slip rule”.  Mr Thompson argued that each amendment made by the arbitrator was a “minor mathematical or other mistake”.  Aside from the arbitrator not hearing the parties on the proposed alterations to the second and third awards, and aside from the genesis of the alterations made in the second and third awards emanating from the arbitrator himself rather than the parties, the amendments themselves are not mere clerical errors, minor arithmetical issues or other mistakes.  They altered the percentages by which property interest were to be divided, quintessentially the exercise of a discretionary power conferred under the Family Law Act.

The arbitrator in producing the second and third awards, not only acted in disconformity with the procedure agreed in clause 8.4 but he made substantive alterations that were not in the purported exercise of the slip rule.  The second and third awards were imposed on the parties in the absence of their knowledge or consent and in disconformity with the agreed procedure by which amendments to an award could be made.  Where the application to register the award is opposed, as here, the contested application must be determined in the manner in which most contested applications are determined.

Conclusion:

The Court held that the versions of the award by the arbitrator subsequent to the first were invalid.  The alterations made by the awards subsequent to the first award were not properly characterised as enlivening the operation of the slip rule.  The registration of an arbitral award in a dispute over registration is the exercise of a judicial function.  The Court refused to register the further amended arbitral award dated 28 July 2021.  The further hearing of the proceeding is adjourned to 4 November 2021 at 10:00am.  The applicant’s costs application is adjourned until 4 November 2021 at 10:00am.

 

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Comments (3)
    • Well there were a few points raised by his Honour in the judgment but is it fair to say that had the arbiter not altered his decision by "a large amount of money", the amendments would have held?

      I wonder why the arbiter did it? Ignorance of the rules? Sloppiness? A change of heart? To better represent his original intention? A desire to avoid getting the lawyers back which would have added to the parents' enormous legal costs?

      I guess from a legal point of view, the reasons for his mistake was not important, but it would still be interesting to know.

      btw it's good to see terms being added to Flast eg. functus officio, Slip Rule

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      • I guess the reason for the questions I posed above is: Will arbitrations be approved in greater numbers in the future because arbitrators will be less likely to make mistakes like the ones that were made here?

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      • Is there anyone else in this forum?

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