Appache Northwest Pty Ltd and ORS v Western Power Corporation P18/1998 [1998] HCATrans 178 (20 May 1998)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Perth No P18 of 1998

B e t w e e n -

APACHE NORTHWEST PTY LTD,

AMPOLEX (WESTERN AUSTRALIA) INC., AMPOLEX (A.O.E.) LIMITED, APACHE OIL AUSTRALIA PTY LTD, SANTOS (BOL) PTY LIMITED, AMPOLEX VARANUS PTY LTD

Applicants

and

WESTERN POWER CORPORATION

Respondent

Application for a stay

HAYNE J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON WEDNESDAY, 20 MAY 1998, AT 2.45 PM

Copyright in the High Court of Australia

MR M.C. GOLDBLATT: May it please, your Honour, I appear on behalf of the applicants. (instructed by Freehill Hollingdale & Page)

MR W.S. MARTIN, QC: If it please, your Honour, with my learned friend, MR J.D. ALLANSON, I appear on behalf of the respondent. (instructed by Clayton Utz)

HIS HONOUR: Gentlemen, I have had the benefit of reading the summaries of argument submitted by both sides. I would propose to limit the time for oral submissions in each case to 20 minutes. So, Mr Goldblatt, 20 minutes. Yes, Mr Goldblatt.

MR GOLDBLATT: As you please, your Honour. As your Honour will be aware, this is an application for an order to extend time for compliance with certain subpoenae duces tecum. Certain background matters that I would just emphasise - there is a comprehensive summary of argument filed - firstly that - - -

HIS HONOUR: Mr Goldblatt, you should assume that I have read it. You should assume that I am familiar generally with the matter. You may also - indeed the parties may assume some slight, if distant, familiarity with the gas supply contracts that lie behind some of the issues.

MR GOLDBLATT: In relation to the requirement of special or exceptional circumstances, the applicants rely upon the subject matter of the litigation being destroyed. Another way of framing it is that the appeal will be rendered nugatory. In relation to the respondents' contentions in that regard, it appears that the submission is that there is an additional requirement over and above that rendering of the appeal nugatory. In my submission, if one had to look at the cases, and for example, Ampolex and the Elspan Case, to which my learned friend refers, it is clear from those cases that the rendering of the appeal nugatory, that is the circumstance that constitutes the special or extraordinary circumstances required to enliven your Honour's jurisdiction.

So that, for example, in Ampolex his Honour Mr Justice Kirby, of the finding at page 32, paragraph 7, that the appeal would be nugatory then went on to consider the second leg which was whether or not there was a substantial prospect of special leave to appeal being granted. There was a similar approach by her Honour Justice Gaudron in the Elspan Case and, with respect, all the authorities are ad idem on that point. In our submission, it is clear that the appeal in this matter will be rendered nugatory if the relief is not granted. Your Honour, with respect, does have, in that regard, the benefit of the Full Court decision with three judges including the judges in the court below, have found that the appeal would be nugatory if compliance with the subpoenae were required to take place at this stage.

The only response, with respect, to that, is the reliance upon the confidentiality regime. But, I draw to your Honour's attention that the Full Court, again including her Honour Justice Wheeler, found that notwithstanding that confidentiality regime, there was a real risk of leakage. Her Honour said whatever restrictions may be imposed. That matter, in fact, has already been argued before the Full Court and determined.

HIS HONOUR: Mr Goldblatt, has the Full Court delivered its reasons yet?

MR GOLDBLATT: No, your Honour.

HIS HONOUR: No. You were speaking as though they had, and I certainly had not seen any reasons. Why would there be futility if the parties subpoenaed were bound to produce the documents to the arbitrator? Futility comes, does it not, only if, one, a particular regime is then imposed on the use of the documents which either is disobeyed or is ineffective? Then there may be futility, but until then why should I assume futility?

MR GOLDBLATT: Yes. Your Honour, just quickly to go back to the other point, I was referring to the reasons of the Full Court on the stay application which are attached to the affidavit of Mr Reithmuller. On this point, your Honour, there is already and there was before the Full Court and her Honour Justice Wheeler, the confidentiality regimes which are in place in the arbitration and the point really is, your Honour, that a one-step procedure at the instance of the respondent was adopted in this matter and the effect of the orders is that the parties to the arbitration are entitled on production to inspection of the documents. That confidentiality regime includes, inter alia, experts having access to those documents.

HIS HONOUR: Mr Goldblatt, where in the papers do I find that regime?

MR GOLDBLATT: Your Honour, the court ordered regime is attached to the judgment of her Honour Justice Wheeler at - if your Honour would bear with me a moment. Your Honour, I assumed it was attached to the judgment. It appears that it might not be. Your Honour, at page 10 of the documents filed in support of the application for special leave to appeal. I apologise to your Honour for the delay.

HIS HONOUR: Does the argument about futility assume that this regime will be disobeyed?

MR GOLDBLATT: Your Honour, the submission is that as your Honour found it is inevitable that it will be disobeyed, not necessarily deliberately, your Honour. It is inevitable in relation to the experts because the proposition her Honour agreed to in her judgment and the Full Court agreed with was that once seen cannot be forgotten. These are experts who thereafter go out into the marketplace and it was said that in the relatively small market, that is the market energy in Western Australia, there is a real problem with those experts engaging in consultancy services with that knowledge.

In other words, if they were approached by a local company in relation to, perhaps, a contract with the Woodside companies as to what they should pay, what terms they should enter into that contract or with one of the applicants, that expert would know the price in those contractual arrangements. Now the question is how does he disabuse his mind of that knowledge in giving advice in the industry here?

HIS HONOUR: The consequence of the regime may be that the expert thereby precludes himself or herself from thereafter acting in this industry and if they do that, that is their lookout.

MR GOLDBLATT: Your Honour, that would probably require - there is nothing in place at the moment in the confidentiality regime. That was the problem the Full Court had, with respect, because this was the main argument on behalf of the respondent on the stay application before the Full Court and the Full Court really was of the view, "How does one supervise this? How does one protect the interests of the applicants in these circumstances?" For example, your Honour, in one of the cases an example is given where all the expert would have to say if approached for marketing consultancy services, "Should I enter into this agreement on these terms?", all the expert would have to say is yes or no. He would not in that way be imparting any information he learnt but there is no question that the information will have been used.

We do not for one minute contend it would be deliberate, your Honour. It would be similar to a barrister being involved in a case and learning some new law and thereafter being expected to disabuse his mind of that knowledge, knowledge relating to his very expertise.

HIS HONOUR: I understand then, I think, Mr Goldblatt, what you say about futility. Since time is running, I wonder whether we might turn for a moment to one other aspect of the matter which troubles me. It is important to assess the likelihood of prospects of success of the application for leave. As I understand it, you make two points in support of the application for leave: one, the point about is there an arbitration agreement; two, the point about relevance, is that right?

MR GOLDBLATT: That is correct, your Honour.

HIS HONOUR: As to the first of those points, that is, is there an arbitration agreement, you depend, do you, on what was said by Justice Zelling in the Alliance Petroleum Case?

MR GOLDBLATT: No, not totally, your Honour. I would also rely upon the dicta of his Honour Mr Justice Wells, also the dicta of his Honour Mr Justice Jacobs in the AMP Society Case.

HIS HONOUR: But the proposition that you advance is that, for there to be an arbitration agreement, there must be an agreement to resolve disputes as to existing rights so far as presently relevant, is that right?

MR GOLDBLATT: Yes, there must be a justiciable issue.

HIS HONOUR: Yes. May it be said of the gas supply contract that the arbitrator is not at large but that the arbitrator is bound, in setting a price, to fix a price that in the opinion of the arbitrator best accords with the contractually-stipulated pricing principles?

MR GOLDBLATT: In my submission, not. Might I put that proposition because, in my respectful submission, there is an explanation as to that distinction in relation to contractual rights and in relation to the legislative power in Waterside Workers' Federation, a decision of this Court in 1918. I would refer your Honour in particular to the joint judgment of their Honours Justices Isaacs and Rich at page 462 and I would refer your Honour to approximately twelve lines up. This case was in relation to an industrial arbitration as provided for in section 51(xxxv) of the Constitution. I will start with the words on page 462:

Industrial disputes extending beyond the limits of any one State embrace so many possible divergencies, of industry, of conditions, of claims, of surrounding circumstances at home and abroad, and of constant changes, that direct legislation in advance is incapable of being applied to them. No one can foresee for any appreciable period the legislative requirements of industrial peace in any one industry, much less in all industries of the Commonwealth which are common to more than one State. Any attempt at detailed regulation, applicable to all industries even if suitable to-day - practically an impossible hypothesis - would certainly be less suitable a month hence. Nevertheless, it was thought necessary that such disputes should not go uncontrolled but that the control should be exercised only by means of conciliation and arbitration. That is essentially different from the judicial power. Both of them rest for - - -

HIS HONOUR: I am familiar with the passage and I am familiar with the distinction that there is drawn. Why do you say that this is not an exercise of judicial power?

MR GOLDBLATT: Your Honour, it is a similar situation to this: it was impossible because of the vicissitudes of the market, in advance to fix a market price for 20 years so what the parties do is similar to what their Honours said in the Waterside Workers' Federation Case. They need a mechanism by which they can adjust their rights and duties in the future so what they do is they set a price for three years and then provide a mechanism by which a third party can come in and fix the market price for the next period. In other words, complete the agreement so to speak, for that subsequent period because no one, as in terms of industrial legislation, it is impossible to foresee where the price is going and the parties want to preserve their rights.

What happens then is that the so-called arbitrator steps in and legislates between them, sets the contractual arrangement for the next term, your Honour, and in fact to such an extent that he redrafts the provisions of clause 14. He does not, in fact, fix a market price. He, in fact, redrafts the legislation between the parties. The legislation is the governing mechanism of this contractual arrangement and he comes in and he legislates. The parties say their mechanism is, as with other agreements, will they try and agree the price. If we cannot agree we will get someone in. An independent third party will come in and will legislate, will fix our rights and obligations for the next period.

Your Honour, with respect, my learned friends refer to certain decisions which they say support the view that this sort of clause does refer to disputes but if one has a look at those cases one sees they actually deal with - they either deal with accrued rights or they were simply idiosyncratic cases dealing with the particular point, a different point. This point, with respect, is a live point. If one looks at his Honour Mr Justice Jacobs in the AMP Case, if one looks at - in South Australia, with respect, if one is counting heads, it is 3:2 in effect because there is the Full Court and then there are their Honours Justices Zelling and Wells and there is also his Honour Mr Justice Jacobs.

There is also the fact that three judges, with respect, in WA found that it was reasonably arguable. The judge, with respect, herself in the court below, found that there was a reasonable argument of substance on this point. It is an important point. The Arbitration Act 1985 , the relevant sections in the other Acts are all the same. If one looks at - - -

HIS HONOUR: Mr Goldblatt, I do not think I need persuasion that if the point arises it is one of general application.

MR GOLDBLATT: Yes.

HIS HONOUR: My concern lies at the anterior point of does the point arise?

MR GOLDBLATT: Yes. Your Honour, in my submission and, with respect, I have set it out in some detail in the submissions. I forgot to mention Halsbury as well would support the view I am taking. Also, his Honour Mr Justice MacPherson in his article, which I have also referred to, also supports the proposition and, your Honour, with respect, in my respectful submission, if one looks at the judgment of his Honour Mr Justice Zelling, the reasons - and it is the same clause really in substance - are compelling as to why this is not - the issues in the so-called arbitration do not concern accrued rights but concern legislating for the future.

HIS HONOUR: Now Mr Goldblatt, the other aspect of the matter that you would seek to agitate on special leave is the question of relevance of the documents?

MR GOLDBLATT: Yes.

HIS HONOUR: Why is that a matter likely to attract the grant of special leave? Why is it any more than a consideration of the particular terms of unique documents drawn by the parties in circumstances raising no question of general application?

MR GOLDBLATT: My submissions in that regard, your Honour, is - I am not sure if your Honours have had the opportunity of reading Her Honour Justice Wheeler's judgment in the court below.

HIS HONOUR: Yes, I have.

MR GOLDBLATT: Thank you, your Honour. Her Honour had, as you would have seen then, your Honour, some difficulty with the management, so to speak, of evidence in relation to subpoena applications. In other words, having found that the evidence was admissible, her Honour, with respect, had difficulty and referred to the dearth of authority, the absence of authority, despite a search as to the extent to which the proposed subpoena recipients can attack the relevance of issues. Your Honour, that difficulty is also reflected in the decision of his Honour Mr Justice Perry, in what I have referred to as the Santos [No 2] Case at page 278, or page 222 of the judgment. They are two page references where his Honour casts doubt upon whether or not a subpoena recipient is entitled to attack relevance and he says:

If such an objection may be raised in this State (a question which I think it best to reserve until it is fully argued) -

so, his Honour had some - - -

HIS HONOUR: Mr Goldblatt, your contention is that you are entitled to attack relevance. Demonstrating that the proposition of entitlement is doubtful seems hardly of assistance to you in demonstrating a grant of, or warranting a grant of leave. Why is this any more than the particular application of a principle of relevance to unique documents drawn by parties?

MR GOLDBLATT: Your Honour, to clarify that first proposition, what I am referring to as the special issue would be the management of the evidence. Her Honour admitted it, but, in my submission, thereafter, because of the difficulty she had, afforded it no weight. So, for example, if one had the absurd issue raised in a pleading that what the issue was was the market price of motor vehicles, her Honour regarded that as an issue, despite, for example, evidence that there are a myriad of variety of motor vehicles - it is not a homogenous product - there are a myriad of variety of vehicles, and there is no such thing as a market price of motor vehicles. Now, her Honour ignored that, and that is the special issue. Not the admissibility, but the extent to which one can attack issues in the pleadings. Your Honour, that is the first point.

The second point is the importance, we would say, why procedural regularity is important in this matter, if one has regard to the nature of the applicants, the nature of the industry in which they are involved, the commonplace of this clause. One only has to look at Santos and you will see that it is the same companies. Their confidential and commercially sensitive documents are being ransacked, with respect, on a regular basis and it is important, in relation to the same types of clauses, and it is important for the applicants and, with respect, to the industry generally, that this type of issue is resolved in relation to not only arbitration agreement point but, in my submission, in relation to relevance as well.

It is, of course, your Honours, an irony that what is happening here is they have sought to establish a market price by reference to documents simply not available in the marketplace and that, with respect, highlights the difficulty in relation to relevance in this matter.

HIS HONOUR: Mr Goldblatt, your time has expired. I have, I know, intervened perhaps rather more than normal. You may have another three minutes, and then if you would be good enough to bring your submissions to a conclusion.

MR GOLDBLATT: Yes. Your Honour, simply, I think in relation to the last point I would like to make in relation to the arbitration agreement issue being reasonably arguable, that there is a substantial prospect of success in the application for special leave is to refer to the submissions on behalf of my learned friend and, with respect, my learned friend has fallen into the same error as her Honour Justice Wheeler did. If your Honour would look at the addendum, your Honour will see, for example, in that addendum that the first question asked is:

whether there was "arbitration" on foot within the meaning of the Commercial Arbitration Act -

That is paragraph 1(a). That was a similar question to what her Honour Justice Wheeler asked and, in my submission, that is to run together a number of concepts. That is not the issue. The issue is whether or not that clause - it is a crisp issue for decision whether or not that clause 15.2(d) refers - the subject matter of it is disputes. It is really the third element of the definition of "arbitration agreement" which raises the issue of whether or not this is an arbitration, so that your Honour will see, for example, on pages 2 and following that my learned friend refers to the intent of the parties.

Now, my submission as to this issue - whether or not clause 15.2 constitutes an arbitration agreement in terms of clause 4.1 of the Act - the intent of the parties is irrelevant. My learned friend refers to the nature of the inquiry provided for in the agreement. In my submission, that is irrelevant. And that is the same mistake, with respect, if your Honour looks at, for example, his Honour Mr Justice Jacobs in the AMP Case, and one looks at the article of his Honour Sir Justice MacPherson, one will see that they allude to this danger of referring to the inquiry instead of focusing on the subject matter of the agreement to refer.

So, if your Honour would look at the foot of page 5 of those submissions of my learned friend, for examples, in paragraphs 12 and 13, your Honour will find they are cases which are said to support the decision of her Honour Justice Wheeler. Now, if one looks at Isca Construction, that dealt with accrued rights. If one looks at AMP Society, I would refer your Honour to his Honour Sir Justice Jacobs at 813C and following. If one looks at Edmond Barton, it is an entirely different case. In fact, in Edmond Barton, the court said that the subject matter of the reference in that case was not the current market rate but the points of difference between the valuers, material to their ultimate determination of the current market. And they then had to go away after the principles were resolved and sort it out.

If one looks over the page at paragraph 13, the Queensland Electricity Board, again, I would refer your Honour to the criticism of that case by his Honour Sir Justice MacPherson in his article. That case focussed on the third requirement, the nature of the inquiry. I think I have probably used up my time, your Honour.

HIS HONOUR: Yes, thank you Mr Goldblatt.

MR GOLDBLATT: Thank you, your Honour.

HIS HONOUR: Mr Martin.

MR MARTIN: Your Honour, can I deal firstly with the question of futility which your Honour raised. In our submission, the confidentiality regime put in place pursuant to the orders of her Honour the trial judge is as strict as one could ordinarily imagine. The only parties entitled to access to the documents are solicitors and counsel, limited in number and identified, and experts who are identified in advance and who are required to sign written undertakings with respect to confidentiality.

HIS HONOUR: To whom are those undertakings given, Mr Martin? That is, who may enforce them?

MR MARTIN: They are given to the court.

HIS HONOUR: That is, if they breach them they are at peril of going to gaol?

MR MARTIN: Of contempt, indeed, your Honour. And before the expert gets access to any document - - -

HIS HONOUR: And I assume, Mr Martin, that the experts would be told - - -

MR MARTIN: Indeed.

HIS HONOUR: - - - that if they breach it, even inadvertently, they are at peril of going to gaol.

MR MARTIN: I can assure your Honour that the experts are alive to these issues already because there is a confidentiality regime in relation to the documents that have been discovered inter partes which has very strict aspects as well, and that regime has been in place for the 18 months or so that the arbitration has been in preparation.

Your Honour, notice has to be given in advance of the identity of the expert, and there is a capacity to object to the particular expert. Plainly, in our submission, the effect of the confidentiality - - -

HIS HONOUR: Capacity, that is in the parties subpoenaed?

MR MARTIN: The parties subpoenaed.

HIS HONOUR: The non-parties.

MR MARTIN: The non-parties. Yes, your Honour. The parties producing have the capacity to object to a particular expert seeing the documents.

HIS HONOUR: Yes.

MR MARTIN: Your Honour, should the hypothetical situation posed by my learned friend arise, it is clear, in our submission, that the consequence of the confidentiality undertaking would be to preclude the expert acting in any way that would give rise to the disclosure either directly or indirectly of that confidential information.

HIS HONOUR: I must say, Mr Martin, that having encountered these kinds of difficulties in earlier times, it seemed to me that experts who undertook them effectively sterilised themselves from the industry thereafter and not all experts, I think, understood that until it was pointed out to them in rather blunt terms.

MR MARTIN: Your Honour's experience has probably been the same as mine and that is that when that is done, it seems to impact upon the fees which they require for the case and that has certainly been the situation here. It certainly does have an impact.

So, your Honour, in our submission there is nothing to be inferred as to futility from the terms of the confidentiality regime and in particular, of course, over the period that it will take this case to get to the special leave application, the experts are very much engaged in other matters, namely, the conduct of the hearing themselves. It is very unlikely the hypothetical situation envisaged by my friend would ever arise.

HIS HONOUR: But the cat is out of the bag by then, is it not, Mr Martin? They have seen then; they have the documents; they have the knowledge.

MR MARTIN: They have the knowledge, certainly, your Honour, but, of course, there would be nothing to stop this application from being renewed if and when a grant of special leave was made. At that point, of course, the documents would be returned. The experts could be required to give additional undertakings in terms of what their future activities and the like.

Of course, your Honour, it is not the case that there is presently necessarily a regime as strict as that in relation to the persons who presently have access to these documents. These documents are in ordinary commercial use by the parties who have access to them in the case of contracts and offers. They are exchanged between companies who have no control over what the party to whom they provide the document does with it. There are, of course - it can easily be envisaged - parties changing employment and so on and so forth. It is not as if this regime creates a special risk that does not already exist in the marketplace. Indeed, we would submit that your Honour ought infer from this regime that it poses a significantly lesser risk than that which one would ordinarily expect in the commercial marketplace in any event.

Your Honour, could I move to the prospect of the grant of special leave. The first point we make is that the proper construction of the Commercial Arbitration Act is not a novel issue for this Court. In the PMT Partners Case precisely the phrase in question was considered by this Court and it ruled that it was to be given its natural and ordinary meaning. That, in our submission, means that now that the construction is settled, the first question that this Court would ask itself is, "What is the natural and ordinary meaning of the expression `arbitration'?" If one poses that test in terms of what ordinary men of commerce would say if asked, "Is what is being carried on here an arbitration?', the answer, in our submission, is that they would plainly say, "Yes, it is."

PMT Partners and Esso v Plowman and, indeed, the Santos Case all stand also for the proposition that the Court would approach the Act with a broad construction because it is evident from the legislative objective inherent in the terms of the Act that extra curial resolution of dispute is to be encouraged and not discouraged and therefore, in our submission, it is highly unlikely that a restrictive interpretation would be placed upon the natural and ordinary meaning of the expression "arbitration".

But more fundamentally than that, your Honour, it is our submission that there is almost no prospect or certainly, in terms of the test posed in the cases, no substantial prospect of the grant of special leave on this point for this reason, and that is that there is in fact no tension between the ruling of Justice Wheeler and the observations of Justice Zelling in Alliance, even leaving aside for the fact that they were obiter and they were expressly disapproved by the subsequent Full Court decision on point in Santos.

Your Honour, the reason I say there is no tension is because my learned friends advance the proposition, variously put in terms of accrued rights sometimes, at other times in terms of justiciable issues, but the fact of it is that her Honour ruled and construed the contract in terms which gave rise to accrued rights. Her Honour ruled, we would say quite properly, that the parties to this contract had a right to a price to be determined in accordance with the three principles that they expressly enunciated in clause 15.1.

If that construction of this unique contract is upheld in this Court, there is no question of principle to be decided. So that the outcome of that question of construction which is unique to this contract would be determinative of the proceedings in this Court, if determined a particular way, that is consistently with the decisions of the courts below. That, in our submission, makes this a particularly inappropriate vehicle for the resolution of any such issue as might exist as to the criterion for determining whether or not there is an arbitration.

Other aspects of that, of course, involve questions such as whether the subpoena recipients are the proper parties to litigate the proper construction of a contract between other parties. But, essentially, your Honour, our proposition is that this is a unique contract. The application of the principles to this contract really depends upon its particular construction and the facts and circumstances that have arisen, and it is for that reason, in addition to all the general considerations - the fact that the matter has been considered in PMT and the like - then, in our submission, it is most unlikely that special leave would be granted on that topic.

HIS HONOUR: The distinction that seems to be drawn by Justice Zelling and others is reflected in the lease cases as the distinction between valuation and arbitration, is it not?

MR MARTIN: Yes, it is, your Honour.

HIS HONOUR: Why is the task on which the person appointed under the gas supply contract a task of arbitration rather than valuation?

MR MARTIN: Because the parties have identified the particular criteria that are to be applied to the determination of the price. So, in other words, the parties have set out three specific principles that are to result in the price. So, in other words, unlike the valuation cases, the parties have not said to the valuer, "You fix the value of this thing without regard to specified criteria". What of course the valuation cases have said, and the three New South Wales cases say, is where there are valuations and there is then competition between those valuations and an umpire is appointed to resolve between those two, what the umpire is doing is an arbitration.

That is a very helpful analogy for this case, your Honour, because the parties are given, by clause 15.2, the opportunity to give notices to each other for, as it were, competing contentions, that is, the proposition that the application of the pricing principles results in a particular price. In the event that they fail to agree as to the resolution of their competing contentions, then the arbitrator is called upon to resolve their differences. The arbitrator is not called upon to bring to bear his own expertise or skill and, plainly, that is apparent from the mechanisms that are set out in the contract for the resolution of the dispute.

The proceeding is to be conducted as nearly as possible to a proceeding in the Supreme Court of Western Australia, procedurally speaking. The parties have appointed a former judge, not a gas expert. The mechanism specified in the contract for the exchange of evidence and the exchange of written submissions plainly connote that the arbitrator is to determine the outcome of the resolution of the competing contentions judicially, that is to say by receiving evidence, receiving submissions and determining between those competing contentions, after making findings of fact based upon the evidence before him, not findings of fact based upon his own inquiry or based upon his own particular skill or expertise. Your Honour, it is in that context, in our submission, difficult to imagine a clearer case of an arbitration when regard is had to the natural and ordinary meaning of that expression.

Your Honour, if those propositions, which are dependent entirely upon the unique provisions of this contract, are accepted in this Court, then there is no question of general principle that arises; there is simply nothing left for the Court to resolve. It is for that reason that, in our submission, unless that construction was demonstrably wrong, which it plainly cannot be said, in our submission, then this Court is very likely to conclude that this is simply an inappropriate vehicle for the resolution of some question that might arise in some other case, where the activity that is being undertaken is plainly and obviously legislative in nature, but that is certainly not this case, in our submission. It is for those reasons that, in our submission, there is no substantial prospect of special leave being granted on that point.

If I could move to the aspect of relevance, in our submission, an application for special leave on that point could properly be characterised as heroic and has really no prospect at all. There is no challenge to the test posed by her Honour the trial judge. That is clear from the submissions. What is put is that her Honour and the Full Court failed in assessing whether there had been a discharge of the burden of proof. That is just another way of saying that the issues that are sought to be raised in this Court are entirely factual in nature. There is no question before this care entirely factual in nature. There is no question before this Court as to the admissibility of evidence. Her Honour admitted all the evidence that the present appellant sought to introduce, made findings of fact based upon it and trimmed down the subpoenas in three material respects as a consequence of the findings that she made.

So that resolution of competing judicial views as to whether or not evidence is admissible in a case of this kind simply will not arise in any proceeding in this Court. So, your Honour, in our submission, there is nothing in that point and it is utterly fanciful to suggest that special leave could possibly be granted.

The additional points we make are, of course, in relation to the criteria that are established. We do, with respect, disagree with my learned friend's equation of special circumstances of the kind enunciated in the Myer Case to the criterion that applies at this stage in this Court. It is clear, in our submission, from Justice Brennan's decision in Jennings that the threshold that has to be crossed before an application of this kind is even considered is the demonstration of the futility of the appeal. But once that threshold is crossed, then, because special has not been granted, the additional four criteria enunciated by his Honour come into play. They include the one we have already discussed, that is the prospect of leave being granted; secondly, the fact of the application of the court below. My learned friend made reference to the fact that the Full Court earlier granted a stay pending its own decision. That same court, comprising at least one of the same members, refused the stay last week pending application to this Court. The third and fourth criteria, enunciated by his Honour Justice Brennan in Jennings, are, of course, lost to the respondent and the balance of convenience.

We have identified in our written submissions the propositions we advance there. There is a long and complex and expensive arbitration about to start which will be frustrated if this stay is granted. There are four cases to which we have drawn attention that are analogous in our submissions. Perhaps the clearest of those is Ampolex in which a question arose as to the provision and access to a document in respect of which legal professional privilege was claimed. His Honour Justice Kirby placed significant weight upon the fact that the grant of a stay pending the application for special leave would disrupt significant and complex litigation that was then in train. In our submission, a very comparable consideration applies here.

The other three which we have referred to were Elspan, in which the proceedings before the referee were not stayed, notwithstanding allegations that it might imperil confidence; Manfal, in which the proceedings in the Federal Court were not stayed, notwithstanding that applications for discovery and for subpoenas returnable prior to trial would be part and parcel of those proceedings. The fourth was the decision in the Duke Group, where an examination under section 596 of the Corporations Law was not stayed, notwithstanding that the special leave application was only five weeks away. Your Honour, those are all indications, we say, comparable to this case to the effect that the assertion of confidentiality, whilst obviously a matter to which consideration is given, is not, of itself, so determinative that the balance of convenience as to necessarily result in the grant of a stay.

In our submission, when regard is had to the need to establish the threshold test and the four criteria, first of all the threshold test is not established on futility, in relation to all the other criteria, in our submission, they point strongly against the grant of a stay.

HIS HONOUR: Thank you, Mr Martin.

MR MARTIN: Thank you, your Honour.

HIS HONOUR: Mr Goldblatt, if you desire to reply I would propose to allow you five minutes for that purpose.

MR GOLDBLATT: I might take that indulgence, your Honour. Firstly, in relation to whether or not this case is the proper vehicle, my learned friend submitted this was a unique contract, I would refer your Honour to the Alliance Case at page 408, and Santos [No 1] at 42, and your Honour will see substantially the same clauses. I would also refer your Honour to page 419 of Alliance, where his Honour Mr Justice Wells said:

The machinery established in the principal agreement for the fixing of a price seems to be in common form. It represents a price fixing mechanism frequently found in practice -

and that is at 419 in the middle. The submission is that this is a common form. If one looks at Alliance, if one looks at Santos, if one looks at the clause in this case, they are common forms of the clause. The other thing is, your Honour, what my learned friend said in relation to there being no prospect of success on the application for special leave is, he answered the question your Honour put in terms of identifying particular criteria in the agreement: that a former judge has been appointed; there will be a receipt of evidence in submissions; that it will be his own inquiry. I cannot stress enough that that deals with what I have discerned as the third requirement, in other words, whether this is an arbitration properly so called.

I would refer your Honour to the judgment of his Honour Mr Justice Debelle in the Santos [No 1], at page 46. If your Honour would look at, with respect, pages 44 and 46, your Honour will see at page 44 there is a heading, "A dispute exists", and there his Honour, with respect, correctly, at page 44, third line, then goes through the process of seeing whether the subject of the clause is a dispute. Then at 46, over the page, his Honour says, there is a heading three lines from the top, "Is it an arbitration?". That is what my learned friend was addressing. Is the inquiry of a judicial nature? Is there evidence forthcoming? That is a completely different test to the issue which we seek to obtain the special leave on. It is that confusion that has taken place in some of the cases, and that is why it is important, with respect, to look at judgments such as his Honour Mr Justice Jacobs and others, who draw the clear distinction between the requirements for a reference constituting an arbitration agreement.

In relation to confidentiality, your Honour, her Honour Justice Wheeler said at page 91 of Mr Riethmuller's affidavit at the letter B:

whatever restrictions may be imposed upon the use of the information -

and she had, your Honour, put this confidentiality regime in place, so she knew it -

it is information which, once seen, cannot be forgotten, and that in a relatively small market place, such as the market for energy in Western Australia, there is a real risk of "leakage" of such information.

And that was adopted by the Full Court in granting the stay application.

Your Honour, the threatened breaches are of an insidious nature; no one is suggesting they would be deliberate. They are insidious, the are impossible to control, they are impossible to supervise and, with respect, the consequences are dire. My learned friend refers to these documents being in ordinary commercial use. That is a point raised for the first time, your Honour, and I can tell your Honour the answer is in the affidavits filed. There was said on a number of occasions that these documents are on a strictly "need to know" basis within those companies and it was for that reason that the parties originally raised the issue of oppression because they said it was only a very limited high-ranking number of people who would be able to go and find these documents and look for them. It is not the ordinary employees; not the secretary who might leave from month to month, et cetera.

Your Honour, if one looks at public policy here, is it seriously contended by the respondent that public policy requires that the courts be burdened by these types of non-justiciable issues? That respondents, in the position of Western Power, in this matter, are able to bring the full administration of justice to bear upon innocent strangers to a contractual arrangement, a price-fixing determination of these two parties. In my submission, public policy is against the interpretation contended for by the respondent. And then second lastly, your Honour, relevance: we rely on procedural irregularity as well. I will stress that.

The last point, your Honour, the long and expensive arbitration: your Honour, the prevailing contract price notices go back to 30 June 1996. This matter has been on foot for over a year. My submission is that the parties to the so-called arbitration have been conducting it at their leisure and at their convenience. They privately arrange a hearing, your Honour, at a time when there is a stay application in place and at a time when the appeal hearing is still pending. That they do not know when the appeal judgment will be handed down and they do not know what the outcome will be, and one has to ask the question, your Honour, what would they have done with the so-called arrangements if the appeal judgment had only been handed down after the arbitration was due to commence in three weeks time. Your Honour, my submission is that this is self-created urgency and what they are asking the Court to do, really, is sacrifice the rights of the applicants on the altar of their convenience. As your Honour pleases.

HIS HONOUR: Thank you, Mr Goldblatt.

On 27 June 1997 Justice Wheeler of the Supreme Court of Western Australia gave leave to Western Power Corporation, the respondent, to issue subpoenas to Apache Northwest Pty Limited, the first-named applicant in the present proceedings, the five other applicants and a large number of other companies. That leave had been sought pursuant to section 17 of the Commercial Arbitration Act (WA) which empowers the court:

on the application of any party to an arbitration agreement, and subject to and in accordance with rules of court,

to issue a subpoena requiring a person to attend for examination before the arbitrator and to produce documents specified in the subpoena.

The subpoenas directed to the applicants in the present matter, which were all subpoenas duces tecum, were sought by the respondent in connection with an arbitration between the respondent and other parties (to which it is convenient to refer as "the Woodside parties") to a contract for the supply of natural gas by the Woodside parties to the respondent. The contract is a long-term contract. It contains elaborate provisions for fixing the price of the gas that is to be supplied under it.

In her reasons for judgment Justice Wheeler records that under the Gas Supply Contract the respondent has issued to the Woodside parties a notice for redetermination of the price. The Woodside parties have not agreed to the redetermination sought by the respondent and the parties have referred that matter to an arbitrator: Western Power Corporation v Woodside Petroleum Development Pty Limited, unreported, Supreme Court of Western Australia 27 June 1997, at pages 6 to 7.

The respondent contended before Justice Wheeler that it sought documents from the persons to whom it wished the subpoenas to be directed that were documents that it, the respondent, considered might assist it in the then pending hearing of the arbitration. The applicants appealed from the decision of Justice Wheeler granting leave to issue subpoenas. On 18 July 1997 the Full Court of the Supreme Court of Western Australia extended the time for compliance with the subpoenas that had been issued until delivery of judgment in the appeal which had been instituted by the applicants or further order. The appeal was heard by the Full Court on 9 and 10 February 1998 and judgment was then reserved.

On 7 April 1998 the respondent applied to the Full Court for an order varying the order that had been made on 18 July 1997 extending the time for compliance with the subpoenas. The variation then sought by the respondent was, in effect, a variation that would have compelled compliance with the subpoenas by production of the documents to the arbitrator but would have precluded inspection of the documents produced until judgment was given by the Full Court. The Full Court declined to vary the order in this way.

On 13 May 1998 the Full Court ordered that the applicants' appeal stand dismissed and it ordered that the applicants comply with the subpoenas by 22 May 1998, that is to say, by next Friday. The Full Court announced that it would publish its reasons at a later date. Those reasons have not yet been published. The applicants sought a stay of the orders that were made by the Full Court pending hearing and determination by this Court of an application for special leave to appeal. The Full Court refused to grant the stay sought.

On 18 May 1998 the applicants applied for special leave to appeal. They now, in effect, apply for a stay of that part of the order of the Full Court which fixes next Friday, 22 May 1998, as the time for compliance with the subpoenas that have been issued.

The circumstances in which this Court will grant a stay pending a hearing and determination of an application for special leave have been considered many times. Reference is often made in this connection to the decision of Justice Brennan in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [1986] HCA 84; (1986) 161 CLR 681. Counsel for the applicants accepted that it was necessary to demonstrate special or exceptional circumstances warranting the grant of a stay, to demonstrate that there was a sufficient prospect that special leave to appeal would be granted and that it was necessary for the Court to consider whether the grant of a stay would cause loss to the respondent and to consider where the balance of convenience lies.

It is convenient to proceed on the basis adopted by the applicants and to turn first to the question of the prospects of the applicants obtaining special leave. Because the Full Court has not yet published its reasons, I have not had the advantage of considering the reasons given for dismissing the applicants' appeal. The applicants have, however, contended that there are two bases upon which they will seek to challenge the orders that were made by the Full Court: first, that there was no jurisdiction to grant leave to issue subpoenas because the gas supply contract between the Woodside parties and the respondent did not contain or amount to an "arbitration agreement", as that expression is defined in the Commercial Arbitration Act 1901 ; and secondly, that it had not been demonstrated that the documents which were identified in the subpoenas that were issued were relevant to the arbitration.

It is necessary to say something about both of these grounds. Is there an arbitration agreement? Clause 14 of the gas supply contract between the Woodside parties and the respondent provides for the fixing and adjustment of the "prevailing contract price" payable under the Gas Supply Contract. Clause 15 of the Gas Supply Contract first records that the respondent, which is the buyer of the gas, and the Woodside parties, which are the seller, agree that the provisions of clause 14 give effect to certain principles, namely:

(a) gas will be utilised by the Buyer in a mixed energy market where oil, coal and gas (including gas from other suppliers) are and/or will be used in significant quantities and compete with one another;

(b) the price of gas delivered under this Agreement must be established such that the gas on a delivered basis is competitive with all alternative energy sources which could be used for the production of electricity and its sale; and

(c) each Seller acknowledges that the price for gas delivered under this Agreement must be established so that the gas can be utilised by the Buyer for the production of electricity and its sale on a commercial basis in the South West.

These principles are referred to in the contract and have been referred to in argument as the "pricing principles".

Clause 15 of the gas supply contract then goes on to provide, in effect, that the buyer or the seller may, at any time during a contract year, serve notice on the other parties that a price redetermination is desired if, during the contract year, the buyer or the seller:

considers that the provisions of Clause 14 result in a Prevailing Contract Price which, having regard to the pricing principles referred to in Clause 15.1, fails to reflect the price of competitive energy forms in the South West.

Elaborate provision is then made for consultation between the parties and if agreement cannot be reached about a price redetermination, the matter is then to be referred to the arbitration of a single arbitrator to be appointed by agreement between the parties or in default of agreement by the court on the application of any party to the dispute under section 10 of the Commercial Arbitration Act.

As I have already mentioned, section 17 of the Commercial Arbitration Act provides, so far as presently relevant, that:

The Court may, on the application of any party to an arbitration agreement.....issue a subpoena requiring a person to.....produce to the arbitrator.....the document or documents specified in the subpoena.

The power to issue subpoenas then is exercisable by the court on the application of a party to an arbitration agreement.

An arbitration agreement is defined by the Act as:

an agreement in writing to refer present or future disputes to arbitration.

The applicants contend that clause 15 of the Gas Supply Contract between the Woodside parties and the respondent, is not an arbitration agreement and is not an arbitration agreement because, so the argument goes, the subject of the agreement is not present or future disputes. It was submitted that what is meant by the subject matter of the agreement being present or future disputes is to be understood in the same way that Justice Zelling understood "civil proceedings" when that expression was used in section 16 of the Service and Execution of Process Act (Cth). (See Alliance N.L. v AGL (1983) 70 FLR 404 at 412 to 413.)

The question that was presented for decision by Justice Zelling was, perhaps, somewhat different from the question that arises in the present matter. Justice Zelling described the question as being:

Does the Service and Execution of Process Act 1901 operate upon section 19 [of the Arbitration Act 1891 (SA)] as process of the State so as to require those served with the subpoena to attend and give evidence or produce documents as the case may be.

His Honour held that the arbitration in aid of which the subpoenas in question had been issued was an arbitration that would, in his Honour's words:

Result in legislation for the future, not the decision of disputes, present or future, relating to existing rights -

70 FLR 404 at 412. His Honour adopted the statement found in volume two of the 4th edition of Halsbury's Laws of England at paragraph 503 that:

The dispute or difference which the parties to an arbitration agreement agree to refer must consist of a justiciable issue triable civilly

and concluded that the arbitrators in the matter then under consideration were not being asked to pronounce on a dispute as to existing rights but were laying down either a price or a formula for a price legislatively for the future. Accordingly, in his Honour's view, there was no power under the Service and Execution of Process Act 1901 to issue subpoenas.

In Santos Limited v Pipelines Authorities of South Australia (1996) 66 SASR, at 38, Justice Debelle criticised some of what was said by Justice Zelling in Alliance Petroleum. Neither the detail of those criticisms, nor the detail of the submissions of the applicants about their validity, need now be noticed. Again, reference was made by counsel for the applicants to a number of other decisions and dicta which he contended supported the validity of the dicta of Justice Zelling in Alliance Petroleum, but I do not pause to notice their detail.

For present purposes, it is enough to note that central to the first contention propounded by the applicants is the contention that the Commercial Arbitration Act limits an arbitration agreement to one which obliges arbitrators to pronounce on a justiciable issue triable civilly which, for present purposes, means a dispute as to existing rights. Those are contentions that assume that nothing turns on differences between the statutes, which Justice Zelling and others had to consider, and those which apply in the present matter. Again I do not stay to examine that assumption.

I note what was said in PMT Partners Pty Limited (In Liquidation) v Australian National Parks and Wildlife Service [1995] HCA 36; (1995) 184 CLR 301, at 310 that:

It is of fundamental importance that statutory definitions are construed according to their natural and ordinary meaning unless some other course is clearly required. It is also of fundamental importance that limitations and qualifications are not read into a statutory definition unless clearly required by its terms or its context as, for example, if it is necessary to give effect to the evident purpose of the Act. The words "agreement ... to refer present or future disputes to arbitration" in s 4 of the Act are, in their natural and ordinary meaning, quite wide enough to encompass agreements by which the parties are bound to have their dispute arbitrated if an election is made or some event occurs or some condition is satisfied, even if only one party has the right to elect or is in a position to control the event or satisfy the condition.

For present purposes, however, I proceed on the basis that it is at least arguable that an arbitration agreement for the purposes of the Commercial Arbitration Act must have the characteristics referred to by Justice Zelling in Alliance Petroleum.

On that assumption, the question that would then fall for determination on any appeal from the Full Court would be whether the Gas Supply Contract has the relevant characteristics. In that regard, it may, perhaps, be of significance that (at least at first sight) the contract is one which stipulates for the resolution of a dispute between the parties to it about the price to be charged for gas supplied under it by an arbitrator, and that it might be said that that arbitrator is not at large in fixing the price.

At first sight there appears much to be said for the view that the Arbitrator would be bound to resolve the issue presented for decision by striking that price which, in the opinion of the arbitrator, best accords with the pricing principles stipulated for by the parties to the Gas Supply Contract. Again, at first sight, there would appear much to be said for the proposition that the task of the Arbitrator is not in the nature of a task of valuation but a task of arbitrating a dispute.

These are, however, matters that have not been debated fully in the course of the hearing of the present application and I am, therefore, not to be taken as expressing concluded views on them or, more generally, on the questions of construction of the Gas Supply Contract that might otherwise arise. The considerations that I have mentioned are, however, matters which may well bear upon the prospects of the applicants succeeding in their application for special leave to appeal, at least so far as the first of the grounds advanced is concerned.

So far as the second of the grounds advanced is concerned, I did not understand the question whether particular documents or classes of documents specified in the subpoenas relate to issues in the arbitration to be a question said to raise any principle of general application. Rather, as I understood the matter, the question which it is sought to agitate in this respect on appeal to this Court is the particular application of an identified and accepted criterion to particular subpoenas and particular classes of document. That is, as I understand it, this second issue is one that would turn largely, if not entirely, upon the terms of the particular subpoenas.

It is as well to say something about questions of futility and balance of convenience. Central to the submission in support of the application for stay was the contention that the application for special leave would be rendered futile if the applicants were bound to comply with the subpoenas before their application for special leave was heard and determined. It is by no means self-evident to me that that is so.

The fundamental concern of the applicants is that documents which they contend are confidential to them and contain information of great advantage to trade rivals will, if they are produced on subpoena, become known to trade rivals or otherwise cease to be confidential.

The essential commercial interest which the applicants seek to protect is an interest which is affected not by production of the documents to the Arbitrator, but by what may then happen to them and the information revealed in them. That is a matter that is concerned essentially with the orders that are made for inspection of the documents produced and the terms on which that inspection may take place. The primary judge made elaborate provision in her orders regulating the use that might be made of the documents that are produced on subpoena. At the risk of failing to record accurately the complexity of the orders that were made, the effect of the orders was that the documents were to be made available to identified counsel and solicitors, and nominated experts, only upon terms that those persons maintain confidentiality of the documents and the information contained in them.

Central to the contention made by the applicants in the present application was the proposition that, notwithstanding the elaborate nature of the provision made by her Honour for maintaining confidentiality of the documents, the information would, nevertheless, leak to trade rivals or those whom the applicants would not wish to know of them. I am not persuaded that I should now conclude that there is a sufficient risk of disobedience to the order made by her Honour, even unwitting disobedience of that order, as the applicants' contention invites me to assume.

In these circumstances I am not persuaded that the chances of the applicants obtaining special leave to appeal are sufficient to warrant making an order now for a stay. Nor am I persuaded that failure to grant a stay is likely adversely to affect the applicants or in any way to preclude them prosecuting their application for special leave to appeal. In the circumstances, the application will be refused.

MR MARTIN: If it please, your Honour, I move for an order that the application be dismissed and for further orders that the applicants pay the respondent's costs with a certificate for the attendance of counsel.

HIS HONOUR: Now, Mr Goldblatt, can you resist an order for costs?

MR GOLDBLATT: I make no submissions on costs, your Honour.

HIS HONOUR: Yes. The application will be dismissed with costs. I will certify for the attendance of counsel. There is, I think, no other matter that needs to be mentioned, is there, gentlemen? Mr Goldblatt, there is no other matter that I need deal with?

MR GOLDBLATT: No, your Honour.

HIS HONOUR: Yes, thank you. I will adjourn.

AT 4.04 PM THE MATTER WAS CONCLUDED