NORMAN MACLEOD MACKENZIE v LEINOR DEVELOPMENTS LIMITED & ORS [2001] NZCA 314 (13 August 2001)

IN THE court of appeal of new zealand

ca301/98

	between	NORMAN MACLEOD MACKENZIE
		First Appellant

	AND	LEINOR DEVELOPMENTS LIMITED
		Second Appellant

	and	ARTHUR FRANCIS STACEY
		First Respondent

	AND	WELLINGTON CITY COUNCIL
		Second Respondent

Hearing:	30 July 2001
Coram:	Gault J Keith J Blanchard J
Appearances:	B O'Callahan for Appellants R J B Fowler and K M Anderson for Respondents
Judgment:	13 August 2001

judgment (NO 2) of the court delivered by GAULT J

[1] In the judgment delivered on 30 August 1999 this Court ordered that interim and final awards be remitted to the arbitrator to reopen the arbitration to take account of a memorandum previously not disclosed to one of the parties. In making the order the Court added.

In case any difficulty arises as to resumption by that particular arbitrator, we specifically reserve leave to apply or to agree to substitution, in which case the remittance will be to that replacement.

[2] While there is no difficulty as regards availability of the arbitrator, the appellants have applied, pursuant to the leave reserved, for an order substituting an arbitrator.That has been opposed by the respondents.

[3] Because of unavailability of members of the Court who made the order, it has been necessary to convene a differently constituted court to hear argument on the matter.

[4] The substitution is sought because the arbitrator made findings in arriving at the award that will need to be re-visited in the light of the undisclosed material.It was submitted that the case will have to be presented again (though that will be for the arbitrator) and that having made findings on evidence previously presented, it will be difficult, or even impossible, for the arbitrator to put aside the conclusions, views and impressions he has already reached.The appellants say they are entitled to have the matter approached afresh by an arbitrator with a mind free of influence from the matter considered to date.

[5] In support of the submission that the parties are entitled to have the matter considered by an arbitrator with an entirely free mind, Mr O'Callahan, for the appellants, cited E Rotheray & Sons Ltd v Carlo Bedarida & Co [1961] 1 Ll. Rep. 220,225.That was a decision of McNair J on a motion to set aside or remit an award for "misconduct" of an arbitrator.Having concluded that there had been an irregularity (one of the arbitrators had relied on a translation of an Italian language document provided by a co-arbitrator), the Judge said:

The remaining question is whether this award should be wholly set aside or should be remitted to the arbitrators.As regards that, I feel it would be very difficult indeed for Mr Todd, having once committed himself to the view to which he has committed himself in the award which is sought to be set aside, with the best will in the world, to approach the question with an entirely free mind.I think it is much more likely that justice would be done between the parties if this award were set aside.

[6] In the present case we are not faced with a decision whether to remit or set aside the award.That was made by the Court previously and there was no appeal against that.Nor are we faced with any assertion of misconduct on the part of the arbitrator.There is no suggestion the award was not one open to him on the material then before him.There is no suggestion of bias or lack of good faith.

[7] The arbitrator was appointed in accordance with the process agreed upon by the parties.He is not to be removed without good reason.He is a senior counsel and there is no suggestion that he will not be competent to carry out what will be essentially a judicial function.He will be required to make findings on a factual base different from that previously considered.That is a not uncommon situation.Arbitrations and court decisions are not infrequently remitted for consideration in the light of new material.

[8] In the absence of misconduct, or established risk of bias, lack of impartiality or independence we see no reason for the arbitrator to be removed.

[9] Mr O'Callahan contended that the usual grounds for removal of an arbitrator such as bias and material misconduct are but examples of a general principle that an arbitrator should be disqualified whenever there is a risk that he or she will be unable to bring to the task an entirely free mind.We do not accept there is any such broad principle.If there were, it would disqualify arbitrators selected for their special expertise, and it would give rise to endless enquiries into the state of knowledge of arbitrators.The focus must be on grounds of prejudice or potential prejudice to the parties.They are the grounds of bias, lack of independence, impartiality and, after award, misconduct.There is neither need nor authority for more.The provisions of the Arbitration Acts are consistent with this (1908 Act s12, 1996 Act, First Schedule Art. 12(2)).

[10] The application is dismissed.

[11] The respondents are entitled to costs which we fix at $3,000 together with disbursements approved, if necessary, by the Registrar.

Solicitors

Carter & Partners, Auckland, for Appellants

Phillips Fox, Wellington, for Respondents