Lease Dispute Arbitration Award Appeal Denied

In a decision of Chief Justice Wayne Martin of the Supreme Court of Western Australia published 30 September 2014, two applications by the tenant of a substantial retail shop seeking leave to appeal the award of an arbitrator of a retail shop lease dispute were dismissed.  Kott Gunning appeared as counsel for the defendant landlord and was successful in both the arbitration and the Supreme Court hearing.

The citation for the decision is Solid Gold Jewellers Pty Ltd v Winston Holdings Pty Ltd [2014] WASC 361.

By way of background, the landlord leased newly renovated premises to the tenant in Perth, the lease containing an arbitration clause.  One aspect of dispute the subject of the applications for leave had arisen from findings of the arbitrator about the standard of fire sprinkler system which the landlord had been required to install in the context of the lease terms and the fact that the premises were intended to be used for retail purposes.

The tenant’s applications for leave to appeal were on the basis of:

  • Seeking leave to appeal under s38 of the Act on the basis of alleged manifest error of law on the face of the arbitrator’s award; and separately
  • Seeking leave, out of time, to amend the notice of appeal so as to assert that the award delivered by the arbitrator should be set aside under s42 of the Act for misconduct due to failure to comply with rules of natural justice.  This was due to the arbitrator making findings that the tenant bore the onus of proof to establish that there had been a breach of a clause of the lease by the landlord, yet the tenant alleged it was taken by surprise that such a finding may have been made.

The arbitration and appeal were made under the Commercial Arbitration Act 1985 (WA) which was applicable at the commencement of the arbitration.  While procedurally the tenant’s applications were irregular and the matter proceeded on the substance of the application, the Chief Justice determined that there did not appear to be any arguable basis for the contentions made by the tenant and dismissed both applications on the day of the hearing.

While the outcome in this case was a very clear victory for the landlord from a legal perspective, certainly lessons need to be taken from it:

  • With any dispute, by way of arbitration, court process or otherwise, there is usually a drawn out process which is costly and potentially damaging to relationships, particularly where there are ongoing long term relationships such as a lease;
  • While an arbitration process may be less formal and usually confidential, it remains subject to appeal and publication of decisions of the Court;
  • Commercially, the parties must be mindful of the fact that the value of the dispute must be one of such significance to make the expense of the processes, including the payment of the arbitrator’s fees and the risk of costs awards and orders, justified; and
  • While each party may be represented by experienced solicitors and counsel, the approach to interpretation of the situation the parties are in, including interpretation of the contractual arrangements between them, can be so different that it is often necessary to have the matter determined by an arbitrator or Judge as the parties’ positions can quickly become entrenched.

The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.