FAMILY LAW ─ APPEAL ─ FURTHER EVIDENCE ─ Natural Justice and Procedural fairness ─ Where although there was no formal application to do so, the Court treated the evidence given by the mother during the course of the hearing as further evidence within the meaning of that expression in section 93A of the Act ─ Where the learned Federal Magistrate sought valiantly to facilitate the mother being heard, notwithstanding a previous order made by another Federal Magistrate that she attend in person if she wish to be heard ─ Where the Court could not reject the mother’s evidence that through technical difficulties the opportunity the learned Federal Magistrate sought to afford her to be heard was not able to be taken up ─ Where the Court was persuaded that the mother was denied natural justice or procedural fairness ─ Appeal against the orders made in the contravention proceedings upheld and the proceedings remitted for re-hearing FAMILY LAW ─ APPEAL ─ PRACTICE AND PROCEDURE ─ Change of venue ─ Where the learned Federal Magistrate was, in the circumstances in which he found himself, entitled to conclude that the mother did not wish to participate in the proceedings, and implicit in that was an absence of desire to prosecute her application for change of venue ─ Where it was established that the order under appeal was, in the light of the further evidence which the mother relied on, erroneous without it having been established that it was erroneous at the time it was made on the evidence which presented itself to the learned Federal Magistrate ─ Appeal allowed, order dismissing the change of venue application set aside, matter remitted for re-hearing. FAMILY LAW ─ APPEAL ─ JUDGMENTS─ Insufficient reasons ─ Established that the learned Federal Magistrate failed to provide adequate reasons for making the location order ─ Where it was established that the absence of adequate reasons meant that the father could not demonstrate that his Honour, in fact, had regard to the matters to which he was required to have regard under the statute ─ Location order set aside and the matter remitted for re-hearing FAMILY LAW ─ APPEAL ─ COSTS ─ Where neither party was represented on the appeal ─ No entitlement to a costs certificate on the appeal emerged ─ The Court granted costs certificates to the parties in relation to the new trial ordered ORDERS (1) That the appeal be allowed. (2) That the findings and orders of FM Harman made in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 of the orders of 21 October 2011 be set side and the applications in relation thereto be remitted to the Federal Magistrates Court for rehearing. (3) That the Court grants to each party a costs certificate pursuant to the provisions of s.8 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each party in respect of such part as the Attorney-General considers appropriate of any costs incurred by each party in relation to the new trial granted by these orders.

Green & Davis [2012] FamCAFC 20 (7 February 2012)

Last Updated: 24 February 2012

FAMILY COURT OF AUSTRALIA

GREEN & DAVIS

[ 2012] FamCAFC 20

FAMILY LAW ─ APPEAL ─ FURTHER EVIDENCE ─ Natural Justice and Procedural fairness ─ Where although there was no formal application to do so, the Court treated the evidence given by the mother during the course of the hearing as further evidence within the meaning of that expression in section 93A of the Act ─ Where the learned Federal Magistrate sought valiantly to facilitate the mother being heard, notwithstanding a previous order made by another Federal Magistrate that she attend in person if she wish to be heard ─ Where the Court could not reject the mother’s evidence that through technical difficulties the opportunity the learned Federal Magistrate sought to afford her to be heard was not able to be taken up ─ Where the Court was persuaded that the mother was denied natural justice or procedural fairness ─ Appeal against the orders made in the contravention proceedings upheld and the proceedings remitted for re-hearing FAMILY LAW ─ APPEAL ─ PRACTICE AND PROCEDURE ─ Change of venue ─ Where the learned Federal Magistrate was, in the circumstances in which he found himself, entitled to conclude that the mother did not wish to participate in the proceedings, and implicit in that was an absence of desire to prosecute her application for change of venue ─ Where it was established that the order under appeal was, in the light of the further evidence which the mother relied on, erroneous without it having been established that it was erroneous at the time it was made on the evidence which presented itself to the learned Federal Magistrate ─ Appeal allowed, order dismissing the change of venue application set aside, matter remitted for re-hearing. FAMILY LAW ─ APPEAL ─ JUDGMENTS─ Insufficient reasons ─ Established that the learned Federal Magistrate failed to provide adequate reasons for making the location order ─ Where it was established that the absence of adequate reasons meant that the father could not demonstrate that his Honour, in fact, had regard to the matters to which he was required to have regard under the statute ─ Location order set aside and the matter remitted for re-hearing FAMILY LAW ─ APPEAL ─ COSTS ─ Where neither party was represented on the appeal ─ No entitlement to a costs certificate on the appeal emerged ─ The Court granted costs certificates to the parties in relation to the new trial ordered

Family Law Act 1975 (Cth) s 93A, Part VII Federal Proceedings (Costs) Act 1981 (Cth) s 8

Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167 Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 CDJ v VAJ (1998) 197 CLR 172 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) and Others[1999] HCA 3; [1999] 160 ALR 588 Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141

APPELLANT:

Ms Green

RESPONDENT:

Mr Davis

FILE NUMBER:

SYC

2567

of

2009

APPEAL NUMBER:

EAA

132

of

2011

DATE DELIVERED:

7 February 2012

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Coleman J

HEARING DATE:

7 February 2012

LOWER COURT JURISDICTION:

Federal Magistrates Court of Australia

LOWER COURT JUDGMENT DATE:

21 October 2011

LOWER COURT MNC:

[2011] FMCAfam 1482

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Self-represented

SOLICITOR FOR THE APPELLANT:

Self-represented

COUNSEL FOR THE RESPONDENT:

Self-represented

SOLICITOR FOR THE RESPONDENT:

Self-represented

ORDERS

(1) That the appeal be allowed.
(2) That the findings and orders of FM Harman made in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 of the orders of 21 October 2011 be set side and the applications in relation thereto be remitted to the Federal Magistrates Court for rehearing.
(3) That the Court grants to each party a costs certificate pursuant to the provisions of s.8 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each party in respect of such part as the Attorney-General considers appropriate of any costs incurred by each party in relation to the new trial granted by these orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Green & Davis has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EAA 132 of 2011

File Number: SYC 2567 of 2009

Ms Green

Appellant

And

Mr Davis

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

INTRODUCTION

1. By Notice of Appeal filed 14 November 2011, Ms Green (“the mother”), appealed against orders made by Harman FM in proceedings between the mother and Mr Davis (“the father”), on 21 October 2011.
2. In essence, the orders made by the learned Federal Magistrate on that day fell within three categories.
3. The first and potentially most significant orders related to applications by the father alleging contravention of parenting orders by the mother. His Honour making findings, substantially in the terms sought by the father in those contravention applications, and imposed on the mother the obligation of entering into a recognisance, the most relevant condition of which was that the mother comply strictly with parenting orders made by the learned Federal Magistrate on 21 October 2011, and with orders previously made by consent by Henderson FM in 2010.
4. The second category of order made by the learned Federal Magistrate is what can be described as a location order to ascertain the residential address of the mother.
5. The third category of order made by the learned Federal Magistrate was an order dismissing the mother’s application to change the venue of ongoing parenting disputes between the parties from the Parramatta registry of the Federal Magistrates Court to the Albury registry of that court for want of prosecution.
6. From those orders, the mother appealed. The father resisted the appeal of the mother and sought to maintain the orders of the Federal Magistrate.

BACKGROUND

7. By way of brief background to the proceedings, the following matters can be stated. They are uncontroversial for present purposes.
8. The parties were previously in a relationship, which the evidence before this Court reveals to have concluded by at the latest some time in 2010. When in that year it concluded is not material for present purposes.
9. There are two children of the parties, T born in 2002 and now approaching 10 years of age, and M born in 2004 and now seven years of age. There are health issues in relation to the child M, who suffers from diabetes.
10. Final parenting orders were made by Henderson FM on 17 November 2010. Those orders were made by consent at a time when the father was living in Sydney and the mother in a town not far distant from Albury. Subsequently, the father relocated to a town some distance to the north of Sydney.
11. The consent orders made by Henderson FM on 17 November 2010 essentially provided that the parties retain the statutory status of equal shared parental responsibility, that the children primarily live with the mother, and spend time with the father essentially on the basis of a weekend per school term, and one half of school holidays.
12. The father’s contravention applications asserted, and Harman FM accepted, that on the occasions referred to in those applications, the father had not been afforded the time with the children to which he was entitled pursuant to the orders made on 17 November 2010. Those findings are uncontroversial for present purposes.
13. The learned Federal Magistrate found that the mother had not established on the balance of probabilities that she had a reasonable excuse for failing to provide the time to which the father was entitled with the children. His Honour varied slightly, pursuant to the provisions of Part VII of the Family Law Act 1975 (Cth) (“the Act”), some of the details of the substantive orders for time to be spent with the father. His Honour also imposed a requirement of a recognisance on the mother, and made compensatory orders.

THE GROUNDS OF APPEAL

14. The mother’s grounds of appeal and her submissions and supplementary submissions in support of them raised a number of complaints.
15. As the course of oral discussion with the parties, both of whom have been unrepresented before this Court, would confirm, early in the hearing of the mother’s appeal, the Court raised with the parties the challenge that the mother raised in her grounds of appeal and submissions in support thereof, which, although not so expressed, was in substance a natural justice complaint.

Natural justice and procedural fairness challenge

16. As the Court indicated to the mother and the father, but more relevantly for present purposes to the mother, having regard to the transcript of the proceedings before the learned Federal Magistrate and the submissions to this Court of both parties, in the absence of the mother’s natural justice challenge to the contravention findings and orders being successful, the Court struggled to discern any other basis for appellate intervention. The issue of substance was whether the mother was afforded natural justice on 21 October 2011.
17. Nothing raised by the mother establishes that any relevant finding of fact made by the learned Federal Magistrate was not reasonably open to his Honour in the circumstances which prevailed. They were that the evidence of the father, who was the applicant in the contravention proceedings, was not challenged by cross-examination, and that the evidence of the mother in her affidavits, to which his Honour referred and to which he had regard, was not able to be tested and its weight not able to be evaluated in the way it would have been had that occurred.
18. The weight liable to be given to the evidence of both parties, particularly in circumstances where that evidence was untested, was uniquely a matter for his Honour. Nothing to which the mother has referred in her submissions establishes that his Honour erred in fact or gave excessive or inadequate weight to any relevant fact or circumstance. Nor does anything raised by the mother establish that the learned Federal Magistrate’s discretion miscarried in the sense in which that term is understood by the law.
19. The focus of interest is clearly in relation to the circumstances in which the case proceeded to be heard by the learned Federal Magistrate. Before considering that issue, it is, hopefully, instructive to consider orders which apparently were made by Dunkley FM prior to 21 October 2011. Those orders appear to have been made by Dunkley FM on 17 August 2011. Those orders were never challenged, whether they required leave to appeal or not.
20. Federal Magistrate Harman on 21 October 2011 recorded (at paragraph 7 of his Reasons for Judgment) that on 17 August 2011, Dunkley FM made directions for the hearing of the proceedings on 21 October 2011, that is, the three applications or classes of application to which reference was earlier made.
21. The learned Federal Magistrate, in his Reasons for Judgment, referred also to events related to or arising from the orders of Dunkley FM of 17 August 2011. His Honour recorded:
    10. I am otherwise satisfied that Ms [Green] is aware of the proceedings and the fact that the matter is listed before the Court for hearing today. That arises from the following:
        1. Ms [Green] was legally represented, and her legal representative or their agent was present at the time that the hearing date was allocated;
        2. Ms [Green] subsequently made, through her then solicitors, an application to appear at today’s hearing by telephone. That application was dealt with by Dunkley FM in chambers and refused;
        100. Subsequent to such refusal being communicated to Ms [Green], and after her solicitors had ceased to act, emails have been forwarded by Ms [Green] to Dunkley FM’s chambers on each of 30 September and 4 October 2011 to have Dunkley FM review or reconsider his decision. That was refused by Dunkley FM and, in any event, Ms [Green] has been advised by the Court that her attendance in person is required; and
        4. A specific order was made by Dunkley FM on 17 August 2011 that “The respondent is to be personally in attendance at Court on 21 October 2011 at 9.30am.”
22. With respect to Dunkley FM, had the mother’s application been dealt with in open Court, apart from the transparency which would have resulted from doing so, the issue which Harman FM was required to address may not have arisen. The case illustrates the risks associated with making any but consensual orders “in chambers” without hearing the parties.
23. For reasons which will emerge, it is ultimately unnecessary to express a concluded view about the orders made by Dunkley FM, particularly as they have never been sought to be appealed against. With the greatest of respect to Dunkley FM, it would have been preferable in this Court’s view for his Honour to have indicated to the mother on 17 August 2011 that whether she appeared in person or by telephone on 21 October 2011 was a matter for her as a party to proceedings, but that if the mother elected not to appear in person the weight likely to be afforded her evidence in the proceedings may be adversely impacted insofar as by not appearing the mother would have deprived the Federal Magistrate on 21 October 2011 of seeing and hearing the mother give evidence under cross-examination and thereby diminishing what is generally referred to as the trial judge’s advantage. (See Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) and Others [1999] HCA 3; [1999] 160 ALR 588).
24. Thankfully, when the matter came before Harman FM on 21 October 2011, notwithstanding the previous orders, his Honour, in this Court’s view very properly sought to make telephone contact with the mother so that she could participate in the proceedings.
25. The transcript of the proceedings records that, at his Honour’s instigation, telephone contact was made with the mother. The transcript reveals that his Honour spoke on the telephone and said:

Ms [Green], my name is Federal Magistrate Harman, and I am dealing with your matter today. Can you hear me? Ms [Green], can you hear me? Well, I think we can terminate that. Nothing much is happening. We tried.

26. What time elapsed between his Honour twice asking whether the mother could hear him or not is, of course, not apparent from the transcript. It can reasonably be inferred, however, that his Honour would have allowed a reasonable time for some response before asking a second time whether the mother could hear him, and thereafter before concluding that there was little to be gained by remaining on the line. The learned Federal Magistrate there properly did everything that was required of him to afford the mother the opportunity to be heard.
27. Early in her oral submissions to this Court, the mother stated that she had, indeed, received a call from a female on 21 October 2011 at about the time referred to in the transcript, who had not identified herself, and that she had sought to reply, but had been unable to make herself heard or thereafter clearly hear what was being said by the Federal Magistrate or, it is reasonably clear, the female Court Officer who was assisting his Honour on 21 October 2011.
28. The mother stated that she remained on the line for about 10 minutes before giving up on the call and thereafter contacted Telstra. As the record would reveal, having heard what the mother asserted, the Court inquired whether that had ever been the subject of an affidavit. The mother confirmed that it had not. The Court inquired of the mother whether, understanding the significance of doing so, she swore or affirmed, albeit retrospectively, that what she had said was the truth. The mother unhesitatingly stated that she confirmed on oath or affirmation that what she had said was, in fact, the truth.
29. The father sensibly conceded that whilst he could attest to what had occurred in the courtroom in terms of the phone call on 21 October 2011, he was not able to attest to, or otherwise agree or disagree with what the mother asserted had happened at the other end of the telephone line.
30. One matter in respect of which the parties disagree is whether or not the female Court Officer identified herself as such when, as undoubtedly occurred, she instigated the phone call to the mother.
31. The father asserts, he having been there, that the Court Officer did identify herself when instigating the call. It is the invariable practice, and for good reason, that Court Officers when making telephone calls to parties to proceedings or their legal representatives or witnesses, identify themselves as such, and again for good reason indicate that the Court is in session. They may or may not indicate that proceedings are being recorded, but certainly indicate that the Court is in session. On balance, the Court is satisfied that the mother is mistaken as to that aspect of the telephone call. It does not follow that she is either mistaken about, or untruthful in relation to what she asserts occurred thereafter.
32. To put matters into their proper context, although there is no formal application to do so, in the circumstances, they being that both parties are unrepresented and that natural justice is a matter of fundamental importance in our judicial system, the Court has treated the evidence given by the mother during the course of the hearing as further evidence within the meaning of that expression in section 93A of the Act.
33. To be significant in the context of this appeal, if accepted, the further evidence would need to render erroneous the decision under challenge. The High Court in CDJ & VAJ (1998) 197 CLR 172 per McHugh, Gummow and Callinan JJ said that section 93A of the Act was remedial in nature, and that its principal purpose was:
    109. ...to give to the Full Court a discretionary power to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors which cannot be otherwise remedied by the application of the conventional appellate procedures. ...
34. The further evidence of the mother is not inherently improbable. It may or may not be truthful or accurate. This Court has no rational basis for saying either that the mother is mistaken about what occurred after the Court Officer commenced the phone call, or that the mother is being untruthful about that. For the purpose of the application under section 93A of the Act the mother’s evidence can be accepted.
35. The question then becomes whether acceptance of that evidence demonstrates that the order under challenge is erroneous. The order under challenge could be erroneous because it resulted in a denial of natural justice. If this challenge succeeds, that does not in any way reflect adversely on the learned Federal Magistrate.
36. With great respect to his Honour, what he sought to do was exemplary in the context of the proceedings where, as the record reveals, another Federal Magistrate had previously made a direction, the effect of which may have been that unless she appeared in person the mother would not be heard.
37. The learned Federal Magistrate sought valiantly to facilitate the mother being heard, notwithstanding Dunkley FM’s previous order that she attend in person if she wished to be heard. If this challenge succeeds it would be because of what did not happen rather than what his Honour sought to have happen, and would not involve any criticism of anything done by his Honour.
38. The High Court in Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 considered the principles of natural justice which are relevant in this Court. In his judgment, Kirby J, commencing at paragraph 35, set out in considerable detail the basis of the foundations of natural justice:

The principle to afford a hearing

35. It is a principle of justice that a decision-maker, at least one exercising public power, must ordinarily afford a person whose interests may be adversely affected by a decision an opportunity to present material information and submissions relevant to such a decision before it is made. The principle lies deep in the common law. It has long been expressed as one of the maxims which the common law observes as “an indispensable requirement of justice”. It is a rule of natural justice or “procedural fairness”. It will usually be imputed into statutes creating courts and adjudicative tribunals. Indeed, it long preceded the common and statute law. Even the Almighty reportedly afforded Adam such an opportunity before his banishment from Eden.
36. The rule is also implicit in international principles of human rights. It is inherent in the proper conduct of judicial proceedings in a court of law. It may even be an implied attribute of the Judicature established under, and envisaged by, the Constitution. So deeply ingrained is the principle that more recent times have seen its extension, with certain exceptions, to administrative tribunals and other decision-makers. The principle governed the Family Court of Australia in determining the rights of the present parties.
37. The foregoing provides the context of principle and of law within which the problem presented by this appeal must be resolved. That context is not contested. It occupied no time either in the Family Court of Australia or in this Court. It is a given. But it affords the starting point for legal analysis.

The acceptance of the error of the primary judge

38. The facts and issues are set out in the reasons of Gaudron, McHugh, Gummow and Hayne JJ (the joint reasons). Having regard to the circumstances in which the initial proceedings took place in the absence of Mr Allesch (the appellant), it is worth emphasising that the principle just described does not require that the decision-maker actually hear (or receive the submissions of) the party potentially liable to be adversely affected. Sometimes, through stubbornness, confusion, misunderstanding, fear or other emotions, a party may not take advantage of the opportunity to be heard, although such opportunity is provided. Affording the opportunity is all that the law and principle require.
39. Decision-makers, including the courts, cannot generally force people to protect their own rights, to adduce evidence or other materials, to present submissions or to act rationally in their own best interests. This consideration may be especially relevant in relation to the Family Court where emotions, often engendered by the highly personal issues involved, can sometimes cloud rational thought.
40. Nor are courts obliged to delay proceedings indefinitely because one party, although proved to be on notice of the proceedings, refuses or fails to appear in person or to be represented by a lawyer or some other individual permitted to speak for them who can explain the need for an adjournment. The rights of other parties are commonly involved. In the Family Court, the rights of non-parties (especially children) may be affected. Additionally (as this Court has itself accepted), the rights of the public in the efficient discharge by courts of their functions must be weighed against unreasonable delay in concluding litigation.
41. Nevertheless, mistakes occur. In legal proceedings, they sometimes occur because of defaults on the part of lawyers which, in a particular case, ought not to be visited on an innocent client. ... (Footnotes omitted).
39. For present purposes however, and hopefully with sufficient detail for the parties to understand, it can be suggested that Kirby J there emphasised (in paragraph 35) the principle of justice that a court must ordinarily afford a person whose interests may be adversely affected by a decision an opportunity to present material information and submissions relevant to such a decision before it is made. Kirby J described that as an indispensible requirement of justice according to the common law which we have inherited from the English justice system.
40. Kirby J accepted, uncontroversially there is no question, that the principle is applied in the Family Court of Australia. His Honour said subsequently, (in paragraph 38) that the principle “does not require that the decision-maker actually hear (or receive the submissions of) the party potentially liable to be adversely affected” what is important is that it is the opportunity to do so “that the law and principle require.”
41. As Kirby J said, (at paragraph 38) “sometimes, through stubbornness, confusion, misunderstanding, fear or other emotions, a party may not take advantage of the opportunity to be heard, although such opportunity is provided.” Later his Honour reiterated, (in paragraph 39) that the courts cannot force people to protect their own rights. It is the opportunity to do so. His Honour, though, (in paragraph 41) recorded that in legal proceedings mistakes sometimes occur because of defaults on the part of lawyers, parties, sometimes through no one’s fault. The important thing is, was the opportunity to be heard afforded, or was it not?
42. If the opportunity was not afforded in this case through no fault of any person, and particularly not the fault of the learned Federal Magistrate, that does not change things if the opportunity to be heard was, in fact, lost. Can it be inferred that the mother sought and continued to seek the opportunity to be heard before the learned Federal Magistrate? On balance, it can, in this Court’s view, be concluded that she did. That is not based on any impressions of this Court, but rather on the narrative which finds expression in the Reasons for Judgment of the learned Federal Magistrate of 21 October 2011, and in particular, paragraph 10 as referred to earlier.
43. How likely was it that, having done as she had, and given the nature of the applications brought by the father, and the reality that the mother herself had a change of venue application, that she would not have wished to be heard. The fact that the mother answered the telephone on 21 October 2011 is itself corroborative of her having wished to be heard.
44. As noted earlier, the Court cannot reject the mother’s evidence that, through technical difficulties, the opportunity Harman FM sought to afford her to be heard was not able to be taken up. In the circumstances, and stressing that so concluding involves no criticism of Harman FM whatsoever, the Court is persuaded that the mother was denied natural justice or procedural fairness.
45. Could any submissions the mother might have made, or any evidence in cross-examination she may have given over the telephone have changed anything? It can, however, be recorded, consistent with the decision of the High Court in Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141 that the evidence before the learned Federal Magistrate, though suggesting a high likelihood that the outcome of the contravention applications would have been no different, does not establish that no other outcome could have resulted had the mother been heard on 21 October 2011. The success to which the mother is prima facie entitled by virtue of the absence of natural justice or procedural fairness ought not be denied her in those circumstances.
46. The appeal against the orders in the contravention proceedings will accordingly be upheld and those proceedings remitted for re-hearing before a Federal Magistrate, whether that be Harman FM or another Federal Magistrate, being a matter for the parties.

Change of venue

47. The second issue relates to the change of venue application.
48. His Honour dismissed the mother’s application for want of prosecution. In the circumstances in which he found himself on 21 October 2011, that was a course open to his Honour. In the circumstances in which he found himself, the learned Federal Magistrate was entitled to conclude that the mother did not wish to participate in the proceedings, and implicit in that was an absence of desire to prosecute her application for change of venue.
49. The further evidence to which reference has been made in the context of the contravention findings has relevance to this challenge, although, as the course of discussion with both parties makes clear, having been dismissed for want of prosecution, and not after a determination on the merits, his Honour’s order would not appear to give rise to any res judicata issue estoppel.
50. The further evidence upon which the mother relies does, in the Court’s view, establish that the order under appeal was, in the light of that further evidence, erroneous without it having been established that it was erroneous at the time it was made on the evidence which presented itself to the learned Federal Magistrate.
51. This Court will accordingly allow that appeal, set aside the order dismissing the change of venue application and remit that matter for re-hearing.
52. Again, it cannot be said that the application could have met no other fate than the fate it met on 21 October 2011.

Location order

53. The third matter relates to what has been described as a location order.
54. In her grounds of appeal, the mother squarely challenged the making of that order, asserting that in a number of respects which she identified, the learned Federal Magistrate had failed to consider the matters which the statute required him to consider with respect to that issue. The natural justice point was also relevant in that context. These challenges can be simply disposed of.
55. It is clear, beyond doubt from the transcript that the primary focus of the learned Federal Magistrate’s attention, quite properly, on 21 October 2011 was the series of contravention applications prosecuted on that day by the father.
56. Without in any way diminishing the significance of the location order, it was very much ancillary or subsidiary to the primary matter which was before the learned Federal Magistrate.
57. Given that his Honour was entitled, as events emerged on the telephone that day, to conclude that the mother had no interest in the proceedings and, indeed, was avoiding or evading the Court’s processes, his Honour was perhaps understandably less concerned to give, or perhaps overlooked giving, any reasons for making the location order.
58. With respect to his Honour, as any Judge or Federal Magistrate who has served for any time would accept, the failure to provide reasons for the location order was in the circumstances then prevailing understandable, and something which very few Judges or Federal Magistrates have not been guilty of. Whilst this Court can well understand how his Honour failed to provide reasons for the location order, understanding how an error occurred does not provide a legal basis for declining to uphold a challenge when appealable error is demonstrated. The Court is not persuaded that the location application could have had no other outcome.
59. The absence of adequate reasons means that the father cannot begin to demonstrate that his Honour had regard to the matters to which he was required to have regard under the statute.
60. This challenge is entitled to succeed.
61. The location order should be set aside and the matter remitted for re-hearing with the other matters to which reference has been made.

CONCLUSION

62. In conclusion, and yet again emphasising that the success of these challenges does not involve any criticism of the learned Federal Magistrate, and stems squarely from the absence of procedural fairness, despite his Honour’s commendable attempts to provide it, means that the mother’s appeal succeeds, the orders referred to will be set aside and the three sets of applications remitted for re-hearing.

Costs

63. Neither party has been represented on the appeal. No entitlement to a costs certificate on the appeal emerges.
64. The parties may wish, and would be greatly advantaged, if they had competent legal representation and heeded it, on the re-hearing of these applications. That is not said critically of the parties, each of whom has, with respect, conducted himself and herself with commendable restraint and attention to the real issues before this Court, but the reality is that if they are represented the slim prospect of the next round of litigation being the last is perhaps enhanced.
65. The Court will accordingly grant costs certificates to the parties for the re-hearing, hopefully to enable them to obtain legal representation and move a step closer to an end to what appears to be turning into a very unfortunate saga of litigation for both parties.

Undertaking

66. It remains to note that during the course of the hearing of the appeal, the mother proffered an undertaking not to change her post office box address without first giving the father not less than three months’ notice in writing of her intention to do so. The record would reveal that the Court established that the mother understood what an undertaking was, what giving an undertaking involved and, importantly, what sanctions or penalties she might be liable to if, having given an undertaking, it was subsequently established that she breached it.
67. In the circumstances, although the mother is not physically present to give the undertaking, the Court is willing to note the mother’s undertaking in the terms which have been indicated. What impact that has on the remitted application for a location order remains to be seen and nothing this Court does or will do impacts upon that. That is a matter for the parties. But the undertaking has been given to the Full Court, it is noted on the records of the Full Court, if it is breached it is in the Full Court that the mother will be answerable. For those reasons, the Court has made the orders which have been indicated.

I certify that the preceding sixty seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Coleman J delivered on 7 February 2012.

Associate:

Date: 16.02.2012

The opponent/appellant submitted they had been in the business of manufacturing and marketing of linear low density polyethylene and high density polyethylene resins are entirely different. The trade mark is derived from the corporate name and the combination of letter T with word TITANLENE which is structurally, visually and phonetically different to the opponent trade mark. The purchasing public of the rival marks are also different. The mark was applied for proposed to be used. On reply to this, the respondent submitted that they are the global proprietor of various trade mark containing the logo ‘T’ and Titan word like TITANEX, TITANPRO, TITANZEX, TITANCEED, etc. There is absolutely no similarity with the appellant mark. 3. The Registrar first took up the Section 9 objection and held that the unique combination of the different features of the mark should be taken into account and this mark is a composite mark containing letter ‘T’ in a logo form and word TITANLENE which is capable of distinguishing the goods of the respondent herein from the goods of the other traders. 4. Next the Registrar held that there was no evidence to show that the appellant herein using the mark in respect of the goods falling under Class 2. The Registrar relied on several judgments and held that there is no evidence of deception and confusion. The Registrar was also satisfied that the adoption was bonafide.

INTELLECTUAL PROPERTY APPELLATE BOARD

Guna Complex Annexe-I, 2nd Floor, 443, Anna Salai, Teynampet, Chennai-600018

(CIRCUIT BENCH SITTING AT DELHI)

OA/47/2007/TM/DEL

FRIDAY, THIS THE 18^TH DAY OF MAY, 2012

Hon'ble Smt. Justice Prabha Sridevan                               … Chairman      

Hon'ble Shri V. Ravi                                                                 … Technical Member

M/s. T.T. Industries,

Through its Proprietor R.C. Jain.

879, Master Prithvi Nath Marg,

Karol Bagh, New Delhi – 110 005.                                           … Appellant

           

(By Advocate – Shri Alok M. Shah)

                                              

Vs.

M/s. Titan Polythylene (Malaysia)

Sdn. Bhd., Re, No.17, Lorong Dungun,

Damansara Heights, 50490,

Kuala Lumpur, Malaysia.                                                        … Respondent

                                               

(By Advocate – Shri Vishnu Rethinam)

ORDER (No.136/2012)

Hon’ble Smt. Justice Prabha Sridevan, Chairman:

            The opponent is the appellant. The opposition was disallowed rejecting the objections under Section Nos. 9, 11 and 18.  The respondent filed an application for registration of label mark consisting of the word TITANLENE and the letter T.T. in Class 2 in respect of raw and natural resins.  It was advertised in the Trade marks Journal No.1292 dated 1.4.2003 under application No.839855.  The appellant filed his opposition as they have been on the hosiery and readymade garments business in class 25 from 1968.  They had also diversified their trade and gained tremendous reputation.  They are registered proprietor of different trade marks in Classes 23, 24 and 25.  They have opposed anyone who tried to falsely apply this mark to their goods.  The applicant’s adoption is malafide and cause confusion. 

2.         The opponent/appellant submitted they had been in the business of manufacturing and marketing of linear low density polyethylene and high density polyethylene resins are entirely different.  The trade mark is derived from the corporate name and the combination of letter T with word TITANLENE which is structurally, visually and phonetically different to the opponent trade mark.  The purchasing public of the rival marks are also different.  The mark was applied for proposed to be used.  On reply to this, the respondent submitted that they are the global proprietor of various trade mark containing the logo ‘T’ and Titan word like TITANEX, TITANPRO, TITANZEX, TITANCEED, etc.  There is absolutely no similarity with the appellant mark. 

3.         The Registrar first took up the Section 9 objection and held that the unique combination of the different features of the mark should be taken into account and this mark is a composite mark containing letter ‘T’ in a logo form and word TITANLENE which is capable of distinguishing the goods of the respondent herein from the goods of the other traders.

4.         Next the Registrar held that there was no evidence to show that the appellant herein using the mark in respect of the goods falling under Class 2.  The Registrar relied on several judgments and held that there is no evidence of deception and confusion.  The Registrar was also satisfied that the adoption was bonafide.

5.         The learned counsel for the appellant submitted that they had been using the mark T.T. since the beginning of the year 1968 as the initials of their trading style.  Before that the mark was used by the predecessor-in-interest, M/s. Tarun Textiles Private Limited in respect of Hosiery goods.  Now they have diversified and expanded the area of business.  According to the learned counsel, T.T. has obtained tremendous reputation and acquired distinctiveness.  They are the proprietors of other marks.  According to them, the impugned application consists of the letter T.T. imposed one another and the word TITANLENE  is placed in small letter and it is confusing and deceptively similar.  The counsel referred to the Annexure ‘A’ where all the applications filed by the appellant are given.  The learned counsel also submitted that there is no whisper in the entire counter statement regarding the date and year of user.

6.         He referred to page 40 in Volume II which is the Weekly Hosiery Report of the year 1974 dated 26.10.1974, the appellants mark was advertised.  The learned counsel also referred to page 54 Volume II which is the Trade Mark Caution Notice.  Page 209 onwards are the documents to show sales.  Several orders in opposition proceedings have been enclosed, to show how vigilantly the appellant has been protecting its mark and using it for a long time.

7.         The counsel also referred to the evidence in support of the opposition, regarding this diversification and the sale figures.  The learned counsel submitted that the appellant has left no stone unturned to protect his mark.

8.         The counsel submitted that the Volume III which deals with the sales figure of the respondent and is referred to as Exhibit-A cannot be received in evidence since no Exhibit – A is referred to in the affidavit of Mr. Koh Boon Wah.  The learned counsel referred to the evidence stating that they have been using the mark for many years in other countries.  He submitted that user elsewhere cannot make a mark distinctive.  The learned counsel submitted that the Registry had applied two different yardsticks for the appellant and the respondent.  The learned counsel submitted that when the mark is proposed to be used, Section 12 will not come into play.

The learned counsel referred to 2004 (30) PTC 345 (IPAB) – Berkefeld Filter Analagenbau GmbH  Vs.  Registrar of Trade Marks and Others

1997 (17) PTC (DB)– Rob Mathys India Pvt. Ltd. Vs. Synthes Ag chur

1999 PTC (19) 521 – Essel Packaging Limited and Others Vs.  Essel Tea Exports Ltd.

2005 (31) PTC 121 (IPAB) – Pradeep Kumar Dhoot & Anr. Vs. Jai Prakash Gupta & Others

2009 (41) PTC 184 (Cal.) (FB) – Sony Kabushiki Kaisha Vs. Mahaluxmi Textile Mills

2012 (49) PTC 209 (Del.) (DB) – Trans Tyres India Pvt. Ltd. Vs. Double Coin Holdings Ltd. & Anr.

(1941) 58 RPC 147 – Saville Perfumery Ld. Vs. June Perfect Ld. And F.W. Woolworth & Co. Ld.

AIR 1965 SC 980 – Kaviraj Pandit Durga Dutt Sharma Vs. N.P. Laboratories (Ayyangar J.)

2010 (44) PTC 448 (Cal.) – R.R. Proteins and Agro Limited Vs. Hari Shankar Singhania and Anr.

AIR 1953 SC 357 – National Sewing Thread Co. Ltd. Chidambaram Vs. James Chadwick & Bros. Ltd.

9.         The learned counsel for the respondent made oral and written submission. According to him there is no deceptive similarity.  The caution notice was only in relation to Hosiery goods. The addition of the graphic was sufficient to distinguish the impugned mark, there was no justification for interference.

These are the marks.

10.       The Registrar on looking at the marks was convinced that the composite mark containing a letter T with the word TITANLENE was not likely to confuse.  The Learned Registrar was correct in concluding that since the purchasing public is different and the class of goods is different, there is no likelihood of confusion.

11.       The objection raised by the appellant that the evidence filed in Volume-III cannot be received since there is no reference to Volume ‘A’ in Mr. Koh Boon Wah affidavit must be accepted.  The evidence filed under Rule 52 in support of the application must be referred to the affidavit.  There is a petition filed by the advocate to take on record, the affidavit of KOH BOON WAH along with the affidavit.  But the affidavit filed by the said officer does not refer to the evidence requesting that it should be recordal evidence. 

12.       However, in this case that will not change our conclusion.  But we refer to it indeed to impress the importance of referring to the evidence in the affidavit.  It is necessary to describe each document in detail.  The affidavit is filed in lieu of giving oral evidence.  So the affidavit must state on oath,  to give an example “Ex. A1 is the registration Certificate, Ex. A2 is the sales statistics certified by our auditor, Ex. A3 are the invoices to show sales of our goods from 1983” and so on. Only if the document is proved as above it can be received as evidence.  We are not able to find any error in the approach of the Registrar.  We have reproduced the marks above to show that no one will mistake the one mark for the other. 

13.       The respondent referred to the decision of the Board where the Board held that

22.       It is a well settled principle that the prior users rights are to be protected against the subsequent user.  In the instant case, the issue as to who is the prior user or adopter need not have to be gone into when we have already decided that the rival marks are not similar.

23.       The other issue as to possibility of confusion or deception also fails on account of the reason that in our considered opinion that the marks are not deceptively similar.  Therefore, the objection raised by the Respondent does not sustain.

            In National Sewing Thread Co. Ltd. Vs. James Chadwick & Bros. Ltd. case, the Supreme Court held that the consideration in passing off action are different than the consideration in an application for registration and that the burden of proving that the trade mark is not likely to deceive cause confusion is on the applicant.  The Supreme Court held that the real question was how an average man react to a particular trade mark.  This ratio favours  the respondent.

            2010 (44) PTC 448 (Cal.) – R.R. Proteins and Agro Limited Vs. Hari Shankar Singhania and Anr.  – Learned Judge held that the defendants had not been able to establish “Sandhya Arati” was prior to the plaintiff adoption of ‘Arati’ and the nature of the goods are the same therefore this would not apply for the present case.

            AIR 1965 SC 980 – Kaviraj Pandit Durga Dutt Sharma Vs. N.P. Laboratories (Ayyangar J.) – the Supreme Court held that the similarity between the two marks is so close either visually, phonetically or otherwise no further evidence is required. 

In this case the respondent mark is a composite mark and the marks are not identical.

            1941 (58) RPC 147 – Saville Perfumery Ld. Vs. June Perfect Ld. And F.W. Woolworth & Co. Ld. – in that case the essential feature of the plaintiffs mark, so the special script in which the word June written and it was held that this essential feature of this mark had been taken by the appellant and used as a mark for goods of the class for which the respondent mark was registered. 

In this case, the duplication of the word is not at all identical in both the marks and the class of goods are different.

            2012 (49) PTC 209 (Del.) (DB) – Trans Tyres India Pvt. Ltd. Vs. Double Coin Holdings Ltd. & Anr. – It is referred to the Territoriality Doctrine and said that the prior use of the trade mark in a dominion would not ipso facto entitle to owner to claim exclusive trade mark rights in another dominion. 

In this case it is not on the ground of priority but on the ground of dis-similarity and unlikelihood of confusion that the respondents mark was ordered to be registered.

            2009 (41) PTC 184 (Cal.) (FB) – Sony Kabushiki Kaisha Vs. Mahaluxmi Textile Mills  The Full bench of the Calcutta High Court held that an infringement action was maintainable even in respect of different class of goods. There the mark was Sony. 

Here the mark is not just T.T. alone but it is a composite mark. Further the depiction of the appellants mark is always T.T. inside the onion like figure.  This has nothing to do with shaded straight T’s the respondent had been using.

            2005 (31) PTC 121 (IPAB) – Pradeep Kumar Dhood & Anr. Vs. Jai Prakash Gupta & Others. – This Board held that two identical marks cannot be registered merely because of goods are different description. 

Here the Registrar rightly come to the conclusion with the two marks are not identical.

            1999 PTC (19) 521 – Essel Packaging Limited and Others Vs. Essel Tea Exports Ltd. – Hon’ble Bombay High Court held that confusion and deception to the public is the relevant consideration that arose in a passing off and their ESSEL was the mark and the explanation for adopting the mark was not acceptable. 

Here, the companies name is starts with T and according to the respondent that is the reason why they have adopted.  It is a plausible explanation.

            1997 (17) PTC (DB) – Rob Mathys India Pvt. Ltd. Vs. Synthes Ag Chur  The Hon’ble Delhi High Court held that to use abroad was not relevant and trade mark law has no extra territorial application.

            In the view that we have taken that there is no deception or confusion, this case will not apply.

            2004 (30) PTC 345 (IPAB) – Berkefeld Filter Analagenbau GmbH Vs. Registrar of Trade Marks & Others. – Both the marks were Berkefeld.  In that case, the opposition was allowed and the Board held that the applicant has to establish the right to claim such registration and the question of user was relevant since the applicant had changed user from proposed user to user from 1984. 

In this case, the mark remains proposed to be used.

14.       The respondent has asserted his right to registration on the ground that the adoption is honest because T is the first letter of the name of its company and that the mark should be treated as composite mark and that there is no likelihood of confusion.  The Registrar accepted this and ordered registration, we do not see any perversity in the order.  We are not inclined to interfere with it.

15.       The appeal is dismissed with costs of Rs.3000/-.

           

           

(V. Ravi)                                                                 (Justice Prabha Sridevan)

Technical Member                                              Chairman

(Disclaimer: This order is being published for present information and should not be taken as a certified copy issued by the Board.)

The case of the applicant is that their mark is also JAILAXMI and it is for the same goods. According to them, since the applicant is the predecessor in business and are the prior adaptors and prior user of the trade mark under No.679795 in class 07. The subsequent user of mark must be removed. They claim user from 1979 and the trade mark has been applied for on 12.09.1995. They claim that by continuous use of the mark, the mark has acquired tremendous reputation and in any event, the respondent’s mark is proposed to be used mark and therefore the mark does not have any distinctive character and is liable to be removed. It is also submitted that the registered proprietor who are in the same place ie. Nagpur are not in existence in the market. The learned counsel failed to file the counter statement therefore this Board must allow the rectification application.The applicant cannot attack the mark on the basis of distinctiveness, since their mark is the same. But their mark is definitely prior in adoption and use. The marks are the same and the goods belong to the same class. The respondent is a subsequent user of the mark as the use shown is proposed to be used. In these circumstances, since the applicant has proved priority they are entitled to seek rectification. Accordingly, ORA/148/2006/TM/MUM is allowed with no cost.

INTELLECTUAL PROPERTY APPELLATE BOARD

Guna Complex Annexe-I, 2nd Floor, 443, Anna Salai, Teynampet, Chennai-600018

(CIRCUIT BENCH SITTING AT MUMBAI)

ORA/148/2006/TM/MUM

FRIDAY, THIS THE 18^TH DAY OF MAY, 2012

Hon'ble Smt. Justice Prabha Sridevan                                    … Chairman      

Hon'ble  Ms. S. Usha                                                                     … Vice-Chairman

Govindrao Sakharam Mahadure and Others

M/s. Dagoba Engineering Works,

7-8 Shashtri Nagar,

Old Bagadganj Road,

Nagpur – 400 008.                                                                   … Applicant

           

(By Advocate – Ms. M. Jaya)

                                              

Vs.

1.         Shree Vyankateshwara Industries,

94, Chikhli Industrial Area,

Nr. Mini Mata Nagar Railway Crossing,

Nagpur  – 445 008.

2.         The Registrar of Trade Marks,

            Trade Marks Registry,

            Boudhik Sampada Bhawan,

            Delhi .                                                                          … Respondents

                                               

(By Advocate – None)

ORDER(No.137/2012) 

Hon’ble Smt. Justice Prabha Sridevan, Chairman:

            The Original Rectification Application is for removal of the mark JAILAXMI under No.1303281 in Class 07 in the name of Shree Vyankateshwara Industries.

2.         The original notice of hearing was sent to the respondent on 11.12.2006 but the Registry did not receive either the cover returned or AD card.  This matter has been filed in 2006.  The applicant addressed a letter to the Board that since no one was appearing on behalf of the respondent the matter may be listed.  It was accordingly listed on 2.12.2011 after issuing notice to both the parties.  On 2.12.2011, no one appeared on behalf of the respondent.  We directed the applicant to send a registered notice which was sent on 2.12.2011 intimating the hearing on 15.03.2012.  On 15.03.2012, there was still no representation on behalf of the respondent.  The learned counsel for the applicant submitted that the respondent was very much at the same place but is avoiding the service.

3.         Before we heard the counsel for the applicant, we found that no affidavit to prove the evidence had been filed and therefore we asked the learned counsel for the applicant, how the documents could be admitted in absence of proof.  We said that in the absence of affidavit to prove the evidence, it cannot be received, unless a petition is filed in this regard and only if a petition is filed an appropriate order can be passed. So an application was filed (Miscellaneous Petition No.88 of 2012).  This was ordered on payment of cost of Rs.2000/-.  The cost has been paid. 

4.         The case of the applicant is that their mark is also JAILAXMI and it is for the same goods.  According to them, since the applicant is the predecessor in business and are the prior adaptors and prior user of the trade mark under No.679795 in class 07.  The subsequent user of mark must be removed.  They claim user from 1979 and the trade mark has been applied for on 12.09.1995.  They claim that by continuous use of the mark, the mark has acquired tremendous reputation and in any event, the respondent’s mark is proposed to be used mark and therefore the mark does not have any distinctive character and is liable to be removed.  It is also submitted that the registered proprietor who are in the same place ie. Nagpur are not in existence in the market.  The learned counsel failed to file the counter statement therefore this Board must allow the rectification application.

5.         The evidence filed are as follows:

Exhibit-A is the registration certificate in favour of the applicant granted on 12.091995 for Thresher Machine in Class 07.  It is a word mark JAILAXMI.  The user claim is 1.1.1978 and it was advertised in Trade Marks Journal on 15.09.2005.  The mark has been renewed. 

Exhibit – B  the partner of the applicant firm has filed an affidavit setting out the details of sales from 1.4.984 and advertisement expenditure from the same date.

Exhibit – C is the sales figure and sales promotion expenses/ advertisement expenses

Exhibit – D are the invoices date from 1985 to till date.

Exhibit – E  The evidence has also been filed to show that the advertised in the Rashtradoot Hindi Daily, Marati Daily, Lokmat, Lok Samachar.

6.         The applicant cannot attack the mark on the basis of distinctiveness, since their mark is the same.  But their mark is definitely    prior in adoption and use.  The marks are the same and the goods belong to the same class.  The respondent is a subsequent user of the mark as the use shown is proposed to be used.  In these circumstances, since the applicant has proved priority they are entitled to seek rectification.  Accordingly, ORA/148/2006/TM/MUM is allowed with no cost.

(S. Usha)                                                                (Justice Prabha Sridevan)

Vice-Chairman                                                     Chairman

(Disclaimer: This order is being published for present information and should not be taken as a certified copy issued by the Board.)

whether on the death of a named arbitrator, the arbitration agreement survives or not. Sections 14 and 15 provide the grounds for termination of the mandate of the arbitrator on the ground of incapability of the arbitrator to act or if he withdraws from his office or when the parties agree to the termination of the mandate of the arbitrator. Section 15(2) states that a substitute arbitrator shall be appointed as per the rules that were applicable to the appointment of the arbitrator being replaced. Section 15(2), therefore, has to be given - a liberal interpretation so as to apply to all possible circumstances under which the mandate may be terminated. We have carefully gone through the arbitration clause in the Agreement dated 16.12.1989 and, in our view, the words “at any time” which appear in Clause 21, is of considerable importance. “At any time” expresses a time when an event takes place expressing a particular state or condition that is when the dispute or difference arises. The arbitration clause 21 has no nexus with the life time of the named arbitrator. The expression “at any time” used in the arbitration clause has nexus only to the time frame within which the question or dispute or difference arises between the parties be resolved. Those disputes and differences could be resolved during the life time of the named arbitrators or beyond their life time. The incident of the death of the named arbitrators has no nexus or linkage with the expression “at any time” used in clause 21 of the Agreement. The time factor mentioned therein is the time within which the question or dispute or difference between the parties is resolved as per the Agreement. Arbitration clause would have life - so long as any question or dispute or difference between the parties exists unless the language of the clause clearly expresses an intention to the contrary. The question may also arise in a given case that the named arbitrators may refuse to arbitrate disputes, in such a situation also, it is possible for the parties to appoint a substitute arbitrator unless the clause provides to the contrary. Objection can be raised by the parties only if there is a clear prohibition or debarment in resolving the question or dispute or difference between the parties in case of death of the named arbitrator or their non-availability, by a substitute arbitrator. 22. We are of the view clause 21 does not prohibit or debar the parties in appointing a substitute arbitrator in place of the named arbitrators and, in the absence of any prohibition or debarment, parties can persuade the court for appointment of an arbitrator under clause 21 of the agreement. 23. The High Court in our view was justified in entertaining such an application and appointing a former Judge of this Court as a - sole arbitrator under the Arbitration and Conciliation Act, 1996 to adjudicate the dispute and difference between the parties. 24. In view of the above mentioned reasons, we find no reason to grant leave to appeal and issue notice on the petition for special leave to appeal and the petition is dismissed.

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                SPECIAL LEAVE PETITION (C) NO. 17689 OF 2012


ACC Limited                                              … Petitioner
(Formerly known as the Associated Cement Co. Ltd).

                                   Versus

Global Cements Ltd.                                      …Respondent


                               J U D G M E N T



K.S. Radhakrishnan, J.



1.    The question that falls for consideration in this case is  whether  on
the death of a named arbitrator, the arbitration agreement survives or not.


2.    At the very outset, let us refer to the  relevant  arbitration  clause
in the agreement dated 16.12.1989, which reads as follows:

           “21. If any question or difference or dispute shall arise between
           the parties hereto  or  their  representatives  at  any  time  in
           relation to or with -

           respect to the meaning  or  effect  of  these  presents  or  with
           respect to the rights and liabilities of the parties hereto  then
           such question or dispute shall be referred  either  to  Mr.  N.A.
           Palkhivala or Mr. D.S. Seth, whose decision in the  matter  shall
           be final and binding on both the parties.”  (emphasis added)



3.    The petitioner submits that both Shri N.A. Palkhivala  and  Shri  D.S.
Seth are no more and therefore the arbitration clause in the agreement  does
not survive.  It was pointed out that Shri N.A. Palkhivala was named in  the
agreement since he was the Chairman of the petitioner company and Shri  D.S.
Seth was named in the agreement since he was the Director  of  the  company.
Both  of  them  were  nominated  as  arbitrators  since  they  were  closely
associated with the company and also due  to  their  eminence,  impartiality
and familiarity in all commercial transactions and the corporate laws.   The
petitioner submits that since the arbitrators are no more,  the  arbitration
clause in the agreement has no life  and  hence  there  is  no  question  of
entertaining the application preferred under Section 11 of  the  Arbitration
and Conciliation Act, 1996 (for short ‘the Act’) filed by the respondent.


-

4.    The respondent, (applicant  before  the  High  Court),  refuted  those
contentions and submitted before the High Court that the arbitration  clause
in  the  agreement  would  survive  even  after  the  death  of  the   named
arbitrators and the parties can still resolve their  difference  or  dispute
by referring them to another arbitrator or move the court for  appointing  a
substitute arbitrator whose decision would be final and binding on both  the
parties.


5.    Bombay  High  Court  entertained  the  application  preferred  by  the
respondent under Section 11 of the  Act.   The  Court  took  the  view  that
clause 21 of the Agreement did constitute an agreement to refer disputes  to
arbitration and also took the view that in the absence  of  any  prohibition
or debarment, there is no reason for the court to presume an intent  on  the
part of the parties to the effect that a vacancy that arises on  account  of
a failure or inability of a named arbitrator to act cannot  be  supplied  by
the court under Section 11.  The court took  the  view  unless  the  parties
have expressly precluded such a course being followed, give  effect  to  the
policy of the law, which is to promote the efficacy of arbitration  and  the
efficacy of commercial arbitration must be preserved -

particularly  when  business  dealings  are  based  on  an  agreement  which
provides recourse to arbitration.  The designated Judge of  the  High  Court
appointed Mr. Justice S.N.  Variava,  former  Judge  of  this  Court  as  an
arbitrator to adjudicate the dispute and  difference  between  the  parties.
Legality of that order is under challenge before us.


6.    Mr. S. Ganesh, Senior Advocate appearing for the petitioner  explained
the circumstance under which Shri N.A. Palkhivala as well as Shri D.S.  Seth
was nominated as arbitrators in the  arbitration  clause  of  the  Agreement
dated 16.12.1989.  Learned  senior  advocate  pointed  out  that  Shri  N.A.
Palkhivala was an eminent jurist of high reputation and he  was  the  former
Chairman of the applicant’s company and the parties had  specifically  named
him as an arbitrator because of his familiarity and  in-depth  knowledge  of
arbitration law as well as  corporate  law.   Learned  senior  counsel  also
pointed out that Shri D.S. Seth  was  appointed  since  he  was  the  former
Director of the applicant’s company and was  familiar  with  the  commercial
transactions and he was  also  instrumental  in  dealing  with  the  various
issues between the parties.  -

Learned  counsel  pointed  out  because  of  the  special  nature   of   the
appointment of both Shri N.A. Palkhivala and Shri  D.S.  Seth,  the  parties
wanted their difference or dispute  to  be  resolved  only  by  those  named
arbitrators and on their death, the  arbitration  clause  in  the  agreement
would not survive.  Learned counsel pointed out that that was the  intention
of the parties and the same is clearly discernable from  the  facts  of  the
case and the terms of the arbitration Clause in the agreement.  Parties,  it
was  pointed  out,  never  intended  to  refer  the  dispute  to  any  other
arbitrator except the named arbitrator and such an inference  can  be  drawn
from Clause 21 and the facts of the case.    Learned  counsel  also  pointed
out that in the above  circumstances,  Section  15(2)  of  the  Act  has  no
application and the High Court has committed an error  in  entertaining  the
application under Section 11 appointing a substitute arbitrator.


FACTS

7.    The petitioner by way of Agreement dated 16.12.1989  transferred  land
admeasuring 53 acres 33 Gunthas and land admeasuring 100  acres  01  Gunthas
with buildings and Mining -

Leases granted by the Government of Gujarat in or  under  lands  admeasuring
423.22 hectares, 21.121 hectares and 4.7551 hectares to the respondent.   By
Orders dated 24.01.2002 and 03.02.2003, the Collector, Porbander as well  as
Secretary (Appeals), Revenue Department, State  of  Gujarat  held  that  the
petitioner had committed breach of condition Nos. 3, 4 and 5  of  the  order
of 1993 and condition Nos. 8 & 11 of Lease Agreement  dated  15.03.1982  and
that the said  lands  were  transferred  to  the  respondent  without  prior
permission of the Collector and as such the petitioner had committed  breach
of the conditions  of  order/lease  agreement.   The  Collector,  therefore,
resumed possession of the aforesaid lands.  Aggrieved by those  orders,  the
petitioner had filed Special Civil Applications bearing Nos.  1975  of  2003
and 1972 of 2003 inter alia challenging the orders passed by the  Collector,
Porbander and Secretary (Appeals) before the High  Court  of  Gujarat.   The
respondents were made parties in the above proceedings, the  predecessor  in
title of the  respondent  neither  initiated  any  proceedings  against  the
petitioner nor challenged those orders of the Collector,  Porbander  or  the
Secretary  (Appeals).   Therefore,  the  Special  Civil  Applications   were
dismissed by the High Court on -

15.12.2009 and appeals were not preferred against the said judgment  and  no
proceedings were initiated by the respondent as well.


8.    The respondent later sent a lawyer notice to  the  petitioner  seeking
reference of the dispute  to  an  arbitrator  involving  Clause  21  of  the
Agreement.  By a letter dated 08.10.2011, the respondent sought  to  propose
the names for appointment as a Sole Arbitrator on the ground  that  the  two
nominated arbitrators under clause 21 had expired.


9.     The  petitioner  through  their  lawyer  replied  vide  letter  dated
07.12.2011 objecting to the appointment of a substitute  arbitrator  on  the
ground that the arbitration clause 21 of the Agreement did not  provide  for
the appointment of any other arbitrator and that was the  intention  of  the
parties.   It  was  pointed  out  that  on  the  death  of  the  two   named
arbitrators, the arbitration clause itself would come to an  end  and  there
is no question of appointing another arbitrator to resolve the  question  or
dispute or difference between the parties.




10.   We have examined closely arbitration clause 21 of the Agreement  dated
16.12.1989 as well as various letters  exchanged  between  the  parties  and
ascertained the intention of the parties from the facts.



REASONING AND CONCLUSION:

11.   Clause 21 of the Agreement indisputably is  an  arbitration  agreement
which falls under Section 7 of the Act.  The intention  of  the  parties  to
enter into an arbitration agreement can therefore clearly be  gathered  from
clause 21 of the Agreement.  Clause 21 clearly  indicates  an  agreement  on
the part of the parties to refer the disputes to the  named  arbitrators  in
the Agreement.


12.   This Court in Jagdish Chander v. Ramesh Chander [(2007) 5 SCC 719]  in
a clear exposition of law has laid down the principles to be borne  in  mind
while interpreting an arbitration agreement  under  Clause  7  of  the  Act.
Existence of an agreement is not in  dispute,  the  question  is  about  its
enforceability on the death of the -

named arbitrators.  Facts clearly indicate that the  parties  in  this  case
have contemplated that if any  question  or  difference  or  dispute  arises
between them, in relation to or with respect to the  meaning  or  effect  of
the contract or with respect to  their  rights  and  liabilities,  the  same
would be referred  to  one  of  the  two  named  arbitrators  named  in  the
arbitration clause.  The question is whether Clause  21  would  outlive  the
lives of the named arbitrators.


13.   Section 14 of the Arbitration and Conciliation Act, 1996 provides  for
the circumstances in which the mandate of the arbitrator  is  to  terminate.
It says that  the  mandate  of  an  arbitrator  will  end  when  it  becomes
impossible for him to perform his functions de facto or de jure or for  some
other reasons he fails to act without undue delay or withdraws  from  office
or the parties agree to terminate his mandate.


14.   Section 15(2) of the Act provides that where a  substitute  arbitrator
has to be appointed due to  termination  of  the  mandate  of  the  previous
arbitrator, the appointment must be made according to the  rules  that  were
applicable to the appointment of the arbitrator -

being replaced.  No further application for appointment  of  an  independent
arbitrator under Section 11 will lie where there has  been  compliance  with
the procedure for appointment of a substitute  arbitrator.   On  appointment
of  the  substitute  arbitrator  in  the  same  manner  as  the  first,   no
application for appointment  of  independent  arbitrator  under  Section  11
could be filed.  Of course, the procedure agreed upon  by  the  parties  for
the appointment of the original arbitrator  is  equally  applicable  to  the
appointment of a substitute arbitrator,  even  if  the  agreement  does  not
specifically say so.  Reference may be made to the judgment  of  this  Court
in Yashwitha Constructions (P.) Ltd. v. Simplex Concrete Piles  India  Ltd.,
(2006) 6 SCC 204.



15.   Sections 14 and 15 provide the grounds for termination of the  mandate
of the arbitrator on the ground of incapability of the arbitrator to act  or
if  he  withdraws  from  his  office  or  when  the  parties  agree  to  the
termination of the mandate of the arbitrator.   Section 15(2) states that  a
substitute arbitrator  shall  be  appointed  as  per  the  rules  that  were
applicable to the appointment of the arbitrator  being  replaced.    Section
15(2), therefore, has to be given -

a liberal interpretation so as to apply to all possible circumstances  under
which the mandate may be terminated.


16.   The scope of Sections 11(6) and 15 came up  for  consideration  before
the learned designate of  the  Chief  Justice  of  India  in  San-A  Trading
Company Ltd. v. IC Textiles Ltd. [(2006) Arb.LR 11] and  the  learned  Judge
held as follows:

           “…..It therefore follows that  in  case  where  the  arbitration
           clause provides for appointment of a sole arbitrator and he  had
           refused to act, then the agreement clause stands  exhausted  and
           then the provisions of Section 15  would  be  attracted  and  it
           would be for  the  court  under  Section  11(6)  to  appoint  an
           arbitrator on the procedure laid down  in  Section  11(6)  being
           followed unless there is an agreement in the contract where  the
           parties specifically debar appointment of any  other  arbitrator
           in case the named arbitrator refuses to act.”





17.   Section 11(6) would not apply only if it is established  that  parties
had intended not to supply the vacancy occurred due to the inability of  the
arbitrator to resolve the dispute  or  due  to  whatever  reasons  but  that
intention should be clearly spelt out from  the  terms  of  the  arbitration
clause in the Agreement.


18.   The legislative policy embodied in Sections 14 and 15 of  the  Act  is
to facilitate the parties to resolve the  dispute  by  way  of  arbitration.
The arbitration clause if clearly spells out any prohibition  or  debarment,
the court has to keep its hands off and there is no question  of  persuading
or  pressurising  the  parties  to  resolve  the  dispute  by  a  substitute
arbitrator.  Generally, this stands out as an exception and that  should  be
discernible from the language of the arbitration clause  and  the  intention
of the parties.   In  the  absence  of  such  debarment  or  prohibition  of
appointment of a substitute arbitrator, the court’s duty is to  give  effect
to the policy of law that is to promote efficacy of arbitration.


19.   We are of the view that the time factor mentioned in  the  arbitration
clause “at any time” is a clear indication of the intention of  the  parties
and is used in various statutory provisions as well and the meaning  of  the
same has been interpreted by this Court in various judgments.  In Situ  Sahu
and Others v. State of Jharkhand and Others [(2004) 8 SCC 340],  this  Court
dealt with Sections 71-A and 71-B of the  Chota  Nagpur  Tenancy  Act,  1908
wherein the power was given to the Deputy Commissioner to restore -

possession  of  “raiyat”  belonging  to  Scheduled  Tribes  transferred   in
contravention of the provisions of the Act or  fraudulently.   Section  71-A
provides that “if at  any  time  it  comes  to  the  notice  of  the  Deputy
Commissioner that transfer of land belonging to a raiyat……. who is a  member
of the Scheduled Tribes has taken plea in contravention  of………..  any  other
provisions of this Act or by any fraudulent  method…..”    This  Court  took
the view that the words “at any time” in Section 71-A  is  evidence  of  the
legislative  intent  to  give   sufficient   flexibility   to   the   Deputy
Commissioner to implement the socio-economic policy of the  Act,  namely  to
prevent inroads upon the rights of the  ignorant,  illiterate  and  backward
citizens.  Certainly, the expression of the words  “at  any  time”  used  in
Clause 21 of the Arbitration Agreement is to give effect to  the  policy  of
the Act which is to promote efficacy of arbitration.


20.   In Ibrahimpatnam Taluk Vyavasaya Coolie Sanghem  v.  K.  Suresh  Reddy
and Others AIR [2003 SC 3592], this Court examined the scope of Section  50-
B of the Andhra Pradesh (Talangana  Area)  Tenancy  and  Agricultural  Lands
Act, 1950.  The Court, while interpreting the words “at any time”, took  the
view that -

the use of the words “at any time” in sub-section (4)  of  Section  50-B  of
the Act cannot be rigidly read letter  by  letter.   It  must  be  read  and
construed contextually and reasonably.   The  Court  also  opined  that  the
words “at  any  time”  must  be  understood  as  within  a  reasonable  time
depending on the facts and circumstances of each  case  in  the  absence  of
prescribed period of limitation.  In New Delhi Municipal Committee  v.  Life
Insurance Corporation of India and Others (1977) 4 SCC 84,  this  Court  was
interpreting the expression of the words  “at  any  time”  which  finds  its
place in Section 67 of the Punjab Municipal Act, 1911 read with Section  68A
which gave power to the Municipal authorities to amend the assessment  list.
  The Court held that the term “at any time” implies that the  list  may  be
amended retrospectively.   Stating otherwise would amount to denying to  the
expression “at any time” even its plain, grammatical  meaning,  quite  apart
from ignoring the context in which it occurs and the beneficent  purpose  of
its incorporation.   The Court held that the expression must  be  given  its
full force and effect, which requires the  recognition  of  the  committee’s
power to amend an  assessment  list  even  after  the  expiry  of  the  year
following the one in which the list was  finalized  by  due  authentication.
-

These decisions are, therefore, to the effect that the  expression  “at  any
time” has to be interpreted contextually and reasonably taking note  of  the
intention of the parties.


21.    We  have  carefully  gone  through  the  arbitration  clause  in  the
Agreement dated 16.12.1989 and, in our view, the words “at any  time”  which
appear  in  Clause  21,  is  of  considerable  importance.   “At  any  time”
expresses a time when an event takes place expressing a particular state  or
condition that is when the dispute or difference arises.    The  arbitration
clause 21 has no nexus with the life time  of  the  named  arbitrator.   The
expression “at any time” used in the arbitration clause has  nexus  only  to
the time frame within which the question or  dispute  or  difference  arises
between the parties be resolved.  Those disputes and  differences  could  be
resolved during the life time of the named arbitrators or beyond their  life
time.  The incident of the death of the named arbitrators has  no  nexus  or
linkage with the  expression  “at  any  time”  used  in  clause  21  of  the
Agreement.  The time factor mentioned therein is the time within  which  the
question or dispute or difference between the parties  is  resolved  as  per
the Agreement.  Arbitration clause would have life -

so long as any question or dispute or difference between the parties  exists
unless the language of the clause clearly  expresses  an  intention  to  the
contrary.  The question may also arise  in  a  given  case  that  the  named
arbitrators may refuse to arbitrate disputes, in such a situation  also,  it
is possible for the parties to appoint a substitute  arbitrator  unless  the
clause provides to the contrary.  Objection can be  raised  by  the  parties
only if there is a clear prohibition or debarment in resolving the  question
or dispute or difference between the parties in case of death of  the  named
arbitrator or their non-availability, by a substitute arbitrator.


22.   We are of the view clause 21 does not prohibit or  debar  the  parties
in appointing a substitute arbitrator in  place  of  the  named  arbitrators
and, in the absence of any prohibition or debarment,  parties  can  persuade
the  court  for  appointment  of  an  arbitrator  under  clause  21  of  the
agreement.


23.   The High Court in our view  was  justified  in  entertaining  such  an
application and appointing a former Judge of this Court as a -

sole  arbitrator  under  the  Arbitration  and  Conciliation  Act,  1996  to
adjudicate the dispute and difference between the parties.


24.   In view of the above mentioned reasons, we find  no  reason  to  grant
leave to appeal and issue notice  on  the  petition  for  special  leave  to
appeal and the petition is dismissed.





                                                             ……………………………..J.
                                             (K.S. Radhakrishnan)




                                                             ……………………………..J.
                                             (Jagdish Singh Khehar)

New Delhi
June 11, 2012