Toby Shnookal QC (2013) 8.4 CLInt 32.

The Victorian Court of Appeal’s judgment in Dura endorsed the decision of the Full Court of the Supreme Court of Western Australia inWMC Resources v Leighton Contractors Pty, and rejected the English approach of the House of Lords in Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd.

Both WMC and Dura held that whether or not the parties to a building contract intended a certificate by a superintendent to be final and binding might be determined by whether or not the decision of the superintendent in question involves the exercise of a discretion or merely a mechanical computation. Where a discretionary judgment is involved, therefore, the Australian courts are more likely to find the parties intended the decision to be final and binding. In turn, a court would not reopen the decision and an arbitrator may not have power to reopen it.

In the author’s opinion, most certifications made by a superintendent involve discretion in the way the courts have defined it. The recent Australian decisions represent, therefore, an unfortunate approach to the construction of building contracts that is unlikely to reflect what the parties intended. Parties intending to contract on the basis that an arbitrator has power to reopen and replace any decision a superintendent makes with his or her own should include express terms to that effect.

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