Pattison & Loomis: Consent To Arbitration Must Be Unequivocal

The 2021 decision of Pattison & Loomis was an appeal brought by the husband in respect of financial orders made by a judge of the Federal Circuit Court of Australia. The orders had been made in the terms decided at an undefended arbitration to which the husband said he had not consented. The court ruled that consent to arbitration under section 13E of the Family Law Act 1975 must be absolute and not conditional.

Pattison & Loomis

The appeal arose as a result of the wife seeking to register an arbitration award which the husband opposed. The primary judge dismissed the husband’s objection to the registration, ordered that the award be registered, and made a costs order in favour of the wife.

The husband sought that the award be set aside and an order of costs.

Background facts

The parties had a history of an off-again, on-again relationship where they had separated, obtained consent orders for property settlement, resumed their relationship several years later before separating again.

Following the second separation, the wife commenced proceedings for a property settlement. A primary issue in the case was an ongoing dispute regarding disclosure. On the second occasion, the matter was before the court, the husband stated that he would agree to the arbitration provided the issues with disclosure were “finalised.” The primary judge made orders for the wife to provide specific disclosure and for the parties to attend arbitration under section 13E of the Family Law Act 1975. The husband refused the choice of arbitrator and refused to participate in the arbitration resulting in the arbitration proceeding on an undefended basis.

The husband then opposed the registration of the arbitration award. The primary judge dismissed the objection and proceeded to make the orders in the terms of the arbitration award. The husband then appealed the decision. The question before the Full Court was whether the primary judge had erred in finding that the husband had consented to the arbitration. If he had not, his objection to the registration of the award should have been upheld.

Section 13E of the Family Law Act

Section 13E of the Act provides:

“With the consent of all of the parties to the proceedings, a court exercising jurisdiction in:

1. 1. Part VIII proceedings; or
   2. Part VIIAB proceedings (other than proceedings relating to a Part VIIIAB financial agreement);

“May make an order referring the proceedings, or any part of them, or any matter arising in them, to an arbitrator for arbitration.

“If the court makes an order under subsection (1), it may, if necessary, adjourn the proceedings and may make any additional orders as it thinks appropriate to facilitate the effective conduct of the arbitration.’

The keywords in the context of Pattison & Loomis are “with the consent of all parties to the proceedings.” The court can only refer a proceeding to arbitration when it has the consent of all parties.

Did the parties in Pattison & Loomis consent to the arbitration?

On the second occasion before the court (where the primary judge made the order for referral to arbitration) the primary judge explained the options of having the court determine the dispute (which may take up to two years) or have an arbitrator determine the dispute in three months.

The husband raised issues with the balance sheet and the disclosure provided by the wife. The husband stated, “I’m keen to go to arbitration provided the financial disclosure is finalised.” The primary judge then made orders for the wife to disclose certain documents and for the matter to be referred to arbitration.

The Full Court decision in Pattison & Loomis

The husband argued that his consent was conditional upon the wife providing the required disclosure and the balance sheet being finalised, and because those conditions were not met, he refused to participate in the arbitration.

The Full Court found that “there is no doubt the consent was conditional. That is evident from the husband saying that he was “interested” to finish it quickly, but wanting it done “properly”, and further that he was keen to go to arbitration provided the financial disclosure was finalised.

The Full Court noted that the husband saying “thank you” when the primary judge made the orders for disclosure did not mean that he was satisfied with that proposal satisfying his conditions to participate in arbitration, but rather an acknowledgement of the proposed orders for disclosure.

The Full Court’s held that the consent must be unequivocal. There is either consent or there is not. The primary judge took the view that because conditional consent is not addressed in the Act it should be essentially disregarded. The Full Court disagreed and found that conditional consent is not sufficient to satisfy section 13E.

The Full Court did not accept that the primary judge making an order for the production of the required documents by the husband was sufficient to constitute unequivocal consent, which is what was required.

The Full Court allowed the appeal and set aside the orders referring the matter for arbitration. It also set aside the orders which registered the award and made an order for costs. Due to these orders being set aside the wife’s initiating application was to proceed and was listed before another judge of the Federal Circuit Court of Australia.

Conclusion

The takeaway from Pattison & Loomis is that consent to arbitration must be absolute and unequivocal. It cannot be conditional on the other terms.

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