Australia: Staying together forever… or not: dispute resolution clauses in contracts

Another reminder from the NSW Court of Appeal of the care required around dispute resolution provisions - Lipman Pty Ltd v Empire Facades Pty Ltd (formerly known as Empire Glass and Aluminium Pty Ltd) [2017] NSWCA 217

Dispute resolution clauses rarely feature heavily in contract negotiations. However, given that dispute resolution provisions will only ever be read in anger, this is perhaps an unfortunate by-product of the relative optimism shared by the parties at the start of a project and the discomfort most people feel in agreeing on what to do if it all goes wrong.

The recent decision of the NSW Supreme Court of Appeal in Lipman Pty Ltd v Empire Facades Pty Ltd [2017] NSWCA 217 has provided guidance on the interpretation of commonly used provisions in dispute resolution clauses in building contracts.

In this case, the Court in dismissing the appeal favoured a natural interpretation of the provisions finding that on the correct construction of the clause, Empire Facades (Empire) did hold the right to litigate in the circumstances, essentially enabling it to 'appeal' an unfavourable expert determination.

Factual background

In late 2014, Lipman and Empire entered into a contract for $3,750,000 whereby Empire agreed to supply Lipman with the design, supply and construction works for the refurbishment of a building lobby located at 580 George Street, Sydney (the Contract). Clause 42 of the Contract contained a dispute resolution mechanism which provided that the parties were to refer the matter to expert determination should they fail to resolve the dispute in negotiations. The determination of the expert was expressed in the Contract to be (amongst other things) " and binding, unless a party gives notice of appeal..." [emphasis added] within a required period. Clause 42.12 stated that "if the determination of the expert does not resolve the dispute then, subject to clause 42.11, either party may commence proceedings in relation to the dispute". The dispute clauses was stated as surviving termination.

A dispute arose between Empire and Lipman, leading to the subsequent termination of the Contract. Notices of dispute were issued by the parties and the disputes were referred to expert determination. On 29 November 2016, the expert found in favour of Lipman in an amount of $106,943.63.

Empire served a 'notice of appeal' together with originating process on Lipman within the time period stated in clause 42.11, seeking to re-agitate the issues considered by the expert. Lipman sought a dismissal of the proceedings submitting that the disputes between the parties had been resolved by the expert determination and it was not open to Lipman to commence proceedings.

Decision at first instance

Lipman identified the issue of construction as whether Empire was permitted by clause 42 to litigate court disputes that had already been resolved by way of expert determination. It argued that the clause did not allow for a party to litigate unless the determination of the expert did not resolve the dispute.

In response, Empire advanced two reasons. Firstly, it argued that the party did not require clause 42.12 to invoke the common law right to challenge an expert determination. Secondly, the contract's reference to an appeal procedure which could result in an expert determination being "reversed, overturned or otherwise changed" did not include a proceeding for a declaration of nullity in relation to the expert determination.

The primary judge agreed with the interpretation advanced by Empire, acknowledging that it was "plain that it was also important to them [the parties] to incorporate an appeal process in the mechanism they adopted".1 Ball J stated that the interpretation advanced by Lipman did not provide for a right of appeal at all.

Court of Appeal

In a unanimous judgment, the Court of Appeal held that Lipman had failed to demonstrate an error in the primary judge's construction of the dispute resolution clause and dismissed the appeal.

In the application for leave to appeal, Lipman repeated the argument that had been rejected at first instance. It contended that the opening words of clause 42.12 imposed a pre-condition on the right to litigate. It submitted that the purpose of the clause was to allow for an option to litigate the dispute if; (a) notice had been given under clause 42.11 within the time period, and (b) it is found by a court or between the parties, that the determination was not in accordance with the contract.

The Court of Appeal held that Lipman's argument would give the expression "determination of the expert" in clause 42.12 an unusual meaning and would be interpreted differently in the preceding sub-clause. Rather it applied the A Hudson2 interpretation of "determination of the expert" as meaning determination in accordance with the terms of the contract.

The Court also distinguished between the facts of the present case and Lipman Pty Ltd v Emergency Services Superannuation Board [2011] NSWCA 163. In that case, the dispute resolution clause did not have a 'litigation' sub-clause similar to that of clause 42.12 and the expert determination was found to be final and binding. In the present case it was established that the parties intended, through the progression of dispute resolution mechanisms (senior negotiation, expert determination and litigation), to accept that determination would not 'resolve' the dispute if either party provided notice of appeal within 15 business days.


In assessing a dispute resolution clause, the Court in this case applied well established principles of contract interpretation in rejecting a strained interpretation of the contested provision.

This case (as was Lipman Pty Ltd v Emergency Services Superannuation Board) is a salutary lesson in the care that must be taken when drafting and interpreting dispute resolution clauses.

1 Empire Glass and Aluminium Pty Ltd v Lipman Pty Ltd [2017] NSWSC 253.

2 Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSLWR 314.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.