St. Aubyn Ltd v Young Women's Christian Association [2011] FJHC 251; HBC30.2010 (6 May 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION HBC 30 OF 2010

BETWEEN

ST. AUBYN LIMITED
Plaintiff

AND

YOUNG WOMAN'S CHRISTIAN
ASSOCIATION
Defendant

Mr J Rabuku for the Plaintiff
Ms L Vaurasi for the Defendant

DECISION

On 19 April 2010 I granted an interim injunction to the Plaintiff on certain terms. The effect of the injunction was that until further order the Defendant was restrained from ejecting the Plaintiff from the YWCA Building located adjacent to Sukuna Park and owned by the Defendant. The Plaintiff carries on the business of a restaurant and a hotel in the building. The interim injunction was granted on condition that, amongst other things, the Plaintiff continues to make weekly rental payments in the sum of $5,000.00.

I had reserved the question of referring the matters in dispute to arbitration. On 30 April 2010 the parties informed me that agreement had been reached that all matters currently in dispute between the parties arising out of the lease dated 5 August 2004 were to be referred to arbitration. As a result I ordered that the further proceedings in the action be stayed until the arbitration had been completed. The effect of this order was that the interim injunction granted on 19 April 2010 would remain in force on the same terms until further order.

On 17 December 2010 the Arbitrator delivered a final (corrected) award in the sum of $138,635.06 to be paid by the Tenant (Plaintiff) to the Landlord (Defendant) forthwith.

By Notice of Motion dated 13 January 2011 the Defendant applied for the following Orders:

"(i) The Arbitrator's Award via Addendum Correcting Award delivered on 17 December 2010 be made an order of the High Court.

(ii) The injunction order granted on 19 April 2010 be dissolved forthwith.

(iii) The Plaintiff pay the costs of the application."

The application was supported by an affidavit sworn by Leba Halofaki Mataitini on 13 January 2011.

This application was listed for mention on 21 January 2011. On that day I gave directions for the filing of further affidavit material by the parties. Pursuant to those directions, the Defendant filed a supplementary affidavit sworn by Leba Mataitini on 28 January 2011.

Then the Defendant filed an Originating Summons on 7 February 2011 seeking an order that:

"... pursuant to Section 13 of the Arbitration Act Cap 38 Young Woman's Christian Association may have leave to enforce the award of Mr Barrie Sweetman, the Arbitrator duly appointed in the above-mentioned arbitration under the agreement dated 31 May 2010 in the same manner as a judgment or order to the same effect."

This originating summons was in turn listed for mention before me on 18 February 2011. On that day, at the request of the parties, I gave directions for the filing of further affidavits. I also gave directions that the matter be listed for mention on 25 March 2011 at 2.30pm.

As a result of the two sets of directions given in the applications the Plaintiff filed two answering affidavits both sworn by Peter John Mazey on 15 March 2011. The Defendant filed two reply affidavits both sworn by Leba Mataitini on 24 March 2011.

When the proceedings were called before me on 25 March 2011 I directed that the applications be listed for the hearing of submissions on 28 March 2011 at 9.30am.

During the course of the hearing on 28 March 2011 Counsel for the Defendant applied to amend order (1) in the Notice of Motion in the following terms:

"(1) That the Defendant be granted leave to enforce the Award of the Arbitrator as if it were an order or judgment of this Court."

The application to amend the Notice of Motion was not opposed by Counsel for the Plaintiff and as a result I granted the application.

Counsel for the Defendant also applied to withdraw, as a consequence of the amended Notice of Motion, the application made by Originating Summons. Counsel for the Plaintiff did not oppose this application. Although I did not formally rule on this application during the course of the hearing I shall indicate at this stage that the application is granted.
Before considering the submissions made by Counsel on the substantive application in the Notice of Motion (as amended), I propose to make some preliminary comments concerning the manner in which the action has proceeded up to the present time with particular reference to the arbitration clause in the agreement dated 5 August 2004.

Clause 23.1 states:

"Any disputes which arise between the parties in relation to the construction of this lease or its subject matter ... shall be submitted to the arbitration of a single arbitrator if the parties can agree upon one but otherwise of two arbitrators (one to be appointed by each of the parties) and their umpire (who shall be appointed prior to their entering upon the arbitration) such arbitration to be carried out in accordance with the provisions of the Arbitration Act Cap 38."

As I noted in an earlier interlocutory decision (delivered 19 April 2010) in these proceedings, since 23 December 2005 "the parties have been involved in an on-going dispute over the non-payment of rent by the Plaintiff on the one hand and over the failure by the Defendant to carry out repairs and to perform other obligations under the leasing agreement."

By letter dated 26 January 2010 the Defendant advised the Plaintiff that unless the amount of $189,429.46 plus interest was paid within 14 days from the date of the letter, it would terminate the leasing agreement and commence eviction proceeding whilst at the same time exercising any other rights and remedies available to it."

By letter dated 2 February 2010 addressed to the Defendant, the Plaintiff raised the issue of arbitration. The letter stated:

"In view of the various discussions held during our mediation process and as you are well aware it has always been our preferred option to mediate on those issues still unresolved by both of us as evidenced by our return to paying weekly rent over the past three weeks.

I now propose that as per the Arbitration Clause 23.1 of our lease and under the Arbitration Act of Fiji we proceed to Arbitration.

In the first instance I would like to propose Mr Gordon Jenkins of Rawlinson and Jenkins to act as arbitrator between us both.

Should a single arbitrator not be acceptable to you can I propose that we use each of our own Legal representatives as our individual arbitrators and propose Mr Gordon Jenkins as Umpire."

By letter dated 8 February 2010 addressed to the Plaintiff the Defendant responded to the arbitration proposal in the following terms:

"In relation to your letter dated 2 February 2010 and subsequent emails to our client, do appreciate that the only issue that presently and urgently needs addressing by you are the rental arrears as per our letter to you dated 26 January 2010. We regret to advise you that until such time that the rental arrears are satisfactorily addressed, arbitration is a non issue."

It may be observed that such a response was not helpful, was not correct and was possibly a breach of the arbitration clause. It is clear to me that the various issues that had arisen between the parties as lessor and lessee constituted disputes arising out of the contract. However, a more reasonable explanation for the response was set out in paragraph 19 of the affidavit sworn by Leba Halofaki Mataitini on 26 March 2010. In paragraph 19 (c) the deponent states:

"The Plaintiff seeks to have Gordon Jenkins as the Umpire when he was the very party that caused great problems for the Defendant during the renovations. He worked for Rawlinson and Jenkins and despite being instructed by the Defendant, he failed to look after the interest of the Defendant to the benefit of the Plaintiff."

I must observe at this point that it was unfortunate that the Defendant had not given more serious consideration to the arbitration proposal put forward by the Plaintiff. I certainly accept the Defendant's concern as to the composition of the arbitration panel, but that did not prevent the Defendant from submitting a counter proposal in relation to who should act as arbitrators and/or umpire.

In any event, the response from the Defendant left the Plaintiff with no choice but to seek the Court's assistance for an order enjoining the Defendant from proceeding further with eviction proceedings. The Plaintiff filed a Writ of Summons and an application for interim injunctive relief under Order 29 of the High Court Rules.

I should indicate at this stage that I do not regard the Plaintiff's resorting to Court proceedings as constituting a breach of the arbitration clause. The Defendant had flatly refused to consider arbitration and had threatened to enforce the demand notice by eviction proceedings.

The application for interim injunctive relief was granted on conditions. Those conditions, although not with uninterrupted continuity, are being complied with. Apart from injunctive relief, the Plaintiff also sought the following orders:

"4. That all other matters currently in dispute between the parties arising in connection with the subject matter of the lease dated 5 August 2004 be referred to arbitration.

5. That these proceedings are stayed pending the outcome of the arbitration referred to in paragraph (3) above."

The application was stated as having been made pursuant to sections 3, 4 and 5 of the Arbitration Act.

During the course of my decision delivered on 19 April 2010 I stated:

"The question of a reference to arbitration is a preliminary issue upon which Counsel for the parties should address me more fully. ... The subject was not fully addressed before me during the hearing by Counsel."

When the proceedings were subsequently listed before me on 30 April 2010 to hear submissions on a reference to arbitration, I was informed that the parties had agreed to proceed to arbitration. It had been agreed as to the name of the arbitrator. By consent the proceedings in this Court were stayed to allow the arbitration to proceed.

In the Arbitration Act Cap 38 (the Act) a submission is defined in section 2 as "a written agreement to submit present ... differences to arbitration whether an arbitrator is named therein or not." A copy of the written agreement between the parties to submit their differences to arbitration, although not included in any of the affidavits that have been filed since 30 April 2010, has since been provided by the parties.

Pursuant to clause 2 of the Agreement to Arbitrate the parties submitted the following differences or disputes to the Arbitrator:

"(i) Whether the Landlord is in breach of the Tenancy Agreement dated 5 August 2004?

(ii) If yes, whether the Tenant is entitled to damages and costs.

(iii) Whether the Tenant is in breach of the Tenancy Agreement dated 5 August 2004.

(iv) If yes, whether the Landlord is entitled to terminate the Tenancy agreement and to damages and costs."

By clause 7 of the Arbitration Agreement the parties agreed that the Arbitrator's Award shall be final and binding on the parties.

It is clear that the parties intended by their agreement that the arbitration proceedings would deal with all the issues in dispute raised by the pleadings.

I now propose to consider the relevant sections of the Act:

"3. A submission, unless a contrary intention is expressed therein, shall be irrevocable, except by leave of the court or by mutual consent and shall have the same effect in all respects as if it had been an order of the Court" ("Court" is defined as the High Court).

4. A submission, unless a contrary intention is expressed therein, shall be deemed to include the provisions set forth in the First Schedule in so far as such provisions are applicable to the reference under submission.

5. If any party to a submission ... commences any legal proceedings in any court against any other party to the submission ... in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time after appearance and before delivering any pleadings, apply to the court to stay the proceedings, and the court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings."

The First Schedule to the Act lists the provisions that are to be implied in the submission. Clause 8 of those implied provisions states:

"The award to be made by the arbitrators or umpire shall be final and binding on the parties and the persons claiming under them respectively."

When the stay application was made on 30 April 2010, the Plaintiff had filed its Statement of Claim with the Writ dated 8 February 2010. The Defendant had delivered a Defence and Counterclaim which was filed on 12 March 2010. Although the stage which the proceedings had reached as at 30 April 2010 may have precluded a stay order being made by the Court under section 9 of the Act, such an order could in any event have been made pursuant to the Court's inherent jurisdiction. The effect of the order made on 30 April 2010 was simply to hold the position reached in the action as at that date.

The Arbitrator's Award is dated 15 December 2010. He made a net Award in the sum of $136,604.06 to be paid forthwith by the Tenant (Plaintiff) to the Landlord (Defendant).

Due to an error in calculations an Addendum Correcting Award dated 17 December 2010 the Arbitrator corrected the Award and confirmed an award of $138,635.06 to be paid by the Plaintiff to the Defendant. In arriving at that figure the Arbitrator awarded an amount of $56,591.46 to the tenant (the Plaintiff) and an amount of $195,226.52 to the landlord (Defendant). As a result in effect the Plaintiff was successful on its claim and the Defendant was successful on its counterclaim.

I note that the amount of the award was immediately due and payable since there was no reference in the Award to any stay in respect of payment.

There is no material on the file to indicate that either party has applied to the Court to have any matter remitted to the Arbitrator for reconsideration pursuant to section 11 of the Act. Nor does there appear to be any application before the Court to have the Award set aside pursuant to section 12 of the Act. Furthermore as far as the Court is aware, neither party has applied for leave for judicial review of the Award. Instead, what is before the Court is the Defendant's application under section 13 of the Act for the Court's leave for the Award to be enforced as a judgment of the Court. Under clause 8 of the implied provisions set out in the First Schedule to the Act, the Award made by the Arbitrator is final and binding on the parties. In Middlemiss and Gould (a firm) –v- Hartlepool Corporation [1973] 1 All ER 172 Lord Denning MR at page 173 stated:

"Once an award has been made – and not challenged in the court – it should be entered as a judgment and given effect accordingly. It should not be held up because the losing party says he wants to argue some point or other or wants to set up a counterclaim or anything of that sort. He would not be allowed to do so in the case of a judgment not appealed from. Nor should he do so in the case of an award that he has not challenged. ....

.... Leave should be given to enforce the award as a judgment unless there is real ground for doubting the validity of the award."

In that case the Court of Appeal was considering section 26 of the Arbitration Act 1950 (UK) which is expressed in terms that were similar but not identical to section 13 of the Act. In my opinion the two sections are sufficiently similar for Lord Denning's observations and the Court of Appeal's decision to be persuasive.

The Award in effect brought to a conclusion the proceedings that were commenced by Writ issued by the Court and filed by the Plaintiff. The Defendant counterclaimed. The issues raised in the Statement of Claim and the Defence and counterclaim were by leave of this Court placed before an arbitrator in the form of an agreement made by the parties. There is no material before me to indicate that the validity of the Award is in doubt. Both parties were successful. The net result is in favour of the Defendant.

As a result leave is granted to the Defendant to enforce the Award in the same manner as a judgment of the court to the same effect. There will be a stay granted of 28 days. The injunction currently in force will be discharged upon payment of the Award or at the expiration of 28 days, whichever occurs first. As both parties were partially successful each side is ordered to pay its own costs in respect of the proceedings in this Court.

W D Calanchini
JUDGE

6 May 2011

At Suva