Jamaica Hydroponics Ltd v Alumina Partners of Jamaica
| Jurisdiction | Jamaica |
| Judge | SYKES J. |
| Judgment Date | 11 December 2008 |
| Judgment citation (vLex) | [2008] 12 JJC 1101 |
| Date | 11 December 2008 |
| Court | Supreme Court (Jamaica) |
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
IN THE CIVIL DIVISION
ARBITRATION — POWER TO REMIT MATTER TO THE ARBITRATOR — SECTIONS 8 (b), (c) AND 11 (1) OF THE ARBITRATION ACT, 1900 (JAM) — SECTIONS 5 AND 8 OF THE COMMON LAW PROCEDURE ACT, 1854 — SECTION 10 (1) OF THE ARBITRATION ACT 1889 (UK) — SECTION 22 (1) OF THE ARBITRATION ACT 1950 (UK)
ARBITRATION - Arbitrator - Power to remit matter to Arbitrator
The issue before the court on this application is whether the arbitration award made by Miss Hilary Phillips Q.C. should be remitted to her by the court acting under powers contained in section 11 (1) of the Arbitration Act of Jamaica, 1900. The application was dismissed with costs to the defendant. These are my reasons.
The Dispute
Not only is the parish of Manchester known for its agreeable climate and hospitable environment, it is known to be the home of Jamaica Hydroponics Limited ("JHL"), a company operated by enterprising business persons who, as the name of the company suggests, have embarked on the agricultural adventure of growing lettuce utilising the hydroponics method of cultivation. This company is one of the companies leading the way in hydroponics farming in Jamaica. Hydroponics, which comes from two Greek words, hydros meaning water, and ponos, meaning labour, is a method of growing plants without soil. JHL has been in the business of growing and marketing lettuce since 2000.
As is well known to farmers in Jamaica, hurricanes can be quite destructive and they inflict heavy losses on the farming community. JHL found this out in quite a striking manner. In 2004, Hurricane Ivan rampaged through the Caribbean beginning with Grenada in the south east and making land fall in the United States of America in the northwest, taking lives as well as destroying homes and businesses. It was the most destructive hurricane of the 2004 Atlantic hurricane season. JHL found out, first hand, how destructive Hurricane Ivan was. Its farming operations were not just damaged but were a total loss. It lost all its greenhouses.
JHL, at the time of the passage of the hurricane, had leased land where it conducted its business from Alumina Partners of Jamaica ("Alpart"). JHL did not rebuild on the spot originally leased because it was told that Alpart intended to mine for bauxite at the site on which the greenhouses stood. It was agreed, by contract, that Alpart would (a) rough level another part of its property that would accommodate six greenhouses; (b) prepare and marl roadways to the new greenhouse site and (c) erect and install utility polls. Alpart failed to do this. The matter was referred to arbitration. Alpart, quite sensibly, accepted that it had breached the contract which meant that the arbitration became an assessment of damages. Miss Phillips Q.C. was appointed the sole arbitrator.
To support its claim for loss of profits, JHL relied on projected income and expenditure it had submitted in its business plan which was submitted to the Bank of Nova Scotia in January 2005 for the expansion of the farm. JHL also relied on actual income earned from the production of lettuces between November 2006 and February 2007 when production had resumed.
The arbitration took place between July 4 and 7, 2007 with the award being handed down on November 12, 2007. The arbitrator awarded $76,398,594.67 to JHL for loss of profit. JHL felt that this sum was inaccurate because of an alleged error made by the arbitrator. JHL felt that the arbitrator made an error when she based her calculations on the extrapolated figure of $6,798,796 per month which was based on two green houses when in the view of JHL she should have used a figure of $9,065,064.00 per month. Had she done this, she would have arrived at a figure of $101,668,802.83 — a difference of $25,270,208.16. This application by the claimant, in practical terms, is about the recovery of the difference what it says it should have received and what the arbitrator awarded.
The first attempt made by JHL to retrieve the difference was to ask the arbitrator to revisit the award. It relied on section 8 (c) of the Arbitration Act which provides that an arbitrator can correct an award on the basis that she had made either a clerical mistake or error arising from an accidental slip or omission. Miss Phillips would have none of this and reaffirmed her position. In fact, she indicated that the issues raised by JHL did not fall within section 8 (c). JHL has now launched this claim asking the court to use its powers under section 11 (1) to remit the matter to arbitrator.
I should point out that JHL has made it abundantly clear that they are satisfied with arbitrator's work and but for the contention that she used the incorrect base figure it would not have launched this claim. JHL's sole complaint is in respect of the award for loss of profit.
The relevant parts of the arbitrator's reasons that are necessary for this application are found at paragraph 94 (5) and (6). They read as follows:
I accept that the actual revenues flowing from one (1) greenhouse in November for two (2) weeks was $968,720.00 which improved to actual revenues of $1,743,450.00 for the two (2) weeks in February of 2007 with two (2) greenhouses in operation (see paragraph 39, page 19 supra)
That a reasonable assumption would be that actual revenues for the three month period of November 2006 to February 2007 in respect of 2 greenhouses would provide an average which when extrapolated to the operation of six (6) greenhouses produces revenues for one (1) month of J$6,798,796.00.
It is obvious that the arbitrator knew that she had figures for one greenhouse in November 2006 and that by February 2007 she had figures for two greenhouses. She now had to decide how she will use this information to decide on the loss of profit. She decided to arrive at a monthly figure for two greenhouses per month and then use that figure as her base to calculate the loss for six greenhouses for one month and then go on to find the loss of profit for the relevant period, taking into account that this was an agrarian enterprise which is subject to the vagaries of the weather. Let it be clear that I am not here deciding whether Miss Phillips was wrong in her approach to the matter. What I am saying is that her thought processes as revealed do not in my view, at this stage of the analysis reveal, any error within the meaning of section 8 (c) of the Act.
The arbitrator's error, according to JHL, was to "assume wrongly, that the figures for November to February were for two greenhouses rather than (on average) one and a half [greenhouses]" (see para. 18 of written submissions). This submission is misconceived because there is no indication of any "wrong" assumptions. The arbitrator decided to do the calculation in a particular way.
This error, submitted Lord Gifford Q.C., was compounded by the arbitrator when, in response to the claimant's request under section 8 (c) that she correct the error, she stated in her ruling handed down on December 19, 2007:
The figures set out in paragraph 94 (7) of the Award (sic) are based on the actual figures submitted over a particular period, by way of extrapolation, on an average, on a balance of probabilities, in the exercise of the discretion of the Arbitrator (sic) in circumstances where no actual figures were given for any month in which all six (6) greenhouses were functioning, and having regard to the vagaries of the agricultural experiences and contingencies. Therefore no correction to paragraph 1 of the Award (sic) is required.
This failure to correct the error, according to Queen's Counsel, amounted to an error of law and so the court has the power to remit the matter to the arbitrator to make an award according to law. As will be seen in my analysis, this submission by learned Queen's Counsel was always going to be difficult to sustain.
Did the arbitrator commit an error of law?
In order to determine whether the arbitrator erred in law in refusing to make the correction, it is necessary to examine the terms of section 8 (c) to see if the arbitrator acted properly. A point that should be made quite early in order to explain why I am looking at section 8 (c) to see if the arbitrator made an error is this: because of how the law in this area has developed, the legal position is that where the arbitrator, on request, refuses to correct the alleged error under section 8 (c), the court can only remit the award to the arbitrator acting under section 11 (1) if and only if the court concludes that grounds for setting aside the entire award exists and instead of doing this, the court remits the matter to the arbitrator for reconsideration.
In examining section 8 (c), it is critical to understand how that provision came to be in the statute. I wish to point out that this provision was included against the backdrop of the courts' reluctance to set aside arbitration awards and this reluctance has had a deep, profound and long lasting impact on how the provision has been interpreted by the courts.
I shall first look at the courts' attitude to arbitration awards. The courts tend to lean in favour of upholding arbitration awards rather than to disturb them. The underlying rationale is that the parties by private treaty have decided on their own "court" and "judge". They submit their dispute to a person to decide the matters in dispute and so it is only fair that they accept the result that comes out of that process. Of course, there are limits to this and the courts have set...
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