Josa Investments Ltd v Promotions and Print Essentials Ltd
| Jurisdiction | Jamaica |
| Judge | P Williams JA |
| Judgment Date | 01 July 2022 |
| Neutral Citation | JM 2022 CA 076 |
| Docket Number | SUPREME COURT CIVIL APPEAL NO 116/2018 |
| Court | Court of Appeal (Jamaica) |
| Year | 2022 |
[2022] JMCA Civ 24
THE HON Miss Justice P Williams JA
THE HON Mr Justice D Fraser JA
THE HON Miss Justice Simmons JA
SUPREME COURT CIVIL APPEAL NO 116/2018
IN THE COURT OF APPEAL
Mrs Symone Mayhew QC and Miss Carol Davis instructed by Carol Davis for the appellant
Emile Leiba, Jonathan Morgan, and Miss Chantal Bennett instructed by DunnCox for the respondent
In this appeal, JOSA Investments Limited (‘the appellant’) is challenging the decision of Batts J (‘the learned judge’), who, on 14 November 2018, dismissed its fixed date claim on the basis that there was no reasonable ground for bringing the claim. The decision was made on the application of Promotions and Print Essentials Limited (‘the respondent’). The appellant had filed the claim against the respondent in its attempt to set aside an arbitration award that had been made against it.
The parties entered into a lease agreement dated 5 October 2015 (‘the agreement’), whereby the appellant leased a site on its property located at 61 Constant Spring Road, Kingston 10, to the respondent for the erection, maintenance, and operation of a structure on which advertisements were to be displayed, namely, a hoarding. In the schedule of the agreement, the site was described as “Building Tower/s” and “Building Roof”. The property itself had a shopping plaza consisting of 50 shops and offices, and the hoarding was to be constructed on the roof of one of the buildings.
The agreement was for a period of three years with an option to renew for a further three years. The rental sum was $900,000.00 per annum plus General Consumption Tax payable bi-annually, and a rate of increase was to be negotiated upon renewal.
Mr Winston Lee, managing director of the appellant, in an affidavit filed on its behalf, explained that at the time the parties entered into the agreement, he was of the view that the hoarding with its advertisements would be compatible with the commercial shops and offices that the appellant intended to rent to individual commercial tenants.
In November 2015, the appellant became aware of an entity that wished to rent the property as one unit rather than the 50 shops and offices originally intended. Mr Lee explained that the appellant considered the matter and determined that renting the property to one tenant would be “a better use of the land” than having to deal with 50 tenants. It was felt that management costs would be reduced, as would the risk of problems of rent collection and accounting associated with 50 units.
In December 2015, the respondent was advised that the appellant was going to seek to terminate the agreement with the respondent because it was negotiating a lease for the property with another tenant, the Ministry of Justice. On 17 December 2015, the attorneys-at-law for the respondent wrote to the appellant expressing concern about the anticipated breach of the agreement and indicated that any unilateral termination by them, for that reason, would constitute a breach of contract entitling the respondent to significant compensation.
On 18 December 2015, a notice to quit was served on the respondent requiring them to deliver up possession of the site on 4 July 2016, or at the end of the tenancy, that would expire after six months from the date when the next month's rent became due and payable. The reason given for the notice was in reliance on a clause of the agreement which provided that it had the right to terminate the agreement by serving six months’ notice in writing on the respondent if, as the landlord, it required the site “for the better amenity of any adjoining land of the Landlord” (clause 5.2 of the agreement).
The respondent rejected the purported termination contending that the reason, as set out in the notice to quit, was “not genuine”. The respondent, having learned that the appellant was desirous of terminating the lease to rent the property to a single tenant, demanded that their agreement be honoured; failing which “breach of contract proceedings” would be instituted to recover all associated losses.
Efforts to resolve the matter proved futile, with the respondent maintaining that the appellant had breached the contract. The agreement provided that any questions or differences were to be referred to a single arbitrator. Thus, it was agreed that the matter be referred to an arbitrator, Mr Dan O Kelly, with an arbitration submission agreed upon between the parties and dated 12 April 2016.
In its statement of claim before the arbitrator, the respondent identified the issue as being whether the appellant's termination of the agreement in the circumstances constituted a breach of contract entitling the respondent to compensation. In its amended statement of defence to the claim, the appellant stated that the agreement was not enforceable since no consideration had passed between the parties and asserted that it required the site for the better amenity of adjoining land.
The arbitration was heard on 17 January and 22 February 2017. In his final arbitration award, the arbitrator identified the following as the four issues to be determined:
“ ISSUE NO. 1
Whether the Commercial Agreement between [the respondent] and the [appellant] was valid?
ISSUE NO. 2
Whether the erection of the hoarding was a condition precedent to the Commercial Agreement coming into effect?
ISSUE NO. 3
Whether [the appellant's] termination of the Commercial Agreement constitutes a breach of Contract?
ISSUE NO. 4
Whether the [respondent] suffered any loss or damage as a result of the [appellant's] termination of the Commercial Agreement?”
After he analysed the evidence and arguments, the arbitrator made the following declarations and award:
“1. The Commercial Agreement dated the 5 th day of October, 2015 is a valid, legally binding and enforceable Agreement between the [respondent] and the [appellant].
2. The erection of the hoarding was not a condition precedent to the Commercial Agreement dated the 5 th of October, 2015 coming into effect.
3. The [appellant's] termination of the Commercial Agreement by way of Notice to Quit dated the 18 th day of December, 2015 constitutes a breach of contract.
4. The [respondent] has suffered loss and damage as a result of the [appellant's] breach of contract.
5. The [appellant] shall forthwith pay to the [respondent] the sum of Sixteen Million Eight Hundred and Twelve Thousand Eight Hundred and Eleven Dollars and Twenty Cents ($16,812,811.20) as damages for breach of contract…
6. The [appellant] shall pay interest on the amount awarded at the rate of three percent (3%) per annum from the date of this Award until the date of full payment of damages.
7. The cost of the Arbitration in the sum of Two Million Three Hundred and Forty-Six Thousand Eighty-Five Dollars and Forty-One Cents ($2,346,085.41) to be borne by the [appellant]….”
The appellant, being dissatisfied by the award, filed a fixed date claim form on 3 May 2018 in the commercial division of the Supreme Court, seeking, among other things, the following order:
“1. That the final arbitration award made by the Arbitrator
Dan O. Kelly on 28 th February 2018 in the proceedings between the [appellant] and the [respondent] be set aside for misconduct pursuant to section 12(2) of the Arbitration Act 1900 and/or or [sic] pursuant to the inherent jurisdiction of the Court.”
The main ground on which it was seeking the order was that the arbitrator made some nine errors of law that were on the face of the record.
On 16 August 2018, the respondent filed a notice of application for court orders seeking to have the appellant's statement of case struck out as the court was without jurisdiction or should refuse to exercise jurisdiction to determine the issue. In the alternative, it sought that the statement of case should be struck out because it disclosed no reasonable grounds for bringing a claim under section 12(2) of the Arbitration Act (‘the Act’).
Batts J heard the application on 1 November 2018 and delivered his decision on 14 November 2018 in a written judgment (with neutral citation [2018] JMSC Comm 37). He was satisfied that even if the allegation of error of law did not constitute misconduct falling within section 12(2) of the Act, the court's inherent jurisdiction was also to be considered. He found that:
“… the latter plea is sufficient to incorporate an error of law on the face of the record. This is because it is in such a case that the court's inherent jurisdiction to revoke an arbitrator's award arises. It flows from the court's supervisory jurisdiction over inferior tribunals.” (see para. [11])
Thus, on this issue, he concluded that he had jurisdiction to consider the matter.
He went on to consider whether there were reasonable grounds to allege an error of law on the face of the record and invoke the court's inherent jurisdiction. On this issue, he found that some of the complaints were really efforts to overturn either factual findings or the arbitrator's interpretation of the contract and did not constitute errors of law on the face of the record.
The learned judge found that the arbitrator's decision related to mitigation of damages “caused him to pause”. He, however, ultimately concluded that the arbitrator's treatment of the issue did not disclose an error of law properly so-called because the arbitrator had correctly stated the relevant principle with respect to mitigation of damages and made an assessment thereafter, which was one of fact and not law.
Finally, the learned judge found another reason to dismiss the fixed date claim. He determined that it was “manifest, on the agreement to arbitrate, on the statements of case filed and on the arbitrator's statement of the issues...
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