Sans Souci Ltd v Vrl Services Ltd

• Jurisdiction: Jamaica
• Judge: Mangatal J
• Judgment Date: 19 September 2012
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. 2012 CD 00055
• Date: 19 September 2012

[2012] JMCC Comm 11

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

IN THE COMMERCIAL DIVISION

CLAIM NO. 2012 CD 00055

Between

Sans Souci Limited

Claimant

and

VRL Services Limited

Defendant

Mr. Gavin Goffe instructed by Myers, Fletcher and Gordon for the Claimant.

Mr. Richard Mahfood Q.C., Dr. Lloyd Barnett , and Mr. Weiden Daley , instructed by Hart, Muirhead Fatta for the Defendant.

PRACTICE AND PROCEDURE — APPLICATION TO STRIKE OUT — ABUSE OF PROCESS — NO REASONABLE GROUND FOR BRINGING CLAIM — RULE 26.3(1)(b) AND 26.3(1)(c) CPR — ARBITRATION PROCEEDINGS — ISSUE ESTOPPEL AND RES JUDICATA

IN CHAMBERS

Mangatal J

1 The Claimant Sans Souci Limited ‘SSL’ is a limited liability company duly incorporated in Jamaica with registered office at Twickenham Park, Spanish Town in the Parish of Saint Catherine. SSL was at times material the Lessee of and carried on the business of a hotel operator at the Sans Souci Hotel and Spa situated at White River, St. Mary, ‘the Hotel’.

2 The Defendant VRL Services Limited ‘VRLS’ is a limited liability company, duly incorporated in Jamaica with registered office at 2 St. Lucia Avenue, Kingston 5, in the Parish of Saint Andrew. VRLS was at times material, engaged in the business of the management of hotels.

3 This is an application by way of Amended Notice of Application to Strike Out filed on behalf of VRLS on the 7 ^th of May 2012. There were several types of relief referred to in the Notice of Application, but ultimately, VRLS' Attorneys-at-Law indicated that the relief being sought at this time is as follows:

‘…..

(2) an order pursuant to CPR 26.3(1)(b) and/or 26.3(1)(c) that paragraphs 18, 19, 20 and 21 of the Particulars of Claim be struck out, and in consequence thereof the Claim Form herein be struck out also;….

THE CLAIM

4 By Management Agreement dated 12 ^th October 1993 ‘the Agreement’ between SSL of the one part and VRLS on the other part, SSL appointed VRLS to manage the Hotel for an initial term commencing on 1 ^st November 1993 and continuing to 31 ^st March 2004, subject to the terms and conditions set out therein. The Agreement was amended by three Supplemental Agreements.

5 Clause 13 of the Agreement provided for differences arising between the parties to be referred to arbitration and reads as follows:

‘13. This Agreement is governed by the Laws of Jamaica and shall be construed and take effect in accordance with the Laws of Jamaica. If any difference shall arise between the parties hereto as to the interpretation of this Agreement or as to the rights duties or liabilities of any party hereto or generally as to any act matter or thing arising out of or under this Agreement the same shall be submitted to two arbitrators one to be appointed by each party who shall by instrument in writing appoint an umpire immediately after they are themselves appointed. Such submission shall be a submission to arbitration under the provisions of the Arbitration Act or any statutory re-enactment modification or extension thereof for the time being in force.’

6 By letter dated 4 ^th March 2003, acting pursuant to Clause 14 (iv) of the Agreement, SSL gave VRLS noticed terminating the Agreement on the ground that force majeure had materially affected the operation of the Hotel.

7 VRLS disputed SSL's right to terminate the Agreement under Clause 14(iv). Acting pursuant to Clause 2(a) of the Agreement, VRLS gave Notice dated 6 ^th March 2003 of its intention to exercise an option to renew the Agreement for a further 10 years.

8 Disputes having arisen between the parties, VRLS and SSL each appointed an Arbitrator to settle the matters in difference under Clause 13 of the Agreement. VRLS appointed Roald Nigel Adrian Henriques of 72 Harbour Street by Notice dated 31 ^st March 2003 and SSL appointed John Cecil Wilman of 6A Holborn Road, Kingston 10 by Notice dated 7 ^th April 2003. The two Arbitrators, in accordance with the Agreement, together nominated an Umpire, the Honourable Justice Boyd H. Carey, (Retired).

9 On the 26 ^th of August 2003, after a preliminary meeting with the parties and their Counsel, amongst other matters, the Arbitrators ruled that the Terms of Reference for the Arbitration were as follows:

• ‘(1) Whether Sans Souci Limited lawfully terminated the said Management Agreement under Clause 14(iv) thereof by a notice dated the 4 ^th day of March 2003; and

• (2) If not, what damages would VRL Services Limited be entitled to recover as a consequence of the wrongful termination of the agreement.’

10 Hearings in the Arbitration concluded on 15 ^th April 2004 and the Arbitrators delivered their Award and Reasons for Judgment dated 16 ^th July 2004 ‘the Original Award’, whereby, amongst other matters, it was awarded that:

‘The questions posed in the Terms of Reference can be answered as follows:

• (i) Sans Souci Limited unlawfully in breach of contract terminated the Management Agreement under Clause 14 (iv) thereof by a Notice dated the 4 ^th day of March 2003.

• (ii) The Claimant (VRLS) is entitled to the total sum of Six Million Thirty Four Thousand Seven Hundred and Ninety Three Dollars (United States Currency) (US$6,034,793) comprising US$5,475,000 damages as claimed and US$559,793 (cost of advertising and promotional material) which amount shall be payable in Jamaican currency computed at the prevailing 10 day moving average rate of exchange for sales published in the Jamaican press on the date of this Award and shall be accepted in full and final settlement of the Claimant's [VRLS'] claim arising out of the matters in dispute in this reference.

• (iii) The Claimant [VRLS] is entitled to interest on the said sum of US$6,034,793 calculated from the date of this Award at a rate equivalent to the average of the commercial bank's prime lending rates prevailing on that rate.

11 SSL in its Particulars of Claim states that the prevailing 10-day Moving Average Rate of Exchange for Sales published in the Jamaican press on the date of the Original Award was Jamaican $61.4280 to United States $1.00. It states that the damages that SSL was being ordered to pay VRLS therefore amounted to Jamaican $370,705,264.40 with interest on this sum calculated from the date of the Original Award at a rate equivalent to the average of the commercial banks' prime lending rates prevailing on that date. The applicable rate of interest was 21 %.

12 SSL applied to set aside the Original Award of the Arbitrators. The Honourable Mrs. Justice Harris (as she then was) heard the application and dismissed it on the 10 ^th of February 2006.

13 The decision of Harris J. was appealed to the Court of Appeal, and according to SSL's Particulars of Claim, paragraph 12, ‘the appeal was allowed in relation to damages’.

14 The Order of the Court of Appeal (per Harrison, P, McCalla J.A. and Dukharan J.A. (Ag), (as he then was), made on the 12 ^th of December 2008 stated:

The appeal against the award of damages is allowed and the matter is remitted to the Arbitrators to determine the issue of damages only.

15 SSL pleads, that following the remission by the Court of Appeal, the arbitration continued on the 1 ^st October 2009, and after Counsel had made submissions in relation to the issue of damages the Arbitrators in due course handed down their Award on the 9 ^th of November 2009, (referred to by SSL as ‘the New Award’).

16 The New Award reads in part as follows:

‘ NOW WE , ROALD NIGEL ADRIAN HENRIQUES and JOHN CECIL WILMAN the Arbitrators herein, having considered the Orders of the Court of Appeal and the written and oral submissions of the parties and the evidence presented to us in written and oral form and for the reasons separately annexed to this Award AWARD AND DIRECT as follows:

• 1. In the light of our Findings(see p.8) the question remitted to us by the Court of Appeal can be answered as follows:

  • (i) the Claimant VRL Services Limited is entitled to receive the full amount of the damages awarded on our Award dated 16 ^th July 2004 (‘the said Award’) i.e. US$6,034,793 without any deduction therefrom and WE HEREBY RE-AFFIRM the said Award.

  • (ii) The Claimant VRL Services Limited is also entitled to interest on the sum of US$6,034,793 calculated from 16 ^th July, 2004 at the rate specified in the said Award.

  • …….’

17 In its pleading, SSL states that interest on arbitral awards accrues at the same rate as interest on judgment debts and is prescribed by the Judicature (Supreme Court) (Rate of Interest on Judgment Debts) Order, 2006 .

18 At the time of the publishing of the New Award, the applicable interest rate prescribed for judgment debts denominated in a foreign currency was 3 per centum per annum and 6 per centum per annum for Jamaican Dollar judgment debts.

19 SSL at paragraph 18 of the Particulars of Claim, alleges that the Arbitrators have misconducted themselves and acted in excess of jurisdiction and authority by awarding interest at a rate equivalent to the average of the commercial bank's prime lending rates prevailing on the date of the Original Award until payment (i.e. post-judgment interest) when they only had jurisdiction to award interest in respect of the period between the date when the cause of action arose and the date of the award (i.e. pre-judgment interest) in accordance with section 3 of the Law Reform ( Miscellaneous Provisions) Act .

20 SSL also asserts, at paragraph 19, that there has never been any agreement or consent on its part to give the arbitrators the authority to make an award of post-judgment interest in the arbitration.

21 Further, or in the alternative, at paragraph 20, SSL alleges that the Arbitrators have misconducted themselves as the New Award is neither an amendment to the Original Award, nor is it, by itself, in a proper or enforceable form but...