Gabriele Volpi v Delanson Services Ltd

• Jurisdiction: Bahamas
• Judge: Klein J.
• Judgment Date: 01 July 2022
• Court: Supreme Court (Bahamas)
• Year: 2023
• Docket Number: Consolidated Appeals 2020/APP/sts/00013, 2020/APP/sts/00018

In the Matter of the Winter Trust, The Summer Trust and The Spring Trust

and

In the Matter of An Arbitration

and

In the Matter of An Application Pursuant to Sections 89, 90 and 91 of the Arbitration Act 2009

Between:

Gabriele Volpi

Applicant/Appellant

and

(1) Delanson Services Ltd.

(2) Matteo Volpi

(3) Simone Volpi

Respondents

In the Matter of the Arbitration Act 2009

And in the Matter of An Arbitration

Between:

Delanson Services Limited

Applicant/Appellant

and

(1) Matteo Volpi

(2) Gabriele Volpi

(3) Simone Volpi

Respondents

Before:

The Hon. Mr. Justice Loren Klein

Consolidated Appeals 2020/APP/sts/00013, 2020/APP/sts/00018

2020/CLE/gen/00632

IN THE SUPREME COURT

Appeals Division

Common Law and Equity Division

Arbitration — International Commercial Arbitration — Trust Arbitration — Distribution of Trust assets to Settlor by institutional Trustee and dissolution of Trusts — Breach of Trust — Scope of Trustee's Powers — Fraud on a Power — Inadequate Deliberations — Knowing Receipt — Rectification — Counterclaim for Mistake — Exercise of powers, whether void or voidable

Arbitration — Partial Awards — Multiple challenges and appeals to Partial Awards by Settlor and Trustee (Applicants/Appellants) — Arbitration Act 2009 — Statutory gateways for Challenges and Appeals under the Act — s. 89, Lack of Substantive Jurisdiction — s. 90, Serious Irregularity — s. 91, Appeal on a Point of Law

Section 89 — Challenge as to the substantive jurisdiction of the Tribunal — Purpose Trusts Act 2004 (“PTA”) — Challenge to jurisdiction on the basis that Trusts authorized purpose trusts (“APTs”) within the meaning of s. 3(1) of the PTA and therefore required authorization of the Court under s.6 to commence enforcement proceedings — Whether the Tribunal lacked substantive jurisdiction as a result of failure to obtain court authorization — Whether Trusts authorized purpose trusts within the meaning of the Act — Sutton v Fedorowsky [2000] BHS J. No. 36 — “Person trust” v. “Purpose Trust” — Substantive jurisdiction vs. Admissibility

Section 89 — Counter-claim by settlor to set aside Trusts for mistake — Challenge to finding that Tribunal was competent to determine that it had substantive jurisdiction to determine counter-claim — Whether provisions of Trustee Act (as amended) provides for arbitration of validity disputes in Trust Arbitration — Construction — Trustee Act 1998 (as amended) — Arbitration Act — Construction, Trust Deed — Whether arbitration clauses encompass validity disputes — Principle of Separability — Competence-Competence — Inter-relationship between concepts — Abrogation of Separability in Trust Arbitration — Effect on ability of Tribunal to determine jurisdiction

Section 89 — Claim to set aside Trust on grounds of mistake before supervisory court — Whether cognizable under s. 89 — Whether claim properly before Court — Pleadings — Notice of Motion — Effect of s. 92(2) of the Act on the ability to bring challenge — Effect of s. 95 of the Act on ability to bring challenge — Evidence — Res judicata — Issue Estoppel — Abuse of process — Procedural Fairness

Section 90 — Applicants challenging Partial Awards on numerous heads under s. 90 — Breach of general duty of fairness within the meaning of s. 44, such as to give rise to serious irregularity under s. 90(2)(a) — Excess of powers by tribunal, s. 90(2)(b) — Breach of procedures agreed by the parties, s. 90(2)(c) — Failure of the tribunal to deal with all the issues put to it, s. 90(2) (d) — Uncertainty or ambiguity of award, s. 90(2)(f) — Whether claims amounting to serious irregularities — Whether causing substantial injustice

Construction — Arbitration Act — Sections 91, 92(8) — Appeal on a point of law — Application for leave to appeal — Whether the Arbitration Act, properly construed, provides for the grant of leave to appeal on a point of law — Whether leave to appeal on point of law by consent of parties only — If appeal available with leave of Court, what is the requisite test for the grant of leave? — Whether grounds can meet threshold for the grant of leave (applying the analogous test for leave under the UK Act or at common law)

Statutory interpretation — Principles of statutory construction — Presumption of rational drafting — Presumption against abrogation of fundamental rights — Conflicting statutory provisions — Rectifying construction — Pre-legislative materials — Reference to Hansard — Pepper v Hart [1993] AC 593

Section 90 — Appeal on a point of law, s. 90(1) — Whether Trustee's decision to make Distributions as a result of fraud on a power void and not voidable — Cloutte v Storey [1911] 1 Ch. 18 — Whether proper test used in finding of inadequate deliberations by Trustee for Distributions — Whether error in exercise of Tribunal's discretion to set aside Distribution for breach of trust or fraud on the power — Whether error in finding Trusts were not authorized purpose trust and that the claimant had standing to institute the arbitration proceedings without authorization under the PTA — Whether Tribunal substituted its discretion for that of the Trustee in finding Trustee was guilty of inadequate deliberations.

Trust (Choice of Governing Law) Act, 1989 — Trustee Act 1998 (as amended — Rules Against Perpetuities (Abolition) Act 2011

Remedies — s. 90, 91 remission or setting aside of award, declaration of no effect — s. 91 confirmation or variation — Whether award to be set aside, varied or remitted (in part of whole), or confirmed.

Appearances:

Mr. Michael Black KC, with Ms. Wynsome Carey for Gabriele Volpi

Mr. Brian Simms KC, with Mr. Marco Turnquest and Mr. Wilfred Ferguson for Delanson Services Ltd.

Mr. Adrian Beltrami KC, with John Wilson KC, Ms. Knijah Knowles and Ms. Berchel Wilson for Matteo Volpi

Mrs. Janet L.R. Bostwick-Dean, with Mr. Tavarrie D. Smith for Simone Volpi

RULING

Klein J.

TABLE OF CONTENTS

A. INTRODUCTION	4
B. FACTUAL AND PROCEDURAL BACKGROUND	6
C. THE ARBITRATION AND AWARDS	10
1. The Partial Award dated 13 June 2020 (“Partial Award”) ……………………………………	12
2. The Additional Award dated 26 August 2020 (“Additional Award”). . ………………….	15
D. THE APPLICATIONS/APPEALS AND THEIR GROUNDS	17
1. Gabriele's challenges/appeals	17
(i) Notice of Motion filed 9 July 2020 (the Partial Award)	17
(ii) Notice of Motion filed 23 September 2020 (the Additional Award)	18
2. Delanson's challenges/appeals	19
E. PRINCIPAL ISSUES	21
1. Whether the Tribunal lacked jurisdiction to hear the arbitration or certain claims in it (s.89 challenge)	21
2. Whether properly construed the Arbitration Act provides for the Court to grant leave to appeal on questions of law	21
3. Whether the Tribunal committed any serious irregularities in the conduct of the arbitration (s. 90)	21
4. Subject to (2), what is the test for the grant of leave and whether the alleged legal errors justify the intervention of the court (s.91)	21
F. THE RELEVANT LAW AND LEGAL PRINCIPLES	22
1. The Arbitration Act 2009	22
(i) s. 89: Substantive Jurisdiction	23
(ii) s. 90: Serious Irregularity	23
(iii) s. 91: Point of Law	24
2. Governing Legal Principles	25
(i) General Approach	25
(ii) s. 89: substantive jurisdiction (s. 41)	27
(iii) s. 90: serious irregularity	29
(a) s. 90(2)(a): breach of general duty of tribunal (s. 44)	30
(b) s. 90(2)(b): excess of powers by tribunal	32
(c) s. 90(2)(c): breach of agreed procedures	33
(d) s. 90(2)(d): failure to deal with all the issues put to it	34
(e) s. 90(2)(f): uncertainty or ambiguity of award	37
(iv) General principles applying to challenges	38
(a) s. 95: loss of the right to object to an award	38
(b) Substantial injustice	39
(v) s. 91: Appeal on question of law	40
G. THE JURISDICTIONAL CHALLENGES UNDER SECTION S. 89	40
1. The Tribunal's determination of the authorised purpose trust (ATP) issue (Delanson Gr. 2; Gabriele Gr. 7)	41
2. The Tribunal's determination of Gabriele's counterclaim for mistake	57
H. APPEAL ON POINTS OF LAW: WHETHER BY OPT-IN ONLY	95
1. Whether the Act provides for leave to appeal on questions of law	96
I. GROUNDS OF APPEAL EXAMINED: CHALLENGES UNDER SECTION 90 (SERIOUS IRREGULARITY) AND 91 (ERROR OF LAW)	114
1. The Tribunal's construction of the scope of Delanson's distributive powers under the Trust Deeds (Delanson Gr. 1; Gabriele Gr. 1)	114
2. The Tribunal's determination of the authorised purpose trust (“ATP”) issue (Delanson Gr. 2; Gabriele Gr. 7)	124
3. The Tribunal's determination of the inadequate deliberation issue (Delanson Gr. 3; Gabriele Gr. 4)	126
4. The Tribunal's findings on the reasons for distribution (Delanson Gr. 4)	130
5. The Tribunal's exercise of its discretion to set aside the Distributions if voidable (Delanson's Gr.5, Gabriele Gr. 4). .	137
6. The Tribunal's alleged failure to determine the “scope of powers rectification claim” (Gabriele Gr. 2)	142
7. The Tribunal's conclusions as to whether a fraud on the power makes the exercise void or voidable (Gabriele Gr. 3)	142
8. The Tribunal's finding on knowing receipt (Gabriel Gr. 6)	146
9. The Tribunal's treatment of the parties' expert evidence on Liechtenstein law (Gabriele Gr. 9)	152
10. The Tribunal's conclusions in the Additional Award (Gabriele Gr. 10)	159
J. CONCLUSION AND DISPOSITION OF APPEALS	165
1. Summary of Conclusions	165
2. Postscript	167

A: INTRODUCTION

1 In 2009, following the appointment of an ad hoc committee to examine the law relating to arbitration, Parliament enacted the Arbitration Act 2009 (the “ Arbitration Act” or “2009 Act”). The effect was to usher in a sea-change in the law of arbitration which had remained largely untouched since the extension to the...