Therapy Beach Club Incorporated v Rav Bahamas Ltd and Bimini Bay Resort Management Ltd

JurisdictionBahamas
JudgeSir Hartman Longley, P,Sir Michael Barnett, JA
Judgment Date16 August 2018
Neutral CitationBS 2018 CA 117
CourtCourt of Appeal (Bahamas)
Docket NumberSCCivApp. No. 23 of 2018
Date16 August 2018
Between
Therapy Beach Club Incorporated
Appellant
and
RAV Bahamas Limited Bimini Bay Resort Management Limited
Respondents
Before:

The Honourable Sir Hartman Longley, P

The Honourable Mr. Justice Isaacs, JA

The Honourable Sir Michael Barnett, JA (Actg.)

SCCivApp. No. 23 of 2018

IN THE COURT OF APPEAL

Civil appeal — Arbitration — Serious irregularity — Remittance order — Substantial jurisdiction — Serious irregularity — Appeal on a point of law — Consequential losses — Sections 89, 90 & 91 of the Arbitration Act

By a lease agreement dated the 31 st December, 2011 the appellant leased premises from the respondents to operate a beach club and restaurant. In March, 2013 the respondent commenced proceedings to have the lease set aside as being void, illegal and of no effect because it violated the International Landholding Act. The trial judge heard the matter, but reserved his judgment and ordered the status quo to remain. After the judgment had been reserved, but before the judgment was delivered, the respondent demolished the subject premises. Subsequent thereto the lease was ruled valid by the trial judge. The issue that was referred to arbitration, therefore, related to the forcible eviction of the appellant during the currency of a valid lease.

The arbitrator ordered the respondents to pay the appellant special damages, general damages for consequential loss and exemplary damages for a total of $9,670,000.00; with interest at 5% from the 18 th July, 2013; and costs.

Subsequently, the respondent challenged the arbitrator's award on the basis of substantial jurisdiction (pursuant to section 89 of the Arbitration Act (AA)); serious irregularity (pursuant to section 90 of the AA); and an appeal on a point of law (pursuant to section 91 of the AA). The challenges to the substantial jurisdiction and on a point of law were dismissed by the trial judge. Pursuant to section 90, that is, that a serious irregularity had occurred, the judge remitted the consequential damages component of the award back to the arbitrator for reconsideration. The serious irregularity was that the arbitrator did not consider the issue of whether the appellant could claim losses occurring not only in the remaining term of the current lease but also in the renewal period.

The appellant now appeals the findings and remittance orders and asks this Court to declare the orders nullities and or to set them aside with consequential orders for costs.

Held (Barnett, JA (Actg.) dissenting): appeal allowed; remittance orders set aside; award of arbitrator upheld. Costs to the appellant, here and below, certified fit for two counsel, to be taxed if not agreed.

per Longley, P: the appellant complains that the judge had no jurisdiction to make the remittance order; alternatively, the judge failed to make a determination as to whether the respondent suffered, or would suffer, a substantial injustice as a result of the irregularity, before making the remittal order. In essence, the appellant argues that before there can be a remittance on the basis of serious irregularity the judge must first find that there was an irregularity and then consider whether that irregularity has caused or will cause substantial injustice. What is substantial injustice for these purposes? “The accepted test now seems to be that there is substantial injustice if it can be shown that the irregularity in the procedure caused the arbitrator to reach a conclusion which, but for the irregularity, they might not have reached, as long as the alternative was reasonably argued.” “The test of “substantial injustice” is intended to be applied by way of support for the arbitral process, not by way of interference with that process.”

The burden is on an applicant to prove substantial injustice and he, as a matter of principle, has the obligation to make the assertions in his pleadings to challenge the award. The other side must know what the challenge is and the case it has to meet. Until this precondition is met the applicant is unable to adduce evidence in support and the judge cannot make the case for him. As the issue of substantial injustice was not pleaded, and, therefore, no finding made on it by the learned judge the remittance order must be set aside.

The appellant claimed damages for consequential loss for the remainder of the term of the lease, as well as damages for the renewal period; the respondents simply denied the claim and put the appellant to strict proof. Nowhere did they plead illegality, uncertainty, invalidity or unenforceability, except in their closing arguments; the only issue raised was quantum. The arbitrator awarded damages for the appellant's damages for consequential loss. The complaint here seems to be that the arbitrator got it wrong by awarding such damages. In which case the challenge should have been brought pursuant to section 91 of the Act as section 90 challenges are only concerned with due process, not whether the tribunal “got it right”. Therefore, there was no evidential basis for the judge to find that there was a serious irregularity pursuant to section 90(2)(d). As such, the remittance order is erroneous as no irregularity is shown nor has it been shown that the respondent will suffer substantial injustice.

A v B [2017] EWHC 596 (Comm) applied

Brockton Capital LLP v Atlantic-Pacific Capital Inc. [2015] 2 All ER (Comm) 350 mentioned

Bulfracht (Cyprus) Ltd v Boneset Shipping Co. Ltd. (‘The Pamphilos’) [2002] 2 Lloyd's Rep. 681 mentioned

Lesothos Highlands Development Authority v Impregilo SpA and others [2005] UKHL 43 applied

SCM Financial Overseas Ltd v Raga Establishment Ltd [2018] EWHC 1008 (Comm) applied

Terna Bahrain Holding Co Wll v Ali Shamsi et al [2012] EWHC 3283 (Comm) applied

Transition Feeds LLP v Itochu Europe [2013] EWHC 3629 (Comm) applied

per Barnett, JA (Actg.): By section 92(2) of the Act, a serious irregularity occurs where one of the factors set out in sections 90(2)(a) through (i) exist and that the irregularity has caused or will cause substantial injustice. Therefore, if a judge finds that one of the irregularities mentioned in sections 90(2)(a) though (i) exists and that that irregularity has caused or will cause substantial injustice to an applicant the judge is entitled to set aside the award in whole or in part.

There are two issues raised by this appeal. Firstly, was the trial judge correct to find that there was an irregularity falling within section 90(2)(d). Secondly, if he was correct that an irregularity exists, should his decision be set aside on the ground that he did not state that the irregularity that he found to exist has caused or will cause substantial injustice. It is common ground that for there to be a serious irregularity under section 90(2) there must exist an irregularity within (a) through (i) and that irregularity has caused or will cause substantial injustice.

A review of the award does not reflect that the arbitrator considered the issue of whether Therapy would be entitled to damages during the renewal period. It seems to have proceeded on the basis that Therapy was entitled to these damages. Whilst not every argument of counsel demands consideration by the Tribunal this was an issue which turned out to be a central one. It was this factor that caused the learned judge to determine that an irregularity within the ambit of section 90(2) existed.

It is accepted without reservation that not every irregularity which falls within section 90(2) (a) through (i) will lead to a finding of serious irregularity which enables the court to exercise its powers under section 90(3) of the Act. The irregularity must have caused or will cause substantial injustice. It is correct that in many cases there must be evidence before the tribunal to satisfy it that the irregularity has caused or will cause substantial injustice. That issue is often fact sensitive. However, there may be irregularities which by their very nature will cause substantial injustice. In this case it is unarguable that the failure to consider whether the renewal option was efficacious must lead to substantial injustice. If the option was not efficacious, then any award which took into account lost profits during the three year renewal period would cause substantial injustice. The injustice caused by the failure to consider that issue is self-obvious and no evidence would be required.

Ascot Commodities NV v Olam International Ltd [2001] EWHC 520 (Comm) applied

Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd 2013 VSC 614 applied

Lesothos Highlands Development Authority v Impregilo SpA and others [2005] UKHL 43 distinguished

Secretary of State for the Home Department v Raytheon Systems Ltd [2014] EWHC 4375 (TCC) applied

Teekay Tankers Ltd v STX Offshore and Shipbuilding Co Ltd (No 2) [2018] 1 All ER 279 mentioned

APPEARANCES:

Mrs. Krystal Rolle with Mr. Wallace Rolle, Counsel for the Appellant

Mr. Ferron Bethell with Ms. Camille Cleare, Counsel for the Respondent

Sir Hartman Longley, P

Judgment delivered by the Honourable

1

. A contractual dispute between the parties to this action led to a reference to a single arbitrator, retired Justice Cheryl Albury. The award was challenged by the respondent. That challenge was heard by Justice Winder of the Supreme Court. He upheld part of the award and remitted other significant parts of the award to the tribunal for reconsideration, apparently on the basis that a serious irregularity was shown. It is against that remittance order that the appellant now appeals to this court.

The Facts
2

. By a lease agreement dated the 31 st December, 2011, Therapy Beach Club Incorporated (Therapy) leased premises from the respondent to operate a Beach Club and restaurant facilities. In March 2013, the respondent commenced proceedings by originating summons seeking a declaration that the lease agreement entered into with the...

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1 cases
  • RAV Bahamas Ltd and another v Therapy Beach Club Inc. (Bahamas)
    • United Kingdom
    • Privy Council
    • 19 Abril 2021
    ... ... The claimant and respondent, Therapy Beach Club Incorporated (‘Therapy’), is a Florida company operating in the Bahamas. The ants and appellants, RAV Bahamas Ltd and Bimini Bay Resort Management Ltd, are two Bahamian companies operating in the ... ...

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