AND

IN THE MATTER of an Arbitration

Supreme Court
Action Nos. 491 & 492 of 1999
14th February, 2000
Shanks, J.

Mr. Wilfred Elrington, S. C. for the Claimants
Mr. Denys Barrow, S. C. for the Respondents.

Application to court against arbitration award made under the Arbitration Act - Court refusing to upset findings of arbitrator - Matter remitted to arbitrator's to clarify certain issues raised during the arbitration proceeding.

J U D G M E N T

1. These applications concern an arbitration award made by Ms. Lisa Shoman dated 2 November, 1999. Ms. Shoman also issued a statement of reasons on 7 January, 2000 to which, it is agreed on all sides, I can have regard in deciding them. The Claimants in the arbitration, the Robersons and McDermotts, sold their shares in Maya Ranch Ltd. to the Respondents, the Wallrafs, under an agreement dated 15 September, 1995. That agreement provided for payment of $500,000 US dollars "up front" followed by 52 six-monthly installments of US $87,407.50 starting 15 June, 1996. The first few installments were not paid and arbitration proceedings were begun. The Respondents to the arbitration counterclaimed inter alia for damages for breach of clause 6.1.10 of the share sale agreement which provided that the Claimants warranted that the Company had good marketable title to the real property described in the Second Schedule to the agreement. The real property in question in these proceedings comprised a portion of 570 acres at the northern part of Black Rock Estate which was part of the land described in the Second Schedule. The counterclaim included, by paragraph 12, a claim for US $50,173 costs incurred in making good title to that land and, by paragraph 13, a claim for US $4½ million loss arising from the fact that the Respondents were unable to implement certain development projects for over two years because of the failure to give good marketable title to the 570 acres.

2. Ms. Shoman rejected this part of the Respondents' counterclaim because she found both no breach and no damage. Mr. Barrow, on behalf of the Respondents, now applies to set aside her award on the basis that she made errors of law apparent on the face of her reasons in rejecting this counterclaim. It is common ground that I have jurisdiction to set aside the award if I find such an error; to do so, I must find that there is in the award or the reasons some legal proposition which is the basis of the award and which is erroneous. It is also common ground that it is open to me to remit the award to the arbitrator with appropriate directions if that seems more appropriate and I think it must be right that if I am of the view that any error of law made no difference to the result (e.g. an error in relation to liability but none on damages) I can simple leave the award as it is.

3. It is necessary to set out some of the background before I can consider whether there has been an error of law on the face of the award. It is not in dispute that the 570 acres in question were the subject of compulsory acquisition notices in the Gazette in 1975. (There were in fact two of these notices: although Ms. Shoman only refers to one notice expressly in her award I am to take judicial notice of all such notices). The effect of these two notices was, by s. 3(4) of the Land Acquisition (Public Purposes) Act, to vest title to the 570 acres in the Government and allow it to enter the land and take possession. Notwithstanding that, the Government took no steps to assert any title and never entered into possession of the 570 acres but continued to collect taxes in respect of the land from those in possession and, furthermore, by a transfer certificate of title ("CTC") dated 15 October, 1976 Maya Ranchos Ltd. acquired certain land including the 570 acres and by a further CTC dated April 1988 that land was transferred to Maya Ranch Ltd. Under s.41 of the Law of Property Act the effect of those certificates combined with registration is to confer an "absolute and indefeasible" title on the holder. It is clear that Ms. Shoman found as a matter of law, and I do not understand it to be challenged, that the later CTCs served to divest the Government of any legal title which it may have enjoyed. As is commonly the case with land registration systems there is provision in s.63 of the Land Registry Act, which in effect allows for rectification in cases where a certificate of title has been issued in error or contains any misdescription of land or boundaries. It is Mr. Barrow's case, as I understand it, that the title of Maya Ranch Ltd. was vulnerable to action under s.63 at the behest of the Government, and, for that reason, Maya Ranch Ltd. did not have "good marketable title" to the 570 acres in 1995.

4. There is no issue between the parties that a "good marketable title" is shown where

   "The facts and circumstances of a case are so compelling to the mind of the court that the court concludes beyond a reasonable doubt that the purchaser will not be at risk of successful assertions against him of the encumbrance..." (Mepc Ltd. v Christian-Edwards [1979] 3 All ER 752).

Apart from the fact that Ms. Shoman made what I accept must be a grammatical error, it is clear from her reasons at page 8 that she asked herself the right question when she concluded that the company did have good marketable title to the 570 acres and I am unable to see any legal proposition in her reasons leading to this conclusion which is erroneous. In a sense that is the end of the matter. However, Mr. Barrow criticizes Ms. Shoman for not making any express finding that the Government had compulsorily acquired the land in 1975 and for not expressly adverting to s.63 of the Land Registry Act. He says that if she had done so, she could not have reached the conclusion she did.

5. I do not accept that the omission to spell these matters out necessarily indicates that she did not have them in mind or necessarily undermines her conclusion. The facts were that in 20 years the Government never entered into possession or took any steps in relation to the land, let alone asserting any claim. They treated it for tax purposes as owned by Maya Ranch Ltd., they assured the Respondents as soon as the matter arose that they had no interest in the land and they gave evidence to that effect at the hearing before the arbitrator. In my judgment, it was open to Ms. Shoman on that material to find (as she clearly did) that there was never any risk of any assertion (let alone any successful assertion) of a claim to the land by the Government in 1995 because the Government never had any intention of asserting any right. The fact that I might have found differently is, of course, totally irrelevant. Mr. Barrow criticises Ms. Shoman for taking into account matters which occurred after the relevant date in 1995 in reaching this conclusion: it seems to me that evidence of the Government's attitude after the relevant date may nevertheless be relevant to assessing what their attitude was earlier on.

6. But, Mr. Barrow says, surely if one recognizes that the effect of the acquisition notices was to vest title in the Government and that there was potential for rectification of the register there must have been a risk of a successful application to rectify; indeed, he goes further and says such an application must have succeeded (though he did not need to go this far). It is clear that the arbitrator was entitled to look at all the facts and circumstances in considering the extent of any such risk. In my view, it was open to her on the material she had to find that even if the Government had sought rectification it would have failed. In my view the Government's behaviour, the time that had passed and the transfers of title which occurred in 1976 and 1988 would have been such compelling factors against an order for rectification that an arbitrator could legitimately find, even to the requisite level of proof, that there was no risk of such an application succeeding. I certainly do not accept the submission that a Court faced with an application to rectify was bound to grant it.

7. Further, Ms. Shoman went on to find that, even if the Respondents had succeeded on liability, they had suffered no loss. Mr. Barrow criticizes the paragraphs of Ms. Shoman's reasons dealing with this and I agree they could be more clearly expressed. However, I do not think they show a clear error of law or should be disturbed. On the paragraph 12 claim for costs of perfecting title she concludes that the costs were incurred unnecessarily. This conclusion is logically separate from the conclusion on liability and there is no need to interfere with it. Given the conclusion that it was unnecessary to take the steps the Respondents did, it would follow that their claim for delay in paragraph 13 would also fail. Further, Ms. Shoman also found that any losses of this nature were too remote and that the Respondents carried on incurring expenses for their own reasons regardless of the acquisition notice issue, i.e. that they suffered no loss in fact. Again I cannot possibly go behind these findings of fact.

8. I therefore reject Mr. Barrow's application in its entirety. Mr. Elrington for the Claimants in the arbitration also has an application to remit the award to Ms. Shoman to clarify certain matters and this is not opposed. I will therefore remit the award to her for her to deal expressly in the award with:

I also enlarge her time for making and publishing the award as appropriate.