IN
THE SUPREME COURT OF BELIZE, A.D. 2000
ACTION
NO. 222
IN THE MATTER of the Arbitration Act, Chapter 69
AND
IN
THE MATTER |
of
an Arbitration between Cedric D. Flowers of the one part
and the Belize Tourist Board and the Registrar of Hotels
and Tourist Accommodation of the other part |
BETWEEN:
CEDRIC
FLOWERS |
Applicant |
and
|
|
BELIZE
TOURIST BOARD
REGISTRAR OF HOTELS &
TOURIST ACCOMMODATION |
Respondents |
____
BEFORE the Hon. Chief Justice Abdulai Conteh
Ms. Lois Young S.C., with Mr. Denys Barrow S.C., for the Applicant.
Respondents unrepresented.
____
JUDGMENT
This
is an application by Originating Motion dated 25th May 2000
by the Applicant Cedric D. Flowers praying the Court for an
Order that the Award made between him and the Belize Tourist
Board and the Registrar of Hotels, the Respondents, and dated
30th April 2000 be set aside or alternatively, remitted in
part on the grounds that there is an error in fact and law
on the face of the Award.
When
the motion came up for hearing on 12th June 2000, the learned
counsel for the Applicant sought leave of the Court to amend
the motion by the addition:
"And
in the event of it being ordered that the Award be set aside
or remitted, the costs of the reference and the Award be paid
by the Respondents and that in any event the costs of and
incidental to this Application be paid by the Respondents."
I duly
granted leave for the amendment sought.
Perhaps
a word or two would be in place on the schema of arbitration
within the machinery for disputes resolution as provided for
by the law in Belize before I come to the issues raised in
this application.
The whole tenor, scheme and explicit provisions of the Arbitration
Act in Chapter 69 of the Laws of Belize, are in
my view, intended to enable the Supreme Court to assist the
process of settling disputes by Arbitration
and to supervise this process where necessary. This is an
aspect of the machinery of the alternative dispute resolution
(ADR) process which unfortunately, is not readily recognised
and resorted to more often, especially by the business community
and their no doubt hard-pressed and preoccupied legal advisers.
But it is a process which should be utilized more often, not
only for the sake of unclogging the pipeline of formal litigation
through the Courts, but because of its intrinsic speed and
informality and hopefully, special knowledge, which the arbitral
tribunal itself may bring to the issues in dispute. These
are attributes that should commend the process to the public,
especially the business community who should be eager for
a quick resolution of disputes so that they can get on with
business.
Under
the provisions of the Arbitration Act assistance is provided
for recourse to arbitration by, for example, under section
3 making the agreement to arbitrate (the submission)
between the parties as irrevocable and effective as an Order
of the Court; under section 4 certain
provisions are implied by law in the agreement between the
parties to arbitrate: these relate, for example, to the appointment
and composition of the arbitral tribunal, the time within
which it must make its award and the finality of the award
itself; under section 5 where there is
an arbitration agreement between the parties, the power of
the Court to stay legal proceedings in Court in defiance of
such an agreement by one of the parties; and under section
6, in certain cases, the power of the Court to
appoint an arbitrator, for example, when the parties to the
arbitration agreement fail to agree on one, or an appointed
arbitrator refuses to act or dies; and under section
13 by leave of the Court, for an award to be enforced
in the same manner as a judgment or order of the Court itself.
This
Court's assistance to the arbitral process extends also to
the situation where even after an award has been made, the
Court has under sections 11 and 12, the
power to remit the award or any part of it back to the arbitrator
for consideration; or set the award aside.
It is in pursuance of either of these powers that this Court
has, that is, either to set the Award aside or alternatively
to remit it in part, that the Applicant has by his motion
moved this Court because, as he avers, of errors on the face
of the Award.
The Final
Award of the Arbitrator is dated 30th April 2000.
The preambular
paragraphs (2) and (3) of the Award itself contain some statements
which caused me some bother and anxiety when examined and
put alongside with the pertinent clause in the Agreement between
the Applicant and the Respondents providing for arbitration,
the submission in law. This is in clause 8
in Document No. 1 in the Bundle of Documents containing the
Contract between the Applicant and the Respondents and dated
15 May 1997 and referred to in paragraph 2.1 of the Arbitrator's
Reasons for Award. It has not been contested
that I am entitled to have regard to the contract and other
pertinent documents in this matter in resolving this application
before me.
In preambular
paragraph (2) of the Final Award the
Arbitrator states:
"The
Contract provided for disputes to be referred to a sole arbitrator
if either of the Parties refused to agree or appoint an Arbitrator
having been requested so to do."
But in fact, clause 8 of the Contract
(the Agreement referred to above) provides that disputes between
the parties shall be submitted to a single arbitrator, in
default of agreement in selecting a single arbitrator, the
dispute shall be referred to two arbitrators one to be appointed
by each party. This, contrary to the statement of the Arbitrator,
clearly could not have meant or provided for disputes to be
referred to a sole arbitrator if either of the parties refused
to agree or appoint an arbitrator having been requested so
to do.
Clause
8 states:
"Any
dispute or difference arising between the parties hereto during
the course of this contract or at the termination hereof,
as to the construction of this Agreement or as to any matter
or thing of whatever nature arising hereunder or in connection
therewith, then such dispute or difference shall be and is
hereby referred to arbitration and final decision of a person
to be agreed between the parties. In default of agreement
in selecting a single arbitrator the dispute shall be referred
to two arbitrators one to be appointed by each party. Before
entering on the reference each of the arbitrator shall appoint
an Umpire who shall preside over the Arbitration and shall
decide in the dispute in the event of difference between the
two arbitrators."
Also,
preambular paragraph (3) of the Final Award states:
"The
Claimant appointed me EAMON H. COURTENAY S.C. of 37 Regent
Street in Belize City by Instrument dated the 15th October
1999 to act as the sole arbitrator in the reference and I
accepted such appointment by Instrument dated 1st November
1999."
But in
fact, it was the failure of the Respondents to concur in the
selection of a single arbitrator even after formal notice
by the Applicant dated 30th August 1999 to do so, that resulted,
by virtue of section 7 of the Arbitration
Act, in the appointment of the Arbitrator as sole Arbitrator
by Instrument dated 15th October 1999 by the Applicant.
However,
it is not on the score of these evident discrepancies on the
face of the Final Award, although they are nonetheless errors
by the Arbitrator in construing the submission clause between
the parties, that the Applicant has sought by his motion,
to impugn the Award or parts of it.
I am
however satisfied that in fact and in law, the Arbitrator
was validly appointed and as sole arbitrator, he properly
embarked upon the reference.
The Final
Award of the Arbitrator is sought to be impugned on the substantive
ground "That on the face of the Award there
is error in fact and in law."
In order to sustain and substantiate this attack, the Applicant
has advanced several grounds, which though not stated on the
face of the motion, are contained in Affidavits by the Applicant
dated 24th May and 8 June 2000 respectively. Although not
exactly easy to follow or comprehend as set out in the Applicant's
Affidavits, the learned counsel for the Applicant valiantly
tried to give some form and structure to them by arguing them
as grounds 1 to 8 seriatim.
A seeming
paradox of this application is that he sole Arbitrator was
in fact the Applicant's appointee. And it is his Award with
which the Applicant now finds fault; and has, by this application,
requested this Court to intervene.
I would
like to observe here that the whole proceedings in this matter,
both before the Arbitrator and before this Court would have
been enormously facilitated and enriched if they had been
attended by the participation of the Respondents either by
their own appointed Arbitrator (as the Contract provided)
and or of counsel on their behalf making necessary representation
to the Arbitrator on their account. In the event however,
neither the sole Arbitrator nor this Court had the benefit
of assistance from the Respondents who evidently chose not
to participate. They were nevertheless served with all the
papers relating to the claims by the Applicant. They also
had notice of the proceedings in this Court.
Personally
speaking for myself, I must say that I was enormously helped
however at the hearing of this application by the legal submissions
and materials the Attorneys for the Applicant furnished me
with.
Although the sole Arbitrator was the Applicant's appointee,
he is, in law, of course, entitled to cavil and even find
fault, if he can substantiate it, with the Award and apply
to set it aside or have it remitted.
I should
say here before proceeding any further that, in my view, a
particular feature of the presentation of the Applicant's
case before the Arbitrator inescapably invested the whole
proceedings there with an element of ritual litigation. During
the Arbitration that has given rise to this application with
respect, heavy weather was made of the Applicant's claims
especially the ritualistic form in which they were made: it
was hardly distinguishable from a formal pleading
in the course of an ordinary litigation in Court. In fact
it is headed "Statement of Claim"
and closely pleaded as one such document would be in an adversarial
setting in a Court, and if I may say so, with the care and
skill of an able common law pleader.
I realise,
of course, that in the instant arbitration, the Arbitrator
himself is an eminent Senior Counsel and as such would have
been naturally at home with the format of the presentation
of the Applicant's claim. The proceedings in my view however,
would have benefitted from the counsel of the learned authors
of Commercial Arbitration (second edition by
Sir Michael Mustill and Stewart Boyd 1989) at page 319:
"Pleadings
are not the ideal way of isolating the essential issues in
a dispute. . . . the use of pleadings tends to multiply the
issues, because of the neutral desire of the advocate to keep
open all his arguments and options until the last possible
moment, in the hope of some favourable turn of events."
"In the main", the learned authors continue,
ibid, ". . . pleadings should be reserved for cases where
the issues are complex, where there is likely to be a full
hearing, with real evidence, and where the parties are legally
represented."
In the
instant case, although it is stated that formal pleadings
were delivered pursuant to the directions of the Arbitrator,
he was however, under no duty to do so. He however stated
that "Formal pleadings have been delivered by the Claimant
. . ." (In preambular paragraph 4 of his Final
Award), it is my view, that the whole proceedings
would have profited in terms of elucidation of the Applicant's
case by a written statement of his case,
instead as an alternative to the full-blown pleadings presented.
In order
more fully to understand the Applicant's complaint against
the Award, I inquired of his Attorneys if there was a formal
submission, reference or document wherein the Applicant's
claims against the Respondents were stated for the arbitrament
of the Arbitrator. They informed me that it was in the document
dated 29th November 1999 and captioned "Statement
of Claim". This document, as I have already
observed, was drawn and settled as in normal litigation by
the Attorneys of the Applicant. (See paragraphs 4 and 5 of
the Applicant's Affidavit dated 24th May 2000).
It is in the "Particulars of Disputes and Differences"
of this document that the Applicant's complaints against the
Respondents are set out from the first paragraph
17 which contains six heads of complaints on to
the second paragraph 17 wherein the Applicant
complains of the wrongful termination of his contract by the
Respondents.
There
then follows "Particulars of Special Damage"
in which various sums are set out under five heads representing
the special damages the Applicant is alleged to have suffered
at the hands of the Respondents.
The section
rounds off as in a litigated claim for
breach of contract and damages in an action in Court, in paragraph
18, by the averment that "by reason of the matters aforesaid,
the Respondents wrongfully and in breach of the contract terminated
the Applicant's services as a result of which he has suffered
loss and damage."
I am
of the view that the various issues presented in the Applicant's
"Statement of Claim" would
perhaps have benefited in precision, clarity and simplicity
if they had been stated in an ordinary written statement
of the Applicant's case. To say this, is not of course, to
fault the Applicant's Attorneys who simply used their forensic
skills and the tools they are most familiar with to craft
his case as best as they knew how for presentation. I want
however, also to commend the Arbitrator, who as it were, was
able to cut through the legalese of the formal mould of the
"Statement of Claim" to reach
his Award, without the benefit of full-blown adversarial presentation
and argument to match the Applicant's. His Award is now being
sought to be impugned by the Applicant.
It is only thus by unravelling the Applicant's claims before
the Arbitrator and a close perusal of the Final Award
that I have been able to see my way through, I hope, to appreciating
the Applicant's case and his prayers soliciting the aid of
this Court in relation to the Award.
THE
CASE OF THE APPLICANT AND THE AWARD
The Applicant's
case can be put in a short compass. He is by profession a
Certified Public Accountant. The Respondents are the Belize
Tourist Board and the Registrar of Hotels and Tourist Accommodation.
In order to improve the collection and increase the amount
of taxes hotel proprietors in the country must by law pay
on all accommodation charges, the Respondents concluded on
15 May 1997 an agreement with the Applicant by which his services
were engaged to assist in the determination and assessment
of the said taxes. The Applicant was charged with performing
several services towards this end. In order to perform the
several services under the contract, the Applicant was authorized
as a term of the contract by the second Respondent "to
enter any hotel premises at all reasonable hours and:
-
to inspect the premises with a view to ascertaining all
matters and things relevant to the true and proper performance
of the proprietor's obligations relating to the said tax.
-
to
require any person in charge of the hotel to produce the
register and books required to be maintained under the
law.
- to
examine such registers and books and to make copies or to
take extracts from such registers and books."
This
express authorization of the Applicant by the Registrar the
second Respondent, to visit hotels and examine their registers
and books and to make copies or take extracts of these was
indubitably part of the substratum of the Applicant's contract:
for factually and logically, he would not be able to perform
his services thereunder without such authorization. More on
this later.
In consideration
of the Applicant performing his duties under the contract
it was originally agreed that he shall be remunerated as follows:
-
A
monthly commission of 4% of the taxes received by the
first Respondent up to but not exceeding $3000000.00.
(This percentage was subsequently revised upwards to 6%
by a Memorandum of Amendment to Agreement. More on this
Memorandum later).
-
On
the amount received in one year in excess of three million
dollars, the Applicant will receive a monthly commission
of 17% (seventeen percent)
- All
the amounts due to the Applicant shall be paid to him within
7 days of the date required by the law for the filing by
a hotel proprietor of the monthly statements together with
the amount collected from that proprietor as tax.
For the
purposes of clarity, it might be pointed out here, in parenthesis,
that section 23 of the Hotel and Tourist
Accommodation Act - Act No. 12 of 1997, provides for the payment
of tax on accommodation charges in all hotels or tourist accommodation
in the country. This provision is the same as section
22 of the Hotel Act which the 1997 Act repealed
and is to the following effect:
"Every
proprietor shall prepare monthly a Statement substantially
in the form prescribed for the purpose of showing the amount
of tax for which he is liable under this Act, and shall furnish
such monthly statement not later than the fourteenth day of
the following month to the Registrar together with the amount
due from him as tax. If the tax is not paid as prescribed
herein, it shall be deemed to be in default."
So in effect, pursuant to paragraph (iii) of the Applicant's
contract with the Respondents, he the Applicant, was due to
be paid all amounts owed him not later than twenty-one days
of the following month when hotel proprietors were by law
required to file their monthly statement together with the
amount of tax due from them with the Registrar, that is the
second Respondent. Or put another way, the Applicant was due
to be paid by the Respondents within twenty-one days of every
following month.
Paragraph
(iv) of clause 2 of the 1997 Contract went on to provide that
the Applicant will be paid his percentage on taxes actually
collected whether collection occurred after the signing of
the Agreement or as a direct result of the assessment by the
Applicant.
The Common
Seal of the first Respondent who is a statutory corporation
was affixed to the Agreement together with the signatures
of the Chairman/Deputy Chairman (it is not clear which of
them) and a Board Member. The second Respondent or the officer
holding that office and the Applicant both signed off on this
Agreement. This Agreement is referred to in paragraph 1 of
the Applicant's Affidavit of 24th May 2000, and paragraph
2.1 of the Arbitrator's Reasons for Award.
The contract
was for a period of six years from 1st June 1997.
Some
ten months later, a Memorandum of Amendment to Agreement (Amendment
No. 1) was executed on 13th March 1998 between the first Respondent
and the Applicant. This document is referred to in paragraph
2 of the Applicant's Affidavit of 24th May 2000 and paragraph
2.7 of the Arbitrator's Reasons for Award.
This Memorandum expressly referred to the Agreement of 15th
May 1997 (the Original Contract) between the Applicant and
the Respondents and stated that the parties were desirous
of modifying the original contract in certain respects. It
also expressly stated that in the event of any inconsistency
between it (the Memorandum of Amendment to Agreement)
and the Original Contract (that is the Agreement between the
Applicant and the Respondents of 15th May 1997), the Memorandum
of Amendment shall prevail. A salient feature of this Memorandum
is that it provided for the termination of the agreement between
the parties on six months written notice to the Applicant
in the event of his failure to comply with reasonable instructions
issued by the second Respondent - more on this later.
The Applicant
claims that the Respondents wrongfully terminated his services
in breach of his contract by a letter dated 8 July
1999 from the second Respondent. As a result of
this, differences and disputes arose between the Applicant
and the Respondents. Notwithstanding the Applicant's efforts
to have the Respondents join him in appointing an Arbitrator
in accordance with the terms of the submission clause in the
contract between them, in order to settle these differences
and disputes, the Respondents did not respond. In the event
the Arbitrator has to embark on the reference as sole Arbitrator
in November 1999. On 30th April 2000 he made his Final
Award. The Final Award and
Reasons for Award were, according to the Applicant,
published on 4th May 2000.
The Applicant now seeks to set aside this Award or, alternatively,
to have this Court remit those portions of the Award contained
in the Findings of the Reasons
for Award in paragraphs 9.0, 9.1,
9.2, 9.4, 9.5, 9.6 and
9.8 on the grounds that there are errors
of fact and of law on the face of the Award.
The original
grounds were first stated in paragraph 9 of the Applicant's
Affidavit of 24 May 2000. However, at the hearing of this
Application on 12 June 2000 the Applicant through his learned
counsel sought the leave of the Court to substitute in their
stead the grounds stated in paragraph 3 of his Affidavit of
8th June 2000. I granted leave, but speaking for myself, I
must confess that although the Applicant avers in paragraph
1 of his Affidavit that on the advice of his learned counsel,
the substitution was effected so that the presentation of
the grounds "could be better structured in order to facilitate
the Court in the exercise of its functions", I am none
the wiser. I have, with some difficulty, tried to grapple
with the Applicant's grounds of complaint against the Award
at least, as stated in his Affidavit. I had earlier alluded
to this difficulty, which was however somewhat eased by the
Applicant's learned counsel's able presentation and more lucid
submissions at the hearing of this application.
I believe
a clearer picture of the Applicant's complaints against the
Award and a more proper appreciation of the whole situation
can be discerned by putting along side each other the
"Particulars of Special Damage" wherein
various sums are set out under five heads representing special
damages the Applicant was alleged to have suffered at the
hands of the Respondents in his Statement of Claim,
together with the dispositive provisions of the Final
Award the Arbitrator made in the reference.
It is important to note that of the five heads of
special damages, the Arbitrator expressly awarded
the first three. That is to say, (1)
the commission due on $85,656 of taxes at 6%, the amount paid
to the Applicant was $3,426.24 on the basis of 4%, leaving
on outstanding sum of $1,713.12 on the basis of 6%; (2) the
commission due on $186,787 of taxes at 17%, the amount paid
to the Applicant was $5,499.28, leaving as outstanding due
the Applicant the sum of $26,254.51, and (3) commission due
on $454009 of taxes at 17% for live-aboard-vessels making
outstanding due the Applicant the sum of $77,181.53. All together
this made a grand total of $105,149.16 which the Arbitrator
awarded and directed to be paid to the Applicant.
This
therefore leaves head (4) in amount of $265,200.00 and head
(5) in the amount of $187,194.00 not awarded by the Arbitrator
to the Applicant.
The issues
underlying these two heads of special damage together with
the finding by the Arbitrator that the Applicant's contract
was validly terminated by the second Respondent and that he
was consequently not entitled to any general damages for the
alleged breach of contract by the second Respondent form,
I believe, the gravamen of the Applicant's complaint before
this Court for which he seeks to impugn the Award by praying
me to set it aside or remit those portions of it contained
in paragraphs 9.0, 9.1, 9.2, 9.4,
9.5, 9.6 and 9.8
as constituting errors in fact and law on the face of the
Award.
Paragraph
9 contains the Findings of the Arbitrator
as contained in his REASONS FOR AWARD which
are incorporated in THE FINAL AWARD. The portions
of this particular paragraph which have agitated this application
can, I hope, be stated as follows for the sake of comprehending
the Applicant's case:
First,
that it was error of law on the face of the Award when the
Arbitrator stated that the second Respondent was empowered
pursuant to section 3(3) of Act No. 12 of 1997, the Hotel
and Tourist Accommodation Act, and clause 6 of the contract
to terminate the Applicant's contract forthwith.
Secondly,
which is in effect the same as the preceding, that it was
an error of law on the face of the Award for the Arbitrator
to find that the second Respondent validly terminated the
Applicant's agency on 8th July 1999.
Thirdly,
that it was an error of law on the face of the Award when
the Arbitrator stated that there was no evidence before him
sufficient to establish that the first Respondent attempted
to terminate the Applicant's contract pursuant to its terms.
Fourthly,
it was error of law on the face of the Award when the Arbitrator
stated that the Memorandum (that is, the Memorandum of Amendment
to Agreement of 13 March 1998) was not binding on the second
Respondent.
Fifthly, that there was an error of law on the face of the
Award when the Arbitrator stated that the Applicant was not
entitled to be paid commission for taxes that might have been
collected from Programme for Belize, Coral Cay Conservation
and Belize Audubon Society, but were not collected because
of the second Respondent's unlawful instructions to the Applicant.
Sixthly,
that there was an error of law on the face of the Award when
the Arbitrator stated that the Applicant was not entitled
to be paid commission on the basis of published rates of hotel
charges but only on net.
Seventhly,
that it was an error of law on the face of the Award when
the Arbitrator stated that the Applicant was not entitled
to any general damages for the alleged breach of contract
by the second Respondent. A possible eight ground, which was
only half-heartedly advanced in counsel's submissions, relates
to what the Applicant states in his Affidavit of 8 June 2000
as the unreasonable and stifling manner of the second Respondent
regarding commission due on taxes from Journey's End. Counsel
invited me to draw the same reference and conclusion as in
the fifth complaint.
By this
application, as I have already stated, the Applicant has moved
this Court to either set the Arbitrator's Award dated 30th
April 2000, aside or alternatively remit it in part, on the
grounds that there is error in fact and law on the face of
the Award.
In other words, the preliminary issue I have to decide is,
providing of course, I find error in fact and law in the Award,
in all the circumstances of this case, whether to set it aside
or remit in part. And if I so decide, what consequences flow
from either course of action?
The power
of this Court to remit or set aside an Award is provided for
by sections 11 and 12 of the Arbitration
Act. Section 11(1) provide
that:
"In
all cases of reference to arbitration the court may from time
to time remit the matters referred, or any of them, to the
reconsideration of the arbitrator or umpire"
and section
12(2) provides:
"Where
an arbitrator or umpire has misconducted himself, or an arbitration
or award has been improperly . . . . , the Court may set the
award aside."
It is
therefore unarguable that this Court has discretion, of course,
to be exercised judicially, to decide whether to remit or
set an award aside. In fact learned counsel for the Applicant
urged this on the Court.
While the four traditional grounds for remission have been
long recognised and stated as follows: "(1) Where the
award is bad on the face of it, (2) where there has been an
admitted mistake and the arbitrator himself asks that the
matter may be remitted; (3) where there has been misconduct
on the part of the arbitrator; and (4) where additional evidence
has been discovered after the making of the award" -
Montgomery, Jones & Co. v Liebenthal & Co.
(1898) 78 LT. 406, it is now generally agreed that
these four grounds are merely guides to the exercise of the
Court's discretion and are not exhaustive and that there is
in the Court a supervisory discretion to remit an award to
ensure that there is no possibility of an inadvertent injustice
- Compagnie Financiere Pour Le Commerce Exterieur S.A.
v O.Y. Vehna AB. (1963) 2 Lloyds Rep. 178, and Vol.
2 Halsbury's Laws of England 4th ed. at
paragraph 617 and Russell on Arbitration
17th ed. page 350 and more recently King
and another v Thomas Makenna Ltd. and another (1991) 1
All. ER 656.
It is
also agreed that in exercising its discretion as to whether
to set aside or remit an award, the Court should have regard
to the circumstances of the particular case as a whole. I
am therefore satisfied that looking at the Applicant's case
as a whole and having regard to the Award itself, it would
be more equitable and proper to remit only those part of the
Award where there may be error of law appearing on its face
instead of setting the Award aside.
Critical
to determining these issues in my view is the resolution of
this question: was there an error of law appearing on the
face of the Award by the Arbitrator in deciding the several
matters that were under reference before him?
For an
answer to this question I can only adopt the dictum of Lord
Parmoor in the Privy Council in the case of Attorney-General
of Manitoba v Kelly (1922) All ER 69, (1922) 1 A.C. 268
when he stated at page 283:
"Where a question of law has not specifically been
referred to an umpire, but is material in the decision of
matters which have been referred to him, and he makes a mistake,
apparent on the face of the award, an award can be set aside
on the ground that it contains an error of law apparent on
the face of the award."
See also
the case of Block Office & Shop Investments Ltd.
And City & Waterfront Development Ltd. v Kingston
Waterfront Development Co. Ltd. Vol. 21 West Indian Reports
442, where Lord Parmoor's dictum was cited with approval
and applied.
In order
to be a ground for upsetting an Award, an error of law on
the face of the award must be such that there can be found
in the award, or in a document actually incorporated with
it (for example a note appended by the Arbitrator as in the
instant case, stating the reasons for his Award) which contains,
some legal proposition which is the basis of the Award and
which is erroneous - Vol. 2 Halsbury's Laws at
paragraph 623.
I now
turn to an examination of the Award to see if there are errors
of law and fact on its face as is contended for by the Applicant,
which if found, may move me to exercise the discretion granted
me in the matter by the provisions of the Arbitration Act.
I do so against the jurisdictional backdrop of those provisions.
In King
and another v Thomas Mckenna Ltd. and another (1991) 1
All E.R. 653, as I have mentioned earlier, it was
held that the jurisdiction of the Court under section
22 of the English Arbitration Act 1950 with which
section 11 of our own Arbitration Act
in Chapter 69 of the Laws of Belize is ipsissima
verba, to remit an Award of an arbitrator was
wholly unlimited and not confirmed to the four traditional
grounds for remission, but extends to any case where, notwithstanding
that the arbitrator had acted with complete propriety, some
aspects of the dispute which had been the subject of the reference
had not, due to mishap or misunderstanding, been considered
or adjudicated upon as fully as or in a manner which the parties
were entitled to expect and it would therefore be inequitable
to allow any such award to take effect without some further
consideration by the arbitrator.
Applying
the principle in this case to the instant application before
me, it is clear that though the Arbitrator here, if I may
say so, commendably conducted the proceedings with due propriety,
the Applicant nonetheless feels that some aspect of the dispute
which had been the subject of the reference before the Arbitrator
had not been adjudicated upon as fully or in a manner which
he the Applicant, was entitled to expect and that it would
therefore be inequitable, in all the circumstances, to allow
the Award to take effect or to do so without further consideration
by the Arbitrator. Hence this application to this Court.
I am mindful of the fact that this is a terrain that has to
be embarked upon with care and circumspection for it is not
the Court's position or duty to substitute its own judgment
or view in place of the Arbitrator's simply because it would
have decided the matter differently. But where it is clear
that a material or fundamental aspect of the reference is
not addressed or not treated in the context of the dispute
that gave rise to the reference, it is only right and proper
that this is set right. One such way this can be done is to
remit that aspect back to the Arbitrator for further consideration
and determination. This, I believe, is the very raison
d'etre of section 11 of the
Arbitration Act. Indeed, the whole or only part of an award
may be remitted - Vol. 2 Halsbury's Laws 4th
ed. para. 618; and section 11
of the Arbitration Act itself talks of "or any
of them", clearly meaning part of an award.
Having
stated the issues that agitated this application and were
canvassed before me by the learned Attorney for the Applicant,
I now propose to consider them in the light of the Award.
I propose however for the sake of avoiding prolixity, to consider
them under the following heads:
-
Was
there a breach of the Applicant's contract by the Respondents?
This is, in my view, tied up with the relationship between
the Respondents, the Belize Tourist Board and the Registrar
of Hotels and Tourist Accommodation vis-a-vis
the contract with the Applicant: was the second Respondent
an agent of the first Respondent and was the second Respondent
bound by the Memorandum of Amendment to Agreement of 13
May 1998?
-
If
there was a breach of the contract was the Applicant consequently
due general damages for that breach?
-
Was
the Applicant entitled to what he claims was lost Commission
on taxes due by chargeable tax payers but were not collected
or paid as a result of instructions from the Respondents?
-
What
was the correct or proper basis for calculating the commission
to be paid to the Applicant? And fifthly,
- The
issue of the costs of the arbitration, and the Award itself.
WAS
THERE A BREACH OF THE APPLICANT'S CONTRACT?
This
issue, of course, is closely tied up with the way and manner
of the termination of the Applicant's contract and whether,
if there was proper termination, in which case the matter
is laid to rest or improper termination, in which case the
Applicant was entitled to damages.
The Arbitrator
expressly found that:
"9.0
The Registrar appointed the claimant (the Applicant here)
pursuant to section 3(3) of the Act to be his agent. The Registrar
is empowered pursuant to section 3(3) of the Act and clause
6 of the contract to terminate the claimant as his agent forthwith."
"9.1
The Registrar validly terminated the claimant's agency on
8th July 1999".
"9.8 The claimant is not entitled to any general damages
for the alleged breach of contract by the Registrar."
It is,
in my view, unarguable that the Respondents manifestly breached
the contract with the Applicant by the letter of
8th July 1999. Central to the Applicant performing
his duties under the contractual arrangement with the Respondents
was his ability to visit various hotels and tourists accommodation
establishments around the country and have access to their
books and other documents, especially their registers and
evidence of charges to guests for accommodation charges, in
order to be able to assess their liability to tax. This was
after all the objective of the Applicant's contract with the
Respondents; and was expressly stated as a term of the contract
between them in clause 1(2) of the 15th
May 1997 Agreement. In pursuance of this objective the second
Respondent on 16th June 1997, a month after the conclusion
of the contract with the Applicant, issued the necessary authorization
to the Applicant. This provided the warrant for the Applicant
and his team (members of his accounting firm) to visit various
hotel establishments for the purpose of carrying out his functions
under the contract with the Respondents. This authorization
was already in fact incorporated as an express term
of the Applicant's contract with the Respondents.
However,
the second Respondent wrote the Applicant on 8th
July 1999, withdrawing the authorization. This
withdrawal was communicated generally to members of the hotel
industry. This, in effect, disabled the Applicant from carrying
on his functions under the contract with the Respondents.
I am
convinced that a careful perusal of the contract between the
parties, either with or without the Memorandum of
Amendment to Agreement of 13 March 1998, and a
proper construction of it would not in the circumstances of
the reference to the Arbitrator and the evidence, justify
his finding that the Applicant was not entitled to any general
damages for alleged breach of the contract by the second Respondent.
I am
ineluctably driven to hold therefore the Award in this respect
is, upon its face, bad in point of law. I say so for the following
reasons.
The contract
between both the Applicant and the Respondents as concluded
on 15th May 1997 provided in clause 6
how it could be terminated. It provided as follows:
"Subject
to the Hotels Act this Agreement shall commence on the 1st
day of June 1997 and shall continue for a period of six years
PROVIDED always that in the event there is a fundamental alteration
in the underlying conditions of this contract the parties
may mutually agree to terminate this contract within six months
from the day of such agreement."
Whatever this particular provision may mean or was intended
to mean, it surely could not comprehend the way and manner
and the circumstances as to how the Applicant's contract was
terminated by the Respondents. To be sure it was not the Applicant's
contract with the Respondents that was eo nomine
terminated. What was terminated by the Respondents was the
authority of the Applicant
to visit hotel establishments. This of course swept away the
substratum of the contractual relationship between them. For
without the authorization from the Respondents the Applicant
could not visit various hotel establishments, at least for
the purposes of assessing the liability to tax.
In this
regard, the second Respondent's letter of July 20,
1999, could be said to be the final nail in the
coffin. It is worth reproducing this letter which was contained
in Discovery No. 8 ordered by the Arbitrator:
"July
20, 1999
Mr. Cedric D. Flowers
Certified Public Accountant
54 King Street
Belize City
Dear Mr. Flowers,
Reference
is made to your letter of today's date.
Please
be advised that in view of the revocation of the Registrar's
authorizations effective July 8th 1999, you and your staff
will have access to the Registrar's receipt records up to
July 8th 1999, for tomorrow only, July 21st, 1999. After this
date access will not be given to you and your staff to any
records of the Registrar of Hotels and Tourist Accommodations
compiled under the Hotels and Tourist Accommodation Act, No.
12 of 1999, or any Act repealing same.
Again, please take note, that the authorization agreement
dated May 15th, 1997 was also revoked by my letter of July
8th 1999, and you are therefore no longer authorized to do
any business on behalf of the Registrar of Hotels and Tourist
Accommodations. The hotel industry has been notified of the
Registrar's action.
No
further correspondence will be made to you by the Registrar
on the matter of the revocation or otherwise, after the final
payment of the balance of the 4% commissions due you at July
8th, 1999.
Sincerely,
sgd - N. Escalante
NOEL J. ESCALANTE
Registrar of Hotels and
Tourist Accommodation"
This letter
in my view, speaks for itself and rather voluminously that
the Respondents were determined to end the contractual relationship
with the Applicant relating to his assessment of taxes by
hotels.
Turning
to the Memorandum of Amendment to Agreement
dated 13 March 1998, this document expressly stated that the
parties were desirous of modifying the Original Contract (that
is the one of 15 May 1997) in certain respects. It proceeded
to modify it in certain areas. For the purposes of the moment,
it is clause 4 of the Memorandum
of Amendment that is relevant here. This clause
amended by deletion clause 6 of the original
contract (already referred to above) and substituted the following
in its stead:
"This Agreement shall commence on the 1st day of
May 1997 and shall continue for a period of six years PROVIDED
always that in the event that Cedric D. Flowers fails to comply
with reasonable instructions issued by the Registrar of Hotels
with regard to the administration of the Hotel taxes, this
Agreement may be terminated by the Board by written notice
served on Cedric D. Flowers at least six months before the
date specified in the notice."
A plain
reading of this provision makes it clear that the parties
intended to import into their contractual relationship some
means of terminating it inside of the six years it was stipulated
to run for: Failure by the Applicant to comply with reasonable
instructions issued by the Registrar of Hotels (the second
Respondent) with regards to the administration of the Hotel
taxes gave the Board (the first Respondent) the right to terminate
the agreement by six months written notice to the Applicant.
It may
be noticed that this new clause did not, unlike the clause
6 in the earlier contract which it was said to
be replacing, subject the commencement or termination of the
contractual relationship between the parties to the Hotels
Act (subsequently replaced by the Hotel and Tourist Accommodation
Act 1997).
Plainly, no other mode of termination of the relationship
between the parties was contemplated; if it was, it was not
provided for. But what was expressly provided was that if
the Applicant failed to comply with reasonable instructions
issued by the second Respondent in relation to the administration
of Hotel taxes, then the first Respondent may on six months
written notice served on the Applicant, terminate their relationship.
Was this done in the circumstances of the relationship that
gave rise to the reference to the Arbitrator? On the contrary,
instead the Applicant received a somewhat peremptory letter
dated 8th July 1999 from the second Respondent
which effectively put an end to the contract as it disabled
the Applicant from performing his own part of the contract
in the only way he could have.
It was
intrinsic to the Applicant's performance under the agreement
with Respondents that he had or be given the necessary visitation
rights to hotels for the purposes of examining their books
and registers in order to assess properly the taxes on accommodation
charges due from them. This was in fact woven into the fabric,
as it were, of the agreement between the parties in clause
1(2).
I therefore
conclude on this point that in the circumstances of the reference
before him, the Arbitrator failed to appreciate the effect
and consequences that flowed from the letter of 8th
July 1999 and enlarged upon by the letter
dated 20 July 1999 from the second Respondent
to the Applicant. In particular, that these letters took away
the substratum of the relationship between the Applicant and
the Respondents. In effect, these letters made it impossible
for the Applicant to perform the duties for which he was engaged.
They denuded him of the essential authority in relation to
the hotels to perform his functions. Called by whatever name,
repudiatory, fundamental, material or what have you, this
was a breach that made the Applicant unable to perform the
services for which he had entered into the contractual relationship
with the Respondents.
The failure by the Arbitrator, to appreciate this, I believe,
coloured his view of the relationship between the Applicant
and the Respondents, especially the second Respondent. The
Arbitrator, with respect, assumed rather facilely that because
the second Respondent could pursuant to section 3(3)
of the Act appoint agents to help him execute
those functions given him as the Registrar of Hotels and terminate
their appointment with facility, he could by the same token
terminate forthwith the Applicant's contract. This, in my
view, was a facile assumption that belied the fact of a legal
contractual status of the Applicant. He was to be sure, in
virtue of the statutory provisions an agent of the second
Respondent; but an agent with a contractual relationship with
the Respondents. If
that relationship is terminated other than as provided for
in the contract, then surely there must be legal consequences.
I do not believe the statutory powers given the Registrar
of Hotels (the second Respondent) by section 3(3)
of the Hotels and Tourist Accommodation Act to generally or
specially authorise any other person to help him discharge
his duties and to revoke such authorization at any time confers
immunity from suit on the Registrar and insulation from consequential
damages if he were to revoke in circumstances that would clearly
be in breach of contract.
Had the Arbitrator done a proper appreciation of the contractual
relationship between the Applicant and the Respondents he
would have found that notwithstanding section 3(3) of the
Act, clause 6 of the contract most certainly
did not empower the second Respondent to terminate the Applicant
instanter, as it were. Even if it did, it would not insulate
or immunize from suit and damages for breach of contract where
the revocation is contrary to the express terms of the contract.
Had the
Arbitrator also done a proper appreciation of the letter of
8th July 1999 together with that of 20th July 1999,
in the circumstances of the reference before him, he would
have found that far from being a valid termination of the
Applicant's agency, it was in fact and in law, a termination
or breach of the contractual relationship between the parties
other than as was provided for in clause 6
(whether the old clause 6 or the new one substituted by clause
4 of the Memorandum of Amendment to Agreement).
Consequently,
I hold that there is error of law on the face of the Award
wherein the Arbitrator found that the second Respondent was
empowered pursuant to section 3(3) of the Act and clause 6
of the contract to terminate the Applicant forthwith, and
that the second Respondent validly terminated the Applicant's
contractual relationship on 8th July 1999, and that further
the Applicant was not entitled to any general damages for
breach of contract by the second Respondent.
This
brings me to a finding which I think is clearly an error of
law on the face of the Award: that the Memorandum
of Amendment to Agreement is not binding on the
second Respondent. This no doubt flowed from the reasoning
of the Arbitrator that the second Respondent was not a party
to the Memorandum.
It is however, pellucidly clear that the Memorandum was executed
expressly to modify the Original Contract which was signed
by all the parties, including the second Respondent. Also,
the second Respondent is expressly mentioned in the Memorandum
in relation to issuing instructions to the Applicant with
regard to the administration of hotel taxes. In fact, for
the duration of the relationship it was the second Respondent
who gave all the instructions to the Applicant. I therefore
hold that the Memorandum was in fact and in law binding on
the second Respondent. It was not in conflict with the Agreement
of 15th May 1997 which it modified and in my view, the two
are inextricably linked together.
In my
view, from the scheme of the Hotel and Tourist Accommodation
Act, there is a necessary nexus between the two
Respondents which is vital for the proper administration of
that Act. This relationship, I find, is reflected in the provisions
of the contractual relationship between the applicant and
the Respondents. The Applicant, though formally engaged by
the first Respondent, was nonetheless obligated by the terms
of the Memorandum of Amendment to Agreement
to comply with reasonable instructions of both
Respondents. In fact, failure by the Applicant to comply with
the reasonable instructions of the second Respondent was expressly
made a condition for the termination of the Agreement itself.
Surely, it would be implausible to say that the second Respondent
was not bound by the Memorandum of Amendment to Agreement.
An analysis of the Act will readily show that in practice
it is the second Respondent who is the point man charged with
the administration of the Act and in this process he is subject
to the general directions of the first Respondent who is,
by law, consulted by the responsible Minister before the appointment
of the second Respondent. The Act itself is the matrix within
which the contractual relationship between the Applicant and
the Respondents was conceived and executed.
I therefore
hold that the Applicant is entitled to damages for the breach
of his contract with the Respondents occasioned by the actions
of the second Respondent and acquiesced in if not actively
condoned by the first Respondent. This contract still had
four years of its life to run when it was peremptorily brought
to an end by the Respondents.
In the
event, it makes no difference as to whether the second Respondent
was a party or not to the Memorandum of Amendment
to Agreement.
In the
premises therefore, it was an error of law on the face of
the Award in the circumstances of this reference for the Arbitrator
to state otherwise.
WAS
THE APPLICANT ENTITLED TO WHAT HE CLAIMS WAS LOST COMMISSION
AS A RESULT OF THE INSTRUCTIONS FROM THE RESPONDENT NOT TO
COLLECT TAXES ALREADY ASSESSED?
The contention
here on behalf of the Applicant as far as I can understand
it is that there is an error of law on the face of the Award
because the Arbitrator found that the Applicant was not entitled
to commissions on taxes that might have been collected from
Programme for Belize, Coral Caye Conversation and Belize Audubon
Society. This is so because the contention runs, the Arbitrator
having found that assessment had been done on these three
establishments should have found as a matter of law that the
instructions of the second Respondent that no further proceedings
should be taken to collect the taxes were unlawful and a breach
of contract and that therefore the Applicant was entitled
to commission on the amount of taxes due from these three
establishments.
I do
no think this is right. After a careful perusal of the Award
and analysis of the relevant provisions of the agreement between
the parties I am unable to find, as is contended for the Applicant,
that Award in this respect contain an error of law on its
face.
The anxiety
of the Applicant is perfectly understandable in the circumstances
when it is remembered that his remuneration was on a percentage
basis of the amount of taxes received by the Respondents.
This anxiety no doubt stems from the professional position
of the Applicant: as an accountant, assessed taxes became
in his eyes receivables, that is, amounts
owed to a business and therefore regarded as assets.
But a
close analysis of the remuneration clause of the Applicant's
contract shows that it was intended by the parties that his
remuneration by commission on a percentage basis could only
have meant a percentage of the amount actually received
in taxes, not assessed whether paid or
unpaid.
Clause 2 of the 1997 Agreement provided
for the method of calculating the remuneration of the Applicant.
Clause 2(IV) of this Agreement was however
omitted altogether in the 1998 Memorandum of Amendment. This
had provided that "the percentage will be paid on taxes
actually collected whether collection occurs after
the signing of the agreement or as a direct result of his
assessment."
However,
it is clear that whether in the old or new clause on the remuneration
of the Applicant, the percentage was only on the amount of
taxes actually received or collected.
Therefore, if there was no collection for whatever reason,
can the Applicant still claim commission? I do not think so.
I therefore
do not find an error of law on the face of the Award when
the Arbitrator found that the Applicant was not entitled to
commission on taxes that might have been collected.
To hold otherwise would be to grant a windfall as it were
to the Applicant on sums that the Respondents never received
for whatever reason. The lawfulness or illegality of the instructions
to the Applicant is, in my view, besides the point - the point
was no taxes were collected, therefore, logically and legally
no commission could ensue.
WHAT
WAS THE CORRECT OR PROPER BASIS FOR CALCULATING THE COMMISSION
TO BE PAID TO THE APPLICANT: GROSS OR NET?
The contention
here is that there is error of law on the face of the Award
when the Arbitrator found that the Applicant was not entitled
to be paid commission on the basis of published rates (gross)
but only on net.
According to the Applicant, the correct and legally binding
basis for calculating the taxes due from hotel proprietors
in respect of the charges to their guests was on the "gross"
or published rates by these establishments. Of course, this
contention is understandable at least from the Applicant's
point of view, for was this the basis of calculation it would
naturally increase the cut, as it were, that would come to
the Applicant in the form of commission to which he was entitled
under the contract as remuneration.
The Arbitrator
however found that on an interpretation of the definition
of "accommodation charges"
in the applicable Act that, is the Hotels and Tourist Accommodation
Act - No. 12 of 1997, the Applicant was entitled to be paid
commission only on the "net"
and not on "the basis of the published rates."
Does
this interpretation and finding by the Arbitrator constitute
an error on the face of the Award as is contended for the
Applicant? I do not think it is from all the circumstances
of the reference before him and on a proper construction and
application of the relevant provisions of the Act which imposed
the tax and a true definition of the subject matter
on which the tax was exigible.
It is
to be observed that the words or expressions "net",
"gross", "rack rate Plus mark up" or "published
rates" are nowhere mentioned or defined in the Act itself.
The tax, the assessment or collection of which the Applicant
was engaged under the contract with the Respondents was "a
tax imposed on all accommodation charges"
(see preambular paragraphs of the contract dated 15 May 1997
in particular paragraph
(1)).
The basis of the computation of the tax on "accommodation
charges" is at the heart of the Applicant's
complaint on this score.
There
may also perhaps be an element of commendable public-spiritedness
behind the agitation of this issue as to the correct or proper
rate of assessing or collecting the tax payable by hotel and
tourist accommodation proprietors in respect of the charges
their guests pay them. The Applicant may feel strongly that
the authorities and consequently the public are being short-changed
and not getting the full amount of the tax imposed by law.
This may be so, but I think it is not, in law, a matter for
the remuneration of the Applicant but between the authorities
and the proprietors to see that the matter is immediately
straightened out.
In fact,
section 24 of the Hotels of Tourist Accommodation
Act empowers the Registrar, for example, if he
is satisfied that he has not been given a true account of
the accommodation charges earned by a proprietor during any
period, to make an assessment of the tax incidence due from
that proprietor.
Section
22(1) of the Act is the warrant for the imposition
of this tax and it provides:
"22(1)
Subject to the provisions of this Act, there shall be levied
and paid at the rate of seven per centum of all the accommodation
charges in regard to lodging."
The term "accommodation charges"
is defined in a Delphic-like fashion in section 2
of the Act as follows:
"
'Accommodation charges' means the sum paid or payable by or
on behalf of guests for accommodation provided in a hotel
or tourist accommodation, whether the sum becomes payable
in Belize or otherwise."
However,
a definition of "accommodation charges" under the
old and repealed Hotels Act in Chapter 228 of the Laws of
Belize provides as follows:
"
'accommodation charges' means the sum payable by or on behalf
of guests for accommodation provided in a hotel exclusive
of any other charges in respect of board, whether
the sum becomes payable in Belize or otherwise" (emphasis
mine)
The words
"exclusive of any other charges in respect of board"
are, it may be noticed, missing from the new Act - No. 12
of 1997.
This,
I suspect may well be behind the divergence between the Applicant
and the Respondents on the basis of the calculation of the
tax. The Applicant contends that the incidence of the tax
should be on the "gross".
This matter was indeed invested with an aura of technicality
during the reference before the Arbitrator (see for example,
paragraphs 67 to 74 of the Applicant's Statement dated 31st
January 2000 before the Arbitrator).
The Arbitrator
however cut through to the heart of the matter, in my view,
in paragraph 7.2 of his Reasons For Award
when he stated that the definition of "accommodation
charges" in the Act referred to the amount paid by guests
at hotels and that it would therefore be strange for the Registrar
to insists, as the Applicant contends, on taxes being paid
on published rates.
As I
have already said, the term "published rate" whatever
it may mean or include, is not mentioned or defined in the
Act. I do not think that a proper and reasonable construction
of section 2 of the Act on the meaning
of "accommodation charges" and section
22 itself will bear out the contention urged on
behalf of the Applicant.
I do
not think therefore that the Arbitrator can properly be faulted
on this score, and his finding that the Applicant is not entitled
to be paid commission on the basis of published rates but
only on net is not, I hold, an error of law on the face of
the Award.
Finally
on the issue of costs.
At the
commencement of the hearing of this application, the learned
Attorney for the Applicant sought leave to amend the Originating
Motion by the addition of the following prayer:
"And in the event of it being ordered that the
award be set aside or remitted, the costs of the reference
and the award be paid by the Respondents and that in any event
the costs of and incidental to this application be paid by
the Respondents."
I granted
the amendment sought. I must say however at the conclusion
of the hearing of the application, learned counsel overlooked
addressing the Court on this aspect of the application. I
notice however from the Award itself that the Arbitrator awarded
and directed that the Respondents should pay the claimant's
(the Applicant before me) costs including the sum
of $2000 already paid to the Arbitrator. The Arbitrator also
awarded and directed that the Respondents should pay his fees
and the expenses of (the) Arbitration, although
he did not state any amount.
But for
the amendment, no thought would have been given to this aspect
of the matter.
Section
4 of the Arbitration Act - Chapter 69 of the Laws of Belize
states the provisions which are deemed included in any submission
unless a contrary intention is expressed. These are set out
in the First Schedule to the Act and paragraph 9
thereof provides for the costs of the reference and the award
to be in the discretion of the Arbitrator.
It is also the position generally that unless the arbitration
agreement itself otherwise provide the costs of the award
and of the reference are within the discretion of the arbitrator,
who may direct by and to whom and in what manner these costs
are to be paid. (Mustill & Boyd on Commercial
Arbitration 2nd ed. at pp. 394 - 395.
It is
however the usual practice for the Arbitrator to separate
the costs of the award from the costs
of the reference.
The
costs of the award consists of the fees of the
Arbitrator together with any expenses he, the Arbitrator,
might have incurred.
The costs
of the reference are the costs, other than the
costs of the award, incurred by the party in whose favour
the order as to cost is made: See Government of Ceylon
Chanders (1963) 2 QB 327 at p. 333
per Megaw J.; and Mustill & Boyd op. cit
at p. 400.
In his
Award, the Arbitrator here did expressly award the
costs of the reference to the Applicant/Claimant
thus: "The Respondent shall pay the Claimant's costs
including the sum of $2000 already paid to me."
The Arbitrator
also ordered the Respondents to pay his fees and the expenses
of the arbitration. In other words, he awarded the costs
of the award against the Respondents although
he omitted stating any amount in this regard.
It is the position that a reasoned award, as in the instant
case, should deal with all the costs of the award and of the
reference, and should not leave the Court to deal with the
costs of the Arbitration - over which the Court has no jurisdiction
- Re Knight and Tabernacle Permanent Building Society
(1892) 2 QB 613; and Mustill & Boyd
op. cit at p. 400. I believe
the power to make orders as to costs in section 15
of the Arbitration Act in relation to this Court is confined
to the costs of orders it may make in relation to applications
concerning arbitration, and not, I suspect, as to the costs
of the arbitration itself.
The power
of the Arbitrator to make orders as to costs of the arbitration
as I have said are either implied in the submission by law
as contained in paragraph 9 of the First Schedule to the Act
or contained in this section 15.
Therefore,
unless and until the Arbitrator's award is set aside or remitted,
his Orders as or the costs of the arbitration stand, which
include the costs of the reference and
the costs of the award.
However,
this prayer in the motion is intrinsically linked with whatever
I decide to do in the light of the Applicant's motion to this
Court wherein he has asked me to either set aside
the award or remit it.
In other
words, to set aside or remit in all the circumstances of this
case and what consequences flow from either course of action?
As the
learned authors of Commercial Arbitration (Mustill
and Boyd) acknowledge, in the 2nd edition of their
work, although there are many reported cases in which the
Court has ordered setting aside or remission, there are few
in which the opportunity has been taken to explore the consequences
of the remedy once granted (at p. 565).
In so far as setting aside is concerned,
it is evident that the effect of such an order from the Court
is to deprive the award of all legal effect. Where however,
the award is severable, and part only is set aside, the valid
part remains as an effective adjudication. This much is agreed
upon.
However,
section 12 of the Arbitration Act - Chapter 69
of the Laws of Belize, limits the power of setting
aside an award to only where the arbitrator has misconducted
himself or the award has been improperly procured.
In the
case of remission, it appears that the
effect of it on an Award is that if it covers all the matters
referred, the Arbitrator resumes all his authority over the
dispute and the original award falls away. Where the remission
applies to only some of the matters referred,
that is, partial remission, as is allowed
clearly by section 11(1) of the
Arbitration Act - Chapter 69 of the Laws of Belize
by the words "or any of them" therein, those parts
not touched by the order of remission stand and the Arbitrator
cannot vary his award in respect of these. In other words
it is the issue or issues remitted for reconsideration
to the Arbitrator by the Court which from the subject of remission
and not the award itself
Therefore,
as I've in the circumstances of this application decided that
only those aspects of the reference relating to the breach
of contract that should be remitted to the Arbitrator for
reconsideration, the parts of the award relating to the Applicant's
claim in paragraph 17(1), (2) and (3)
of his Statement of Claim stand, including
his award as to the costs of the reference and the award.
The issue of breach of contract and the
quantum of damages thereof are hereby
remitted to the Arbitrator. I therefore order and remit the
Award to the Arbitrator to reconsider the issue of:
l)
the breach by the Respondents of the contract with the Applicant,
ll) the Applicant's claim for damages for the breach of the
contract, that is, the quantum he is entitled to.
I also
order that the Arbitrator shall make and publish his Award
not later than three calendar months from the date of this
Order.
The costs
of this application is awarded to the Applicant in the sum
of $5,000.00.
A.
O. CONTEH
Chief Justice
DATED: 6th July, 2000.
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