Minister of Works and Engineering v Village Hotels of Bermuda Ltd 1995 Civil Jur. No. 143

• Jurisdiction: Bermuda
• Judgment Date: 13 September 1995
• Date: 13 September 1995
• Docket Number: Civil Jurisdiction 1995 No. 143
• Court: Supreme Court (Bermuda)

In the Supreme Court of Bermuda

Meerabux, J

Civil Jurisdiction 1995 No. 143

BETWEEN

The Honourable Leonard Ormond Gibbons Minister of Works and Engineering for and on Behalf of The Government of Bermuda

Plaintiffs

-and-

Village Hotels of Bermuda Ltd.

Defendant

Mr. P. Storr for the Plaintiff

Mr. S. Froomkin, Q.C. for the Defendant

Olver v HillierUNK [1959] 2 All ER 220

Taunton Collins v CromieWLR [1964] 1 WLR 633

Law v GarretttELR (1878) 8 ChD 26

McMillan v DeGroote 1991 Civil Appeal No. 15

Heyman v Darwins LimitedELR [1942] AC 356

Bristol Corporation v AirdELR [1913] AC 241

Channel Tunnel Group Ltd. v Balfour BeattyELR [1993] AC 334

Raydon Underwriting v North American Fidelity and Guarantee 1994 Civil Jur. No. 108

Phoenix v PopeUNK [1974] 1 All ER 512

Hayter v NelsonUNK [1990] 2 Lloyds Rep. 265

Skandia v MG Re 1993 Civil Jur. No. 381

Harbour Assurance Ltd. v Kansa Ltd.ELR [1993] QB 701

Arbitration Act 1986, s. 7

Landlord and Tenant Act 1974, s. 13

Defendant seeking stay of action under Arbitration Act — Claim for an order to terminate lease, for damages and interest — Arbitration agreement — Meaning of ‘dispute’ and ‘difference’ in the context of arbitration clause

JUDGMENT

Meerabux, J.

PRELIMINARY

This is a summons by the Defendant seeking a stay of the action pursuant to section 7 of the Arbitration Act 1986 (hereafter referred to as ‘the 1986 Act’).

The Plaintiff's claim is for an order to terminate the lease, for damages, for interest from the date of the issue of the Writ, for such other relief as the Court deems just and for costs.

The Plaintiff commenced action in April 1995. The Defendant entered appearance on 21 April 1995. The Plaintiff filed summons for judgment on 5 May 1995. The Plaintiff's Statement of Claim was amended on 11 August 1995.

SUBMISSIONS

Counsel for the Plaintiff conceded at the outset that an arbitration agreement existed between the parties within the meaning of the 1986 Act and that the agreement was contained in the Lease Agreement.

He stated that it was for the Plaintiff to satisfy the Court why an Order for stay of the action should not be made.

Counsel for the Plaintiff submitted that the matters pleaded in the Writ were not either disputes or differences touching any clause, matter or thing whatsoever contained in the Lease or constituted any matter referred to in clause 6(d) of the Lease. He said that a Writ was issued claiming relief under section 13 of the Landlord and Tenant Act 1974 (hereafter referred to as ‘the 1974 Act’) and that the Plaintiff did not seek to exercise any power of re-entry under the Lease. He submitted that recovery of possession was a matter which was reserved to the Court.

He submitted that the Court did not have jurisdiction to grant the relief claimed and that section 7 of the 1986 Act did not apply. He argued that nowhere in the lease was anyone given delegated power to consider the question of termination of lease or ordering possession. He submitted that it was not possible to give that power to the arbitrator for to do so would extend the provision of the lease to authorise the arbitrator to make order over and above power contained in the lease. He cited Olver v HillierUNK[1959] 2 All E.R. 220 and Phoenix v PopeUNK[1974] 1 All E.R. 512.

He submitted that if the Court did have to consider the exercise of its jurisdiction under section 7 of the 1986 Act then there were four matters which the Court would have to consider.

He argued that the Affidavit sworn by Mr. Townsend on the Defendant's behalf clearly identified one reason for not granting a stay. In paragraph 5(2) of the Affidavit Mr. Townsend deposed that there would be disputed issues as to whether or not, on a proper construction of the Lease, the defendant had the right to close the hotel. That and the other issues raised, for example, the effect of any alleged waiver of breaches of the tenant's covenants and/or estoppel were matters of law and as such were more suitable for resolution by a court.

He argued that the Plaintiff would rely on the serious nature of the alleged breaches to claim that they were deliberate and of such an extent that there was effectively nothing for an arbitrator to consider i.e. that there was no dispute under the Lease to be resolved.

He argued that the Plaintiff would rely on the matter of delay and would seek to show that in the public interest, the dispute should be resolved as quickly as possible, that was in one forum not two as would be the case if the matter were to be stayed for arbitration and matter of law referred to the Supreme Court for decision. He cited Taunton Collins v Cromie and othersWLR[1964] 1 WLR 633. He argued that the arbitrator would have no power to grant the remedy sought namely to determine the Lease. He cited. Law v GarrettELR(1878) 8 Ch.D. 26 at page 37, Marion H. McMillan v Michael George DeGroote, Civil Appeal, No. 15 of 1991, Bermuda. He conceded that the question of damages alone could be properly dealt with by arbitration if the Defendant wished to sever that.

Counsel for the Defendant argued that in the Statement of Claim breaches of convenant appeared in a number of paragraphs, that breach of covenant was a condition precedent to damages or termination and that it fell within the arbitration clause.

He submitted that Olver's case and Phoenix's case destroyed the Plaintiff's argument. He argued that Counsel for the Plaintiff misconstrued the 1974 Act and that section 13 of the 1974 Act was discretionary.

He argued that in the McMillan's case it was stated that section 23 of the Arbitration Act specifically took away specific performance and that an arbitrator had exactly the same powers as those available to a Judge. He referred to the Law and Practice of Commercial Arbitration in England, Second Edition, Mustill and Boyd, 1989 (hereafter referred to as ‘Mustill and Boyd’) at 388, 389, 390 and cited Heyman v DarwinsELR(H.L.) [1942] AC 356 at 369, 370, 391, 392.

He argued that there was no principle in law to support the Plaintiff's argument that there was no dispute, that waiver, laches and estoppel were matters which an arbitrator could deal with, that the Defendant offered to open the Hotel on two occasions, that the Defendant offered arbitration on 21 April 1995 and that offer was rejected, that arbitration was swifter, that section 7 of the 1986 Act was the same as section 4(1) of the Arbitration Act 1950 of the United Kingdom.

He stated that the Defendant filed appearance and remained ready, able and willing to go to arbitration. He submitted that section 42 of the Arbitration Act applied to any arbitration in which the Crown was a party and that if the Plaintiff were not the Crown it did not matter.

He submitted that the court should start on a strong bias to maintain the bargain. He cited Bristol Corporation v AirdELR[1913] A.C. 241, Channel Tunnel Group Ltd. v Balfour Beatty Ltd.ELRENR(H.L. (E.)) [1993] A.C. 334, al 343, 351, 352, 353, 355, 356, Raydon Underwriting v North American Fidelity and Guarantee, Civil Jurisdiction 1994 No. 108, Phoenix v PopeUNK[1974] 1 All E.R. 512.

He submitted that the Plaintiff conceded that there was a difference of opinion as to the ambit and scope of the agreement. He asked the Court to stay the order for arbitration to proceed and for costs.

ARBITRATION AGREEMENT

The Plaintiff has conceded that an arbitration agreement exists between the parties within the meaning of the 1986 Act. It is clear that an Arbitration Agreement is set out in Clause 6(d) of the Lease Agreement which reads thus:

‘(d) if any dispute or difference shall arise between the landlord and the tenant touching any clause matter or thing whatsoever herein contained or the operation or construction thereof or any matter or thing in any way connected with this lease or the the rights duties or liabilities of either party under or in connection with this lease then and in every such case the dispute or difference shall be determined by a single arbitrator in accordance with the Arbitration Act, 1924, or any statutory modification or re-enactment thereof for the time being in force’.

I find that Clause 6(d) of the Lease Agreement is an arbitration clause which is couched in very wide terms.

DISPUTE AND ITS PRECISE NATURE

Next I will consider the meaning of ‘dispute’ and ‘difference’ in the context of an arbitration clause. I applied the principles of Hayter v Nelson[1990] 2 LLR 265 at 268 in Skandia v MG Re et al, Supreme Court of Bermuda 1993 No. 381 and also applied the same principles in Raydon Underwriting Management Company Limited v North American Fidelity and Guarantee Lid.Supreme Court of Bermuda 1994 No. 108. Hayter's case has been approved by the highly persuasive decision of the House of Lords in Channel Tunnel Group v Balfour Beatty ConstructionELR[1993] A.C. 334. In Hayter v Nelson, supra, Saville J. said at 268:

‘For example, in Ellis Mechanical Services Ltd. v Wates Construction Ltd., [1978] 1 Lloyd's Rep. 33 at p. 37, Lord Justice Bridge, as he then was, said this:

“To my mind the test to be applied in such a case is perfectly clear. The question to be asked is: is it established beyond reasonable doubt by the evidence before the Court that at least £x is due from the defendant to the plaintiff? If it is, the judgment should be given for the plaintiff for that sum, what ever X may be, and in a case where, as here, there is an Arbitration clause the remainder in dispute should go to arbitration. The reason why arbitration should not be extended to cover the area of the £x is indeed because there is no issue, or difference, referable to arbitration in respect of that amount.”

To the extent that such observations are intended to define what is or is not a dispute or difference within the meaning of an arbitration clause of the kind under consideration, I am respectfully unable to agree with...