IN THE HIGH COURT OF JUSTICE BETWEEN QUANTUM CONSTRUCTION LIMITED AND NEWGATE ENTERPRISES CO. LTD.
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1 REPUBLIC OF TRINIDAD AND TOBAGO IN THE HIGH COURT OF JUSTICE Claim No. CV BETWEEN QUANTUM CONSTRUCTION LIMITED AND NEWGATE ENTERPRISES CO. LTD. Claimant Defendant BEFORE THE HONOURABLE MR. JUSTICE ROBIN N. MOHAMMED Appearances: Mr. Walede Michael Coppin holding for Mr. Farid Scoon for the Claimant Mr. Justin Phelps and Ms. Yelena Hewitt for the Defendant DECISION ON DEFENDANT S APPLICATION FOR A STAY OF PROCEEDINGS Introduction, Applications and Procedural History 1. By Notice of Application filed on the 11 th April, 2014, the Defendant/Applicant seeks, inter alia, a stay of these proceedings pursuant to section 7 of the Arbitration Act and/or under the inherent jurisdiction of the Court. 2. The Defendant s Application arose as the result of the Claimant s commencement of legal proceedings on the 28 th January, On that date, the Claimant filed a Claim Form and Statement of Case, seeking, inter alia, the sum of $1,817, for works performed and services rendered by and for the Claimant pursuant to a contract entered into between the parties. 3. The Defendant thereafter entered an Appearance on the 24 th March, Its Notice of Application for a stay of proceedings and affidavit in support were filed on the 11 th April, On the 23 rd April, 2014, the Claimant filed two affidavits in opposition to the Defendant s Notice of Application of the 11 th April, Page 1 of 12
2 5. Written submissions on its Application to stay were filed by the Defendant on the 13 th June 2014, followed by the filing of the Claimant s submissions on same on the 25 th June, The Defendant s written response to points of law was then filed on the 14 th July, The Defendant s Position 6. The Defendant seeks an order that these proceedings be stayed pursuant to section 7 of the Arbitration Act Chap. 5:01 and/or under the inherent jurisdiction of the Court. 7. The Defendant contends that by clauses 20.6 and 20.8 of FIDIC , being part of the written agreement made between the Claimant and the Defendant, the parties agreed to submit present and future differences, disputes, claims and demands arising under the said contract to a Dispute Resolution Board and then to arbitration (arbitration agreement). 8. It is contended that all of the claims and reliefs raised by the Claimant in this action are matters within the arbitration agreement and that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement. The Defendant further contends that it was at all material times, and at the time when the proceedings were started, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration. The Claimant s Position 9. The Claimant contends that Clause 20.6 only makes arbitration mandatory if there is a Dispute Adjudication Board ( DAB ) who has been unable to amicably settle a dispute between the parties and has made some decision that has not been made final. However, no DAB was ever appointed. The Claimant contends that clause 20.8 of FIDIC applies. Clause 20.8(b) in turn does not compel or obligate the parties to arbitrate. 10. The Claimant further contends that in any event, section 7 of the Arbitration Act Chap. 5:01 states that the Court in exercising its discretion on whether to stay proceedings must first be satisfied that: (i) there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and (ii) the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration. 1 Federation Internationale des Ingenieurs-Consells- International Federation of Consulting Engineers. Page 2 of 12
3 11. According to the Claimant, there is sufficient reason why the matter should not be referred in accordance with the arbitration agreement and the Defendant/Applicant has not established that it was at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration. ISSUE 12. The main issue to be resolved is whether this Court ought to grant a stay of proceedings in light of the arbitration clause contained in the contract between the parties. LAW AND ANALYSIS 13. The Contract between the parties consists of a series of documents. Of particular relevance to this Application are the General Conditions of Contract ( GCC ) and Particulars of Contract ( PCC ) which form part of the contract. The GCC and PCC are to be read conjunctively, with the changes or amendments effected by the PCC informing the GCC. Accordingly, Clause 20.6 of the Contract which deals with arbitration provides as follows: Unless settled amicably, any dispute in respect of which the DAB s decision (if any) has not become final and binding shall be finally settled by reference at the option of either party to arbitration in accordance with the Arbitration Act Chapter 4:01 (sic) of the Laws of Trinidad and Tobago (1980) or any modification, amendment or reenactment thereof. The arbitrator shall have full power to open up, review and revise any certificate, determination, instruction, opinion or valuation of the Engineer, and any decision of the DAB, relevant to the dispute. Nothing shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrator(s) on any matter whatsoever relevant to the dispute. Neither party shall be limited in the proceedings before the arbitrator(s) to the evidence or arguments previously put before the DAB to obtain its decision, or the reasons for dissatisfaction. Any decision of the DAB shall be admissible in evidence given in the arbitration. Arbitration may be commenced prior to or after completion of the Works. The obligation of the Parties, the Engineer and the DAB shall not be altered by reason of any arbitration being conducted during the progress of the Works It appears however, that the application of Clause 20.6 (in the absence of the applicability of clause 20.8 to same as shall be discussed below) is premised, at the very least, on a DAB ( Dispute Adjudication Board) having been appointed in the first place. The Claimant submits that this was never done and this contention was not challenged by the Defendant. Page 3 of 12
4 The Claimant submits that Clause 20.6 thus does not apply which mandates settlement by arbitration where the dispute is referred at the option of either party in accordance with the Arbitration Act of Trinidad and Tobago. 15. However, I note that Clause 20.8 provides as follows: If a dispute arises between the Parties in connection with, or arising out of, the Contract or the execution of the Works and there is no DAB in place, whether by reason of the expiry of the DAB s appointment or otherwise: (a) Sub-clause 20.4[ Obtaining Dispute Adjudication Board s Decision] and Sub-Clause 20.5 [Amicable Settlement] shall not apply, and (b) the dispute may be referred directly to arbitration under Sub-Clause 20.6 [Arbitration]. 16. Accordingly, Clause 20.8 of the Contract applies where there is no DAB in place for whatever reason, seemingly encompassing a situation where no DAB was ever appointed. In such circumstances the requirements for obtaining its decision and amicable settlement are bypassed (they do not apply) and the dispute may be referred directly to arbitration under subclause Given that amicable settlement and the DAB s decision are not elements for consideration under recourse to clause 20.6 pursuant to clause 20.8, insofar as clause 20.6 requires that any dispute shall be finally settled by reference at the option of either party to arbitration in accordance with the Arbitration Act Chap 4:01 (sic) of the Laws of Trinidad and Tobago (1980) or any modification, amendment or re-enactment thereof it shall be applicable. 17. The Claimant makes much of the fact that clause 20.8(b) says that where there is no DAB in place, the dispute may be referred directly to arbitration under clause 20.6 and highlights that it is not mandatory that the dispute be so referred. However, when read together, I find the position to be as stated hereunder in the proceeding paragraph. 18. The dispute may be referred directly to arbitration under clause When the first part of the phrase is read in isolation- the dispute may be referred directly to arbitration it suggests that settlement via arbitration is not mandatory. However, the phrase is completed by under sub-clause That clause provides that the dispute shall be finally settled by reference at the option of either party to arbitration Accordingly, where a party opts to proceed with arbitration, that is the means via which the dispute between the parties shall be settled. Thus the contract envisages that even where no DAB has been appointed, once a party seeks recourse to arbitration, that is the route via which the parties shall proceed to resolve same. 19. The Defendant contends that notwithstanding the express terms of Clauses 20.6 and 20.8 the Claimant commenced these proceedings and further contends that those clauses were never at any time amended, Page 4 of 12
5 rescinded or waived in any manner whatsoever, and accurately reflect the true and full agreement between the parties. The Claimant does not challenge the contention that the clauses were never amended, rescinded or waived. In fact, the Claimant said in its submissions that it does not dispute the existence or validity of the arbitration agreement and does not deny that the present facts of the case constitutes a dispute within the meaning of the arbitration agreement or Arbitration Act or case law on the issue. 20. It is a stay of proceedings that the Defendant seeks. Section 7 of the Arbitration Act, Chap. 5:01 deals with the power of the Court to stay proceedings where there is an arbitration agreement. Section 7 reads as follows: If any party to an arbitration agreement, or any person claiming through or under him, commences any legal proceedings in the Court against any other party to the arbitration agreement, or any person claiming through or under him, in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to the Court to stay the proceedings, and the Court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement, and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings. 21. Accordingly, the Court may exercise its discretion to stay the proceedings where it is satisfied that- (i) there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement; and (ii) the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration. 22. I turn now to a consideration of the evidence in light of the aforementioned two factors. Whether there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement? 23. The Defendant contends that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement. On the other hand, the Claimant contends that sufficient reason does in fact exist to warrant the non-referral of the matter. 24. According to the Claimant, the main question in this case is whether or not the Defendant s actions amounted to a repudiatory breach of contract and therefore entitles the Claimant to damages for wrongful termination. This, it contends, is a matter of law and it would be better dealt with by a Page 5 of 12
6 court than an arbitrator as it would be idle to remit to the arbitrator a question which the arbitrator will in turn have to submit to the Court. The Claimant contends that this is a sufficient ground for refusing the Defendant s application to stay the proceedings. The Defendant counters that this submission is unsupportable having regard to the Claim Form and Statement of Case filed by the Claimant which show that the disputes which have arisen raise points of facts and points of law for the determination of the arbitrator. The Defendant submits that the Claimant s submission is unsupported in fact and in law. 25. Indeed, an examination of the facts alleged in the Statement of Case, namely under Particulars of Breach reveals that the disputes which have arisen raise not only points of law but points of facts as well. (For example, the Claimant says that neither sub-clauses 15.2(a) nor 15.2(c) nor sub-clause 8 nor its related sub clause 13.3 were applicable to the Claimant s circumstances nor were they valid grounds for termination. In its Appearance, the Defendant stated that it disputes the Claimant s claim. Thus the alleged facts on which the Claimant relies in claiming that there was no valid ground for termination will necessarily involve questions of fact to be determined). In fact, the Claimant itself in its written submissions stated that it does not deny that the present facts of the case constitute a dispute within the meaning of the arbitration agreement or Arbitration Act or the case law on the issue In support of its claim, the Claimant referred to the case of Re Carlisle, Clegg v. Clegg (1890) 44 Ch D 200. Therein, the Court held that the only question was one of law as to the construction of the partnership deed. The Court held that it had a discretion whether it could stay the proceedings or not and it would not exercise that discretion by staying the proceedings in a case where the only question was one of law which if sent to the arbitrator ought to have been referred back by him to the Court. However, I note the dicta of Farwell LJ in Rowe Brothers and Co. Ltd. v. Crossley Brothers Ltd. [ ] All ER Rep Farwell LJ. stated that the mere fact that there must be questions of law is not sufficient to say that there is a sufficient reason why the matter should not be referred to arbitration. The learned judge went on to note that in the Clegg case, there was only one question in the action and that was a question of the construction of the deed of partnership and there were no facts in dispute. Unlike Clegg, the instant matter raises questions of both fact and law and as was quite rightly said in Rowe this is not a case where questions of law can be kept apart from the facts of the case. 27. Further in Rowe, it was noted by Cozens-Hardy MR that Counsel for the Plantiffs said very forcibly that the questions which have arisen are really questions of law, and it is said that there cannot be anything more absurd than to refer to a civil engineer difficult questions arising under the law of 2 Paragraph 16 of the Claimant s written submissions of the 25 th June,2014. Page 6 of 12
7 contract as interpreted and enforced by the law in this country. His Lordship observed that there is no doubt considerable force in that but But the Arbitration Act, 1889, itself seems to me to furnish an answer to that. It is quite clear that that Act contemplates that the arbitrator shall deal or may deal with questions of law. He can state his award in the form of a Special Glee under s 7(b) of the Act, and under s 19 of that Act the arbitrator can, and the court may order him at the request of either of the parties to state in the form of a Special Case any question of law for the opinion of the court. So that on the face of the Arbitration Act, 1889, itself you do not find it is contemplated that questions of law should not be referred to arbitration. Coupled with that, you find that the arbitrator who may not be, and in a case like this cannot be supposed to be, a skilled lawyer, may on his own behalf, and even if he does not think fit, may be ordered by the court at the request of either of the parties, to state in the form of a Special Case any question of law for the opinion of the court. I, therefore, do not think that it can be enough to say that as questions of law of a serious kind will arise here the court ought not, in the exercise of its discretion, to interfere. This is not a case in which questions of law can be kept apart from the facts of the case. 28. Similarly to the English Act outlined above, in the instant matter, Section 32 of the Arbitration Act Chap. 5:01 provides that: An arbitrator or umpire may, and shall if so directed by the Court, state (a) any question of law arising in the course of the reference, or (b) an award or any part of an award, in the form of a special case for the decision of the Court. Thus, the Arbitration Act in our jurisdiction likewise does not appear to contemplate that questions of law many not be dealt with by the arbitrator. 29. The Claimants also referred to the cases of Printing Machinery Co. Ltd. v. Linotype and Machinery Ltd. [1912] 1 Ch. 566 and Clough v. County Live Stock Insurance Association Ltd. (1916) 85 LJKB In Printing Machinery, in refusing the application to stay, the Court held that the question as to the rectification of the lease was not one which fell within the arbitration clause and the question of the construction of the option to purchase and that of the rectification were so intimately connected that it was convenient that they be dealt with together by the Court. This case turned on its own facts. Similarly, the same may be said of Clough, where the Court in refusing the application for stay, noted that the case raised difficult questions of law. 30. Taking into account all of the aforementioned, I am of the view that the instant matter raises questions of both law and fact that may be dealt with by the arbitrator and am unable to accept the Claimant s argument raised at paragraph 24 above. Page 7 of 12
8 31. The Claimant also submits that the Defendant s non-compliance with the Practice Direction on Pre-Action Conduct should constitute sufficient reason for refusing to stay the proceedings. According to the Claimant section 4.4 of the Practice Direction states that : the Defendant should acknowledge the Claimant s letter in writing within 7 days of receiving it.. Section 4.5 of the Practice Direction says that: the Defendant s full written response should be as appropriate The Claimant also refers to section 6 of the Practice Direction which states that parties and their legal representatives are encouraged to enter into appropriate negotiations with a view to settling their dispute and avoiding litigation and that parties should take all amicable steps to resolve their dispute before a claim is issued. 32. The Claimant contends that it fully complied with the Practice Direction on Pre-action Conduct and gave the Defendant the full opportunity to acknowledge and respond to the claims made and yet the Defendant did nothing. Instead it sat idly by waiting for the Claimant to initiate steps to arbitrate. The Claimant submits that to allow the Defendant to rely on these incredulous excuses would be inconsistent with the overriding objective of the CPR and the equitable maxim that he who comes to the Court should come with clean hands. 33. I note that the pre-action letter dated the 8 th November, 2013 was only served on the Defendant on the 8 th December, This was not disputed. The Claimant highlights that the Defendant did not acknowledge or respond to same within 30 days of receipt of same as was clearly instructed in the pre-action letter. The Defendant submits that by the time the letter had been served the time indicated therein for meaningful reply and for meetings to be held had already passed. They also considered the threat of legal action premature and ill-advised and decided to await further action on the part of the Claimant to duly initiate the dispute in accordance with the subsisting arbitration agreement. While not ideal, I do not think, taking all the circumstances of the case into account, that the Defendant s pre-action conduct, particularly in light of the somewhat late receipt of pre-action letter itself, in and of itself amounts to sufficient reason why the proceedings should not be referred as per the arbitration agreement. 34. In light of all of the foregoing, I am of the view that on the evidence there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement. Whether the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration. 35. According to the Claimant, the Defendant has not shown that it was, at the time when proceedings were commenced, and still remains, ready and Page 8 of 12
9 willing to do all things necessary to the proper conduct of the arbitration. In support of this contention the Claimant relies upon the Defendant s pre-action conduct, that is, the reasons included in Lennox Thompson s affidavit for failure to respond to the pre-action letter- that the time indicated for meaningful reply had passed and that they considered the threat of legal action premature and ill-advised and decided to await further action on the part of the Claimant to duly initiate the dispute in accordance with the subsisting arbitration agreement. 36. The Claimant also refers to the Defendant s continuous insistence on its attorneys costs as evidence of a repugnant pattern of conduct emerging. They contend that this pattern is one of hostility and is not consistent with a party willing to do all that is necessary for the proper conduct of arbitration. The Claimant relies upon the case of Satyanan Sharma and Chandrica Sharma v. Christina Adit and Vashti Mohammed CV The Claimant contends that the Court ought to take into account the ruling of Gobin J. therein. According to the Claimant, the facts regarding the conduct of the Applicant for a stay were very similar to this case and the Court looked at pre-action conduct in determining whether the applicant was always willing to do all necessary for the proper conduct of arbitration. The Claimant submits that the Court ought to follow Gobin J. s approach of holding pre-action conduct as being significant in determining whether the Applicant was always willing to arbitrate. 37. The Defendant submits that the judgment of Gobin J. in Satyanan Sharma does not support the general proposition that the failure to reply to a preaction letter is evidence of not being ready or willing to go to arbitration. They contend that the ratio of the case is clearly based on the particular terms of the pre-action protocol letter and the fact that the defendant in that case had itself maintained legal proceedings in breach of the arbitration clause and issued a Notice to Quit with a litigation in default clause. According to the Defendant, the ratio decidendi of Satyanan Sharma is that positive evidence of a waiver of the benefit of an arbitration clause would amount to evidence that you were not willing to arbitrate within the meaning of the Act. It is no authority for the proposition that omissions would amount to such evidence. 38. Having read Satyanan Sharma, I am of the view that the Gobin J s decision eventually turned on the positive steps taken by the Defendant which were at odds with any willingness or readiness to invoke the arbitration clause. While Gobin J. did indeed find their failure to respond to the claimant s pre-action letter to indicate their willingness or readiness to invoke the arbitration significant and said that had they been so ready and willing I would have expected a response to that effect this factor in and of itself did not appear to lead her to the conclusion that the Applicants were not ready and willing to engage in arbitration. Rather her conclusion stemmed, as the Defendant rightly pointed out, from the Defendants institution of summary proceedings in the Chaguanas Page 9 of 12
10 Magistrates Court for possession of the premises almost four weeks after the pre-action letter was sent and the addendum to the Notice to Quit which stated that.high Court proceedings will be commenced against you for damage. 39. Au contraire, in the instant matter, I am of the view that no such positive steps were taken by the Defendant so as to be able to draw the conclusion that they were not ready and willing at the time that proceedings were commenced to engage in arbitration. While they failed to respond to the pre-action letter, this omission, taken in isolation, is not sufficient to draw the conclusion that they were unwilling to engage in arbitration. 40. The Claimant points to the Defendant s insistence on costs as evidence of its hostility and conduct in this matter. Again, I do not see how this amounts to evidence of an unwillingness to arbitrate. The Defendant wrote to the Claimant on the 19 th March, 2014, indicating that the dispute fell within the ambit of the arbitration clause and requested that in the circumstances they withdraw their claim. The Defendant informed the claimant that seeking default judgment would only increase costs for them. By letter dated the 26 th March, 2014, the Defendant again wrote to the Claimant indicating that it remains ready and willing to take all necessary steps to have this matter resolved by arbitration and repeated their request for the Claimant to withdraw the claim and pursue arbitral proceedings as stipulated by the contract and requested their reasonable proposals for the settlement of their client s costs in the matter. I do not see how the request for costs in such circumstances leads to an inference that the Defendant s were unwilling to engage in arbitration. The Claimant filed their action. The Defendant, through its attorneys, wrote to them advising that the proper procedure to be adopted in the circumstances was that of arbitration. The Defendant would have had to engage the services of their attorneys to carry on the correspondence which occurred back and forth between the parties and such would obviously have resulted in the incurrence of attorney s fees. In the circumstances, I see the Defendant s request as being in the normal course of dealings between attorneys engaged in negotiations on opposite sides of the fence and do not view same as amounting to a positive indication that there was an unwillingness to engage in arbitration. 41. Counsel for the Defendant drew this Court s attention to the Jamaican case of Leighton Chin-Hing v. WISYNCO Group Ltd JMCA Civ 19. Therein, the Court of Appeal held that: It is my view that the assertion of an applicant who seeks to have proceedings stayed that it is willing and ready to arbitrate is sufficient evidence upon which a court may find that it is indeed willing and ready unless there is evidence to the contrary. There need not be any further facts in support of that assertion although such facts would strengthen its position. There is no evidence that the Defendant refused or stated it was unwilling to arbitrate It is true that there is no evidence of a response to the from Mrs. Gibson-Henlin in which arbitration was Page 10 of 12
11 suggested. But in my view silence or inaction on the part of the respondent to a suggestion to arbitrate is insufficient to ground a finding of unwillingness. 42. The position of the Jamaican Court of Appeal, while not binding, can certainly serve as a source of guidance. Further it ought to be noted that it is not incompatible with the approach taken by Gobin J. in Satyanan Sharma. An omission to respond- silence or inaction- in and of itself is not sufficient to ground a finding of unwillingness to arbitrate. There must be something more- a positive action on the part of the party now seeking to claim a willingness to arbitrate that runs counter to that assertion- as the Jamaican Court of Appeal states- evidence to the contrary. 43. The Defendant herein has asserted that it was willing and remains willing and ready to engage in arbitration under the arbitration agreement. Contrary to the Claimant s assertions, I am of the view that there is no sufficient evidence to establish unwillingness on their part to do so. Their request for costs and failure to respond to the pre-action letter are not sufficient to arrive at such a finding. DECISION 44. There is no dispute between the parties that the arbitration agreement is valid. This Court is satisfied that there is no sufficient reason why the dispute in question ought not to be referred to arbitration as per the arbitration agreement and moreover finds that the Defendant was, at all material times and the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary for the proper conduct of the arbitration. In the circumstances, exercising its discretion in accordance with Section 7 of the Arbitration Act, this Court is of the view that a stay of these proceedings ought to be granted to allow the parties to pursue arbitration as per the arbitration agreement contained in the contract. 45. Accordingly, the order of the Court is as follows: ORDER (1) That these proceedings be stayed pursuant to section 7 of the Arbitration Act Chap. 5:01 for the purpose of allowing the parties to pursue arbitration in accordance with the Arbitration Agreement contained in the contract between the parties. (2) The Claimant shall pay to the Defendant costs to be assessed in accordance with CPR Part Page 11 of 12
12 (3) The Defendant to file and serve a Statement of Costs for assessment on or before 4 th November, (4) The Claimant to file and serve Objections on or before 25 th November, (5) Assessment of Costs is fixed for the 16 th December, 2014 at 10:00 a.m. in Courtroom POS 24. Dated this 30 th day of September, 2014 Robin N. Mohammed Judge Page 12 of 12
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