Francis Dariah v Eastern Caribbean Insurance Ltd
| Jurisdiction | St Lucia |
| Judge | Cenac-Phulgence J,Kimberly Cenac-Phulgence,High Court Judge |
| Judgment Date | 29 June 2018 |
| Judgment citation (vLex) | [2018] ECSC J0629-2 |
| Docket Number | SLUHCV2017/0436 |
| Court | High Court (Saint Lucia) |
| Date | 29 June 2018 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
(Civil)
The Hon. Mde. Justice Kimberly Cenac-Phulgence High Court Judge
SLUHCV2017/0436
Mrs. Lydia Faisal for the Claimants
Ms. Patricia Augustin for the Defendant
The claimants, Francis Dariah and Jeanette Dariah (“the Dariahs”), husband and wife, filed a fixed date claim against the defendant, Eastern Caribbean Insurance Limited (“ECIL”) for an order setting aside the arbitration award dated 29 th May 2017 made by arbitrator, Mr. Dexter Theodore (“the Arbitrator”). The claim is filed pursuant to section 19 of the Arbitration Act1 (“the Act”).
The gravamen of the claimants' complaint is that the arbitrator misconducted himself in the conduct of the proceedings when he: (1) sought to deal with an issue which had not been pleaded; and (2) received from the defendant the claimants' share of the fees without informing the claimants, which would lead the fair-minded and informed observer to conclude that there was conflict of interest and the real possibility that the Arbitrator was biased when he rendered his decision of 29 th May 2017.
ECIL filed a defence to the claim and denied that there was any misconduct on the part of the Arbitrator or in the conduct of the proceedings. ECIL alleged that there was no evidence upon which an allegation of bias could be sustained. ECIL denied that the fact that the Arbitrator received the claimants' portion of the fees from them amounted to a conflict of interest. ECIL filed a counterclaim in which it seeks to recover the sums paid to the third party pursuant to section 9 of the Motor Vehicles Insurance (Third Party Risks) Act2 and the sum of $8,970.00 representing the final instalment of the fees due to the Arbitrator which was paid by ECIL.
The claimants' minibus was insured with ECIL for the period 30 th April 2013 to 29 th April 2014. During that period, the minibus was involved in an accident and sustained damage, as well as a vehicle belonging to a third party and injuries were also sustained by third parties. ECIL denied liability under the policy on the basis that the driver was not an authorized driver and that the policy had been cancelled for non-payment of premiums. As a result of ECIL's denial of liability under the policy, the Dariahs filed a claim against them. That claim was referred to arbitration by the High Court judge. As part of the process, the parties and their legal practitioners signed Terms of Appointment of the Arbitrator and also entered into an arbitration agreement which contained the terms of reference for the Arbitrator. The arbitration took place on 12 th December 2015 and the parties were
required to submit closing submissions. The Arbitrator delivered his award on 29 th May 2017.The sole issues for the Court's determination are: (1) whether the Arbitrator misconducted himself or the proceedings when he decided an issue which had not been pleaded and (2) whether the Arbitrator was biased.
Section 19 of the Act states as follows:
“19. Power to set aside award
(1) Where an arbitrator or umpire has misconducted himself or herself or the proceedings, the Court may remove him or her. However, before making any such order the arbitrator or umpire may, if the Court so directs, be given an opportunity of showing cause against such order.
(2) Where an arbitrator or umpire has misconducted himself or herself or the proceedings, or an arbitration or award has been improperly procured, the Court may set the award aside.”
The Act does not define misconduct and so one must look to case law to determine whether there has been misconduct on the part of an arbitrator in the given circumstances of a case. The Privy Council in National Housing Trust v YP Seaton & Associates Company Limited3 in relation to the term misconduct stated as follows:
“As Atkin J remarked with regard to the word “misconduct” in Williams v Wallis and Cox [1914] 2 KB 478, 485: “That expression does not necessarily involve personal turpitude on the part of the arbitrator, and any such suggestion has been expressly disclaimed in this case. The term does not really amount to much more than such a mishandling of the arbitration as is likely to amount to some substantial miscarriage of justice.”
Or as Russell on Arbitration (20th ed (1982)) put it at p 409:
“Misconduct' is often used in a technical sense as denoting irregularity, and not any moral turpitude. But the term also covers cases where there is a breach of natural justice. Much confusion
is caused by the fact that the expression is used to describe both these quite separate grounds for setting aside an award; and it is not wholly clear in some of the decided cases on which of these two grounds a particular award has been set aside.”
There must be more than a mere error of law or fact. As Sir John Donaldson MR in Moran v Lloyd's (A Statutory Body)4 put it:
“For present purposes it is only necessary to say, … that the authorities established that an arbitrator or umpire does not misconduct himself or the proceedings merely because he makes an error of fact or law. …”
In the Jamaican case of R.A. Murray International v Brian Goldson, 5 the Court said:
“…“the expression “misconduct” is of wide import and does not necessarily connote that the arbitrator has been guilty of moral turpitude. It ranges from a fundamental abuse of his position, i.e. “on the one hand, that which is misconduct by any standard, such as being bribed or corrupted, to “mere ‘technical’ misconduct, such as making a mere mistake as to the scope of the authority conferred by the agreement of reference. That does not mean that every irregularity of procedure amounts to misconduct”. Our Act does not define misconduct, and it is tolerably clear that it is difficult to define exactly what this term means.”
The claimants' contention is that the parties having agreed to be guided by the Civil Procedure Rules 2000, the Arbitrator was not entitled to decide matters which (1) were not included in the parties pleaded cases and (2) were not followed through with evidence in their witness statements.
A look at the background facts is important to appreciate the claimants' contention. I will attempt to briefly outline the relevant facts.
By letter dated 2 nd November 2012 referring to the vehicular accident which had occurred on 5 th October 2012, ECIL advised the Dariahs that they could not accept liability in the matter because (1) at the time of the accident, the vehicle was being
driven by someone who was not a named driver under the policy and (2) the policy had been cancelled on 25 th September 2012, notice of which cancellation had been sent to them by registered post.The letter also stated that ECIL had not received the affidavit, authorization letter notarized by a Justice of the Peace along with a copy of picture ID which they had requested on 19 th October 2012.
By letter dated 4 th December 2012, ECIL wrote to the solicitor for the Dariahs and indicated that it was satisfied that the cancellation of the policy in relation to the Dariahs or termination of their contract was legitimate and as a result ECIL had no authority to provide an indemnity to the Dariahs for the claim which was now being submitted.
The terms of reference which the Dariahs and ECIL signed stated at clause 6 that ‘the procedure to be followed in the Arbitration shall be as agreed between the parties and the Sole Arbitrator in accordance with the Rules of Arbitration attached to the (1) Arbitration Agreement and to the extent applicable (2) the Civil Procedure Rules 2000’.
The parties also signed an Arbitration Agreement in which it stated as follows:
“The Claimant and the Respondent are in dispute as to whether the Respondent was entitled to disclaim liability to provide an indemnity to the Claimant under the said Policy of Insurance, for the loss sustained by the Claimant arising from the accident which occurred on the 5 th day of October 2012 on the grounds that at the time of the accident:
The Claimant's contention:
(i) Whether Anthony Felix … driver of the insured vehicle at the time of the accident, was driving the said vehicle contrary to provisions of Clause No. 5 of the policy of insurance at the time of the accident; or whether such qualification was null and void by virtue of Section 11(1)(i) of the Motor Vehicle Insurance (Third Party) Act (the MVIA).
(ii) Whether the policy of insurance which the Defendant alleges was cancelled on 25 th September 2012 was in fact cancelled; and if whether such cancellation was in keeping with the provisions and requirements of the MVIA; the applicable principles of contract, and the laws as to service by post?
(iii) Whether a party who claims that there was no policy of insurance in force at a given time, can rely on the arbitration clause within the (non-existing) policy of insurance to determine issues between the parties?
(iv) What constitutes the making of a claim; and whether this allegation was communicated to the Claimants in the Defendant's letter of December 4th 2012 which contains the reasons for the denial? Is the Defendant estopped from raising that issue?
Grounds upon which the Respondent disclaims liability:
(i) The vehicle was being driven by Anthony Felix …contrary to the provisions of item 5 of the Certificate of Insurance thereby constituting a breach of the policy of insurance.
(ii) The policy was cancelled on September 25 th, 2012 and notice of the cancellation was sent by registered mail to the address of the Claimant and his agent S & A Insurance Brokers Ltd.
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