FBD Insurance Plc v Connors & Gore-Grimes
| Jurisdiction | Ireland |
| Judge | Miss Justice Laffoy |
| Judgment Date | 14 March 2011 |
| Neutral Citation | [2011] IEHC 184 |
| Court | High Court |
| Date | 14 March 2011 |
[2011] IEHC 184
THE HIGH COURT
AND
BETWEEN
AND
ARBITRATION ACT 1954 S41
RSC O.56 r4
ARBITRATION ACT 2010 S3(1)
RSC O.56
RULES OF THE SUPERIOR COURTS (ARBITRATION) 2006 SI 109/2006
ARBITRATION ACT 1954 S5
GALWAY CITY COUNCIL v SAMUEL KINGSTON CONSTRUCTION LTD & HAWKER 2010 3 IR 95 2010 2 ILRM 348 2010/20/4859 2010 IESC 18
GRANGEFORD STRUCTURES LTD (IN LIQUIDATION) v SH LTD 1990 2 IR 351 1990 ILRM 277 1987/6/1555
BREMER VULKAN SCHIFFBAU UND MASCHINENFABRIK v SOUTH INDIA SHIPPING CORP LTD 1981 AC 909 1981 2 WLR 141 1981 1 AER 289
LENNON & HARVEY LTD v MURPHY & WHELAN UNREP MURPHY 21.12.2004 2004/27/6378 2004 IEHC 402
MUSTILL & BOYD THE LAW & PRACTICE OF COMMERCIAL ARBITRATION IN ENGLAND 2ED 1989 303
ARBITRATION ACT 1954 S38
REDAHAN v MIN FOR EDUCATION & ORS 2005 3 IR 64 2005/52/10976 2005 IEHC 271
FORDE ARBITRATION LAW & PRACTICE 1994 PARA 14
ARBITRATION
Award
Set aside - Due process - Practice & procedure - Insurance contract - Hearing in absence of insurer - Application to compel compliance with award - Proceedings to set aside award and remit dispute - Whether proceedings within jurisdiction - Whether arbitrator should been joined as defendant - Whether proceedings in compliance with Rules of the Superior Courts - Arbitration commenced before operative date in legislation - Originating notice of motion - Adjournment sought - Unavailability of witness - Refusal to adjourn - Withdrawal from hearing - Whether misconduct in arbitration- Whether insurer given reasonable opportunity to be present - No allegation bad faith against arbitrator - Order discharging arbitrator from proceedings - Costs of arbitrator awarded against insured on indemnity basis - Galway City Council v Samuel Kingston Construction Ltd [2010] IESC 18 [2010] 2 ILRM 348 and Redahan v Minister for Education [2005] IEHC 271 [2005] 3 IR 64 considered; Grangeford Structures Ltd (In Liquidation) v SH Ltd [1990] 2 IR 351 distinguished ; Lennon and Harvey Ltd v Margaret Murphy [2004] IEHC 402 (Unrep, Murphy J, 21/12/2004) followed -Arbitration Act 2010 (No 1), s 3(1) - Rules of the Superior Courts 1986 (SI 15/1986), O 56, r 4 - Rules of the Superior Courts (Arbitration) 2006 (SI 109/2006) - Award set aside (2011/88SP - Laffoy J - 14/3/2011) [2011] IEHC 184
FBD Insurance PLC v Connors
Facts This application arose out of arbitration proceedings in which the second named defendant was the Court appointed arbitrator and the first named defendant was the claimant. The claim against the plaintiff herein, (the respondent in the arbitration) was on foot of a policy of insurance in respect of loss sustained by the claimant due to a fire at his dwelling house. The reasoned award of the second defendant, dated 12 January 2011 awarded sums aggregating €156,369.75 to the claimant together with interest and costs. The plaintiff herein initiated proceedings by way of special summons seeking an order pursuant to Order 56, rule 4 of the Rules of the Superior Courts 1986, as amended, setting aside the 'purported award' of the arbitrator and also an order remitting the dispute between the claimant and the plaintiff herein to arbitration for formal adjudication. The arbitration had been scheduled to take place on 13 December 2010. However by letter dated 7 December both parties were notified that it would not take place on that date but would proceed the following day. The plaintiff herein responded stating that Senior Counsel was unavailable on 14th but would be available on the 16th. The first defendant was travelling from Australia and was due to return on 16th. On the morning of the arbitration hearing, Junior Counsel for the plaintiff herein applied for an adjournment on the grounds that an essential witness, namely a loss adjustor was unable to attend. Counsel informed the second defendant that the plaintiff would pay the first defendant's reasonable additional air fare if he was unable to return to Australia on the 16th as planned. Two other grounds for an adjournment were advanced but the application was refused. Consequently, the plaintiff herein withdrew from the arbitration process and it proceeded in the absence of the plaintiff and its legal advisers. It was submitted on behalf of the second named defendant that he should not have been joined as a party on the plaintiff's application herein
Held by Laffoy J. in setting aside the award and remitting the matter to arbitration: That notwithstanding that the application should have been initiated by way or originating notice of motion, it was appropriate to hear the application and treat it as having been properly brought. The second named defendant herein misconducted the arbitration in the technical sense in which that expression is used in connection with arbitrations. The combined effect of the refusal to adjourn the hearing for two days and to proceed with the arbitration in the absence of the plaintiff herein resulted in the dispute between the parties being determined without the plaintiff having been heard. It was unreasonable of the second named defendant herein not to accede to the request for a two day adjournment in the circumstances in which the plaintiff found itself. It was not disputed that the plaintiff had arranged matters so that it could appear and defend the claim on the date originally set for hearing. The legitimate interest of the first defendant would not have been prejudiced if the adjournment had been granted. The second named defendant should not have proceeded with the arbitration after the withdrawal of the legal advisers and representatives of the plaintiff and in consequence the outcome, the award, was tainted with unfairness and injustice and could not stand. There was no allegation of bad faith against the second named defendant and he should not have been joined as a party to the application herein. The second named defendant was discharged and was awarded his costs against the plaintiff on an indemnity basis.
Reporter: L.O'S.
Judgment of Miss Justice Laffoy delivered on the 14th day of March, 2011.
2 1.1 These proceedings were one of two matters which were before the Court on 7 th March, 2011 for determination arising out of arbitration proceedings before the second defendant (the arbitrator), as arbitrator, in which the first defendant (the claimant) was claimant and the plaintiff (FBD) was respondent. The claimant's claim against FBD was on foot of a policy of insurance in respect of the loss which the claimant sustained when his dwelling house in Kilcullen, County Kildare and its contents were completely destroyed by fire on 25 th November, 2009. The reasoned award of the arbitrator, which was dated 12 th January, 2011 and which was clearly intended to be a final award, awarded sums aggregating €156,369.75 to the claimant, together with interest thereon at the rate of 8% per annum from 25 th April, 2010 up to the date of payment. In addition, costs were awarded against the respondent in favour of the claimant.
3 1.2 Chronologically, the earliest proceedings before the Court on 7 th March, 2011 were proceedings under Record No. 2011/25MCA entitled "In the matter of the Arbitration Acts 1954 - 2010" between the claimant, as plaintiff, and FBD, as defendant, which were initiated by an originating notice of motion dated 2 nd February, 2011 (the claimant's application), which was first returnable for 21 st February, 2011. The reliefs sought on the claimant's application were:
(a) an order pursuant to s. 41 of the Arbitration Act 1954 (the Act of 1954) or otherwise compelling FBD to comply with the arbitrator's award; and
(b) an order directing FBD to pay to the claimant the sum of €156,369.75 plus interest at the rate of 8% from 25 th April, 2010 and the costs of the arbitration, to include witness costs.
The claimant's application was grounded on an affidavit of his solicitor, Gerard F. Burns, sworn on 2 nd February, 2011 and the exhibits referred to therein and a supplemental affidavit sworn by Mr. Burns on 10 th February, 2011.
4 1.3 Before the claimant's application was first returnable before the Court, FBD had initiated these proceedings by special summons which issued on 4 th February, 2011 (FBD's application), in which FBD sought:
(a) an order pursuant to Order 56, rule 4 of the Rules of the Superior Courts 1986 (the Rules), as amended, setting aside what was referred to as the "purported award" of the arbitrator dated 12 th January, 2011; and
(b) an order remitting the dispute between FBD and the claimant to arbitration for formal adjudication thereon.
5 1.4 A number of issues arise in relation to the form of FBD's application, namely:
(a) whether they are proceedings properly brought under the jurisdiction conferred by the Arbitration Act 2010 (the Act of 2010), as the title suggests;
(b) whether the arbitrator should have been joined as a defendant in the proceedings; and
(c) whether the manner in which the proceedings were initiated complies with the Rules.
6 1.5 On the first issue, s.3(1) of the Act of 2010 provides that the Act shall not apply to an arbitration made under an arbitration agreement concerning an arbitration which has commenced before the operative date. The operative date was 8 th June, 2010. As will be demonstrated later, the arbitration at issue here commenced before the operative date and, accordingly, the Act of 2010 does not apply to it.
7 1.6 In relation to the second issue, since Order 56 of the Rules was amended by the Rules of...
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