Hoban v Coughlan

• Jurisdiction: Ireland
• Judge: Mr. Justice Brian J. McGovern
• Judgment Date: 12 May 2017
• Neutral Citation: [2017] IEHC 301
• Court: High Court
• Docket Number: [2016 No. 399 MCA]
• Date: 12 May 2017

IN THE MATTER OF THE ARBITRATION ACT 2010

AND IN THE MATTER OF AN ARBITRATION

BETWEEN

FERGUS HOBAN

APPLICANT

AND

KIERAN COUGHLAN

AND

CLAIRE RIORDAN

RESPONDENTS

AND

FRANK NYHAM

NOTICE PARTY

[2017] IEHC 301

[2016 No. 399 MCA]

THE HIGH COURT

Arbitration – The Arbitration Act 2010 – Art. 34 (2)(a)(ii) of the UNCITRAL Model Law – O. 56, r. 3(1)(i) of the Rules of the Superior Courts – Setting aside of arbitral award – Uncontested hearing – Reasoned decision

Facts: The applicant had filed the present application for setting aside the arbitral award made by the notice party ('arbitrator') in relation to the applicant's liabilities under the relevant lease agreement entered into between the applicant and the respondents. The respondents claimed the payment of sum due from the applicant on foot of the personal guarantee executed by the applicant.

Mr. Justice Brian J. McGovern refused to set aside the arbitral award. The Court held that the award made by the arbitrator was a reasoned decision and every aspect was considered in detail. The Court found that the applicant was given proper notice of the appointment of the arbitrator, given the opportunity to partake in the arbitral process, and was informed about the date of arbitration; however, he did not respond. The Court held that the jurisdiction of the Court to set aside an arbitral award under art. 34 of the UNCITRAL Model Law ('Model Law') was restricted and such jurisdiction should be exercised with utmost care. The Court held that under art. 25(c) of the Model Law, the arbitrator was entitled to make an award in the absence of the other party if the other party had reasonable notice of the conduct of arbitration hearing. The Court found that despite extensive engagement by the arbitrator, the applicant remained absent.

JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 12 ^th day of May, 2017.

1 This is an application brought pursuant to O. 56, r. 3(1)(i) of the Rules of the Superior Courts and under Article 34(2)(a)(ii) and (iv) of the UNCITRAL Model Law to set aside an arbitral award made by the notice party ('the arbitrator') on 4 ^th October, 2016.

2 For the purposes of this application, the relevant parts of Article 34 of the Model Law, as adopted pursuant to the Arbitration Act 2010, are as follows:-

'(1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article.(2) An arbitral award may be set aside by the court specified in article 6 only if:

(a) the party making the application furnishes proof that:

(i) ...(ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iii) ... (iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law; or...'

3 The dispute relates to premises owned by the respondents within the Blackrock Hall commercial development in Blackrock, Co. Cork. Two companies connected with the applicant executed leases and agreements to lease in respect of separate units at Blackrock Hall and the applicant executed a personal guarantee in respect of the liabilities of each of his companies under the leases and agreements to lease.

Chronology of Events.

4 On 1 ^st February, 2010, the tenant companies took possession of the premises. On 4 ^th May, 2012, the respondents and BHL Pharmacy Limited (one of the applicant's companies) entered into a thirty-five-year lease for ground floor unit 4 at Blackrock Hall. The lease was executed on that date.

5 On 8 ^th June, 2012, the respondents and BHL AMS Limited (another of the applicant's companies) entered into a thirty-five-year lease for part of the second floor at Blackrock Hall. The lease was executed on that date.

6 On 28 ^th January, 2015, the respondents called upon the applicant to discharge the sum of €400,049.42 which was claimed to be due and owing by the applicant in respect of his liabilities on foot of the 2012 leases pursuant to his guarantee dated 15 ^th October, 2009.

7 On 29 ^th January, 2015, a notice to refer to arbitration was sent by the respondents' solicitor to the applicant and to the applicant's solicitor at that time; Mr Ciaran Desmond of Messrs McGuire Desmond.

8 On 21 ^st May, 2015, the arbitrator wrote to the applicant and to the respondents advising that he had been nominated by the President of the Law Society of Ireland to act as arbitrator. No response was received from the applicant. By letter of 24 ^th June, 2015, the arbitrator wrote once more to the applicant noting the absence of a response to his previous correspondence and stated that if he did not hear from the applicant within seven days he proposed to accept his appointment and to issue preliminary directions. No response was received from the applicant. By further letter to the applicant dated 31 ^st July, 2015, the arbitrator confirmed that he was accepting his appointment and that he would issue preliminary directions in due course. No response was received from the applicant.

9 By letter to the applicant dated 9 ^th October, 2015, the arbitrator confirmed that he intended to conduct a preliminary meeting on 21 ^st October, 2015, and he advised that each party should be present or represented and that he proposed to issue directions for the conduct of the arbitration following the meeting. Again, no response was received from the applicant.

10 The preliminary meeting proceeded on 21 ^st October, 2015, with the respondents' solicitor present and in the absence of the applicant or any representation on his behalf. Preliminary directions were issued by the arbitrator to the applicant and the respondents on 28 ^th October, 2015. Points of claim were delivered on 8 ^th April, 2016.

11 On 12 ^th April, 2016, Messrs McGuire O'Hanrahan wrote to the arbitrator on behalf of the applicant seeking relevant documentation. The arbitrator responded enclosing all correspondence and a copy of the preliminary directions which had already been forwarded to the solicitor at the request of Ms Eleanor Hackett and to the applicant at three different addresses. On 13 ^th June, 2016, the arbitrator wrote to the applicant's solicitor and informed him that the time for the delivery of points of defence had expired and requested to hear from him.

12 The applicant's solicitor claims that a letter of response was sent to the arbitrator on 24 ^th June, 2016, but the arbitrator claims that he did not receive this. The letter stated inter alia that the applicant was '...out of the country at this time but available to us'. It further stated that they would update the arbitrator 'as to the time frame in which we will have a response' to him. No update was provided to the arbitrator.

13 On 12 ^th July, 2016, the arbitrator wrote to the applicant's solicitor referring to earlier correspondence to which no reply had been received and he stated that he would allow a further extension of time for seven days for delivery of points of defence. No response was received to that letter.

14 On 27 ^th July, 2016, the arbitrator wrote to the applicant's solicitor noting that he had not received any points of defence and that no application had been made seeking a further extension of time for delivery of same. He informed the applicant's solicitor that he would conduct an oral hearing of the on 1 ^st September, 2016. Again, no response was received from the applicant.

15 On 19 ^th August, 2016, the arbitrator wrote to the applicant's solicitor asking him to confirm whether he intended to be in attendance at the hearing on 1 ^st September, 2016, and in the course of his letter he stated '...[a]s no defence has been filed, the hearing will be to hear the evidence on behalf of the claimant's'. Curiously the letter also asked the applicant's solicitor to confirm the number of witnesses that would be called on behalf of the applicant.

16 The applicant's solicitor made contact with the arbitrator on 31 ^st August, 2016, (the eve of the hearing date), stating that he was in difficulty in respect of attending at the arbitration the following day and requested an adjournment. The arbitrator informed him that he could not deal with such an application ex parte and suggested that the solicitor contact the respondents' solicitor Mr Niall Daly.

17 Following a number of missed calls between the applicant's solicitor and the respondents' solicitor on the evening of 31 ^st August, 2016, the applicant's solicitor spoke to the respondents' solicitor at 10:26 on the morning of 1 ^st September, 2016; the date of the arbitration. The arbitration was due to begin at 11:00am. There is some disagreement as to what was said but what is clear is that the respondents were not willing to have the matter adjourned. On arrival at the arbitration hearing the arbitrator confirmed that the applicant's...