McStay v Assicurazione Generali S.P.A.

• Jurisdiction: Ireland
• Judge: FINLAY C.J.,O'FLAHERTY J.,[HEDERMAN CONC.]
• Judgment Date: 01 January 1991
• Neutral Citation: 1990 WJSC-SC 2720
• Court: Supreme Court
• Date: 01 January 1991

1990 WJSC-SC 2720

THE SUPREME COURT

Finlay C.J.

Hederman J.

O'Flaherty J.

271/89

MCSTAY v. ASSICURAZIONI GENERALI SPA

IN THE MATTER OF THE ARBITRATION ACTS 1954– 1980

BETWEEN

JOHN McSTAY, RECEIVER OF HOTEL HOLYROOD LTD.

Plaintiff/

Appellant

and

ASSICURAZIONI GENERALS SPA

and

PETER MAGUIRE

Defendants/

Respondents

Citations:

ARBITRATION ACT 1980 S5

ARBITRATION ACT 1954 S35

DEBTORS (IRL) ACT 1840 S26

KEENAN V SHIELD INSURANCE CO LTD 1988 IR 89

ARBITRATION ACT 1954 S38

ARBITRATION ACT 1954 S39

ABSALOM LTD V GREAT WESTERN LONDON GARDEN VILLAGE SOCIETY 1933 AC 592

COURTS ACT 1981 S22

CHANDRIS V ISBRANDTSEN-MOLLER CO INC 1951 1 KB 240

CHURCH & GENERAL INSURANCE CO V CONNOLLY & MCLOUGHLIN UNREP COSTELLO 7.05.1981 1981/9/1523

ARBITRATION ACT 1954 S34

MELLOWHIDE PRODUCTS LTD V BARRY AGENCIES LTD 1983 ILRM 152

BREMER VULKAN SCHIFFBAU UND MASCHINENFABRIK V SOUTH INDIA SHIPPING CORP 1981 AC 904

ARBITRATION ACT 1954 S37

Synopsis:

ARBITRATION

Award

Finality - Dispute - Reference - Question of law - Determination - Parties bound by arbitrator's determination whether or not erroneous - Arbitration Act, 1954, ss. 35, 36 - (271/89 - Supreme Court - 7/11/90) - [1991] ILRM 237 - [1991] I.L.T. 126

|McStay v. Assicurazioni Generali S.P.A.|

1 JUDGMENT delivered on the 7th day of November 1990by FINLAY C.J. [HEDERMAN CONC.]

2 This is an appeal brought by the Plaintiff against the Order of the High Court made by Carroll J. on the 23rd June 1989 dismissing thePlaintiffs" claim.

The claim of the Plaintiff

3 The Plaintiff's claim as pleaded and apparently to some extent, at least, as pursued in the High Court was for

4 1. An Order directing the second-named Defendant to state a question of law referred to in his award on an arbitation in the form of a special case for the decision of the High Court and, in thealternative

5 2. An Order remitting the portion of the award made by the second-named Defendant which inter alia determined that he had no jurisdiction or power in law to award interest to the Plaintiff for any period between the date of the event giving rise to the Plaintiff's claim and the date of the award for his reconsideration.

6 It would appear that the first relief sought was either not fully pursued or expressly abandoned in the High Court, and the claim for it was dismissed by the learned High Court Judge and no appeal has beenbroughtagainst that dismissal.

7 With regard to the appeal against the dismissal of the claim for an Order remitting portion of the Arbitrator's award for his reconsideration, it arises out of the following facts. The Plaintiff is the receiver over the assets of Hotel Holyrood Ltd. (the Company) by virtue of two appointments dated the 9th July 1986 and the 13th February 1987. By two separate policies of insurance taken out by the Company with the first-named Defendant (the Insurance Company) both of which were dated the 9th October 1984, the Company insured its premises, contents and business of a hotel in Harcourt Street in Dublin, in the one instance against loss or damage by fire and certain other perils, and in the other instance in respect of consequential loss.

8 Whilst those policies were in force the hotel premises were, on the 25th February 1985, damaged by fire. Subsequently, portion of them had to beremovedto comply with Dublin Corporation's requirements for safety, and certain payments on account of the responsibility of the Insurance Company were made in respect of that operation in May of 1985. Disputes then arose between the Company and the Insurance Company as to the amount payable under each of the two policies.

9 The Company instituted proceedings in the High Court claiming the amounts which they alleged were due on foot of the said policies and in those proceedings the Insurance Company applied to the High Court pursuant to the provisions of Section 5 of the Arbitration Act 1980for an Order staying the proceedings by reason of the existence of an enforceable agreement to refer the dispute between the parties to arbitration. An Order staying those proceedings was made by the High Court, apparently without opposition on the part of the Plaintiff, and an agreement was then entered into between the Plaintiff and the Insurance Company, dated the 20th June 1988, referring the matters in dispute tothe arbitation of the second-named Defendant. Clause 2 of the matters agreed in that reference read as follows:

"The said Arbitrator shall have power to direct what pleadings are to be delivered by the parties hereto, and such other steps of an interlocutory nature as may reasonably be necessary or convenient for the conduct of the said arbitration and in his award to give directions and make declarations as to the rights of the parties as to the time and manner of payments, including (if he shall think fit) the amount of interest (if any) to be payable on such amount and the period in respect of which interest (if any) may be payable and to determine and direct by which party and in what amounts the costs of the arbitration and of the award my be borne."

10 Prior to the actual execution of that agreement to refer the disputes to arbitration the Solicitors for the Insurance Company had raised with the Plaintiff particulars of the claims being made, and in reply to those a claim was made for interest at 11 per cent from various dates in respect of both the building loss and the consequential loss. Of even date withtheexecution of the reference to arbitration the Insurance Company entered points of defence to the claim of the Plaintiff and at paragraph 11 thereof stated as follows:

"The claimant is not entitled to interest upon any payment found recoverable under either policy;"

(a) There is no jurisdiction under either policy for an award of interest in respect of any period prior to the determination by anarbitrator;

(b) No amount has at any time to date been ascertained as due and recoverable under either policy, such as would attract an entitlement tointerest.

(c) The claimant alone has been responsible for any delay in bringing about an ascertainment of the amounts payable under either policy by virtue of his failure to comply with the conditions thereof and to make and vouch claims thereunder as aforesaid."

11 The arbitration was heard by the Arbitrator on a number of dates between the 27th September 1988 and the 24th October 1988, and he issued his award on the 16th November 1988. At paragraph 1 (d) of that award he determined as follows:

"I award and determine that I am not entitled as Arbitrator to adjudicate on the claim of the claimant for interest on the sum referred to at paragraph 1 (b) hereof, save and except as hereinafter provided for in respect of the period as and from the date of this award until payment, accepting as I do the submission on behalf of the Respondent that I as Arbitrator do not have in law any jurisdiction or power to award interest on any sums payable by the Respondent, save and except such interest as I may in my discretion award as and from the date of this my award. The Respondent herein requested that I as Arbitrator should state a special case for the decision of the High Court under Section 35 of the Act of 1954 in the event that I should decide that I had in law jurisdiction to award interest for any period, between the date of the event giving rise to the claim, and the date of this my award. In the event, it is unnecessary for me to state this part of my award in the form of a special case for the decision of the HighCourt."

12 It was agreed by the parties in the High Court and again on appeal in this Court that at no stage during the hearing of the arbitration was any application madeon behalf of the Plaintiff for the stating of a special case to the High Court under any conditions or in any event pursuant to Section 35 of the Act of 1954.

The Plaintiff's claim

13 The Plaintiff claims that the provisions of Section 22 of the Courts Act 1981enabling the Judge concerned in any proceedings where a court orders the payment by any person of a sum of money also to order the payment by the person of interest at the rate per annum standing specified for the time being in Section 26 of the Debtors (Ireland) Act 1840 was by virtue of the principles of common law an authority and jurisdiction vested in the Arbitrator to whom a dispute which was maintainable in the Courts had been referred, in the absence of an agreement to the contrary. In the alternative, it was the claim of the Plaintiff and Appellant that the terms of Clause 2 of the reference to arbitration, which I have already quoted in this judgment, amounted to an agreement by the parties thatthe Plaintiff was entitled to interest on the sums due to him in respect of the insured liability from the appropriate date at an appropriate rate of interest and that the only matter left to the decision of the Arbitrator was as to the appropriate period and rate.

Submissions on behalf of the Defendants

14 Counsel on behalf of the Insurance Company submitted that upon the true construction of the reference to arbitration the question of law as to whether the Arbitrator had jurisdiction to award interest prior to the date of the award was expressly and unambiguously submitted to the determination of the Arbitrator. It was further contended that once that had been done and a question of law was expressly submitted for the determination of the Arbitrator that the Arbitrator's decision was final, subject to his right to state a special case to the High Court for guidance on the issue of law and subject to the rightsof either of the parties prior to the making of a final award, to request the High Court to direct the stating of such a case. It is contended that this principle is fundamental to the finality of arbitration and is well supported by judicial authority.

The judgment of the High Court

15 The ratio decidendi of...