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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Tobin & Twomey Services Ltd. v. Kerry Foods Ltd. [1998] IEHC 61; [1999] 3 IR 483 (22nd April, 1998)
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Cite as: [1999] 3 IR 483, [1998] IEHC 61

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Tobin & Twomey Services Ltd. v. Kerry Foods Ltd. [1998] IEHC 61; [1999] 3 IR 483 (22nd April, 1998)

THE HIGH COURT
1997 No. 301 Sp.


IN THE MATTER OF AN ARBITRATION BETWEEN TOBIN & TWOMEY SERVICES LIMITED, CLAIMANT AND KERRY FOODS LIMITED, RESPONDENT

AND IN THE MATTER OF THE ARBITRATION ACTS, 1954-1980


BETWEEN

TOBIN & TWOMEY SERVICES LIMITED
PLAINTIFF
AND
KERRY FOODS LIMITED AND
TIMOTHY C. SULLIVAN
DEFENDANTS


Judgment of Ms. Justice Laffoy delivered on the 22nd day of April, 1998 .


BACKGROUND IN OUTLINE

1. The first named Defendant, hereafter referred to as "Kerry", is a limited company incorporated in the United Kingdom which was formerly incorporated under the name W.L. Miller & Sons Limited. Kerry is a subsidiary of Kerry Group Plc., hereafter referred to as "the Plc.", a public limited company incorporated in this jurisdiction. In January 1992 Kerry entered into a contract with the Plaintiff to carry out certain electrical works at Kerry's factory at Poole, Dorset in the United Kingdom. The contract incorporated the Articles of Agreement and Conditions of Contract (1977 Edition) published by the Royal Institute of Architects of Ireland. The contract price was STG£133,418.60 or such other sum as should become payable under the contract. The works, which commenced on 6th February, 1992, were to be completed within six weeks. However, the Plaintiff, at the request of Kerry, carried out additional works in consequence of which the Plaintiff was engaged in works on the factory at Poole until November 1992.

2. Following completion of all of the works, a dispute arose between the Plaintiff and Kerry as to the amount due to the Plaintiff in respect of the works. That dispute was not resolved and eventually the Plaintiff and Kerry agreed to the appointment of the second named Defendant, hereafter referred to as "the Arbitrator", of the firm of Dermot C. Coyle & Partners, Chartered Engineers, to arbitrate on the dispute. The Arbitrator accepted the appointment and in August 1994 an Arbitrator's Appointment Form, hereafter referred to as the "Appointment Form", which dealt, inter alia, with the remuneration of the Arbitrator, was executed on behalf of the parties to the arbitration.

3. The Arbitrator held a preliminary meeting on 30th August, 1994 and subsequently issued directions in relation to pleadings, discovery and such like. A procedural meeting was held on 20th February, 1995. The arbitration commenced on 22nd May, 1995.

4. At the outset an issue arose as to whether the contract which had been executed in January 1992, which will be referred to hereafter as "the electrical services contract", covered the additional works or whether the additional works were subject to separate contracts. After four days argument as to how the matter should proceed, it was agreed that the Arbitrator should hear a preliminary issue to determine the scope of the electrical services contract. The hearing of the preliminary issue, at which evidence was led by each party, lasted for seven days from 26th May, 1995 to 9th June, 1995. The Arbitrator gave his decision on the preliminary issue in an interim award dated 14th June, 1995 (the Interim Award) in which he found that four categories of work did not form part of the electrical services contract and that each category was the subject of a separate contract, the categories being:-


(i) the manufacture and supply of certain designated panels,
(ii) the supply and installation of a transformer,
(iii) work done and spares supplied at the request of Mr. M. Cruz, and
(iv) works carried out in the bonded cold store area and in the dispatch area and the dock
levellers.

5. The Arbitrator went on to direct that these works be excluded from the reference.

6. While the parties were awaiting the making and publication of the Interim Award the arbitration had continued on 13th June, 1995 on the substantive dispute between the parties arising from the electrical services contract only and continued after the publication of the Interim Award. Between 13th June, 1995 and 18th July, 1995 there were sixteen hearing days during which Mr. James Tobin, the managing director of the Plaintiff, was testifying. On 20th July, 1995 the Plaintiff issued a plenary summons in this Court in a matter entitled "Tobin & Twomey Services Limited -v- Kerry Foods Limited and Kerry Group Plc." (Record No. 1995 No. 5698P) in which the main reliefs claimed by the Plaintiff were as follows:-


(a) An Order under Section 39 of the Arbitration Act, 1954 (the Act of 1954) that the agreement to submit the dispute to the Arbitrator should cease to have effect or, alternatively, an Order giving leave to revoke the authority of the Arbitrator;
(b) In the alternative, an Order under Section 36 of the Act of 1954 remitting to the reconsideration of the Arbitrator the matters referred to; and
(c) A Mareva injunction.

7. Contemporaneously, the Plaintiff issued a notice of motion seeking interlocutory orders to the same effect as the relief sought on the plenary summons.

8. On 21st July, 1995 the Arbitrator refused to accede to an application made on behalf of the Plaintiff that the arbitration be adjourned pending the outcome of the proceedings in this Court. The cross-examination of Mr. Tobin continued on 21st July, 1995 and for a further three hearing days until 27th July, 1995, when the arbitration was adjourned pending the outcome of the proceedings in this Court. At that stage there had been thirty-one hearing days.

9. On 6th October, 1995, Carroll J. delivered judgment in this Court on the Plaintiff's motion, refusing all the reliefs sought. The Plaintiff appealed against that decision to the Supreme Court, but the appeal was confined to two issues, namely, the refusal of an order under Section 36 of the Act of 1954 and the refusal to grant a Mareva injunction. The judgment of the Supreme Court, which is reported as Tobin & Twomey Services Limited -v- Kerry Foods Limited , (1996) 2 I.L.R.M. 1, was delivered on 6th March, 1996 by Blayney J.. In his judgment, to which I will refer in greater detail later, Blayney J. held that there was an error patent on the face of the Interim Award - the error made by the Arbitrator in concluding that, because the additional works did not form part of the subject matter of the electrical services contract, the dispute in regard to them had not been referred to him for decision - and that the matter should be remitted to the Arbitrator to be dealt with in accordance with the findings set out in his judgment. The Plaintiff's appeal against the refusal of a Mareva injunction was dismissed. That judgment was followed by an Order of the Supreme Court made on 11th March, 1996, in which it was ordered that the appeal be allowed insofar as it related to the arbitration issue and that the matter be remitted to the Arbitrator to be dealt with in accordance with the judgment of the Court. The order of the High Court in respect of the costs thereof, which awarded costs to Kerry and the Plc. against the Plaintiff, was affirmed and the Plaintiff was awarded its costs of the appeal against Kerry and the Plc..

10. Following the judgment and order of the Supreme Court, on 27th May, 1996 the Arbitrator made and published an amended interim award (the Amended Interim Award) in which he repeated his findings that the four categories of work itemised in the Interim Award did not form part of the electrical services contract. However, he went on to find that the whole of the works were within his jurisdiction.

11. I propose outlining in detail later in this judgment what transpired between the parties to the arbitration, and the parties, on the one hand, and the Arbitrator, on the other hand subsequently. For the purpose of this outline suffice it to say that the Arbitrator did not meet with the legal advisors of the parties until February 1997, when two procedural meetings were held, on 7th February and 25th February respectively. The outcome of those meetings was that it was agreed that the arbitration would resume on 7th April, 1997, at which time Counsel for the Plaintiff would be permitted to present an application that Kerry pay the Plaintiff's costs of the first eleven days of the arbitration, that is to say, up to the conclusion of the hearing of the preliminary issue. It was anticipated that this application and Kerry's response to it would take over a day and it was envisaged that the hearing of the substantive claims (the Plaintiff's claim and Kerry's counterclaim) in the arbitration would be resumed on 14th April, 1997. On 7th April, 1997 the Plaintiff sought an indefinite adjournment of the arbitration on grounds which I will outline later. The matter was adjourned until 14th April, 1997. Three further adjournments were granted at the behest of the Plaintiff, in circumstances which I will outline later: from 14th April, 1997 to 12th May, 1997; from 12th May, 1997 to 16th June, 1997; and from 16th June, 1997 to 7th July, 1997. On 7th July, 1997, in circumstances which I will outline in detail later, the Plaintiff withdrew from the arbitration. On 18th July, 1997 these proceedings were initiated by special summons.

12. In the intervening period between the order of the Supreme Court of 11th March, 1996 and the Plaintiff's withdrawal from the arbitration on 7th July, 1997, this Court's jurisdiction was invoked in two separate sets of proceedings initiated by the Plaintiff. The ultimate source of the dispute which gave rise to those proceedings was the provision which was made as to costs in the order of the Supreme Court of 11th March, 1997. Following the making of that order, Kerry and the Plc. set about having their High Court costs taxed. On the taxation before the Taxing Master it was conceded by Kerry and the Plc. that their liability to the Plaintiff for the costs of the appeal should be dealt with by way of deduction or set-off in accordance with Order 99, Rule 37(14) of the Rules of the Superior Courts. The High Court costs awarded to Kerry and the Plc. taxed at £62,303.91 and on 23rd May, 1996, having refused an application by the Plaintiff to stay the issue of the certificate of taxation, the Taxing Master signed the certificate. Subsequently, on 23rd July, 1996, the Plaintiff's costs of the appeal were taxed.

13. Prior to the taxation of the Plaintiff's costs of the appeal but following the taxation of their High Court costs, on 24th June, 1996, Kerry and the Plc. demanded payment of the sum of £62,303.91 from the Plaintiff and threatened, in default of payment within twenty-one days, that a Petition would be issued for the winding-up of the Plaintiff by this Court. On 16th September, 1996 a Petition was issued by the Plc. pursuant to the Companies Acts, 1963-1990 seeking an order that the Plaintiff be wound-up, on the basis that the Plaintiff was indebted to the Plc. in the sum of £24,004.75, being the balance due to Kerry on foot of the certificate of taxation dated 23rd May, 1996, having allowed credit to the Plaintiff for the sum of £38,299.16 in respect of the costs of the appeal. The Petition provoked the initiation of the following proceedings:-


(a) Plenary proceedings (Record No. 1996 No. 8616P) entitled "Tobin & Twomey Services Limited, Plaintiffs and Kerry Foods Limited & Kerry Group Plc., Defendants" in which the Plaintiff sought injunctive relief to restrain the publication of the Petition to wind up the Plaintiff and in which an interim order was made on foot of an ex parte application on 2nd October, 1996 restraining Kerry and the Plc. from advertising or informing anyone whatsoever that a Petition to wind-up the Plaintiff had been presented; and
(b) Judicial Review proceedings (Record No. 289 J.R./1996) entitled "Tobin & Twomey Services Limited, Applicant and James Flynn, Taxing Master, Respondent and Kerry Foods Limited and Kerry Group Plc., Notice Parties" in which orders of certiorari and mandamus were sought against the Taxing Master.

14. Both sets of proceedings were resolved in this Court on 17th June, 1997. The Taxing Master not having opposed the Plaintiff's application, an order of certiorari quashing the Taxing Master's certificate of 23rd May, 1996 and an order of mandamus directing the Taxing Master to hear the Plaintiff's objections to the allowance of items in the bills of costs of Kerry and the Plc. were made. The plenary proceedings became defunct in that the Plc. withdrew the Petition to wind-up the Plaintiff.


RELIEF SOUGHT IN THESE PROCEEDINGS

15. In these proceedings which, as I have stated, were initiated by special summons which issued on 18th July, 1997, the relief which the Plaintiff claims is as follows:-


(1) An order removing the Arbitrator, which relief is sought pursuant to -
(a) Section 24 of the Act of 1954, and/or
(b) Section 37 of the Act of 1954.
(2) An order that the arbitration agreement shall cease to have effect and an order revoking the authority of the Arbitrator appointed under the agreement, which relief is sought pursuant to Section 39(2) of the Act of 1954.
(3) An order that the arbitration agreement shall cease to have effect pursuant to Section 40 of the Act of 1954.
(4) In the alternative, an order remitting to the Arbitrator his order of 7th July, 1997 pursuant to Section 36 of the Act of 1954.

THE STATUTORY PROVISIONS INVOKED BY THE PLAINTIFF

16. It is convenient at this juncture to set out the various provisions of the Act of 1954 invoked by the Plaintiff.

Section 24(1) provides as follows:-

"The Court may, on the application of any party to a reference, remove an arbitrator...... who fails to use all reasonable dispatch in entering on and proceeding with the reference and making an award."

17. Subsection (2) of Section 24 provides that an arbitrator who is removed by the Court under Subsection (1) shall not be entitled to receive any remuneration in respect of his services.

Section 37 provides as follows:-

"Where an arbitrator..... has misconducted himself or the proceedings, the Court may remove him."

Section 39(2) provides as follows:-

"Where -
(a) an agreement between any parties provides that disputes which may arise in the future between them shall be referred to arbitration, and
(b) a dispute which so arises involves the question whether any party has been guilty of fraud,
the Court shall, so far as may be necessary to enable the question to be determined by the Court, have power to order that the agreement shall cease to have effect and power to give leave to revoke the authority of any arbitrator....... appointed by or by virtue of the agreement."

18. Subsection (2) of Section 40 provides as follows:-


"Where -

(a) the authority of the arbitrator..... is revoked by leave of the Court, or
(b) a sole arbitrator.... who has entered on the reference is..... removed by the Court,

the Court may, on the application of any party to the arbitration agreement, either -

(i) appoint a person to act as sole arbitrator in place of the person or persons removed, or
(ii) order that the arbitration agreement shall cease to have effect with respect to the dispute referred."

Finally, Section 36(1) provides as follows:-

"In all cases of reference to arbitration, the Court may from time to time remit the matters referred or any of them to the reconsideration of the arbitrator....."

THE JUDGMENT OF THE SUPREME COURT

19. As I have already indicated, in his judgment, Blayney J. held that there was an error patent on the face of the Interim Award and that the matter should be remitted to the Arbitrator to be dealt with by him in accordance with the findings set out in the judgment. Before outlining the conduct of the arbitration subsequent to the order of the Supreme Court, I think it would be useful to record the passage from the judgment of Blayney J. in which he considered the issues with which the Arbitrator was concerned. He said:-


"Whether or not the additional works were carried out pursuant to the original contract or pursuant to separate and distinct contracts was undoubtedly an issue which had to be determined by the Arbitrator. If they were carried out pursuant to the original electrical services contract, then the terms and conditions of that contract would have applied to them, but otherwise they would not have. And whether they did apply was obviously very relevant to the question of how the amount due in respect of the additional works should be assessed. The error made by the Arbitrator was in concluding that because the additional works did not form part of the subject matter of the electrical services contract the dispute in regard to them had not been referred to him for decision. In effect, two separate matters had to be decided in respect of the additional works, firstly, did the terms and conditions of the original contract apply to them, and, secondly, in the light of the decision on that question, what sum, (if any) was due to the Plaintiff in respect of the additional works. From the start the Plaintiff claimed that the terms and conditions of the electrical services contract applied to the additional works, and the Defendant claimed that these works were the subject of separate and distinct contracts. These conflicting claims gave rise to an issue which had to be resolved in assessing what was due in respect of the additional works. The fact that the defendant was claiming that they were the subject of separate contracts was not inconsistent with the clear intention of both parties that the disputes in regard to all the works were being submitted to the arbitrator."

CONDUCT OF THE ARBITRATION SUBSEQUENT TO THE ORDER OF THE SUPREME COURT

20. On 27th May, 1996 the Arbitrator made and published an Amended Interim Award in the terms which I have outlined above. Prior to making the Amended Interim Award the Arbitrator had written to the Solicitors for the Plaintiff and the Solicitors for Kerry on 15th May, 1996 intimating that he intended to make such an award shortly. The Plaintiff's Solicitors apparently did not receive the letter addressed to them. The inference I draw from the evidence is that it must have gone astray. On 11th June, 1996 Kerry's Solicitors apprised the Arbitrator that Kerry was ready to proceed with the arbitration. At this time the Plaintiff was not evincing any eagerness to resume the arbitration. On 4th September, 1996, the Arbitrator issued an order for directions to the parties ordering that a procedural meeting be held without further delay to discuss and agree a calendar for the completion of the hearing. On 2nd October, 1996 Kerry's Solicitors wrote to the Arbitrator indicating a willingness to comply with the order for directions but requesting that the question of a preliminary meeting be deferred for a period of one month until this Court should have adjudicated upon the Plc.'s Petition to wind-up the Plaintiff, which had just been presented. By letter dated 5th November, 1996, Kerry's Solicitors apprised the Arbitrator of the existence of the injunction restraining the Plc. from publishing or proceeding with the Petition and indicated that Kerry was prepared to resume the arbitration. By letter dated 12th November, 1996, the Plaintiff's Solicitors notified the Arbitrator that the Plaintiff would be available for a procedural meeting on 27th November, 1996, a date suggested by Kerry's Solicitors in their letter of 5th November, 1996. This was the first communication from the Plaintiff's Solicitors to the Arbitrator since the making and publication of the Amended Interim Award on 27th May, 1996. The date suggested did not suit the Arbitrator who suggested that any date in the week commencing 2nd December, 1996 be agreed by the parties.

21. By letter dated 26th November, 1996 to the Arbitrator, the Plaintiff's Solicitors made suggestions about dates and the venue for the procedural meeting and suggested that the meeting should commence at 11.00 a.m. to allow adequate time for all the matters to be dealt with and went on to state as follows:-


"Arising from the Supreme Court decision a number of matters remain to be addressed in a further Interim Award. These would include the following:

(1) The conditions of each contract.
(2) The dates of commencement and completion of each contract.
(3) The geographical location of the work comprised in each contract, i.e., into which contract each of the items of work fall.

We note that you have already heard the evidence of each party on these issues.
Of course a date must be set for further evidence to be heard, particularly on the question of the appropriate valuation and payment for work done in accordance with the directions of the Supreme Court.

It is the judgment of the Supreme Court that you had jurisdiction to deal with all matters. Therefore we require a formal order of costs of the first eleven days of the reference...... against the Respondents to enable same to be recovered."

22. In response, by letter dated 2nd December, 1996 the Arbitrator indicated that the matters raised by the Plaintiff's Solicitors should await the resumption of the hearing.

23. The first mutually convenient date for the procedural meeting was 7th February, 1997. At that meeting, Brendan Kilty, B.L., instructed by Burke O'Riordan & Company Solicitors, appeared on behalf of the Plaintiff and John Gordon, S.C., instructed by O'Flynn Exhams & Partners, appeared for Kerry. There is no transcript of the meeting but the Arbitrator's contemporaneous note has been put in evidence and I accept it as an accurate reflection of what transpired. Mr. Kilty raised the matters raised in the letter of 26th November, 1996, including the question of a further interim award. The Arbitrator's position was that a further interim award was not called for. Mr. Kilty also made the point that during the earlier hearings he had asked the Arbitrator to identify into which contract each of the items of work fell and, while the Arbitrator acknowledged that such was the case, he stated that he had not agreed to issue an interim award on these matters. He asked that the parties endeavour to agree where the items of work fell and, in default of agreement, he would adjudicate on these matters. This was agreed and a further procedural meeting was arranged for 25th February, 1997. It was also arranged that the arbitration would resume on 7th April, 1997, when the Plaintiff's application for costs would be dealt with.

24. At the meeting on 25th February, 1997 the Plaintiff was again represented by Mr. Kilty, as was Kerry by Mr. Gordon. There is no transcript of the meeting but the Arbitrator's note has been put in evidence and I accept it as an accurate record of what transpired. The Arbitrator was told that a meeting had been held on 21st February, 1997 at Macroom, County Cork at which a very good discussion had taken place concerning the classification of the variations and these had been allocated to the various contracts, the electrical services contract, the transformer contract and so forth. It is clear from the evidence that these discussions were between the Plaintiff's quantity surveyor and Kerry's engineer. A further meeting was envisaged and it was hoped that further agreement could be reached, which would reduce the Arbitrator's volume of work. Both parties agreed that the hearing on 7th April, 1997 to deal with the Plaintiff's application for costs should proceed. It was suggested that the hearing of the substantive claims should recommence on 14th April, 1997. The Arbitrator queried whether there were transcripts for the earlier hearings and indicated that he would like copies of the transcripts which he did not already hold.

25. Following that meeting, on 5th March, 1997 Kerry's Solicitors wrote to the Plaintiff's Solicitors on the question of transcripts of the hearings which had taken place in the summer of 1995. Kerry's Solicitors stated that they had transcripts for eight days of hearings only, which, because of a copyright reservation in favour of the court reporters who had made the transcripts, they were not free to photocopy. However, they offered the transcripts on loan to the Plaintiff's Solicitors, or, as an alternative, suggested that the Plaintiff's Solicitors could take up copies from the court reporters on payment of a small fee, Kerry having paid to have the transcripts written up. Kerry's Solicitors suggested that the Plaintiff and Kerry should share the cost of taking up the transcripts for the balance of the hearings which took place in the summer of 1995. There was no response whatsoever to any of the suggestions contained in the letter from the Plaintiff's Solicitors.

26. By letter dated 7th March, 1997 the Plaintiff's Solicitors raised an issue which is of importance in these proceedings. In that letter to Kerry's Solicitors the Plaintiff's Solicitors sought written confirmation that neither the Arbitrator nor his firm, Dermot C. Coyle & Partners, had previously acted in any arbitration involving the Plc. or any of its subsidiaries or had received fees from the Plc. or any of it subsidiaries prior to the commencement of the arbitration between the parties. Kerry's Solicitors responded by letter dated 20th March, 1997 confirming that the Arbitrator had previously acted as Arbitrator in two related arbitrations which took place in 1990 involving claims between a third party and Kerry Agri Business Limited and between the Plc. and the third party and that the Arbitrator had been an agreed arbitrator in relation to both matters. It was also confirmed that the Arbitrator had no commercial connection with Kerry or with any subsidiary of the Plc. and reference was made to a letter dated 17th June, 1994 from Martin O'Donoghue, the "in-house" Solicitor for the Plc., who was then acting for Kerry. In that letter Mr. O'Donoghue stated as follows:-


".......I can confirm that my client will agree to Mr. Tim Sullivan of Dermot Coyle & Partners of Dublin as Arbitrator. For the record you might confirm that Mr. Sullivan has no commercial connection with your firm or any of its associate companies. I confirm that Mr. Sullivan has no commercial connection with my client or, to the best of my knowledge, any subsidiary company of Kerry Group Plc."

27. The Arbitrator was one of three persons who had been nominated by the Plaintiff for appointment as arbitrator prior to 17th June, 1994.

28. Following receipt of the letter of 20th March, 1997 the Plaintiff's Solicitors sought all relevant documents in relation to the previous arbitrations, which the Plaintiff's Solicitors declined to furnish, pointing out that the Arbitrator had acted as an independent arbitrator between the parties in the earlier arbitrations and that he had no other connection with Kerry or the Plc. By letter dated 3rd April, 1997 to the Arbitrator, the Plaintiff's Solicitors sought an adjournment of the hearing which was due to be held on 7th April, 1997 until such time as they should receive clarification from Kerry in relation to the matters raised in the Plaintiff's Solicitors' letter of 7th March, 1997 to Kerry's Solicitors. The Arbitrator responded by letter dated 4th April, 1997, refusing the adjournment sought and stating as follows:-


".......I wish to confirm that I acted as Arbitrator in a dispute involving the Kerry Group in 1989/91. In that dispute, I was appointed by the President of the Institution of Engineers of Ireland.

Subsequently, I was appointed as Arbitrator in a dispute by the parties concerned. One of the parties was a subsidiary of the Kerry Group.

In both these arbitrations, the cost of the award was apportioned between the parties in accordance with the terms of the awards.
Apart from payments representing 'cost of the award' in the above mentioned arbitrations, I have not received fees from the Kerry Group.

I also confirm, if such confirmation is necessary, that I have no interest in or relationship with the Kerry Group, have never been employed or consulted by them in any capacity and have not, or ever had, any commercial connection with the group."

29. Another topic canvassed in the correspondence between the parties subsequent to the order of the Supreme Court, which became an issue in these proceedings, was the question of the Arbitrator's remuneration. In the Appointment Form, the Plaintiff and Kerry jointly and severally agreed to pay the Arbitrator's fees, costs and expenses in connection with the arbitration at the rates quoted in the Schedule thereto. The Schedule stipulated certain half-hourly, daily and hourly rates of charge and provided for reimbursement of all expenses and outgoings and then stipulated, in paragraph e, the time scale for payment of the fees as follows:-


"(i) An initial sum of £200 plus VAT at 21% to be made upon appointment, by the Claimant.....
(ii) If the arbitration shall continue after the expiration of six months from the date of appointment, the Claimant, shall upon demand, make interim payments on account of the Arbitrator's outstanding fees and expenses.
(iii) When the Award is taken up or when the arbitration reaches an end, the balance of the fees shall be paid....."

30. The references to the Claimant in the quoted provisions were references to the Plaintiff. The Plaintiff duly paid the sum of £200. Thereafter, the history of the Arbitrator's remuneration was as follows:-


(1) The Arbitrator did not seek any interim payment until 14th August, 1995, when he sought payment of the sum of £27,902.60 from the Plaintiff in respect of his fees and charges from his appointment to the adjournment of the arbitration on 27th July, 1995, giving credit for the sum of £200 already paid. Despite reminders sent to the Plaintiff's Solicitors on 12th September, 1995 and 25th September, 1995, the Arbitrator received no response whatsoever from the Plaintiff's Solicitors to whom the demand had been sent.
(2) By a letter dated 31st October, 1995 addressed to the Solicitors for the Plaintiff and the Solicitors for Kerry, the Arbitrator sought immediate payment of the demand dated 14th August, 1995 in accordance with the Appointment Form.
(3) On 8th November, 1995 Kerry's Solicitors remitted £13,951.30, representing 50% of the demand, to the Arbitrator.
(4) After the judgment and order of the Supreme Court and the making and publication of the Amended Interim Award, at a time when Kerry's Solicitors were seeking to have the arbitration resumed, the Arbitrator by letter of 5th July, 1996 to Kerry's Solicitors, which was copied to the Plaintiff's Solicitors, stated that the Plaintiff had not paid any part of the fees claimed in the demand of 14th August, 1995 and sent a statement showing the balance of the fees outstanding for Kerry's attention. Arising out of that letter, Kerry's Solicitors wrote to the Plaintiff's Solicitors seeking confirmation that the balance would be discharged to enable the matter to proceed. They also wrote to the Arbitrator on 19th July, 1996 expressing the view that the outstanding fees should be discharged before the arbitration resumed and stated that they had taken the matter up with the Plaintiff's Solicitors.
(5) With a letter dated 6th January, 1997 to Kerry's Solicitors, the Arbitrator sent a statement of his fees and expenses up to that date, showing the balance due after making allowance for the payments already made. It was clear from the statement that no payment had been made by the Plaintiff other than the initial payment of £200. There is no indication on the letter that it was copied to the Plaintiff's Solicitors. On the enclosed statement, the client was named as the Plc. The balance due to the Arbitrator as of 6th January, 1997, as shown on the statement, was £23,225.95 inclusive of VAT, which included a claim for 127 hours at £60 per hour which had not been previously billed to either party.
(6) On 10th January, 1997 Kerry's Solicitors wrote to the Plaintiff's Solicitors seeking confirmation by return that the Plaintiff would discharge its proportion of the fees.
(7) By letter dated 21st February, 1997 to Kerry's Solicitors, the Arbitrator complained that he had not received any payment from Kerry arising from the letter dated 6th January, 1997 and that it appeared that, despite written agreements, neither party was prepared to honour their commitments. The Arbitrator stated that he would have to consider his position and seek legal advise. In his Affidavit sworn in these proceedings, to which I will refer to later, the Arbitrator confirmed that he did not send a copy of the letter to the Plaintiff's Solicitors as he had previously written to the Plaintiff's Solicitors concerning payment of his fees on six occasions and had not received an acknowledgement or reply to any of those letters.
(8) On 24th March, 1997, in a letter addressed to the Plaintiff, c/o Burke O'Riordan & Co., Solicitors and to the Plc. c/o O'Flynn Exhams & Partners, having stated that he had repeatedly requested payment from both firms of Solicitors and that the Solicitors for the Plaintiff had failed to acknowledge his correspondence, the Arbitrator stated:-

"Therefore, I have to inform you as Solicitors for the parties that unless payment of my outstanding fees is made within seven days of the date of this letter, I shall regard the parties in breach of contract and my obligations as Arbitrator terminated".

31. A copy of the fees statement dated 6th January, 1997 was enclosed with that letter.


(9) By letter dated 1st April, 1997 Kerry's Solicitors informed the Arbitrator that, given the contents of the Arbitrator's letter of 24th March, 1997, Kerry was prepared to discharge the balance of the fees outstanding. A cheque for £23,225.95 was remitted by Kerry's Solicitors to the Arbitrator by letter dated 4th April, 1997.

32. Against the foregoing background the arbitration proceedings resumed on 7th April, 1997. Mr. Kilty, instructed by Burke O'Riordan & Co., appeared for the Plaintiff and Mr. Gordon, instructed by O'Flynn Exhams & Partners, appeared for Kerry. At the outset, Mr. Kilty sought an adjournment and he did so on three grounds, namely:-


(a) that the transcripts of the hearings in the summer of 1995, which Mr. Kilty indicated he needed to make his submissions on the application for the costs of the preliminary issue, had not been furnished by Kerry to the Plaintiff's Solicitors as, he alleged, Kerry had promised at the second procedural meeting the previous February;
(b) that Kerry had failed to disclose the documents in relation to the previous arbitrations which involved the Plc. and a subsidiary of the Plc. in which the Arbitrator had acted as arbitrator; and
(c) that the manner in which the Arbitrator had procured payment of his fees and, in particular, his threat to terminate his obligations as Arbitrator, suggested that the Plaintiff's submission on the question of costs would not be heard in a fair and unbiased manner.

33. It was emphasised that the application for an adjournment was being made without prejudice to any other action that might be considered by the Plaintiff. From reading the transcript of the proceedings on 7th April, 1997, it is clear that the application, in effect, was for an adjournment sine die. The application was opposed by Kerry. The Arbitrator refused to grant an adjournment on the grounds that the Plaintiff could not be specific about when the arbitration might be resumed and he indicated that the matter would proceed on 14th April, 1997, either on the question of costs or on the substantive claims.

34. On 14th April, 1997 Mr. Burke of the firm of Burke O'Riordan & Co. appeared and requested that his firm be allowed come off record in the arbitration proceedings. The Arbitrator acceded to the request. Mr. Tobin, the Managing Director of the Plaintiff, then sought an adjournment to enable him to instruct another firm of solicitors. The Arbitrator adjourned the matter until 12th May, 1997. The reason advanced by Mr. Burke for seeking to come off record was that a conflict had arisen between the Plaintiff and his firm and he felt it would be in the best interest of the Plaintiff and they would be better served by instructing another firm of Solicitors. By letter dated 28th April, 1997, in response to an inquiry from Kerry's Solicitors, Burke O'Riordan & Co. intimated that they would remain on record for the Plaintiff in the Judicial Review proceedings and the plenary proceedings referred to earlier, which were then pending in this Court.

35. On 12th May, 1997 the Plaintiff was represented by a new legal team, Edmund Honohan, S.C. instructed by Arran, Solicitors. Mr. Gordon appeared for Kerry. Mr. Honohan had only just been retained and he sought an adjournment to prepare for the resumed hearing. He told the Arbitrator that his instructions from Mr. Tobin were that Mr. Tobin was anxious to get on with the case and to have it brought to conclusion. The Arbitrator granted an adjournment until 16th June, 1997.

36. Following the proceedings on 12th May, 1997, Kerry's Solicitors wrote to Arran, the Solicitors who had come on record for the Plaintiff, on three occasions endeavouring to make arrangements in relation to the resumption of the arbitration proceedings on 16th June, 1997 - on 15th May, 1997, on 3rd June, 1997 and on 9th June, 1997. There was no response from Arran to any of those letters. However, on 9th June, 1997 Arran wrote to the Arbitrator advising him that they no longer acted for the Plaintiff and would not be in the position to provide representation for it at the forthcoming hearing.

37. On 16th June, 1997 Mr. Tobin appeared without legal representation and applied for an adjournment to enable him to instruct another firm of Solicitors. Kerry opposed the application. The Arbitrator granted an adjournment until 7th July, 1997. It is quite clear from the transcript that the adjournment was granted on the basis that the substantive claims in the arbitration would be resumed on that day, with the cross examination of Mr. Tobin being resumed. It is also clear that Mr. Tobin was in full agreement with the course proposed. On no less than three occasions, Mr. Tobin told the Arbitrator that it was not his intention to "mess about" the arbitration. He also joined in, apparently enthusiastically, in exchanges as to the days on which the Arbitrator would sit to finalise the matter. The Arbitrator expressly stated that there would be no more adjournments because the arbitration had to finish and Mr. Tobin confirmed that he accepted that.

38. When the matter resumed on 7th July, 1997 Mr. Kilty once again appeared for the Plaintiff, this time instructed by Eames & Co., Solicitors. Mr. Gordon appeared for Kerry. Immediately the proceedings opened, Mr. Kilty intimated to the Arbitrator that he was there to make an application for the costs of the Interim Award and the Amended Interim Award. Mr. Gordon requested the Arbitrator not to hear the application for costs but to resume the arbitration. The Arbitrator ruled that the arbitration was to continue, although he recognised the Plaintiff's right to apply for costs but not at that moment. A similar position was adopted by Mr. Gordon on behalf of Kerry, in that he submitted that there was no reason why the arbitration could not proceed forthwith and on a later date, which suited everybody, time could be set aside to deal with the application for costs. When the Arbitrator had ruled against the Plaintiff, Mr. Kilty intimated that he was leaving the arbitration and would be seeking his remedies elsewhere. Mr. Gordon then indicated that Kerry, on notice of the Plaintiff, would be seeking that a date be fixed to enable it to make an application for a final award dismissing the Plaintiff's claim and to hear evidence on Kerry's counterclaim.

39. It is clear from the transcript of the proceedings of 7th July, 1997 that the Plaintiff's reason for withdrawing from the proceedings was that the Arbitrator would not accede to the request to hear the application for costs of the preliminary issue forthwith. The complaints made by the Plaintiff on 7th April, 1997 were not reiterated. There was no question of inability on the part of the Plaintiff to prosecute the application for costs by reason of the failure of Kerry to furnish copies of the transcripts. There was no expression of concern that, having regard to the manner in which he had pursued the recovery of his own fees, the application for costs might not be heard in a fair and unbiased manner by the Arbitrator. There was no suggestion that justice might not be seen to be done by non disclosure of the documents that passed between the Arbitrator and the Plc. and its subsidiary in the previous arbitrations, as had been suggested by Mr. Kilty on 7th April, 1997. On the hearing in this Court, Mr. Gordon submitted that the stance adopted by the Plaintiff on 7th July, 1997 was entirely at odds with the stance adopted in these proceedings. On 7th July, 1997 no reference was made to perceived or actual bias. On an objective analysis of the uncontroverted facts, it was submitted, the Court could not be satisfied that the Plaintiff had a bona fide complaint at the time these proceedings were commenced, that is to say, on 18th July, 1997.


EVIDENCE

40. The Plaintiff's case was grounded on the Affidavit of Mr. Tobin sworn on 18th July, 1997.

41. Kerry filed a replying Affidavit sworn by Patrick O'Neill on 5th January, 1998. In his Affidavit Mr. O'Neill outlined the entire course of the dealings between the Plaintiff and Kerry and exhibited:-


(1) the pleadings in the arbitration, in the earlier High Court proceedings and the Supreme Court appeal, in the plenary action in the High Court and in the Judicial Review proceedings;
(2) all relevant contract documentation and such like;
(3) all inter partes correspondence and all correspondence passing between the parties' legal advisers, on the one hand, and the Arbitrator, on the other hand;
(4) the transcripts of the hearings before the Arbitrator;
(5) the orders for directions and awards made by the Arbitrator; and
(6) minutes of meetings between the parties' respective technical advisers.

42. At the end of his Affidavit Mr. O'Neill set out the stance being adopted by Kerry in these proceedings: Kerry had made a sealed offer upon which it proposed to rest and wished the arbitration to proceed to ultimate conclusion.

43. One averment in the Affidavit of Mr. O'Neill was relied on by the Plaintiff in support of its claim for relief in these proceedings. In his Affidavit, Mr. Tobin had averred that on 12th September, 1994 the Plaintiff's advisers had visited the factory in Poole and that Kerry's advisers were there at the same time and that this opportune time had not been availed of by Kerry "to agree figures as figures or facts as facts". In response Mr. O'Neill averred as follows:-


"It was perfectly clear from the Points of Defence in the Arbitration that the first named Defendant considered the Plaintiff's claim to be entirely spurious, and this made it difficult to come to any agreement with the Plaintiff with regard to the matters in dispute. However, during the course of the Arbitration, a considerable number of the matters in dispute have been agreed between the technical witnesses for both parties, and, if the Arbitration was allowed to proceed, this would have considerably reduced the hearing time of the Arbitration. There remains a large number of items and facts in dispute between the parties which cannot be agreed, and which must be resolved by the Arbitrator. The first named Defendant considered the plaintiff's calculations and methodology to be spurious, contrived and inflated."

44. The Arbitrator also filed an Affidavit in reply to the Plaintiff's claim, which was sworn by him on 24th November, 1997. This Affidavit was parsed and analysed in depth by Counsel for the Plaintiff, who sought to bolster his submissions in reliance on it and on two averments in it in particular. In paragraph 26, the Arbitrator averred as follows:-


"I say that the preliminary issue which was the subject of the Interim Award dealt with the scope of the electrical services contract and its relationship with the other works. Over the period of eleven days, evidence was given on the nature and construction of the contracts and on the variations to each of the five sections of work. I did not consider it necessary, when preparing the Interim Award, to list the variations applying to each of the five contracts and was of the opinion that that should be left for the Final Award...... I was requested by the Plaintiff, in connection with eleven variations, to state a case to the High Court to determine if they were within the meaning of paragraph one of my Interim Award. I refused this application as set out in my letter dated 7th July, 1995......as it was my intention to deal with this issue in my Final Award."

45. In paragraph 28, the Arbitrator averred as follows:-


"I say that at the procedural meeting held on 7th February, 1997, a difference of opinion arose between Counsel for the Plaintiff and me over the question of the necessity for a further Interim Award arising out of the Supreme Court ruling to deal with the issues raised by the Plaintiff in its letter to me dated 26th November, 1996.....
Counsel for the Plaintiff stated that during the Arbitration hearing he had asked me to identify into which contract each item of work (variation) fell. As the Supreme Court had confirmed my jurisdiction over all of the contracts I asked the parties to meet and agree the classification of the variations under the five separate contracts and if possible to agree the value of each variation. Failing agreement, I said I would decide on the issues....."

THE ISSUES

46. The multiplicity of issues identified by Counsel for the Plaintiff, in my view, can be conveniently subsumed into the following questions:


(1) Has the Plaintiff established that the Arbitrator has misconducted himself or the proceedings, so as to require his removal under Section 37 of the Act of 1954? In addressing this question, in my view, the multifarious alleged instances of misconduct can be conveniently considered under the following headings -

(a) Failure to give effect to the Supreme Court judgment;
(b) Procurement of his fees by the Arbitrator; and
(c) Bias.
(2) Has the Plaintiff established that the Arbitrator has failed to use all reasonable dispatch in proceeding with the reference and making an award, so as to justify his removal under Section 24 of the Act of 1954?

(3) Has the Plaintiff established that a dispute has arisen which involves a question whether the Plaintiff has been guilty of fraud, so that the Court's powers under Section 39 of the Act of 1954, including the power to give leave to revoke the authority of the Arbitrator, have arisen?

(4) If the answer to any of the foregoing questions is in the affirmative and the Arbitrator is to be removed or his authority is to be revoked by leave of the Court, which of the options available under Section 40(2) of the Act of 1954 should be availed of, in other words should -

(a) the Court appoint a substitute arbitrator, or
(b) should the Court order that the arbitration agreement shall cease to have effect, so that it is open to the Plaintiff to litigate its claim?

47. The Plaintiff did not advance any basis on which the Arbitrator's order of 7th July, 1997 should be remitted. The whole thrust of the Plaintiff's case was that the arbitration agreement should cease to have effect, so that the Plaintiff might litigate its claim in this Court, or that a substitute arbitrator should be appointed. In fact, Counsel for the Plaintiff strongly urged that remission would not be appropriate. Accordingly, although remission was one of the reliefs claimed in the special summons, it is not now an issue for the Court.

48. During the course of the hearing a problem arose in relation to a sealed offer which had been made by Kerry to the Plaintiff on 23rd February, 1995. This raises a separate issue which I propose considering having considered the other issues.

49. Before considering the issues in depth, I have a number of general observations to make.

50. First, in his Affidavit, Mr. Tobin deposed in fifty-four sub-paragraphs to "instances" which he averred have led the Plaintiff to have no confidence "in the conduct of this reference by this Arbitrator and no confidence that justice is being done or that justice is being seen to be done", or "in the ability of the Arbitrator..... to..... bring the matters in dispute to a conclusion in a prompt expeditious fair manner". The first twenty-seven sub-paragraphs relate to matters which arose prior to the determination of either this Court or of the Supreme Court of the issues in the earlier proceedings between the parties. I have come to the conclusion that, insofar as it is the Plaintiff's case that these matters constituted misconduct on the part of the Arbitrator, the Plaintiff is estopped from pursuing these allegations at this juncture given that in the earlier proceedings no allegation of misconduct was made against the Arbitrator and, in fact, the Plaintiff sought to have the matter remitted to the Arbitrator and was successful in that claim.

51. Secondly, in his submissions, Counsel for the Plaintiff contended that the Interim Award was ambiguous and lacking in certainty and that to allow the ambiguity and lack of certainty to remain is active misconduct. No case was made in the earlier proceedings that the Interim Award was ambiguous or lacked certainty and, in my view, the Plaintiff is estopped from making that case now.

52. Thirdly, in considering the issues which arise in this case, this Court must have regard to the policy considerations which the Supreme Court has identified as being appropriate when the Court is concerned with issues arising in the course of or out of arbitrations. In Keenan -v- Shield Insurance Company Limited , [1988] I.R. 89, McCarthy J. stated at page 96:-


"Arbitration is a significant feature of modern commercial life; there is an International Institute of Arbitration and the field of international arbitration is an ever expanding one. It ill becomes the courts to show any readiness to interfere in such a process; if policy considerations are appropriate as I believe they are in a matter of this kind, then every such consideration points to the desirability of making an arbitration award final in every sense of the term. Church and General Insurance Company -v- Connolly and McLoughlin .... itself is an example of the type of fine combing exercise which courts should not perform when it is sought to review an arbitration award. There may be instances in which an award which shows on its face an error of law so fundamental that the courts cannot stand aside and allow it to remain unchallenged......"

53. While the foregoing remarks were made in the context of a claim to set aside an arbitrator's award, they must apply with equal force, and I would suggest with greater force, where the arbitral process has not been completed because one party has unilaterally withdrawn from it.

54. In support of his contention that these proceedings lack bona fides and are unmeritorious, Counsel for Kerry outlined the course of the dealings between the parties to illustrate the manner in which, as he contended, what started out as a relatively modest claim escalated into a major claim over a period of eighteen months. He also analysed the evidence, including exhibits, put before the Arbitrator in the early stages of the arbitration in relation to the classification of the works according to contract and the various stances in relation to such classification adopted by the parties and their respective technical advisers from the outset up to the end of February 1997 to illustrate what he contended was eventual consensus between the parties as to classification. In my view, it would not be proper for this Court to express any view on the merits of the claims before the Arbitrator, either directly or indirectly, and I express no view on these matters.


FAILURE TO GIVE EFFECT TO SUPREME COURT JUDGMENT

55. At the core of the Plaintiff's contention that the Arbitrator has failed to give effect to the judgment of the Supreme Court was the assertion that he was required by that judgment and, in particular, by the passage from that judgment which I have quoted above, to publish a further interim award dealing with the scope of the electrical services contract and its relationship with the other contracts. Moreover, it was submitted, unless the Arbitrator defined by way of a further interim award into which of the five contracts the discreet items of work fell, the Plaintiff could not deal with the delay and disruption element of its claim, which is a significant element of its claim. The Plaintiff, by its Solicitors' letter of 26th November, 1996, had requested that a further interim award be published and had repeated that request at the procedural meeting on 7th February, 1997, but the Arbitrator refused to accede to the request and this refusal, it was alleged, constituted misconduct.

56. Further complaints were made by the Plaintiff as to the manner in which the Arbitrator reacted to the Supreme Court judgment and order. First, it was submitted that it was misconduct to make and publish the Amended Interim Award without first convening a hearing and hearing submissions from the parties. Secondly, a remark made by the Arbitrator at the hearing on 12th May, 1997 querying whether the Plaintiff's claim had to be resubmitted or changed in any way as a result of the Supreme Court ruling was cited as evidence that the Arbitrator did not appreciate the consequences of the Supreme Court ruling.

57. During the hearing Counsel for the Plaintiff developed a further argument that the Arbitrator had misconducted the proceedings in failing to make a further interim award defining the parameters of the electrical services contract and the other four contracts, which argument was founded on the averments contained in the Arbitrator's replying Affidavit and, in particular, paragraphs 26 and 28, which I have quoted above. This argument proceeded on the assumption that the proper inference to be drawn from the Arbitrator's averment that he did not consider it necessary, when preparing the Interim Award, to list the variations applying to each of the five contracts and was of the opinion that it should be left for the final award, was that not later than 11th June, 1995 the Arbitrator had all the ingredients at his disposal and was capable of defining the parameters of each of the five contracts. The argument was premised on a further assumption, namely, that it is to be inferred from the averments in the Arbitrator's Affidavit that he had in fact determined the parameters of each of the five contracts. On the basis of these assumptions the Plaintiff advanced two further grounds of misconduct. First, it was contended that it was misconduct on the part of the Arbitrator to fail to impart information to the parties, that is to say, his conclusion as to the parameters of each of the five contracts. On this element of his argument Counsel for the Plaintiff relied on the decision of the Court of Common Pleas in Thomson -v- Millar , (1867) I.R.C.L. 90, in which it was held that when a reference is made to a single arbitrator, it is not sufficient to constitute a valid award that the arbitrator has made up his own mind as to what the award is to be on the matters referred, unless that mental determination is manifested by some external act. The second contention was that in requesting the parties to agree the matters raised in the letter of 26th November, 1996, which request was made at the procedural meeting of 7th February, 1997, the Arbitrator was burdening the parties with an additional unnecessary layer of costs, because the Arbitrator had already determined what he had asked them to agree.

58. The grounds of complaint against the Arbitrator outlined above are founded on the proposition that the Arbitrator was obliged at law to determine the issues arising between the parties piecemeal; that he was obliged to make a further interim award determining the matters set out in the Plaintiff's Solicitors' letter of 26th November, 1996, and, in particular, to determine into which of the five contracts each of the items of work fell, before proceeding to make a final award in which he valued the items of work and assessed the compensation due to the Plaintiff for delay and disruption. This proposition is unsustainable.

By virtue of Section 25 of the Act of 1954 it is provided that, unless a contrary intention is expressed therein, every arbitration agreement shall, where such a provision is applicable to the reference, be deemed to contain a provision that the Arbitrator may, if he thinks fit, make an interim award. There being no contrary intention in the arbitration clause in the electrical services contract, there was implied therein by virtue of Section 25 a term that the Arbitrator should have a discretion to make an interim award. In my view, in principle, the refusal of an arbitrator to exercise his discretionary power to make an interim award, which is a procedural step in an arbitration, is not reviewable in this Court. This conclusion is consistent with the view expressed by Denning M.R. in " The Angelic Grace ", (1980) 1 Lloyds Reports 288 at page 293 in relation to the corresponding provision of the English legislation (Section 14 of the Arbitration Act, 1950) and is consistent with the policy considerations adumbrated by the Supreme Court in Keenan -v- Shield Insurance Company Limited .

59. The Plaintiff's argument, however, is not based on the general law but on the assertion that the judgment and order of the Supreme Court directed the Arbitrator to make a further interim award before proceeding to his final award. No such direction is to be found in the judgment of the Supreme Court. The ratio decidendi of the Supreme Court was that the Arbitrator was in error in directing in his interim award that the additional works be excluded from the reference and that, as that error was patent on the face of the interim award because it was inconsistent with a recital in the interim award, the matter should be remitted to the Arbitrator for reconsideration. These were the findings by reference to which the Arbitrator was enjoined by the Supreme Court to deal with the matter. In the passage from the judgment which I have quoted above, the Supreme Court outlined the issues which confronted the Arbitrator in relation to the additional work, namely, whether the terms and conditions of the electrical services contract applied to them and, in the light of the decision on that question, what sum, if any, was due to the Plaintiff in respect of the additional work. The first issue arose because there were conflicting claims: the Plaintiff claiming that the terms and conditions of the electrical services contract did apply and Kerry claiming that the works were the subject of separate and distinct contracts. The point made in the judgment was that the existence of the issue was not inconsistent with the clear intention of both parties that the disputes in regard to all the works were being submitted to the Arbitrator. In remitting the matter to the Arbitrator to be dealt with in accordance with the findings set out in the judgment, the Supreme Court was directing the Arbitrator to proceed with the reference in relation to matters in respect of which the parties had given him jurisdiction, that is to say, all the work, including the additional works. While the Supreme Court identified the broad issues which arose between the parties, the Supreme Court did not give any direction to the Arbitrator as to how or when he should determine those issues, and, in particular, the Supreme Court did not direct him to make any further interim award on the first issue identified.

60. In the Amended Interim Award the Arbitrator corrected the error on the face of the Interim Award, in that he found that the whole of the works was within his jurisdiction. The Amended Interim Award was no more than an acknowledgement by the Arbitrator of the error found by the Supreme Court and the rectification of that error in a formal manner. Nothing further was required in the Amended Interim Award and there was no necessity to convene a hearing or to elicit submissions from the parties before the Amended Interim Award was made. In short, there was nothing further to be said. Moreover, it is manifest on the face of the Amended Interim Award that the Arbitrator fully understood the true import of the judgment and order of the Supreme Court.

61. The arguments which the Plaintiff has concocted out of the averments in the Arbitrator's Affidavit are wholly unsustainable. It is implicit in the arguments that the Arbitrator went some way toward giving effect to the requirements of the Supreme Court judgment contended for by the Plaintiff, the assumption underlying the arguments being that the Arbitrator has actually classified the items of work according to the various contracts. The complaint is that he did not communicate the classification to the parties. The Plaintiff has not established any factual basis for the assumption. The Arbitrator did not aver in his Affidavit that he had made any such classification or that he had listed the variations, nor can it be inferred from his Affidavit that he did so. Even if there was evidence that the Arbitrator had made up his mind about such classification or listing or any other issue of fact during the course of the arbitration, there is no basis in law for the proposition that the Arbitrator was under an obligation to communicate his conclusions to the parties as soon as he had reached them. How he goes about evaluating the evidence and reaching conclusions thereon and the point at which his deliberations have resulted in a determination which can be published as an interim award or a final award are matters solely for the Arbitrator. It is no function of this Court to scrutinise his deliberative process.


ARBITRATOR'S FEES

62. The main strand in the Plaintiffs submission that the manner in which the Arbitrator went about securing his fees constituted misconduct was that the timing of his requests for interim payments was inappropriate. The timing of the initial fee note dated 14th August, 1995 was inappropriate because it was sent to the Claimant, the Plaintiff, who at that time was challenging the Interim Award in this Court. The timing of the fee note dated 6th January, 1997, which was sent to Kerry's Solicitors, was also inappropriate and it was also improper and it amounted to misconduct on the part of the Arbitrator to address it to the Plc., when the Arbitrator knew that the Plc. at that time was petitioning to have the Plaintiff wound up. The demands for payment made by the letters dated 21st February, 1997 and 24th March, 1997 were also inappropriately timed, in that they were made when the Arbitrator well knew that the Plaintiff was seeking to be heard on the question of the costs of the first eleven days of the Arbitration and at a time when the Plc was petitioning to have the Plaintiff wound up. Those demands put the Plaintiff in an inferior position. If the Plaintiff's application for costs had been successful Kerry would have become indebted to the Plaintiff, which would have put the Plaintiff in a position to deal with the claim of the Plc. and get rid of the Petition. Being made in this context, the Arbitrator's demands disadvantaged the Plaintiff, it was argued.

63. Other strands were interwoven with the main strand of the Plaintiff's argument. It was contended that communication by the Arbitrator to one party without copying the communication to the other party, as happened in the case of the letters dated 6th January, 1997 and 21st February, 1997 to Kerry's Solicitors, constituted misconduct. A source of significant annoyance and embarrassment to the Plaintiff, it was contended, was the letter of 21st February, 1997 in which the Arbitrator referred to the necessity to consider his position and seek legal advice, which the Plaintiff only became aware of when it was referred to by Counsel for Kerry at a meeting with the Arbitrator. It was also contended that the receipt by the Arbitrator without comment, criticism or reprimand, of various items of correspondence from Kerry's Solicitors, for instance, the letters dated 19th July, 1996, and 2nd October, 1996, constituted misconduct. It was also submitted that it was misconduct for the Arbitrator to accept his fees from one party, when the other party was not paying. Addressing the fee note dated 6th January, 1997 to the Plc., which was not a party to the Arbitration, was also misconduct it was submitted, and amounted to allowing the Plc. into the Arbitration. It was emphasised that the Plc., to whom the fee note was addressed, was capable of destroying the Plaintiff's capacity to arbitrate by prosecuting the Petition to have the Plaintiff wound up. It was also submitted that the evidence did not establish whether the Arbitrator's fees were in fact paid by Kerry or the Plc. and that point should have been clarified by the Arbitrator.

64. I did not understand the Plaintiff to contend that Kerry did not have liability under the Appointment Form for interim payments on account of the Arbitrator's fees. The Plaintiffs complaint goes to the manner in which the Arbitrator secured payment. There was another mechanism open to him, it was suggested: he could have required payment from both parties as a precondition of the publication of the Interim Award or the Amended Interim Award and relied on his lien for costs and fees. Such approach, it was suggested, would have avoided any perception of bias.

65. In support of his various arguments on the issue of the Arbitrator's fees, Counsel for the Plaintiff relied on the decision of the Court of Appeal in Turner -v- Stevenage Borough Council [1997] 3 WLR 309.

66. In responding to the foregoing arguments, Counsel for the Arbitrator submitted that the Arbitrator's conduct must be assessed by reference to the respective rights and obligations of the Arbitrator and the parties in relation to the Arbitrator's fees and costs under the Appointment Form. He pointed to certain salient features discernible on a literal interpretation of the appointment form. While it provides that both parties are jointly and severally liable for payment of the Arbitrator fees, costs and expenses, nonetheless it envisages payment by one party only - payment of the initial fee and any interim payment by the Plaintiff - and it envisages a demand for an interim payment being made on one party only. The interim payments envisaged are merely payments on account of outstanding fees and expenses. The Arbitrator is entitled to make a demand for interim payment at any time and from time to time after the expiration of six months from the date of appointment; more than one interim payment is clearly envisaged and there is nothing in the Appointment Form to link a demand for an interim payment to the making of an interim award.

67. In construing the Appointment Form, it was submitted, the intention of the parties must prevail and the following statement of Lord Wilberforce in Reardon Smith Line Limited -v- Hansen - Tangen [1976] 3 ALL ER 570 at page 574, which was quoted with approval in the judgment Griffin J. in Rohan Construction -v- I.C.I (1988) I.L.R.M. 373, should be applied in the construction of the Appointment Form:-


"When one speaks of the intention of the parties to the contract, one is speaking objectively - the parties cannot themselves give direct evidence of what their intention was - and what must be ascertained is what is to be taken as the intention which reasonable people would have had if placed in the situation of the parties. Similarly, when one is speaking of the aim, or object, or commercial purpose, one is speaking objectively of what reasonable persons would have had in mind in the situation of the parties ...... what the Court must do must be to place itself in thought in the same factual matrix as that in which the parties were."

68. It was also submitted that the Appointment Form being a commercial document, it is open to the Court to consider its commercial purpose so as to give it a business like interpretation. The following passage from the judgment of Lord Diplock in Antaios Cia Naviera S.A. -v- Salen Rederierna A.B. [1985] A.C. 191, quoted in Lewison on Interpretation of Contracts

(1989 Edition) at page 12 was relied on in support of that proposition:-

"While deprecating the extension of the use of the expression 'purposive construction' from the interpretation of statutes to the interpretation of private contracts, I agree with the passage I have cited from the arbitrator's award and I take this opportunity of restating that, if a detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made yield to business common sense".

69. Reading the Appointment Form as a whole, it was submitted, it is clear that the objective intention must have been to permit the Arbitrator to demand an interim payment from Kerry in the event that the Plaintiff had failed to comply with such a demand previously made on it.

70. Counsel for the Arbitrator submitted that, having regard to the terms of the Appointment Form, acceptance of payment by the Arbitrator from one party only could not constitute misconduct. Moreover, he submitted that the timing of the demands for the interim payments was not inappropriate. The initial demand made on 14th August, 1995 was made at a point in time which was significantly prior to the presentation of the Petition to wind up the Plaintiff by the Plc.. The subsequent demands were made after the Arbitrator had been apprised by Kerry's Solicitors that this Court had restrained the further prosecution of the winding-up Petition. Furthermore, it was submitted, in the event of the breach of terms of the Appointment Form in relation to payment of his fees, the Arbitrator was entitled to regard himself as discharged from further performance of the agreement to act as arbitrator and he was entitled to enforce the parties' obligations by threat of resignation if they did not comply, as he did in his demand of 24th March, 1997. Whether or not to reprimand Kerry's Solicitors on account of the content of their communications to the Arbitrator was a matter entirely within the discretion of the Arbitrator. It was pointed out as being noteworthy that, in fact, the Plaintiff had never sought that the Arbitrator reprimand or adversely comment on any communication from Kerry's Solicitors. Finally, it was submitted that no right-minded person would interpret the fact that the fee note of 6th January, 1997 was addressed to the Plc. as showing bias or as allowing a third party into the arbitration. Even if the Arbitrator's fees were discharged by the Plc., there was nothing reprehensible about this; it was merely an example of a parent company discharging the liability of a subsidiary - the vicarious performance of a contractual obligation - as referred to in Chitty in Contracts, 27th Edition, at page 987.

71. Counsel for Kerry adopted the Arbitrator's submissions on the fees issue. He emphasised that under paragraph e(ii) of the Schedule to the Appointment Form, while primary responsibility for making interim payments is on the Plaintiff, ultimately both parties are jointly and severally responsible for the Arbitrator's fees. The Arbitrator is entitled to look to Kerry, in the event of default by the Plaintiff. The liability of Kerry arises not just at the end of the arbitration, but during the course of the Arbitration. If Kerry was not jointly and severally liable with the Plaintiff for interim payments throughout the currency of the reference, the result would be absurd. The Plaintiff could wilfully refuse to make an interim payment secure in the knowledge that Kerry could do nothing about it. This could bring about a situation, such as the situation which almost arose in the instant case - that the Arbitrator would regard both parties as being in breach of contract and would retire. If the Plaintiff was unhappy with the course of the arbitration, it could wilfully wreck the arbitration by not paying on foot of a legitimate demand and thus leaving it open to the Arbitrator to retire. This could produce a grave injustice and manifestly it was not the intention of the parties. Kerry was constrained to make the interim payments it made to ensure that the arbitration would continue. It could not risk letting the entire process be wrecked, given its huge investment in time and money in it.

72. On this aspect of the Plaintiff's case, in my view, three questions fall for consideration, namely:


(1) What entitlement to interim payment of fees was conferred on the Arbitrator by the Appointment Form and how was his entitlement to be enforced?
(2) Did the Arbitrator exceed his entitlement or engage in inappropriate methods to enforce his entitlement?
(3) If the answer to (2) is in the affirmative, did the actions of the Arbitrator constitute misconduct of an order that the Court should exercise its discretion under Section 37 of the Act of 1954 to remove him having regard to all of the circumstances prevailing?

73. As to the first question, under the Appointment Form the fundamental basis of the liability of the parties to the Arbitrator for his fees, costs and expenses is joint and several liability, which means that both parties or either of them, at the option of the Arbitrator, may be sued for the fees, costs and expenses. The Schedule to the Appointment Form regulates the measurement of the fees, costs and expenses and the time for payment thereof. The fees are to be measured in accordance with the rates stipulated in the Schedule and the costs and expenses are to be measured on a reimbursement basis. As to the time for payment, paragraph e(ii) provides for interim payments on account of fees and expenses, but only after six months have elapsed from the date of appointment. What triggers off the entitlement to an interim payment is a demand by the Arbitrator on the Plaintiff. Such a demand can be made any time, and more than once, after the expiration of the six months period and it is not linked to the making of an interim award.

74. The crucial question for present purposes is what is the entitlement of the Arbitrator if the Plaintiff fails to comply with a demand for an interim payment properly made on it? Is he entitled to call on Kerry to meet the demand? There is no express provision in paragraph e(ii) of the Schedule conferring such an entitlement on him. Therefore, the question which arises is whether it is an implied term of the agreement embodied in the Appointment Form that he should be so entitled. In my view, it is. Given that the fundamental basis of the liability of the Plaintiff and Kerry to the Arbitrator is joint and several liability, and given that express provision is made for interim payments on account, on an objective construction of the Appointment Form it cannot have been the intention to deprive the Arbitrator of the entitlement to have recourse to Kerry for interim payments in the event of default on the part of the Plaintiff. It is true that under paragraph e(ii), the primary obligation to meet a demand for an interim payment lies on the Plaintiff. If a demand is made on the Plaintiff, it is clearly open to the Plaintiff to look to Kerry for a contribution to the interim payment. Indeed, there is a certain logic in providing that during the currency of the reference the Arbitrator may trigger an entitlement to an interim payment by a demand on one party and that that party should be the Plaintiff, the claimant in the reference, the claimant being the party most likely to be eager to prosecute the arbitration. It is obviously desirable that during the currency of the reference interplay between the parties in relation to interim payments on account of the Arbitrator's fees and expenses should be, to adopt the metaphor used by Counsel for the Plaintiff, " off the field ". However, if the Plaintiff defaults in its primary obligation, there must be an entitlement on the part of the Arbitrator to direct the demand to Kerry and a secondary obligation on Kerry to meet the demand. Otherwise, the Arbitrator would be bereft of a remedy, other than regarding himself as discharged from his appointment, in the face of a wilful breach of contract by the Plaintiff during the currency of the arbitration and Kerry would not be in a position to prevent the Arbitrator regarding himself as discharged, with possible consequential prejudice to Kerry.

In Turner v. Stevenage Borough Council , having found that there was an implied term in the arbitration agreement in issue in that case that the arbitrator might request an interim payment towards his fees and expenses, Staughton L.J. went on to consider whether the arbitrator was entitled to accept half of the interim payment requested from one party only and stated at page 317:

"K/S Norjarl AIS v. Hyundai Heavy Industries Co. Limited [1992] QB 863 shows that it is wrong for an arbitrator to agree to accept a fee from one party after the start of the arbitration and not from the other. He may, it seems, do so if he agrees on that course before the arbitration starts, but not afterwards".

75. Under the Appointment Form it was expressly provided that the Arbitrator should be entitled to receive an interim payment on account of his fees from one party only, namely, the Plaintiff. As I have indicated, I consider that the Arbitrator is impliedly entitled to demand and receive an interim payment from Kerry, in the event of default by the Plaintiff in compliance with a demand on it. Accordingly, in my view, the acceptance by the Arbitrator of interim payments from Kerry solely was not improper conduct, given that that conduct was sanctioned by the agreement as to the terms of his appointment between the Arbitrator and the parties.

76. I am also of the view that there was nothing inappropriate about the timing of the demands made by the Arbitrator. On the contrary, it seems to me that the initial demand made by the Arbitrator on 14th August, 1995 was made at the most appropriate time since his entitlement to make a demand had accrued, because it was made after the cessation of the arbitration hearings at the behest of the Plaintiff. The renewal of the demand in July 1996 was also appropriately timed, because, in consequence of the Supreme Court judgment and order, the Arbitrator had seisin of the dispute between the parties once again, but hearings had not resumed. The third request for an interim payment in January 1997 was also appropriately timed, in my view, because the resumed arbitration hearings were imminent.

77. As to the second question, it follows from what I have said above that the Arbitrator did not exceed his entitlement in receiving payments on account of his fees from Kerry alone. However, the methods he engaged to enforce his entitlement were inappropriate in two respects. First, in my view, the fee statement dated 6th January, 1997 should not have been addressed to the Plc.. In his replying Affidavit the Arbitrator averred that he had been requested on receipt of the first tranche of the interim payment from Kerry's Solicitors in November 1995 to issue a VAT invoice and that he had addressed the VAT invoice to the Plc. because he was unaware of the VAT arrangements within the Kerry group of companies. Kerry was the party to the arbitration, not the Plc., and the demand for the interim payment should have been addressed to Kerry. This is a small point, however, and, in my view, there is no justification for the assertion that thereby the Arbitrator was allowing the Plc. into the arbitration. Indeed, it is perhaps worth commenting that it was the Plaintiff who unsuccessfully embroiled the Plc. in the issues between the Plaintiff and Kerry in the earlier proceedings. Secondly, while the annoyance and frustration of the Arbitrator at the failure of the Plaintiff's Solicitors to respond to his requests for payments on account and reminders in relation to fees is understandable, in my view, it was inappropriate for the Arbitrator to send the fee statement dated 6th January, 1997 to Kerry's Solicitors solely. That fee statement, which claimed an additional interim payment which had not already been demanded from the Plaintiff, should have been directed to the Plaintiff first and, in the event, of non-compliance by the Plaintiff, the demand could have been directed to Kerry, the Plaintiff being simultaneously notified that a demand was being made on Kerry. Moreover, the letter dated 21st February, 1997, which contained the reference to the possibility of the Arbitrator seeking legal advice, should have been addressed to both parties.

78. As to the third question, in my view, those errors on the part of the Arbitrator do not constitute misconduct of an order that the Court should exercise its discretionary power to remove the Arbitrator. The basis on which the English Courts exercise their jurisdiction under the provision of the Arbitration Act, 1950 which corresponds to Section 37 is explained in the following passage from Mustill and Boyd on The Law and Practice of Commercial Arbitration in England , 2nd Edition, 1989 at page 530:


"The fact that the Court is given a wide power to remove the arbitrator in cases of misconduct does not mean that the power will be freely exercised. An arbitrator may commit errors - even serious errors - in the course of the reference, and yet remain perfectly able to carry the arbitration to a successful conclusion once his mistakes have been pointed out. Justice requires that in such a case the arbitrator should be left in office, rather than that the parties should suffer the delay and expense of beginning the arbitration afresh. The remedy is therefore likely to be confined to those cases where the arbitration simply cannot be allowed to continue with the particular arbitrator in office - either because he has shown actual or potential bias or because his conduct has given serious grounds for destroying the confidence of one or both of the parties in his ability to conduct the dispute judicially or competently".

79. The approach adopted by the English Courts is in line with the policy considerations which the Supreme Court in Keenan -v- Shield Insurance Company Limited indicated should inform interference by the Courts in this jurisdiction in an arbitral process and, in my view, is an approach which should be adopted in implementing Section 37.

80. The errors made by the Arbitrator, in my view, are not serious errors. Moreover, they must be viewed in the context that over a period of almost a year and a half the Plaintiff had flagrantly and persistently refused to honour its contractual obligations to the Arbitrator. On the evidence I am satisfied that the Arbitrator has not shown actual or potential bias. Viewed objectively, his conduct has not given serious grounds for destroying the confidence of either party in his ability to conduct the reference properly. Moreover, on the evidence, the only reasonable inference which can be drawn is that subjectively these actions did not destroy the confidence of the Plaintiff in the ability of the Arbitrator to adjudicate fairly on the issues. Even as late as 7th July, 1997, the Plaintiff wanted to move its application for the costs of the preliminary issue before the Arbitrator and it was only when it did not get its own way in dictating the future course of the arbitration that it withdrew.


BIAS

81. The gravamen of this aspect of the Plaintiff's case is that it was misconduct on the part of the Arbitrator not to disclose at the outset that he had acted as arbitrator in two arbitrations involving associated companies of Kerry and in not giving the Plaintiff an opportunity to reject his appointment on that account. The Arbitrator's error was compounded, it was submitted, by his failure to disclose in a proper way the information sought of him by the Plaintiff. The facts give rise to a perception of bias and the Court should intervene to remove the Arbitrator.

82. In an unreported reserved judgment delivered on 31st May, 1990 in Bord na Mona v. John Sisk and Son Limited and Others , Blayney J. considered the correct test as to the existence of bias in an arbitration context. Translating the test which Blayney J. applied in that case to the instant case, the question which arises for consideration here is whether the Plaintiff has established that a right-minded person with full knowledge of the facts would have been led to conclude that there was a real likelihood of bias in the Arbitrator acting in the arbitration between the Plaintiff and Kerry. The relevant facts are set out in the letter dated 17th June, 1994 from Kerry's then Solicitor to the Plaintiff's Solicitors, the letter dated 20th March, 1997 from Kerry's Solicitors to the Plaintiff's Solicitors and the Arbitrator's letter dated 4th April, 1997 to the Plaintiff's Solicitors. The facts are that prior to accepting his appointment, the Arbitrator had no commercial connection with Kerry or any of its associated companies. Even though in every arbitration one or other of the parties to the arbitration ultimately bears the arbitrator's fees, costs and expenses, that circumstance of itself does not create a commercial connection between the arbitrator and the parties to the reference before him. The factual position is that the only connection, using that word in its very broadest sense, between the Arbitrator and Kerry is that on two occasions in the past the Arbitrator had acted as an independent arbitrator in disputes between an associated company of Kerry and a third party. In my view, there was no duty on the Arbitrator to disclose such a connection. To hold otherwise would be to imply that the Arbitrator did not perform an independent role on the previous occasions. Moreover, in my view, no right-minded person would conclude that such a connection could give rise to a real likelihood of bias on the part of the Arbitrator in dealing with the reference at issue here.

83. As in the case of the fees issue, the evidence indicates that the fact that the Arbitrator acted as arbitrator in previous references involving associated companies of Kerry had not subjectively destroyed the confidence of the Plaintiff in the Arbitrator's ability to conduct the reference fairly and competently up to the point in time when the Plaintiff unilaterally withdrew from the arbitration on 7th July, 1997. The issue of the Arbitrator's previous involvement was canvassed in correspondence in March and April 1997 and it was raised at the hearing on 7th April, 1997. However, it was not raised again until these proceedings were initiated and, significantly, at all of the hearings subsequent to 7th April, 1997, including the final hearing on 7th July, 1997, the Plaintiff's representatives evinced an unambiguous resolve to continue and complete the arbitration before the Arbitrator. Therefore, the averments in Mr. Tobin's affidavit as to his loss of confidence in the Arbitrator, which I have quoted in part above, must be viewed with scepticism.

84. In the course of the submissions on behalf of the Plaintiff a plethora of allegations was made against the Arbitrator of other conduct which it was contended constituted actual bias or gave rise to a perception of bias. Much emphasis was laid on the decision of the Supreme Court in The State (Hegarty) -v- Winters , [1956] I.R. 320 and the statement in the judgment of Maguire C.J. at page 336 that the fundamental rule is that in an arbitration it is necessary not alone that justice be done, but that it must be seen to be done. Having considered the various allegations made, some of which I have already referred to, such as the contention that the Arbitrator misconducted himself in failing to reprimand Kerry's Solicitors for alleged improper suggestions made by them in correspondence, and others, which I consider it unnecessary to outline in detail, such as allegations that the Arbitrator made improper remarks during the course of the hearings, I have come to the conclusion that it has not been established that the Arbitrator conducted himself in a manner which would "reasonably give rise in the mind of an unprejudiced onlooker to the suspicion that justice was not being done" - the test posited in The State (Hegarty) -v- Winters .

DELAY

85. The Plaintiff's contention that the Arbitrator failed to proceed with the reference with reasonable dispatch is based on the inferences which the Plaintiff contends are to be drawn from the averments in the Arbitrator's Affidavit, in particular, the averments in paragraphs 26 and 28. It was contended that the Arbitrator made no helpful suggestions to move the arbitration along. In failing to list the variations, it was contended, he had failed to crystallise the issues in the arbitration, to communicate his conclusions, to manage the arbitration expeditiously and to bring matters to a resolution as quickly as possible.

86. Having found that the Arbitrator was under no obligation to make a further interim award or to classify the various items of work according to the contract they fell into, or to list the variations in advance of making a final award, it follows that a charge of delay and lack of expedition predicated on the Arbitrator's failure to do those things must fail. Apart from this, the evidence clearly establishes that the Arbitrator did his utmost to get the parties to resume the arbitration after the order of the Supreme Court. The evidence also shows that the Arbitrator got little co-operation from the Plaintiff, who did not request a procedural meeting until eight months had elapsed and who did not protest the alleged inadequacy of the Amended Interim Award until six months had elapsed from the making of the Amended Interim Award. Even allowing that the issue of the taxation of the costs of Kerry and the Plc. in the earlier proceedings and the presentation of the Petition to wind up the Plaintiff by the Plc. were distractions and provocations, the Plaintiff displayed an extraordinary lack of urgency about resuming the hearings and it ill-behoves the Plaintiff to allege delay on the part of the Arbitrator. The conduct of the Plaintiff between 7th April, 1997 and 7th July, 1997, when considered over that whole span of time, was wholly unreasonable and I would even go so far as to say that it was bizarre. It was certainly at variance with the oft-repeated statement of Counsel for the Plaintiff in this Court, that what the Plaintiff, a small company looking for the money which it considered due to it, wanted was expedition in a private arbitration.

87. The Plaintiff has made out no case of delay, let alone culpable delay of the type which would justify his removal without remuneration, against the Arbitrator. Accordingly, the claim under Section 24 of the Act of 1954 fails.


FRAUD

88. The basis of the Plaintiff's contention that it is entitled to relief under Section 39 of the Act of 1954 is that the averment in the Affidavit of Mr. O'Neill, which I have quoted above, is tantamount to an allegation of fraud against the Plaintiff. That being the case, it was argued, the Plaintiff has a right to vindicate its good name in open Court.

89. Counsel for Kerry stood over the averment contained in Mr. O'Neill's Affidavit and pointed out that in its Points of Defence delivered in February 1995 Kerry had pleaded that as follows -


"The Claimant has exaggerated the extent of its claim out of all proportion".

90. An allegation that a claim on foot of a building contract is exaggerated or inflated or is based on contrived calculations or methodology, it was submitted on behalf of Kerry, is not an allegation that a party has been guilty of fraud within the meaning of Section 39. If it were, an arbitration agreement could be easily defeated.

91. The decision of this Court in Winterthur Swiss Insurance Company v. ICI [1990] I.L.R.M. 159 was relied on by the Plaintiff in support of its contention that the Court's jurisdiction under Section 39(2) has arisen. In that case, in which a defendant against whom allegations of fraud were being made was seeking to stay proceedings pending arbitration and the plaintiffs were seeking leave under Section 39(2) of the Act of 1954 to revoke the authority of the arbitrators who had been appointed, O'Hanlon J. stated that the general approach adopted by Wolfe L.J. in the following passage from his judgment in Cunningham-Reid v. Buchanan-Jardine [1988] 2 All ER 438 represents the correct approach in giving effect to the provisions of Section 39(2) and (3) of the Act of 1954:


"First of all, before a court will refuse a stay where fraud is alleged, there must be sufficient prima facie evidence of fraud. Second, if the application is made in a case where there is sufficient prima facie evidence of fraud and the application is opposed by the party charged with the fraud, then almost as a matter of course the Court will in fact refuse a stay so that the matter can proceed to trial. However, third, in the case where the party charging the fraud wishes the action not to be stayed but to proceed in the court, the court has a discretion to either refuse or grant a stay. Whether or not it does grant or refuse a stay will depend on all the circumstances of the case."

92. As to the suggestion that the party opposing a stay on legal proceedings must establish a prima facie case of fraud against his opponent, O'Hanlon J. said he preferred the approach adopted by the Irish Queen's Bench Division in the case of Workman -v- Belfast Harbour Commissioners , [1899] I.R. 234 where Kenny J. expressed himself as follows:-


"Therefore, without offering any opinion whatever as to the merits of the plaintiff's claims, I am convinced that they are made with perfect bona fides , and with a deliberate intention of prosecuting them, and that on the documents before us there is no foundation for the contention that they are either sham or frivolous, or that they are put forward with the object of placing an obstacle in the way of a compulsory reference under Section 14 of the Common Law Procedure Act, 1856."

93. The question which the Plaintiff's invocation of Section 39(2) raises is whether an issue has arisen in the arbitration that the Plaintiff has been guilty of fraud. No authority was cited as to the meaning of the word "fraud" in the context of Section 39(2). In my view, it must connote behaviour of the type which constitutes fraudulent conduct under the law of contract and the law of tort - knowledge or recklessness as to falsity. An allegation that a claim under a contract is exaggerated or inflated, without a further plea that the claimant in making the claim is being knowingly or recklessly false or dishonest, is not an allegation that the claimant guilty of fraud. Similarly, an allegation that, in the formulation of the claim, spurious and contrived calculations and methodology are being employed is not an allegation that the person making the claim is guilty of fraud, without a further plea that in making the claim that person is being knowingly or recklessly dishonest, even ascribing the most sinister meaning to the words "contrived" (fabricated) and "spurious" (false). Moreover, Kerry's position is that, while it is standing on its contention that the Plaintiff's claim is exaggerated and based on a false premise, it has not used the word fraud and it is not alleging fraud on the part of the Plaintiff. Therefore, both objectively and subjectively, Kerry is not alleging that the Plaintiff has been guilty of fraud. There being no allegation of fraud, the Plaintiff cannot invoke Section 39(2).

94. This is the second occasion on which the Plaintiff has unsuccessfully sought to have the arbitration which it instigated aborted on the ground that it involves a question as to whether a party has been guilty of fraud. As regards these proceedings, the Plaintiff's bona fides must be questioned, given that on this occasion the source of the only allegation of fraud contended for by the Plaintiff was an affidavit sworn almost six months after these proceedings were initiated. I am constrained to conclude that it is the suggestion that an allegation of fraud exists that is a sham.

95. The Plaintiff's Counsel developed another argument out of the judgment of O'Hanlon J. in the Winterthur case. He referred to the following summary of one aspect of the judgment in the head-note in the report:-


"Where a situation arose which had not been within the contemplation of the parties, who had bound themselves contractually to go to arbitration in the event of a dispute arising in their business dealings with each other (for example, as in this case, allegations of fraud), proceedings by way of litigation in court might be more appropriate."

96. It was submitted on behalf of the Plaintiff that, because of the manner in which the arbitration was conducted, a situation has arisen which was not in the contemplation of either party, that is to say, delay in resolving the dispute, and, therefore, litigation is the appropriate form of proceeding in the events which have happened. This submission is misconceived. In the case of delay, the Court can intervene and remove an arbitrator under Section 24 of the Act of 1954 but only where it has been established that the arbitrator has failed to use all reasonable dispatch in entering on and proceeding with the reference and making an award. I have already decided that that jurisdiction does not arise in this case. The Court has only jurisdiction to order that an arbitration agreement shall cease to have effect and to give leave to revoke the authority of the arbitrator under Section 39(2) where an issue of fraud arises. The relevant passage in the judgment of O'Hanlon J. at p. 171 does not suggest that it is otherwise.

97. The Plaintiff has not established that it is entitled to relief under Section 39(2).


RELIEF CLAIMED

98. Having held that there is no basis for the removal of the Arbitrator under Section 24 or Section 37 and that the Plaintiff is not entitled to invoke Section 39(2), the question of granting relief under Section 40 does not arise.

99. As I have indicated, remission was not pursued as an issue at the hearing and, in any event, nothing emerged at the hearing which gave rise to the necessity to remit any matter to the Arbitrator for reconsideration under Section 36.


DECISION

100. Therefore, the decision on the proceedings is that they will be dismissed, thus clearing the way for the resumption of the arbitration.





THE SEALED OFFER ISSUE

101. As I have already mentioned, amongst the documents exhibited in the Affidavit of Mr. O'Neill filed by Kerry was the whole range of inter partes correspondence between the Plaintiff and Kerry in chronological order, with communications from the parties to the Arbitrator and communications from the Arbitrator to the parties interspersed chronologically. The correspondence filled two ring-binders and ran to 528 pages. Prior to the commencement of the hearing in this Court, Kerry's Solicitors furnished copies of the correspondence to the Arbitrator's Solicitors, McCann Fitzgerald.

102. On the second day of the eleven day hearing in this Court, when Counsel for the Plaintiff was opening the Plaintiff's case, the correspondence opened in Court in the presence of the Arbitrator included the following:-


(a) A letter dated 23rd February, 1995 from Kerry's Solicitor to the Arbitrator enclosing a "sealed Letter of Offer made by the Respondent to the Claimant to be held by you pending publication of your award in the above entitled action".

(b) A letter dated 23rd February, 1995 from Kerry's Solicitor to the Plaintiff's Solicitors enclosing a "Letter of Offer made on a no prejudice basis". A copy of the enclosure was not exhibited in this Court, although a copy had been exhibited in the previous proceedings with the amount of the offer masked. The offer was referred to in the judgment of Blayney J. and that judgment discloses that it was made "on a no prejudice basis and without admission of liability" and "in full and final settlement of all claims howsoever arising (save for costs to the date hereof) in the above entitled proceedings".

(c) A letter dated 24th February, 1995 from the Plaintiff's Solicitors to Kerry's Solicitor stating that, having taken the Plaintiff's instructions, the Plaintiff rejected the offer which was made on 23rd February, 1995, the amount of the offer being stated in the letter. When this letter was being read in open Court, Counsel for the Plaintiff, realising that a problem was emerging, very properly did not read out the figure mentioned in the letter. The letter dated 24th February, 1995 further stated that the length of time given for consideration of the offer was unacceptable.

(d) A letter dated 28th February, 1995 from the Arbitrator to the Plaintiff's Solicitors confirming that he had received a sealed envelope containing the letter of offer, but no copy of the letter of offer.

(e) A letter dated 1st March, 1995 from Kerry's Solicitor to the Plaintiff's Solicitors in which it was stated that the Plaintiff was at liberty to apply for such extension of time to consider the offer "as would be the practice with regard to a lodgment made in the High Court pursuant to the Superior Court Rules".

103. Contending that the amount of the sealed offer had been communicated to the Arbitrator and that he had either actual or constructive knowledge of the amount of the offer, the Plaintiff sought on that account an order that the arbitration agreement should cease to have effect and that the authority of the Arbitrator should be revoked. It was submitted that the Arbitrator had been put in an invidious position and this was particularly unfair to a lay arbitrator. Irrespective of the amount of the Arbitrator's award ultimately, the fact of disclosure of the amount of the sealed offer might reasonably give rise in the mind of an unprejudiced onlooker to suspicion that justice was not being done. Moreover, the ultimate award would be open to the bona fide suggestion from either party that it could have been influenced by either actual knowledge or constructive knowledge of the amount of the sealed offer, thus rendering the award potentially uncertain and not final.

104. The stance adopted by the Arbitrator in relation to this issue was that it was an issue with which he was not involved. No submissions were made on his behalf, so that he could maintain his neutral stance.

105. Counsel for Kerry sought leave to adduce oral evidence as to the circumstances surrounding the inclusion of the letter of 24th February, 1995 in the correspondence exhibited in the Affidavit of Mr. O'Neill and the manner in which McCann Fitzgerald dealt with this exhibit. The application was made under Order 38, Rule 8 of the Rules of the Superior Courts 1986. I allowed the evidence be adduced. Arising out of the evidence, I make the following findings of fact:


(a) The inclusion of the letter dated 24th February, 1995 with the correspondence exhibited in Mr. O'Neill's Affidavit without masking the amount of the offer was due entirely to inadvertence on the part of Kerry's Solicitors who, in preparing the two ring-binders of correspondence, were careful to ensure that no copy of the letter of offer was exhibited but failed to advert to the fact that the amount of the offer was stated in the letter dated 24th February, 1995.

(b) Having received the two ring-binders of correspondence from Kerry's Solicitors, McCann Fitzgerald copied the correspondence to the Arbitrator's Counsel but did not copy it to the Arbitrator.

(c) The figure mentioned in the letter of 24th February, 1995 has not been disclosed by McCann Fitzgerald or by the Counsel briefed by them on behalf of the Arbitrator to the Arbitrator.

106. The position of an arbitrator to whom a without prejudice offer has been disclosed and, in particular, whether he should resign is addressed in the "Handbook of Arbitration Practice" by Bernstein and Mees, 2nd Edition, at page 121 in the following passage:-


"It not infrequently happens that an offeror requests the arbitrator to resign because the offeree has disclosed to the arbitrator the content of a without prejudice offer. See for example Brown -v- CBS Contractors , (1986 unreported) where His Honour Judge Hawser (sitting as a Deputy Judge of the High Court) remitted the matter to the arbitrator for argument, and reconsideration, of the question whether he should continue as arbitrator notwithstanding that evidence of without prejudice discussions had been put before him.

The following guidelines are suggested:

1. When he becomes aware that information about 'without prejudice' discussions has been put before him without the consent of all the parties, the arbitrator should notify all parties and ask whether any of them objects to his continuing the arbitration.
2. If both request him to resign he should do so, subject where appropriate to his being paid for his services to date.
3. If one requests him to resign, but the others oppose his so doing, he should give each of them an opportunity of making submissions on the matter.
4. In the light of those submissions he should consider whether the information has created a serious risk that he will be unable to approach the substantial issue in the arbitration with an open mind. For example, if the substance of the arbitration is the assessment of damages, and the arbitrator is told by the claimant of a substantial offer made 'without prejudice' by the respondent, the arbitrator may think that it will be impossible for him not to be influenced by the offer when arriving at his figure; and moreover that the respondent will not be able to believe that he has not been influenced by it."

107. The case referred to in the above passage is now reported as Brown -v- CBS (Contractors) , [1987] 1 Lloyd's Law Reports 279. That case concerned an application to remove an arbitrator on the ground, inter alia, that matters were put before him which should not have been placed before him, namely, matters alleged to have been agreed between the parties' surveyors at a meeting which it was contended was a "without prejudice" meeting. Judge Hawser Q.C. concluded that privileged matters had been put before the arbitrator. He went on to say (at page 282):-


"In my judgment the arbitrator was entitled to reach the conclusion that he could properly continue with the arbitration and ignore the references to the 'without prejudice' discussions. The decision on that matter was one for him and except in very special circumstances which do not apply here, is not a matter for the Court's decision......."

108. Having also found that the arbitrator had not given one of the parties any proper opportunity of making submissions on the matter prior to reaching a decision adverse to that party, as he should have done, Judge Hawser went on to say:-


"Looking at the matter as a whole I am not satisfied that this is a case where it would be in the interests of justice or, indeed of the parties, for me to remove the arbitrator but I do think that the circumstances are such that the arbitrator should consider the situation and give the parties the opportunity of making their representations on the issue as to whether the arbitration should continue with this arbitrator."

109. The approach adopted in Brown -v- CBS (Contractors) and the guidelines suggested by Bernstein and Mees accord with principle and are in line with the policy considerations set out in Keenan -v- Shield Insurance Company Limited .

110. The basis on which Kerry made the offer of 23rd February, 1995 to the Plaintiff was that, while the fact of the making of the offer was being made known contemporaneously to the Arbitrator, the amount of the offer was to remain secret. Therefore, as regards its amount, the offer was made on a "without prejudice" basis and it was not open to either party to disclose the amount to the Arbitrator. Even if he had become aware of the amount of the offer through the medium of the documentation exhibited in these proceedings, such awareness not being attributable to any misconduct on his part, it would be for the Arbitrator to decide whether he should continue to act as arbitrator, having elicited the views of each party and having entertained submissions from each party. Having regard to the manner in which the parties have signalled their views during the hearing in this Court, such submissions would in all likelihood address the question of the potential significance of the sealed offer to the award of costs following the decision on liability and quantum, given the unusual circumstance which the views signalled indicate, that it would be the offeree who wished to remove the dispute from the Arbitrator's jurisdiction, not the offeror.

111. It was argued by Counsel for the Plaintiff that the letter of 1st March, 1995 from Kerry's Solicitor anchored the offer to the Rules of the Superior Courts 1986 and in support of this argument he also relied on the decision of the Queen's Bench Division (Commercial Court) in Tramountana -v- Atlantic , [1978] 1 Lloyd's Reports 291 in which Donaldson J. stated at page 397 that the position of a "sealed offer" in an arbitration has to be considered against the background of the law relating to payments into Court. That is an argument to be made to the Arbitrator to whom the parties have entrusted the conduct of the resolution of their dispute and who has a discretion as to where the burden of the costs of the arbitration should ultimately lie, in the event that he becomes aware of the amount of the sealed offer. It is not a matter in which the Court has any function at this juncture.

112. The letter dated 24th February, 1995 should not have been exhibited in an Affidavit in these proceedings without the amount of the offer having been masked. The fact that it was, however, is not a basis on which the Court could order that the arbitration agreement should cease to have effect and that the authority of the Arbitrator should be revoked, even if it had resulted in the Arbitrator acquiring knowledge of the amount of the offer.


© 1998 Irish High Court


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