Thomas Doyle and Elaine Doyle v Kildare County Council and John Shackleton.
Arbitration Jurisdiction to set aside arbitrator's award Need for arbitrator to misconduct himself or the proceedings or that the award has been improperly procured Evidence of an inconsistent basis of calculation of the market value of land No statutory basis for setting aside award on these grounds Common law basis Need for error of law on the face of the award Jurisdiction to be sparingly exercised Arbitration Act 1954 (No 24).
The Supreme Court (The Chief Justice, Mr Justice Hamilton Mr Justice O'Flaherty and Mrs Justice Denham) judgments delivered 31 October 1995.
EVIDENCE that an arbitrator used an inconsistent basis of calculation of the market value of certain parts of the land subject to compulsory acquisition does not amount to grounds for setting aside an arbitrator's award in the absence of any finding that the arbitrator had misconducted himself or the proceedings.
The Supreme Court so held in allowing an appeal from the decision of Mr Justice Flood in the High Court on 29 January 1994 in, which he set aside the second Defendant's arbitration award pursuant to section 38 of the Arbitration Act 1954.
Section 38 of the Arbitration Act 1954 provides as follows where an arbitrator or umpire has misconducted himself or the proceedings, or (b) an arbitration or award has been improperly procured, the Court may set the award aside."
Section 6 of the Acquisition of Land (Assessment of Compensation) Act 1919 provides that
"The decision of an official arbitrator upon any question of fact shall be final and binding on the parties and the persons claiming under them respectively."
Henry Murphy SC and Aedamar Kirrane BL for the plaintiffs, David Byrne SC and John Aylmer BL for the first defendant, Liam McKechnie SC and Robert Haughton BL for the second defendant.
THE CHIEF JUSTICE stated that this was an appeal brought by the two defendants against the whole of the judgment and order of Mr Justice Flood made on 20 January 1994 whereby he set aside the arbitrator's award pursuant to section 38 of the Arbitration Act 1954 and ordered that the matter be sent to arbitration with liberty to the plaintiffs to apply to the Land Values Reference Committee for the appointment of a new arbitrator. In addition the plaintiff respondents appealed against so much of the order and judgment of the High Court as found against them.
The plaintiffs are the owners of a house and approximately 20 acres of land situate at Athgarvan, Kildare. Under a scheme for the Kilcullen bypass, known as the Kildare County Council (Kilcullen Link) Motorway Scheme 1987, the council proposed to compulsorily acquire part of the lands owned by the plaintiffs at Athgarvan, amounting to 5.24 acres. The plaintiffs and the county council failed to reach agreement as to the compensation to be paid to the plaintiffs for the freehold interest in their lands. Subsequently the second defendant, Mr Shackleton, was appointed as arbitrator by the Land Values Reference Committee.
He carried out an arbitration between the parties where the basic issue was as to the proper amount of a claim for compensation to which the plaintiffs were entitled for their lands. The plaintiffs valuation of the compensation to which they were entitled was the sum of £1,377,010, whereas the valuation placed on the lands by the county council was £125,000.
By an award made on 26 July 1991, Mr Shackleton determined the compensation to be paid by the county council to the plaintiffs for their freehold interest in the lands in the sum of £106,000. On 17 October 1991 the plaintiffs issued a special summons seeking an order setting aside the award made by Mr Shackleton.
The Chief Justice stated that the issues raised in the appeal relate to
(1) the nature and extent of the jurisdiction of the appellant, Mr Shackleton
(2) the manner in which Mr Shackleton exercised his jurisdiction
(3) the jurisdiction of the court to interfere with or set aside an award made by Mr Shackleton.
The Chief Justice stated that it was clear from the statutory provisions that the decision of the official arbitrator upon any question of fact should be final and binding on the parties. However, the parties to an arbitration were protected against any misconduct or impropriety on the part of the arbitrator by the provisions of sections 37 and 38 of the Arbitration Act. Section 37 of the Arbitration Act permits the court to remove an arbitrator who has misconducted himself or the proceedings and section 38 enable the court to set aside an award when (a) an arbitrator has misconducted himself or the proceedings, or (b) an arbitration or award has been improperly procured.
In the course of his judgment in the case, Mr Justice Flood stated that there was evidence of an inconsistent basis of calculation of the market value of certain parts of the lands subject to acquisition or effective sterilisation. He held that this inconsistency was sufficient to invalidate the mathematical calculation of the appropriate amount of the award and the award was accordingly invalid. He further held that the award should be set aside and directed the parties to apply to the Acquisition of Land Reference Committee for the appointment of another arbitrator.
The Chief Justice stated that the fundamental question for determination by the court was whether, in the circumstances, the learned trial judge had jurisdiction to set aside the award, because if he had no such jurisdiction, he obviously had no jurisdiction to direct an application for the appointment of another arbitrator.
The Chief Justice held that as there were no findings that Mr Shackleton, as arbitrator, had either misconducted himself or the proceedings, or that the award had been improperly procured, there was no statutory basis for an order removing the arbitrator or setting aside the award. Consequently the provisions of sections 37 and 38 of the Arbitration Act, 1954 had no application to the case.
He stated that although the order made by the learned trial judge was expressed to have been made pursuant to section 38 of the Arbitration Act 1954, it would appear from the terms of the judgment that the learned trial judge actually made the order in exercise of the inherent jurisdiction of the court.
The Chief Justice said that one of the cardinal principles of the law of arbitration is that the parties to the arbitration are taken to have abandoned their right to litigate the question in issue. The mere fact that the decision of the arbitrator is established to be erroneous is not grounds for setting it aside. He referred to McStay v Assicurazoni Generali Spa [1991] ILRM 237 where he adopted the statement of the then Chief Justice that a decision by an arbitrator on a question of law cannot be interfered with by way of setting aside or remitting the matter to the arbitrator by reason of the fact that it is established to be erroneous. The Chief Justice stated that this statement of principle clearly illustrated the reluctance of the courts to interfere with the finality of an arbitrator's award when the matter has been referred to him or her when there has been no misconduct or impropriety on the part of the arbitrator, even when he or she is wrong.
The Chief Justice adopted the words of Mr Justice Murphy in Hogan v St Kevin's Company [1985] IR 80 and stated the courts should be slow to usurp the functions of the chosen tribunal by intervening whether it be by way of setting aside an award, remitting an award or directing a case to be stated.
The plaintiffs also appealed against the award of the arbitrator on the basis that the award made by Mr Shackleton as arbitrator was so low as to be perverse and irrational. This ground had not been accepted by the learned trial judge. The Chief Justice stated that it is clear there was a very clear divergence of evidence adduced on behalf of the plaintiffs and the county council. The fact that the arbitrator preferred the evidence adduced on behalf of the county council did not render the award invalid.
The Chief Justice stated that at common law, a court has jurisdiction to set aside an award where an error of law appears on the face of the award. This jurisdiction should only be exercise sparingly and where an award shows on its face an error of law so fundamental that the courts cannot stand aside and allow it to remain unchallenged. The Chief Justice referred to the provisions of section 6 of the Acquisition of Land (Assessment of Compensation) Act 1919 which provides that the decision of an official arbitrator on any question of fact shall be final and binding on the parties. He held that the award made by Mr Shackleton does not disclose on its face any error of law which would justify a court in interfering with the award.
The Chief Justice said that what basically was sought by the plaintiffs in these proceedings was a complete rehearing of the arbitration and an opportunity to re argue the merits of the evidence with regard to compensation to which they claimed to be entitled. Unfortunately perhaps for them, they were not entitled to such relief and the appeal of Mr Shackleton and the county council must be allowed and the plaintiffs' appeal dismissed.
MR JUSTICE O'FLAHERTY and MRS JUSTICE DENHAM concurred with the Chief Justice and allowed the appeal by Mr Shackleton and the county council and dismissed the plaintiffs' appeal.
Solicitors McKeever & Sons (Dublin) for the plaintiffs Browne & McCann (Kildare) for the first defendant Hayes & Sons (Dublin) for the second defendant.