The National Housing Trust v YP Seaton & Associates Company Ltd (Jamaica)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Sumption,Lord Hodge,Lord Toulson,Lord Mance,Lord Neuberger |
| Judgment Date | 19 October 2015 |
| Neutral Citation | [2015] UKPC 43 |
| Date | 19 October 2015 |
| Docket Number | Appeal No 0072 of 2014 |
| Court | Privy Council |
[2015] UKPC 43
Privy Council
From the Court of Appeal of Jamaica
Lord Neuberger
Lord Mance
Lord Sumption
Lord Toulson
Lord Hodge
Appeal No 0072 of 2014
Appellant
Stuart Ritchie QC Alexander Robson
(Instructed by Signature Litigation LLP)
Respondent
Karen Gough Anna Gracie
(Instructed by Thomson Snell & Passmore LLP)
Heard on 3 June 2015
( with whom Lord Neuberger, Lord Sumption and Lord Hodge agree)
This appeal is one, though not the only, unhappy sequel to the parties' initiative as long ago as 1999 to achieve an amicable settlement of disputes about an abortive joint venture relating to the Phase II development and sale of 259 housing units on land at East Prospect in St Thomas, Jamaica.
It concerns the jurisdiction to make and legitimacy of a supplementary award by an arbitrator, Mr Maurice J Stoppi, on 10 May 2007 of compound interest amounting to J$214,512,232.76 on a principal sum of J$24,325,000. Mr Stoppi had, by an original award dated 12 July 2005, held the principal sum to be payable by the appellant, The National Housing Trust ("the Trust"), to the respondent, YP Seaton & Associates Co Ltd ("YPSA"), and the Trust had paid it in early December 2005.
The Trust is a statutory body tasked with increasing and enhancing Jamaican housing stock. YPSA was controlled by Mr Seaton and carried on business as engineers, building contractors and developers. Mr Seaton owned the land to be developed, comprising some 150,000 sqm.
The venture, formalised in a "Loan Agreement for Construction Financing" dated 28 August 1995 ("the loan agreement"), involved the Trust lending YPSA up to J$187,316,603 to finance construction of the 259 units and associated facilities. The land was to be made available by Mr Seaton for J$14,504,000, and the Trust was to take over the units with associated facilities from YPSA for J$201,820,603, on a basis which contemplated that YPSA would receive developers' profit and risk in the sum of J$29,923,440 (14.8% of the total of the price assigned to the land and the units), making a total base selling price of J$231,744,043. The Trust was to advance 10% of the base selling price (J$23,174,404) in two instalments during the first ten months if the development was on schedule. As and when units were completed and transferred to the Trust, the remaining 90% of their sale price was to be set off in discharge of the loan balance from time to time.
Development commenced on or about 16 November 1995, with an original deadline for completion of the whole development of 20 months. This was extended by agreement to 30 October 1997 by when it appears that the Trust had disbursed to YPSA J$160,866,338.88 (loan moneys) together with J$23,174,404 (10% advance of base selling price).
Difficulties had by then also arisen, and the development was incomplete. An extension of time could not be agreed. The parties were at odds as to how far any was due, and in particular how far the delay was YPSA's fault. By notice dated 10 September 1996, the Trust asserted defaults on YPSA's side including failure to relocate squatters. The Trust also alleged failure by YPSA to deploy sufficient resources. YPSA in return alleged bad weather and strikes or labour problems. In October 1997 YPSA ceased work and the construction site was closed. It remained so for nearly two years until July 1999.
By notice dated 29 April 1998 the Trust sought repayment of sums it claimed were outstanding; and on 4 August 1998 YPSA served on the Trust a notice dated 21 July 1998 to the effect that sums were owed to YPSA and due for payment within 14 days. Negotiations followed, leading to a provisional agreement recorded by the Trust in a letter to YPSA dated 17 January 1999. The letter stated:
"… we now write to outline our understanding of the agreement for the National Housing Trust (NHT) to takeover the East Prospect Phase II housing project. The operational framework for the takeover of the project is set out for your review and agreement.
(1) YP Seaton & Associates agreed to handover the project as is to the NHT as of 1999 January 18.
(2) The NHT agreed to takeover the project as of 1999 January 18.
(3) The project accounts prepared by the NHT and dated 1999 January 7 will be considered final subject to further agreement on the interest and profit items.
a. The NHT & YPS will refer the items of interest cost beyond the contract time and profit to an arbitrator if no agreement is reached by 1999 January 31.
b. The commitment fees on the project will not be for YP Seaton & Associates' account.
(4) YP Seaton & Associates has until 1999 January 18 to make full submissions to Geta Engineers of any items of final measurement. Geta Engineers' certificate issued after 1999 January 18, will be considered final.
(5) The NHT is to take possession of the site on 1999 January 18 and complete the housing project singly, without YP Seaton & Associates' involvement. The NHT is to re-configure and sell housing solutions as it sees fit.
(6) YP Seaton & Associates is to cease its involvement with the project at handover to the NHT and the final accounts are to reflect the status at handover. There will be no accounting to YP Seaton & Associates at completion of the project.
(7) The NHT would be responsible for resolving the squatter difficulties on site. YP Seaton & Associates agreed to make additional lands, originally proposed, available to NHT to resettle the squatters.
(8) A re-measurement of the works on the date of takeover is necessary to adjust the project accounts as part of the works has deteriorated while other aspects have been vandalized. This re-measurement adjustment is to be incorporated in the adjusted final project accounts.
(9) YP Seaton & Associates will ensure that the NHT has a Power of Attorney to be able to deal with the utilities, the Tax Office and any other entities to complete all transactions on the project.
(10) After the final accounts have been agreed and issued, any debt will be settled in a three-month timeframe.
Until the agreement is prepared and signed by both parties, this letter will be evidence of our (NHT & YP Seaton & Associates) understanding. As the completion of the project is paramount, the NHT has full authority to take possession of the project lands on 1999 January 18 and proceed with the construction and complete the project."
Attached to the letter dated 17 January 1999 was a statement by the Trust of the project accounts, showing the sums advanced. In it the Trust claimed interest from 30 October 1997 on the J$160,866,338.88 loan moneys, and put the value of the works done by YPSA at J$135,953,468,64. The effect was to show a net claim by the Trust of J$63,002,387.14. The Trust's interest claim was not agreed by YPSA and was if necessary to be referred to arbitration, together with a cross-claim by YPSA to profit on the works (para 3 of the letter). The value of the works was also due to be re-measured (para 8). Once accounts had been agreed and issued on this basis, any debt owed was to be settled within three months (para 10). An agreement was to be prepared and signed by the parties to formalise the provisional agreement (final para).
With the involvement of lawyers, the parties reached and signed a formal agreement contained in Rattray, Patterson Rattray's letter dated 27 July 1999.
" RE: EAST PROSPECT. PHASE II
[1] The purpose of this letter is to set out the agreements arrived at between YP Seaton & Associates Company Limited (YPS) and the National Housing Trust (NHT) to:
— facilitate the handover of the East Prospect, Phase II housing project (the Project) by YPS to NHT for completion as NHT sees fit, and
— as far as possible enable NHT to be paid all sums that are due and payable to NHT by YPS and to fulfil NHT's commitment to sell housing solutions in the Project to its contributors.
[2] THE PROJECT
The Project comprises the construction of housing solutions with associated infrastructure on two hundred and fifty-nine (259) residential lots on Land situate at East Prospect in the parish of Saint Thomas, as identified on the pre-checked survey plan prepared by Leslie Mae & Associates bearing Survey Department Examination Number 255083, for sale to NHT and/or its
nominees: and for this purpose the transfer to NHT and/or its nominees of the said 259 residential lots and the roads in the Project.
The Project includes works and modifications necessary to connect the Project to the existing sewage treatment plant. The Project does not include arrangement for the ownership of the sewage treatment plant or the upgrading, repairing and operation thereof.
[3] HAND OVER OF THE PROJECT
YPS and NHT have agreed that the effective date of the handover of the Project will be the date of execution of this letter or such other date as the parties may agree in writing.
NHT will take possession of the Project site and will take delivery of the keys for the housing units from our offices on the effective date. From the date of the execution of this letter and of the Power of Attorney to NHT, YPS will have no further involvement in or liability for the Project with the exception of:
(a) any sums (not including profit and interest) found to be due and owing to the Trust based on the Project Account dated January 7, 1999 as adjusted when the final account is prepared;
(b) any sums relating to profit and interest which are found by the Arbitrator to be outstanding under the Loan Agreement between YPS and NHT for East Prospect, Phase II.
NHT will re-configure and sell housing solutions as it sees fit and will not be required to account to YPS on completion of the Project.
NHT will be responsible for resolving the squatter difficulties...
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