NHT wins $multimillion Privy Council case against YP Seaton and Associates
The National Housing Trust (NHT) has won a multimillion-dollar legal battle with contractor YP Seaton & Associates Ltd.
As a result of the Privy Council judgment, YP Seaton and Associates is to repay $214 million in compound interest to the NHT.
The dispute arose out of a housing development project in East Prospect, St Thomas which was to be developed by YPSA from loan financing secured from the NHT.
The loan to the company was essentially to be repaid by the sale of completed units or lots to the NHT, which would then sell them to its contributors.
The sale price to the NHT included a component reflecting contractors profit and risk.
The project started in November 1995 with an extended completion deadline for the whole development of October 30, 1997.
However, difficulties arose and in October 1997 YP Seaton and Associates stopped work and the construction site was closed, with the parties disputing the cause for non-completion of the development.
There were ensuing efforts to resolve the dispute and in 1999 the parties arrived at an agreement to facilitate the handover to the NHT of the East Prospect Project for the trust to complete it, with four issues remaining to be resolved whether by arbitration, re-measurement or third party clarification.
Two of those four issues went to arbitration.
In July 2005, the arbitrator awarded approximately $24 million to YP Seaton and Associates as profit and risk which the NHT paid in December 2005, within the six-month time frame provided by the agreement for payment.
YP Seaton and Associates claimed, however, to be entitled to interest on the award for profit and risk.
In January 2007 the Supreme Court sent back the issue of interest to the arbitrator.
In May 2007 the arbitrator made a supplementary award in favour of YP Seaton and Associates of over $214 million as compound interest on the profit and risk award, as sought by the company.
The NHT applied to the Supreme Court to set aside the supplementary award, challenging the arbitrator’s jurisdiction to award compound interest in this case.
Justice Lloyd Hibbert agreed with the NHT and in September 2009 set aside the supplementary award and sent back the issue of simple interest to the arbitrator.
YP Seaton then appealed the Supreme Court’s decision and in November 2013, the Court of Appeal ruled in favour of the company and restored the over $214 million supplementary arbitration award of compound interest.
The construction company alleged that the NHT owed it an additional approximately $411 million for the period since the supplementary award was interest upon the approximately $214 million compound interest award.
The NHT appealed the Court of Appeal’s ruling to the Privy Council, which on October 19, 2015, handed down its decision in favour of the NHT.
The Privy Council, in allowing the appeal and setting aside the Court of Appeal’s decision, has set aside the supplementary award of compound interest stating that the arbitrator in awarding compound interest acted in excess of his jurisdiction.
The Privy Council therefore has sent back to the arbitrator the issue of an appropriate simple interest rate for reconsideration in accordance with the principles set out in its decision.
The NHT was represented at the Privy Council by Stuart Richie, Q.C and Alexander Robson who were instructed by DunnCox and Signature Litigation LLP.
Julianne Mais Cox of the law firm DunnCox, who with John Vassell Q.C of DunnCox had represented the NHT in the Court of Appeal, said the Privy Council’s decision settled a number of important principles regarding arbitration awards and the award of compound interest, and is a significant development in our law.
The NHT’s General Counsel and Company Secretary, Judith Larmond Henry, she was pleased with the ruling of the Privy Council saying it was indeed positive news for the many NHT contributors.