Division: IN THE HIGH COURT, ACCRA
Date: 9TH JULY, 1964
Before: ARCHER J
JUDGMENT OF ARCHER J
The applicants in this application seek an order o this court to set aside the award of the umpire in an arbitration on three grounds that is to say; (a) The arbitrators did not deliver to any party to the arbitration or to the umpire a notice in writing that they could not agree in accordance with the provisions of section 12 (2) of the Arbitration Act, 19611 (b) The umpire who purported to enter on the reference in lieu of the arbitrators exceeded the terms of reference in making his award and misconstrued the provisions of the insurance policy regulating the relationship between the respondent and the applicants; (c) The umpire in
his award drew inferences which were not warranted by the evidence adduced at the arbitration. Alternatively the applicants ask that the award should be remitted to the umpire for his reconsideration.
On the first day of the hearing, preliminary objection was taken by learned counsel for the respondent on the ground that the application was out of time as the award was published on 21 February 1964, and referred to Order 72, r. 13 of the Supreme [High] Court (Civil Procedure) Rules, 1954.2 Learned counsel for the applicants correctly pointed out that the arbitration was not a reference by the court and that Order 72, r. 13 was inapplicable. The court however pointed out that the appropriate order was Order 64, r. 13 which lays down a period of six weeks after an award within which an application may be made to set aside or remit the matter for reconsideration. The umpire who had stated 7 May 1964 in his affidavit as the date of publication was invited by the court to file a further affidavit to correct the date of publication
of the award. Accordingly the umpire altered the date from 7 May 1964 to 21 February 1964. The new date therefore rendered the application by the defendant out of time. The court however exercised its discretion in the matter and allowed extension of time. After hearing the submissions of both counsel, I reserved my judgment and I now propose to deliver it.
I shall first of all deal with the ground that no written notice was given to any party or to the umpire as required by section 12 (2) of the Arbitration Act, 1961. That section reads as follows: [His lordship here read the section as set out in the headnote and continued:] The court has not seen the insurance policy incorporating the arbitration agreement and neither learned counsel was able to reveal that a “contrary intention” as provided by section 12 (2) of the Arbitration Act, 1961, appears in the insurance policy. In that case the words of the section must be construed. Unfortunately the section does not lay down any particular form of written notice; it does not even state that the notice should be signed by both parties and it is therefore reasonable and correct to assume that the section contemplates individual or separate notices in writing to be given by each of the arbitrators. As there is no statutory form for the written
notice, I am of the opinion that any communication in writing addressed by the arbitrators whether jointly or individually to the umpire which suggests that the arbitrators cannot agree is sufficient written notice under section 12 (2) of the Arbitration Act, 1961. Indeed there is authority in Winteringham v. Robertson3 that the non-agreement of the arbitrators who had submitted their views to the umpire was equivalent to disagreement and that put an end to the authority of the arbitrators and gave the umpire jurisdiction.
Mr. Acquaah the umpire in this arbitration, in paragraph 2 of this first affidavit stated that when the two arbitrators forwarded their awards to him, he found that one arbitrator had decided in favour of one party, and the other arbitrator had decided in favour of the other party. He informed the solicitors for the parties by telephone that the two arbitrators had disagreed and that he had assumed jurisdiction. In my view the two awards sent to the umpire by the two arbitrators were sufficient written notice to the umpire that they could not agree. The first ground of the application cannot therefore be sustained.
The second ground which I have already read in full is simply that the umpire exceeded his powers by making an award and misconstrued the provisions of the insurance policy regulation the relationship between the plaintiff and the defendants. There are two wings in this ground and I shall deal with the first. The agreed terms of reference were as follows:
“Is the company right in law in repudiating liability under the policy on the grounds alleged by the company, namely, that (a) the claimant is guilty of concealing material facts on the proposal form completed by him; (b) the claimant is in breach of condition 1 of the policy aforesaid.”
It is obvious that the umpire was not expressly invited by the parties to compute what amount of compensation or indemnity was due from and payable by the applicants to the respondent and also what costs were payable and by whom. The umpire in the last paragraph of his award stated:
“The claimant at the time of the accident, was holder of Policy No. A3737667 still in force under which he insured his car a Wolseley saloon No. AG. 8889 for £G1,175. I find that claimant is entitled to recover his loss under the policy and I accordingly award in his favour the sum of £G1,175 being the value at which the car was insured. I also award in favour of the claimant costs which I assess at 75 guineas.”
It cannot be disputed that the umpire exceeded his authority by pronouncing on matters which were not included in the agreed terms of reference or submission. Learned counsel for the respondent argued that it was reasonable that the umpire should compute what monetary compensation was due to the respondent after he had found that the respondent was entitled to claim on the policy. Whether it was reasonable or not, it is not a matter for the court to discuss. Briefly the umpire has acted ultra vires and no theories or standards of the reasonable man can validate his action in this respect.
The other wing of the second ground for the application is that the umpire misconstrued the provisions of the insurance policy regulating the relationship between the respondent and the applicants. This ground is based on the umpire’s finding that as the claimant (the respondent herein) had not been convicted of improper driving there was no need to disclose “whether the proposer or any of his present drivers have ever had an accident when driving or been fined, or convicted for, improper driving and whether compensation had been paid for injury or damages.” I entirely agree with the umpire when he states at page 3 of his award that improper driving connotes careless or negligent manoeuvring of a vehicle and that the respondent’s convictions for (1) using an unlicensed vehicle and (2) driving with an unrenewed driving licence, and (3) his disqualification from driving for one year for using a motor vehicle when a
third party insurance policy was not in force “are not within the definition of improper driving.” In this connection I wish to refer to McGillvray on Insurance, Vol. 2, p. 2077 on the question of materiality where it is stated that the question, “Have you been convicted of any offence in connection with the driving of any motor vehicle?” has been interpreted to refer to offences committed in the act of driving a car, and not to include such offences as driving without a licence or insurance certificate. The case of Taylor v. Eagle Star Insurance Co., Ltd.4 is cited as authority for this interpretation. Lloyds Law Reports are not available in Ghana but I have no reason to doubt the accuracy of the statement in McGillvray. The applicants could have framed their questionnaire in more detail to cover all those convictions not necessarily involving improper driving but chose not to do so. Indeed Scrutton L.J. in Newsholme Bros.
v. Road Transport & General Insurance Co, Ltd.5 observed that by not asking questions about a matter the insurers do, however, run a greater risk of the contention being pressed home that such matter is not material. We also find Vaugham Williams L.J. in Joel v. Law Union and Crown Insurance Co.6 stressing that where insurers ask for information of a specific sort the proposer is in effect partially relieved from his obligation to disclose all material facts. I cannot therefore find any reason for disturbing the finding of the umpire in this respect, that is to say, that although the contract was one involving uberrimae fidei, the claimant was under no obligation to disclose his convictions not connected with improper driving.
The third ground for the application poses a problem: it reads, “The umpire in his award drew inferences which were not warranted by the evidence.” Under this ground, learned counsel for the applicants referred to page 4 of the award where the umpire attempted (an attempt which I would not regard as plausible) to construe condition 1 of the policy, the material part of which reads as follows:
“Notice shall also be given in writing to the company immediately the insured shall have knowledge of any impending prosecution inquest or fatal injury in respect of any occurrence which may give rise to a claim under the policy.”
The umpire, in his award, by a system of logic, which I cannot classify under any orthodox name stated that:
“ . . . notice of impending prosecution is essential only where the accused has a good fighting case or pleads not guilty. Where the accused must plead guilty however the giving of notice of impending prosecution is otiose as it does not in any way improve or worsen the position of the company.”
I must confess I do not see how the umpire can construe condition 1 of the policy in the manner he has done and I entirely agree with learned counsel for the applicants that the umpire drew inferences which were not warranted by the evidence adduced at the arbitration.
This application has been made under sections 25 and 26 (1) of the Arbitration Act, 1961, which enable the court to remit the matters referred, or any of them for reconsideration by the umpire or to remove the umpire or set aside an award or both where the umpire has misconducted himself. Learned counsel for the respondent referred to section 20 of the Arbitration Act and argued that once an award has been made by the arbitrators or the umpire, the award was final and binding on the parties and the persons claiming through them. Section 25 is subsequent to section 20 of the Act and if indeed learned counsel’s submissions were correct, section 25 would not have been inserted by the legislature to give the court powers to remit the terms of reference, to remove the arbitrators or umpire or to set aside awards.
As the applicants have succeeded partially on the first part of their second ground and also on the third ground, what is the court to do in the circumstances? It is settled law that misconduct occurs if an umpire by his award purports to decide matters which have not in fact been included in the agreement of reference (see Halsbury’s Laws of England (3rd ed.), Vol. 2, p. 58 and the following cases there cited in support of that proposition of law, namely, Price v. Popkin,7 Re Green & Co. and Balfour, Williamson & Co.’s Arbitration,8 Turner v. Swainson,9 Walford, Baker & Co. v. Macfie & Sons10. I have already found that the umpire has exceeded his authority and I have to consider whether the misconduct is such to warrant removal or setting aside of the whole award. But before I do so I wish to consider the other aspects of the alleged misconduct and the following passage at page 60, para. 127 of Halsbury’s Laws of
England (3rd ed.), Vol. 2, and the footnotes thereto may be of assistance:
“If a specific question of law is submitted to the arbitrator for his decision and he decides it, the fact that the decision is erroneous does not make the award bad on its face so as to permit of its being set aside . . . [The authorities distinguish two types of cases: (i) where a specific question of law is submitted to the arbitrator; and (ii) where a matter or matters in which a question of law becomes material are submitted. In the former the Court cannot, but in the latter it can and will interfere, if an error of law appears on the face of the award, (Absalom (F.R.), Ltd. v. Great
Western (London) Garden Village Society), [1933] A.C. 592, H.L.)”; and where the question referred for arbitration is a question of construction, which is, generally speaking, a question of law, the decision of the arbitrator cannot be set aside only because the Court would itself have come to a different conclusion; but if the arbitrator … deciding on evidence which was not admissible or on principles of construction which the law does not countenance, there is error in law which may be ground for setting aside the award. (Kelantan Government v. Duff Development Co., Ltd. [1923] A.C. 395, H.L.)”
In this award, the umpire has demonstrably construed conditiona1 of the policy on principles of construction which the law does not countenance by introducing extraneous considerations instead of applying the elementary and rudimentary rules of construction. Instead of construing the words of condition 1, he has imported into this exercise irrelevant notions and has made the operation of condition 1 dependent on whether or not a claimant pleads guilty or not guilty in a prosecution.
All the available evidence has already been heard by the arbitrators and the umpire has also had the benefit of considering that evidence. As such it would be unnecessary to rehear the evidence. I have also considered very carefully the extra expense which will be involved if the award is set aside or if the umpire is removed. I have therefore decided to remit the award to the umpire for his reconsideration with the following directions (2) that he should confine himself strictly to the agreed terms of reference and (2) that he should reconsider his construction of condition 2 of the insurance policy and (3) that he should refrain or abstain from computing any compensation or indemnity or any costs in the matter and lastly (4) that the umpire shall make his award within one month from the date hereof.
DECISION
Matter remitted to umpire for reconsideration.
N. A. Y.
