COMET CONSTRUCTION CO., LTD. v. TEMA DEVELOPMENT CORPORATION [1965] GLR 66

DIVISION: HIGH COURT, ACCRA

DATE: 26 FEBRUARY 1965

BEFORE: HAYFRON-BENJAMIN J.

CASES REFERRED TO

(1) Roberts v. Bury Improvement Commissioners (1870) L.R. 5 C.P. 310; 39 L.J.C.P. 129; 22 L.T. 132. (2) Walker v. London & North Western Rly. Co. (1876) 1 C.P.D. 518; 45 L.J.C.P. 787; 36 L.T. 53. (3) Joshua Henshaw & Sons v. Rochdale Corporation[1944] K.B. 381; 113 L.J.K.B. 278; 170 L.T. 214; [1944] 1 All E.R. 413, C.A. [p.68] of [1965] GLR 66

(4) Universal Cargo Carriers Corporation v. Citati [1957] 2 Q.B. 401; [1957] 2 W.L.R. 713; 101 S.J. 320;[1957] 2 All E.R. 70;[1957] 1 Lloyd’s Rep. 174. (5) Rickards (Charles) Ltd. v. Oppenheim [1950] 1 K.B. 616; 66 T.L.R. (Pt. 1) 435; [1950] 1 All E.R. 420,C.A. (6) Tool Metal Manufacturing Co., Ltd. v. Tungsten Electric Co., Ltd. [1955] 1 W.L.R. 761; [1955] 2 All E.R. 657, H.L. (7) Nils Heime Akt. v. Merel (G.) & Co., Ltd. [1959] 2 Lloyds Rep. 292.

NATURE OF PROCEEDING

APPLICATION to set aside an arbitration award. The facts are fully set out in the judgment.

COUNSEL

A. W. Acquaah for the applicant. Mrs. Hotoba-During for the respondent. JUDGMENT OF HAYFRON-BENJAMIN J. The arbitrator by his award dated 14 October 1964 dismissed the claim of the company and partly allowed the claim by the corporation. On 18 January 1965 the Solicitor-General acting for the corporation filed a motion for the enforcement of the award. On 2 February 1965, the company by its solicitor also filed a motion on notice asking for an extension of time and an order setting aside the award under section 26 of the Arbitration Act, 1962,1 and Order 64, r. 13 of the Supreme [High] Court (Civil Procedure) Rules, 1954.2 The application for extension of time was not opposed, and in view of the facts deposed to in the affidavit in support of the application, I exercised my discretion and extended the time. At the same time I stayed further proceedings on the motion to enforce the award until the hearing and determination of the application to set aside. The grounds relied on by the company in their application are that the arbitrator was guilty of misconduct in that: (a) he failed to determine all the issues before him; (b) the fees he charged were unreasonable and excessive; (c) he changed his award after making it; (d) he misconducted the proceedings; (e) the award is erroneous. Under these grounds learned counsel for the company (which I shall hereafter refer to as the contractor) argued that there are several errors of law appearing on the fact of the award. He submitted that the arbitrator failed to decide all the issues that were before him, [p.69] of NATURE OF PROCEEDING that he changed his award after making it, that the arbitrator was wrong in law in holding that the contractor waived his right to the site on the stipulated date and several other points. I am of the view that one of these is so fundamental that a ruling on it will dispose of the application, i.e. whether the employer was entitled in law to terminate the contract at all. Before proceeding to consider this point, I think it will help to give a clearer picture of this matter if I set out the undisputed facts of this case. I do not think it is necessary to cite any authority for the proposition that the findings of fact by the arbitrator are final. There will be no merit at all in arbitrations unless awards are to be treated, if at all possible, as final on the facts. The arbitrator sets out the undisputed facts clearly in his award as follows: “By an agreement dated 1 June 1961, the employer employed the contractor to build 17 BN type houses ( a BN type house comprises two dwellings) together with external services on site 21, Community No. 1, Tema at the cost of £G114,462 10s.0d. which amount included £G17,400 for contingent and provisional sums. The work to be carried out upon and subject to the conditions annexed to the agreement which is exhibit D. By condition 18 of the agreement the contractor was to be given possession of the site on 5 June 1961 and the works were to be completed by the contractor on 4 January 1962. By a variation order dated 28 June 1961, exhibit U, the type of building was varied from BN type to CA type and the contract price was raised by £G15,000 and the time for completion was extended to 4 February 1962. This variation was accepted by the contractor. Prior to signing the agreement, the contractor inspected the site, almost half of which was occupied by temporary dwellings tenanted by employees of the employer. This inspection of the site was in about March 1961, and the contractor was then told that the site would be made available before 1 June 1961. The position with respect to the site remained the same up to 1 June 1961, when the contract was signed; so that both parties knew the condition of the site when the contract was signed. On 5 June the contractor was given a site which could contain only seven buildings, i.e. fourteen dwellings and eleven boys’ quarters: the remainder of the site still had the temporary dwellings on it. The contractor said he was told by the employer’s representative that the temporary structures would have been removed long before then, but they had been let down by one contractor: that they expected the buildings for the tenants of the temporary dwellings to have been ready in April. This reason

[p.70] of [1965] GLR 66 having been given, the contractor agreed to accept the available site and commence work and did commence work. The rest of the site was given piecemeal on different dates as and when the tenants were rehoused. After the available site given on 5 June 1961, no further site was given until May 1962 when a site was made available for four more buildings (of two dwellings each), i.e. eight dwellings in all, this was a little over three months after the completion date. There is disagreement as to the dates when the other sites were made available. It is however agreed that the rest of the site, except a site for two blocks, was made available in September 1962 and the other two sites were made available in April 1963. Therefore by September 1962 sites for fifteen dwellings had been made available. The contractor continued working and was paid approximately for work done each month. There were no obstructions on the sites made available for the contractor. The job for the demolition of the temporary dwellings was subsequent to 5 June 1961 given to the contractor who did the demolition as and when the tenants were rehoused. Though by the contract the contractor was to be paid approximately for work done each month, from December 1961 to May 1962, the contractor was not paid. Notwithstanding this, the contractor continued to work until May 1962, when he accepted payment of all due to him and continued to work until April 1963 when the contractor was given two weeks’ notice of determination of the contract if the faults (lack of reasonable diligence) complained of were not remedied. The contract was determined on 10 May 1963 on the ground of lack of reasonable diligence in carrying on with the works. After 4 February 1962, the completion date, the contractor did not apply for extension of time nor did the employer grant any but the contractor continued to work until the contract was determined, this is just over fifteen months after the completion date. The employer endeavoured to get the contractor to agree to a new completion date but he would not until he had the whole site. The dispute which is the subject of this reference is about the determination of the contract which the contractor claimed to be wrongful and therefore a breach of the contract, while the employer claimed it was proper exercise of his power under clause or condition 21 in paragraph 4 of the agreement, exhibit D.”

[p.71] of [1965] GLR 66

These being the undisputed facts of the case the arbitrator confined himself in his award to deciding: (a) Whether the employer was in breach of any conditions of the contracts at the time of the notice of termination. We shall see later that the contract prohibited the exercise of the power to terminate if the employer at the time of termination was in breach of any of the terms of the contract. The arbitrator decided in favour of the employer on this issue, and in so doing held that the contractor had waived his right to have possession of the whole site on the date stipulated in the contract. (b) Whether the notice was unreasonable or vexatious. We shall also see later that by the contract the power to terminate is not to be exercised unreasonably or vexatiously. The arbitrator answered this question also in favour of the employer. Having disposed of these two issues the arbitrator went on to consider whether the determination of the contract was wrongful. He said: “Having decided the question of whether the employer was in breach of the contract at the time of notice of determination, I have now to decide on the facts whether or not the determination of the contract was wrongful. To decide this question one must look at the notice of 25 April 1963 and the letter of determination dated 20 May 1963.” Then after having recited passages from these two letters, the arbitrator went on, “Now whether the determination was wrongful or not depends on whether the charge of failing to proceed with the works with reasonable diligence was justified or not: for this one has to look at the evidence.” The arbitrator then went on to examine the evidence with great care and clarity and at length. The object of this is apparent on the face of the award, and it was to establish that the charge of lack of due or reasonable diligence has been made out. The conclusions he arrived at are, as I have said, final and conclusive, and are amply supported by the evidence referred to in the award. However, with the greatest respect to the arbitrator who I know is a learned, experienced and respected former judge of the Superior Courts of Ghana and Nigeria, and with the greatest diffidence, I think he failed to direct his mind to the vital legal issues which had to be decided before he could arrive at the conclusion that the determination of the contract was not wrongful. To ascertain whether the termination of the contract was wrongful, far more is required than proof of the charge of lack of due or reasonable diligence. I think it is the law that where a building contract provides for completion by

[p.72] of [1965] GLR 66 a certain stipulated date and also provides for forfeiture or determination for lack of due or reasonable diligence or for delay, it is a question of construction whether the forfeiture clause can still be enforced if the time for completion has passed. If it cannot be enforced then it is irrelevant whether the charge of lack of reasonable diligence is made out. I need hardly say that this is eminently a question of law, depending as it is on the construction of the contract. There is abundant authority for the proposition that forfeiture clauses in contracts are strictly construed by the courts: see Roberts v. Bury Improvement Commissioner.3 The party who invokes a forfeiture clause must satisfy the court that the requisite conditions or circumstances exist which call for the exercise of the power to terminate. The question that arises for determination therefore is, whether in view of the undisputed facts and of the terms of the contract, the employer could exercise his power to terminate the contract at all. To succeed, I am of the view that the employer must show that the power to terminate for lack of reasonable diligence had not been lost because of the expiration of the time limited for completion. In this case, nothing appears in the award to suggest that the contract was terminated for any other reason but lack of progress. There is no suggestion of shoddy or bad workmanship. The arbitrator referred to the evidence of the chief development officer of the employer as to the lack of progress by the contractor with the works due to inadequate labour force on the works; that the notice of determination was on his instructions; that after the notice of determination he inspected the site and found that the work done was negligible so he instructed the determination of the contract on the expiration of the fourteen days’ notice; after that notice he received from Mr. Quansah for the contractor a letter of 3 May 1963, exhibit O, in which the contractor admitted slow progress which he put down to the employer’s failure to make the whole site available on 5 June 1961. The reply to exhibit O of 10 May 1963, in which the contractor was informed that the notice of determination was solely based on the grounds of lack of expedition on the contractor’s part, is exhibit 11. The law as I understand it is that lack of due or reasonable diligence, where it implies lack of progress, can only be ascertained by reference to the time for completion of the contract. This must be so, because the power to terminate for lack of due diligence is in the nature of a power given to the employer to terminate for anticipatory breach of the contract, i.e. if the employer finds that the progress of the works is such that it cannot be completed within the stipulated time or within a reasonable time (where such a term can be implied [p.73] of [1965] GLR 66 in the contract) he need not wait for the completion date or the expiration of reasonable time; he can exercise his powers and terminate the contract. However to exercise his powers legitimately the employer must be able to establish the anticipatory breach, and as has been said an anticipatory breach must be proved in fact and not in supposition. However, the important point at this juncture is that lack of due diligence is only ascertainable with reference to date for completion, either express or implied. The two leading cases on this point are Walker v. London & North Western Rly. Co.4 and Joshua Henshaw & Sons v. Rochdale Corporation.5 The learned editors of Hudson on Building Contracts (6th ed.), p. 412 relying on Walker’s case stated that: “In the case of contracts giving a power of forfeiture for not proceeding with the work at the required rate, if the contract date for completion has ceased to be binding, no forfeiture for delay in progress can be made, for there is no period in respect of which speed can be gauged. The clause, therefore, can only be acted upon and enforced in respect of delay when there is a date fixed for completion and confers no power of forfeiture after that date has passed or ceased to be applicable.” The learned judges in Joshua Henshaw’s case thought that this statement of the law was too wide, but they did not overrule Walker’s case. Scott L.J. giving the judgment of the court and referring to the statement in Hudson said6: “The author cites as authority for this statement the decision in Walker v. London and North Western Rly. Co. Although we think the statement quoted too wide, we see no reason to differ from the decision. It depended on the terms of the forfeiture clause, which was made exercisable if the work was not prosecuted at the required speed, that is, the speed required to finish the work on the contract date.” Much, if not everything, therefore depends on the terms or wording of the contract. In Joshua Henshaw & Sons v. Rochdale Corporation, the relevant clause in the contract provided7: “The contractor shall carry on the work with due diligence and as much expedition as the surveyor shall require, and in case the contractor shall fail to do so, or shall neglect to provide proper and sufficient plant and materials, or to employ a sufficient

[p.74] of [1965] GLR 66 number of workmen to execute the works, which he shall be ordered to execute, with due diligence or the despatch required, or if the works of the contract are, in the judgment of the surveyor, not being carried on in all respects in strict conformity with the specification and to his satisfaction, or with such progress as would enable them to be efficiently completed at the time, or in the manner required and specified, the same shall be intimated to the contractor by the surveyor, and in case he refused to alter or amend any defective or unsatisfactory work or materials, or comply with any order he may so receive to the effect,” then the corporation or their authorised officers shall be entitled to enforce their power of forfeiture. There is nothing in this clause to suggest that it is dependent on the date of completion. Scott L.J. said further8: “C1. 28 is not dependent on the contract being completed by the fixed date. It provides for the execution of the works with due diligence and as much expedition as the surveyor shall require, the employment of a sufficient number of workmen to execute the works with due diligence, and a number of other contingencies, all of which provisions are as much applicable to the fulfilment of the contract within a reasonable time as to its completion on the contract date.” In the case before the court the obligation to exercise reasonable diligence is imposed by clause 18 of the agreement and provides: “On or before the date for possession stated in the appendix to these conditions possession of the site shall be given to the contractor who shall thereupon begin the works forthwith and regularly and diligently proceed with the same and shall complete the same on or before the date for completion stated in the said appendix subject nevertheless to the provisions for extension of time contained in Clause 20 of these conditions.” Clause 20 of the conditions of the contract provides for circumstances under which the employer by his agent can extend time for completion. It is not necessary to set out any of these provisions except to note that this clause makes no provision for extension of time where the delay is through the default of the employer. In such circumstances it seems that a fresh completion date has to be negotiated and agreed upon. Clause 21 of the contract contains the forfeiture clause. Clause 21 (a) provides that:

[p.75] of [1965] GLR 66

“if the contractor shall make default in any of the following respects viz: If he fails to proceed with the work with reasonable diligence, and if he shall continue such default for fourteen days after notice specifying the default has been given to him by the chief development officer, the employer may, without prejudice to any other rights or remedies, thereupon by notice determine the employment of the contractor under this contract: provided that notice in pursuance of this clause shall not be given unreasonably or vexatiously and shall be void if the employer is at the time of the notice in breach of this contract.” The clause then goes on to provide for the forfeiture of all sums of money due or accruing to the contractor and all materials and things whatsoever on the site and gives power to the employer to take over possession of the site and continue the work by engaging other contractors. I know of no rule of construction that can lead me to any other conclusion than that the parties contemplated that the obligation to exercise reasonable diligence was enforceable by termination only before the date for completion. The obligation to exercise reasonable diligence is contained in the same clause 18 as the date for completion, and in this respect I am of the view that this case differs from Joshua Henshaw & Sons v. Rochdale (supra) and is also stronger than Walker v. London & North Western Rly. Co. with which it is very similar. In Walker v. London & North Western Rly. Co. the plaintiffs contracted with the defendants to construct a dock, and other works in connection therewith, and the contracts provided as follows9: “Should the contractors fail to proceed with the rate of progress required by the engineer, or to maintain the said works as hereinafter mentioned to the satisfaction of the engineer, his contract shall, at the option of the company,but not otherwise, be considered void as far as relates to the works or maintenance remaining to be done, and all sums of money that may be due to the contractors, together with all material and implements in their possession and all sums named as penalties for the non-fulfilment of the contract shall be forfeited to the company, and the amount shall be considered as ascertained damages for breach of contract.” The contract also provided in another clause that “The whole of the works should be entirely completed on or before 31st Aug. 1873” and that should the works not be completed by a stipulated date, the employer might engage other contractors to complete. The works [p.76] of [1965] GLR 66 were not completed by that date. There was no power of extending the time, but by mutual consent the time for completion was disregarded. It was held that upon the true construction of the contract the forfeiture clause could not be enforced after the time originally fixed for completion of the works had expired: Archibald J. in his judgment said10: “The question which arises upon this notice is, whether, upon the facts and under the circumstances stated, the notice was valid and sufficient to avoid the contract so far as related to the works or maintenance remaining to be done, and to cause to be forfeited to the defendants all sums of money due to the plaintiffs, together with all materials and implements in their possession, and all sums of money named as penalties for non-fulfilment of the said contract, or whether the notice was valid and effectual for any, and if so, for which of such purposes.” He goes on11: “The clause, in our opinion, can only be acted on and enforced within the time fixed for completion of the works, for time is clearly of the essence of the contract, and it is only with reference to the time so agreed that the rate of progress can be determined. If as has happened, the time has been exceeded, there may be a new contract to complete in a reasonable time: but to give the clause in question any application to a reasonable time after the time originally fixed has expired, would be, without any express provision, to make the company judge in their own case of what was a reasonable time, and to enable them in their own favour to avail themselves of a most stringent and penal clause.” He ends by saying that “We therefore think the notice of the 22nd Jan. 1874, was not effectual for all or any of the purposes mentioned in the question put to us, and that the contract was not avoided.” In my view the present state of the law is that where the forfeiture clause is made dependent on time for completion, then it cannot be invoked after the date for completion whether or not the parties agree expressly or impliedly to extend the time. Where on the other hand the forfeiture clause is not so dependent then it can be exercised at any time either before or after the date for completion. I am satisfied that in this case the power of termination or the forfeiture clause for lack of due or reasonable diligence was made dependent on the contract being completed by a fixed date. The contractor by the contract assumed the obligation to exercise

[p.77] of [1965] GLR 66 reasonable diligence and complete the works on a stipulated date and the employer was empowered to terminate this contract if the contractor failed to fulfil this obligation. If the time for completion has passed, and the parties have treated time as not to be of the essence of the contract, it does not necessarily follow that the employer can still exercise his power of forfeiture. There is nothing in the clause in this contract from which it can reasonably be inferred that the parties agreed that the power of forfeiture should be exercisable by the employer after the time for completion had passed. I am therefore of the view that the termination of the contract by the employer was wrongful. If my view of the effect of the forfeiture clause is wrong, and the proper view is that the parties by their conduct must be deemed to have agreed that the power to terminate can be exercised within a reasonable time, then we have to consider how reasonable time is to be measured. I think it is too late in the day to deny that failure to measure reasonable time in the way in which as a matter of law it ought to be measured is an error of law in an award. Devlin J. (as he then was) in Universal Cargo Carriers v. Citati12 had this to say: “I can account for this alternative finding only on the hypothesis that the arbitrator has not measured the reasonable time in the way in which as a matter of law I think it ought to be measured. Accordingly this finding cannot stand, and I hold, contrary to the view of the arbitrator, that the charterer broke these terms.” In this case the arbitrator has examined the evidence at length, and it seems to me that in arriving at his conclusion that the contractor did not exercise reasonable diligence, he measured reasonable time for completion by taking into account (a) the dates on which the sites were given piecemeal by the employer to the contractor (b) the amount of work done by the contractor on each house up to the time of termination and (c) the evidence of the contractor and his witnesses that if the contractor had decided to build the house piecemeal he would have completed seven buildings for which sites were available on 5 June 1961 in about four to five months, and those for which sites were available in May 1962 in a little over half that time. He therefore arrived at the conclusion that “except the two buildings for which site was not made available until April 1963, the contractor could have completed fifteen buildings at the latest by December 1962.” The essential consideration which in my view should have been taken into account is whether the contractor (even if he had waived his right to possession of the site on a particular date) had by his

[p.78] of [1965] GLR 66 conduct undertaken not only to accept the sites piecemeal, but had further undertaken to complete the houses piecemeal. If the true construction of the contract (as amended by the conduct of the parties) is that the contractor did not undertake to complete the houses piecemeal, then the arbitrator was wrong in taking into consideration the time which would have been spent in completing them piecemeal. The arbitrator said in his award that it is only common sense and in accordance with the practice in the trade for the contractor under the circumstances to build the houses as and when the sites were made available, and he went on “and the contractor had admitted that it would have been prudent to have done that.” With the greatest respect to the arbitrator, the mere fact that it might be prudent to have completed the houses piecemeal does not mean that the parties had so contracted. Furthermore the mere fact that it is the practice in the trade does not mean that the express contract was waived to such an extent by the conduct of the parties as to incorporate a trade custom or practice in their agreement. The admission by the contractor that such a term would have been prudent is irrelevant to the determination of the contractual terms agreed on. The arbitrator has found as a fact that not one house was completed at the time of termination although work on all sites had started and reached various stages, with the exception of work on the two sites made available in April 1963. The arbitrator has set out the reasons given by the contractor for non-completion. He said: “We have Mr. Quansah’s reason in his evidence at page 6 of 15 May 1964, this is, because he did not think it prudent to spoil the job: at page 7 of the same date he states that he made arrangements to leave the buildings in certain stages because he was given seven months to build seventeen houses in a continuous programme; he did not contract to deliver one by one and that he could reduce his own rate of progress, and that he had to cut down labour because of non-availability of site; he at the same page admits that he substantially reduced progress because of the obstructions (that is the temporary dwellings) he would not fix windows for children to come and break. In view of the obstructions being present at the time when he accepted the available site and when all sites except the two had been made available by September 1962, I failed to appreciate Mr. Quansah’s reasons for not completing. I endeavoured myself and through his counsel to get some reasonable cause for non-completion but this was without success. From the questions put by his [p.79] of [1965] GLR 66 counsel I concluded the contractor could give no other reason than what he had already given.” I would have thought that the best reason for failing to complete a house is that you never undertook to complete it. Moreover the fact that the contractor had not completed even one building, but had started all, negatives any inference that by his conduct he must be deemed to have impliedly agreed to complete the house piecemeal. Be that as it may, nowhere in the award is there any finding that the contractor either by words or conduct agreed to complete the houses piecemeal. In the absence of such a finding, I am of the view that the yardstick employed by the arbitrator in measuring reasonable time is wrong. Reasonable time for completion can only mean reasonable time for completing the whole contract, and not reasonable time for completing individual houses. It is impossible to ascertain reasonable time for completion of the whole contract before the whole site has been made available. In this case it would have been impossible to ascertain the reasonable time before April 1963 when the last two sites were made available to the contractor, for the simple reason that no one, with the exception of the employer would have known when the last sites would be available. The proper method is therefore to take the work done at the site up to April 1963 when the last sites were given, then ascertain what time it would take a reasonably diligent contractor to complete. This would give the reasonable time for completion. The rate of progress on the site from the time when the contractor was given possession of the last site, i.e. in April 1963 to the time when notice of termination was served, i.e. May 1963 is then ascertained, and then it is possible to find out or decide whether at that rate of progress it was likely or probable that the works would be complete within the reasonable time for completion as ascertained above. This must be so, because up to April 1963, the employer was in breach of clause 18 of the contract, not having given the whole site to the contractor, and therefore could not have under any circumstances invoked the forfeiture clause. The clause could only have been validly invoked after that date, i.e. April 1963 if it was established that at the rate of progress between April 1963 and May 1963, the whole works could not be completed within a reasonable time as ascertained by the above process. I am therefore of the view that even if it is said that the parties agreed that the clause should be invoked within a reasonable time, the method of ascertaining reasonable time was contrary to law, and the exercise of the power to terminate was illegal and ineffectual.

[p.80] of [1965] GLR 66

This, however, is not the end of the matter. The arbitrator found that the contractor had waived his right to possession of the site on the stipulated date. He said: “When the contractor could not be given the whole site on 5 June 1961, it was up to him to have treated the failure as a breach of the contract by the employer and to have repudiated the contract and sued for breach of contract or not to have insisted on the condition and to have accepted the available site and commenced the work and claimed for any damages suffered by any delay in getting the rest of the site. The contractor for reasons given him by the employer as earlier stated elected not to insist on condition 18 and accepted the available site, entered upon it and commenced work. The contractor at no time gave notice to the employer that he would not carry on with the work if he did not get the whole site, and he continued to carry on with the work on fresh sites as and when they became available. In the circumstances can the contractor at a later date turn round and complain of a breach of clause 18, a condition of the contractor? Clearly he cannot. The contractor by his conduct waived the condition for date of possession of site and in the absence of such a notice as I have referred to above, he cannot revive the condition he has waived.” Counsel for the contractor has argued with force that there was no waiver. I do not think it is necessary to decide the point. However, assuming that the arbitrator was right in holding that the contractor waived the condition for a particular date for possession of the site, I am of the view that in the absence of any other agreed date, the parties must be deemed to have substituted a reasonable time within which the site would be made available. The site, by the terms of the contract should have been available on 5 June 1961; it was not made so until April 1963, i.e. about 22 months later. Nowhere in his award did the arbitrator consider whether this was a reasonable time. If 22 months delay in making the site available was unreasonable then the right of forfeiture could not be validly excercised, because the employer would have been in breach of a term in the contract (as amended by the conduct of the parties) by failing to make the site available within reasonable time. The arbitrator, however, after a reference to some English cases notably Charles Rickards Ltd. v. Oppenheim13 which he found not to be applicable to this case except on the question of

[p.81] of [1965] GLR 66 waiver, and Tool Metal Manufacturing Co., Ltd. v. Tungsten Electric Co., Ltd.,14 said: “On the authorities I have referred to above, I must hold that the contractor waived conditions 18 and 27a of the contract and so there can be no breach of them. Therefore, I hold that the employer at the time of the notice was not in breach of the contract. ”I am of the view that where there is a waiver of a stipulated time in a contract, the parties are deemed to have substituted reasonable time (which does not mean any time) and that there can be a breach of this implied condition to deliver the site within reasonable time. As I have earlier said, a forfeiture clause in a contract is construed strictly, and the party who invokes the power to terminate that contract must prove that the conditions for termination exist. In this case there is nothing in the award to show that the employer even tried to explain the 22 months delay in making the site available. I hold therefore that the employer failed to prove that at the time of termination he was not in breach of the contract. The termination therefore was wrongful. The only point now remaining for consideration is whether on these grounds I can set aside the award or remit it to the arbitrator. In this case there was a general reference to the arbitrator, and not a reference of a specific question of law. The position is well-stated in Russell on Arbitration (17th ed.), p. 317 thus: “It is necessary to distinguish between cases in which a question of law is specifically referred, and cases in which a question of law merely arises (though necessarily so) in the course of a reference. The question is whether what is referred to the arbitrator is `the question, whether involving fact or law’ or `only some specific question of law in express terms as the separate question submitted,’ or in other words whether there is `a reference in which the questions of construction arise as being material in the decision of the matter which has been referred to arbitration’ or `a reference in which a specific question of law was referred to decision of the arbitrator as the sole tribunal.’ Only in the latter case will an apparent error in law be left unquestioned.” All the points I have considered are errors of law appearing on the award and I am satisfied that I am fully entitled to look at the contract exhibit D in coming to my conclusions. In Nils Heime Akt. v. G. Merel & Co., Ltd.,15 it was held that the mere fact that a contract

[p.82] of [1965] GLR 66 is referred to in the award, especially if it is referred to in a recital to an award, does not make that contract a document which is incorporated in the award so that the court can look at it for the purposes of seeing whether there is an error of law. But if the arbitrator goes further and sets out at least one of the material clauses it becomes permissible to look at the contract. In this case the arbitrator set out in his award more than one material clause. In view of the conclusions I have arrived at, that the employer had no right in law to terminate the contract I do not consider that any useful purpose can be served by remitting the case to the arbitrator. I therefore set aside the award and also the order of 1,250 guineas costs. I substitute therefor an order that the termination of the contract by the employer is wrongful and that the contractor is entitled to damages. I award costs to the contractor assessed at 1,250 guineas on the abortive arbitration, and costs on this application at 300 guineas inclusive of counsel’s fee of 250 guineas. Subject to what the parties or their representatives may have to say, I propose to consider the question of damages on 9 March 1965.

DECISION

Award set aside with costs.

A. K. F.