SUPREME COURT, ACCRA
DATE: 19th February, 1962
BEFORE: VAN LARE, SARKODEE-ADOO AND CRABBE, JJ.S.C.
CASES REFERRED TO
(1) Heyman v. Darwins, Ltd. [1942] A.C. 356, H.L.
(2) Jenkins v. Bushby [1891] 1 Ch. 484, C.A.
[p.99] of [1962] 1 GLR 98
(3) Charles Osenton & Co. v. Johnston [1942] A.C. 130, H.L.
(4) In re Carlisle, Clegg v. Clegg [1890] 44 Ch.D. 200.
(5) Re Phoenix Timber Co. Ltd.’s Application [1958] 2 Q.B. 1; [1958] 2 W.L.R. 574; [1958] 1 All E.R. 815, C.A.
(6) Metropolitan Tunnel & Public Works Ltd. v. London Electric Railway Co. [1926] Ch. 371, C.A.
NATURE OF PROCEEDINGS
APPEAL from a ruling by Smith J. in the High Court, Accra, delivered on the 16th November, 1960 (unreported) refusing an application by the appellant for an order to stay court proceedings and refer the dispute to arbitration.
COUNSEL
E. Akufo-Addo for the appellant.
J. D. Reindorf for the respondent.
JUDGMENT OF VAN LARE, J.S.C.
The appellant and the respondent by virtue of a partnership agreement made between them and dated the 1st April, 1930, had since been trading in partnership together in this country as general merchants, transport owners, moneylenders and investors in property. Early in 1958, for reasons not disclosed, they mutually agreed with each other that the said partnership should be dissolved as from the 1st April of that year; arrangements were therefore made by themselves with a’ view to determining the terms of dissolution of the said partnership. The parties appear to have decided upon a division of the physical assets of the partnership between themselves and they, on the 1st April, 1958, signed a memorandum which divided the buildings and motor vehicles between them. They both agreed that the solicitor of the partnership Mr. J. H. Lynes of the firm of Lynes & Cridland of Accra, should be, and was in fact, instructed to prepare the necessary documents to transfer the properties shared between the partners. Not long afterwards the appellant complained about the memorandum of distribution, as he considered that he would be losing some money in the transport business allocated to him by the said memorandum of distribution. Some adjustment appears to have been made, but when, however, Mr. Lynes submitted a draft deed of dissolution for approval the appellant would not approve as he wanted to look into the matter of his personal account in the books of the partnership.
The appellant later that month withdrew the instructions to the said Mr. Lynes to prepare the deeds of transfer of the properties contained in the memorandum of distribution and indicated that he would refuse to sign any deed of transfer. It does appear in these proceedings that the appellant assumed this attitude alleging that the division of the properties of the partnership was subject to a condition that the respondent should submit certain facts for the purpose of taking the partnership accounts and further that the partnership would be kept going for the purpose of winding-up the affairs of the partnership. The appellant alleged that the respondent had failed to honour this condition, upon which the distribution memorandum was based, and therefore considered himself not bound to execute the deed of dissolution prepared by Mr. Lynes. A dispute thus arose between the parties and it becoming irreconcilable, each of the partners consulted different solicitors. Mr. Akufo-Addo came to act for and on behalf of the appellant and Messrs. Giles Hunt & Co. acted for the respondent. These solicitors appeared to be in agreement that the dispute arising between their respective clients came within the terms of
[p.100] of [1962] 1 GLR 98
the partnership deed of the 1st April, 1930, paragraph 24 of which is in the following terms: “All disputes and questions whatsoever which shall either during the partnership or afterwards arise between the partners or their representatives or between any partner and the representatives of either partner concerning this partnership or the construction or the application of these presents or any clause or thing herein contained or any account valuation or division or assets debts or liabilities to be made hereunder or as to any other matter in any way relating to the partnership business or the affairs or the rights duties or liabilities of either partner hereunder or otherwise in relation to the premises shall be referred to the arbitration of a sole referee to be chosen by the parties or two referees one to be appointed by each party and their umpire to be chosen by the referees. The decision of the sole referee or the majority of the referees shall be final and binding on the parties. In case either party shall refuse or neglect to nominate his referee or in case either referee when chosen shall neglect or refuse to choose an umpire as aforesaid or to act the referee of the other party may proceed alone in the business of the reference and his award shall be conclusive on both parties. The cost of the reference and of all matters incident thereto shall be borne and paid by the parties thereto in equal shares.”
Negotiations were then set afoot for referring the dispute to an arbitration and suggestions for appointment of arbitrators or a sole arbitrator were made. Both parties appeared willing and ready to submit to arbitration under the arbitration clause contained in their partnership deed of the 1st April, 1930, but the respondent at all material times appeared to reserve to himself the right to apply to the court for such remedies which he might consider not to be within the jurisdiction or powers of an arbitrator. He has however failed to show which aspect of the dispute falls outside the ambit of the arbitration clause.
The disputes still remained unsettled and arrangements for submission to an arbitration had not been finalised when suddenly on the 17th September, 1960, the respondent issued a writ in the High Court of Justice, Accra, against the appellant claiming:
“(1) A declaration that the partnership entered into between himself and the defendant on the 1st April 1930 has been dissolved with effect from the 1st April, 1958.
“(2) An order for specific performance by the defendant of the terms of the dissolution agreement as evidenced by a draft deed of dissolution prepared in 1958 by Messrs. Lynes & Cridland, Solicitors, Accra on the joint instructions of the plaintiff and the defendant.
“(3) An order for an account of all outstanding debts got in by the defendant since dissolution of the said partnership in accordance with clause 5 of the aforesaid draft deed of dissolution.
(4) An order that the defendant pay forthwith into Barclays Bank D.C.O. High Street, Accra, for the credit of the account of F. & M. Khoury and in reduction of the overdraft in relation thereto the sum of (a) £G1,000 being the amount withdrawn by the defendant since the date of dissolution of the said partnership plus interest thereon at the rate of 10 % per annum from the 9th day of July 1958 (the date of such withdrawal) to the date of such payment-in, should the court so order. (b) £G1,649 6s. 8d. being an amount paid by the plaintiff in excess of that paid by the defendant in reduction of the said overdraft plus interest thereon at the rate of 10. per annum from the 1st day of May, 1958 (being the date of under-payment by defendant) to the date of such payment-in, should the court so order.”
After a formal appearance had been entered on behalf of the appellant, Mr. Akufo-Addo acting for the appellant filed an application for an order to stay proceedings pending reference to arbitration and for an order for the appointment of a receiver. The matter came before Smith, J. who on the 16th November, 1960, in his ruling refused to grant a stay and it is from such refusal that this appeal is brought. The application was
[p.101] of [1962] 1 GLR 98
made under section 5 of the Arbitration Ordinance,1(1) which was the same as section 4 of the English Arbitration Act, 1889,2(2) now section 4 of the English Arbitration Act, 1950,3(3) and the court should therefore be guided by the English decisions on matters of this nature. The decision of the House of Lords in Heyman v. Darwins, Ltd.4(4) appears very much to be in point as that case dealt with the main issue for consideration in the present case. In that case the respondents applied for an action to be stayed under section 4 of the Arbitration Act, 1889,5(5) and the judge held that the issue involved only a question of law and in the exercise of his discretion refused to grant a stay. The Court of Appeal allowed an appeal by the respondents, holding that the arbitration clause applied and that the judge had wrongly exercised his discretion. On further appeal to the House of Lords, the decision of the Court of Appeal was confirmed, it being held that the dispute fell within the terms of the arbitration clause and that the action ought to be stayed.
Upon a study of the concurrent judgments delivered by their Lordships in Heyman v. Darwins, Ltd. one is led to the conclusion that the governing consideration in every case of this nature must be the precise terms and language in which the arbitration clause is framed. In the present case the arbitration clause is a comprehensive one and includes “all disputes and questions whatsoever which shall either during the partnership or afterwards arise between the partners, . . . or any account valuation or division of assets, debts or liabilities, etc.” It is not in dispute that it was agreed to dissolve the partnership, but differences arose concerning the distribution of assets, and the appellant has refused to sign the dissolution agreement. Although it is admitted that the partnership between the parties has been dissolved with effect from the 1st April, 1958, nevertheless the partnership account appears to be still subsisting and requires adjustment. The main point however for determination is whether the draft deed prepared by Mr. Lynes is binding as a matter of law and this question together with the other ancillary reliefs relating to the accounts cannot be decided without ascertaining a number of facts. The whole of the dispute is easily discernible, and there is no doubt that each and every question falls within the ambit of the arbitration clause. The law allows parties to a contract to include in its terms an agreement to refer disputes which may arise to arbitration, and the normal rule is that the courts respect such a reference by staying legal proceedings instituted without honouring such arbitration clause. It appears to me from the wording of section 5 of the Arbitration Ordinance,6(6) that the court should be more disposed to grant stay in matters of this sort unless there is sufficient reason to the contrary. Although the grant of stay of legal proceedings is subject to the discretion of the court, the onus of satisfying the court that there are sufficient grounds not to stay the proceedings remains on the party opposing the stay. The judge’s discretion is not exercised simpliciter but in conformity with well-established principles. In saying this I am not unaware of the dictum of Kay, L.J. in Jenkins v. Bushby7(7) that: “in a question of discretion, authorities are not of much value. No two cases are exactly alike, and even if they were, the Court cannot be bound by a previous decision, to exercise its discretion in a particular way, because that would be in effect putting an end to the discretion.”
[p.102
But I would wish to draw attention to what Viscount Simon, L.C. said in a later case, Charles Osenton & Co. v. Johnston8(8): “The law as to the reversal by a court of appeal of an order made by the judge below in the exercise of his discretion is well-established, and any difficulty that arises is due only to the application of well-settled principles in an individual case. The appellate tribunal is not at liberty merely to substitute its own exercise of discretion for the discretion already exercised by the judge. In other words, appellate authorities ought not to reverse the order merely because they would themselves have exercised the original discretion, had it attached to them, in a different way. But if the appellate tribunal reaches the clear conclusion that there has been a wrongful exercise of discretion in that no weight, or no sufficient weight, has been given to relevant considerations such as those urged before us by the appellant, then the reversal of the order on appeal may be justified.”
I will now refer to the judge’s ruling to ascertain the reasons on which he appears to ground his refusal to stay in the instant case. Firstly it appears to me that the learned judge gave inadequate reasons and secondly that the stay was refused mainly because the dispute between the parties involves questions of fact as well as of law and therefore the court would be a more appropriate forum for settling the dispute. This, on the authority of Heyman v. Darwins Ltd.,9(9) supra, is no ground for refusing to make an order for the stay of proceedings. In that case, Viscount Simon, L.C. said: “Even if the learned judge were right in regarding the issue as one in which nothing but a question of law is involved, that circumstance would not necessarily and in all cases make it right to refuse a stay . . .
Moreover, in the present case questions of fact may well have to be determined and the dispute as a whole is of a class which is constantly dealt with by an arbitrator.”
Heyman v. Darwins is an authority for the proposition that both questions of law and questions of fact can be determined by an arbitrator and a court cannot therefore refuse a stay because the court is in a better position to adjudicate upon such matter. In my view the learned judge has failed to give due weight to the established principles. He concluded as follows: “Depending on the outcome of this claim, it may be that there are no sufficient matters left to go to arbitration or, if there are, the arbitrator will be left with clear instructions and directions from the court as to any matters still in issue as, for example, further accounting and matters of that sort.
But I am clearly of opinion that to stay this action and remit the whole case to arbitration at this stage might well give ground to endless difficulty and I visualise frequent references and applications from the arbitrator to the court.
On considering the affidavits and the authorities cited on both sides I think it more satisfactory that the case should proceed in the court. Any reference to an arbitrator can always be made, of course, at any stage.”
The question is not whether it will be more satisfactory that the case should proceed in court, but whether there is sufficient reason why the matter should not be referred in accordance with the submission because, in a sense, the person opposing the stay is seeking to get out of his contract to refer the dispute to arbitration. To refuse stay on this ground would in effect neutralise the contract the parties had agreed upon.
I concede to the argument of learned counsel for the appellant that the learned judge appears to confuse a submission under the Arbitration Ordinance10(10) with a reference to arbitration under Order 72 of the Supreme Court (Civil Procedure) Rules, 1954. The learned judge erroneously thinks that if the dispute remains for determination before the court a
[p.103] of [1962] 1 GLR 98
judge can always give instructions by way of implementing the arbitration clause; but the true position is, if a stay be refused, as it was in this case, then the matter can only be governed by rules of court, and a submission under the Arbitration Ordinance is in that case completely ruled out. The arbitration clause not having been disputed, and it appearing in law that an arbitrator is competent to deal with the whole of the dispute on both questions of law and fact, the legal position of the parties must be regulated by the Arbitration Ordinance and the court should enforce the reference by staying legal proceedings as it does not appear that there is any reason why the matter should not be referred in accordance with the submission. With respect there appears to be some confusion in the mind of the learned judge in regard to the principles applicable in the exercise of his discretion to stay the proceedings.
The main point of Mr. Reindorf’s submissions before this court is that the judge had the whole matter before him and exercised his discretion in favour of the respondent and his discretion should therefore not be interfered with. He has supported the judge’s refusal for a stay on the grounds that: (1) if the case were referred to an arbitrator there would be endless difficulties in the form of frequent references to the court, which procedure could be used and manipulated to delay the proceedings indefinitely; (2) references to the court would be the questions of law raised as to whether the dissolution agreement would be binding; whether extraneous evidence could be led to amend or vary the dissolution agreement, and there would also be a reference to the court on the specific
performance, if found that there should be one; (3) from the correspondence and the affidavit, the judge must have come to the opinion that many difficulties arose from delaying tactics. The correspondence shows the attitude of the defendant-appellant and he found it would be better to have the matter in the court; (4) one of the conditions in section 5 of the Arbitration Ordinance is that the party applying for stay is willing and ready to go to arbitration.
As to the last point there is nothing in the affidavits to show that the appellant has been unwilling and not ready to go to arbitration. The appellant has at all material times pressed for a reference to arbitration, and there is also nothing from which to infer that the appellant was adopting delaying tactics. With respect to the other points made on behalf of the respondents the answer is that as the dispute falls within the ambit of the arbitration clause and as an arbitrator has full and wide powers in deciding the matters before him, he can well deal with all the questions of law as well as of fact. It is wrong in principle for the judge to think that difficulties, which have not been specified, may arise and it would be better to have the matter in court. Mr. Reindorf has also drawn attention to the case of In re Carlisle; Clegg v. Clegg11(11) and submitted that the judge is right in refusing a stay so that the
court may decide the question of law as to whether the draft deed is binding before referring, if necessary, to an arbitrator to decide the matter of account. Clegg v. Clegg was decided in the year 1890 and the principle upon which a stay was refused in that case appears no more to be sound in view of the concurrent opinions of their Lordships in the case of Heyman v. Darwins12(12) in the year 1942 to which reference has already been made. I may also refer to the case of Re Phoenix Timber Co. Ltd.’s application13(13)
[p.104] of [1962] 1 GLR 98
where Lord Evershed, M.R. delivering the judgment of the court on the effect of section 4 of the English Arbitration Act, 1950 (which as already pointed out was the same as our section 5 of Cap. 16) says as follows: “It must, therefore, be taken that in a case under section 4 the mere fact that the dispute is of a nature eminently suitable for trial in court is not a sufficient ground for refusing to give effect to what the parties have by contract agreed.”
It is clear in these proceedings that the dispute between the parties is not only one of law but also one of fact, and further that the questions of law cannot be decided without ascertaining a number of facts.
Furthermore the law does not preclude an arbitrator in a submission from deciding questions of law. It has also not been shown that there is any question which if the dispute goes before an arbitrator, the arbitrator in his turn would have to remit to the court. The arbitration clause is not in general but specific terms and covers every aspect of the dispute. In such circumstances as the majority opinion shows in the case of The Metropolitan Tunnel & Public Works Ltd. v. London Electric Railway Co.14(14) the courts are generally more disposed to order stay of legal proceedings and refer the parties to arbitration.
In conclusion I am clearly convinced that the judge in the case before us has unfortunately proceeded on wrong principles and his order refusing a stay should be set aside. I would therefore allow the appeal, and grant stay as prayed and refer the parties.
JUDGMENT OF SARKODEE-ADOO, J.S.C.
I concur.
JUDGMENT OF CRABBE, J.S.C.
I concur.
DECISION
Appeal allowed.
Stay of court proceedings ordered.
