Vitafoam (SL) Ltd v Leone Construction & General Engineering Services (CIV APP 61 of 2017) [2020] SLCA 9 (30 June 2020)

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CIV.APP. 61/2017 IN THE MATTER OF SECTION 12

(2) OF THE ARBITRATION ACT (CAP 25 OF THE LAWS OF SIERRA LEONE, 1960) AND IN THE MATTER OF AN AWARD/DECISION OF THE ARBITRATION PANEL OF THE SIERRA LEONE INSTITUTE OF ARBITRATORS DATED 27" DAY OF MARCH, 2017 IN THE MATTER BETWEEN VITAFOAM MANAGEMENT AND LEONE CONSTRUCTION — & GENERAL ENGINEERING SERVICES FOR WITHHOLDING OF PAYMENT AND | wcrHE MATTER OF AN APPLICATION BY VITAFOAM (SL) LTD FOR AN ORDER SETTING i ASIDE THE AWARD/DECISION/ORDER OF THE ARBITRATION PANEL OF THE SIERRA LEONE INSTITUTE OF ARCHITECT DATED THE 27" DAY OF MARCH, 2017 Ly THE MATTER BETWEEN VITAFOAM MANAGEMENT AND LEONE CONSTRUCTION & GENERA ENGINEERING SERVICES AFORESAID. BETWEEN VITAFOAM (SL) LTD : APPELLANT/APPLICANT AND LEONE CONSTRUCTION & GENERAL ENGINEERING SERVICES | - RESPONDENT

Coram

1. HON. MR. JUSTICE DESMOND B EDWARDS-CHIEF JUSTICE-PRESIDING

2. HON. MR. JUSTICE SENGU M KOROMA- Isc

3. HON. MR. JUSTICE REGINALD S FYNN- JA

VITAFOAM(STERRA LEONE) LTD- PLAINTIFF /APPELLANT

AND

Leone Construction and General Engineering Services

DEFENDANT/ RESPONDENT JUDGMENT DELIVERED ELECTRONICALLY BY HON.MR JUSTICE SENGU M KOROMA Isc ON THE “x /4 DAY OF JUNE, 2020.

Judgment

1. This is an appeal from the Judgment of Hon. Justice Miatta Samba 3. (as she then was) dated the 20 day of July, 2017 on the following grounds:

2. a. That the Learned Judge erred in law and in fact in failing to appreciate that the crux of the Plaintiff/Appellant’s submissions is that the arbitral award “was procured amidst serious irregularities’, to wit: that the Arbitrators had heard the evidence of the case in advance and in the absence of the plaintiff, thereby denying the Plaintiff the invaluable opportunity of cross-examining the Defendant and/or its witness(es)” At page 7 of the Judgment/Ruling the Learned Judge stated that:

«Counsel for the Plaintiff/Applicant refers to the

supporting affidavit .. and submits that the arbitration

herein is improperly procured athe award ought to be set

aside. Counsel referred to the case of London Expert Corp

Ltd vs. Jubilee Coffee ... It is not in contention that the

Defendant/Respondent stated his case on the 20 day of March, 2017. The contention rather is whether or not the Plaintiff/Applicant was given notice of the hearing of 20" March, 2017...” (See paragraph 5.1.2 at page 7 of the Judgment/Ruling dated the 20 day of July, 2017.

At page 8 of the Judgment/Ruling the Learned Judge stated that: “Counsel says he disagrees with counsel for the Defendant/Respondent when he told the court that arbitration proceedings do not have to copy what happens in courts. My understanding of what counsel for the Defendant/Respondent said to the Court is that arbitral proceedings..are more flexible and this I must hold is correct...”

(See paragraphs 5.1.4 of page 8) In Lines 6-8 of paragraph 5.1.5 at page 8 of the Judgment/Ruling the Learned Judge stated that:

“To my mind therefore, an Arbitrator is not bound by the stringent rule as they apply to the Courts for as long as he dispenses justice”

Further still, in paragraph 6.1.3 at page 9 of the Judgment/Ruling the Learned Judge stated that: «.the issues for determination, it seems to me are whether or not the award was procured wrongly; whether the Plaintiff/Applicant was refused an opportunity to be heard ...to which I have made my comments.” In consequence of the above, the Learned Trial Judge erred in construing and applying the facts and submissions before her to the conclusions of her judgment/Ruling, which could have been otherwise but for the at error.

b. That the Learned Judge erred in law and in fact in holding

that:

i. Because arbitral hearings are informal an Arbitrater is not bound by the stringent rules as they apply to the

Courts for as long as he dispenses justice” (see lines 6- 8 of paragraphs 5.1.5 at page 8 ante);

ii. “..the issues for determination, it seems to me are...whether interjections made by representatives of the Defendant/Respondent had any negative effect on the testimony of representatives of the Plaintiff /Applicant..”

iii. “I have addressed the informality of arbitration proceedings .... It seems to me that utterances made by contractor who I suppose represents the Defendant/Respondent, were clarifications of points made by the representatives of the Plaintiff/Applicant. I find nothing condescending in those utterances...” (See paragraph 7.14, at page 11 of the Judgment/Ruling)

In consequences of the above Learned Judge erred in construing and applying the facts and submissions before her to the conclusions of her Judgment/Ruling, which could have been otherwise but for that error. c. That the Learned Judge’s findings and Decision that: !

i. The “parties on their own volition chose arbitration” (Sic: the Arbitrators in question) is against the weight of the evidence before the Court below;

ii. That the cost imposed by the arbitrators in what they deemed just is against the weight of the evidence before the court below.

d. That the cost of Le 35,000,000/00 awarded to the Defendant/Respondent by the Learned judge is prohibitive, punitive and unreasonable in the circumstances and an arbitrary exercise of discretion.

e. RELIEF SOUGHT FROM THE COURT OF APPEAL:

a. That the Judgment/Ruling of the Fast Track Commercial

Court dated 20°" day of July, 2017 aforesaid be set aside

b. That the Court makes any Order(s) consequent upon the

setting aside of the aforesaid judgment/Ruling

c. That the Defendant/Respondent bears the costs of this

Appeal as well as the costs of the action in the court below.

#. TAKE FURTHER NOTICE that at the hearing of this Appeal leave may be sought to file amended and/or additional grounds of appeal for and on behalf of the Plaintiff/Appellant.

3. The Appellant did not however file any further grounds of appeal: PROCEDURAL HISTORY:

4. By an Agreement dated the 5‘ day of April, 2012, the Appellant herein, VITAFOAM (SIERRA LEONE) LIMTIED (“the employer”) and the Respondent herein, LEONE CONSTRUCTION & GENERAL ENGINEERING SERVICES (“the contractor”), the parties herein agreed that for the consideration of the sum of US$2,780,000/00, the “Contractor” constructs for the “Employer” an Industrial Complex comprising: Factory and Warehouse, Maturing block, Max foam plan, Administrative Building, Canteen, Toilet block, General and Engineering Block and paved areas, Hastings Village, Eastern Rural District, Western Area, Republic of Sierra Leone.

5. By sub-clause 4( in the recitals) of the said Agreement, it is provided that: “the Quantity Surveyor” appointed in connection with this contract shall mean: EBEN ELLIOT ASSOCIATES or in the event of his death or ceasing to be Quantity Surveyor for this purpose such other person as the Employer nominates for the purpose”.

6. I am in doubt about the effectiveness of this sub-clause. The Quantity Surveyor mentioned here is a body corporate-EBEN ELLIOT ASSOCIATES so the expression “or in the event of death” is inappropriate in the circumstance. It is important for Contracts to be drafted with care.

7. Clause 4 of the said Agreement sets out the arbitration clause (which I shall refer to in detail in this appeal)

8. Due to some misunderstanding regarding the performance of the contract, to wit: that the Appellant herein was withholding payment in the sum of US$290,577.28 which the Respondent claims is a sum due and owing under a contract for the construction of an Industrial complex aforesaid, the Respondent referred the dispute to arbitration as provided for in Clause 4 of the principal agreement.

9. On the 18% November, 2016, the Respondent herein requested the SLIA in writing to arbitrate a dispute between them and the Appellant regarding the matter set out in paragraph 8 above.

10. On the 27% March, 2017, the Arbitration Panel heard evidence and upheld the Respondent’s claim and made the following Order against the Appellant: ‘We therefore ask the amount of uSD290, 577.28 to be paid in full plus 15% cost of the amount to the contractor( the Respondent herein) and also Le.4, 000.000.00 to SLIA within 14 days with effect from 27/3/17 by Vitafoam’

11. The Appellant being filed an Originating Summons dated the ast? day of April, 2017 seeking the following orders which have been clearly set out in the Judgment of Miatta Samba J, (as she then was) at page 290 of the Records.

12. The Appellant stated the following as the grounds of the Application:

a) That the aforesaid Award/Decision was procured amidst serious irregularities to wit:

i) That the Arbitrators had heard evidence of the case in advance and in the absence of the Plaintiff, thereby denying the Plaintiff the invaluable opportunity examining the Defendants and/or its witness(es) ;

ii) That during the hearing the Arbitrators gave a carte blanche to the Defendant who interrupted the flow of the testimony of the Plaintiff at will without any regard for judicial or quasi-judicial procedure, thereby preventing the Plaintiff the invaluable opportunity of presenting its case fairly;

iii) That the Arbitrators failed to take relevant matters into consideration in making their award etc, i.e.-

- Their deliberate refusal to have an even cursory glance at the Plaintiff’s documentary evidence to show the inconsistencies in its Project Manager’s presentation and implied bias on his part as well as to substantiate the Plaintiff’s claim regarding the Defendant’s breaches and defective works;

- Their refusal to visit the said construction site to assist them in their deliberations, thereby preventing the Plaintiff the invaluable opportunity of presenting its case fairly;

iv) Tnat the Arbitrators took irrelevant matters into consideration in making their Award etc- the issue of the Plaintiff’s absence at the scheduled hearing of

20° March, 217 and the complaint by the Project Manager regarding his remuneration etc

v) That the Arbitrators were bias ab initio from their letter dated the 15" March ,2017 addressed to the Plaintiff as well as the Arbitrators conduct during the hearing( as stated above)

b) That the Arbitrators did not exercise their discretion judiciously and reasonably in awarding costs and levying fees, having regard to the current financial climate.

13. Judgment was delivered by Samba J( as she then was) on the 20% July, 2017 against the Plaintiff( now Appellant) and the following Orders were made:

i) That the application to set aside the Award/Decision/Order by the Arbitration Panel of the Sierra Leone Institute of Architects adjudicating on the matter between Vitafoam Management and Leone Construction and Engineering Services dated 27 March, 2017 is refused.

ii) That the application to set aside the costs awarded is refused.

iii) That the application to set aside the fees imposed on the Plaintiff in favour of the Arbitrators on the ground that they are excessive and unreasonable is refused.

iv) Costs against the Applicant at Le. 35,000,000.00(Thirty-five Million Leones).

14. The Appellant applied for stay of execution of the judgment which was refused.

15. As a result thereof, the Appellant has appealed to this court by Notice and Ground of Appeal dated 31°‘ day of July, 2017 2017 on the grounds hereinbefore stated.

Submissions of Counsel

A) The Appellant.

16. Counsel for the Appellant, Gibril K. Thorley ESQ. prefaced his submissions on the distinction between facts and law in order to set the stage for his submissions on the errors of law and questions of fact in this and other grounds of Appeal. For this he relied on the definition given by the Learned Authors, Aaronson, Dyer and Groves in their book, JUDICIAL REVIEW OF ADMINISTRATIVE ACTION (3 Edition page 184). He submitted that for the purpose of the law with regard to Section 12(2) of Cap

25, there should be a determination of whether or not there is evidence before the court below from which it can ineluctably conclude that: i. The arbitrators misconducted themselves during (the submission); or ii. The arbitration was improperly procured; or iii. The award itself was improperly procured

17. Mr. Thorley submitted that there was an error law on the part of the Judge with respect to certain instances he stated which to my mind do not merit mentioning here. Suffice it to say that the Appellant’s complaint was that the Learned Trial Judge (LTJ) failed to take relevant matters into consideration in coming to a decision. In support of this, Counsel cited the case of ASSOCIATED PROVINCIAL PICTURE HOUSES (LIMITED) -V- WEDNESBURY CORPORATION (1948) 1 KB 223.

18. Mr. Thorley further submitted that the Arbitration Act, Cap 25 is an off shoot of Arbitration Act, 1927 of the United Kingdom. (It therefore follows that the decisions and commentaries there under could be applied by this court). He specially mentioned the following authorities -

i. Russell on the Law of Arbitration, 19 Edition at Page 225° DUTY TO ACT FAIRLY’

ii. Russell on Power and Authority and Duty of an Arbitrator and the taw of submissions and awards. Etc.at page 371° DUTY TO ACT FATRLY TO BOTH PARTIES’, 11 Edition.

19. Mr. Thorley narrated a number of irregularities in the Arbitration proceedings - a) the Arbitrators were not appointed by the parties; no Notice of the arbitration proceedings was given to the Appellant. He argued that the Arbitration clause was clear on the point that whenever a dispute arises, the complaining party must make a reference but in this case, no such reference was made. Mr. Thorley contended that the fact that the

Arbitration panel heard evidence in the absence of the Appellant on the first day of hearing makes the process irregular.

28. Another irregularity complained of by Mr. Thorley is that the Plaintiff did not have an opportunity to participate in choosing the panel. This was deposed to by Ola Ogunfayitimi in his affidavit sworn to on the 24 day of April, 2617 in support of the Originating Notice of Motion dated the 24% day of April, 2017. This means that the Arbitration proceeded when the Plaintiff/Appellant was yet to “agree on the panel”, its composition and modus operandum. He submitted that like other tribunals performing judicial functions, an arbitrator is dutybound to act in accordance with the essential rules of natural justice. Accordingly, the courts will readily review and set aside an award where it is made to appear that in the course which the arbitrator had pursued he had acted unfairly to either party, however well-intentioned (See HAIGH -V- HAIGH (1861) 5 LT 5@7 Per Turner L3)

21. On the second ground of Appeal -

“that the Learned Trial Judge erred in law and in fact at page 297 of the Records, lines 6-8 of paragraph 5.1.5 (page 8 of the Judgment etc)in holding that “pecause arbitral hearings are informal an arbitrator is not bound by the stringent rules as they apply to the courts for as long as it dispenses justice”

22. Mr. Thorley submitted that the LTJ’s statements and conclusions as contained in paragraph 5.1.5 (page 297 of the records) do not only represent an inaccurate legal proposition but they are also a clear misunderstanding or misconstruction or misapplication of the applicable law to the facts of this case. In support of this, (rather unfortunate use of words to refer to a Judges’ reasoning in a matter), he cited the case of ATTORNEY- GENERAL V. DAVISON (1825) M’ CI 8 Y

160. In this case as narrated by the Appellant’s counsel in his synopsis, the gravamen of the Plaintiff’s claim, is that evidence was taken ex-parte, the court upheld an application to set aside the award holding that:

“TI never understood that arbitrators, like other judges were at liberty to deviate from those rules which govern the

superior courts... I agree... that this is not legal evidence, and, if it was not legal evidence, then it ought not to be received”

23. The second limb of this ground of appeal has been sufficiently dealt with in previous submissions in respect of the first limb.

24. On the third ground of Appeal, Learned Counsel for the Appellant submitted that the finding of the Learned Trial Judge that the “parties on their own volition choose arbitration” (Sic: the Arbitrators in question) is against the weight of evidence. This was because there was nowhere in the records that provides evidence this statement. He referred to the Agreement dated 5‘ April, 2012 between the parties herein - Page 6 of the Records.

25. The submission of Counsel for the Appellant on the fourth ground of Appeal related to costs which he described as prohibitive, punitive and unreasonable in the circumstances and an arbitrary exercise of discretion...”

26. Mr. Thorley submitted that best practice dictates that where the court pronounces its Judgment in the absence of the party against whom it is made, especially in cases involving huge sums of money, as is in this case, it is prudent for the court to refer the costs thereon to the taxing master in the light of the High Court Rules, 2007.