A. Savoia Limited V A. O. Sonubi (2000)

LAWGLOBAL HUB Lead Judgment Report

MICHAEL EKUNDAYO OGUNDARE,  J.S.C.

It has always been thought that proceedings by way of arbitration is a quick way to resolution of disputes between contracting parties, when compared with the tardy proceedings of a law court. This case appears to cast some doubt on the truism of this belief.

The parties to this appeal entered into a building contract on 13th April, 1983 by which the Respondent as Contractor, contracted to erect for the Appellant, as Employer two-storey blocks of 6 flats together with out-houses at Plot 7 Parkview Estate Ikoyi Lagos. Before the completion of the building, a dispute arose as a result of which the appellant terminated the contract on 24th March, 1984. The dispute was referred by the parties, to an arbitrator, Dr. T. M. Aluko, an acknowledged civil engineer of no mean repute. Dr. Aluko entered onto the arbitration and after taking evidence from witnesses called by the parties, issued a report containing his award. The report was issued on 8th March, 1985 within a year of the dispute. That is as it should be so far.

The Respondent, as claimant has claimed in the arbitration –

1. A total sum of N83,410.49 payment for work done by the Respondent from 21st January, to 24th March, 1984;
2. Payment of retention money of N22,911.00 in respect of all work done by the Respondent; and
3. Repayment of the sum of N25,000 allegedly loaned to the Appellant by the Respondent.

The Appellant on the other hand counter-claimed for –

1. Compensation for expenses incurred by him putting right work allegedly done badly by the Respondent;
2. Damages suffered by him through Respondent’s failure to complete the work satisfactorily and in the 10 months contract period; and
3. Payment of the sum of N5,000 balance on a N30,000 he gave to Respondent as an advance at the beginning of the contract.

In his award, the arbitrator upheld Respondent’s claim for work done between 21st January and 24th March, 1984 and allowed the sum of N53,105.96 in respect of this claim. On the retention money, he allowed the sum of N22,648.68 instead of N22,911.00 claimed by Respondent.

The arbitrator disallowed the Respondent’s claim for N25,000.00 loan made by it to the Appellant. A total sum of N75,754.64 was made in favour of the Respondent.

On the Appellant’s claims, the arbitrator found that the “unilateral circumstances of that determination (of the contract) must absolve the claimant from liability to refund any expenses incurred by the Respondent in making good these defects”. Consequently, he rejected the Appellant’s claim (1) and (2). He also rejected his claim (3) for N5,000.00. Notwithstanding his rejection of Appellant’s claim (1), the arbitrator awarded him N11,000.00 instead of his claim for N8,095.00 for defective staircase. A further award of N3,000.00 was also made in favour of the Appellant for other defective works; making a total of N14,000.00 made in favour of the Appellant. The final award to the Respondent was put at N61,754.64 to be paid to the latter by the Appellant.

But this was not the end of the matter. For on 19th April, 1985 the Appellant, as applicant, filed an application pursuant to section 12, Arbitration Law, Cap. 10 Laws of Lagos State and Order 73 rule 2 RSC (England), for an order, as subsequently amended, that the award made between the parties to the above-mentioned arbitration by Dr. Timothy Mofolorunso Aluko, the arbitrator therein dated 8th day of March, 1985 be set aside on the following grounds:

1. That the arbitrator Dr. Timothy Mofolorunsho Aluko misconducted himself by:-
2. receiving and acting upon contradictory, unreasonable, unwarranted and inconsistent evidence which by law is not admissible and if at all, to which no weight ought to be attached; and
3. breaching the basic rules of natural justice, equity and good conscience, having applied different yardsticks of justice.

2.That the said award does not deal with, either conclusively, including the issues of delay in completion, bad workmanship and materials.

3. That the award is bad on the face of it because:-
4. the principle therein stated as the principle of law according to which the said arbitrator professed to make this award is erroneously stated and applied;
5. the award is uncertain, contradictory and ambiguous and
6. the award was improperly procured, the Respondent having;
7. suppressed vital evidence during the hearing of the arbitration and
8. tendered forged documents.
9. That the said arbitrator exceeded his authority by relying on assumptions in displacement of the contract between the parties, and thereby acting on matters not within the terms of reference of the arbitration agreement.
10. That the arbitrator is biased in his award.

The application was supported by affidavits and a number of documents which included the Report of the Arbitrator (Exh. 3), the Contract documents (exhibit S1), Rules of Procedure for the arbitral proceedings (Exhibit S8) submission of counsel (Exhibit S9) and Evidence of Witnesses (Exhibit S. 10).

After hearing arguments from learned counsel for the parties, the learned trial Judge (Oguntade J. as he then was) in a judgment delivered on 14th October, 1985, found against the Appellant on all issues raised by him except on the issue of N5,000.00 claimed by the Appellant and remitted the “award to the arbitrator to enable him look further into applicant’s claim for N5,000.00 arising from the disputed payment of N25,000.00 and to make such other awards as the justice of the matter deserved.”

The Appellant was dissatisfied with this judgment and appealed to the Court of appeal (Lagos Division) which Court dismissed the appeal and affirmed the judgment of the trial High Court. It, however, made the following consequential order in respect of the disputed sum of N5,000.00:

“In agreement with the learned Judge in the court below, I order that the sum of N5,000.00 being the balance for the loan made to the Respondent by the appellant at the beginning of the contract for the work to be done at Park View Estate, Ikoyi, should be paid to the appellant by the Respondent.”