Joseph Saliba V. M. J. Lababedi & Ors. (1972)

LawGlobal-Hub Lead Judgment Report

G. B. A. COKER, J.S.C. 

The point to be decided in this appeal is whether in the events that happened a referee chosen by the parties and appointed by the court should, at the instance of the appellant, be removed.

The application was made by the present appellant; he was the plaintiff in an action instituted in the High Court, Lagos, against the respondents, as defendants, and in which he claimed, inter alia, an account of partnership funds and payment over to him of whatever is found due to him on the taking of such account.

It appears that an order was made for the defendants to file such an account and for the plaintiff to falsify and surcharge. These steps seemed to have been taken on that part of the order and complied with and it seemed also that thereafter it was agreed by the parties that the accounts be referred to a referee in accordance with rules of court. On the 22nd June, 1967, both parties filed jointly in court a document purporting to contain terms of reference in respect of which they would go before the referee when appointed. The agreed terms of reference read:-

“To determine how much (if any) is due and payable by either party to the other in the light of:-

(a) The writ of summons

(b) Statement of claim

(c) Statement of defence

(d) Statement of account filed by the defendants

(e) Notice of falsification and surcharge filed by the plaintiff, and

(f) Such evidence as the parties may wish to call before him, relating to the issues set out on the writ and pleadings.”

On the 26th June, 1967, the parties appeared before the High Court, Lagos (Lambo J.) and both parties agreed in the nomination of Mr. Mojibola Oluwa, a chartered accountant of Lagos, as the referee. The learned trial judge then made the following order:-

“It is hereby ordered that the said Mr. Oluwa, a chartered accountant, be and is hereby appointed a referee as per the terms of reference jointly filed by the parties in this Court on the 22nd June, 1967.

Copies of the referee’s report should be filed and served on the parties who will as between them bear the referee’s remuneration in equal proportion.”

Apparently there was no agreement between the parties as to what the remuneration of the referee should be and how it should be paid for on the 12th February, 1968, the High Court, Lagos, made another order that each side should within 14 days thereof deposit in court an amount of 250pounds and that unless this was done, the action should be listed for the 4th March, 1968 for disposal. The matter was then adjourned and was so adjourned for a number of times to enable the defendants, who were stated to be out of the country, to comply with the order for the deposit of 250pounds. It does not seem that the work of the reference was being carried out for on the 6th May, 1968, when the parties again appeared in court, the following order was made: “It is hereby ordered that the referee should complete his reference within 3 months from date and submit his report within the said period.

It is further ordered that he should be paid 300pounds forthwith as part payment out of the 500pounds deposited in court and the balance of 200pounds should be paid on his completion of the reference and submission of report to court.”

It is fair to conclude from what thereafter took place that as from the time of this last-mentioned order, the referee did start to do his work. He had written a number of letters to the parties as well as to other persons and, as he stated himself, he had tried, but failed, to arrange a preliminary meeting of the parties ..

On the 7th November, 1969, however, the plaintiff filed the present motion in the High Court, Lagos, asking for “an order that a fit and proper person, acceptable to both parties herein be substituted for the accountant Mr. Mojibola Oluwa the referee appointed by this Honourable Court in this matter.” The application is supported by an affidavit and as the affidavit told the whole story, paragraphs 2, 3, 4, 5, 6 and 7 of it are reproduced hereunder:-

“2. That on the 26th June, 1967 a chartered accountant, Mr. Mojibola Oluwa, was by an order of this Honourable Court appointed to act as referee in the dispute between the two parties herein.

3. That on the 28th July, 1967 the said Mr. Mojibola Oluwa by his letter of that date addressed to Chief F. R. A. Williams agreed to act as such referee and proposed to fix a date for the commencement of the arbitration proceedings after he had examined the books and records relevant to the case, and suggested that Chief Williams furnish him with a copy of terms of reference for which he said he had written to the Registrar of this Honourable Court since the 14th July, 1967, but had not received a reply.
4. That on the 6th September, 1967 Chief Williams forwarded to

him in his letter of that date, the following documents:-

(a) A copy of the terms of reference.

(b) A copy of the statement of claim filed by the plaintiff.

(c) A copy of the statement of defence filed by the defendants.

(d) A photocopy of the statement of account filed in court by the

defendants.

(e) A copy of the notice of falsification and surcharge of the said account filed on behalf of the plaintiff.

5. That since then a number of correspondence were exchanged between the counsel for the two parties and the said referee but up until today the arbitration has not been commenced.
6. In his letter dated the 4th December, 1967, the referee requested that both parties deposit the sum of two hundred and fifty pounds (250pounds) each in court in anticipation of the cost of the arbitration, and both parties have accordingly deposited the said sums totalling five hundred pounds (500pounds).
7. That I am informed by Chief Williams and I well and truly believe that the referee is not familiar with the procedure to be followed in this matter.”

Without any order of court whatsoever and without having been asked to do so, the referee, Mr. Oluwa, filed in court on the 13 November, 1969, a counter-affidavit, paragraphs 5, 6 and 7 of which provide as follows:-

“5. That I am fully conversant with the proceedings in arbitration and have actually conducted several on the order of the High Court.

6. That I have always been willing and ready to commence and conclude the arbitration but for the various excuses of counsel, and particularly those of the plaintiff/applicant’s counsel.
7. That I am of the firm belief that the plaintiff is unwilling to arbitrate on the issues involved in these proceedings.”

The motion to appoint another referee was heard on the 24th November, 1969, when it was moved by learned counsel for the plaintiff and the point then urged for the removal of Mr. Oluwa was that he was biased, the allegation being based upon paragraph 7 of the counteraffidavit which he himself had filed in court without advice or instruction. The application was however opposed by learned counsel for the defendants who also referred to and relied on the same counter-affidavit. In the course of his ruling, by which he dismissed the application, the learned trial judge, Sowemimo J. (as he then was) observed:-

“The question of bias does not arise whatsoever in the counteraffidavit filed by the referee. I have gone through the letters which he exhibited and I am satisfied that the delay to the proceedings on the order for reference was due to the requests made by the plaintiff’s solicitor at different periods. There were no allegations in any of the letters about the incompetency of the referee.

This application is absolutely misconceived since the referee appointed in this case had been agreed upon by the parties since the 26th June, 1967. The rule under which the application is made is not applicable to this case. The application will therefore be refused with costs. ”

This appeal is from the decision of the High Court, Lagos, dismissing the motion to appoint another referee. Undoubtedly there is no express provision in the Rules of Court, i.e. High Court, Lagos, concerning the removal of the referee or arbitrator in the circumstances postulated by the application and on the face of it, Order 49, rule 2 of the Rules to which learned counsel had referred in arguing his motion has no bearing on the matter. There can be no argument in any case that a court which itself had appointed a referee or an arbitrator may by order remove him if, from circumstances so deserving, such arbitrator or referee can no more be entrusted with the duties of that office. See East and West India Dock Co. v. Kirk and Randall (1887) 12 App. Cas. 738 at page 744 (observations of House of Lords-Lord Halsbury, L.c.); also In re an arbitration between Lord Gerard etc. [1894] 2 Q.B. 915 (per Kennedy, J. at page 918).

We have already set out the principle contents of the affidavit on which the plaintiff relies for asking for the removal of the referee as well as the contents of the referee’s own counter-affidavit denying the imputations contained in the plaintiff’s affidavit. It appears to us that the matters complained of by the plaintiff are:-

(a) the referee has been tardy in embarking upon the duties of the reference;

(b) although the referee had received the copy of the accounts filed by the defendants pursuant to the order of court, yet as late as the 11th October, 1967 he still wrote to the plaintiff’s solicitors asking for a statement “to be filed by the plaintiff on or before the date above fixed together with any document that may help our examination of the accounts.” See his writing on the 4th December, 1967 of letters to the solicitors of the parties stating, inter alia, as follows:-

“In addition, we are requesting that both the plaintiff and defendant should deposit with the court a sum of 250pounds each in anticipation of the cost of the arbitration. This has been made necessary by our experience with this kind of work especially as it may be necessary to support our findings with a verbatim report of the day to day sitting.”

(c) his writing on the 8th May, 1968 to the solicitors of the plaintiff stating, inter alia, as follows:-

“In the statement of defence, the defendants mentioned the name of Btesh Brothers & Company Limited who was said to be in close collaboration with one F. Habib stated to be agent or sub-partner of your clients. Will you please let us have from them their Own statement of account in connection with the part played by them in the venture.”

(d) his writing on the 12th August, 1968 to the plaintiff’s solicitor stating as follows:-

“We have received statements of account prepared by the defendants and shall be grateful to have on or before that date the statements of account on their part of the joint venture prepared by your clients together with all relevant documents, invoices and receipts in connection with the venture.”

(e) his filling a counter-affidavit without an order or leave of court and stating, inter alia, therein:-

“That I am of the firm belief that the plaintiff is unwilling to arbitrate on the issues involved in these proceedings.”

Before us, it was submitted by learned counsel for the plaintiff that the referee, by virtue of the paragraph quoted above from his counter-affidavit, was biased against the plaintiff and that by virtue of the other matters suggested above, he was not familiar with arbitration proceedings since the letters demonstrate that the referee was travelling outside his terms of reference and was embarking on steps which contravened orthodox and regular procedures; that he was calling witnesses of his own accord when he was not so requested by either or both of the parties and was indeed pre-occupied with the assurance of the payment of his own remuneration. On the other hand, learned counsel for the defendants submitted that the referee had not done anything improperly and that his conduct, which at the very worst may indicate tendencies to go wrong, should merely be corrected and that he should be advised as to what he should do. Learned counsel for the defendants further submitted that the court would only interfere in proceedings such as this where the referee had actually gone wrong and had done something wrong and drew our attention to the cases of R. v. Nailsworth Licensing Justices ex parte Bird [1953] 2 A.E.R. 652 and R. v. Cambourne Justices ex parte Pearce [1954] 2 A.E.R. 850. In the latter case and at page 855 of the report, Slade J. observed as follows:-

“In the judgment of this court the right test is that prescribed by Blackburn J. (L.R.I Q.B. 233) in R. v. Rand, namely, that to disqualify a person from acting in a judicial or quasi-judicial capacity on the ground of interest (other than pecuniary or proprietary) in the subjectmatter of the proceeding, a real likelihood of bias must be shown …. ”

We do not accept the contention of learned counsel for the defendants that in order to secure the removal of a referee the applicant must show that a referee or arbitrator had actually committed the wrong complained about. The authority on which he relied stated that a real “likelihood of bias” should be shown and we are firmly of the view that the test is the likelihood of bias and not the real application of it. See Obadara v. The President, Ibadan D.C., etc. [1964] 1 All N.L.R. 336. We think that a real likelihood of bias must certainly be shown in every case where it is sought to remove a referee or arbitrator in the circumstances of a case like the one in hand. For the plaintiff it was argued before us that the referee’s statement that the plaintiff is not desirous of going on with the proceedings is tantamount to an exhibition of bias. For this to be a real likelihood of bias, recourse must be had to a consideration of the surrounding circumstances. In this case, the referee was served with a copy of the plaintiff’s affidavit charging him with a number of inadequacies and we have no doubt that he reacted by filing a counter-affidavit without seeking legal advice both as to the propriety of filing such a document and as to the choice or selection of the wording of that counter-affidavit. The plaintiff is certainly entitled to apprehend a situation in which the referee should consider him, the plaintiff, unwilling to proceed with the arbitration proceedings because his case is hopeless, but we are convinced that that was not the only reason or consequence that could be ascribed to the filing of the affidavit or the particular paragraph that has been called in question.

With respect to the other allegations, we think that they do not amount to bias. It is true that the referee had shown a tendency to proceed to obtain evidence wrongfully or from wrong persons. It is the duty of counsel to object to irregularity in proceedings as and when such an irregularity does occur and the consequences of the other complaints may certainly be obviated by the vigilance of counsel. As Slade J. further said in the case of R. v. Cambourne Justices, supra, at page 855:-

“The frequency with which allegations of bias have come before the courts in recent times seems to indicate that the reminder of Lord Hewart C.J. in R. v. Sussex JJ. ex p. McCarthy (b) ([1924] 1 K.B. 259) that it is:-

‘of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done’

is being urged as a warrant for quashing convictions or invalidating orders on quite unsubstantial grounds and, indeed, in some cases, on the flimsiest pres of bias. While indorsing and fully maintaining the integrity of the principle reasserted by Lord Hewart C.J., this court feels that the continued citation of it in cases to which it is not applicable may lead to the erroneous impression that it is more important that justice should appear to be done than that it should in fact be done.”

It seems to us that these observations, with which we respectfully agree, are very pertinent and decisive on the matters raised on this appeal.

The referee himself is aware of the present proceedings and certainly would benefit immensely from reading this judgment. We think however that whilst a suspicion of bias or incompetence is enough to arouse the vigilance of a party against whom it is aimed, it is not enough for a court of law to act in order to revoke an appointment made in good faith and in complete reliance on the ability, and with it the capability, of the arbitrator.

The appeal fails and it is dismissed. The appellant will pay the costs of the respondent fixed at 36 guineas.

SC.91/1970