United Nigeria Insurance Company V. Adene (1971) LLJR-SC
United Nigeria Insurance Company V. Adene (1971)
LawGlobal-Hub Lead Judgment Report
Parties
UNITED NIGERIA INSURANCE COMPANY – Appellant(s)
AND
ADENE – Respondent(s)
MADARIKAN, J.S.C.
The appellants, the United Nigeria Insurance Co. Ltd., formerly known as the Northern Assurance Co. Ltd., were the defendants in the High Court, Kaduna, where the respondent had instituted an action, Suit No. Z/25/1967, against them on a writ which was indorsed as follows:
“The plaintiff’s claim against the defendants is for the sum of 2,500 pounds, being damages for breach of contract in that the plaintiff insured his 22-ton vehicle, a Fiat 643T tractor KA 9899 and its body-trailer KA 9896, with the defendant company at Kaduna comprehensively and when the said vehicle was damaged in a road accident on September 3rd, 1966 on the Zaria-Kana road during the currency of the said policy of insurance the defendants refused to indemnify the plaintiff against the financial loss and damage occasioned by the said accident.
The defendants have refused to repair the plaintiff’s said vehicle and have also refused to pay the plaintiff’s loss of use of same at the rate of 60 pounds per diem, which the plaintiff claims against the defendants from the date of the said accident till the date of judgment in this matter.
The defendants have refused to settle this claim, and have also refused to submit to arbitration despite repeated demands.”
On the return date, that is, August 15th, 1967, pleadings were ordered by the court. It would appear that, having agreed to submit to arbitration, the parties later that day appeared before Mr. Tunde Adewunmi who as the sole Arbitrator commenced arbitration proceedings, and on September 2nd, 1967 made an award in the following terms in favour of the present respondent, who was the plaintiff in the action and the claimant in the arbitration proceedings:
“In the result I award the claimant the sum of 7,300 pounds for both the pre-accident value of the vehicle and the loss of profit occasioned by the failure of the insurance company to repair or replace the tractor and trailer within a reasonable time of the accident.”
As an aftermath of the arbitration award, three applications were filed in the High Court and were listed for hearing before Bello, J. (as he then was).
The first application was filed by the plaintiff on September 23rd, 1967, praying for leave to enforce the award as a judgment of the court. The learned trial Judge refused the application on November 28th, 1967, and in so doing he stated, inter alia:
“However, I find that the application for leave to enforce is lacking in substance. There is no evidence of the award and the arbitration agreement which ought to have been verified by the affidavit in support of the application. The result therefore is that the court is left in the dark as to what were the terms of the arbitration agreement and the award. The affidavit simply states that an award was made and the applicant accepted it and now seeks its enforcement. I refuse leave to enforce the award on the only ground that the application is lacking in substance. I may as well indicate that this decision is not on the merits.”
The second application was for an order striking out the claim in the substantive action, that is, Suit No. 2/25/1967, on the ground that the plaintiff had failed to comply with the order for pleadings. When the application came up for hearing on December 23rd, 1967 it was not opposed, and the learned trial Judge ordered that the suit be struck out, with liberty to relist without payment of further fees. But before making this order, he had earlier that day given a ruling on another application filed in court by the defendants, now the appellants, in which they were seeking an order to set aside the arbitration award on the following grounds:
- “That the learned Arbitrator has misconducted himself or the proceedings by neglecting to take evidence on oath which by law is required to be taken on oath or affirmation.
- That the whole proceedings before the learned Arbitrator were null and void because there was no instrument of his appointment before entering into the reference.
- The proceedings are irregular in law because the plaintiff did not, and was not ordered by the learned Arbitrator, to submit his points of claim so as to give the defendants adequate notice of the allegations they were called upon to answer.
- That the proceedings are irregular in law in that the matters referred to the learned Arbitrator were not clearly defined and agreed by the parties before entering in the reference and he did not specify the issues he was called upon to adjudicate and the matters referred to him for his decision.
- The learned Arbitrator did not give notice of the appointment of the meeting for proceeding in the reference and thus did not afford the insurers adequate opportunity to prepare their case and produce their vital witnesses to testify on their behalf.
- That the award is bad on the face of it because the principle therein stated as the principle of law according to which the said Arbitrator professed …. to make his award is erroneously stated and or applied.
- That the said Arbitrator made the award well knowing that the same was contrary to law.”
In his considered ruling on that application, the learned trial Judge rejected each of the grounds relied upon by the defendants and dismissed the application. Being dissatisfied with the ruling, the defendants filed a motion on January 4th, 1968 seeking leave to appeal, and the motion was dismissed by Bello, J. (as he then was) on February 21st, 1968.
The plaintiff also filed a fresh application on January 4th, 1968, for an order granting him leave to enforce the arbitration award as a judgment. That application was duly transferred to the learned Chief Justice who, after hearing argument, made the following observations in the ruling which he gave on June 1st, 1968:
‘There remains a point which has not been raised before me or decided previously. I feel bound to refer to it now. The award of consequential damages was for breach of the contract of insurance by the respondents’ repudiation of their liability under it. The question is whether or not those damages were the ordinary consequence of the breach, or consequences which might reasonably be supposed to have been contemplated. The damages awarded were for loss of use from December 2nd, 1966 to June 15th, 1967. Under condition 4 of the policy, the respondents had the option of discharging their liability either by repairing the vehicles or by paying their pre-accident value or the amount of the damage to them. They did none of these things, but they were not obliged to do any particular one; and the applicant said the tractor was damaged beyond repair. The respondents could have discharged their liability by paying the pre-accident value, which the Arbitrator found was 1,900 pounds. Was loss of use a consequence of the respondent’s failure to pay 1,900 pounds Would payment of that sum have enabled the applicant to have the use of the vehicles again, or of a replacement even if one was procurable – the Arbitrator found that the vehicles could not be replaced until the last week in June. I will hear argument on this.”
Thereafter, he heard further argument, and gave his final ruling on November 23rd, 1968, in the following terms:-
‘This is an application for leave to enforce an arbitration award as a judgment of the court. The subject-matter of the arbitration was a claim by the applicant for damages for the respondent company’s breach of a contract of motor vehicle insurance by their repudiation of their liability under their contract. The history of the arbitration and the subsequent proceedings in this court was set out in my ruling on this application delivered on June 1st, 1968. In my ruling I decided in favour of the applicant on all the points raised before me which had not already been decided in the same sense by a ruling of Bello, J. dated December 23rd, 1967, dismissing an application to set aside the award. I then referred to a point which had not been raised on this application or on the application to set aside, namely, that the damages of 5,400 pounds awarded by the learned Arbitrator for loss of use of the vehicles insured were too remote because the respondent company’s liability under the policy could, under condition 4, have been discharged at the company’s option either by repairing the vehicles or paying their pre-accident value, which the Arbitrator found was 1,900 pounds, and it had not been shown that the loss of use was a consequence of the failure to pay the pre-accident value or that such payment would have enabled the applicant to have had the use of the vehicles or of equivalent replacements. I was unwilling to give leave to enforce the award for the full amount of the damages in those circumstances, and I heard argument on the question I had raised.
Having considered the authorities, which were not cited to me, on the court’s jurisdiction on an application of this nature, I am of the view that the point I have raised cannot be a ground for refusing leave to enforce the award or any part of it. Leave to enforce an award may be refused on the ground that the award is a nullity or is wholly or in part ultra vires, but if the objection is that the Arbitrator misconducted himself or erred in law, that will not be a ground for refusing leave (or a defence to an action to enforce the award) and the proper course is to apply to set aside the award or remit it to the Arbitrator. An application to set aside the award has already been made and decided, and there has been no application to remit and no application to adjourn the proceedings to enable an application to remit to be made. I grant leave to enforce the award as a judgment of this court, with costs in favour of the applicant assessed at 10gns.”
The defendants have now appealed against that ruling.
Before us on appeal, one of the complaints of learned counsel for the appellants, Mr. Sofola, was directed against the portion of the ruling of the learned Chief Justice in which, whilst dealing with the jurisdiction of the court, he stated that:
“Having considered the authorities, which were not cited to me, on the court’s jurisdiction on an application of this nature, I am of the view that the point I have raised cannot be a ground for refusing leave to enforce the award or any part of it.”
We are of the opinion that the criticism of counsel that the learned Chief Justice ought to have specified the authorities he was relying upon is well founded. Where, as in this case, a Judge feels obliged to consider in his judgment or ruling cases which were not cited in argument, it is desirable that the titles and references of such cases should appear in the judgment or ruling. But as it has not been shown that the learned Chief Justice was wrong in his conclusion on the issue of the court’s jurisdiction, we fail to see any justification to interfere.
Mr. Sofola also referred us to the portion of the ruling of the learned Chief Justice in which he said that:
“Leave to enforce an award may be refused on the ground that the award is a nullity or is wholly or in part ultra vires, but if the objection is that the Arbitrator misconducted himself or erred in law, that will not be a ground for refusing leave {or a defence to an action to enforce the award} and the proper course is to apply to set aside the award or remit it to the Arbitrator.”
Whilst conceding that the learned Chief Justice properly directed himself when he said that leave to enforce the award may be refused on the ground that the award is a nullity or is wholly or in part ultra vires, Mr. Sofola argued that the directions were inadequate as the learned Chief Justice failed to direct himself that in answer to the application for leave to enforce the award, the appellants could set up a defence that the award was bad on the face of it. To buttress his argument, he referred to the case of In re Stone {903} 2 KB 463; {1903} 89 LT. 353. In that case, a dispute arose between the owners of two adjoining houses. The Arbitrators who were appointed to settle the dispute under s.91 of the London Building Act, 1894, directed inter alia in their award that 38.10s.6d should be paid by the building owner to the adjoining owner for the extended use of the party wall. It was held that the provisions of s.91 of the Act restricted the questions which an Arbitrator appointed under the section could entertain, and that the Arbitrators had no jurisdiction to make the award of 38.10s.6d, as the reference under s.91 did not embrace any claim to a share in the expenses incurred in raising the party wall.
On examining the decision in In re Stone {supra}, it is clear that it proceeded on the basis that the award was bad on the face of it through lack of jurisdiction. It is therefore readily distinguishable from the instant case where there has been no suggestion that the Arbitrator had no jurisdiction to make the award.
Mr. Sofola next submitted that the learned Chief Justice was doubtful as to whether the Arbitrator was right in awarding consequential damages for loss of use, and that it was for that reason that he adjourned the case on June 1st, 1968, to enable counsel to address him on that point. Counsel relied strongly on the case of In re Boks & Co. {1919} 1 KB 491; {1919} 120 LT 516, where Scrutton, L.J. said at 497-498; (120 L.T. at 518):
“….. this summary method of enforcing awards is only to be used, in reasonably clear cases. It is not intended on the application for leave to enforce an award to try a complicated or disputed or difficult question of law. If it is not reasonably clear that the award should be enforced, the party seeking to enforce it must be left to his remedy by action, when the matter can be raised on proper pleadings and dealt with in proper form.”
We observe that Mr. Sofola had unsuccessfully canvassed this point when he was arguing the appellants’ motion for an order to set aside the award. The relevant portion of the ruling of Bello, J. (as he then was) of December 23rd, 1967 on the motion reads as follows:
“It remains to consider ground 6 – that the Arbitrator erred in law in making the award. Counsel for the applicants made two points on this issue. First, he argues that the Arbitrator having found that the applicants repudiated liability within the shortest possible time, he was wrong in law in holding that only the applicants were entitled to appoint an Arbitrator, and counsel submits that the duty to appoint was on the respondent under cl. 8 of Exhibit 2, and that he was negligent in so appointing and this caused the applicants to pay for 180 days at 35 pounds per diem. In dealing with this point the Arbitrator states in the award thus:
‘As to the other defence put forward by the insurance company, i.e., the defence that they repudiated the claim within the shortest possible time, and that the claimant was negligent in failing to appoint an Arbitrator, I must say that this defence is not tenable. Condition 8 of the policy is very clear on the point. There is nothing in condition 8 to show that any particular party should apply for arbitration. All the condition says is:
“All differences arising out of this policy shall be referred to the decision of an Arbitrator; to be appointed in writing by the parties ”
It could not have made any difference if the insurance company suggested the appointment of an Arbitrator, as they did at last.’ It is pertinent to note in this respect that the company eventually suggested the appointment in their letter dated August 10th, 1967, Exhibit 13, and subsequently effected the appointment under cover of their letter dated August 29th, 1967, Exhibit 17. I am satisfied that the Arbitrator correctly construed cl. 8 of the policy. He did not hold that only the applicants were duty bound to appoint, as counsel contended. His holding is, which is a correct one, that both parties have a right to do so, and that one would not therefore complain on the default of the other.
The other point on this ground argued by counsel for the applicants is that, as a contract of insurance is a contract of indemnity, loss of use is not recoverable under it. He refers me to 22, Halsbury’s Laws of England, 3rd ed., at 402-403, where various types of insurances for consequential loss are set out which must be specifically insured. He submits that consequential loss was not specifically insured under the policy in this case, and that the Arbitrator was therefore wrong in making an award for consequential loss.
Superficially this argument seems convincing, but it falls to the ground on deeper examination of the issues involved. The main issue before the Arbitrator, as I have indicated, is not a claim for indemnity under the policy or of consequential loss, but a claim for breach of this indemnity agreement as the result of its repudiation by the applicants. The Arbitrator considered that fully in the award and came to the conclusion that loss of use was not ‘indirect and consequential’ loss but that it arose ‘directly and naturally from the breach based on delay in putting the tractor and trailer back on the road, or replacing it …..’ He cited a number of authorities on the subject-matter before coming to this conclusion. I am of the opinion that he correctly stated the law, and I find no ground to interfere with his holding and finding.”
The appellants sought leave to appeal against the ruling. On February 21st, 1968, Bello, J. (as he then was) refused leave; and as the appellants chose not to pursue the matter any further, we cannot allow them to re-open it on this appeal.
Finally, when answering questions put to him by the court, Mr. Sofola sought to argue that the arbitration was void on the ground that the agreement to submit to arbitration was not in writing, but as this point was not raised in the grounds of appeal, we do not feel disposed to consider it.
In the event, the appeal fails on all grounds and it hereby dismissed with 30 guineas costs to the respondent.
Appeal dismissed.
SC.17/05/1971