TOTAL ENGINEERING SERVICES TEAM INC V. CHEVRON NIGERIA LIMITED
(2010)LCN/3581(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 23rd day of February, 2010
CA/L/222/2006
RATIO
PLEADINGS: BINDINGNESS OF PLEADINGS
It is trite law and as rightly submitted by both counsel that parties are bound by their pleadings and facts not pleaded would go to no issue. In line and binding on the parties therefore is section 19(1) of the Arbitration and Conciliation Act Cap A 18, Laws of the Federation of Nigeria 2004 which provides and said:-
“The claimant shall, within the period agreed upon by the parties or determined by the arbitral tribunal, state the facts supporting his points of claim, the points at issue and the relief or remedy sought by him, and the respondent shall state his points of defence in respect of those particulars, unless the parties have agreed otherwise on the required elements of the points of claim and defence.” PER CLARA BATA OGUNBIYI, J.C.A
ARBITRATION: CIRCUMSTANCES WHERE ARBITRAL AWARD CAN BE SET ASIDE
Section 30 of the Arbitration Act specifically states as follows:-
“(1) Where an arbitrator has misconducted himself, or where the arbitral proceedings, or award, has been improperly procured, the court may on the application of a party set aside the award.”
(2) An arbitrator who has misconducted himself may on the application of any party be removed by the Court.
In the case of Baker Marine (Nig) Ltd v Chevron (Nig) Ltd (2000) 12 NWLR (Pt. 681) page 393 at 404 Oguntade JCA (as he then was) found the expression “misconduct” having a wide import and the learned Jurist thereby gave the interpretation to include “where there is a failure on the part of an arbitrator to comply with the terms of an arbitration agreement this will amount to misconduct. See London Export Corporation Ltd v Jubilee Coffee Roasting Co. Ltd (1958) 1 All ER 494 at 497 …”
His Lordship Aderemi JCA (also as he then was) in his concurring judgment at page 412 of the report had this to say:-
“Although, the grounds for setting aside an arbitral award are quite the same as for its remission, the two have different connotations. The object of remission is to return the award published to the arbitrator for an error to be corrected, as for further information and a rightful decision to be given by the arbitrator. It follows therefore, that in a situation where the Court thinks that remission will meet the justice of the case former proceedings in the reference continue to be valid and the case is not started all over.” PER CLARA BATA OGUNBIYI, J.C.A
WORDS AND PHRASES: MEANING OF MISCONDUCT
At paragraph 622 of Halsbury’s Laws of England the learned authors at page 330 related what constitutes “misconduct” as follows:-
“It is difficult to give an exhaustive definition of what may amount to misconduct on the part of an arbitrator or umpire … It is accordingly misconduct for an arbitrator to fail to comply with the terms, express of implied, of the arbitration agreement. – – -” PER CLARA BATA OGUNBIYI, J.C.A
COURT: POWER OF A COURT TO EXERCISE DISCRETION TO AWARD OR REFUSE COSTS
I would further wish to restate the trite law that a court has an absolute and unfettered discretion to award or refuse costs in any particular case but that the discretion must be exercised judicially and judiciously. Relevant in point is the case of Nigerian Bank of Commerce and Industry v Alfirjir (mining) Nig. Ltd., (Supra) wherein their Lordships of the apex court said:-
“The award of costs or refusal to award costs is a matter in the discretion of the court, subject to the only qualification that the court’s discretion must be seen to have been judicially and judiciously exercised in this regard. It is a popular saying that costs follow the event in the sense that although every litigant has a right to obtain an order as to costs, nevertheless he may waive it. Assessment of the amount allowed in terms of an award of costs is the responsibility of the court who determines what are reasonable costs in the circumstances…” PER CLARA BATA OGUNBIYI, J.C.A
JUSTICES
CLARA BATA OGUNBIYI Justice of The Court of Appeal of Nigeria
RAPHAEL CHIKWE AGBO Justice of The Court of Appeal of Nigeria
ADAMU JAURO Justice of The Court of Appeal of Nigeria
Between
TOTAL ENGINEERING SERVICES TEAM INC Appellant(s)
AND
CHEVRON NIGERIA LIMITED Respondent(s)
CLARA BATA OGUNBIYI, J.C.A (Delivering the Leading Judgment): This is an appeal against the ruling of Adefope – Okojie J. of the Lagos State High Court (Lagos judicial Division). The ruling was delivered on the 13th day of September, 2005 and is contained at pages 234 to 270 of the record of appeal. By the judgment, the Lagos State High Court remitted part of the arbitral award to the sole arbitrator, Mr. H. Odein Ajumogobia (SAN) for reconsideration and decision.
The Respondent and the Appellant herein were the claimant and the respondent in the arbitration proceedings respectively. In this appeal, the claimant at the lower court would be referred to as the Respondent while the Respondent is the appellant. The award of the sole Arbitrator was delivered on the 23rd day of April, 2004. A portion of the award was in favour of the Respondent but the arbitrator dismissed a significant part of the Respondents’ claim. On the 21st day of July, 2004 the Respondent being dissatisfied with the portion of the award dismissing a head of its claim filed originating summons with supporting affidavit (at pages 1 – 162 of the Record of Appeal) at the High Court of Lagos State seeking an order setting aside that portion of the award or an order remitting that part of the award to the Arbitrator for reconsideration. The basis of the Respondent’s application was that the Arbitrator misconducted himself in taking a decision outside the scope of the issue for determination as formulated and agreed by the Arbitrator and counsel to the parties and that the award contains errors of facts or law on its face.
The brief facts of this case arose out of a contract service agreement between the Chevron Nigeria Limited (respondent herein) and Total Engineering Services Team Inc. (TEST) (appellant herein) under which TEST undertook to provide labour services to Chevron Nigeria Ltd among other Chevron entities.
Pursuant to the said agreement, one Mr. Danny Bufkin, an employee of appellant was assigned to work with the respondent at its facilities in Nigeria, where the said Mr. Bufkin was abducted and tortured for eight (8) days by a local tribe (the Ijaws), whilst he was on one of the respondent’s supply boats on an official assignment. That the respondent eventually paid a ransom in exchange for Mr. Bufkin’s freedom and upon his release, Mr. Bufkin instituted an action in the United States against the respondent on grounds of negligence.
The gravaman of Mr. Bufkin’s Claim as stated in his Amended original complaint filed in the U.S District court for the Southern District of Texas was that the respondent, being aware of the threat posed by the Ijaws (having been victims of such threats in the past), ought to have enacted safety precautions to mitigate the danger to those working for them or travelling on vessels owned or chartered by the respondent. Mr. Bufkin confounded that the respondent was negligent and as such he was entitled to damages for physical and mental pains for loss of wages loss of earning capacity and medical expenses.
The respondent demanded that the appellant take over its defence and settle the case on its behalf under the indemnity provisions in the contract.
However, the appellants’ insurers, Zurich American Inc. group turned down the request to take over the defence of Mr. Bufkin’s suit in the US District Court on the ground that the obligation imposed on the appellant under the indemnity clause of the contract, was not triggered, having regard to the respondent’s negligence.
The respondent and the appellant eventually settled Mr, Bufkin’s claim out of court. The terms and condition of the settlement are contained in a General Release Agreement dated 29 June, 2002 at pages 49 – 66 of the record.
Pursuant to the indemnity provisions in the Contract Service Agreement, the respondent sought reimbursement from the appellant of the amount it expended in the defence and settlement of Mr Bufkin’s suit. A dispute therefore arose as to whether the appellant was liable to indemnify the respondent under clauses 10 and 11 of the contract. Pursuant to clause 15.2 of the contract therefore, the dispute was referred to a sole – arbitrator for resolution in accordance with the Arbitration Agreement under the contract. The arbitrator, in an award published on the 24th day of April, 2003 (at pages 138 – 162 of the record) resolved the issue contained in the reference, He held that the respondent was entitled to be indemnified in respect of the sum of US $ 175,000 (One hundred and seventy five thousand United States Dollars) paid by the respondent to Mr. Bufkin in settlement of his claim against the respondent The arbitrator however refused the respondent’s claim for reimbursement of attorney’s fees of $232,249,66 on the ground that the head of claim was not proved.
Being dissatisfied with that part of the arbitrator’s award refusing its head of claim for reimbursement of attorney’s fees, the respondent, by an originating summons dated and filed 21st July, 2004 at the lower court, sought to either set aside that Part of the award or have it remitted to the arbitrator for reconsideration of that head of claim. The originating summons is at pages 1 – 162 of the record.
On the 13th September, 2005, the lower court delivered a ruling remitting that part of the arbitrator’s award, refusing the respondent’s claim for reimbursement of the attorney’s fees, to the arbitrator for reconsideration on that ground that the issue of who paid the attorney’s fees was one raised suo motu by the arbitrator. The lower court held that the arbitrator ought to have invited the parties to address him on the issue prior to reaching a decision. It is this part of the lower court’s decision therefore that forms the basis of this appeal.
By notice of appeal dated 14th and filed 15th November, 2005 the appellant filed four grounds of appeal at pages 271 – 274 of the record of appeal. On the 12th January, 2010 when the appeal was called up for hearing, the learned appellants counsel Mr. Adewale Afake informed the court of their intention to abandon grounds 2 and 3 of the grounds of appeal which same are accordingly struck out. The learned appellant’s counsel therefore proceeded to adopt and rely on their brief of argument dated and filed 5th May, 2008.
It is pertinent to state that the appellant’s ground four of the grounds of appeal challenges an award of cost. The learned counsel in justifying the absence of any leave of court prior to filing an appeal went further to rely on the provision of section 241(2)(C) of the constitution of the Federal Republic of Nigeria 1999. In other words that where the appeal relates to other issues other than costs alone no leave is therefore required to appeal thereon. The learned counsel therefore submitted the competence of the said ground of appeal. The counsel therefore urged in favour of allowing the appeal while the ruling of the lower court should be set aside and a consequential order be made dismissing the claim of the respondent as contained in the originating summons.
On behalf of the respondent the learned counsel Mrs. Adedoyin Rhodes-Vivour also adopted and relied on their brief dated and filed 30th April, 2009 but properly deemed filed on the 12th January, 2010. The counsel therefore urged that the appeal be dismissed as lacking in merit.
Briefly and on the question of the competence of ground four of the ground of appeal, it would be pertinent to reproduce
section 241(2)(C) of the constitution of the Federal Republic of Nigeria under reference which stated as follows:-
“(2) Nothing in this section shall confer any right of appeal.
(a) …
(b) …
(c) Without the leave of the Federal High Court or a High Court or of the Court of Appeal, from a decision of the Federal High Court or High Court made with the consent of the parties or as to costs only”.
As rightly submitted and argued by the learned appellant’s counsel, the notice of appeal at hand relates to other issues other than costs. In other words, it is not pertaining to costs alone. Without having to belabour the issue, the provision of the constitution under reference is very clear and explicit. It is my view therefore that the said ground 4 of the grounds of appeal on costs is competent.
From the two grounds one and four of the grounds of appeal, two issues were formulated on behalf of the appellant as follows:-
1. Whether the issue of who paid the attorney’s fees was raised suo motu by the arbitrator as to constitute misconduct, and if not, whether the learned trial Judge was right in remitting the award to the arbitrator for reconsideration.
2. Whether the learned trial Judge was justified in awarding the sum of N30,000.00 as costs to the respondent having regard to the circumstances of this case?
The Respondent, while adopting the appellant’s issue no 2, however reformulated issue 1 as follows:-
Whether the issue of who paid attorney’s fees was an issue before the arbitrator, and if not, whether the arbitrator was correct in raising and deciding on the issue without hearing the parties (suo motu) or whether such action constituted misconduct?
Submitting and responding on behalf of the 1st issue, the learned appellant’s counsel Adewole Afake copiously related to the relevant findings by the lower court whom counsel argued was wrong in its contention and conclusions. Counsel therefore drew, the court’s attention to paragraph 16 of the respondent’s claim at pages 37 – 38 of the record of appeal. That from the foregoing deductions it is clear that the respondent to the arbitration (appellant herein) joined issues with the claimant on the above said averment at paragraph 10 of the Defence at pages 79 – 83 of the record.
Counsel further argued that the arbitrator by holding that general principles embodied in cases and specific rules of Court are inapplicable to these proceedings and thereby putting the burden of proof on the claimant amount to a findings of fact. In other words that issues were joined by the parties on the respondent’s averment that it incurred reasonable and necessary attorneys’ fees and expenses in the defence of Mr. Bufkin’s claims. That both the parties and the courts are therefore bound by this finding of fact made by the arbitrator. Learned counsel to buttress his submission cited the authority in the cases of Taylor Woodrow (Nig) Ltd V S.E. GMBH (1993) 4 NWLR (Pt. 286) 127 at 140 B and Baker Marine (Nig) Ltd v Chevron (Nig) Ltd (2000) 12 NWLR (Pt 681)393 at 406). The learned counsel therefore, submitted the lower court being in error when it received the findings of fact made by the arbitrator in its ruling wherein it held that the question of who paid the attorneys’ fees was never in dispute between the parties. Further authorities in support were the publication by Phipson on Evidence 14th Edition, paragraph 4.02 at page 50; Maisaje v Hassan (2004) 11 NWLR (Pt. 883) 181 at p 193 at – 194 B. also the case of Tewogbade v Akande (1968) N.M.L.R 404 at 408 per Eso JSC. That the respondent failed to discharge the onus on it of proving its assertion that it paid the attorney’s fees.
Furthermore, that it was the respondent who pleaded and tendered Exhibit CNL5; and that all that the arbitrator did was to evaluate the evidence (i.e Exhibit CNL5) and that from same, a finding was arrived at which was not favourable to the respondent. Counsel therefore, submitted that the respondent cannot in the circumstance turn around to complain of the use to which Exhibit CNL5 has been put to by the arbitrator. The counsel cited the case of Tijani v Akinwunmi (1990) 1 NWLR (Pt 125) 237 at 249 per Akpata JCA, also the view expressed by Edozie JCA in Igwe v A.l.E.C (1994) 8 NWLR (Pt 363) 459 at 476. That it was therefore wrong of the learned trial Judge to have held that the arbitrator misconducted himself by not inviting the parties to address him on his findings that it was Chevron Texcaco Overseas Petroleum Inc., that paid the Attorney’s fees and not the claimant. Counsel submitted and urged this Court to hold that the Arbitrator did not misconduct himself because the issue whether or not it was the respondent who incurred the Attorneys fees was part of the dispute that was referred to the Arbitrator for determination. That to the contrary, the said issue could not have been raised by the Arbitrator suo motu as alleged. That the finding of the trial court is perverse and ought to be set aside.
Responding to the first issue raised on behalf of the appellant, the learned counsel Mrs, A.a. Rhodes-Vivour representing the respondent submitted the principles of law which binds parties to their respective pleadings and proceeded to relate same to the provision of section 19(1) of the Arbitration and Conciliation Act Cap. A18, Laws of the Federation of Nigeria 2004. Further reference was also laid on sections 14 and 15 of the same Act wherein ensurance of fair hearing was of a top most consideration. That it is a misconduct for an arbitrator to decide a reference on a point or issue not before him, Counsel further cited the provisions of sections 29 and 30 of the Arbitration Act as relevant.
Counsel argued further that in the proceedings before the Arbitrator neither in its pleadings nor written address did the appellant raise any issue as to whether the sum claimed in respect of attorneys’ fees was actually paid by the Respondent or not. That Exhibit CNL5 at page 67 of the record was tendered by the Respondent in support of the claim for Attorneys’ fees, That the fees were payable to the firm of Messrs Adamu & Reese LLP who represented the respondent and other parties as counsel in relation to the defence of Mr. Bufkin’s claim before the US District Court. That the issue of who paid attorneys’ fees was not taken up in evidence. In other words, either in the affidavits filed by the appellant or by the filing of a counter affidavit. Reference was graphically related to the evidence before the arbitrator in respect of payment of attorneys’ fees and also made to Exhibit CNL5 and which learned counsel submitted did not say who made the payment. Further references were also made to the submission by the Respondent’s Counsel vide paragraphs ii and iii at page 170 of the Record of Appeal and also to the findings of the arbitrator at paragraph 15.03 of his award, That no where in its pleadings or evidence did the appellant deny that the respondent herein had paid attorneys’ fees. Reliance was further made to the decision in the provisional Liquidator of Tapp Industries Ltd v Tapp Industries Ltd (1995) 5 NWLR (Pt 393) 9 at 41, a Supreme Court decision; also Kuti v Balogun (1978) 1 SC 53, Ugo v Obikwe (1989) 1 NWLR (Pt. 99) 566 at 581 and Oje v Babalola (1991) 4 NWLR (Pt. 185) 267 at 280.
On the conduct of the arbitrator in cases of this nature, the learned counsel referred to the apex court’s re-iteration per Oguntade JSC in the case of Taylor Woodrow v S.E.GMBH (1993) 4 (WLR (Pt. 286) p. 127. That the cases relied upon by the appellant are not applicable to the facts of the matter under consideration. That the arbitrator having determined the issue in favour of the Respondent herein nevertheless proceeded to deprive it of a significant part of its claim on the basis of a point not canvassed by the parties. That counsel cannot at the appellate stage make a case which it had not made at the arbitral tribunal.
On the deductive summary of the issue, the learned counsel submitted that the appeal is not worthy of consideration bearing in mind the fundamental principle of arbitration Law and practice (i.e. fair hearing) and the need to uphold the principle that a judicial body ought not to decide upon points not canvassed before it and/or raise points suo motu without hearing the parties. That in doing so, the arbitrator misconducted himself and failed to adhere to the fundamental principles of arbitration as stated in sections 14 and 15 of the Arbitration and Conciliation Act, Laws of the Federation 2004. The learned counsel in the circumstance urged that the decision of the lower court be upheld: In other words that the arbitrator misconducted himself by raising the question of who paid attorney’s fees, suo motu and determining the question without hearing the parties, thereby depriving the respondent of the costs he had held it was entitled to. That the appeal should in the circumstance therefore fail.
For the determination of the 1st issue, it is pertinent to reflect the Respondent’s complaint at the lower court. In other words, it was to the effect that the arbitrator went outside the agreed issue before him and raised the matter pertaining to proof of payment of Attorney’ s fees suo motu, and proceeded to rely upon grounds not canvassed by any of the parties in coming to a decision relating proof of such payment by the Respondent thus leading to the refusal of the head of claim. The learned trial Judge in his ruling agreed with the respondent and consequently remitted the part of the award on payment of Attorney’s fees to the Arbitrator for reconsideration and decision. The issue for determination therefore, is whether the arbitrator went out of the issues before him to make a case for a party outside its pleadings and outside the issue referred for resolution by the parties as found by the lower court? For purpose of a clearer insight for the determination of the issue at hand, a background reference of the claimant’s claim before the arbitrator would be relevant, wherein the following reliefs were sought for at page 147 of the record of appeal.
“9.01 A declaration that the claimant is entitled to be fully indemnified by the Respondent for all sums paid to Mr. Bufkin in settlement of his claim in suit No. CA- NO G – 01 – 218 (Bufkin v Chervon).
9.02 A declaration that by virtue of clause 11 of the contract, the Respondent was obliged to provide insurance coverage for the claims of Mr. Bufkin and that it did not provide that Insurance Coverage.
9.03 A declaration that the Respondent was in breach of the contract by failing to have its worker’s compensation Insurance assigned to the claimant and thereby caused the claimant loss and damages.
9.04 Payment by the respondent to the claimant of the sum of US $407,249.66 including:
(i) The sum of US $175,000 paid by the Claimant to Mr. Bufkin as part of the settlement;
(ii) Reinbursement of the legal fees and expenses of US $232,249.66 paid by the claimant to the firm of Adams & Reese LLP.
(iii) The sum of US $20,000 as general damages.
9.05 Interest on the total sum at the rate of 4.75% per annum from 28th June, 2002 until the date of the award and thereafter at 6% per annum until final liquation 9.06 costs”
At page 148 of the record of appeal and in the arbitrator’s opinion the matter between the parties essentially turns on two issues as follows:-
1. Firstly, the meaning, in Nigerian Law of the phrase “active negligence and whether as a matter of fact, ‘active negligence’ occurred.
2. The related second issue to be resolved related to whether the injury suffered by Mr. Bufkin consequent upon his abduction was an insurable risk under the cover by clause 11 of the contract.
On the claim for reimbursement of Attorney’s fees of $232,249.66 the arbitrator at page 156 of the record of appeal had this to say at paragraph 15.06 and 15.08.
“15.06 Respondent did not file a counter affidavit and would ordinarily be deemed to have admitted that the said sum of N232,249.66 (Evidenced by EXHIBIT CNL5) was paid by Claimant in defence of Mr. Bufkins claim as per EXHIBIT CNL5. The Exhibit headed “matter summary” further indicates that it emanated from Adams & Reese LLP and was issued in the matter of Danny Bufkin.
15.08 In the light of the Arbitrator’s finding that the Respondent failed to prove “active negligence” on the part of the claimant, it cannot be contested that Respondent would be liable for the reimbursement of all Attorneys’ fees paid by the claimant where such payment is proved.”
In the circumstances therefore, the arbitrator at page 157 of the record held and said:-
“The claimants claim reimbursement of Attorneys’ fees in the sum of USD 232,249.66 (Two Hundred and Thirty Two Thousand, Two Hundred and forty Nine Dollars; Sixty Six Cents) allegedly paid to the firm of Adams and Reese LLp in defence of the claimant, fails and is hereby dismissed.”
It is pertinent to restate that the arbitrator’s reason for his refusal and hence the dismissal of the claim for reimbursement was clearly set out at pages 155 – 157 of the record with specific reference to paragraphs 15.06, 15.08 and 15.16 respectively.
Also at page 142 of the record of appeal at a preliminary meeting of the parties represented by their respective counsel on 13th February, 2003 the essential terms of reference and issue for determination for the arbitration was agreed upon as follows:-
“Whether Respondent is liable under the indemnity/insurance provisions of contract No. OPR – 95 1214 to indemnify and/or hold claimant harmless against costs and expenses waived by claimant arising from Mr. Bufkin’s claims and/or Jawsuit.”
Furthermore and at the said page 142 of the same record, the arbitrator on the terms Reference/issues of determination said thus at paragraph 3.01:-
“Essentially, the dispute between the parties was the interpretation and legal effect of consequences of the provisions of the contract with regard to the indemnitylinsurance clauses viz clauses 10.01, 10.02 and 11 of the contract.”
I have related copiously and earlier in this judgment, the complaint of the respondent before the lower court alleging that the arbitrator went outside the agreed issue before him and raised the matter pertaining to proof of payment of Attorneys’ fees suo motu and thereby arriving at a decision on pr00f of such payment by the respondent and thus leading to the refusal of the head of claim.
Relevant aspects of the findings by the lower court at pages 247 -269 are of significant importance. For example at page 267 (lines 1 – 10) of the record the lower court said:-
“From the foregoing observations, it is my opinion that since the evidence of Mr. Boyo with regards to the claimant’s payment of legal fees had not been contradicted, and the witness found to be truthful, and since it was not an issue for resolution before the Arbitrator as to whether it was the claimant or it’s affiliates that paid the fees for which reimbursement was sought, the issue raised by the Arbitrator of the fees not having been paid by the claimant, but by chevron Texaco Overseas Petroleum Inc., and which issue led to a denial of a leg of the claim by the claimant, was an issue taken suo motu by the arbitrator, the same not having been raised by either party.”
Furthermore and at page 268 (lines 3 -7) of the record, the lower in its findings proceed and said:-
“…The interest of justice dictates that since neither of the parties raised the issue as to which party paid the professional fees, and since this was not canvassed by either party as an issue, the Arbitrator should have given the parties an opportunity to address him on the Invoice of Adams and Reese before arriving at his decision.”
Continuing further, the lower court also at page 269 (lines 5 – 7) and lines 11 – 13) of the record said:-
“The Arbitrator, before he made a decision based thereon, should I hold, have put the issues to the parties, the same not having emerged as a dispute between the parties … I accordingly hold that the arbitrator misconducted himself by raising and determining suo motu the issue of who paid the fees in the suit instituted by Daniel Bufkins without putting the same to the parties.”
The learned appellant’s counsel related steadfastly to paragraphs 16 and 10 of the points of claim pleaded by the respondent (claimant) and the response by the appellant (respondent) respectively; counsel submitted that, parties have joined issues as to who paid the attorney’s fees. That the error was on the part of the lower court in its findings at page 269 lines 2 – 7 of the record of appeal wherein it was held that:-
” the question who paid the fees was never disputed either by the witness at the proceedings or in the Defendant’s point of defence. The Arbitrator, before he made decision based thereon, should, I hold, have put the issue to the parties, the same having not emerged as a dispute between the parties.”
Having spelt out the issues as formulated by the arbitrator and decision arrived there from, can it be rightly said and as submitted by the learned appellant’s counsel that the lower court erred in its findings and conclusion arrived there at?
It might be relevant at this point to restate the general principles of law as laid down in situations
where a Judge decides to raise a point suo motu; It has been held in plethora of authorities that in the interest of justice and in such situations a Judge is enjoined to invite parties, particularly the party that may be adversely affected as a result of the point raised suo motu, to address it on such a point, before basing it’s decision thereon. The authority in point is the case of Provisional Liquidator, Tapp Industries V. Tapp Ind. (1995) 5 NWLR part 393 page 9 at 41, wherein their Lordships of the Apex Court per Iguh JSC noted that:-
“The issue of worthlessness of the said affidavit of inventory was raised for the first time by the Court of Appeal suo motu. It was either canvassed by the parties in the trial court now before the court below. With profound respect the court below was in gross error by failing to give the parties an opportunity to address it on the status of the said document before arriving at its decision…”
Other authorities related to by their Lordships were the cases of Kuti v Balogun (1978) 1 SC 53; Ugo v Obikwe (1989) 1 NWLR (Pt. 99) 566 at 581; and Oje v Babalola (1991) 4 NWLR (pt. 185) 267 at 280.
Also relevant is the case of Borno Radio Television v. Egbuonu (1991) 2 NWLR (Pt. 171) p. 81 at 88, a decision of this court, wherein it was that:-
“If a party does not make a ground as the basis of his case, it is wrong for the court to determine his case on the basis of that ground as it is wrong for the court in a civil case to make for a party a case which the party has not made for himself.”
The learned respondent’s counsel Mrs. A.O. Rhodes – Vivour also referred to a number of publications putting a caution on an arbitrator in the cause of mediating between parties. Such examples drawn were learned authors Oroio and Ajomo in the book “Law and Practice of Arbitration and Conciliation in Nigeria” where at page 204 they emphasized that decisions predicated on issues such as raised suo motu, should not be arrived at without an opportunity given to the parties to comment thereon. Equally significant and of note is the view by the learned writer Robert Merkin in his book Arbitration Law at paragraph 15.55(d) at page 616 wherein he said:-
“In general an arbitrator must provide notice of, and opportunity to respond to, issues, ideal, methods research, investigations and/or studies of the arbitrator that were not reasonably foreseeable in the light of the arguments traversed before the arbitrator. ”
The learned authors Sir Michael J. Mustill and Steward C. Boyd in their publication Commercial Arbitration at page 312 on the subject also said:-
“If the arbitrator decides the case on a point which he created for himself, he creates surprise and deprives the parties of their right to address full arguments on the base which they have to answer…”
It is trite law and as rightly submitted by both counsel that parties are bound by their pleadings and facts not pleaded would go to no issue. In line and binding on the parties therefore is section 19(1) of the Arbitration and Conciliation Act Cap A 18, Laws of the Federation of Nigeria 2004 which provides and said:-
“The claimant shall, within the period agreed upon by the parties or determined by the arbitral tribunal, state the facts supporting his points of claim, the points at issue and the relief or remedy sought by him, and the respondent shall state his points of defence in respect of those particulars, unless the parties have agreed otherwise on the required elements of the points of claim and defence.”
The learned respondent’s counsel drew the attention of this court to the provision of sections 14 and 15 of the Act wherein the Arbitral Tribunal is obliged to give the parties full opportunity to present their case and ensure fair hearing. The applicable Arbitration Rules in schedule 1 of the Arbitration and conciliation Act Cap A18, Laws of the Federation of Nigeria 2004 also contain provisions with respect to the procedure for parties to make out their respective cases. The procedure which is to ensure that each party is aware of the case of the other and be expected to answer thereto. In other words there should be no springing of surprises on their opponents. The case of Eneoh v Oraekwe (2005) 1 NWLR (Pt. 961) p. 342 at 353 is in the circumstance relevant.
On the status of Exhibit CNL5 heavily relied upon by the learned appellant’s counsel, the same was tendered by the respondent in proof of the averment contained in paragraph 16 of the point of claim, that it paid the attorney’s fees. It is in evidence on record that Exhibit CNL5 at page 67 of the record of appeal was tendered by the Respondent in support of the claim for Attorney’s fees. As rightly submitted an argued by the learned respondent’s counsel, the fact that Messrs. Adams & Reese LLP represented the Respondent and other parties as counsel in relation to the defence of Mr. Bufkin’s claim was not contested by the appellant (i.e. the respondent in the arbitral proceedings.)
In other words, deducing from the facts before the arbitrator on the claim related thereto as presented by parties, issues formulated thereon the facts available, and evidence taken, there is no where that the question as to who paid attorney’s fees was taken up as an issue between parties. Neither the affidavits filed by the appellant nor counter-affidavit revealed such having been raised.
The document Exhibit CNL5 at page 67 of the record which is heavily relied upon by the appellant shows the client’s name as Chevron Texaco Overseas Petroleum Incorporated. The fees were due to Adams & Reese. There is nowhere on the Exhibit stating or evidencing who made the payment.
The learned appellant’s counsel while relating to Exhibit CNL5 and to buttress his submission cited the decision in the case of Akinola Vs. V.C. Unilorin (2004) 11 NWLR (Pt. 885) 616 at page 650. In that case however, the contents of the Exhibit sought to be relied upon by the court in the making of its finding of facts were relevant to the determination of a point in issue before the judicial body. The exhibit therefore was material to the determination of an issue before the court and which the parties were aware of and had the opportunity to address the court thereon. The case under reference is therefore remarkably distinguishable with case at hand. In other words that the appellant at hand, in its pleadings, evidence or address did not contest the issue whether the sums claimed as Attorneys’ fees was paid for by the Respondent.
The appellant in his further submission relied on the case of Odejide v Fagbo (2004) 8 NWLR (Pt. 874) page 1. In that case, the court was considering the application of section 92 of the Evidence Act. In other words, the evidence sought to be relied upon was rejected on the basis that the relevance of the name of the party had not been shown and that no foundation had been laid for the admissibility of the receipts. The documents were therefore rejected on the basis of relevancy and admissibility. The question of admissibility or relevance is not applicable to Exhibit CNL5 to which evidence Act per section 1(2) is not applicable wherein it clearly stated as follows:-
” This Act shall apply to all judicial proceedings in or before any court established in the Federal Republic of Nigeria but it shall not apply to proceeding before an arbitrator.”
At page 156 of the record of appeal paragraph 15,06 of his award, the arbitrator also had this to say:-
“Respondent did not file a counter affidavit and would ordinarily be deemed to have admitted that the said sum of $232,249.66 (evidenced by EXHIBIT CNL5) was paid by claimant in defence of Mr. Bufkin’s claim as per EXHIBIT CNL5. The Exhibit headed “matter summary” further indicates that it emanated from Adams & Reese LLP and was issued in the matter of Danny Bufkin”.
At page 142 of the record of appeal and specifically at paragraph 1.08 of the Award, the re – statement of the essential terms of reference and issue for determination for the arbitrator as agreed upon confirms that the arbitrator clearly underst00d what the dispute between the parties was. The said paragraph 1.08 reproduced states as follows:-
“Whether Respondent is liable under the indemnity insurance provisions of contract No. OPR – 95 1214 to indemnity and/or hold claimant harmless against costs and expenses measured by claimant arising from Mr. Bufkin’s claims and/or Law suit.”
The learned appellant’s counsel also related to the authorities in the cases of Jibrin v Baba (2004) 16 NWLR (Pt. 899) page 243 and Tijani v Alanwunmi (1990) 1 NWLR (Pt. 125) 237. It is pertinent to point out that in the earlier decision of Jibrin v Baba (supra), the court clearly emphasized that evaluation of evidence should be on the case before the court. It follows that, where a case has not been placed before the court, there cannot be any evaluation thereof. Similarly and in line with the case of Jibrin v Baba the authority of Tijani v Akinwunmi is also not relevant to the appellant’s case. Briefly and for purpose of recapitulation, the complaint of the respondent before the trial court as earlier stated was not premised on the Sole Arbitrator’s consideration of EXHIBIT CNL5 but rather its finding on the basis of a case not put before him.
Also in the case of Igwe v A.I.E.C (1994) 8 NWLR (pt. 363) relied upon by the learned appellant’s counsel, the court found that the matter dealt with by the trial Judge and complained about at the appellate court was covered by the pleadings of the parties. The trial Judge was therefore found to have been within and not outside the pleadings. Contrary to the matter at hand, the question of an issue having been raised suo motu did not arise in that case.
From all deductions of the matter at hand, it would appear that the appellant’s counsel on the submission and authorities cited had totally misconceived the deduction arrived at by the arbitrator and which same had been dealt with appropriately by the learned trial Judge. In other words, the lower court in its ruling whilst distinguishing the facts of the case of Jibrin v Baba supra and Usi Enterprises Limited v Kogi State Government (2004) 16 NWLR (pt. 908) page 494 was on a proper track and perspective when at page 269 of the record of appeal it said thus:-
“Each case, I hold is however to be determined on the peculiar facts before it. In the present case, the question of who paid the fees was never disputed either by the witnesses at the proceeding or in the Defendant’s point of Defence.
The Arbitrator, before he made a decision based thereon, should, I hold, have put the issue to the parties, the same not having emerged as a dispute between the parties.”
Sections 14 & 15 of the Act in summary oblige the Arbitral Tribunal to give the parties full opportunity of presenting their case and ensure fair hearing. The arbitrator as rightly found by the lower court did flagrantly flouted the good intention of the provisions.
As a consequence of the findings made by the lower court therefore it proceeded and pronounced the arbitrators line of action amounting to a misconduct and thereby concluded thus:
” I accordingly hold that the arbitrator misconducted himself by raising and determining suo motu the issue of who paid the fees in the suit instituted by Daniel Bufkins, without putting the same to the parties.”
Sections 29 and 30 of the Arbitration Act empower a party to apply to a High Court to set aside an award made by an arbitrator who has acted beyond the scope of the parties reference.
While the learned appellant’s counsel applauded the arbitrator and argued the issue of who incurred the Attorney’s fees being part of the dispute that was referred for determination, the respondent’s counsel vehemently argued same as having been raised suo motu. The question is, whether the arbitrator has infact misconducted himself in a manner that warrants the setting aside of the award, or its remission back for his reconsideration?
Section 30 of the Arbitration Act specifically states as follows:-
“(1) Where an arbitrator has misconducted himself, or where the arbitral proceedings, or award, has been improperly procured, the court may on the application of a party set aside the award.”
(2) An arbitrator who has misconducted himself may on the application of any party be removed by the Court.
In the case of Baker Marine (Nig) Ltd v Chevron (Nig) Ltd (2000) 12 NWLR (Pt. 681) page 393 at 404 Oguntade JCA (as he then was) found the expression “misconduct” having a wide import and the learned Jurist thereby gave the interpretation to include “where there is a failure on the part of an arbitrator to comply with the terms of an arbitration agreement this will amount to misconduct. See London Export Corporation Ltd v Jubilee Coffee Roasting Co. Ltd (1958) 1 All ER 494 at 497 …”
His Lordship Aderemi JCA (also as he then was) in his concurring judgment at page 412 of the report had this to say:-
“Although, the grounds for setting aside an arbitral award are quite the same as for its remission, the two have different connotations. The object of remission is to return the award published to the arbitrator for an error to be corrected, as for further information and a rightful decision to be given by the arbitrator. It follows therefore, that in a situation where the Court thinks that remission will meet the justice of the case former proceedings in the reference continue to be valid and the case is not started all over.”
At paragraph 622 of Halsbury’s Laws of England the learned authors at page 330 related what constitutes “misconduct” as follows:-
“It is difficult to give an exhaustive definition of what may amount to misconduct on the part of an arbitrator or umpire … It is accordingly misconduct for an arbitrator to fail to comply with the terms, express of implied, of the arbitration agreement. – – -”
The learned authors outlined numerous circumstances amounting to misconduct and concluded that “In each of the cases the arbitrator or umpire has misconducted himself, the court has power to set aside his award.”
As rightly submitted by the learned respondent’s counsel, by the arbitrator making a finding on an issue raised by him suo motu, he had certainly misconducted himself by not allowing the parties to address thereon. The conclusion arrived there at by the lower court that the arbitrator had misconducted himself cannot in the circumstance be faulted. The said issue one is therefore resolved against the appellant.
The second issue, relates to the award of cost in the sum of N30,000 to the respondent wherein the appellant argued as wrongful. Counsel submitted that having regard to the facts of this case, the award was excessive, arbitrary to known principles for the award of costs. That in awarding cost, the lower court ought to have taken into account the principles stated in order 49 rule 1 of the High court of Lagos State (Civil Procedure) Rules, 2004 and also a number of judicial authorities cited in support. That one of the principles laid down in the cases is that, costs are not usually awarded for fanciful expenditure but on the ordinary principles of genuine and reasonable out of court expenses. See specifically Rewane v Okotie Eboh (1960) FSC 200. That there were no sufficient materials before the court to justify the exercise of its discretion to award cost in the sum awarded. That the lower court had failed to take into consideration the factors stated in paragraph 5.3 and the decision in Ihesirim V. W.C.N Ltd (2002) 26 WRN 144. The learned counsel urged that the appeal should also be allowed on that issue. On the totality this court is called upon to set aside the decision of the trial court inclusive of and all the consequential orders and thereby dismiss the claims of the respondent in the originating summons.
In response to the submission on costs the learned respondent’s counsel enumerated the various expenses incurred which she totaled amounted to over N26,000 as an out of pocket expenses including serving processes outside Nigeria through DHL at the appellant’s offices located out of jurisdiction. Submitting on the discretion of the Court the learned counsel cited the case of Nigeria Bank of Commerce and Industry v Alfirijir (Mining) Nig. Ltd (1999) 4 NWLR (Pt. 638) 176. That the appellant had failed to prove that the lower court violated the set down principles for award of costs. That the court should not therefore interfere with the discretion so exercised in the light of the case of Okeke v Okoli (2000) 1 NWLR (Pt 642) 641 at 655. Counsel reiterated that the issue of costs should also be dismissed while the award by the lower Court should be upheld.
The respondent’s counsel in conclusion, urged that this court upholds the decision of the lower court and to dismiss the appeal as unmeritorious with costs to the respondent.
For the determination of the issue at hand, reference can be made to the proceedings of the lower court in awarding cost on the oral application made by the respondent’s counsel wherein Mr. Balogun said thus at page 270 of the record of appeal.
“I ask for costs of N50,000.00 out of pocket expenses amounts to over N26,000.00 we also had to serve the processes thought DHL. We have had over 5 appearances. Two senior counsel favour were involved from outside.
Court: Costs of N30,000 is awarded in favour of claimant.”
In projecting and contesting the excessive nature of the costs awarded, the appellant at paragraph 5.3 of its brief of argument amongst others contended that:-
“5.3 there were no sufficient materials before the Court to justify the exercise of its discretion to award cost in the sum of N30,000.00”
Generally, cost are awarded on the premise that the successful party should be compensated for expenses incurred in the case/litigation. Order 49 rule 1 sub-rules 1 and 2 of the High Court of Lagos State (Civil Procedure) Rule 2004 being the source of the principle state as follows:-
“1 (1) In fixing the amount of costs, the principle to be observed is that the party who is in the right is to be indemnified for the expenses to which he has been necessarily put in the proceedings, as well as compensated for his time and effort in coming to court. The Judge may take into account all the circumstances of the case.
2. when cost are ordered to be paid, the amount of costs shall, if practicable, be summarily determined by the Judge at the time of delivering the judgment or making the order.”
The learned appellant’s counsel cited the authority in the case of Ihesirim supra, where at page 149 Bulkachuwa JCA had this to say:-
“where on the peculiar facts and circumstances of a case, a court awards cost which is too excessive for no apparent reason that the mathematical equation of the cost claimed and the cost conceded, it is within the competence of an appellate court to have it reviewed.”
It is pertinent to take note that before the cost awarded is to be reviewed, it must have been too excessive and awarded for no apparent reason. The question to pose at this juncture is, whether the cost of N30,000 awarded by the lower court is too excessive in the circumstance at hand. This is taking into consideration that N26,000.00 represented out of pocket expenses.
I would further wish to restate the trite law that a court has an absolute and unfettered discretion to award or refuse costs in any particular case but that the discretion must be exercised judicially and judiciously. Relevant in point is the case of Nigerian Bank of Commerce and Industry v Alfirjir (mining) Nig. Ltd., (Supra) wherein their Lordships of the apex court said:-
“The award of costs or refusal to award costs is a matter in the discretion of the court, subject to the only qualification that the court’s discretion must be seen to have been judicially and judiciously exercised in this regard. It is a popular saying that costs follow the event in the sense that although every litigant has a right to obtain an order as to costs, nevertheless he may waive it. Assessment of the amount allowed in terms of an award of costs is the responsibility of the court who determines what are reasonable costs in the circumstances…”
As rightly submitted by the learned respondent’s counsel in the circumstance of the case at hand, I hold, that the appellant has failed to prove that the lower court violated the set down principles for the award of costs. In line with the case of Okeke v Okoli under reference supra, I have not seen any reason why this court should interfere with the discretion exercised by the lower court in awarding the cost as it did. I will certainly not venture to do that. In Okeke v Okolis’ case supra, the court at page 655 held and said:
“The costs awarded by the trial Judge has not been shown to be arbitrary or out of tune with the reality of the situation or indeed vindictive. It has not been shown that the trial Judge did not exercise his discretion in the award of cost judicially and judiciously as well. Consequently this court will not interfere with the trial Judge’s exercise of discretion in his award of costs which was not depicted as violative of set down principles for the award of costs generally.”
The said foregoing authority is, from all deductions apt and applicable to the case at hand and I hold that the appellant, contrary to the submission by its counsel, has not shown that the award of costs was excessive. In other words, the learned trial Judge in my candid view, was very judicial and judicious in the exercise of his discretion wherein he awarded the costs of N30,000 to the respondent. As a consequence, the said issue two is also resolved against the appellant.
On the totality of this appeal and with both issues having been resolved against the appellant, I make an order dismissing the entire appeal, and thus upholding the decision of the lower court and remitting the part of the award, dealing with the issue of who paid the Attorney’s fees, back to the arbitrator for reconsideration and decision. This, I hold especially wherein the issue was raised suo motu and decided upon without giving the parties an opportunity to address thereon and thus amounting to the violation of the cardinal constitutional principles of the right to fair hearing. The appellant is also condemned to costs of N50,000.00 costs in favour of the respondent.
Appeal is dismissed with N50,000.00 to the respondent.
RAPHAEL CHIKWE AGBO, JCA: I have been opportuned to read in draft the lead judgment just delivered by OGUNBIYI, JCA and I agree with both her reasoning and conclusions. She has dealt most exhaustively with all the issues raised and I have nothing useful to add. I too dismiss the appeal with N50,000.00 costs to the respondent.
ADAMU JAURO, J.C.A.: I have had the advantage of reading in draft the lead judgment just delivered by my learned brother, Ogunbiyi JCA. I am in complete agreement with the reasoning and conclusions reached.
By way of emphasis, I wish to reiterate that where any point is raised suo motu by any adjudicating body, parties to the dispute must be heard on the new point raised.
Where this is not done, it will have the resultant effect of denying the parties their right to fair hearing as enshrined in Section 36 of the 1999 Constitution, thereby occasioning a miscarriage of justice. See A.G. Leventis (Nig) Plc v. Akpu (2007) 17 NWLR (Pt. 1063) 416 Bhojsons Plc v. Daniel Kalio (2006) 5 NWLR (Pt. 973) 330 at 351 and Citizens International Bank v. Scoa Nig. Ltd (2006)18 NWLR (Pt. 1011) 332 at 356 where his lordship, Salami JCA now PCA held thus:
“It is more than settled by a long line of cases that when a court raises a point suo motu, the parties must be afforded the opportunity to be heard on the issue particularly the party that may be adversely affected by the decision on the point raised and thereby avoid breaching the right of that party to fair hearing.”
In the instant case, the arbitrator raised an issue suo motu as to who paid the attorney’s fees and decided same without hearing the parties. The failure to hear the parties has infringed on their right to fair hearing as envisaged by the Constitution and Sections 14 and 15 of the Arbitration and Conciliation Act Cap A18, LFN 1990, which is also a ground for setting aside the award either in whole or in part under S.29(2) & 30 of the Arbitration Act.
For the above and fuller reasons contained in the lead judgment, the appeal is devoid of any merit, same is hereby dismissed by me. I abide by the consequential orders made, including order as to costs.
Appearances
Adewale Atake with Godwin Omoaka and Olugbenga AkinlabiFor Appellant
AND
Mrs. Adedoyin Rhodes – Vivour with Miss Enola Aro and Miss Abimbola AlliFor Respondent
