N.M. JEBARA (PLAINTIFF)
MERCURY ASSURANCE CO. LTD. (DEFENDANTS)
(1971) All N.L.R. 639
Division: High Court, Kano
Date of Judgment: 15th November, 1971
Case Number: SUIT NO. K/27/71
Before: Jones, S.P.J.
(1) Section 5 of the Arbitration Law empowers a stay pending arbitration provided application is made before the party applying has taken any step in the suit. Such step includes filing a statement of defence, as was done here.
(2) The right to plead a condition precedent in a written contract as a defence does not depend on the Arbitration Law.
(3) Defendant is not estopped from applying to amend his statement of defence to include breach of an arbitration condition by his having originally filed the statement of defence without including such plea.
(4) The court has power under Order XXXIII Supreme Court (Civil Procedure) Rules to allow amendment of the statement of defence to include the defence of a condition precedent, including, an arbitration condition precedent.
(5) In the circumstances the application would be granted.
Cases referred to:
A. Wuraola v. Northern Assurance Co. Ltd., (1963) N.M.L.R. 31 not followed.
Ewer v. National Employers Mutual Assurance Co. Ltd, (1937) 2 All E.R. 193 followed.
Parker, Gaines & Co. Ltd. v. Turpin, (1917) 1 K.B. 358 mentioned.
SUIT NO. K/27/71.
O.T. Nnadi for applicant/defendant.
Jones, S.P.J.:-This is an application made under Order XXXIII Supreme Court (Civil Procedure) Rules to amend the Statement of Defence by including the defence that an arbitration clause in the contract sued on precludes the court from adjudicating the issues to which that clause applies.
Mr Majiyagbe for plaintiff submits that the application is too late because the filing of the Statement of Defence operates as waiver of defendant's rights under the arbitration clause. He cites in support A. Wuraola v. Northern Assurance Co. Ltd. (1963) N.M.L.R. 31.
Mr Nnadi for applicant/defendant points out that he is not asking for a stay of proceedings which, he agrees he cannot do after taking a step in the proceedings, but he wishes to add this arbitration condition precedent to his defence. He cites Ewer v. National Employers Mutual Assurance Co. Ltd. (1937) 2 All E.R. 193 in support.
It is true that after taking a step in the proceedings defendant cannot ask for a stay pending arbitration. This is the negative effect of s. 5 of the Arbitration Law-and see the leading English case on the same provisions in the
Arbitration Act 1889, Parker, Gaines & Co. Ltd v. Turpin (1917) 1 K.B. 358.
Wuraola's case appears to disagree with Ewer's case (above). If it does, then I must respectfully disagree with Wuraola on this point. What Fatai Williams J. (as he then was) said was:-
"Once pleadings have been filed it would appear that defendants had waived their right to arbitration under condition 8 (the arbitrations clause)."
He then quotes s. 5 Arbitration Law. But s. 5 deals only with stay of proceedings, and it is the right to apply for a stay under s. 5 which is waived by taking a step in the proceedings.
The learned Judge's decision in this point was based on the proposition put by Chief Williams that:-
"for this condition (the arbitration condition) to apply, the defendants should have asked for a stay of the proceedings pending arbitration."
No authority is cited for this proposition, and, with respect I do not think there can be such authority. It appears that Ewer was not brought to the learned Judge's attention. In Ewer, Mackinon J. said:-
"Clause 11 of the conditions (of that insurance contract) ... requires that any pecuniary claim shall be settled by arbitration, and makes the obtaining of such arbitration award a condition precedent to any right of action or claim or the policy. That is a defence which on the terms of the policy is available."
Now, it may well be that on the terms of the policy in Wuraola that defence was not available. And it may well be that the same applies to the terms of the policy in the present case. I do not know. I have not seen the policy. That will remain to be decided. However, it is, I think clear, that s. 5 Arbitration Law does not debar such a defence as a defence. It authorises application for stay pending arbitration and gives a right to such stay. Without this statutory authority there would be no such right. It authorises it only before any step in the proceedings has been taken by the party wishing a stay. This necessarily implies a bar on such application for stay after such step has been taken as in Parker, Gaines & Co. (above). It does not bar the use of breach of condition precedent as a defence. To use it as a defence does not need the authority of the Arbitration Law. (Wuraola was in fact reversed on appeal [S.C. 340/66] but, it appears, on the basis of breach of another condition precedent, on condition 1 not condition 8. Both were mentioned but condition 8 was not discussed.)
I therefore find that defendant is not barred from using the condition in this policy as to arbitration as a defence. I cannot agree with Mr Majiyagbe that the filing of the defence without reference to the arbitration clause estops defendant from amending the statement of defence to include this defence. In the circumstances I think defendant is entitled to his amendment, and I grant the application. Amendment ordered as prayed.