Attorney General and Ministry of Justice v. Cape Management and Entertainment (CC352/07 2007 A. NO. 8)  SLHC 31 (02 July 2007);
CC352/07 2007 A. NO. 8
IN THE HIGH COURT OF SIERRA LEONE
ATTORNEY GENERAL MINISTRY OF TOURISM - PLAINTIFFS
CAPE MANAGEMENT &ENTERTAINMENT - DEFENDANT
LAHAI FARMAH and Keikura Bangura as Solicitor for the Plaintiff KHALILA DIANA KAMARA for the Defendant RULING DELIVERED THIS 2nd DAY OF July 2007.
D. B. EDWARDS J .This is an application by Motion dated 18th day of May 2007 for an order that these proceedings now pending in the High Court of Sierra Leone be stayed pending the reference of the matter to Arbitration on the grounds that:
1. the Lease Agreements which are the subject matter of the present proceedings provide that all disputes, differences and questions touching or arising out of or in respect of the Leases or the demised properties be referred to arbitration in accordance with the provisions of the Arbitration Act of Sierra Leone ;and
2. that the Defendant /Applicant was at the commencement of the proceedings and still remains ready willing to do all things necessary to the proper conduct of the Arbitration.
The Application was supported by the Affidavits of Mohamed Najib Jojo swom to on the 18th day of May 2007 and 30th May 2007 respectively together with the exhibits referred thereto, to wit, exhibits MNJ1 -MNJ7 and MNJ 8 respectively .
The Plaintiff opposed the Application and filed an affidavit in opposition sworn to on the 24th of May 2007.
The facts of the case up to this Application are that the Plaintiff had issued a writ of summons intituled CC 357/07 A NO 8 dated 2nd day of May 2007 against the defendants claiming inter alia:
1. Forfeiture of Lease Agreements in respect of the Cape Sierra Hotel, the Agreement of which is dated 15th day of June 2000 and registered as NO 54/75528 in Volume 92 at page 123 in the Book of Leases and the LUNGI AIRPORT HOTEL, the agreement of which is dated 27th day of June 1995 and registered as NO 44/44458 in Volume 89 at
page 86 in the Book of Leases in the Administrator and Registrar General's office in Freetown;
ii) Arrears of rent of US$810,000 for the period 2003 -2006 in respect of the above mentioned Hotels; and
iii) An injunction restraining the defendant company and or its servants , agents etc from carrying on any activity on the demised premises.
An appearance was entered for and behalf of the defendant on the 15th of May 2007 and thereafter on the 18th of May 2007 to be precise, solicitor for the defendant made an application for stay on the grounds hitherto mentioned above . To date and quite regularly no defence has been filed .
The contention of the defendant is that this action ought to be stayed in view of the fact clause 7 of both lease agreement provides for a reference to arbitration in terms that all disputes, differences and questions touching or arising out of or in respect of the Leases or the demised properties be referred to arbitration in accordance with the provisions of the Arbitration Act of Sierra Leone. The full text of these arbitration clauses as stipulated in both exhibits MNJ 4 AND MNJ 5 which are the Lease Agreements for both hotels is as follows:
"This Lease shall be construed and the rig/its of the parties determined according to the Laws of Sierra Leone. All disputes, differences and questions which may at any time arise between the parties hereto and their respective representatives or assigns touching or arising out of or in respect of this Lease or the subject matter thereof shall be referred to Arbitration in accordance with the provisions of the Arbitration Act of Sierra Leone ( Cap 25 of the Laws of Sierra Leone 1960)"
It is this clause which the defendants argue ought to cause a stay of proceedings . They refer to the cases of the SPILIADA MARITIME CORP V CANSULEX LTD THE SPILIADA 1986 All ER 843 HL; TOLLER V LAW ACC.INSSOCYLTD1936 2ALL ER 952 AND SCOT VS AVERY 1856 10 ER 1121
The plaintiff in opposition state that this is a.simple matter of breach of Lease Agreement by failure to pay the lease rent for which clause 2.1 and 4.2 in both Lease Agreements provide for the right of re -entry and that the issue of arrears of lease rent was never denied by the defendant /applicant and consequently there has not been any dispute and the defendant had evinced no indication that they were disputing the rent.
I have perused all documents before me and heard the several arguments of the plaintiffs' counsel and the defendant's solicitor on their various contentions.
This court has a very wide discretion to stay proceedings Sometimes a stay operates as a temporary interruption only and sometimes it would or could amount to a final termination of the action. Even in the latter case the action will not die but merely sleep
until revived. The stay could later be removed and the action revived. Even if a stay is ordered here such would be its effect.
There are several grounds for a Stay of proceedings /stay of action one of which may be
i) a reference to Arbitration in an agreement under which the defendant herein
has brought this motion; or
ii) Forum Non Conveniens; or
iii) That the plaintiff's claim discloses no reasonable cause of action, or is frivolous or vexatious or is otherwise an abuse of the process of the Courts; or
iv) Applications under the rule in EDMEADES VS. THAMES BOARD MILLS 1969 2QBD; or
v) Where partners suing in a Firm name fail to comply with a written statement of names and addresses of persons constituting the firm; or
vi) That the plaintiff pays the cost of an earlier action on the same subject matter which has been discontinued.
I have raised this issue because the defendant's solicitor in support of her various arguments referred this court to the case of the House of Lords decision of SPILIADA MARITIME CORP V CANSULEX LTD THE SPILIADA 1986 All ER 843 HL. This case concerns application for stay of proceedings under the ground of Forum Non conveniens separate and distinct from the ground of their being a reference to arbitration under which the current application of stay of proceedings to this court is made .
The application in these proceedings was made under Section 5 of the Arbitration Act CAP 25 of the Laws of Sierra Leone 1960 and this section provides as follows:
"IF any party to a submission, or any person claiming through or under him, commences any legal proceedings in any court against any other party to the submission, or any other person claiming through or under him, in respect of any matter agreed to be referred, any party to such legal proceedings may at any time after appearance, and before delivering any Pleadings or taking any other steps in the proceedings apply to the court to stay the proceedings, and the court if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission, and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings"
In the case of KABIA VS KAMARA 1967/68 ALRSL CA AT PAGE 455 AT PAGE
459 Sir Samuel Bankole Jones P delivering the judgment of the court where an arbitration clause in the following terms was raised as reason why the learned trial judge ought to have stayed proceedings until the parties have complied with the clause
"5 .Arbitration, the Employer and contractor agree that in the event of a dispute or difference which may likely disrupt the progress of the work either of them should forthwith solicit the intervention of the an impartial arbitrator"
had this to say
I interpret clause 5 as being merely an agreement between the parties to refer certain matters to arbitration. I think it has for a long time been the law that a mere agreement between the two parties to arbitration cannot be pleaded in bar of an action brought in respect thereof SCOT VS AVERY . Clause 5 in my opinion is nothing more than a contract to refer. It may be the ordinary arbitration clause but it is certainly not a submission for the arbitrator is neither chosen nor appointed . The learned Trial Judge was therefore right in holding that clause 5 was not a bar to the action."
This is a court of Appeal decision which binds this court and I am inclined to go by it. Furthermore from it would seem to me that there is a difference between a mere reference to arbitration and a submission even though the usual arbitration clause is a mere reference . In accordance with the Arbitration Act Cap 25 "a submission" is a written agreement to submit present or future difference to Arbitration, whether an arbitrator is named therein or not" and a submission is irrevocable except by leave of court or mutual consent of the parties. "A submission, unless a contrary intention is expressed therein shall be irrevocable except by leave of court or by mutual consent and shall have the same effect in all respects as if it had been an Order of Court." Also a submission unless a contrary intention is expressed is deemed to include provisions as set out in the 4th schedule relating to the appointment of an arbitrator.
What I am to make of all this is that with the state of our laws in Sierra Leone, the mere reference to arbitration may not be enough to refer disputes to arbitration where a specific submission has not been made. There must be a written agreement regarding specific difference(s) or dispute(s) and the issue of consensus Ad idem between the parties to submit the dispute to arbitration is relevant, for it is only in such situations that the courts would be bound to uphold it; for a submission cannot be changed except with the leave of court. It is my opinion that in such a situation there is a need for a separate and distinct arbitration agreement over and above the mere general reference agreed between parties to submit disputes differences and questions to arbitration . In this particular case notwithstanding the serious arguments by the defendant's solicitor the important issue was that despite the general reference to refer all disputes , differences and questions to arbitration it was in the first instance secondary to the 1st rubric under clause 7 which provides that this Lease shall be construed and the rights of the parties determined according to the Laws of Sierra Leone. In the second instance, based according to the Cap 25 of the Laws of Sierra Leone 1960, this provision, it would seem, expressly recognizes submissions to arbitration rather than mere reference and that finally the parties never agreed to submit the issue of arrears of lease rent to arbitration and if any
thing the defendant /applicant has not disputed the US$ 810, 000 which was to be paid within 30 days which was never paid entitling the plaintiff to sue as a matter of law for forfeiture of the lease for nonpayment of the rent.
According to Halsbury's laws of England 4th Edition para 560- 565 pages 288 -291 in order for a stay to be granted in view of a reference to arbitration the following conditions should be fulfilled.
i) There must be a valid arbitration agreement covering the question in dispute
ii) The applicant must be entitled to rely on the agreement
iii) No step taken after appearance
iv) The applicant must be ready and willing to arbitrate ; and
v) There must be sufficient reason for refusing the stay
If the above conditions are fulfilled then it is for the party who wishes the matter to be litigated in court instead of being referred to Arbitration to show that it ought not be referred and, unless he can show that, an order to stay will be made.
Notwithstanding what has been said as the distinction between the contract to refer and to submit, It behoves this court to examine whether the defendant has fulfilled all of these conditions and therefore each question will handled severally.
i)Whether there is a valid arbitration agreement covering the question in dispute Clause 7 of the Lease Agreement provides
"This Lease shall be construed and the rights of the parties determined according to the Laws of Sierra Leone."
It goes further to state,
"All disputes, differences and questions which may at any time arise between the parties hereto and their respective representatives or assigns touching or arising out of or in respect of this Lease or the subject matter thereof shall be referred to Arbitration in accordance with the provisions of the Arbitration Act of Sierra Leone ( Cap 25 of the Laws of Sierra Leone 1960) "
It behoves this court to conclude that this was a reference to arbitration that does not intend to oust the jurisdiction of our courts and in any case the parties seriously intend not only that the lease be construed according to the laws of Sierra Leone but that their rights are also be determined according to the laws of Sierra Leone .In any case it stops short of being the arbitration agreement covering the question in dispute as there was no submission within the meaning of Cap25 of the Laws of Sierra Leone which would require that both parties agree to refer the dispute to arbitration. The mere agreement to refer as evinced in the lease is not a submission .
ii)whether the applicant is entitled to rely on the agreement
This application is made by a party to the lease Agreement but they have fallen short of making a submission to arbitration. Hence they are not entitled to rely on the agreement and the agreement to refer cannot be a bar to the action already commenced .
iii)No step taken after appearance The defendant rightly did not take any fresh step after appearance and was within the law in making the application at that stage of the proceedings see Sect 5 of Cap 25 Laws of Sierra Leone 1960 and Halsbury's Laws of England 4th Edition para 563 page 290
iv) whether the applicant is ready and willing to arbitrate
It is noted that the 2ndground for making this application is that the Defendant /Applicant was at the commencement of the proceedings and still remains ready willing to do all things necessary to the proper conduct of the Arbitration. This court is however unable to form the opinion that the defendant was willing at the commencement of the proceedings to do all things necessary for the proper conduct of the arbitration. This is so because prior to the commencement of proceedings there had been no written agreement between the plaintiff and defendant to submit arrears of rent to arbitration.
v) whether there is no sufficient reason for refusing the stay
Section 5 of the Arbitration Act Cap 25 provides that "the court if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the sub mission would be entitled to stay the proceedings".
In the case of BRISTOL CITY COPORATION VS AIRD & CO 1911-13 ALL ER a
House of Lords decision, Lord Moulton had this to say on the matters which ought to play in the courts mind before referring a matter to arbitration.
"It must, however, be remembered that these arbitration clauses have been inserted with due regard to the existing law of the land t and they do not prevent the parties from coming to the courts, but they only give to the courts the power of refusing their assistance in proper cases. Therefore, when it is said that if we refuse to stay action we are not carrying out the bargain between the parties that does not describe the position fairly. We are carrying out the bargain because that bargain, to substitute for the courts of the land a domestic tribunal was a bargain into which was written, by reason of the existing legislation, the condition that it should only be enforced if the courts thought it a proper case for so enforcing it."
In that case he went further to state
"Or again there may be questions which, although included in the Arbitration clause, were clearly not in contemplation of the parties and are not suitable from their nature to come before this domestic tribunal. But this does not exhaust the
consideration to which it is legitimate for a court to pay attention in a case like this. They must consider all the circumstances of the case. It may be that they will have to consider the magnitude of the questions, the way in which they have been raised, the circumstances with regard to the claims with a strong bias in favour of maintaining the special bargain between the parties and at the same time, with vigilance to see that they are not driving either of the parties to a tribunal where they will not get substantial justice."
Taking all the circumstances of this case I would hold that there are sufficient reasons why a stay should be refused . Apart from all that has been said, I am inclined to believe that the only matter which the defendant had wanted referred to arbitration is the quantum of the arrears of rent. They accepted that the sum of US$810,000.00 was the arrears of rent as per the Lease Agreements but having paid US$670,000 to the National Revenue Authority were of the opinion that the sum of US $140,000 ought to be waived as according to Paragragh 9 of the affidavit in support this sum was obtained by the said defendant with the knowledge of the plaintiff respondents to refurbish reconstruct and rebuild the Lungi Airport Hotel and they thus disputed whether the same should be deducted from the rent. With respect, this is not a matter for arbitration as it is a matter of law based on the Lease Agreement signed and concluded by both parties . The lease agreement clearly provides that the lease rent for the first year is hereby waived by the lesssor in consideration of the rehabilitation work required so that this was an issue pre-considered before the lease rent was set. Secondly, the Lease agreement provided for a review after every 3 years so that rather than refuse to pay and holding that there is a dispute when there is none up to the point that you stand the risk of forfeiting the Lease the defendant would have done well to pay the agreed rent and argue for reduction in the after 3 years review for which the rent has not yet been agreed. Thirdly, the issue of the Defendant agreeing with the National Revenue Authority a means of paying the arrears without any reference to the actual Lessors even as a government agency and claiming that the plaintiff has varied the agreement is wholely unacceptable as a reason why the matter should be referred to arbitration
NRA is not the Lessor and if there is any agreement to vary the terms of the Lease it must be with the original parties that must be involved and this must include the Lessor or their expressed representative not any government AGENCY .
For reasons I have outlined I do refuse a stay of these proceedings now pending in the High Court of Sierra Leone.
Application is dismissed with cost; cost assessed at Le 1,000,000.00
Hon. Mr. Justice D:B; Edwards J.