( 386 )
Present : Bertram C. J. and Garvin J.
GOONEWARDENE v. GOONEWARDENE.
*141—D. G. (Inty.) Negombo, 14,894.
Arbitration—Misconduct—Arbitrator y decliningto arbitrate on some
matter included in the reference.
Where the arbitrators in their award state that they decline toarbitrate upon some matter which was included in the reference,this is misconduct; such an award is bad.
Bbbtbak C.J.—" I do not consider that sections 600 and 691 of theCivil Procedure Code are mutually exhaustive. I think the Courthas a discretion whether it will set aside the award, or whether itwill remit the award for consideration.**
“ The expression misconduct does not necessarily involvepersonal turpitude on the part of the arbitrator. The terra doesnot really amount to much more than such a mishandling' of thearbitration as it likely to amount to some substantial miscarriageof justice, and one instance that may be given is where the arbi-trator refuses to hear evidence upon a material issue.**
T HE facts are set out in the judgment of the Chief Justice.
Bawa, K.C. (with him Samarawickreme and F. de Zoysa), for theplaintiff, appellant.
Pereira, K.C. (with him Soertsz), for the defendant, respondent.
February 21, 1923. Bertram C.J.—
This is an application to set aside an award on the ground ofmisconduct on the part of the arbitrators. I would confine myselfonly to one of the grounds of misconduct suggested; that is, theonly one which is material, and, moreover, that ground is sufficientto dispose of the case. It is recognized that the imputation ofmisconduct to an arbitrator in arbitration proceedings does notin the least involve anything in the nature of moral turpitude.That has been laid down in the case of Williams v. Wallis, 1 wereAtkin L.J., then Atkin J., says:“ That expression does not
Necessarily involved personal turpitude on the part of the arbitrator.The term does not really .amount to much more than such a mis-handling of the arbitration as is likely to amount to some substantialmiscarriage of justice, and one instance that may be given is wherethe arbitrator refuses to hear evidence upon a material issue."It has been expressly held in the case of Bowes v. Femie 3 that,
1 (1914) 2 K. B. D. 47$.* (1838) 4 My. and Or. S9.
( 886 )
where the arbitrators in their award state that they decline toarbitrate upon some matter which was included in the reference*this is misconduct, and that such award is bad. This is the lawon the matter.
The facts are as follows:—The action was between two brothers,and the plaintiff claimed, among other things, an account from hisbrother of the income of certain mills > part of the property of theirfather. The plaint was filed, but before answer was filed thewhole matter was referred to arbitration and it was referred inthe very widest terms. I will refer to those terms presently.Upon the arbitration proceedings beginning, the arbitrators, inview of the absence of an answer, called upon the defendant to givethem a statement of his case. He accordingly prepared a fullStatement in which he contested the right of his brother' to callfor an account of the mills, on the ground that, though the legaltitle to those mills was in his brother, equitably they belonged tohimself, and that the brother in fact held his legal Ownership intrust for the defendant. The basis of that claim was that, inconsideration of the defendant quitting Government service atBatticaloa and returning home, his father promised to conveythe land on which these mills are situated to him, and to work themills. This promise is contained in a letter, and. the intention ofthe father was to carry out the promise, but he died before thiscould be done. ' The statement goes on to allege that questionsarising about the distribution of the family property, which underan old will of the father had been bequeathed to the mother alone,at the instance of his brother the defendant refrained from puttingforward any claim he might make, based upon his father's promise,and the plaintiff suggested that the simplest course would be toask the mother to transfer aU the properties to both the sonsjointly, and the plaintiff promised that he would make no claimto the mills and the house attached thereto, but would reconveythe same to the defendant. That is clearly an equitable claimwhich required consideration.
But when the arbitrators came to frame issues, and the proctorfor the defendant put forward a suggested issue to the effect thatthe defendant was entitled to a declaration that the mills and theresiding house belonged to him entirely as from the date of hisfather's letter, counsel for the plaintiff objected to that issue, onthe ground that the claim so set up was in the nature of a claim inreconvention, and that it could not be considered in an arbitrationbased upon the plaint. Unfortunately, the arbitrators were misledby that ingenious contention. They upheld that contention,and declared that the issue suggested by the defendant’s proctordid not come within the scope of the reference in the case; in otherwords they declined to adjudicate upon an important point whichwas included in the reference. Was that point included in that
( 387 )
reference ? Of that, I think, there can beno doubt.It is not19B8.
necessary to consider any technical questionswith regardto plaint,
answer, and reconvention. The terms of the reference could 'scarcely have been wider. That embracedmatters ixrdifferenceQoone-
between the parties in the action, "including all dealings andtransactions between all parties." This point was infact thetoardene
defendant’s substantial defence.
I do not see how it can be contended that it was not one of thequestions at issue between the parties. An attempt was madeto prove that the defendant had never put forward this contentionuntil the present ease. But I can scarcely believe that the defendantwould have sat down to write his case for the purpose of the arbi-tration and put this point in the very forefront of his statement,unless it had been a matter really at issue between the parties.
These then are the facts in regard to the alleged misconduct.
Much as I regret that such careful work as has been done by the'arbitrators in the case should be wasted, it seems to me impossiblenot to uphold the contention of the defendant.
This judgment might have stopped there. But certain pointswere raised upon subsequent proceedings. The history of thesubsequent proceedings is as follows: —
The case went on, and, notwithstanding the rejection of theissue referred to, the plaintiff in his evidence was fully cross-examined with regard to the arrangement alleged in the defendant’sstatement. His examination extends to several pages, and nineof these pages are occupied with questions relating to this arrange-ment. At a certain stage of the proceedings, however, while theplaintiff was being cross-examined about certain matters ofaccount, the arbitrators made an order that the defendant on hisside should furnish a statement of the accounts of the mills, andthat the plaintiff on his side should furnish a statement of amountsreceived. This order was certainly made without any idea ofprejudging the question whether the defendant ought to be calledupon for an account. But the defendant took upon himself totreat it as such, and the proctor withdrew from the arbitration.
I have great doubts myself as to whether that award was sincere,or whether it was not rather of a diplomatic nature. The arbi-trators elected to proceed with 'the reference, and, having fullyconsidered the question, gave a judgment in which, in spite of their-disallowance of the issue put forward by the defendant, theythoroughly examined such evidence as they had of the allegedarrangement, and found against the defendant. On the basis ofthis cross-examination to which I have referred, and tha basisof this finding of the arbitrators, Mr. Samarawickr.eme asks us torule that, even supposing there was any legal misconduct in theexclusion of the issue, that- misconduct had been cured.
( 888 )
I cannot adopt this proposition. It is quite true that evidencehas been given by the plaintiff of that arrangement and that he hasbeen cross-examined; and it is suggested that, if he had not diplo-matically withdrawn from the case, the defendant would have beenallowed, when called upon for his evidence, to have put forwardhis whole case with regard to that, arrangement; that he musttake responsibility therefore for all the facts not being beforethe arbitrators, and that the arbitrators must be considered ashaving given a definite judgment on the issue which they hadrejected.
, As I have said, I am not able to adopt this proposition. As theease stands, the finding on this issue is of an ex parte nature. It isbased solely upon the examination and cross-examination of theplaintiff. It is said that the plaintiff ought to have gone on tothe end, and that, if he had gone on to the end, the whole casewould have been presented. I do not think that this accuratelystates the facts. Why was the plaintiff cross-examined with regardto this arrangement ? Why did the arbitrators not rule outany question sought to be asked in cross-examination on thisissue? The explanation appears to be this: The plaintiff claimedan account, not only on the ground of co-ownership which wouldhave been quite sufficient, but also on the ground of a specialagreement by which the defendant was made the agent of thetwo brothers.
Mr. Samarawickreme says, that though this evidence was irrelevantto the issue of co-ownership, it was relevant to the otherquestion of agency, and that in this way both sides should havepresented their case with regard to the defendant’s claim to anequitable right based upon a trust. I do not think that this issound. It would not have helped the defendant to have succeededon this issue of agency. There was another issue in the case,issue No. 5, which was: 4‘Did the mills and the residing housebelong to the defendant 6olely”? The arbitrators had deli-berately shut out the defendant’s issue in which he asked them todetermine whether he was. entitled to a declaration that the millsand the residing house belonged to him entirely from December,1918. He was precluded, therefore, by that decision from settingup his equitable rights, and the issue No. 5 would necessarily havegone against him. I do not think that, the fact that the arbitratorswould probably have listened to him if he had stated his case withregard to the supposed trust in order to determine whether or notthere was an agreement between the brothers which made thedefendant the manager of the property, in any way cures the mis-conduct which the arbitrators have unfortunately committed.The truth is that the defendant might well have retired from thearbitration at the tune when this issue was rejected. He wouldhave been well advised to do so The foot that some evidence of
( 889 )
a one-sided nature was given, between the time that he might havewithdrawn and the time that he actually withdrew, does not,T think, affect the question.
Mr. Samarawickreme has pressed upon us one other consideration,namely, that the trust alleged in the defendant’s statement wason the face of it a trust to which effect could not be given in law,even though it was proved. He contended that the principle thatthe law will not allow Ordinance No. 7 of 1840 to be used as aprotection against fraud in cases where a person obtains propertyin his own name, subject to a trust and claim to hold it free fromthat trust, applies only to cases in which a trust, results from thecircumstances, and does not apply to an express trust. I havenothing to add to what I have said on this question in the case ofNanaydkkara v. Andris 1 and also in Ranasinghe v. Fernando.*
Mr. Samarawickreme made one further point. He contendedthat, with regard to this particular form of misconduct, our onlypower was to remit the matter to the arbitrators under section 890of the Civil Procedure Code. I do not consider that sections 690and 691 of the Civil Procedure Code are mutually exhaustive.I think the Court has a discretion whether it will set aside theaward, or whether it will remit the award for re-consideration. Inthe present case, the arbitrators having made up their minds ona partial statement of facts, I do not think they would be free toconsider the whole matter if the defendant placed his whole casebefore them.
In deciding as I do, I do not wish to say that I have formedthe opinion that a trust has Keen established in this case. It isquite possible that had the whole matter been fully gone into,' theclaim that a trust existed would have been rejected. There isobviously much to be said on both sides.- With regard to thepresent appeal, it must, in my opinion, be dismissed, with costs.
G-arvin J.—I agree.
* (1921) 23 N. L. B. 193.
• (1922) 24 N. L. B. 170.
GOONEWARDENE v. GOONEWARDENE