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AITKEN, SPENCE & CO. v. FERNANDO.
June 13 <0 14
and July 4.
D. C., Colombo, 12,706.
Arbitration—Special authority to proctor under a. 676 of the Code to refer amatter to arbitration—Stamp thereon—“ Recognized agent ”—Necessity offiling power of attorney in Court—When to be filed—Effect of anarbitrator proceeding ex parte—Setting aside award—Misconduct ofarbitrator under s. 691 (a) of the Code—Cost- of Successful appellantrefused for perverse conduct—Entering decree after appeal filed againstprevious order.
The special authority under section 676 of the Civil Procedure Codeto a proctor to refer a matter to arbitration need not he stamped.
The requirement of section 25 (6) of the Civil Procedure Code, thatthe power of attorney in favour of a “ recognized agent ” or a copythereof should be filed in Court, is complied with by such power orcopy being filed at any stage of the case, and not necessarily when therecognized agent takes his initial step therein.
An arbitrator cannot, under the Roman-Dutch Law, proceed in theabsence of one of the parties; and where he hears a case ex parte he isguilty of misconduct under section 691 (a) of the Civil Procedure Codeand his award will be set aside.
The costs of a successful appellant will be disallowed for discredit-able and perverse conduct on his part.
Where an appeal has been filed against an order of the DistrictJudge refusing to set aside an award, he ought not to enter up a decreein terms of the award, but should wait till the Supreme Court decideswhether the award should stand or not.
HE plaintiffs sued the defendant for the recovery of
Rs. 51,254.19, being damages alleged to have been sustainedby the plaintiffs by reason of failure on the part of the defendantto deliver to the plaintiffs certain plumbago sold to them by thedefendant. The defendant pleaded that he was not liable todeliver the plumbago, inasmuch as the sale had been cancelledby the two parties; and the defendant counterclaimed from theplaintiffs a sum of Rs. 17,750.87, being balance value of certainplumbago sold and actually delivered by him to the plaintiffs.
On the joint application of the parties, the matters in disputein the case were on the 1st February, 1900, referred to thearbitration of Mr. H. L. Wendt, Advocate. He was requiredto make his award on the 1st March, .1900. The due date of theaward was on the 27th February, 1900, extended by the Courtwith the consent of both parties to the 15th March, 1900. Afternotice to both parties, the arbitrator began the hearing on the28th February, 1900, and adjourned it to the 3rd March, 1900,and again on the latter day to the 10th March, 1900, when thehearing was concluded, and the arbitrator took time to considerhis award. Although due notice was given of the hearing onthe 28th February, 1900, and of each of the adjournments, the
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June Id it 14
and July 4.
defendant did not appear before the arbitrator. His proctorwrote to the arbitrator that his client “'withdraws from the“ arbitration and revokes his mandate to you to arbitrate in the“ matter,” as he wanted his case to be heard by the District Judgein open Court with the aid of assessors, in view of the conflict ofevidence that was sure to arise in the case. The arbitratorreplied: “I should be most happy to discontinue proceedings in“ the arbitration, if both parties agreed. Without such agreement,
“ I consider it entirely out of my power to do so.’’ The proctorfor plaintiffs replied: “ I have been advised by defendant’s counsel“ to point out that an arbitrator has power, Under section 679 of“ the Procedure Code, to refuse to act under the reference, and“ that the unwillingness of my client would be good ground for“ such refusal. With regard to any hardships that- may be“ occasioned to the plaintiffs by reason of the arbitration being“ dropped at this stage, I undertake on behalf of my client to“ make good all expenses and costs of the plaintiffs as well as your“ fee as arbitrator, and leave it to you to determine what sum“ should be paid to the plaintiffs as such expenses and costs.”The arbitrator, nevertheless, continued his proceedings and filedhis award.
The defendant applied to the Court to set aside the award.That application being refused, the defendant field an appealagainst the order refusing his application.
Thereafter the plaintiff moved, after notice to the defendant,that judgment be entered in favour of the plaintiffs in terms ofthe award. Judgment was accordingly entered fpr plaintiffs.
The defendant appealed against the order entering up judgment.
W. Pereira (H. J. C. Pereira and 0, Brooke Elliott withhim), for defendant, appellant.—The reference to arbitration issigned by ,the proctors and not by the parties themselves, and theSpecial authority under section 676 of; the Civil Procedure Codeto plaintiffs’ proctor is not signed by all the plaintiffs, but by someof them and the attornies of the rest; but the powers of attorneyin favour of these attornies have not been filed of record as requiredby section 25 (b) of the Code. Under that section, a recognizedagent is not to be regarded as such until he has filed in Court thepower .of attorney in his favour or a copy of it. As this has notbeen done, the special authority in favour of the plaintiffs’ proctorunder section 676 Cannot be said to be an authority conferred bythe plaintiffs or their recognized agents.,
Then, the special authority under section 676 is in the nature ofa new proxy, and must be stamped as a proxy, but the authority inquestion has not been so stamped. [Bonser, C.J.—It is not the
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same as an appointment of a proctor. It is merely a furtherauthority to a proctor already appointed.] The special authorityappears to be independent of the proxy granted for the in-dial stepsof a case. It is not necessarily to be granted to the proctor whoseproxy is already on record, but may be granted to another proctor.It is, in other words, an appointment of a proctor for a specialpurpose, a purpose' other than that for which a proctor was origi-nally appointed, and should therefore be stamped in the same wayas the proxy already filed.
Bonser, C.J., after conferring with Moncrieff, J., intimatedthat their lordships were of opinion that a special authority undersection 676 need not be stamped, and that the power of attorneyor copy of it might, under section 25 (b), be filed at any stage ofthe case.
W. Pereira, continuing.—Before the arbitrator entered uponthe arbitration, the defendant withdrew the authority he hadgiven. His reason for doing this was that he had until then beenunder the impression that Mr. Wendt had been appointed, not anarbitrator, but merely a sort of mediator between the parties tosuggest to them terms of settlement, which they might accept ornot. [Moncrieff, F.—Is it likely that a party to a case wouldthink of appointing a person for a purpose like that?] It cannotbe said that the defendant acted with a knowledge of the law onthe subject, but such appointments were not uncommon under theBoman-Dutch Law. Van Leeuwen, for instance (Kotze’s Trans.,vol. II., p. 413, and Ceylon Trans., p. 554), speaking of electedjudges, says they are) either arbiters or arbitrators. Arbitrators orgood men, anciently called Kersluden, are friendly mediators whodecide according to the best of their knowledge and judgment,and satisfy parties in an amicable manner. Arbiters of oldcorrespond to the arbitrators of t-he present day. The bond fidebelief alluded to, however, was the defendant’s excuse for revok-ing the authority unwittingly granted to Mr. Wendt. [Bonser,G.J.—Is it open to a party to a- suit to revoke, without theintervention of the Court, a reference to arbitration made by theCourt on the motion of both parties to the suit.?] It appears tohave been a common practice under the English Common Law.In the case of a voluntary reference, the fact that it was madethrough the Court did not deprive either party of his right torevoke the reference independently of the Court. The caseknown as Vijnior’s Case and the other cases cited in 3 Campbell’sRuling Cases 357 et seq. are authorities in point. .
Apart from the fact of revocation of authority, no award hasbeen duly made by the arbitrator, and it is only an award duly
June 13 & 14and July 4.
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1900. made that can be given effect to by the Court. The arbitrator has^al’d J3J<f W acted in contravention of a material requirement of the law in
'making this award. The whole law of arbitration is not to be
looked for in the Civil Procedure Code. While the Code makesprovision for a reference to arbitration, it is silent as to how thearbitration is to be conducted, and as to that the Common Law ofthe land applies. Under the Roman-Dutch Law, an arbitrator can-not proceed ex •parte. That is clear from what Voet says in lib. 4,tit. 8, section 15, of his Commentaries. It is there laid downthat where an award is given in the absence, although properlysummoned, of either party, it is ipso jure null and void.
Van Lang enb erg (with Bawa) for plaintiff, respondent.—Thereference was made by order of Court, and it was not open to thedefendant to revoke the authority of the arbitrator so long as theorder of reference stood uncancelled. Either party might havemoved with notice to the other side to cancel the order of reference,but he could not act independently of the Court. Section 691 ofthe Code specifies the grounds on which an award may be set aside.None of these grounds can be said to be present in this case.The Code does not limit an arbitrator’s powers as to the conductof the arbitration; and where either party after due notice keepsaway from an arbitration, it is quite competent to the arbitratorto proceed ex parte, and the authority conferred on an arbitratorcannot be revoked except for such cause as is contemplated bysection 679. O’Kinealy’s Ind. Civil Pr. Code, 4th >ed., p. 493, noteto seetion 513, and Halirribhai v. Shanker (I. L. B. 10 Bom. 381.)
Then, as to the Roman-Dutch Law, the passage cited shows notthat the arbitration should be conducted in the presence of bothparties, but thait the award must be given in the presence of bothparties. The word used in the passage in this connection issententia, meaning not the arbitration, but the award, and here itcannot be said that the award was not delivered in the presenceof both parties. The award, according to our procedure, was filedin Court with notice to both parties.
W. Pereira, in reply.—It is no doubt true that what is said inthe passage cited from Voet is that the award must be made inthe presence of both parties, but what is really intended appearsto be that the arbitrator should proceed with the arbitration in thepresence of both parties. The delivery of the award was anessential part of the arbitration, and in the olden time it waspossibly done the same day. Even supposing the passage meantthat the bare delivery of the award, and not necessarily the wholearbitration, should take place in the presence of the parties, it isclear that it referred to delivery- by the arbitrator and not by the
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Court,—in other words, the pronouncement by the arbitrator ofhis decision: that has not been done, in this case, in the presence,at any rate, of the defendant.
Cur. adv. vult.
4th July, 1900. Moxcrieff, J.—
June 13 <£ 14
and July 4.
The plaintiffs in this action sued the defendant in theDistrict Court of Colombo (No. 12,706) for certain sums whichthey declared to be due to them on various transactions setout in the plaint. On the 31st January, 1900, the parties agreedto authorize their proctors to apply to the Court for an order sub-mitting all matters in dispute between them in the action to thefinal decision of the Hon. Mr. H. L. Wendt. That order wasobtained no the 1st February, 1900, and on the 15th May thearbitrator filed his award. On the 28th February, when thearbitrator began his inquiry, he received notice from the defend-ant to the effect that he (the defendant) withdrew his mandateto the arbitrator. A similar notice was sent to the proctor for theplaintiffs. The arbitrator, however, proceeded in the absence ofthe defendant, and eventually, as I have said, filed his award.Thereupon the defendant applied to the District Judge to set asidethe award and fix a day for the hearing of the case. The appli-cation was refused, and the defendant appealed to this Court.The defendant excuses Ms conduct on the ground that “ he was*' under the bond fide belief that it—the arbitration—was a mere“ arrangement for Mr. W§pdt to suggest terms of settlement which“ either party would be free to refuse or accept.” I do not believein this bond fide belief. Men of business do not indulge inacademical discussions as to their legal rights. They have no timefor such futilities. I think that the defendant’s excuse should bedismissed from our further consideration.
But it was argued for the defendant that he had a right to recallhis consent to the submission, and the argument was supported byreference to a number of decisions of the English Common J_iawCourts. We are not concerned with the English Common Law,and there are no such decisions under our Common Law. Thereis no principle involved in those decisions. The reason forthem is not apparent; and I suspect that, like many other deci-sions of the Common Law Courts, they were due to considerationswhich cannot operate now. So little did they depend on principlethat the 1st section of the Arbitration Act of 1889 enacts that thesubmission shall be irrevocable.
Then the defendant complained that ” the inquiry appeared to“ have been proceeded with ex parte, notwithstanding the peti-“ tioner’s objection thereto.” Therefore we must hold that he
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June 13 i(S 14and July 4.
raised, although he may not have realized the full value of thispoint, the objection that the arbitrator proceeded in the absenceof one of the parties. In support of this contention a passage wasquoted to us from Voet (4, 8, 15) to show that, when an arbitratorproceeds in the absence of one of the parties—although that partymay be liable to a penalty (poem)—the award (scntcntia) is ipsojure void. What takes the place of the penalty, in our practice ofto-day it is not for me to say, but I think we could not refuse,unless we are forbidden, to apply the principle conveyed by thispassage to the present case. The arbitrator heard the case referredto him in the absence of the defendant, who was not representedat the hearing, and the award is apparently void.
Our attention was however drawn to the provisions of section691 of the Civil Procedure Code, which enacts that “ no awardBhall be set aside ” except on one of certain grounds which areenumerated in the section. The section runs thus: “ No awardshall be set aside except on one of the following grounds.” If theaction of the arbitrator in proceeding in the absence of the appel-lant does not come within the compass of the “ grounds ” specifiedin the section, I should infer that the section had abrogated thelaw laid down in the passage in Voet. Such abrogation would bewithin the immediate scope and objects of the enactment—in fact,the section deals with that very subject. Moreover, the provisionis negative in form, and may be taken to exclude all grounds notmentioned. But among the grounds are ” corruption or miscon-duct of the arbitrator.” Certainly there was no misconduct in theordinary sense of the word, but it seems that an unusual meaningis put upon it both in England and under the 521st section of theIndian Civil Code. It appears from Gunga Sahai v. LekhrajSing (I. L. R. 9 Alla. 353) that the word is to be understood inthe sense put upon it by the English Courts. That sense is wellillustrated by Phtpps v. Ingram (3 Dowl. 670), in which a- coach-builder, to whom a question regarding the construction of acarriage was referred, contented himself with inspecting thecarriage and refused to hear the plaintiff’s witnesses. There wasno imputation of improper conduct, but the award was set aside.
Upon this footing the arbitrator in the present instance has beenguilty of misconduct. He has done nothing deserving of blame,but he has misconducted the arbitration by disregarding a prin-ciple of law which has been exhumed from Voet. He hassupplied one of the grounds upon which, according to section 691of the Civil Procedure Code, an award may be set aside. I thinkthat-the judge should have set aside the award, and that thereforethis appeal should be allowed.
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I agree. Having regard to the law of arbitration, I am of opi-nion that the arbitrator misconducted the arbitration. His conductwas not blameable, still it was legal misconduct. I also agree thatthere was no mistake on the part of the defendant as to the mean-ing of his agreement. It was a mere disingenuous attempt on hispart to shuffle out of the agreement. When the case -goes back tothe District Court, the District Court will insist on.the defendant’scarrying out his agreement, and if he does not he will find himselfin a very unpleasant predicament. The time for submitting theaward, will be extended for such time as the District Judge maythink fit.
My brother’s judgment is silent as to the costs of the appeal.We consider the appellant’s conduct to have been discreditableand perverse, and therefore give no costs.
Then there was a cross-appeal, and in my opinion that appealshould be dismissed without costs. The District Judge ought not tohave entered up a decree after an appeal had been filed against hisdecision refusing to set aside the award, but should have waiteduntil it had been finally decided whether the award was to standor not. I should have wished to allow the appeal, but the wordsof section 692 of the Code are too clear to be disregarded, andprovide that there is to be no appeal from such a decree as- this.No doubt the parties are in some difficulty owing to entry of thedecree, for the District Court has apparently no jurisdiction to setit aside when it has once been entered up. Possibly there maybe some means, as by an application in revision, by which thematter may be set right.
June 13 it.14
and July 4.