Imperial Homes Ltd. -vrs- Victoria Bright & 2 Ors [2021] GHACA 9 (20 May 2021)

IN THE SUPERIOR COURT OF JUDICATURE IN THE COURT OF APPEAL ACCRA CORAM: HENRY KWOFIE JA (PRESIDING) P. BRIGHT MENSAH JA OBENG-MANU JNR. JA SUIT NO. H1/114/2017 DATE: 20TH MAY, 2021 IMPERIAL HOMES LTD. ….. ….. PLAINTIFF/APPELLANT VS. 1. VICTORIA BRIGHT 2. RIVONIA LTD. ….. DEFENDANTS/RESPONDENTS 3. LANDS COMMISSION J U D G M E N T HENRY KWOFIE JA: This is an appeal by the plaintiff/appellant against the ruling of the High Court, Accra dated the 4th of March 2016. The appeal resulted from a ruling of the High Court staying proceedings in the suit before the trial High Court and referring same to the Court connected ADR following an application by the 1st defendant/respondent before the High Court for an order staying proceedings and referring the Suit to arbitration. The facts giving rise to this appeal are that on 3rd December, 2015 the plaintiff instituted an action against the defendants/respondents claiming the following reliefs: a) A declaration that as beneficial joint owners of land known as Plot No. 86, Roman Ridge Residential Area, the 1st defendant cannot sell the whole of the said land to the 2nd defendant or any other party without the consent of the plaintiff. b) An order for Specific Performance of the Joint Venture Agreement dated 29th December 2014. c) A declaration that the 2nd defendant’s attempt to complete the purchase of the title and all interests in land known as Plot No. 86 Roman Ridge Residential Area is an act inducing breach of contract. d) An order restraining the 3rd defendant from granting its consent to the assignment of the 1st defendant’s legal title in the land known as Plot No. 86 Roman Ridge Residential Area to the 2nd defendant without the written consent of the plaintiff as the beneficial joint owner with the 1st defendant in the said land. e) Damages against the 2nd defendant for inducing breach of contract f) Costs g) Any other reliefs that the honourable Court shall deem fit. It was the plaintiff’s case that the plaintiff and the 1st defendant (who became the lessee of a parcel of land situate at Roman Ridge Residential Area by virtue of a lease agreement dated 27th May 2008) executed a Development Agreement dated 29th December 2014 for the development of the land into a residential area comprising of six (6) houses. The terms of the Development Agreement between the plaintiff and the 1st defendant were as follows: a) The plaintiff was to pay the 1st defendant an amount of One Hundred and Fifty Thousand United States Dollars ($150,000) in four instalments over a period of one (1) year commencing from 31st December 2014 and ending on 1st December 2015. b) The plaintiff was to give two (2) of the houses to the 1st defendant upon completion of the construction works and was to retain four (4) of the said houses c) The 1st defendant was to transfer to the plaintiff all her title and interest in the portion of the land on which the four (4) houses to be remitted to the plaintiff were to be constructed, upon receipt of the final instalment of the cash consideration. The Development Agreement also provided for a right of termination wherein the 1st defendant was liable to pay up a sum of One Hundred Thousand Dollars ($100,000) were she to terminate the agreement before commencement. The agreement also provided that this right would be extinguished if and when the plaintiff commenced construction within Six (6) months of obtaining a permit. It was the case of the plaintiff that pursuant to the terms of the contract and in relation thereto, it paid the 1st defendant an amount of $113,334.00 via payment of the pound sterling equivalent of $20,000, Stanbic Bank transfers and Stanbic Bank cheque respectively dated 30th December, 2014, 5th February 2015, 31st March 2015 and 31st July 2015. The plaintiff’s case was that despite meeting its obligations under the contract and making part- payment of the agreed consideration as well as expending large amounts in reliance thereof, the 1st defendant intends to transfer her interest in the portion of the land that belongs to her together with that portion on which plaintiff’s four (4) houses would be situated to the 2nd defendant in breach of the terms of the said contract. The 1st respondent’s case as set out in her application to stay proceedings and have the Suit referred to arbitration is that plaintiff’s action against her arises from a Joint Venture Agreement executed on 29th December 2014. That she exercised her right to terminate the agreement in accordance with the terms of the Joint Venture Agreement specifically Clause 12 thereof and further that Clause 14 of the Joint Venture Agreement contains an arbitration agreement. It is the case of the 1st respondent that by reason of the fact that the action commenced in the Court below by the plaintiff/appellant centered around the Joint Venture agreement, she caused her lawyers to file an application to have proceedings in the court below stayed and to have the suit referred to arbitration pursuant to Section 6(1) and (2) of the Alternative Despite Resolution Act 2010 (Act 789). The 1st respondent further contends that appellant has no accrued right in respect of the property. The trial High Court judge in a ruling delivered on 4th March 2016 ruled in favour of the respondent, stayed the proceedings before the Court and referred the Suit to arbitration. Dissatisfied with the ruling of the trial Court the plaintiff/appellant filed an appeal on the 24th March 2016 on the following grounds; i. ii. iii. iv. v. The ruling is against the weight of evidence The learned judge exceeded his jurisdiction in ordering ADR between the plaintiff and the 2nd and 3rd defendants when there was no arbitration agreement between them nor written consent to do so The judge exceeded his jurisdiction in ordering ADR between the plaintiff and 2nd and 3rd defendants when no application had been made by either of them The judge erred in treating the lack of affidavit in opposition by the 2nd and 3rd defendants as written consent to use ADR The judge erred by relying on the 1st defendant’s application for stay pending arbitration to order ADR involving the 2nd and 3rd defendants when there was no dispute between the 1st defendant on one hand and the 2nd and 3rd defendants on the other hand. The reliefs sought from the Court of Appeal was an order setting aside the part of the ruling of the High Court (Land Division) Accra referring the suit between plaintiff/Respondent and the 2nd and 3rd defendants to ADR when indeed no such agreement existed between them. The ruling appealed from is at pages 212 to 218 of the Record of Appeal whilst the Notice of Appeal is at pages 219 to 221 of the record. In this judgment the plaintiff/appellant shall be referred to as the plaintiff whist the 1st defendant/respondent shall be referred to as the 1st defendant. Counsel for the plaintiff/appellant argued grounds 2 and 3 of the appeal together that is: Ground 2: The learned judge exceeded his jurisdiction in ordering ADR between the plaintiff and the 2nd and 3rd defendants when there was no arbitration agreement between them nor written consent to do so Ground 3: The judge exceeded his jurisdiction in ordering ADR between the plaintiff and the 2nd and 3rd defendants when no application had been made by either of them. Arguing these 2 grounds of appeal, counsel referred to Section 2 of the Alternative Dispute Resolution Act 2010 (Act 798) and submitted that the Agreement which contains the arbitration agreement dated 29th December 2014 was only between the plaintiff/appellant and the 1st defendant/respondent and that the 2nd and 3rd defendants were not parties to the said Agreement and therefore not covered by the clause 14 of the Development Agreement. Counsel also referred to Section 6(1) of Act 798 and submitted that since there was no application by the 2nd and 3rd defendants before the trial judge, it was not open to the trial judge to rely solely on the application of the 1st defendant to extend the Dispute Resolution clause of the Joint Venture Agreement to them. Counsel further submitted that having regard to the escalatory nature of the dispute resolution clause in the Development Agreement, it was premature for the trial judge to have referred the dispute to arbitration and thus exceeded his jurisdiction. Responding to the arguments of counsel for the plaintiff, counsel for the defendant submitted that the case of the 1st defendant is that the plaintiff’s action against her arises from a Joint Venture or Development Agreement executed on 29th December 2014. Counsel contended that the same Joint Venture Agreement which forms a vital part of the suit commenced against the defendant contains an arbitration clause which can be found in clause 14 of the Joint Venture Agreement. Counsel referred to the ruling of the High Court and submitted that the trial court addressed the appellant’s argument that the court lacks jurisdiction to refer the suit to arbitration because there was no agreement between the plaintiff and the 2nd and 3rd defendants to arbitrate. He submitted that there is an admission from the plaintiff’s depositions that some of the issues to be determined in the suit, if not the main issue and consequently reliefs being claimed in this suit are covered by the Arbitration Agreement and in the light of this admission, the instant appeal lacks merit. Counsel refers to Section 6(1) and (2) of Act 798 and submitted that upon hearing the application, the court’s focus must be more on whether the matter in respect of which the application has been made is a matter in respect of which there is an arbitration agreement. With respect to appellants contention that the arbitration agreement was only an agreement between appellant and the 1st respondent and not the 2nd and 3rd respondents, he submitted that the issues between the parties in this suit will be effectively and conclusively settled between the plaintiff and respondents at an ADR, therefore the plaintiff’s opposition to the arbitration is strange. Both parties agree that the plaintiff’s suit against the defendants arose out of a Joint Venture Agreement entered between the plaintiff and the 1st defendant and dated 29th of December 2014 which set out the rights and obligations of the parties to the agreement. The said Joint Venture Agreement (JVA) is at pages 114 to 154 of the Record of Appeal. The record also shows that it was the termination of this Joint Venture Agreement by the 1st defendant that resulted in the suit by the plaintiff against the defendants. The 1st defendant terminated the said agreement pursuant to clause 12 of the agreement which deals with Termination. There is also no dispute that the Joint Venture Agreement contained a dispute resolution clause in clause 14 which provided as follows: “14 Any dispute arising out of this agreement that cannot be resolved amicably between the parties within fourteen (14) days after its occurrence shall be referred by the parties herein to mediation failing which the dissatisfied party may refer the dispute to Arbitration under the Alternative Dispute Resolution Act 2010 (Act 798)” As can be seen, clause 14 of the Agreement clearly provides that any dispute arising out of the agreement that cannot be resolved amicably between the parties within fourteen (14) days after its occurrence shall be referred by the parties to mediation failing which the dissatisfied party may refer the dispute to Arbitration under the ADR Act, 2010 (Act 798). The agreement clearly provides a two-step approach to the resolution of disputes arising out of the Joint Venture Agreement. The agreement provides for the reference of the dispute by the parties firstly to mediation, and, if the mediation fails to resolve the dispute, then the dissatisfied party may refer the dispute to Arbitration under the ADR Act 2010 (Act 798). In his ruling in respect of the application by the 1st defendant for a stay of proceedings and reference of the suit to arbitration, the trial judge held as follows at page 218 of the Record of Appeal: “In the light of the foregoing it is my belief that there is merit in the application and ought to be granted. The application is as a result granted. By this I refer the whole suit to the Court connected ADR for it to be resolved in accordance with clause 14 of the Joint Venture Agreement between the plaintiff and the 1st defendant. The Registrar of this court is accordingly ordered by this court to refer the whole suit to the court connected ADR for the issues between all the parties to be resolved in accordance with clause 14 of the Joint Venture Agreement between the plaintiff/respondent herein and the 1st defendant/applicant herein.” Section 6(1) and (2) of the Alternative Dispute Resolution Act 2010 (Act 798) provides: “6(1) Where there is an arbitration agreement and a party commences an action in court, the other party may on entering appearance, and on notice to the party who commenced the action in court apply to the court to refer the action or a part of the action to which the arbitration agreement relates to arbitration (2) The court on hearing an application made under subsection (1) shall, if satisfied that the matter in respect of which the application has been made is a matter in respect of which there is an arbitration agreement, refer the matter to arbitration” In the case of BCM Ghana Ltd. vs. Ashanti Gold fields Ltd (2005-2006) SCGLR 602 the Supreme Court held in holding 2 thereof as follows: “(2) An arbitration clause can only have such effect as its terms warrant. Thus in several typical arbitration clauses, a submission to arbitration ensues pro tanto upon the fact that the dispute is one of the types of dispute embraced by the arbitration clause. In the instant case however, mutual conciliation was a pre-condition to resort to arbitration. Thus, the effect of the dispute clause in the agreement executed by the parties somewhat reduces the ambit of the arbitral clause by making resort to mutual conciliation a pre- conciliation for resorting to arbitration. Therefore resort to the arbitration clause can only follow after conciliation under the dispute clause has been complied with. The two must go together in order to found an action. In the circumstances, the defendant was entitled to bring the application for stay of proceedings pending arbitration under the agreement ………” In the dispute clause in the Joint Venture Agreement in the instant case, the parties must refer the case to mediation and if mediation fails then resort to arbitration follows. It is worth noting that mediation is itself a form of Alternative Dispute Resolution mechanism. The tenor of the Joint Venture Agreement and its clause 14 shows clearly that the agreement seeks to promote out of court settlement. Indeed in BCM Ghana Ltd. vs. Ashante Gold Fields Ltd (supra), Her Ladyship Sophia Adinyira JSC emphasized at page 611 that: “That courts must strive to uphold dispute resolution clauses in agreements, which I consider to be sound business practice” The trial judge in the face of the wording of the dispute clause had no option than to refer the suit to Court connected ADR to seek to resolve the dispute. Indeed the trial judge stated as follows in his ruling: “The dispute between the parties has arisen out of the Agreement between the plaintiff and the 1st defendant so it is a proper case that can be referred to the ADR for mediation” This finding by the trial judge is amply supported by the affidavit and other documentary evidence on record. Counsel for the appellant has also contended that the 2nd and 3rd defendants are not parties to the arbitration agreement and so they cannot be compelled to go for the mediation. In his reaction to this contention of the appellant, the trial judge stated in his ruling at page 217 of the record of appeal thus: “In the first place, it ought to be noted that the 2nd and 3rd defendants have not filed any affidavit in opposition which implies they are not opposed to the application. Secondly, the resolution of the dispute between the plaintiff and the applicant would definitely affect the outcome of the issues between the plaintiff and 2nd and 3rd defendants. I therefore do not agree with the respondent that the issues between the plaintiff and the 2nd and 3rd defendants cannot be affected by the resolution of the issues between the plaintiff/respondent and the 1st defendant/applicant. They will be affected. It is not for the plaintiff/respondent to raise that issue. If they think that by the nature of their case against the plaintiff/respondent they cannot be compelled to go for mediation, it is up to them to raise it and not the plaintiff/respondent” This view of the trial judge cannot be faulted. The 2nd and 3rd defendants were served with the writ of summons. The 2nd and 3rd defendants clearly must be aware of the 1st defendant/respondents application for an order to stay the proceedings and to refer plaintiff’s action to arbitration. They were perfectly entitled if they were so minded to oppose the said application. They chose not to oppose the application. And yet the plaintiff purports to speak for them and thus contends that they should not be forced to go to mediation. Clearly it was not for the plaintiff who had commenced the action against the 2nd and 3rd defendants to turn itself into a spokesman for them. As counsel for the 1st defendant put it graphically in his written submission, the plaintiff cannot be seen to be crying more than the bereaved. It does not lie in the mouth of the plaintiff to purport to speak for the 2nd and 3rd defendants and in my view the trial judge correctly rejected that view. It seems to me that this should dispose off the appeal and it is unnecessary to consider the other grounds of appeal. The plaintiff/appellants appeal has no merit and is dismissed in its entirety. SGD ...................... JUSTICE HENRY KWOFIE (JUSTICE OF THE COURT OF APPEAL) SGD I AGREE ....................... JUSTICE P. BRIGHT MENSAH (JUSTICE OF THE COURT OF APPEAL) SGD I ALSO AGREE ......................... JUSTICE OBENG-MANU JNR (JUSTICE OF THE COURT OF APPEAL) COUNSEL: ELLEN ADOLEY AUGUSTT WITH MAAME BARNIE ADU AMOAH FOR PLAINTIFF/APPELLANT ELIJAH BONSU-TURKSON FOR 1ST DEFENDANT/RESPONDENT 13