IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT(COMMERCIAL DIVISION)
ACCRA - A.D 2016
WALLACE AGBI GBEDEMAH - (Plaintiff)
PHYLLIS LOMOTELLE ENGMAN - (Defendant)
DATE: 22ND FEBRUARY, 2016
SUIT NO: MISC/0010/2016
JUDGES: HIS LORDSHIP ERIC KYEI BAFFOUR JUSTICE OF THE HIGH COURT
This is the ruling of the court in respect of the preliminary points of law raised by the counsel for Respondent when this application came to be moved by the counsel for the Applicant. The Applicant who roots this application under the Incorporated Private Partnership Act, Act 152, 1962 and seeks an order to the effect that the Respondent ceased to be a partner in the firm Blue Bells Pre-School International on the following grounds that:
1. That Respondent since July, 2000 when the partnership was formed has willfully and persistently failed or refused to pay her capital contribution in breach of the partnership.
2. That the respondent forfeited her interest in the partnership when she willfully and persistently refused to pay up her capital contribution when she was called upon by the Applicant to pay up.
3. That Respondent cease to be a partner of the firm.
In an affidavit that accompanied the application deposed to by the lawful attorney of the Applicant, Stephanie Haizel, Applicant claim that per the partnership agreement the fixed capital of the partnership was Gh¢10.000 which the Applicant was liable to pay Gh¢7.000.00 and the Respondent Gh¢3.000.00. That the Respondent has not made good the payment of her portion of fixed capital for the business, notwithstanding letters and notices served her to pay her portion of the fixed capital. To the Applicant as long as the Respondent has not paid her portion of the fixed capital she is incapable of claiming a 30% share of interest in the partnership.
Respondent has resisted the application on two preliminary points of law. The first is aptly captured by the Respondent in paragraphs 6 and 7 of her affidavit in opposition to the application which reads:
6.“That Blue Bells Pre-School International is already the subject matter of an ongoing dispute between the Applicant as Petitioner and myself as Respondent in Divorce and Matrimonial suit No BDMC 136/2013 entitled Brigadier General Wallace Gbedemah and Phyllis Lomotelle Gbedemah pending before the High Court of Justice”
7. That in the Suit No BDMC 136/2013 aforementioned I sought as one of the reliefs in my cross partition a declaration of joint ownership of Blue Bells Pre school International, an order of valuation of the entire business together with the assets and for my share thereof to be paid to me accordingly”.
Respondent further claims that the present application is only an attempt to scuttle an ongoing valuation exercise that has been ordered by the Divorce and Matrimonial Division of the High court.
The second preliminary objection is to be found in paragraph 12 of the affidavit in opposition and reads as follows:
“that I am again advised by counsel and verily believe same to be true that instant application is also premature in so far as it runs contrary to the provisions of Clause 14 of the partnership Agreement dated the 19th day of July 2000 .. which mandates the parties to refer any disputes or differences arising between them to arbitration”.
On that basis it has been contended that this court lacks jurisdiction and should accordingly decline same to venture into the merits of this application. Before delving into these two pronged legal challenge mounted by the Respondent; it is necessary for the court to situate the application in its proper context within the scope of the law. Counsel for the Applicant seeks umbrage under section 37(4) of the Incorporated Private Partnership Act, 1962, Act 152. Section 37 has no sub section 4. For the whole of section 37 reads as follows:
“The interests of the partners in the firm shall be personal estate and shall not be in the nature of real or immovable property”.
Surely this application could not have been mounted under the section supra. The correct one should have been section 39(4) of Act 152 which reads as follows:
4. “On application by a partner the Court may order that any partner shall cease to be a partner in the firm in any of the following cases, that is to say,
(d) when such partner wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the firm's business that it is not reasonably practicable for the other partners to carry on the business in partnership with him;
(e) whenever circumstances have arisen which, in the opinion of the Court, render it just and equitable that such partner should cease to be a partner in the firm”.
Be that as it may, the failure of misquoting the exact section of the law is not fatal to defeat the action as long as the application being mounted is not alien to the Incorporated Private Partnership Act.
The court intends to deal with the two pronged legal objections by starting with the claim of an arbitration clause in the agreement of the parties and for which reason Respondent contends that this court is stripped of jurisdiction.
As jurisdiction is so fundamental and has been noted by Justice Brobbey in his work Practice and Procedure in the Trial Courts and Tribunals in Ghana, as “the authority of a court to entertain or decide a case” it would be worthwhile to determine the issue of jurisdiction. Amua Sakyi in the case of KUMNIPAH 11 v AYIREBI (1987-88) 1 GLR 266 that:
Jurisdiction means the power or authority to adjudicate. Where it is lacking, any judgment or order emanating from the court or judge is a nullity and a person affected by it is entitled to ignore it”
Looking at Order 58 of the High Court (Civil Procedure) Rules, C.I 47 as amended by Order 6 of the High Court (Civil Procedure) Amendment Rules, C. I 87, the prayer of the applicant fall squarely within the four corners of the actions that a Commercial Court ought to entertain before it as this action is a claim of a commercial nature. Arbitration clause even when properly invoked only has the net effect of staying proceedings in litigation but not to oust the jurisdiction of the court.
I surmise that what learned counsel for Respondent, Zwennes, Esq meant by lack of jurisdiction of this court to entertain the action was not subject matter jurisdiction but rather one that has to do with the appropriate forum to determine the action as it is trite that when a party resist litigation in favour of arbitration he does not divest the court of jurisdiction but only seeks to hold in abeyance the judicial process in favour of the parties own preferred means of resolving their dispute.
Having resolved that the court has jurisdiction what is left to be determined is whether the court should decline to entertain this action in favour of the parties own choice of arbitration. As noted in the Nigerian case of BEST NIGERIA LTD v BLACKWOOD HODGE (2011) 1 CLRN 33 that:
“Parties are bound by the terms agreed to in a contract. If the conditions for the formation of a contract are fulfilled by the parties thereto they will be bound. It is not the function of a court to make contract for the parties or to rewrite the one which they have made”
The court ordinarily should not have difficulty at all in making reference for settlement of dispute among parties in a an arbitral forum in pursuit of the parties own choice, nonetheless, this action raises concerns in view of proceedings taken and still ongoing in Suit No. BDMC 136/2013 as to whether or not the parties have not waived their right to have their dispute in respect of Blue Bell Pre-School International settled before arbitration. The courts are not yet unanimous as to what should be the criteria for concluding that a party has waived his right to have his claim resolved in arbitration.
In one of the United States Federal Court of Appeal, which they call it the Circuits, the 11th Circuit in the case of IVAX CORPORATION v BRAUN OF AMERICA, 286 F 3RD 1309 noted regarding what will constitute a waiver of arbitration clause in an agreement that:
“In determining whether a party has waived its right to arbitrate, we have established a two-part test. First, we must decide if, under the totality of the circumstances, the party has acted inconsistently with the arbitration right,” and, second, we look to see whether, by doing so, that party has in some way prejudiced the other party”.
But in the cases of MOSES CANE MEMORIAL HOSPITAL v MERCURY CONDUCTOR and also HOWARTH v BLINDER 980 F 2ND 912, 925 (3RD Cir, 1992) other considerations have been added and they include among others, the following; whether the party seeking arbitration has informed his adversary of the intention to seek arbitration even if it has not yet filed a motion to stay the court proceeding; whether the actions of the party seeking arbitration are inconsistent with the right to arbitrate; whether the litigation machinery has been substantially invoked by filing the appropriate application for stay, whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay of proceeding; and finally whether the delay “prejudiced” the opposing party. It is the gamut of these multi factors that will inform my view as to whether the challenge mounted regarding arbitration is well founded in law.
The parties have signed terms of settlement wherein they agreed to appoint a valuer to value the assets of Blue Bell School in order to determine the net worth of each of the parties. Indeed that an order has been made by Doris Bempong J. for the valuation to be carried and the said order was made on an application launched by the Respondent herein admits of little controversy. If indeed, Respondent was minded to invoke its rights under the Partnership Agreement to have recourse to arbitration, it would have done so long ago. It seems crystal clear to me that by the conduct of Respondent she has waived her right to have issues and matters regarding the School arbitrated and cannot be allowed now to be pushing for arbitration when her other hand is on the wheel of litigation accelerating at a supersonic rate. The court will not allow approbation and reprobation whenever a party deems fit. The ground of resisting the application on the basis of an arbitral clause fails as by the very conduct of Respondent in Suit No BDMC/136/2013 she has waived her right to have the claim arbitrated .
Now to the first leg of the preliminary objection which is to the effect that the Blue Bell School is already a subject matter of dispute between the parties at the Divorce and Matrimonial Court. I have already made some reference to the proceedings that has transpired in respect of the Blue Bell School where a valuation was ordered by the Divorce Court with a view for the court to determine the respective net assets of each of the parties. Will the determination and grant of an order in respect of the School in this Suit not undermine the administration of justice by overreaching the order made by my learned sister? Is it not possible for the Applicant to file the present application before the court that has already dealt to some degree with the School so that all the issues regarding the School could be determined by one Judge.
The essence of the objection of counsel for the Respondent is one which is termed as lis alibi pendes. The court has a duty to ensure that the same basic outcome is obtained in a claim arising out of the same set of facts and also to ensure that suits that are connected and related is heard and determined to avoid the risk of irreconciliable decisions from two courts of co-ordinate jurisdiction.
The practice of the courts when a subject matter is already pending and another suit is filed that is substantially the same or similar or that could conveniently be dealt with the first suit, the action is stayed to enable the parties proceed usually with the suit that has gone far. It is not normal to dismiss the second suit or strike it out simply because the matter is already pending before another court.
Supreme Court in the case of IN RE APPLICATION BY NEW PATRIOTIC PARTY & PEOPLES CONVENTION PARTY (Applicants); TEHN-ADDY v. ELECTORAL COMMISSION [1996-97] SCGLR 216 the Supreme Court explained lis alibi pendens thus:
“By this principle, the suit must be between two parties in one Court in respect of a given matter and one of the parties goes to another court within the same jurisdiction-seeking the same relief. In such a situation, either party may be put to his election as to the forum in which he would like to pursue his claim. In which case, the other suit may be dismissed or stayed pending the outcome of the other”.
In this matter whiles the Applicant intends to have his day in this court as he made some disparaging remarks regarding the determination of this application before the Divorce and Matrimonial, which I find myself unable to repeat here, the Respondent on the other hand intends that the processes began in the first court should not be scuttled by this application. Forum shopping is not encouraged by judicial administrators as it amounts to a party seeking to choose his own Judge. To ensure that the Judge who has already dealt with matters regarding valuation of the res litiga, being the School, albeit the original matter before her was a divorce proceedings with the School being one of the ancillary reliefs. There seems to be the other matter to be determined as to how much each of the parties own in the partnership, I think that it would be fair and just that this court stays this action and refer the parties to conclude the matters before the Divorce and Matrimonial Court.
The preliminary objection succeeds in part as this action is stayed but not dismissed or strike out as counsel for Respondent had expected.