N.M. JEBARA v MERCURY ASSURANCE CO. LTD. (SUIT NO. K/27/71) [1971] NGHC 43 (15 November 1971)

**N.****M****.** **J****EB****A****R****A** **(P****L****AI****N****T****I****FF****)** **_v._** **MERCURY** **A****SSURANCE** **C****O.** **LT****D.** **(D****EFENDANTS)** **(1971)** **All** **N.L.R.** **639** **Div****i****si****o****n:** High Court, Kano **D****at****e** **o****f** **Judgment:** 15th November, 1971 **C****as****e** **Num****b****er:** SUIT NO. K/27/71 **Before:** Jones, S.P.J. Civil Action. **_HELD_**** _:_** (1) Section 5 of the Arbitration Law empowers a stay pending arbitration provided application is made before the party applying has taken any step in the suit. Such step includes filing a statement of defence, as was done here. (2) The right to plead a condition precedent in a written contract as a defence does not depend on the Arbitration Law. (3) Defendant is not estopped from applying to amend his statement of defence to include breach of an arbitration condition by his having originally filed the statement of defence without including such plea. (4) The court has power under Order XXXIII Supreme Court (Civil Procedure) Rules to allow amendment of the statement of defence to include the defence of a condition precedent, including, an arbitration condition precedent. (5) In the circumstances the application would be granted. _A_ _p_ _p_ _l_ _i_ _c_ _a_ _t_ _i_ _o_ _n_ _g_ _r_ _a_ _n_ _t_ _e_ _d_ _:_ _Cas_ _e_ _s_ _re_ _f_ _err_ _e_ _d_ _to_ _:_ _A._ _Wur_ _aola_ _v_ _._ _Nort_ _hern_ _A_ _ssurance_ _Co_ _._ _Ltd.__,_ (1963) N.M.L.R. 31 not followed. _Ewer_ _v._ _National_ _Employers_ _Mutual_ _Assurance_ _Co._ _Ltd,_ (1937) 2 All E.R. 193 followed. _P_ _arke_ _r_ _,_ _G_ _a_ _ine_ _s_ _&_ _C_ _o_ _._ _Ltd_ _._ _v_ _._ _Turpi_ _n_ _,_ (1917) 1 K.B. 358 mentioned. CIVIL ACTION. SUIT NO. K/27/71. _O_ _.__T_ _._ _N_ _n_ _a_ _d_ _i_ for applicant/defendant. _J.B_ _._ _Majiyagbe_ _._ Jones, S.P.J.:-This is an application made under Order XXXIII Supreme Court (Civil Procedure) Rules to amend the Statement of Defence by including the defence that an arbitration clause in the contract sued on precludes the court from adjudicating the issues to which that clause applies. Mr Majiyagbe for plaintiff submits that the application is too late because the filing of the Statement of Defence operates as waiver of defendant's rights under the arbitration clause. He cites in support _A._ _Wuraola_ _v._ _Northern_ _Assurance_ _Co._ _Ltd_. (1963) N.M.L.R. 31. Mr Nnadi for applicant/defendant points out that he is not asking for a stay of proceedings which, he agrees he cannot do after taking a step in the proceedings, but he wishes to add this arbitration condition precedent to his defence. He cites _Ewer_ _v._ _National_ _Employers_ _Mutual_ _Assurance_ _Co._ _Ltd._ (1937) 2 All E.R. 193 in support. It is true that after taking a step in the proceedings defendant cannot ask for a stay pending arbitration. This is the negative effect of s. 5 of the Arbitration Law-and see the leading English case on the same provisions in the Arbitration Act 1889, _Parker,_ _Gaines_ _&_ _Co._ _Ltd_ _v._ _Turpin_ (1917) 1 K.B. 358. _Wur_ _a_ _ola_ _'__s_ case appears to disagree with _Ewer's_ case (above). If it does, then I must respectfully disagree with _Wuraola_ on this point. What Fatai Williams J. (as he then was) said was:- "Once pleadings have been filed it would appear that defendants had waived their right to arbitration under condition 8 (the arbitrations clause)." He then quotes s. 5 Arbitration Law. But s. 5 deals only with stay of proceedings, and it is the right _to_ _apply_ _for_ _a_ _stay_ under s. 5 which is waived by taking a step in the proceedings. The learned Judge's decision in this point was based on the proposition put by Chief Williams that:- "for this condition (the arbitration condition) to apply, the defendants should have asked for a stay of the proceedings pending arbitration." No authority is cited for this proposition, and, with respect I do not think there can be such authority. It appears that _Ewer_ was not brought to the learned Judge's attention. In _Ewer_ , Mackinon J. said:- "Clause 11 of the conditions (of that insurance contract) ... requires that any pecuniary claim shall be settled by arbitration, and makes the obtaining of such arbitration award a condition precedent to any right of action or claim or the policy. That is a defence which on the _terms_ _of_ _the_ _policy_ is available." Now, it may well be that on the terms of the policy in _Wuraola_ that defence was not available. And it may well be that the same applies to the terms of the policy in the present case. I do not know. I have not seen the policy. That will remain to be decided. However, it is, I think clear, that s. 5 Arbitration Law does not debar such a defence as a defence. It authorises application for stay pending arbitration and gives a right to such stay. Without this statutory authority there would be no such right. It authorises it only before any step in the proceedings has been taken by the party wishing a stay. This necessarily implies a bar on such application for stay after such step has been taken as in _Parker,_ _Gaines_ _&_ _Co._ (above). It does not bar the use of breach of condition precedent _as_ _a_ _d_ _efence_. To use it as a defence does not need the authority of the Arbitration Law. (_Wuraola_ was in fact reversed on appeal [S.C. 340/66] but, it appears, on the basis of breach of another condition precedent, on condition 1 not condition 8. Both were mentioned but condition 8 was not discussed.) I therefore find that defendant is not barred from using the condition in this policy as to arbitration as a defence. I cannot agree with Mr Majiyagbe that the filing of the defence without reference to the arbitration clause estops defendant from amending the statement of defence to include this defence. In the circumstances I think defendant is entitled to his amendment, and I grant the application. Amendment ordered as prayed. _Ap_ _p_ _l_ _i_ _c_ _a_ _t_ _i_ _o_ _n_ _g_ _r_ _a_ _n_ _t_ _e_ _d_ _._