IN THE HIGH COURT OF MALAWI

[COMMERCIAL DIVISION]

LILONGWE REGISTRY

COMMERCIAL CAUSE NUMBER 13 OF 2011

BETWEEN:

AUCTION HOLDINGS LIMITED PLAINTIFF

AND

FASTA CIVIL ENGINEERING DEFENDANT

CORAM: THE HONORABLE MR. JUSTICE L P CHIKOPA

Songea of Counsel for the Plaintiff
Nankhuni of Counsel for the Defendant
Njala/Banda, Court Clerk

Chikopa, J

JUDGMENT

INTRODUCTION
by a written contract dated March 4, 2005 the parties agreed that the
defendant erects a ‘tobacco selling floor’ [Sic] facility at Chinkhoma. As
matters turned out the contract was terminated by the plaintiff in writing by
letter dated February 16, 2006. The defendant was not overly impressed with
such termination. The matter was thus taken for arbitration in terms of Clause
36 of the contract between the parties. Mr. Joseph Skinner Chimangafisi was
appointed arbitrator by mutual consent. The arbitrator rendered his award. It
was dated January 17, 2011. In paragraph 5.01 thereof the arbitrator found:

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 ‘the Respondent shall pay the Claimant K27,354,441.38 [Twenty seven
million fifty four thousands four hundred forty one kwacha and thirty
eight tambala] in full and final settlement of all claims referred to me
herein and in addition the Respondent shall pay compound interest at
24.5% per annum for every day that elapses from December 31, 2010 to
the date of payment’. [Sic]

The defendant came to court and via Commercial Case Number 8 of 2011
sought to have the award registered and enforced. The plaintiff objected. It
instead applied in the same action that the award be set aside for being
improper. The court in the person of my Brother Mbendera J, SC decided that
the challenge against the award could not properly be made in Commercial
Case Number 8 of 2011. With the consent of both parties it was then agreed
that subject to some variations being made in the award the same would be
registered for enforcement as a judgment of this court. Its enforcement would
however be stayed pending the determination of the plaintiff’s challenge
against the award in this action. The sum in dispute, now reduced to
K24,064,613.63 due to the variations/adjustments referred to hereinabove was
paid into court on .

THE LAW
Under section 24(2) of the Arbitration Act[Cap 6:03 of the Laws of Malawi] this
court has the mandate to set aside an arbitral award if in our view the
Arbitrator misconducted himself or the proceedings, or if the Arbitrator/award
has been improperly procured.
There is a similar power at common law. Thus an arbitral award maybe set
aside if there is something radically and viciously wrong with the proceedings.
This is clear from the cases, cited to us herein, namely Press Trust Limited v
Littleways Building Contractors Limited Commercial Case Number 9 of 2007
Principal Registry [unreported] Celtel Malawi Limited v Star FM Radio Station
Commercial Case Number 31 of 2011 Principal Registry [unreported]. There is

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also the English case of Haigh v Haigh (1861) 31 LJ Ch. 430. The conclusion is
the same namely that an arbitral award will not be set aside unless there is
something radically and viciously wrong with the proceedings/award. We
should however be quick to emphasize certain of our sentiments vis a vis
applications like the one before us. This is that this court does not in hearing
an application to set aside an arbitral award sit as an appellate court. The
Courts Act is clear about the hearing of appeals from subordinate courts. the
High Court proceeds by way of rehearing. Such is not the case herein. The
court only has to ask and answer the question whether or not there is
something radically and viciously wrong with the award. If the answer be in the
positive the award will be set aside. If not the award will be maintained.
Secondly this court does not in hearing an application like the present one sit in
place of the arbitrator. In other words this Court is not and cannot be the
arbitrator. It must not therefore proceed as if it is the arbitrator. It only sits to
test the award against the standards laid out in Haigh v Haigh, the Apex case
and more importantly in section 24(2) of the Arbitration Act. Further we feel
obliged to also point out that the power to set aside an arbitral award will not
be exercised wily nilly. In Haigh v Haigh the court said:

‘I would observe that we must not be over-ready to set aside awards

where the parties have agreed to abide by a decision of a tribunal of
their own section’. [Sic]

This we want to believe is more so where the arbitrator is some expert in the
area in which the parties are disputing. The Malawi Supreme Court of Appeal in
Apex Operations Limited v World Food Programme MSCA Appeal Number 15
of 2001[unreported] cited with approval the sentiments of Banda J [as he then
was] in Chikosa v Attorney General 11 MLR 454 at 457 namely that:

‘in my judgment this court must not be over-anxious to set aside an

arbitrator’s award where the parties have their own choice, unless the

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 court is satisfied that there has been something radically and viciously
wrong in the proceedings. The test is whether the irregularity may have
substantial miscarriage of justice’. [Sic]

In our judgment it is clear that the setting aside of an arbitrator’s award should
be the exception rather than the norm. That an arbitral award should stand
unless it is proved to be radically and viciously wrong or so irregular as to cause
substantial miscarriage of justice. That in our judgment is also the purport of
section 17 of the Arbitration Act which we, for other reasons quote hereunder.
From a different perspective we also find it important that we state two
things. First that this remains a civil matter. He who alleges has the burden to
prove their contention on a balance of probabilities. Secondly it is important
that reference is made to section 17 of the Arbitration Act. This because it
relates well to the court’s jurisdiction to set aside an arbitral award. The
section provides:

‘unless a contrary intention is expressed therein, every arbitration

agreement shall where such a provision is applicable to the reference
be deemed to contain a provision that the award to be made by such
Arbitrator or umpire shall be final and binding on the parties and the
persons claiming under them respectively’.

Sometimes this provision is used to argue that an arbitral award is final and not
subject to review by the courts. That is to argue in error. The above section
must be read subject to section 24(2). But only to the extent that an award is
final unless shown to the satisfaction of a court that it is radically or viciously
wrong or in the alternative that it will cause substantial injustice.

THE PLAINTIFF’S CASE

The plaintiff according to its originating summons seeks to have the award set
aside because the contract from which the award emanates is illegal and

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invalid for being contrary to statute and public policy and also because the
arbitrator misconducted himself. The plaintiff alleges that the contract
between the parties hereto dated March 4, 2005 is illegal, invalid and void ab
initio in terms of section 20 of National Construction Industry Act Cap 53:05 of
the Laws of Malawi and section 20 of the Engineers Act Cap 53:03 of the Laws
of Malawi. And also that the arbitrator misconducted himself and the
proceedings by (i) ignoring the plaintiff’s defence (ii) not determining several
issues before him (iii) making inconsistent and ambiguous findings (iv) making
an award to the defendant that is arbitrary and without justification and (v)
making an interest award that is over the required interest rate. We will get to
the exactitudes of the plaintiff’s case later in this judgment.

THE DEFENDANT’S CASE

There is a general disputation. We would rather though that we dealt with the
defendant’s precise arguments as we deal with the issues herein.

A DISCUSSION OF THE ISSUES

We remind ourselves that this is a civil matter. The burden is on he who alleges
to prove their allegation on a balance of probabilities. In the instant case the
plaintiff is alleging that the award be set aside on grounds of illegality and
misconduct. It is on the face it for the plaintiff to prove such allegation on a
balance of probabilities. In deciding this matter we also remind ourselves that
we are not sitting on appeal. That we are not therefore rehearing the referral
to the arbitrator. Neither, we must emphasize, are we going to turn ourselves
into the arbitrator. Our duty is to decide on the material before us whether the
award is bad for being illegal or whether there was such misconduct by the
arbitrator or of the proceedings as to make them so viciously and radically
wrong as to cause substantial injustice or miscarriage of injustice. The two
issues before us therefore are whether the award should be set aside on
grounds of illegality or of misconduct.

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ILLEGALITY
The plaintiff’s argument is in two parts as we understand it. Firstly that the
arbitrator never decided on the issue of illegality and secondly, and the
foregoing notwithstanding, that the award should be set aside for being based
on an illegal contract.
We have to understand and decide this matter in context. When the parties
herein agreed on an arbitrator the arbitrator wrote them as to how the
arbitration would proceed. The parties were asked to respectively submit their
statement of claim and statement of defence complete with evidence. That in
our view was to determine the issues in dispute between the parties. The
arbitrator also made it clear that he would only make a determination on
matters that were in issue and nothing else. It was to achieve this that in his
letter of August 1, 2007 which was followed up by that of October 19, 2006 the
arbitrator implored the parties to restrict their submissions to matters raised in
the claim and defence and nothing else. In its statement of claim of November
22, 2006 the defendant claimed the sum of K42,848,781.48. This was from a
total value of works done of K47556288.00 less the sum of K21268810.00 paid
by the plaintiff to the defendant. The amount claimed by the defendant was
broken down as follows:

i. Amount due for work done K26,287,478.00

ii. Loss of value compensation K2,944,197.51
iii. Interest thereon
K11,617,106.22
iv. Retention K
2,000,000.00

The claim according to the defendant was for works done on site. There was
attached to the statement of claim a schedule of the works done on site and
their respective values. See PL7 of the affidavit of Pempho Likongwe of
February 15, 2011. Thereafter the parties exchanged responses see PL 8 to

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PL12 in which each party sought to show why they were entitled to carry the
day. At no point in our view was the small matter of the illegality of the
contract between the parties hereto raised by the defendant indeed any party
hereto. Can the arbitrator be accused of not having decided on whether or not
the contract in issue was illegal? The answer is in the negative. It was not an
issue before him. He was not made aware of it. He could not on the evidence
before us have been aware of it. He therefore could not have been expected to
decide on it. The plaintiff argues that they did raise this issue in their final
submissions to the arbitrator which is PL13. That in accordance with David
Taylor & Son Ltd v Barnett [1953] 1 ALL ER 841 the arbitrator should still have
decided on illegality irrespective of the stage at which the issue of illegality
was brought to the arbitrator’s attention. We have gone through exhibit PL13.
By its own admission the plaintiff admits not having used the term illegality in
its submissions before the arbitrator. They however think that the arbitrator
should have inferred from the plaintiff’s mention of the two section 20s
abovementioned that the plaintiff was talking about illegality. That is a giant
leap of faith we think. As we have said above the arbitrator had already told
the parties before him to raise the issues on which his decision was prayed for.
Nowhere was the question of illegality raised. Not having raised the issue
expressly did the plaintiff expect the arbitrator to bring it in by himself and by
mere implication? After the issues had already been set out? He would in our
judgment have run the risk of being accused of raising his own issues and
deciding the dispute between the parties thereon. Of deciding the dispute by
reference to matters not raised before him? Or of bringing to the dinner table
items that were not on the menu? The mistake was the plaintiff’s. They neither
pleaded nor at any one time expressly brought to the arbitrator’s attention the
issue of illegality. They should not now be allowed to blame the arbitrator for
not having decided one way or the other on this issue. In saying this we feel
duty bound to point out that the facts herein are different from those in
Barnett’s case. In that case the issue of illegality was actually brought to the
attention of the arbitrator/umpire who, together with the other party to the

7
arbitration, accepted that the contract was indeed illegal. That is not the case
in the instant case. The alleged illegality was not brought to the attention of
the arbitrator. Neither the defendant. Any which way you look at it the
plaintiff’s argument that the arbitrator did not address his mind to the
contract’s alleged illegality has no leg to stand on.
The next strand of the plaintiff’s argument is that having made the illegality
argument in this court we should decide on it and in its favour. The argument is
again in two parts: that the contract between the parties herein is illegal firstly
for being in contravention of section 20 of the National Construction Industry
Act [NCIA] and secondly section 20 of the Engineers Act.

Section 20 of the Engineers Act

The section provides as follows:

(1) Save where this Act otherwise provides, no person shall engage in the
practice of engineering in Malawi, or hold himself out as being entitled
so to do, unless he is registered under this Act;
(2) Any person who engages in the practice of engineering in contravention
of subsection (1) shall not be entitled to recover in any court any charge
or fee in respect of any engineering work or activity done or performed
by him in the course of his said practice;
(3) No person other than a natural person may be registered under this
Act.

The plaintiff alleges that the defendant put themselves out as engineers when
they were not registered under the Engineers Act. This according to the
plaintiff was done via the defendant’s utterances to the plaintiff’s former
Group General Manager Dr Chipala and the defendant company’s profile which
was submitted by the defendant together with the quotation for the
construction of the tobacco selling floor facility at Chinkhoma the building in
issue herein. It is important that the purport of the Engineers Act be

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understood. It does not say that one cannot be an engineer unless they are
registered under the Engineers Act. It only says one cannot engage in the
practice of engineering or hold themselves out as a practicing engineer unless
they are registered under the Act. The reasoning is simple enough in our view.
You become an engineer not because you are registered under the said Act but
because you have the requisite academic qualifications. One can therefore be
an engineer without being registered under the said Act. What one cannot be
[even with the requisite academic papers!] unless registered under the Act is a
registered engineer. What the said Act therefore proscribes is the practice of
engineering or the holding out of oneself as such without first being registered
under the Engineers Act. The question therefore is whether the defendant
engaged in the practice of engineering or held themselves out as being
entitled to so do. The answer is in the negative in both respects. Dr Chipala
never testified to such effect. All we have is an allegation from Mr. Likongwe
that the defendant held themselves out as registered engineers to Dr Chipala.
At best that is hearsay evidence. We have also looked at the profile in issue. It
clearly stated that the defendant was registered with the National Construction
Industry Council[NCIC] and offered ‘construction and maintenance services in
roads, bridges and building works’. It of course said it has engineers but
clearly that was for purposes of the service it offered [as set out above] and
not for purposes of carrying out the practice of engineering or holding itself out
as being entitled so to do. More than that it is worth noting that the defendant
company was careful to say it has engineers which is permissible if one has the
requisite academic papers and not ‘Registered Engineer, Registered Graduate
Engineer, Registered Technician Engineer or Registered Engineering
Technician’ which is proscribed under the Engineers Act if one is not registered
under that Act. As for the contention that the defendant did not in fact have
an engineer or engineers on their books we think the plaintiff is catching at
straws really. There was an exchange between the parties as to whether Mr.
Msendema the defendant’s engineer was in fact an engineer. He produced a
duly certified degree certificate from the University of Malawi showing that he

9
did qualify in engineering from the said university’s Polytechnic College. That
surely rested the matter of whether or not Msendema is an engineer. Whether
or not he was registered is perhaps irrelevant for purposes of this case seeing
as he never held himself out as a registered engineer or some such
professional. There is in our view nothing on the basis of which we, even at this
late stage, can conclude that the contract in issue herein was illegal for being
in breach of section 20 of the Engineers Act. The defendant company never in
the context of this matter held itself out as an engineering practice nor did it
engage in the practice of engineering.

Section 20 of the NCIA

Subsection 1 provides that:

‘No person shall carry on business in the construction industry in Malawi

unless he is registered under this Act’.

Subsection 2 on the other hand provides that:

‘No person being registered under this Act shall carry on business of a
category in respect of which he is not registered’.

The plaintiff contends that the defendant company being registered as a

building contractor in the K5,000,000.00 category could not have lawfully
contracted to execute the Chinkhoma works because the works were for a
different category namely the K50,000,000.00 category.
Our understanding is that you cannot carry on business in the construction
industry unless you are registered under the NCIA. It is our further
understanding that registration in the construction industry is in different
categories and that even if registered one cannot carry on business in a
category in respect of which he is not registered. The question being what are

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these categories across which one cannot flit without registration? The
plaintiff, as we have indicated above, thinks these are provided for in the First
Schedule which is to be found in the National Construction Industry[ Fees and
Forms] Regulations Regulation 2 thereof made under section 29 of the NCIA
with respect to building contractors. Accordingly building contractors are
categorized, project value wise, beginning from K5,000,000.00 to the unlimited
categories. The plaintiff contends that the defendant being a building
contractor registered in the K5,000,000.00 category could not have lawfully
contracted for work valued at more than K5,000,000.00. That any contract to
such effect is void ab initio and therefore unenforceable. The plaintiff has
fallen into error in our view. Our understanding of the NCIA is that
‘construction industry’ is the generic term for the business which NCIA seeks to
regulate. Every person seeking to do business in the construction industry
should, to use the words actually used in section 20 of the NCIA, be registered
with NCIC. Such registration is provided for under National Construction
Industry [Application Fees] Regulations Regulation 1 thereof complete with an
application fee. It is obvious from the said Regulations that the construction
industry is categorized. There are eighteen [18] such categories. See
Regulation 2 of the immediately foregoing Regulations. The fees payable for
each category are then set out in the First Schedule which is itself made under
Regulation 2 above-mentioned. Whether or not one will be registered is in the
discretion of the NCIC. See section 22 and 23 of the NCIA. The following will be
taken into account before registration:

i. Capital and other functional resources;

ii. Whether one owns land, buildings and machinery;
iii. One’s managerial, professional, technical and other personnel;
iv. In the case of an individual one’s qualifications and skill;
v. Whether one has vehicles, plant, implements, tools, instruments,
fuels and other goods and supplies for the unlimited categories; and

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 vi. Any other requirements which the Council may determine for each
category necessary to enable him to discharge in a satisfactory
manner, the obligations which may reasonably be expected of or
undertaken by a person belonging to the category in respect of which
registration is sought.

Depending on one’s application one will be registered to carry on business in

the construction industry as inter alia a civil engineering contractor, building
contractor, mechanical services contractor, borehole drilling contractor, a
consulting architect, surveyor or engineer etc. It is clear in our judgment that
the word category as used in section 20(2) of the NCIA therefore refers to the
categories set out in the National Construction Industry[Application Fees]
Regulations Regulation 2 thereof. Not to the classification based on the value
of work for building contractors. To so interpret category as used in section 20
abovementioned would produce absurdities that could never have been in the
contemplation of the legislature. Such an interpretation would proceed on the
erroneous assumption that registration under the NCIA is restricted only to
building contractors the categories of which are those set out in building
contractors classification based on value of work. That cannot clearly be for
what would we then term the rest of contractors, suppliers etc specified in
Regulation 2 of the National Construction Industry(Application Fees)
Regulations if not categories? Further it is clear that the word business as used
in subsection 2 of section 20 of the NCIA refers to those numbered one to
eighteen in the above Regulations one of which is of course that of a building
contractor. It is clear therefore that when subsection 2 talks of categories it
cannot be referring to the value of work classifications being spoken of by the
plaintiff. Again it would suggest that the only class of business in the
construction industry is that of a building contractor which is not the case.
Much the same is the case with section 23(1) (e) and (f) of the NCIA.
Categories as used in paragraph (e) refers to unlimited categories. Unlimited
categories does not appear under the Regulations with respect only to building

12
contractors. It also applies to civil engineering contractors and electrical
contractors. It is obvious that it also refers to materials suppliers who are
classified either as small scale or large scale suppliers. It is therefore clear to
our mind that the word category as used in section 20 of the NCIA does not
refer to classification of builders based on value of work as set out in the First
Schedule. It refers to the categories set out in Regulation 2 of the National
Construction Industry [Application Fees] Regulations. What therefore the NCIA
proscribes i.e. makes unlawful is one flitting across such categories. Thus one
registered as a building contractor cannot as well carry out business within the
construction industry as an electrical or civil engineering contractor. The
plaintiff’s contention that the contract between the parties herein is illegal for
being business in the wrong category and therefore in breach of section 20(2)
of the NCIA is untenable. But even if category as used in section 20 referred to
building contractor’s classifications on the basis of project value (and it does
not as we have concluded above) the contract between the parties herein
would not be illegal as contended by the plaintiff. Or void ab initio. It would
only be capable of sanctioning in terms of section 28 of the NCIA which
provides that an offender is liable for two years imprisonment and a suitable
fine if they contravene the provisions of the NCIA. The contract itself would
however remain legal. It would have been illegal if the contractor were not
registered in any of the eighteen categories referred to above. If the
legislature had intended that the sanction be the nullity of the contract they
would have inserted in the NCIA a provision similar to that found in the
Engineers Act section 20(2)quoted hereinabove. That such a provision was not
included means that it was not the intention of the legislature to punish
noncompliance with nullity. But rather with imprisonment and/or a fine. Does
this mean that the categorization/classification of building contractors in the
First Schedule in respect of value of works is of no consequence? Not at all. we
have above said that a disregard thereof may result in imprisonment/a fine.
Further and speaking both generally and with specific reference to the instant
case it should be noted that it is those wishing to construct in the instant case

13
the plaintiff that ask for bids. Depending on the nature of the work at hand
they will specify the kind of building contractor they want by specifying the
class of contractor they want. Thus if the work requires a K50,000,000.00
category contractor the client will say so. In those circumstances it is difficult
to envisage how a contractor can be awarded a contract if they are not eligible
for due to category limitations. Unless of course the client decided to disregard
their own award criteria in which case they will only have themselves to blame
if things turn out bad. If however the contractor lies or misrepresents their way
into a contract the result is not in our view that the contract will be illegal.
Rather that the contractor can be sanctioned under section 28 above-
mentioned or that the client can resort to contractual reliefs. In the instant
case the plaintiff did not according to evidence state what class of contractor
they were looking for. The defendant on the other hand indicated that they
were registered with NCIC. That was true. If the plaintiff wanted to check out
what class they would easily have done so like they eventually did and it would
then have been up to them whether or not to award the contract to the
defendant. As things are it is obvious that the plaintiff did not care that much
for the kind of contractor they were engaging. Like the arbitrator opined it is
obvious that they went into the contract without giving due regard to
contractual niceties and hoped for the best. It never went that way. They only
have themselves to blame. The contract between the parties herein is not
illegal. It is however one that might attract sanction under section 28 of the
NCIA.

MISCONDUCT
We have above listed the alleged misconduct. We note that the affidavit
and/or the submissions of which there were three versions sought in some
instances to say more than was alleged in the summons. We will, as we decide
on the issues, as much as possible stick to the allegations raised in the
summons. Where necessary we will of course resort to the additives in the

14
submissions and the affidavit as long as of course in so doing we do not go
beyond the essence of the allegations.

Failure to Decide On the Main Issue

The plaintiff contended that the main issue before the arbitrator was whether
or not the plaintiff had wrongfully determined the contract between the
parties hereto. That issue the plaintiff contends the arbitrator did not
determine. For that failure the plaintiff contended that the award should be
set aside.
The defendant on the other hand dispute that the issue before the arbitrator
was whether or not the contract had been terminated properly. They also
contend that their claim was not premised on an alleged breach of contract. It
was for the sum of K42,848,781.48 being the value of work done plus interest
following the termination of the contract. The first question we need to ask is
‘what was the main issue herein?’ The second is whether or not the arbitrator
decided on the main issue.

What Was The Main Issue Before The Arbitrator?

The plaintiff contends that the issue before the arbitrator was whether or not
the contract had been properly terminated. The defendant thinks that the
main issue was their money claim for work done as set out in exhibit PL7 page
2.
The starting point in our view has to be the documentation which the parties
put before the arbitrator and the evidence in respect thereof. The basis of the
defendant’s claim is PL7 which is the statement of claim they placed before
the arbitrator. The opening words were that the defendant was writing to
‘stipulate our claims in addition to the main dispute that our contract with
AHL was not terminated in accordance with the Contract Agreement. This
contract was determined erroneously, Auction Holdings breached the
contract’. The defendant then went on to claim the sums hereinbefore

15
mentioned for value of work done. The letter terminating the contract on the
other hand alleged that the defendant failed to finish the contract within the
stipulated time, that the defendant used substandard material and
workmanship, and that the defendant put up an unsafe structure and finally
that the defendant failed to proceed diligently and regularly. In our view two
issues were raised before the arbitrator. Firstly the propriety of the
termination and secondly the value of works done claim issue.

Did The Arbitrator Decide On These Issues?

Propriety of the Contract’s Termination
It appears to us that when the plaintiff alleges that the arbitrator did not
decide on the propriety of the termination it is actually saying that the
arbitrator did not decide one way or the other on the four grounds raised in
exhibit PL3 on the basis of which the contract was terminated. We consider
each one of them separately.

Failure to Complete Contract on Time

Either the plaintiff wanted the arbitrator to find for them or in a particular
fashion. Otherwise we have to agree with the defendant that the arbitrator did
make a finding about the time within which the contract was to be completed.
The totality of his finding was that it was unrealistic to have expected the
contract to be completed in the time it was contracted for i.e. 28 days. This
because of the way the project was structured. There were no proper
architectural drawings as a result of which changes were being made to the
structure and design of the building as the project progressed. He also found
that at the time the contract was being terminated i.e. February 16, 2006 it
had been practically complete from June 27, 2005. This is clear from reading
paragraphs 2.07 and 3.06 of the arbitral award. The arbitrator was saying it
was not too clever for the plaintiff to in February 2006 terminate the contract
for failure to complete the same within four weeks when the structure was
practically finished in June 2005 and when any extensions of time were

16
necessitated by the constant changes to the structure for which the plaintiff
was as liable as the defendant. Unless the plaintiff wanted the arbitrator to
make the finding in a specific fashion or in his favor we fail to agree that the
arbitrator did not make a finding/decision on whether the defendant failed to
complete the contract within the agreed time.

Use of Substandard Materials and Substandard Workmanship

Again we fail to agree that the arbitrator did not make a finding on this issue.
In paragraphs 2.05, 2.06. 2.27 and 2.49 of the award it is clear that the
arbitrator put the blame for use of substandard materials largely on the
plaintiff. This was because the structure was being put up subject to the direct
supervision and direction of the Supervising Officer/Quantity Surveyor Mr.
Cardew. See Clause 1 of the conditions of the contract that provided:

‘the contractor shall upon and subject to these Conditions carry out and
complete the Works shown in the Contract Drawings and described by or
referred to in the Contract Bills and in these Conditions in every respect
to the reasonable satisfaction of the Architect/Supervisor’.

Further and more than that the arbitrator found that the contractor i.e. the
defendant did the works in accordance with the sketch the basis of the works
except for the purlins. It is clear that the arbitrator concluded that the
defendant could not be accused of using substandard materials or workmanship
without at the same time attaching liability in the same respect to the plaintiff
who was through Mr. Cardew present during the purchase and use of materials.

Safety Of The Structure

The plaintiff alleged that the arbitrator did not decide whether or not the
structure was safe for use. This in our view is to forget the content of
paragraph 2.49 of the award. In it and as we have said above the arbitrator
found that save for certain defects in respect of which blame was to be shared

17
between the parties the structure was constructed in accordance with the
design shown on the contract drawings [i.e. the sketch] save for the purlins.
The defective purlins were the responsibility of both parties and he opined that
they both be responsible for rectifying the defect thereby occasioned. See
paragraph 3.07 of the award.

Regularity And Diligence

The plaintiff alleged that the defendant failed to proceed regularly and
diligently on the contract. They then alleged that the arbitrator failed to
decide whether this was such or not. The plaintiff is again catching at straws.
Given the findings the arbitrator made about the conceptualization and
execution of the contract it is idle we think to allege that the defendant failed
to proceed with regularity and diligence. There were no architectural drawings
for the project. There were therefore no detailed bills of quantities. The
supervisor/architect was unsuitable. There was therefore no proper
supervision. The structure was however generally found to have been
compliant with the sketch. It cannot be said that there was a lack of diligence
and regularity.

Failure To Remedy Defects

This contention was withdrawn by the plaintiff. The defects were the
responsibility of both parties and the cost of remedying them was shared
between the parties. The award was reduced to reflect such sharing. We say no
more thereon.

Value Of Work Done And Interest

Again the question is whether or not the arbitrator decided on the defendant’s
claim. As we have shown above the defendant’s claim was in two parts. First
the propriety of the termination and secondly the value for work claim. It is
clear that the arbitrator decided on both. One only has to go to paragraph 5.01
of the award. It is quite a different thing that the plaintiff disagrees with the

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decision or that the arbitrator did not find for the plaintiff or that he found for
the defendant.

Ignoring Issues In The Plaintiff’s Defence

The plaintiff alleged that they raised issues in defence which the arbitrator
‘completely ignored’. We feel obliged to ask the question what exactly is the
defendant’s argument? Is it that the arbitrator took no notice of what the
plaintiff said in defense during the arbitration? Is it in the alternative that the
arbitrator took notice but disagreed with them or found against them? In our
considered judgment it is an issue if the arbitrator took no notice or
completely disregarded the plaintiff’s arguments for in doing so the arbitrator
effectively denied the plaintiff the right to a hearing. It is not, in the context
of this part of our judgment an issue if all the arbitrator did was disagree with
the defendant for it within the arbitrator’s remit to disagree. Disagreement
only becomes an issue if the arbitrator disagreed for no proper reason or in
travesty. That is a matter we consider later herein. For now let us consider
whether as the plaintiff alleges the arbitrator ignored issues raised in the
plaintiff’s defence.

The Changed Purlins

One of the reasons advanced for terminating the contract was bad
workmanship and the use of substandard materials. This, it is further
contended, was as a result of the plaintiff unilaterally changing the
specifications of the purlins used on the structure. The arbitrator found that
any changes to materials including the purlins was the act of the both parties
hereto. In other words it refused to blame the defendant to the exclusion of
the plaintiff. He instead blamed both parties. The plaintiff thinks this
conclusion was arrived at without reference to the evidence put before him.
That had he done so he would have concluded that the change of the purlins
was purely the work of the defendant. The plaintiff cannot be serious. Unless
of course they have not read the award itself. In the alternative unless they are

19
unable to differentiate between ignoring an issue and making a finding against
one’s position. The issue of the steel purlins is discussed in paragraphs 2.25,
2.26, 2.27, 2.31, 2.32 and 2.33. In those paragraphs the arbitrator laid the case
for each party. He also set out his conclusions basing from each party’s
submissions. It cannot be true therefore that the arbitrator ignored the
plaintiff’s arguments in defence. What is true is that the arbitrator disagreed
with the plaintiff’s view that the change to the purlins used and therefore the
shoddy work was the defendant’s fault. Was that by itself wrong? We answer in
the negative. Like we have said above there is nothing to stop the arbitrator
indeed any tribunal from disagreeing with a party’s viewpoint. The plaintiff
cannot be heard therefore to say that their viewpoint was ignored merely
because the arbitrator disagreed with them. There is therefore no basis for
contending that the plaintiff’s position that the defendant was responsible for
the changed purlins was completely ignored.

Value Of Work Done

The defendants claimed that the value of the work done was K47556288.00 and
attached what the plaintiff called a strange bill of quantities in support
thereof. The arbitrator found for the defendant in the sum of K27354441.38
from which was later deducted the costs of remedying the defects on the
project. The plaintiff disputed the amounts and now allege that the arbitrator
ignored their defence in respect of the above sums. If by that the defendant
means the arbitrator took no notice of their defence then they are being less
than forthright. If they however mean that the arbitrator disagreed with them
our immediate response is he, like all tribunals, was entitled so to do provided
there were good reasons for so doing. It is now up to the plaintiff to show that
the arbitrator’s coming to the decision was so much without basis as to amount
to a viciously and radically wrong decision. The truth of the matter is that the
arbitrator did not ignore the plaintiff’s defence. He took it into consideration.
Just that he disagreed with it. And if you ask us it was for good reason.
Whereas the defendant brought detailed support for the claim to justify the

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work done and the cost thereof and had a Mr. Gondwe, a Quantity Surveying
Technician, and the defendant’s Managing Director as witnesses the plaintiff
was content to use Mr. Likongwe a lawyer as their witness. Not only is he with
respect barely out of the kindergarten in matters in issue herein it is clear that
his evidence was hearsay. If we may why did the defendant not use Mr. Cardew
who, despite his obvious limitations, had some technical ability and firsthand
knowledge of the matters in issue herein. Yet again we do not agree that the
arbitrator completely ignored the plaintiff’s arguments on the value of work
done issue. He only disagreed with them and that he was entitled to do.

Did The Arbitrator Ignore The Plaintiff’s Assertion That The Defendant Put Up A
Substandard Structure?
Again the answer is in the negative. Yet again the plaintiff confuses ignoring
their defence and a decision against them. As we have shown above the
arbitrator made a finding that the structure was substantially in accordance
with the drawings. That conclusion was arrived at after a consideration of both
party’s positions. That was aside from the issue of the changed purlins which
the arbitrator found was a matter for which both parties were responsible.

Illegality
We have dealt with this matter in substantive fashion above. If the plaintiff’s
argument is that it was ignored we will respond by saying their argument is
untenable. This is an issue on which the arbitrator could not have made any
pronouncement. The issue was simply not put before the arbitrator. It is
preposterous therefore to expect him to have made any decision thereon. This
in our judgment is not a matter of the arbitrator ignoring the issue but of not
being called upon to make any pronouncement thereon. The plaintiff alleges
that they raised the issue in the submissions. That cannot be true. In its own
written submissions before this court the plaintiff admitted that it never
specifically or expressly alleged illegality. It only made certain noises from
which it expected the arbitrator to infer and conclude illegality. It is an

21
untenable proposition. Not having raised the issue of illegality the plaintiff
cannot now be allowed to turn around and accuse the arbitrator of ignoring a
nonexistent defence/issue.
Adequacy Of Consideration
The plaintiff’s point is that this is a fixed price contract. That had the
arbitrator not ignored that fact he would have found that the defendant was
not owed any more money by the plaintiff under the contract. The arbitrator
did not ignore the plaintiff’s defence. He considered the evidence before him
and found that this was not a fixed price contract. He found that the works
were, due to the fashion in which the contract was structured, capable of
variation. Similarly therefore the cost of the contract and the exact amount
owing to the plaintiff were, subject to audit and remeasurement, capable of
change. See also Clause 2 of the agreement which clearly provided that the
plaintiff would pay the defendant the sum of K19,753,750.00 [the contract
sum] or such other sum as shall become payable hereunder at the times and
in the manner specified in the said Conditions[our emphasis]. Clearly the
contract envisaged that the contract sum was only the starting point and that
other sums could become payable under the said contract. The plaintiff’s
argument in this regard falls by the wayside.

That The Award Had No Legal Or Evidential Basis

Going by paragraph 4.1.3 paragraph two of its submissions the plaintiff took
issues with the award of K27,354,441.38, interest and the arbitrator’s
fees/costs. It thinks the figures are erroneous. It also feels there is no legal or
evidential basis for the award. On the latter the plaintiff contends that since
the main issue was whether or not the contract had been wrongfully
terminated and since that question was not determined the arbitrator had no
business awarding the defendant anything. There was no wrongdoing on the
part of the plaintiff on which to hang such award. The plaintiff has got it
wrong. To begin with the propriety of the termination is not the only issue
indeed the main issue. There was also before the arbitrator the small matter of

22
value of work done. Secondly, we have no doubt in our mind that the basis of
the award is not the perceived wrongful termination of the contract. It is the
value of work done. The contention that there was no basis for making the
award cannot therefore stand. This was a claim based on the procedure to be
followed following the termination of the contract under Clause 26 especially
paragraphs 3(d) and 4 thereof. As to the figures themselves we respond as
follows:

The K27354441.38 Award

First it should be noted and we have also said this above there was supposed to
be deducted from this sum a sum representing the defandant’s responsibility
towards the normalization of defects. This was done with the consent of both
parties and should not therefore busy us. The plaintiff says there was no basis
for this award. The defendant has for some reason forgotten exhibit PL7 and
paragraph 2.15 of the award. Therein lies the defendant’s claim. The total sum
claimed came to K42848781.48. The arbitrator in due exercise of his discretion
decided that of the amount claimed he would award the sum of K27354441.38.
The plaintiff says it would have been better if the arbitrator had set out or
broken down such sums so that he should know what was awarded for what.
Maybe and we would admit that that would be better. But we should not forget
that the arbitrator is not ordinary arbitrator. He is also a professional in the
very matters under dispute. He heard evidence from both sides on all relevant
issue. He even went to the site. Thereafter he made his award which is a
substantial reduction of the total sum claimed. Can such conduct be said to be
so radically or viciously wrong as to justify a setting aside of the award? We do
not think so. We would like to observe that there is no uniform way of writing
an award in much the same way that there is no uniform way of writing a
judgment. It would therefore be perverse if a judgment or an award were to be
set aside merely because it does not accord with certain preferred stylistics or
esthetical tastes. We would have been willing to find the award radically or
viciously wrong if evidence was proffered that the works done and the other

23
heads could not have justified an award such as was made herein. But as we
have shown above the plaintiff was content to bring in the evidence of Mr.
Likongwe which is hearsay while the defendant brought in that of the
defendant company’s Managing Director and Mr. Gondwe a Quantity Surveying
Technician. We are not unaware that there were reports submitted about the
structure by the Director of Buildings, Malawi Government, RD Consultants and
Romana Consultants. It is clear from where we stand however that such
reports were in the main on defects and not value of works done. The issue of
defects was decided already with the consent of both parties. They agreed
they were equally liable and the sum spent on correcting such defects was
contributed in equal share by the said parties. There were also issues of
competence and impartiality raised about the consultants. These were not
substantially disputed by the plaintiffs.

Interest
There is need to understand the matter of interest properly. Section 21 the Act
does not proscribe an award from carrying interest. It only says it will not carry
interest unless it is so ordered by the arbitrator. Where the interest is not
ordered by the arbitrator it will nevertheless carry interest as from the date of
the award and at the same rate as a judgment debt. The arbitrator herein
awarded the sum of K27354441.38. He also ordered that interest be payable
thereon from December 31, 2010 at 24.5% per annum. Was the award allowed
by law to carry interest? The answer has to be in the positive. Section 21
above-mentioned leaves us in no doubt whatsoever on that score. The next
question is whether the award should be allowed to carry interest from
December 31, 2010 allowing for the fact that the sum awarded already
included interest. We do not think so. That would result in a possible double
payment of interest. We agree therefore that the operative date for
calculating interest on the award should be January 17, 2011 the date it bears.
We also agree that the rate of interest should be that applicable for judgment
debts. Should the fact of changing the operative date and the rate of interest

24
make the award so radically and viciously wrong or so substantially unjust as to
warrant its setting aside? We do not think so. These are matters capable of
being cured just as the amount in respect of the defects was cured.
Fees/Costs
The summons does not raise the issue of fees and costs. Technically we would
be within our rights if we did not debate this issue. We will say our tuppence’s
worth about it all the same. Not because we are not unaware that we should
not or that we pay scant regard to the rules of procedure but because we find
it a point that though not necessarily on the agenda herein is one that may
provide useful obiter. And this is that if a party is unhappy with fees the way
forward is not to move for a setting aside of the award itself but to ask for a
taxation of the costs/fees. Secondly we wish to say that it appears to us that
unless there is a contrary intention costs/fees are borne by the unsuccessful
party in this case the plaintiff. See section 19 of the Act. The plaintiff argued
that it had been agreed that the costs/fees would be paid and were paid in
advance by the defendant. Such seems to have been the agreement indeed.
But if we go to the letter from the arbitrator setting out the process of the
arbitration costs and fees were to be paid by the losing party. Both parties
agreed to such manner of proceeding and proceeded accordingly. The second
agreement naturally superseded the earlier one. The plaintiff cannot now turn
around and plead the earlier agreement when there is a latter one.

Allegations Of Bias
The plaintiff raised all those issues which it alleged the arbitrator ignored and
argued that because the arbitrator found against it then he was biased. We
have dealt with these matter hereinbefore. A mere finding against one party is
not equal to bias. Why because an arbitrator is entitled to find against one or
the other party on any issue before him. That is the essence of his function. He
cannot therefore be faulted for doing his job. For a case of bias to be made out
there has to be more. The party alleging it has to show that the arbitrator went
beyond making a finding against them. That in doing so they were driven by

25
considerations other than the evidence before them. An example would be an
arbitrator finding in the face of clear evidence pointing towards one conclusion
against a party merely because of consanguinity. That has not been alleged
herein. We cannot even therefore talk of it having been proved on a balance of
probabilities.

Is The Award Inconsistent And/or Ambiguous?

It is one thing to allege. It is quite another to set out and prove such
allegations. In paragraph 4.1.5 set out what he considers are inconsistencies
and ambiguities. First that the arbitrator did not set out the issues and the
nonissues. It cannot be true in our view. The arbitrator set the alleged
wrongful termination and the value for work claims and made finding thereon.
Secondly the plaintiff alleges that the claim being based on an alleged wrongful
termination of contract and the arbitrator having made no finding thereon the
award should not stand for allegedly being inconsistent and ambiguous. We are
not sure wherein lies the inconsistency and/or ambiguity. We have shown that
the termination of the contract was not the only issue. Also that that
notwithstanding a finding was made thereon. But more importantly we have
shown that the award was not based on the wrongful termination of the
contract. It was based on the value for work claim. Thirdly the plaintiff says it
was baffling that the plaintiff was found liable despite the arbitrator finding
that the defendant was contracted to put up not a makeshift shed but some
auction floor. The plaintiff keeps bringing this argument in different shapes.
The defendant’s claim was based on value for work done. Not the wrongful
termination of the contract. It is also a tad simplistic to allege that the
defendant’s claim was premised on the claim that they had been contracted to
put up a makeshift shed. Then there is the small matter of the K7879655.47.
Firstly the plaintiff makes a mountain out of the fact that the arbitrator did not
mention it in the award. It was clearly an oversight which was resolved by the
parties in Civil Cause Number 8 of 2011. We need not spend further time on it.
All in all the claim for inconsistency and ambiguity is not made out.

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CONCLUSION
An arbitral award is meant to be final. The court may however set it aside if
there is something viciously or radically wrong with the award. Or that it will
cause substantial injustice. The burden as in all civil matters is on the
applicant to show on a balance of probabilities that the award is indeed
viciously or radically wrong or that it will cause substantial injustice. In
exercising the power to set aside an arbitral award the courts will move with
caution. The thinking is that if the parties have agreed on a manner of sorting
out their issues they should be allowed to do so unless the solution is
untenable. In the instant case the plaintiff alleged illegality. We found none.
They also alleged misconduct of both the arbitration and the arbitrator. We
went allegation by allegation and we found no such misconduct. What we
faulted the arbitrator for was the operative date of the interests and the rate
thereof. That is a fault that can be corrected and does not in our humble
judgment make the award viciously and radically wrong. Or one that will cause
substantial injustice. The same was done in respect of the money in respect of
the defects. It was agreed that half of the K7879655.47 should be deducted
from the award. Accordingly we dismiss the application to set aside the award.
We will however and in accordance with our findings above order that the
operative date for the calculation of interests be January 17, 2011 the date of
the award. The rate and calculation will be as applicable for judgment debts.
The money paid into court will therefore be paid out to the defendant’s
Counsel forthwith. Interest will be calculated and payable thereon starting
from January 17, 2011 to the date the payment into court was made in the
manner ordered above.

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COSTS
The defendant has successfully resisted the plaintiff’s claim. He shall therefore
have the costs of this matter.

Dated this December 1, 2011 at Lilongwe.

L P Chikopa
JUDGE

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