Scottish Court of Session Decisions

The pursuer and defenders, and the late John Brebner, under the firm of Mitchell, Brebner, & Company, entered into a contract in 1855 with the Inverness and Aberdeen Junction Railway Company for the formation of a portion of their line of railway. The partners agreed among themselves that the work should be divided into four sections, of which each partner should execute one. The work was performed under this arrangement, the pursuer executing not only his own section but also, by arrangement, that of Mr Brebner, who died shortly after the contract was entered into. After the work was completed, the parties differed as to the true meaning of an agreement which they had made as to the payment of the expense of extra works. They accordingly entered into a submission to Mr Alexander Gibb, C.E., Aberdeen, and he issued an award in 1860, in which he decided what was the meaning of the agreement. After this they still differed as to the division of a sum of upwards of £5000, which remained over after dividing the greater part of the contract price which had been received from the railway company. The difference arose in consequence of disputes as to claims advanced by each partner for extra works. A second submission was accordingly entered into to Mr Gibb for the purpose of fixing the amounts of these claims. This submission fell by lapse of time, and in 1863 a third submission was entered into. Under it Mr Gibb issued one decreet-arbitral awarding a certain portion of the balance to the defender Brand, and another awarding a certain portion to the defender Dean. No decreet-arbitral was issued in favour of the pursuer, because, as the defenders explained, he had never called on the arbiter to pronounce such a decree. There had been a draft decreet-arbitral, in which a sum was proposed to be found due to all the parties; but this draft was admittedly never extended or executed.

The pursuer brought a reduction of the decrees pronounced in favour of the two defenders; and after a debate, the Lord Ordinary has pronounced an interlocutor, in which he “finds that the decreets-arbitral sought to be reduced are inconsistent with the terms of the submission and ultra vires of the arbiter, and ought to be set aside in respect that the arbiter has not disposed of the subject-matter referred to him, in so far as he has not by said decreets-arbitral, or by any previous award or finding in the submission, substantially fixed and determined the extent and amount of the claims of the parties to the submission respectively as individuals, and not as partners, for their shares of the company assets against the balance of money received by Messrs Mitchell, Brebner, & Company, from the Inverness and Aberdeen Junction Railway Company; and also in so far as the said decreets-arbitral only dispose of the interest of the defenders respectively in the said balance of money, while the arbiter has not pronounced any judgment upon the interests of the pursuer therein.” His Lordship therefore reduces the said decreets-arbitral, and finds the defenders liable in expenses.

A note is appended to the interlocutor, from which we make the following extracts:—“Reduction of the decreets-arbitral is sought for on various grounds, some of which the Lord Ordinary thinks are not well founded. But he is of opinion that the arbiter has committed two fatal errors in the manner in which he has professed to give forth his award. It may be that these errors arose from ignorance as to the proper forms of procedure; but the Lord Ordinary is of opinion that the first of them, at least, essentially affects the justice of the case, as well as the validity of the alleged decrees.

“The pursuer and the two defenders are the surviving partners of Messrs Mitchell, Brebner, & Co.

Page: 69↓

The pursuer, in addition to his own interest, represents that of Mr Brebner, a deceased partner. The partners are thus entitled to the free balance of the assets of the company in the proportion of two shares to the pursuer and one share to each of the defenders. Each of the three parties had claims against the company and its assets as individuals for work performed by them respectively and otherwise. Having differed as to these claims, they entered into the submission which is the subject of this action for the purpose of having them adjusted. Some relative points had been previously adjusted •between them by the same arbiter, and another submission to determine the amount of their respective claims had accidentally fallen.

The submission now entered into sets forth that the parties differ as to the division of the balance of money received from the Inverness and Aberdeen Junction Railway Company, which constitutes the remaining assets of Mitchell, Brebner, & Company. They refer to the arbiter their differences as to the division of the remainder of the foresaid balance of money, with power to him to hear us thereon, and finally to decide the said differences, and with special power to the said Alexander Gibb to receive all claims which may be given in to him against the said balance of money, whether in the shape of claims for extra work on the said railway by each or any of us, or in the shape of debts due by the said firm of Mitchell, Brebner, & Co., or in any other shape or upon any ground whatever, with power to the said arbiter to hear us thereon; to take all manner of probation which he may consider necessary; and, finally, to fix and determine the extent and amount of all such claims; and whatever the said arbiter shall fix or determine in the premises by any final award to be pronounced by him, whether formal or not, we bind and oblige ourselves, and our respective heirs, executors, and successors, to give full effect to, in the division of the remainder of the foresaid balance of money received from the said railway company, and to abide by, implement, and fulfil the same to each other in good faith.”

“There was no difference between the parties as to their respective shares in the free assets of the company when the amount of these should be ascertained. Their differences had reference entirely to claims upon these assets before they could fall to be divided. The pursuer accordingly alleges that there was no power given to the arbiter in regard to the ultimate division of the company funds; and on that ground he maintains that the arbiter has gone ultra fines compromissi in so far as he has proceeded to divide the funds of the company. The terms of the submission are not quite clear or consistent on this point, but the Lord Ordinary does not think that it would have been a great objection to the decrees that they did not stop short on ascertaining the amount of the individual claims, but proceeded also to divide the remaining balance of the assets after deducting these claims among the partners according to their respective shares. He rather thinks that this was within the power of the arbiter, and it would have been a merely formal proceeding.

The important objection to the proceeding of the arbiter in this matter is that their individual claims being the real matter in dispute between the parties, he has so framed his award (assuming him to have pronounced an award at all) that it is impossible to discover what he holds to be the amounts of these individual claims. He has only fixed in cumulo the amount which each partner is to receive of the assets, on account both of his individual claims and his share of the balance. The parties are thus left ignorant as to what judgment the arbiter has formed upon the only point on which they differed and required his decision. The Lord Ordinary is of opinion that he was expressly required by the submission to fix and determine the extent and amount of the individual claims, and that not having done so upon the face of his award, it cannot be sustained.

There is another objection of a more formal kind, but which the Lord Ordinary has also felt himself bound to sustain. It is stated (Cond. XV.) that the arbiter issued to the parties a draft of the decreet-arbitral which he proposes to pronounce. In that document he proposes to find the parties each entitled to a cumulo proportion of the entire assets. It is not alleged that any award in terms of that draft, and dealing with the interests of the whole three parties as it did, was ever signed by the arbiter; but he subsequently issued at different times the two decrees under reduction in favour of the two defenders. By these he found each of them entitled to the sum which by the draft-award he had proposed to give them. But each decree deals only with the interests of the party in whose favour it is conceived, and neither of them takes any account of the interest of the pursuer. It is said that it necessarily follows that the pursuer is entitled to the whole balance after payment of what has thus been awarded to the other parties. It was only after both the existing decrees were issued that this inference could be drawn, and the argument would not have applied to the first decree while it stood alone. But the Lord Ordinary is not inclined to think that it is competent for the arbiter to pronounce a final decree, which leaves his award upon an important part of the case to stand upon mere inference. The defenders must maintain that the submission is exhausted, except to the effect of still giving a formal decree in favour of the pursuer, and they can only do so by holding that there is no complete award upon the whole subject-matter of the reference, while no deliverance has been made upon the claims of the pursuer.”