Scottish Court of Session Decisions

The question raised in this case is as to the functions of arbiters appointed to assess compensation for land taken under the Lands Clauses Acts. The pursuer is a gasalier manufacturer, having premises in Buchan Street, Gorbals, Glasgow, held under a lease having about six years to run. A statutory notice was served upon him by the defenders on 7th June 1871, setting forth, in the usual form, that they required to purchase

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and take the premises in execution of the Glasgow Improvements Act 1866, and that they were willing to treat for the purchase thereof, and the compensation to be paid therefor. The pursuer accordingly sent in his claim for compensation, amounting to £3769, whereupon he received a letter, dated 6th July 1871, from the defenders' secretary, withdrawing the notice, on the ground that the compensation claimed was so far beyond their estimate that they had resolved to abandon that part of their plan. The pursuer's agents immediately replied, pointing out that it was beyond the power of the defenders to withdraw the notice, which had created an irrevocable contract of purchase and sale between them and the pursuer. He accordingly insisted that arbiters should be named, and this was done by nominations of arbiters, dated 2d and 11th September 1871, each naming a writer in Glasgow; the defenders at the same time, by a separate document, protesting that no claim of compensation had arisen, because the notice of June had been withdrawn by the letter of July. The amount claimed consisted of the value of the unexpired lease, together with loss and damage to trade-fixtures, stock, &c., and loss of trade profits, consequent on removal; but the defenders maintained that as the pursuer had not been disturbed in his possession, and as he would not be removed at the instance of the defenders, no compensation was due. The pursuer, on the other hand, maintained that the arbiters had nothing to do with the question of right or title to compensation, but merely with the value of the subjects contained in the notice, on the footing that the notice would be acted on. A proof having been taken before the arbiters, which the pursuer maintained fully proved the amount of his claim, and no contradictory evidence having been adduced by the defenders, the parties were heard before the arbiters, who issued an interlocutor, dated 4th December 1871, finding that the pursuer had “failed to establish the claim for compensation as made by him against the promoters (Trustees), under and in terms of the Lands Clauses Consolidation (Scotland) Act, 1845.” No reasons were assigned, and no notes of proposed findings had previously been issued. The statutory period of three months for the arbitration being about to expire, the arbiters, on 7th December, issued a formal decree-arbitral in the terms of the above interlocutor, and on 8th December placed it on record. The award was issued and recorded without the knowledge of the pursuer.

The present action was now raised by the pursuer, in order to reduce the decree-arbitral, on the grounds that it was ultra vires of the arbiters to determine, as they had done, the legal question of the pursuer's legal right or title in the circumstances to compensation, and the validity of the letter of withdrawal. The pursuer averred that he had ascertained from the arbiters that, in arriving at the conclusions embodied in the award, they proceeded on the footing that, as there bad not and would not be any removal of the pursuer from the premises at the instance of the defenders, no damages were due. Reduction was also sought on the grounds that the arbiters were guilty of legal corruption by issuing and recording the award without communicating with the pursuer, and without letting it appear in the award whether they decided on fact or law; and that if they professed to decide as a matter of fact that the pursuer's interest was of no value, they were also guilty of legal corruption by wilfully deciding against the only evidence in the case. There were also conclusions to have it declared that the pursuer is in law entitled to compensation, and to ordain the arbiters to proceed with the arbitration, and to assess the amount of compensation, on the ground that there was, at the date of the award, a short period of the statutory duration of the arbitration unexpired, and that the issuing of the award had the effect of suspending further proceedings. The pursuer also concluded, alternatively for damages at common law, and, in support of that conclusion, stated in the 20th and other Articles of the Condescendence, that on the same day on which he received the defenders' statutory notice he had received an offer for the purchase and transfer of the whole business and premises to a third party, which he was prevented by the service of the notice from accepting, and that the offer would not be renewed. At the discussion of the case before the Lord Ordinary (Lord Gifford) the pursuer asked a proof, in order to show, from the arbitration proceedings and the evidence of the arbiters themselves, that they had dealt with the questions of law as above mentioned, and that their award was therefore invalid. The defenders maintained that the action was irrelevant. There was nothing on the face of the award or arbitration proceedings to show that the arbiters had adjudicated on any question of law. The award merely found that the pursuer had not established his claim as made by him, leaving the pursuer to make any other competent claim; and the award did not necessarily proceed on the letter of withdrawal; besides, it was quite possible that the lease of premises might be of no value, and even entail a positive loss.

The Lord Ordinary issued the following interlocutor and note:—

“The Lord Ordinary having heard parties' procurators, before answer, Allows the pursuer a proof of his averments in the Condescendence of the Closed Record, with the exception of what is contained in Article 20, and the defenders a conjunct probation thereanent, under the “Evidence (Scotland) Act, 1866,” on Saturday the 6th day of July next, at half-past ten o'clock forenoon, and grants diligence for citing witnesses and havers.

Note.—The Lord Ordinary is of opinion that arbiters appointed under the provisions of the Lands Clauses Act are appointed merely for the purposes of valuation, that is, of fixing the value of the subject contained in the statutory notice, and that they have no power to decide any question of law, or any question of title, or to determine whether the amount of their valuation is to be paid at all, or the parties to whom it is to be paid. In particular, the Lord Ordinary thinks that the arbiters in the present case had no power to decide whether the Glasgow Improvement Trustees had or had not power to withdraw the notice of 7th June 1871. That was a question of law for the decision of the Court, and not for the decision of the valuators. Now, if the arbiters did in one form or another decide this question of law, and if their decision thereof affected their valuation so as to lead them to award no compensation, the Lord Ordinary thinks their award cannot stand. The pursuer's averments appear to be relevant, and the Lord Ordinary does not doubt the competency of getting behind the mere terms of the award so as to reach

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which the arbiters may have committed. But the terms of the award in this case are ambiguous. The award seems rather to negative the pursuer's claim for payment than to find that the subject for which he claimed compensation was of no value. As a matter of expediency, the Lord Ordinary has thought it right to allow a general proof before answer of the whole averments, excepting only those in the 20th Article. He has made the proof before answer so as to keep all questions open as to the competency or relevancy of any special evidence that may be tendered. Many of the averments will be proved by the recovery and production of the proceedings in the submission.”

The defenders reclaimed.

Solicitor-General and Mr Balfour for them.

Shand and J. C. Lorimer, for pursuer, were not called upon.

The following cases were referred to in the discussion:— Queen v. The London and North-Western Railway Company, 15th Feb. 1854, 23 L. J. (Q.B.) 185; Read v. Victoria Station, &c. Company, 14th Feb. 1863, 32 L. J. (Exch.), 167; Dare Valley Railway Company, 9th July 1868, L. R., 6 Equity, 429; Penny v. South-Eastern Railway Company, 7th May 1857, 26 L J (QB) 225; Alexander v. Bridge of Allan Water Commissioners, 5th Feb. 1869, 7 Macph., 492; Duke of Buccleuch v. Metropolitan Board of Works, 3 L. R., Exch., 306, and 5 Exch., 221; and in H. L., 30th April 1872.

At advising—