Scottish Court of Session Decisions

On 17th March 1879 Charles Wilson, ironmonger, Glasgow, and John Porter, brickbuilder, Glasgow, entered into a minute of agreement and reference in the following terms:—“Whereas the first party has a claim against the second party in respect of accounts for goods and workmanship supplied by the first party to the second party, amounting said accounts to £1028 or thereby, and the second party has stated certain objections thereagainst; and whereas the parties have agreed to refer the said accounts and objections to the amicable decision of John Mathieson, manager to William M'Geoch & Company, ironmongers, Argyle Street, Glasgow, as sole arbiter: Therefore the parties have agreed to refer the said accounts, and do hereby agree to submit to the amicable decision, final sentence, and award of the said John Mathieson the amount of the aforesaid accounts, and the second party's objections thereto, with power to the said arbiter to hear parties, to examine witnesses, and take all manner of probation; and with special power, if he sees proper, to alter, vary, and modify or increase all or any of the items of said accounts, and also to award expenses to either of the parties if deemed equitable: And whatever the said arbiter shall determine in the premises, both parties bind and oblige themselves to abide by, implement, and perform, the one to the other, in so far as incumbent upon each, under the penalty of £100, to be paid by the party failing to the party observing or willing to observe, besides performance.” Mr Mathieson accepted the office of arbiter, and on 19th April 1879 issued the following award:—“Having now finished the examination of the disputed accounts between Charles Wilson, ironmonger, Glasgow, and John Porter, brickbuilder, Glasgow, which were handed me as sole arbiter, per minute of agreement, and duly signed, I find there is a balance due to John Porter, amounting to the sum of £71, 11s. 4d. as per abstract annexed. And further, as the award is in favour of John Porter, I find Charles Wilson liable for the expenses of my fee, &c., amounting to the sum of ten guineas. I may add that in coming to this conclusion my actions all through have been guided by a strict desire to do justice to both parties irrespective of what the final result might be, and such being my finding I trust it will end any little misunderstanding that has existed between you; and feeling assured my efforts meet with your approval, I remain, most respectfully yours, John Mathieson, Arbiter.

Glasgow, April 19, 1879.

Account.

John Porter Dr. to Charles Wilson.

To amount of a/c. as per abstract	£1028	0	0
To Goods undercharged and omitted	5	7	8
	£1033	7	8
By errors and overcharges	69	7	2
	£964	0	6
July 15/75 by Bill	£300	0	0
Sept. 27/75 by Bill	200	0	0
Nov. 29/75 by Bill	200	0	0
Nov. 24/76 by Bill	75	0	0
April 30/78 by Bill	200	0	0
	£975	0	0

John Mathieson.

Account.

Charles Wilson Dr. to John Porter.

To amt. of a/c. for hire of pony, &c.,	£60	11	10
To Balance	10	19	6
	£71	11	4

John Mathieson.”

Wilson having refused to pay the balance of £71, 11s. 4d., on the ground that the arbiter had exceeded the scope of the reference by entertaining counter-claims and deducting the amount of the bills of exchange and of the account for hire of a pony, which he further alleged to be overcharged, Porter sued him in the Sheriff Court for the amount, and averred that “the parties dealt before the arbiter on the footing of the accounts on both sides being submitted.” The defender averred that the arbiter's proceedings were incompetent, unjust, and illegal, he having exceeded his powers “by voluntarily, or in collusion with, or at the dictation of the pursuer, importing into the reference other matters not submitted or, within the province of the referee, and wholly irrelevant thereto, and disposing of the whole matters summarily, and without assigning any grounds or reasons for his decision.” Proof was led, in which the arbiter deponed—“On looking over the different accounts that were put into my hands, I understood that the deed of agreement empowered me to go over the whole of them, including Mr Porter's account, and the question of payments by bill or money. Apart from the minute of reference, there was no authority given to me about these accounts or payments.” He further stated that at and previous to the meeting when the award was read Wilson had not objected to the counter-claims beyond stating that the hire of the pony was overcharged. Wilson deponed that on the first occasion when the account was rendered “I had said distinctly, ‘This has nothing to do with your account against me, Mr Porter; the account against me is not in;’ and I asked Mr

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Maclachlan to draw the deed so that Mr Porter's account would not be in. When Mr Porter was entrusted with the minute of reference to give to Mr Mathieson, there was nothing said about his account being submitted—it was never breathed. I had no idea that the account was to be submitted nor the bills. The cash transactions were never mentioned. It was simply the pricing of the account. The first time I knew Mr Mathieson had taken to do with Mr Porter's account was the day he gave his decision in the Mechanics’ Institute. He had never before then got any information from me about bills, or spoken to me about the contra account. When he stated his decision I said, ‘You have nothing to do with that account at all,’ and I protested against it.” Porter stated—“In the course of the arbitration I never heard of any objection by Mr Wilson to the arbiter dealing with that matter of the pony hire.”

The Sheriff-Substitute ( Guthrie) pronounced an interlocutor in which he found “that the defender has not established any valid ground of objection to the award,” and decerned against him accordingly, but found no expenses due to or by either party. This note was added:—

“ Note.—It seems pretty clear that the defender admitted the account against him into the proceedings without stating distinctly, or at all, that he did not hold it to be within the submission. In these circumstances he cannot now be allowed to plead that it was ultra fines compromissi. But for this fact the terms of the submission, looking to the observations of the Lord Justice-Clerk in M'Ewan v. Middleton, 14th December 1866, 5 Macph. 159, would have made it very doubtful, to say the least, whether the arbiter was entitled to deal with any questions involving the plea of compensation. I am not prepared to say that, apart from explanations derived from the conduct of parties, a counter-claim is included in the phrase ‘objections to the accounts.’

While I am constrained to find for the pursuer, I am not able to say that the proceedings in the reference were altogether satisfactory; and as I feel that the defender might imagine that he had some reason to question their entire propriety I have not found him liable in expenses.”

The defender appealed to the Sheriff ( Clark), who adhered, “but with this variation, that the pursuer is found entitled to his expenses in common form.” He added this note:—

“ Note.—If the award-arbitral is sound, or which is the same thing, if it cannot be set aside on the ground of alleged informalities, I do not see why the successful party should not be entitled to costs. The main, indeed the sole object of having recourse to arbitration instead of bringing the cause before the ordinary tribunals, is to obtain finality and save expense. But if instead of implementing the award-arbitral, the party against whom it is given chooses to propone defences, and thereby create litigation, in which he is ultimately found to be in the wrong, it follows, as matter of principle, that he should be found liable in the expenses, otherwise arbitration, instead of being a definite mode of settling a dispute, would become little else than a preliminary to litigation—in other words, a premium would be held out to those dissatisfied with the award to invoke the aid of the ordinary courts.”

The defender appealed to the Court of Session.

Authorities— North British Railway Company v. Barr, Nov. 27, 1855, 18 D. 102; M'Ewan v. Middleton, Dec. 14, 1866, 5 Macph. 159.

At advising—