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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Levy & Co. v. J. & J. Thomson [1883] ScotLR 20_753 (10 July 1883)
URL: http://www.bailii.org/scot/cases/ScotCS/1883/20SLR0753.html
Cite as: [1883] ScotLR 20_753, [1883] SLR 20_753
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SCOTTISH_SLR_Court_of_Session
Page: 753↓
Court of Session Inner House First Division.
[
v.
Title to Sue — Agent and Principal — Mandate.
Facts:
In a contract to build two steamships it was stipulated that failing delivery by a certain date the builders should pay liquidated damages at a certain rate per day, unless the delay was owing to causes beyond their control. The contract contained this
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clause of reference—“In case any questions or differences shall arise between the parties hereto relative to the true intent and meaning of this contract, or the rights of parties under the same, they shall be submitted” to arbiters named. Timeous delivery of one of the ships was not made, and the builders were sued for liquidate damages under the contract. They stated in defence that the delay was owing to causes beyond their control, for which therefore they were not liable, and pleaded that the action was excluded by the clause of reference. Held that the question fell within the clause of reference. In a contract entered into by an agent for a foreign principal, who was disclosed, there was a clause by which the other contracting party bound himself to pay to the agent liquidated damages in case of delay. Held that the agent had a good title to sue for the damages.
By contract dated 4th and 6th May 1881, entered into between Messrs Edward A. Levy & Company, merchants, 72 Cornhill, London, as agents for the Australasian Steam Navigation Company, Sydney, New South Wales, of the first part, and Messrs John & James Thomson, engineers and shipbuilders, Glasgow, of the second part, the second party bound themselves to build for the first party two iron screw steamships, on the conditions and of the dimensions set forth in the contract, and in the specifications annexed and signed as relative thereto. The second parties bound themselves to make delivery of one of the vessels within ten calendar months, and the other within thirteen calendar months, from the first date of signing the contract.
It was stipulated that “in the event of said vessels respectively not being so completed and delivered till after said respective dates, the second party shall be bound, as they hereby bind themselves, to pay or allow to the first party, as agreed on, liquidated or fixed damages for any such delay the sum specified in the said specification, namely, in respect of each vessel £10 per day for every day that delivery of the vessel is so delayed, unless the delay has been caused by fire, or by the strikes or locksout of workmen, or other such cause beyond the control of the second party, and provided immediate notice shall be given at the time of the occurrence of such cause.”
Then followed this clause:—“For which causes, and on the other part, the first party hereby bind themselves, as agents foresaid (but not individually), and the said Australasian Steam Navigation Company, to pay to the second party the sum of £78,000 sterling, as the agreed-on price of the said two vessels.”
The clause of reference was in these terms:—“And in case any questions or differences shall arise between the parties hereto relative to the true intent and meaning of this contract, or the rights of parties under the same, they shall be, and (notwithstanding the arbitration clause in the foresaid specification, which shall be read as varied to the following effect) are hereby, submitted and referred to the amicable decision and final decree-arbitral of John, Lennox Kincaid, Jamieson, engineer, Glasgow, whom failing from any cause, of Hazelton Robson Robson, engineer there, as sole arbiter, in the order above named, hereby mutually chosen, by whose decree or decrees-arbitral, interim or final, the parties shall be conclusively bound.”
Two steamships were accordingly built by the defenders, named respectively the “Rockton” and the “Cintra,” but timeous delivery was not made in terms of the contract. The “Rockton” was due for delivery on 4th March 1882, but was not delivered until 19th October 1882; the “Cintra” was due for delivery on 4th June 1882, but was not delivered until 15th February 1883.
This was an action at the instance of Messrs Levy & Company against Messrs Thomson to recover the sum of £2280 and £2550, as liquidated damages in terms of the contract, in respect of the delay in delivering the “Rockton” and “Cintra” respectively. The pursuers had paid the whole price of £78,000 for the two vessels, reserving their claim for the sums respectively now sued for.
The defence to the action was that the defenders’ inability to complete the ships within the times stipulated in the contract was due to unavoidable causes, entirely beyond the defenders’ control within the meaning of the contract, which were, in terms of the contract, duly notified to the pursuers. The main causes of the delay for which the defenders maintained that they were not responsible were set forth in the defenders’ statement of facts—“(Stat. 2) … In the first place, a delay of not less than 47 days on each ship was caused by the defective character of the plans furnished by the owners…. (Stat. 3) In the second place, a delay of not less than 65 days in the case of the ‘Rockton,’ and of 80 days in the case of the ‘Cintra,’ was caused in consequence of considerable alterations on and additions to the work, made upon the express instructions of the owners’ inspector…. (Stat. 4) In the third place, a delay of not less than 120 days on each ship was caused by the difficulty of obtaining delivery of the necessary quantities of iron and other materials. This difficulty arose from the enormous and unprecedented increase of the demand for shipbuilding and engineering work which took place suddenly a short time after the contract was made…. (Stat. 5) In the fourth place, a delay of not less than 30 days on each ship was caused by the abnormal scarcity of labour on the Clyde during the time of their construction…. (Stat. 6) In the fifth place, a delay of not less than 40 days was occasioned by strikes, and by the excessive and unprecedented irregularity of the workmen…. (Stat. 7) In the sixth place, a delay of at least 10 days on each ship was caused by the exceptionally inclement weather which prevailed during a considerable portion of the time when the ships were on the stocks.”…
The defenders pleaded—(1) No title to sue. (2) The questions raised in the action being questions comprehended within the reference clause of the contract, fall to be decided by the arbiter therein named.
The Lord Ordinary ( M'Laren) repelled these pleas and ordered an issue to be adjusted.
The defenders reclaimed, and argued that the pursuers had no title to sue, because the contract was made by them as agents for a known principal. The principal therefore should sue, unless the agent holds a mandate to sue, which in this
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The pursuers replied that the rights of parties were clearly expressed in the contract, and that they had a good title to sue— Fisher v. Syme, December 7, 1827, 6 S. 216; Bonnar v. Liddell, March 9, 1841, 3 D. 830. The dispute here was not regarding the true intent and meaning of the contract, and therefore did not fall within the clause of reference— M'Cord v. Adams, November 22, 1861, 24 D. 75; Savile Street Foundry Co. v. Rothesay Tramways Co., March 20, 1883, ante, p. 562.
At advising—
The first of these is founded upon the fact that the pursuers entered into the contract on which this action is laid, on behalf of the Australasian Steam Navigation Company, the contention being that that company, and not their agents, were the proper parties to sue this action. The plea depends upon the special clauses of the contract which is embodied in a probative instrument, and the language of which is expressed in a very careful and precise manner. The pursuers are described as the first party to the contract, in the capacity of agents for and on behalf of the Australasian Company, and the defenders, who are shipbuilders in Glasgow, are the second parties. The contract was executed in due form, and with the solemnities required by law, by Edward A. Levy & Co. on the one hand, and by the defenders on the other, and the deed bears to be duly signed by them in presence of two witnesses. In one of the clauses of the contract the first party stipulates very clearly and distinctly that they are not to be personally or individually liable for the contract price, which was to be paid by them in certain instalments and at certain times, as agents for the Australasian Company. On the other hand, the second party bound themselves in certain events to pay certain sums, not to the Australasian Company but to the first party, and these are the sums which it is now sought to recover in this action. The words of the contract are:—“The second party shall be bound, as they hereby bind themselves, to pay or allow to the first party, as agreed on, liquidated or fixed damages for any such delay the sum specified in the said specification.”
The obligation is expressed in very distinct language, and payment is to be made to the first party. Indeed it could not be fulfilled by payment to anyone else. So that I do not see how anyone else would be entitled to recover payment except the first party, and the title to sue appears to me to be good. It hardly requires the cases of Fisher v. Syme, 6 S. 216, or of Bonnar v. Liddell, 3 D. 830, to support that contention, because it is one which rests upon the contract itself.
The second question is, how far the action or the subject of it is embraced in the clause of reference contained in the contract? and that is a matter of somewhat greater difficulty, because it is not very easy to distinguish between one case and another when an agreement to refer differences under a contract such as that now before us is expressed in a few words. It is generally from the very short way in which the agreement is expressed that the difficulty arises. But in the present case, although the language is brief, it is more than usually distinct. This arises from its simplicity and the absence of all qualification. The clause is as follows:—“And in case any questions or differences shall arise between the parties hereto relative to the true intent and meaning of ‘this contract,’ or the rights of parties under the same, they shall be, and (notwithstanding the arbitration clause in the aforesaid specification, which shall be read as varied to the following effect) are hereby submitted and referred to the amicable decision and final decree-arbitral of John Lennox Kincaid Jamieson, engineer, Glasgow, whom failing from any cause, of Hazelton Robson Robson, engineer there, as sole arbiter, in the order above named, hereby mutually chosen, by whose decree or decrees-arbitral, interim or final, the parties shall be conclusively bound.”
I understand that neither the one nor the other of the gentlemen named as arbiters has had anything to do with the preparation of the contract, or with the execution of the work, but both have been chosen as qualified in point of skill, and in other ways for the duties which it is proposed shall be submitted to them.
I cannot say that I find in the clause any words which can be said to limit its application to questions or disputes arising during the execution of the contract. The words are very general, but I also think they have a plain signification. The claim is one for liquidated damage in respect of a failure to implement the contract within the stipulated period, and that claim is met by several defences—all working into this, that the defenders are not to blame for the time which was lost, the cause of delay being beyond their control. The exception which is pleaded by the defenders was made matter of express stipulation in the contract. The question accordingly is, whether this claim for liquidated damage, and the defence that the delay was not caused by anything which could have been avoided, is not a question for the arbiter, and after giving the case my best attention, and comparing it with the numerous authorities upon this branch of the law, I have come to the conclusion that it is. I think it is for the arbiter to determine (1) the question as to the fact of the delay; (2) the question whether the defenders are answerable for it; and (3) assuming that they are answerable, whether they are liable in the penalty of £10 per day imposed under the contract.
The result will be not to throw the case out of Court, but merely to send it to the arbiter to determine the rights of parties under the contract.
Page: 756↓
The other point is a little more difficult, and such clauses as we have here appear to come under our notice with greater frequency every year. In the present clause there appears to me to be no qualifying words; they are quite general, and seem to cover this claim.
In regard to the second plea, the case is distinguished from many previous authorities of the same class by the circumstance that there are no words to indicate that the disputes contemplated under the contract to be referred to the arbiter were disputes arising during the course of the work. The decisions of the Court have as a rule proceeded upon the view that disputes falling within clauses of submission were such as were concerned with the execution of the contract. In the present case the terms used are simple and comprehensive. The words used in Mackay's case were “matter, claim, or obligations” in connection with the works. Here the words used are the “rights of parties,” and I think that those words are sufficiently comprehensive to include the disputes which have now arisen, and I therefore think the case should be remitted to the arbiter as your Lordship proposes.
The Court pronounced the following interlocutor:—
“The Lords having considered the cause and heard counsel for the parties on the reclaiming-note for John & James Thomson against the interlocutor of Lord M'Laren of 19th June last, Adhere to the interlocutor in so far as it repels the first plea-in-law for the defenders: Quoad ultra recal the same: Find that the claims of the pursuers stated on the record, and the defences against that claim stated in the 2d, 3d, 4th, 5th, 6th, and 7th articles of the defenders' statement of facts, raise questions which fall within the arbitration clause in the contract libelled: To this extent sustain the second plea-in-law for the defenders, and in respect the arbiter first named is now dead, remit to Mr H. R. Robson, engineer, Glasgow, the arbiter second named in the contract, to determine the said questions, and continue the cause till his decree-arbitral shall be lodged in process, and decern: Find no expenses due to or by either party since the date of the Lord Ordinary's interlocutor.”
Counsel for Pursuers— Mackintosh— Graham Murray. Agents — Webster, Will, & Ritchie, S.S.C.
Counsel for Defenders— J. P. B. Robertson— Ure. Agents— Dundas & Wilson, C.S.