Scottish Court of Session Decisions

By agreement entered into between Peter Benjamin Wright, contractor, and the Greenock and Port-Glasgow Tramways Company, dated 25th and 28th November 1889, the former agreed to provide as many horses, to be driven by his drivers, as should be required to draw the cars of the Tramway Company, and the latter agreed to pay Wright at the rate of per mile for the distance travelled by the cars.

By the 19th article it was provided that the agreement should be terminable on six months' notice by either party.

By the 21st article it was provided that for the amicable settlement and determination of all questions and differences which might arise between the pursuer and the defenders as to the true import and meaning of these presents, or as regards the implementing or failure to implement the same or any clause thereof, and generally for the settlement of all questions of what nature soever, which should or might arise out of or in any way connected with the said agreement, including all pecuniary claims by the one party against the other, the same should be submitted to Arthur A. Macfarlane, veterinary surgeon, Greenock, whom failing William M'Geoch, veterinary surgeon, Paisley, as sole arbiter, with all the usual powers competent to arbiters.

The agreement was brought to an end on March 2nd 1891, notice having been given six months previously by the Tramway Company in terms of the agreement. At

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the date of the termination of the agreement Wright had been paid for all the work done by him under it down to 31st January 1891.

On 11th March Wright raised an action in the Sheriff Court at Greenock against the Tramways Company for the sum of £200, 14s. 2d.

The pursuer averred—“(Cond. 6)—The amount due to the pursuer by the defenders for the horsing of and providing drivers for their cars, and for the doing of the whole other work provided by the said agreement to be done by the pursuer during the month of February 1891 is £193, 0s. 1d., and for the 2nd day of March 1891 £7, 14s. 1d., amounting together to the sum of £200, 14s. 2d., conform to statement thereof prepared by the defenders, and letter from the defenders' secretary dated 9th March 1891 sending said statement to the pursuer, and admitting the correctness of the amount sued for, which sum of £200, 14s. 2d was payable to the pursuer on the 10th day of March 1891. (Cond. 7) The defenders have refused to pay the pursuer the said sum of £200, 14s. 2d., and the present action has been rendered necessary.” …

The defenders replied to condescendence 6 by a simple denial, and further in a separate statement of facts they set forth the 8th article of the agreement, which provided that damages arising through accident or fault to third parties from the working of the company's cars, or incident thereto, should be borne in the proportion of 50 per cent. by the company and 50 per cent. by the contractor, and they made the following averments of counter-claim against the pursuer—“(Stat. 3) A claim has been made by a party who was injured on 11th November last for £500 damages, and negotiations are at present pending for a settlement of same. The accident is alleged to have occurred through the injured man leaving the front part of the car or driver's platform, which was in charge of the pursuer's servant, and the fault of the accident is attributed to the driver not stopping the car. (Stat. 4) On 23rd December 1889 one of the cars belonging to the defenders was run against a cart standing on the side of the road, from which the horse had been temporarily unloosed, and injury was done to the car by the shafts of the cart, and again on the 31st of December 1889 one of the company's cars was very seriously injured through coming into collision with a soda-water van, when one of the shafts of the van crushed through a panel in the front of the car. Again, on the 10th day of March 1890, through furious driving, one of the company's cars was run off the line, and came into collision with another of the company's cars going in the opposite direction, when both of the said cars were seriously injured. On 27th December 1890 one of the company's cars was driven against a lorry standing on the street, breaking a window and seriously injuring the woodwork of the car. The damage sustained by the company's car was through reckless driving or carelessness on the part of the drivers employed by the pursuer, and for whom he is responsible. Very frequently damage of greater or less extent was sustained by the company's cars through the recklessness or carelessness of the drivers employed by the pursuer, but in the cases particularly referred to above official intimations were sent to pursuer. The damage to defenders' cars as aforesaid is estimated at £150, which sum is due by pursuer to defenders.”

The pursuer pleaded—“(3) Assuming that the clause of reference is in force, there being no dispute between the pursuer and defenders as to the amount of the pursuer's claim, the clause of reference does not apply. (4) The defenders are not entitled to retain the amount due to the pursuer until the indefinite claims they allege against him are determined.”

The defenders pleaded—“(1) The subject of dispute falling under the reference clause of the agreement, the action is incompetent and should be dismissed, and the defenders found entitled to expenses.”

The pursuer also founded on the letter dated 9th March 1891 addressed to him by Mr Louson Walker, the defenders' secretary, which the defenders admitted before the Sheriff to be genuine—“I send you herewith the usual statement of account for horsing the cars for the month of February, adding the horsing for last Monday, the 2nd of March, the total being £200, 14s. 2d. The sending of this statement has been delayed in the hope that before the 10th current some settlement would have been effected as to the claim for £500 which has been made against the company by Martin Cannon in respect of the accident on 11th November last, but I regret that so far no settlement has been come to, and, as you are aware, the Employers Insurance Co. of Great Britain, Limited, have repudiated liability. Should the company be found liable for the accident to Cannon, and the Insurance Company be able to make good their repudiation of liability, 50 per cent. of the loss will fall upon you and 50 per cent. upon the company in terms of agreement. Having regard to this, and considering the contents of your letter of 16th February, and the present position of the matter, the directors have instructed me not to pay the above sum of £200, 14s. 2d., but to lodge the money on deposit-receipt with the National Bank of Scotland, Limited, pending a settlement of Cannon's claim. The money will accordingly be placed on deposit-receipt to-morrow. Meantime the Insurance Company are negotiating without prejudice with a view to bringing about a settlement of Cannon's claim, which I trust they may be able to do very soon, and whenever a final arrangement of the claim and of the question raised by the Insurance Company has been effected, the whole of the balance due to you will at once be handed over.”

On 29th April 1891 the Sheriff-Substitute ( Henderson Begg) repelled the first plea-in-law for the defenders, and appointed the parties to be further heard on 1st May.

On 1st May the Sheriff-Substitute pronounced

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this interlocutor—“In respect the defenders do not ask for a proof of any of their averments contained in their statement of facts, ordains the defenders to pay to the pursuer the sum of £200, 14s. 2d., with interest thereon at the rate of 5 per cent. per annum from 10th March 1891 till payment, reserving to the defenders their claims mentioned in the said statement of facts, and to the pursuer his answers thereto,” &c.

The defenders appealed, and on 12th June the Sheriff ( Cheyne) recalled the interlocutors of the Sheriff-Substitute, sustained the defenders' first plea-in-law, and dismissed the action.

“ Note.—The terms of the reference clause in the agreement founded on appear to me quite as wide as those of the clause which came up for construction in Mackay v. Parochial Board of Barry, 1883, 10 R. 1046, and in my opinion exclude this action. It was urged that there was no room for this objection, in respect that there was really no dispute as to the pursuer's claim, the sum sued for being precisely the sum stated in the letter of the defenders' secretary, the genuineness of which was admitted by Mr Turner at the debate. The accuracy of the claim is, however, denied on record, and for all I know the defenders may be able to satisfy the arbiter, the proper judge of the matter, that the amount due is less than the amount claimed. I cannot, therefore, sustain this contention. I will only add that if I had taken a different view in regard to the defenders' first plea, I could not have allowed them a proof of the averments contained in the fourth article of their statement of facts, unless these averments had been made a good deal more specified than they are at present.”

The pursuer appealed, and argued—As a matter of pleading the defenders' mere denial in answer 6 was insufficient, there being no attempt to explain away the productions by which the pursuer supported his averment that the sum sued for was conform to a statement prepared by the defenders themselves. It must therefore be taken that the defenders did not on record dispute the amount of the pursuer's claim, and that they did not was abundantly clear from the letter by the secretary to the pursuer dated 9th March 1891. Their denial of the accuracy of the pursuer's claim was merely a device to enable them to make their counter-claims, but as the pursuer's claim must be looked upon as liquid under their hand, they were not entitled to plead compensation in respect of these alleged illiquid counter-claims— Scottish North-Eastern Railway Company v. Napier, March 10, 1859, 21 D). 700. The action was not excluded by the reference clause in the agreement, because (1) there was no question under the agreement to be referred to the arbiter as the pursuer's claim was not disputed, and the defenders had made no relevant averment of counterclaims against the pursuer; (2) the arbiter nominated having no power given him to assess damages, the ordinary rule applied that he had no such power, and the defenders' counter-claims were claims of damages except one which was contingent— Pearson v. Oswald, February 4, 1859, 21 D. 419; Tough v. Dumbarton Waterworks Commissioners, December 20, 1872, 11 Macph. 236; (3) the reference clause was merely executorial of the agreement, and the agreement having expired was no longer in force—Bell on Arbitration, 75; M'Cord v. Adams, &c., November 22, 1861, 24 D. 75; Kirkwood v. Morrison, November 6, 1877, 5 R. 79; Beattie v. M'Gregor, July 5, 1883, 10 R. 1094; Saville Street Foundry Company v. Rothesay Tramways Company, March 20, 1883, 10 R. 821. The pursuer was therefore entitled to decree for the sum sued for.

The defenders were not called upon.

At advising—