Scottish Court of Session Decisions

John Graham, the outgoing tenant of the farm of Greenhill, Selkirk, raised an action against John Spottiswoode Mill and David Mill, the incoming tenants of the said farm, for the sum of £403, 13s. 6d., with interest at 5 per cent. from 18th June 1903.

The following narrative of the facts is taken from the opinion of the Lord Ordinary ( Pearson) The pursuer was tenant of the farm under a lease for ten years

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from Whitsunday 1892. The defenders are now tenants of the farm in succession to him. In the pursuer's lease he was taken bound by the landlord at expiry to sell to the succeeding tenant the whole dung that might be produced on the farm subsequent to the turnip season in the year preceding the expiry, and also his waygoing crop, corn, and straw, at such price or prices as should be fixed ‘by arbitration in common form.’ In the defenders' lease the landlord lays a corresponding obligation upon them in the same terms to purchase the dung and the waygoing crop from the outgoing tenant. On the other hand, the outgoing tenant having been taken bound by his lease to leave the houses, fences, and drains on the farm in good tenantable order and repair at his expense, the landlord in the new lease assigned the defenders as incoming tenants into his part of the obligation, taking them bound to apply any sum they might receive thereunder towards repairs. Then as regards the houses, fences, and drains there is no express agreement to arbitrate, while as regards the dung and crop there is an agreement that the prices should be fixed ‘by arbitration in common form.’ The parties not being agreed as to the amounts payable took steps to have them ascertained. They might, it would seem, have named a valuator or valuators, and had the thing determined summarily. But instead of doing so they entered into a formal submission, dated 30th May 1902, whereby they agreed to submit and refer, and thereby submitted and referred, to the amicable decision, final sentence, and decreet-arbitral to be given forth and pronounced by two gentlemen named [farmers at Jedburgh and Lauder] as arbiters mutually chosen by them, and in the event of their differing in opinion, to an oversman to be named by said arbiters all the matters I have above referred to under five heads. The arbiters and oversman were expressly empowered ‘to take all manner of proof by writ, oath, or otherwise, and to employ tradesmen and measurers, and whatever the said arbiters and oversman respectively shall do by interim or final decreet arbitral, to be pronounced by them or him respectively betwixt and the day of, or on or before any other day to which they or he shall prorogate this submission, which they or he are hereby, empowered to do at pleasure, both parties bind and oblige themselves and their respective heirs and successors to implement and fulfil to each other under the penalty of £100 sterling, to be paid by the party failing to the party implementing or willing to implement, and that over and above performance.’ Now, according to the pursuer's averments what happened was this. The arbiters named accepted office, and appointed an oversman [a farmer at Galashiels], who also accepted office. They had numerous meetings as to the matters referred. They did not, however, exhaust the reference within a year and a day, nor did they during that time execute any minute of prorogation. After the year and day had expired the arbiters signed a minute devolving two matters upon the oversman, and as they were not quite at one as to the other matters referred, they verbally agreed to leave everything to the oversman. The oversman thereupon drew out a note of proposed findings, and handed them to Messrs Curle & Erskine, who were supposed to be clerks to the reference, although they disclaim being such,’ and Messrs Curie & Erskine intimated the terms of the proposed findings to the parties. These proposed findings drawn out by the oversman, run in name of the two arbiters and make no mention of the oversman. They bring out the sum now sued for, and add that ‘if required by either of the parties the arbiters will issue a formal award.’ But they are not signed by the arbiters, one of whom refuses to sign either the proposed findings or a minute devolving the whole questions upon the oversman. The pursuer adds that he is willing to have the action sisted until a final award is issued if the defenders consent to this course. Then follows in Cond. 6 a statement which discloses the real and as I think the only ground of action. ‘The defenders have consumed the dung, corn crop, and straw belonging to the pursuer and are bound to pay him the value thereof.’ The defenders' reply is that the amount to be paid by the defenders must in terms of the lease be ascertained by arbitration; that the submission of 30th May 1902 has failed through the lapse of year and day without prorogation, and that the defenders are willing to arbitrate.”

The pursuer pleaded—“(1) The defenders having consumed dung, corn, and straw on the farm of Greenhill, belonging to the pursuer, are bound to pay him the value thereof. (2) The sum sued for being the value of said dung, corn, and straw, under deduction of the sums payable by the pursuer, decree ought to be pronounced in terms of the conclusions of the summons, with interest and expenses.”

The defenders pleaded—“(1) The action is incompetent. (2) No relevant case. (3) The defenders having all along been, and still being, ready and willing to pay whatever sum may be due by them to the pursuer on the same being ascertained by arbitration in terms of the leases condescended on, the action is unnecessary, and should be dismissed, with expenses.”

On 15th March 1904 the Lord Ordinary dismissed the action.

Note.—[ After the statement of facts as above]—“I do not understand the pursuer to maintain that there has been any final or enforceable award, or that this can be regarded as an action for implement of an award. His case, as explained in argument, is this—the arbitration contemplated in the lease was and must have been a mere appointment of valuators with limited powers and duties, of skilled men who would visit the ground and fix the values; and the arbiters appointed, having inspected the subjects of reference at the time, are the only persons who can now carry out the intention of parties. In this

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view, the obligation to refer, and the submission which followed thereon, are inseparable, and either both subsist or both have fallen. If they subsist, the action should be sisted to allow of the arbiters or oversman issuing a final award. If they have fallen, then this action should proceed as an action to ascertain the values.

“I am unable to adopt this view, to which I think there are several objections. In the first place, I hold that the submission set up by the formal deed of 30th May 1902 has fallen by the lapse of year and day without prorogation. It may be that an ancillary reference contained in a contract is not subject to the rule of year and day. That is a question of construction upon the contract, and in the ordinary case of an ancillary reference the rules as to prorogation are not applicable at all. It may be also, that the expression ‘arbitration in common form,’ which was used in the lease, would be satisfied by an appointment of valuators or a valuator. But that is not the view which parties took of it. They entered into a submission of the most formal description, and it was quite open to them to make such stipulation therein as they pleased as to the duration of that submission. They did so, by inserting a clause of style which has been uniformly interpreted as meaning that the submission is to fall if year and day elapse without either an award or a prorogation. I hold it to be clear, on the facts averred by the pursuer, that this submission to the arbiters named therein has fallen.

But it does not follow that the obligation to refer, contained in the lease, has also fallen. On the contrary, it seems to me that this stands in full force, and that it is no answer to say that the arbiters named are the only persons who can now fix what the values were. The pursuer himself asks the Court to fix the values, which, I suppose, would be possible upon a proof, and if the Court could do it so could new arbiters. It is true that the arbiters and oversman already appointed may be the only persons whose inspection of the crops, fences, &c., in their then condition would enable them now to act as valuators in the narrower sense—that is, without taking evidence. But the values can still be ascertained by evidence, and it will be observed that this was expressly contemplated by the parties even as regards the arbiters named in the submission, which empowered the arbiters and oversman ‘to take all manner of proof by writ, oath, or otherwise.’

Now, if the obligation to refer subsists, it can be enforced, though not in this action; and the defenders have been and now are ready and willing to enter into a reference. It is by arbitration, and not by an action in Court, that the parties agreed in the lease that the values should be ascertained. Possibly this may be held to include only the values of the dung, corn crop, and straw, which are payable to the pursuer, for the arbitration clause of the lease appears to apply only to these, and not to the sum payable to the defenders in respect of the houses, fences, and drains. But, in any view, it covers the whole of the pursuer's claim.

I hold, therefore, that the defences must be sustained.”

The pursuer reclaimed, and argued—He was willing to accept the amount which the arbiter and oversman had found him entitled to in the incomplete reference, or to sist the action until the award was formally completed. The strict rules applicable to ordinary arbitrations were not applicable to references under the terms of a lease— M'Gregor v. Stevenson, May 20, 1847, 9 D. 1056. It was a case of two persons skilled in such matters being chosen to value dung, corn, and straw which they had seen and inspected on the spot, and no special formalities required to be observed in such a case— Nivison v. Howat, November 22, 1883, 11 R. 182, 21 S.L.R. 104, opinion of Lord Young, 191; Robertson v. Boyd and Winans, January 9, 1885, 12 R. 419, 22 S.L.R. 331; Logan v. Leadbetter, December 6, 1887, 15 R. 115, 25 S.L.R. 110. There should be no new reference to skilled men who could not now see the dung or crop, these having been consumed, but the quantum meruit of these should be proved before the Court in the ordinary way, the former arbiters and oversman being called as witnesses— Clarke v. Westrope, 1856, 25 L.J., C.P. 287.

Argued for the defenders and respondents—The lease bore that the value of the dung and waygoing crop was to be fixed by arbitration in common form. This meant that the value was to be fixed by arbiters, who if they pleased could take evidence. The submission to the first arbiters had fallen, more than a year and a day having elapsed since their appointment, but new arbiters could be appointed who could take evidence as to the facts and exercise their own judgment as to the result. It was impossible to take the proof before the Court. The mode of proof, namely arbitration, was distinctly named in the lease, and that mode must be followed— Dixon v. Campbell, June 25, 1830, 8 S. 970; Smith v. Wharton, February 28, 1843, 5 D. 749; Cochrane v. Guthrie, February 3, 1859, 21 D. 369, opinion of Lord Deas, 376.

At advising—