Scottish Court of Session Decisions

Messrs Alston & Orr, writers, Glasgow, raised an action against John Allan, wright and patternmaker, Glasgow, and John Herbertson, builder, Glasgow, concluding for reduction of proposed findings dated 5th July 1906, and an interlocutor dated 8th August 1906, pronounced by the said John Herbertson as sole arbiter in a reference between the pursuers and the defender John Allan. Mr Allan died on 26th October 1907, and his trustees were sisted as defenders on 5th November 1907.

The pursuers pleaded, inter alia—“(1) The said proposed findings and pretended interlocutor should be reduced, in respect that ( a) they do not decide the questions submitted to the arbiter Mr Herbertson; ( b) they are ultra vires and ultra fines compromissi; ( c) they do not exhaust the questions submitted to Mr Herbertson; ( d) the interlocutor was pronounced by Mr Herbertson upon considerations which were never submitted by the parties for his determination.”

The defenders pleaded, inter alia—“(3) The arbiter's interlocutor of 8th August 1906 being intra vires of the arbiter, and regular and in order, is binding on the pursuers.”

The pursuers in September 1903 contracted with Mr Allan, by missive offers and acceptances based on specifications, for the execution by Mr Allan of the wright, ironmongery, and glazing work of twenty-one cottages at Weirwood Park, Barrachnie, and nine cottages at Carlyle Drive, Hillington.

The offer for the houses at Barrachnie was in these terms—“I hereby offer to execute wright, ironmongery, and glazier works of cottages to be erected by you at Barrachnie, finished in the same style as cottages at Bogton Avenue, Cathcart, and as specification …” The offer for the houses at Hillington was in similar terms, except that it referred to the houses at Barrachnie instead of to those at Bogton Avenue.

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The specification in both cases provided—“The whole work to be executed expeditiously in a thoroughly complete and tradesmanlike manner.…”

On the completion of the contract disputes arose between the parties as to the manner in which the work had been done, and Mr Allan raised an action in the Sheriff Court at Glasgow against the pursuers concluding for the balance which he alleged to be due. Before the record in that action was closed the parties entered into the said reference to John Herbertson.

The minute of reference bore—“Considering that disputes have arisen between us, the parties hereto, as to the proper and complete implement of certain contracts and the performance of the works embraced therein in connection with the wright, ironmongery, and glazier works of twenty-one cottages at Weirwood Park, Barrachnie, and nine cottages at Carlyle Drive, Hillington, and certain extra work and jobbings, all executed by me, the first party [Allan], at said cottages, and also in connection with the making and fitting up of a press for our, the second party's, place of business, and that on the order and instructions of us, the second party [Alston & Orr], the total balance claimed by me, the first party, as due to me by the second party being £640, 3s. 7d. (which balance is brought out as per statement annexed hereto); and considering further that we, the second party, apart from the deductions claimed by us in respect of inferior or omitted work by the first party, claim to be allowed as further deductions the sum of £52, 12s. 1d. sterling as the same is set forth in the statement annexed hereto.… Therefore we … agree to refer to the decision of the said John Herbertson the whole questions now at issue between us as to the proper and complete implement of said contracts and the performance of the works embraced therein, and the said other works and jobbings above mentioned.… And the particular points which the said John Herbertson is hereby requested and empowered to decide are (1) Whether I, the first party, have duly implemented my contracts for the wright, ironmongery, and glazier works of the said twenty-one cottages at Weirwood Park, Barrachnie, and said nine cottages at Carlyle Drive, Hillington? (2) Whether I, the first party, have failed to implement my said contracts or any of them? and if so, in what respects? and what deductions should be made from the contract prices in respect of such failure to implement my said contracts or any of them? (3) Whether the various sums claimed by me, the first party, as above mentioned, for extra work and for said press are justly due and owing to me? or if not, to what sums am I, the first party, entitled in respect of said extra and additional work? (4) Whether the second party are entitled to the deductions claimed by them, or any of them, and to fix the amount thereof? (5) What is the total sum remaining due by us, the second party, to me, the first party, in respect of the whole of the contracts above narrated? And (6) Whether and to what extent interest should be allowed to me, the first party, upon the sum found due to me? With power to the said John Herbertson to visit the loci of said various works, and also Bogton Avenue, Cathcart, and there, in presence of the parties … to examine the work done by me, the first party, and thereafter, if he considers it necessary, to have such further meetings with parties or their agents, and to call for such evidence, all as he in his absolute discretion may think proper to enable him to decide the whole matters in dispute.…”

The statement for the pursuers included business accounts incurred to them by Mr Allan in connection with the purchase by him of one of the houses.

The arbiter's note of proposed findings issued on 5th July 1906 was in these terms—“The arbiter, having considered the minute of reference, together with the statements of claim by the claimants and answers by the respondent, and the whole other productions in this reference, and having personally inspected the properties in question in presence of the parties, proposes to find that the claimants Messrs Alston & Orr are liable to make payment to the respondent Mr John Allan of the sum of £512 with interest at the rate of 5 per cent. per annum from this date till paid, and that the expenses of the reference, including the arbiter's fee and clerk's account, be paid by the parties equally.”

Note.—“The arbiter has anxiously considered the statements and counter statements made by the parties in this reference regarding the disputes that have arisen between the parties as to the implement of the contracts and the performance of the works embraced therein. He does not think that any good purpose would be served by detailing the reasons that have led him to the decision above referred to. The parties have left the entire settlement of all questions between them to his judgment, and he considers that the sum proposed to be decerned for represents fairly and equitably the liability of Messrs Alston & Orr to Mr John Allan. A first-class tradesmanlike job could not possibly be executed or expected at the contract prices allowed to Mr Allan, but, on the other hand, Messrs Alston & Orr were entitled to require that the work should be reasonably completed according to the contract and the standard set up.”

The interlocutor of 8th August 1906 was in these terms:—“The arbiter having heard parties' agents on his proposed findings, and carefully considered their arguments, and the whole cause, adheres to the proposed findings: Finds Messrs Alston & Orr liable to make payment to Mr John Allan of the sum of five hundred and twelve pounds (£512), with interest at the rate of five per centum per annum from 5th July 1906 till paid.”

Note.—“On behalf of Messrs Alston & Orr it was maintained that the arbiter in his findings should categorically answer the six questions specified on page third of the minute of reference, whereas he had

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only answered questions five and six, with the result that Messrs Alston & Orr were left in partial ignorance as to the lines on which the arbiter had proceeded in giving his decision.

“The obvious answer to this contention is that the questions referred to are not capable of detailed and definite answers within reasonable limits, and the real point at issue between the parties was, as to the amount payable by the one to the other. The first terrace of houses at Barrachnie was to be erected in accordance with a detailed specification, but taking Bogton Avenue houses as a standard, the second terrace at Barrachnie was to be erected in accordance with the first terrace, and the terrace at Hillington was to be similar to the second terrace at Barrachnie. Without going into details, the arbiter may state that he considers Mr John Allan did not complete the work in its entirety according to the contract and the standards set up, and in consequence of this he has disallowed what he considers a fair proportion of Mr Allan's claim, to compensate Messrs Alston & Orr for the defects discovered by him. He has also given careful consideration to Mr Allan's claim for extras and Messrs Alston & Orr's claim for deductions, and the net result arrived at is the sum decerned for.”

On 6th January 1909 the Lord Ordinary ( Johnston) pronounced an interlocutor sustaining the defenders' third plea-in-law and assoilzieing them.

Opinion.—[ After narrating the facts]—“The objections stated by the pursuers to Mr Herbertson's findings in the matter are—

1st, That he has failed, in fact I think I may say declined, to give categorical answers to the first four points enumerated in the reference, and has contented himself with answering the fifth and sixth. I may dispose of this matter at once. I think there is no substance in the objection. As I have pointed out, the reference was emphatically one involving practical matters, and the arbiter was purely a practical man. He was taken to visit and inspect the subjects, and as all the houses were dittoes of one another, examples merely were examined, and the parties left the whole matter to him, renouncing probation. I do not think that there was any call for him to give categorical answers to the first four questions put. They were merely an unnecessary defining in detail of the mental process or consideration which the arbiter must go through in order to arrive at the real question at issue, namely, what was the sum still due. I think that it is evident from the proceedings that with great care the arbiter has applied his practical mind to the questions at issue, and has determined the true matter in dispute, viz., the fifth question submitted, or what remains to be paid. The sixth question was a separate one, which required a categorical answer, and it has received one.

2nd. That Mr Herbertson has shown, by the notes to his proposed and final findings, that he has been influenced by a consideration foreign to the question at issue. If he has been so, there is no doubt that his award is ultra vires. But while I think Mr Herbertson has so expressed himself as to enable the pursuers to state a very specious objection on record, a careful consideration of what Mr Herbertson says shows that there is no substance in this objection either.

In the note to his proposed findings of 5th July 1906 Mr Herbertson states ‘a first-class tradesman-like job could not possibly be executed or expected at the contract prices allowed to Mr Allan; but on the other hand Messrs Alston & Orr were entitled to require that the work should be reasonably completed according to the contract and the standard set up.’ So long as one knows nothing about the contract, or the meaning of the expression ‘and the standard set up,’ this statement leaves room to contend with considerable force that Mr Herbertson had made the contract price the measure of the class of work to be exacted, which would clearly have been wrong. The class and style of work to be exacted depend on the contract and relative specification, and if Mr Allan has cut his prices too low he must suffer for it; he is not entitled to say, at anyrate I have given the money's worth. The money's worth might be far short of fulfilling the contract. But when one knows what the contract is, and knows that a standard for the style of work was fixed by reference to similar buildings already erected at Bogton Avenue, Mr Herbertson's meaning is at once explained, and it is seen that his reasoning is perfectly correct, and his award unobjectionable. But if there could be any doubt raised by his proposed findings, it is set at rest by his final findings of 8th August 1906, in the note to which, after his attention had been drawn to the point, he says—‘Without going into details, the arbiter may state that he considers Mr John Allan did not complete the work in its entirety according to the contract and the standard set up, and in consequence of this he has disallowed what he considers a fair proportion of Mr Allan's claim to compensate Messrs Alston & Orr for the defects discovered by him. He has also given careful consideration to Mr Allan's claim for extras, and Messrs Alston & Orr's claim for deductions, and the net result arrived at is the sum decerned for.’

Accordingly, I sustain the third plea-in-law for the defenders, who are now the representatives of Mr Allan, he having died pendente processu, and assoilzie them from the conclusions of the action.”

The defenders reclaimed, and argued—(1) The minute of reference set forth specific questions, to which the arbiter was bound to give specific answers. He was not entitled simply to find a lump sum due without first answering the questions submitted to him. This was not a general reference but a reference of specific points, and if the arbiter did not deal with these he had not exhausted the reference. The

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arbiter ought to have said in what respects the contractor had failed to implement his contract, and what deduction had been made in respect of each failure. It was impossible otherwise for the defenders to make a representation against the proposed findings. The claims involved in the questions enumerated were not ejusdem generis, and if they were not separately dealt with the award was invalid— Miller & Son v. Oliver & Boyd, November 10, 1903, 6 F. 77, 41 S.L.R. 26. In any event the deductions claimed by the pursuers, in so far as they involved business charges, should have been separately dealt with. The case of Paterson & Son, Limited v. Corporation of Glasgow, July 29, 1901, 3 F. (H.L.) 34, 38 S.L.R. 855, on which the defenders founded, was distinguishable, because there the arbiter was never asked to separate the different items of claim— per Lord Robertson. (2) It appeared ex facie of the arbiter's note to his proposed findings, in which he said that a first-class tradesman-like job could not possibly be executed at the contract prices, that he had been influenced by a consideration foreign to the question at issue, namely, the contract price. He was not entitled to take the price into consideration, but must determine whether the work had been done according to the contract between the parties, as contained in the specification and relative offer and acceptance. The award therefore could not stand— Davidson v. Logan, 1908 S.C. 350, 45 S.L.R. 142. In any event the pursuers were entitled to a proof to establish this ground of reduction, and would be entitled to examine the arbiter as a witness— Glasgow City and District Railway Company v. Macgeorge, Cowan, & Galloway, February 25, 1886, 13 R. 609, 23 S.L.R. 414; Duke of Buccleuch v. Metropolitan Board of Works, 1871, L.R., 5 E. & I. App. 418.

Argued for the defenders (respondents)—(1) There was a general reference, the sole purpose of which was to arrive at the amount due by one of the parties to the other in respect of the contract. The special questions were merely for the purpose of directing the arbiter's attention to the points therein raised. The arbiter could not arrive at a decision on the whole matter without taking these separate questions into consideration, and his award showed that he had done so. In Miller & Son v. Oliver & Boyd, cit., the arbiter gave a general finding on questions which were not ejusdem generis, and there was nothing to show what questions the arbiter had considered. Here the claim was for various sums due under a contract for work done, and the various heads of claim were ejusdem generis, and that distinguished the case from Miller & Son v. Oliver & Boyd, cit. per Lord Trayner. The award could not be reduced on the ground that he had failed to distinguish between such questions as were put here— Paterson & Son, Limited v. Corporation of Glasgow, cit. (2) There was no evidence that the arbiter had been influenced by considerations foreign to the questions at issue. His notes showed clearly that though he had thought the price too low, he knew that he was not entitled to take that into consideration, and he had accordingly decided whether the contract had been fulfilled according to its plain terms. If the arbiter said, as the notes to his interlocutors had said, that he had not been influenced by extraneous considerations, he was final on that— Glasgow City and District Railway Company v. Macgeorge, Cowan, & Galloway, cit.