Scottish Court of Session Decisions

Hurst, Nelson, & Company, Limited, in liquidation, and David Smith Macpherson, accountant, Greenock, the liquidator thereof, pursuers, brought an action against Spenser Whatley, Limited, Paddington, London, against whom arrestments were used to found jurisdiction, defenders, for payment of the sum of £2900 as a quantum meruit in respect of work done by the pursuers on defenders' waggons.

The pursuers pleaded—“(1) The defenders are subject to the jurisdiction of the Court of Session ( a) ex reconventione; ( b)) in respect of the arrestments used to found jurisdiction.”

The defenders pleaded—“(1) The defenders not being subject to the jurisdiction of the Court of Session on either of the grounds alleged by pursuers or otherwise, the action should be dismissed. (2) Separatim, this Court being in the circumstances set forth forum non conveniens, the action should be dismissed.”

The facts of the case appear from the opinion of the Lord Ordinary ( Skerrington), who on 20th February 1911 sustained the first plea-in-law for the defenders and dismissed the action.

Opinion.—“The question in this case is whether the defenders Spenser Whatley, Limited, are subject to the jurisdiction of the Court of Session in the present action at the instance of Hurst, Nelson, & Company, Limited, in respect either ( a) of reconvention, or ( b) of arrestments to found jurisdiction. The pursuers are a company registered in Scotland, but having places of business in England. As they are being reconstructed, their liquidator is conjoined as a pursuer. One branch of their business is to repair railway waggons. The defenders are a company registered in England. In the course of their business as coal factors they own and use a large number of railway waggons. For many years prior to 1908 the parties did business with each other under contracts for the maintenance, reconstruction, and hiring of railway waggons. Under the nine maintenance contracts the pursuers undertook to maintain, paint, and repair for various periods certain groups of waggons belonging to the defenders, in return for quarterly payments calculated at so much per annum for each waggon. Under the reconstruction contracts the pursuers undertook to reconstruct individual waggons at various prices. Under the hiring contracts the pursuers hired waggons from the defenders for which they paid rent. On 24th March 1908 the present pursuers Hurst, Nelson, & Company brought an action against the present defenders, Spenser Whatley, concluding for payment of (first) £1933, 12s. 4d. and (second) £354, 2s. 2d. The sum first concluded for was claimed as due to the pursuers under the maintenance and reconstruction contracts after giving credit for what was due to the defenders under the hiring contracts. The sum sued for in the second conclusion was, the damage claimed by the pursuers in respect of the defenders' alleged breach of the maintenance contracts. In reply to this action Spenser Whatley on 22nd June 1908 brought a cross-action against Hurst, Nelson, & Company. The summons contained six conclusions based on the three groups of contracts above referred to, and it concluded for moneys due under the contracts and also for damages for their breach. The total sum concluded for in the leading action was £2287 and in the cross-action £4871. The actions came before me as Lord Ordinary and they were conjoined. After a long proof I pronounced an interlocutor on 22nd February 1910, in which I disposed of the several conclusions, first in the leading and then in the cross-action. In the leading action I found that Hurst, Nelson, & Company were entitled practically to the sum sued for under their first conclusion,

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but that they were entitled only to one shilling as damages under their second conclusion. In the cross action my decision was, with certain comparatively unimportant exceptions, in favour of Hurst, Nelson, & Company. By interlocutor of 9th March 1910 the sums to which Spenser Whatley had been found by the former interlocutor entitled were fixed at £59 and £117, 1s. 6d., and I further found Hurst, Nelson, & Company entitled to expenses in the separate actions and also in the conjoined actions modified to three-fourths. Spenser Whatley reclaimed to the First Division, and on 8th March 1911 their Lordships pronounced an interlocutor disposing of the whole merits of the conjoined actions and also disposing of the question of expenses. It is apparent on the face of this interlocutor that a mistake in figures has been corrected at a later date, and I was told that this was done in the month of May with the consent of both parties. It was suggested by the pursuers' counsel that the final interlocutor of the Inner House must be held to have been pronounced not in March but in May 1911. I do not agree with this view, but the difference is not material.

The judgment of the Inner House affirmed my interlocutor except on two points, viz., ( a) Hurst, Nelson, & Company's right to about £1100, which I awarded to them as the arrears which I held to be due to them under the maintenance contracts; and ( b) as regards the expenses incurred in the Outer House. With reference to the first point, their Lordships held that the pursuers were notentitled to anysum under the maintenance contracts, and they accordingly to that extent recalled my interlocutor and dismissed the first conclusion of the summons at the instance of Hurst, Nelson & Company. The leading opinion was delivered by Lord Mackenzie, and I quote the following passage from it—‘The fact remains that the (maintenance) money had, in part, not been earned. How much had been earned cannot be determined in this process. The action is laid on the contract and, on the contract alone, as regards the £1123, 7s.4d. of maintenance money. Though it may be somewhat of a hardship to Hurst, Nelson, the matter is not one of form but of substance. In my opinion they should, as regards the period between 1st October 1906 and 7th January 1908, have sued for quantum meruit, or have brought an action to recover damages for work done by them during that period and not paid for. It is not possible in this process to say what that sum should be. I am therefore unable to agree with the Lord Ordinary's view that Hurst, Nelson are entitled to decree for £1123, 7s. 4d.’ The present action, which was signeted on 1st August 1911, was avowedly brought with the object of taking advantage of Lord Mackenzie's suggestion, and the pursuers plead that the sum sued for (restricted to £2314) is due to them either as a quantum meruit or in name of damages. As regards the expenses incurred in the Outer House, the First Division affirmed my judgment, finding Hurst, Nelson, & Company entitled to expenses in the separate actions and also in the conjoined actions, but they modified the amount to one-half instead of three-fourths.

Another fact bearing upon the question of reconvention is not founded upon in the pleadings in the present action, but is vouched by the correspondence, the genuineness of which is admitted. On 28th July 1911—that is, three days before the signeting of the present summons—Spenser Whatley's solicitors wrote to Hurst, Nelson & Company's solicitors enclosing a cheque for £438, 16s. 1d., being the amount' which they considered to be payable on a balancing of the amounts due under the conjoined actions. This cheque was accepted by Hurst, Nelson, & Company's solicitors, and although a trifling controversy remained unsettled, the fact upon which the defenders' counsel placed great reliance is substantially true, viz., that when the present action was raised Spenser Whatley were making no claim against Hurst, Nelson, & Company, and were ready and willing to pay the latter's account of expenses when taxed. Hurst, Nelson, & Company's account of expenses has not been lodged for taxation even at the present date (February 1912), but their counsel explained that the account was one of unusual magnitude, amounting to about £4000. It is not averred that the delay was intentional, and technically the action at the instance of Spenser Whatley is still a depending cause. In these circumstances, the question arises whether Spenser Whatley's action can be regarded as an actio conventionis, entitling Hurst, Nelson, & Company to bring the present action as one reconventione.

It was argued for the defenders that their cross-action against Hurst, Nelson, & Company was purely defensive, and that accordingly they could not be regarded as persons who had voluntarily appealed to the jurisdiction of the Scottish courts. There is authority to the effect that as regards reconvention the question is one of substance and not of form, and that an action which is truly defensive in its nature cannot be founded on as giving rise to this plea. A typical example is an action brought by a foreigner in the Scottish courts for the purpose of suspending threatened diligence on a bill of exchange. These authorities have no application to the facts of the present case. It is true that Spenser Whatley appeared as defenders in the leading action by compulsion in respect of arrestments used against them to found jurisdiction. It is also true that a cross-action was necessary in order to give effect to what they conceived to be their rights under the three groups of contracts. None the less, by bringing the cross-action they subjected to the jurisdiction of the Court of Session various questions which were not raised in the leading action, and by suing for a larger sum they practically placed their opponents on the defensive.

I am accordingly of opinion that if the present action had been brought while the conjoined actions were depending for judgment

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no valid objection could have been taken to the jurisdiction, and that it would not have been necessary for the present pursuers to arrest of new in order to found jurisdiction against the defenders. The whole difficulty to my mind arises from the fact that the present summons was not signeted until long after final judgment on the merits had been pronounced by the Court of Session in the conjoined actions.

The pursuers' case rests upon the decision of the Second Division in the case of Allan v. Wormer, Harris, & Company, 1894, 21 R. 866. In that case the Lord Justice-clerk (Macdonald), Lord Young, and Lord Trayner, decided that an action of reconvention was competently raised after final judgment on the merits with a finding of expenses had been pronounced in the action of convention. Lord Rutherfurd Clark dissented, and he quoted the opinion of Lord President Inglis in Thompson v. Whitehead, 1862, 24 D. 331, to the effect that reconvention will apply only ‘when the two claims—the conventio and the reconventio—may be tried simultaneously and terminated by a single sentence or by two sentences contemporaneous or nearly contemporaneous.’ The facts in Thompson's case raised an entirely different question from that which had to be decided in Allan's case or in the present case, but the dictum of the Lord President is of high authority, and it commends itself by its good sense. That dictum seems to me to deprive of all authority the earlier decision of Lord Rutherfurd in Baillie v. Hume, 1852, 15 D. 267, which in some respects is more favourable to the pursuer's than Allan's case. In Allan's case the Lord Justice-Clerk and Lord Trayner accepted as authoritative the Lord President's dictum, but they did not comment upon the requirement that the two claims ‘may be tried simultaneously.’ They discussed only the requirement that the two judgments must be ‘contemporaneous or nearly contemporaneous.’ While I prefer the opinion of Lord Rutherfurd Clark, it is my duty to give effect to the decision of the Second Division, and I can best do so by quoting the concluding words of Lord Trayner. After stating that the crucial date is that at which the actio reconventionis is brought, he proceeds—‘The only tests, at that date, of jurisdiction are (1) Do the actions arise out of the same transaction, or are they ejusdem qeneris? (2) Is the actio conventionis still in dependence? and (3) Do the cases in themselves admit of being terminated by judgments nearly contemporaneous? If these questions are answered in the affirmative there arises jurisdiction ex reconventione, if otherwise not. Applying these tests here, I think jurisdiction ex reconventione was well founded.’ It is a question of fact whether in any particular case two actions can be terminated by judgments nearly contemporaneous. In considering this matter I have kept in view the observations of the Lord Justice-Clerk (p. 871), to the effect that delay from accidental causes ought not to be taken into account. Accordingly I discount the fact that the present action was brought in the beginning of the Autumn vacation of 1911, and that I was unable to hear the debate until early in February 1912. Allowing for all this, I am of opinion that it is impossible in the present case to hold that there is jurisdiction ex reconventione unless one is prepared to interpret Lord Trayner's third test in such a wide sense as to deprive it of all meaning.

I now proceed to consider whether the pursuers have founded jurisdiction against the defenders by means of arrestment. The subjects arrested were some planks of wood, which Spenser Whatley cut out from certain of their wagons and lodged in process in the conjoined actions in order to prove that Hurst, Nelson, & Company had scamped their work. I do not pretend to forget a disreputable mass of rotten wood and putty which was exhibited in the former action. Fortunately for my judicial impartiality I did not see the whole of the wood, and I am prepared to believe that the sample was much worse than the bulk. The pursuers have arrested this wood in the hands of the Clerk of the First Division, and by way of precaution they have arrested also in the hands of the Superintendent of the Parliament House and of the defenders' Edinburgh solicitors. Through some clerk's mistake only one box of planks is noted in the inventory of process, whereas two boxes were understood to have been lodged and were treated as productions in the hands of the Clerk of Court, but I do not attach importance to this discrepancy. The defenders' counsel did not argue that the arrestments had not been used in the hands of the proper custodiers of the wood. Nor did he argue that an article, however valuable, which had been produced in process for the mere purpose of being used in evidence, could not be arrested in order to found jurisdiction against the unfortunate litigant or witness. No authority was cited to show that jurisdiction can be founded against a foreign litigant or witness merely because he lodged in process some article of value in order to assist the Scottish Court to arrive at a proper decision in a case depending before it. There is good sense in the view presented by the pursuers' counsel that a debtor may not place his property beyond the reach of his creditors by lodging it as a production in a litigation, but there is no sense in the logical deduction that an article can be arrested to found jurisdiction when the only purpose for which it was brought to Scotland was in order that it might be used to assist in the administration of justice in that country. I hope that it will never be decided that a foreign litigant who seeks justice, or a foreign witness who gives testimony in Scotland, can do so effectually only at the risk of being subjected to the jurisdiction of the Scottish courts in every kind of action at the instance of all and sundry. I do not need to decide this general question, because there is a separate ground on which I hold that

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the arrestment was inoperative to found jurisdiction. The wood in question, when lodged in process, was valuable primarily as evidence—like the business books, plans, and documents in Trowsdale's Trustee v. Forcett Railway Company, 1870, 9 Macph. 88. It had also a trifling value as firewood, just as the books, &c., above referred to might have been worth something as waste paper. Firewood and waste paper are proper subjects of arrestment when the value is not elusory. But I demur to the view that by fiction of law the defenders should be treated as dealers in firewood. The case would have been different if after the end of the litigation they had placed the wood in the hands of a merchant for sale on their account. It is in this aspect that the correspondence may be of use to the defenders. It shows that the only value of the wood from their point of view was as evidence. If the arrestments in the present case are held effectual as a foundation of jurisdiction, the same would follow as regards pieces of machinery and models produced in patent cases. Many of these models are worth something as mechanical toys.

For these reasons I am of opinion that jurisdiction has not been constituted against the defenders by arrestment. I do not agree with the view urged by the defenders' counsel to the effect that the pursuers were barred from founding upon the arrestment in respect that their solicitors had not assented to the suggestion of the defenders' solicitors that the wood should be destroyed or disposed of as of no further use. The pursuers' solicitors were right in refusing their consent, as it might have led to difficulties in the event of an appeal to the House of Lords if articles spoken to by the witnesses had been destroyed. The pursuers' solicitors did nothing to prevent the defenders' solicitors from borrowing the wood from process and returning it to the defenders in England, If this course had been followed, any attempt to arrest would probably have been unsuccessful. Further, I cannot construe the correspondence as evidence that the defenders abandoned their right of property in the wood. As regards the value of the wood, the pursuers offered to prove that it was worth nine shillings as it lay in the Parliament House, and their counsel quoted a decision to the effact that an arrestment of a sum of 9s. 3d. is sufficient to found jurisdiction. A proof in the Court of Session as to the value of the wood would be farcical. I decide the case upon the assumption that a dealer might be found who would offer nine shillings for the logs in order to use them as firewood, or to re-sell them to the Society of Antiquaries as a legal curiosity.

I dismiss the action for want of jurisdiction, and sustain the defenders' first plea-in-law. As the defenders' second plea of forum non conveniens was carefully argued I may say that I would have repelled that plea if the action had been competently before me. The fact that the defenders plead res judicata shows how inconvenient and unjust it would be for the Court of Session to refuse to entertain the action. A Scottish lawyer can see at a glance that this plea is absurd, but an English Court might have difficulty in arriving at the same result.”

The pursuers reclaimed, and on 14th May 1912 the case was ordered by the Extra Division to be heard before Seven Judges.

The case was heard before the Lord President, Lords Kinnear, Dundas, Johnston, Salvesen, Mackenzie, and Guthrie.

Argued for the pursuers—The test of jurisdiction ex reconventione was not its effectiveness (which would exclude jurisdiction at an earlier as much as at a later stage), but the fact of the submission of the foreigner to the jurisdiction of the Scots Courts. Thus it was not necessary that the actio conventionis and the actio reconventionis should be capable of being brought to final judgment contemporaneously. This had been recognised in the case of Allan v. Wormser, Harris, & Company, June 8, 1894, 21 R. 866, 31 S.L.R. 698, where jurisdiction ex reconventione had been sustained after final judgment on the merits in the actio conventionis, and the question therefore was whether that case was rightly decided. The opinion of Lord Rutherfurd Clark, who dissented, proceeded partly on principle, partly on the absence of authority in Scots law, and partly on his construction of the civil law. The pursuers accepted the principle that there could be no reconvention when there was a finish of the lawsuit judicii sententia, the only question being when the finish was. There were certain Scots authorities not before the Court in Allan v. Wormser, Harris, & Company, cit. sup., which supported the appellants' contention and the views of the majority in that case. These were Balle Brink v. Benton, June 21, 1763, Mor. 4036; Black & Knox v. Ellis, June 7, 1805, Mor. Ap. “Foreign,” No. 7; M'Ewan's Trustees v. Robertson, March 9, 1852, 15 D. 265; Baillie v. Hume, December 17, 1852, 15 D. 267; Ord v. Barton, January 22, 1847, 9 D. 541. These cases showed a practically continuous recognition of the principle in Scots law that the foundation of jurisdiction ex reconventione was not its effectiveness, or the possibility of compensation, but the submission of the foreigner to the jurisdiction. In Longworth v. Yelverton, November 5, 1868, 7 Macph. 70, 6 S.L.R. 22, where jurisdiction ex reconventione was refused, the ground on which the Court proceeded was that the original processes had been extracted. This case really supported pursuers' contention, and showed that the real test was whether the case was appealable or not. There might be an appeal from the Auditor's report raising the merits— Stirling Maxwell's Trustees v. Kirkintilloch Police Commissioners, October 16, 1883, 11 R. 1, Lord President at p. 2, 21 S.L.R. 1; Inglis v. National Bank of Scotland, Limited, 1911 S.C. 6, 48 S.L.R. 9. Reconvention depended on the vitality of the courts in the actio conventionis, and this subsisted till extract. In

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the case of Thomson v. Whitehead, January 25, 1862, 24 D. 331, there was an exhaustive review of the law of reconvention byL. J.-C. Inglis, and he had expressed the view that to render the principle applicable the cases must be capable of being tried together and terminated by judgments nearly contemporaneous. But this view proceeded on a misconception of the civil law and the civilians. Thus Voet, book v, title i, sections 78, 80, 86, and 88, made it clear that compensation was not the test, and that though reconvention could not be pleaded after the termination of the lis, it could be pleaded up till then. So also Huber, Prælectiones, book, xi, title ii, section 5. The principle of reconvention was also recognised by the practice of the English courts— Schibsby v. Westenholz, 1870, L.R., 6 Q.B. 155, per Blackburn, J., at p. 161; Yorkshire Tannery and Boot Manufactory, Limited v. Eglinton Chemical Company, Limited, 1885, 54 L. J, Ch. 81; South African Republic v. La Compagnie Franco-Belge du Chemin de Fer du Nord, [1897], 2 Ch. 487. Further, the present action arose ex eodem negotio, and it was not equitable that the foreigner should have his side of the question determined without pursuers' own claim being heard— Morison and Milne v. Massa, December 8, 1866, 5 Macph. 130. There was an analogy between reconvention and the plea of lis alibi pendens, and that plea could be sustained as long as the question of expenses was undisposed of—Mackay's Manual, 226; Aitken v. Dick, July 7, 1863, 1 Macph. 1038; Kennedy v. Macdonald, June 12, 1876, 3 R. 813, 13 S.L.R. 525.

Argued for the defenders—Reconvention was not applicable here in respect that (1) the actio conventionis had proceeded to final judgment; (2) this was not a true resort by the foreigner to the jurisdiction of the Scots courts in respect that he was originally brought there by an arrestment and really appeared as a defender; (3) if reconvention could be widened or narrowed according to circumstances, then equity required that this should not be made a case of reconvention. The pursuers being a company registered in Scotland could not be convened in an action in the English courts— Watkins v. Scottish Imperial Insurance Company, 1889, 23 QBD 285. And further, as pursuers only stated their claim by way of defence, it could not be maintained that they selected the tribunal— Goodwin & Hogarthv. Purfield, December 8, 1871, 10 Macph. 214, 9 S.L.R. 151. Roman law was not applicable, as it related to a different system—Bartolus, cited in Thompson v. Whitehead, cit. sup. The true test was that the two judgments should be capable of being given in one. Thompson v. Whitehead, cit. sup., showed that the second action must be capable of being decided approximately simultaneously, but at what stage of the first action it was necessary to bring the second was a matter of circumstances. Reconvention was not an arbitrary rule of process, but a rule of equity— Longworth v. Yelverton, cit. sup. There was no institutional authority in Scotland, and no discussion of the question before Thomson v. Whithead, cit. sup. Balle & Brink v. Benton, cit. sup., and Black & Knox v. Ellis, cit. sup., were not examples of reconvention— Vans v. Sandilands, 1675, M. 4840; White v. Spottiswoode, June 30, 1846, 8 D. 952; Ord v. Barton, cit. sup.; M'Ewan's Trustees v. Robertson, cit. sup. In Allan v. Wormser, Harris, & Company the majority of the Court recognised the principle of contemporaneous judgments as the basis of reconvention, and that case therefore was not an authority against the principle, though a wrong application of it— Davis v. Cadman, January 13, 1897, 24 R. 297, 34 S.L.R. 260; Oliver & Boyd v. Miller & Son, January 18, 1905, 12 S. L. T. 634. The case of Inglis v. National Bank of Scotland, Limited, cit. sup., was quite different from the present, because the Inner House in the present case having exhausted its judgment on the merits, could not raise them again on the Auditor's report— Cruikshank v. Smart, February 5, 1870, 42 S.J. 241. Further, the plea of lis alibi pendens was not in pari casu with reconvention, because in the former case the party against whom it was pleaded had it in his power to get rid of the first suit, and in any event there were cases where the plea had been refused, even though the first action was still technically in Court— Grade v. Kerr, November 28, 1846, 19 S.J. 60; M'Aulay v. Cowe, December 13, 1873, 1 R. 307, 11 S.L.R. 156. The English authorities did not support pursuer's contention, Sup. Ct. Rules 1883, O. 31, Rules 15 and 16, and O. 19, Rule 27; “ The Salybia,” [1910], P. 25. [The Lord President referred to Rousillon v. Rousillon, 1880, 14 Ch. D. 351, per Fry, L. J., at p. 371.]

At advising—