Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2009] CSOH 157
P592/09	OPINION OF LORD BANNATYNE in the Petition of CITY OF GLASGOW COUNCIL Petitioners; for Judicial Review ­­­­­­­­­­­­­­­­­________________

Petitioners: J J Mitchell, Q.C., City of Edinburgh Council

Counterparties: C MacNeill, Q.C., Balfour + Manson LLP

25 November 2009

Background

Overview
[1] This application for judicial review concerns a challenge to a decision of the Sheriff Principal of Glasgow & Strathkelvin of 6 February 2009 to appoint an arbiter under a contract between the petitioners and the firm of Oxton House Residential Home.

[2] At the first hearing the petitioners were represented as were the partners of the Oxton House Residential Home (hereinafter referred to as "the counterparties"). No other parties were represented at the first hearing.

The statutory context
[3] The petitioners have statutory obligations inter alia under section 12 of the Social Work (Scotland) Act 1968 (hereinafter referred to as "the 1968 Act") to secure the provision of residential care in their area. They may secure appropriate provision by themselves providing this directly, or by making arrangements for residential care to be provided by third party providers such as the counterparties. In circumstances where the petitioners are the direct providers of such services for the purposes of section 12 of the 1968 Act, they are obliged by section 22 of the National Assistance Act 1948 (hereinafter referred to as "the 1948 Act"), to recoup the full cost thereof from those individuals who are assessed, in accordance with the applicable regulations, as being able to pay for the said provision of those services to them. In circumstances where provision of residential care services is made by a third party provider under arrangements made with the relevant local authority, section 26 of the 1948 Act applies. By virtue of section 26(2) of the 1948 Act, the local authority pay to the third party provider the rate agreed under the arrangements between them in respect of the provision of residential care to an individual. By virtue of section 26 the person who was in receipt of the residential care services from a third party (and to whom the relevant local authority make a payment under section 26(2)) comes under an obligation to refund that payment to the local authority, subject to a like assessment as is made under section 22 of the 1948 Act or being able to pay some or all of that refund. There are further provisions, in subsection (26)(3A), enabling a recipient of residential care provision to make payments in respect thereof direct to the third party provider. The amount payable by a local authority to a third party provider is governed by the contractual arrangements entered into for that purpose, as provided for by section 26(2) of the 1948 Act. Those contractual arrangements are unrelated to the discrete statutory obligation upon a local authority to recoup full costs, under section 22 of the 1948 Act, where the local authority is the direct provider of residential care.

Contractual background
[4] That on or about 1st and 15^th May 2007 the petitioners and the counterparties entered into a contract. That contract constitutes the arrangements contemplated by section 26(2) of the 1948 Act. Under the contract the counterparties (who are defined as "the providers" under the contract) undertook to provide residential care and nursing care to individuals placed with them from time to time, and to do so in accordance with their needs as assessed by the petitioners. The contract provided for payment for the provision of those services according to a specified and agreed rate. The payment to be made by the petitioners in respect of any placement was defined in the contract as the "Council's approved rate". The Council's approved rate is comprised of two components: the Council's contribution and the resident's contribution. An individual who was in receipt of the services provided by the counterparties might, depending on his or her assessed resources, be obliged to pay a contribution (defined as "the resident's contribution") and might, depending upon their age, be entitled to receive free personal and/or nursing care. That contractually agreed rate (namely, the Council's approved rate) depended on the nature of the services provided, namely:-

(i) residential care, in which case the Council's approved rate was £406.78 per week;

(ii) nursing care for a person over pension age, in which case the Council's approved rate was £471.45 per week; or

(iii) nursing care for a person under pension age, in which case the Council's approved rate was £448.59 per week.

That the petitioners' approved rate applicable to services provided after April 2007 is not stated in the contract.

The arbitration provision in the contract
[5] The arbitration provision in the contract is in the following terms:

"A.20.3 If the parties are unable to agree upon a single independent arbiter within 14 days of the date of the decision to refer the matter to arbitration, then either party may refer the matter in dispute to an arbiter appointed by the Sheriff Principal of the sheriffdom in which the contract is performed whose decision on the matter and any issues relating to expenses of such arbitration shall be final and binding on the parties".

The proper construction of the arbitration clause
[6] It was not a matter of dispute between parties that the proper construction of the arbitration clause was as follows:

"Properly construed, the arbitration clause does not extend to matters which do not relate to the contract, in the sense of arising out of the carrying out of the contract, the import or interpretation of the contract, breach of the contract or as to the parties' rights or obligations thereunder".

The factual background relevant to the making of the challenged decision
[7] In the course of 2008 the counterparties set forth in certain correspondence certain complaints and matters in relation to which they said they were in dispute with the petitioners and it was on the basis of those matters alleged to be in dispute that the challenged decision was made.

[8] The complaints of the counterparties were contained in the following correspondence:

1. A letter of 12 May 2008 (6/3 of process) from the counterparties to Ms Margaret Doran, Executive Director, Education & Social Work Services. The material part of said letter for the purposes of the matter before me were:

"It is still my intention to claim that the Council is acting unlawfully, if not unfairly, by charging more monies for their own care home fees than the fees paid to private care homes. (My emphasis)

I had been claiming £498 for older people....and £724 for older people (with dementia) and I have now received under the Freedom of Information Act, a copy of the Executive Committee Report dated 2 May 2008 which now increases the older people (frail elderly) rate to £536 per week and older people (with dementia) rate to £782 per week. These are the new figures that I am now claiming which should be paid for all residents who have been placed into my care home by your Council (including back money for how many years the Council have been claiming more money from residents in Council managed homes).

I do this under the National Assistance Act 1948 which has now been superseded by the Community Care Act 1990 which indicates how the Council will arrive at a figure for their own homes and the same amount shall be paid to people placed in residential care homes by the Council. Furthermore, in the report that went to the Executive Committee on 2 May 2008, paragraphs 2.1 Background and 3.2 Proposed Charges for 2008/09 you state clearly the charges for accommodation operated by you and approved by it (that is your Council)".

2. A letter 6/8 of process from the counterparties to the respondent dated 12 October 2008. The material parts of that letter for the purposes of the matter before me were in the following terms:

"The basis of the claim is for the standard charge for frail, elderly and dementia which is many hundreds or even thousands of pounds of a year more than what they pay us, be applied to the residents of my care home to allow me to pay decent wages, pension scheme and have additional money to spend on my residents".

3. A letter 6/11 of process from the counterparties to the respondent in response to the respondent seeking clarification as to the precise nature of the dispute between the counterparties and the petitioners (see: 6/11 of process). The material parts of the said letter for the purposes of the matter before me were as follows:

"1. National Assistance Act 1948
A total of four pages marked 1 to 4. This document indicates the charges to be made for accommodation and the full costs are referred to as the standard charge, within the notes it indicates the local authority has a duty to pay that standard charge for accommodation that has been provided or arranged by them. It also mentions accommodation which is provided and approved by them and our home falls into the latter category. Also, all residents that are admitted to our home are assessed and approved by the authority's representatives.....

2. The Report to the Executive Committee on 2 May 2008
I then refer you to item 5 Executive Committee Report, which was approved on 2 May 2008. This report refers to residential accommodation approved by the Council and approves the 2008/09 standard charge for long term care as outlined in paragraph 3.2. You will see that the 2007/08 standard charge was £498 (older people, frail elderly) and £724 (older people, dementia). The standard charge for 2008/09 is £538 (older people, frail elderly) and £782 (older people, dementia).

I draw your attention to paragraph 2.1 that the standard charge each year is for accommodation operated by the Council and approved by it.

These costs are weekly and we are claiming the difference in the rate. (My emphasis). For example, the rate we are paid from Glasgow City Council is £450.45 flat rate for older people, frail elderly and for residents with dementia.

So I am claiming the money for 34 residents we have in our home for a total of 7 years. The last being the year we have argued over going to arbitration and the other 6 years are the years we are legally entitled to claim back.

The Council will have to supply you with the figures that they have paid to us, and the figure that was their standard charge for each previous financial year we are claiming."

On the basis of the foregoing complaints the respondent appointed an arbiter in terms of the said arbitration clause and it is the said decision which is the subject of challenge by the petitioners. The terms of appointment of the arbiter are set out in 6/1 of process.

The submission for the petitioners
[9] Senior counsel for the petitioners commenced his submissions by contending that on a proper construction of the said correspondence in which the counterparties set forth the basis of their dispute with the petitioners no dispute susceptible to arbitration within the meaning of the said arbitration clause was stated in that: no real dispute between the parties in relation to the carrying out or, the import of, or any breach of the contract was set forth. It thus followed that there was no jurisdiction exercisable by the arbiter and that the appointment by the respondent was ultra vires.

[10] Senior counsel for the petitioners conceded at the outset of his analysis of the said correspondence that given that the letters were written by a lay person that the proper approach to the construction of them was not to read them strictly and not to analyse them as if they were conveyancing documents. However, he submitted that even adopting such an approach that what was presented with reasonable clarity was a dispute which did not relate to the carrying out or, the import of, or any breach of the contract.

[11] Looking first at 6/3 of process, it was his submission that having regard to the whole terms of the letter it set out a dispute which had nothing to do with the contract between the parties. Rather it set forth a dispute that the petitioners were acting unlawfully/unfairly "by charging more monies for their own care home fees than the fees paid to private care homes," such as that operated by the counterparties.

[12] It was his submission that the foregoing was the consistent theme throughout the said correspondence and in certain other documentation. It was his submission that it was the difference between what the petitioners paid themselves where they directly provided care and the rate which had been agreed in the contract with the counterparties that was at the heart of the basis of the dispute.

[13] Senior counsel then turned to 6/4 of process which was the next document chronologically following upon 6/3 of process and was the notes prepared by the petitioners of a meeting involving the petitioners and counterparties at which the dispute between them was discussed. He advised me that the terms of this document were not accepted as accurate by the counterparties. He therefore intended only to refer to it for a limited purpose and that was this: there was nothing he submitted within the document which ran counter to his submissions as to the nature of the dispute contained in the correspondence emanating from the counterparties.

[14] He then turned to the next item of correspondence 6/8 of process. It was his position under reference in particular to paragraphs 2 and 3 thereof that on a proper understanding of this letter it raised the same issues as 6/3. The respondent in 6/10 of process then called for clarification as to the basis of the dispute.

[15] In response to this call for clarification 6/11 of process was sent by the counterparties to the respondent. It was senior counsel's position that this document contained the fullest statement of the counterparties' position as to the basis upon which they were seeking arbitration. Again he submitted that there was nothing in that which was contrary to what had been said by the counterparties to that point. Again there was an underlying reference to this question of unfairness and a complete disregard of the contractual terms relative to payment. The counterparties did not dispute the private care rate paid to them but continued to assert that this was unfair or illegal, having regard to the rate paid to the petitioners where they were the direct providers of the care.

[16] The final document which he referred to he accepted post dated the appointment of the arbiter. This was the petitioners' note of what had happened at a preliminary hearing before the arbiter. He drew my attention to the following section of the note which is 6/15 of process:

"The arbiter asked Mr Cannell what specifically he wanted the arbiter to do, i.e. to make a financial award or to come to a view on the relevant statutory and contractual provisions.

Mr Cannell confirmed that he wanted the arbiter to interpret the statutory provisions and agree that the partnership is due more money than it had been receiving to date. In particular Mr Cannell confirmed that he wanted an award on the basis of the Community Care Act 2002, the Social Work (Scotland) Act 1968 and the National Assistance Act 1948 because Mr Cannell believes that Oxton House is an "improved home" in terms of legislation.

Mr Cannell also confirmed that he was claiming that he signed the contract under duress. The arbiter confirmed that this latter matter was not one for him to determine".

Senior counsel submitted that the foregoing very much had the same flavour as what had been the counterparties' position prior to the appointment of the arbiter. He submitted that the arbiter's reaction to the issue of duress had been the correct one.

[17] In summary it was his submission that the dispute which had been placed before the arbiter for his decision was not one which on a proper construction he was entitled to deal with.

[18] Senior counsel's position relative to the answers which had been submitted shortly prior to the first hearing was that the following passage at Answer 18:

"Explained and averred that the counterparties' claim is what sums are properly payable under the contract in the absence of express terms governing those amounts after 10 April 2007. As such, the dispute is as to the petitioners' obligations and the counterparties' entitlements under the contract. That is a dispute as to which the arbiter has jurisdiction to make a determination".

amounted to an attempt to wholly restate the basis of the dispute in what might be said to be contractual terms. However, those were not the matters which were placed before the respondent upon which he was requested to appoint an arbiter. Nor as was shown by the note of the preliminary meeting before the arbiter was it the dispute which was actually sought to be placed before the arbiter.

[19] It was his position that if there was a dispute which arose post 9 April 2007 as to what was to be the approved rate in absence of express terms governing this, then it had not arisen to date. He advised that there had been perfectly amicable relations between the parties since that date with further persons being placed in the counterparties' care by the petitioners; payments had been made by the petitioners to the counterparties since that date and these had not been refused or accepted under protest. This was evidenced by reference to various documents, namely: 6/19 to 6/23 of process.

[20] Senior counsel concluded his submissions by moving the Court to uphold the petitioners' first and second pleas in law; repel the counterparties' pleas in law; and thus reduce the decision appointing the arbiter.

Counterparties' submissions in reply
[21] Senior counsel for the counterparties commenced his submissions by inviting me to uphold the third to fifth pleas in law for the respondents; to repel the petitioners' pleas in law and refuse the terms of the petition.

[22] He then referred me first to the terms of the appointment of the arbiter which he highlighted had not been referred to in the course of the submissions made on behalf of the petitioners. In particular he referred me to the following passage in the appointment which was 6/1 of process:

"the claimants and respondents entered into a contract dated 10 April 2006 for the provision by the claimants of certain services further to section 12 of the Social Work (Scotland) Act 1968 and that a dispute has arisen between the parties as to the remuneration to which the claimants are entitled;".

He submitted that the foregoing accurately reflected the nature of the dispute between the petitioners and the counterparties.

[23] He next accepted (1) that senior counsel for the petitioners was entitled in seeking to identify the basis of the dispute which led to the appointment of the arbiter to have regard to the terms of the letter, sent by the counterparties 6/3, 6/8 and 6/11 of process and (2) that the correct approach to construing these documents was as set out by senior counsel for the petitioners.

[24] Turning to his detailed position it was his submission that approaching these documents in the way as set out by senior counsel then on a proper construction what was put forward in them by the counterparties was a claim about the amount which ought to be paid to them. That claim could be characterised he submitted as a dispute as to what was properly payable to them under the contract. That was what in essence they were claiming within these letters. The letters he submitted were setting forth a claim which could be formulated (in legal language) as set out in Answer 18 to which I earlier referred in this Opinion. He submitted that there was no rate specified in the contract for the period post April 2007 and accordingly there was no express provision for remuneration. In these circumstances the counterparties were entitled to payment quantum meruit. What the counterparties were arguing in their correspondence was that in considering their quantum meruit claim the appropriate figure to have regard to was that which the petitioners were paid when providing care provision directly rather than having it done through a third party such as the counterparties.

[25] He accepted that that formulation was perhaps different in its language and detail from what had been said in the said correspondence but that he submitted did not matter. The letters had raised the issue of a dispute about remuneration under the contract. He had as set out in answer 18 identified a specific dispute of that nature. There existed a decision appointing an arbiter, the terms of which would cover that dispute. Therefore the whole argument before me was a sterile and academic discussion. There was nothing to be gained by the reduction of the decision appointing the arbiter. There was nothing to gain in that there was clearly a dispute as to what was payable to the counterparties. Thus it was important to look at the deed of appointment and ask should it be reduced?

[26] He submitted that if the dispute he had identified as set forth in answer 18 were to go to arbitration a deed of submission would be drawn up refining the grounds of dispute within the terms of the deed of appointment and in so doing there would be no constraint placed upon parties by the terms of the said correspondence. Lastly he referred me to Albyn Housing Society Ltd v Taylor Woodrow Homes Ltd 1985 SC 104. In particular he referred me to the dictum of Lord Hunter at pages 107 and 108 where he said:

"Having regard to the ample nature of the arbitration clause which was admittedly incorporated in all four of the agreements referred to on Record, I am satisfied that the pursuers' averments in Article 5 of Condescendence are relevant, if proved, to establish that a dispute exists between the parties within the principle to which I have referred. (The principle is that there must be a dispute between the parties which comes within the terms of the arbitration clause). As the discussion developed, the arguments presented on behalf of the appellants was confined to a contention that the averments in the said Article were lacking in specification and on that ground irrelevant. Although any such intention was disclaimed, it appeared to me that counsel for the appellants was really demanding that the pursuers' averments, in order to be relevant, should specify the defects complained of at least house by house, if not defect by defect, together with the dates on which each of the specific defects were said to have developed or to have been noticed. Counsel certainly did not suggest any satisfactory halfway house between the method adopted in the pursuers' pleadings and the somewhat extravagant requirement to which, in my opinion, he was driven by the logic of his argument. In an action of this nature, what is required is averment and proof of a dispute which falls within the limits of the arbitration clause. In my opinion the pursuers' averments are adequately specific for this limited purpose and give fair notice of the case which the defenders have to meet. If the action had been one of damages for breach of contract, the position might have been different. I say 'might have been different', since the pursuers' averments suggest the defects complained of were general throughout the works, that is the items were covered by the respective agreements. I also note, in this connection, the references in the pursuers' pleadings to the extensive correspondence and number of meetings, in the course of which it is said that the defects complained of were notified by the defenders. In the whole circumstances, I am of the opinion that the pursuers' averments are, having regard to the nature of the action, sufficiently specific to pass the test of relevancy".

It was his position that the foregoing supported his position that all he had to show was that a dispute had arisen regarding the remuneration which the counterparties were entitled to in terms of the contract.

Discussion
[27] The narrow question before me is this: on the basis of the information before him was the respondent entitled to hold that there was a dispute between the parties which came within the terms of the arbitration clause? Or, put another way, was there a question of the kind which the contract between the parties appropriates to the determination of the arbiter? (See per Lord President Clyde at 698 in Woods v Co-operative Insurance Society 1924 SC 692).

[28] There is no dispute between the parties as to what on a proper construction were matters which the contract between the parties appropriated to determination of the arbiter. Having regard to that definition which was in the following terms:

"that the arbitration clause did not extend to matters which do not relate to the contract, in the sense of arising out of the carrying out of the contract, the import or interpretation of the contract, breach of the contract or as to the parties' rights or obligations thereunder".

I am clearly of the view that there was no dispute between the parties which came within the terms of the arbitration clause as the dispute did not relate to the carrying out of the contract, the import or interpretation of the contract, breach of the contract or as to the parties' rights or obligations thereunder.

[29] I should say at this point that the respondent was in no way helped in making his decision as to whether he could competently appoint an arbiter by the petitioners' failure prior to his making the challenged decision to raise the issue as to whether there was such a real dispute. That issue was only raised with him after he had made the challenged decision and as he correctly pointed out at that stage he was functus and could do nothing. Accordingly the present action has proved necessary.

[30] The counterparties primary argument was to the effect that on a proper construction of the said correspondence there had been raised an issue as to their entitlement to remuneration under the contract.

[31] The correct approach to the construction of this correspondence was, it seems to me, correctly identified by counsel for both parties, namely: given that the letters were drafted by a lay person they should not be interpreted strictly and should not in particular be construed as if they were conveyancing documents.

[32] Approaching them in that way, it seems to me that they cannot be construed as raising the issue of entitlement to remuneration under the contract (my emphasis).

[33] In a broad sense the correspondence raises the issue: what remuneration are the counterparties entitled to? However, critically what is not raised is the question of entitlement to remuneration under the contract. Rather properly understood the gravamen of the complaint of the counterparties is based on an asserted unfairness or unlawfulness in the differential between the approved rate, payable to the counterparties under the contract, and the payment made to the petitioners where they are providing the care directly.

[34] This is a consistent theme which runs through all three letters and is reflected, and certainly in no way contradicted, by the notes of the two meetings prepared by the petitioners 6/4 and 6/15 of process.

[35] What on a proper understanding of the said correspondence is sought to be asserted by the counterparties and therefore is the basis of their dispute is having regard to questions of fairness and lawfulness no regard should be had for the terms of the contract and in particular for the terms of the contract regarding the remuneration of the counterparties. What is sought to be asserted in terms of the complaint as set out in the correspondence is that on the basis of this alleged unfairness/illegality the terms of the contract regarding remuneration should be unilaterally overturned.

[36] Thus in summary the position is that on a proper understanding of the correspondence the counterparties assert a right to claim sums other than those they are entitled to in terms of the express terms of the contract and that they base this claim under reference to factors external to the terms of the contract and on a broadly asserted basis of unfairness. It clearly appears to me that such a dispute cannot fall within the terms of the arbitration clause.

[37] The claim for the counterparties, properly understood, as set forth in the correspondence is not as set out in Answer 18 (as submitted by senior counsel for the counterparties) where it is averred:

"the counterparties claim is what sums are properly payable under the contract in the absence of express terms covering those amounts after 10 April 2007".

Those averments do not merely recast the counterparties' claim as set forth in the said correspondence in legal language rather it puts forward a wholly different claim in that:

(i) it specifically states that the claim is what sums are payable under the contract. The claim as stated in the said correspondence sought unilaterally to overturn the contractual terms in relation to remuneration.

(ii) the ground as restated refers to the absence of express terms as being the gravamen of the claim. On no sensible construction of the said correspondence could it be said that the basis of the claim had anything to do with the absence of express terms. That is not set out either expressly on impliedly. Rather, the payment terms are set out and it is thereafter asserted on behalf of the counterparties that for reasons of fairness they should not be bound by these terms and that they are entitled to a different figure.

(iii) the claim as contained in Answer 18 is confined to the period post 10 April 2007. As is made expressly clear in 6/11 of process, and is implicit in the rest of the correspondence, the counterparties' claim as put before the respondent was for a total period of 7 years thus making it clear that it has nothing to do with any purported absence of express terms covering the period from 10 April 2007.

[38] In my view the reference to the passage in the Opinion of Lord Hunter in Albyn Housing Society Ltd v Taylor Woodrow Homes Ltd supra at 107/108 adds nothing in support of the submissions advanced by senior counsel for the counterparties.

[39] All that in my opinion can be taken from that passage is that:

"What is required is averment and proof of a dispute which falls within the limits of the arbitration clause".

For the reasons I have already stated in my opinion on a proper construction of the said correspondence no relevant case in terms of such a test was put before the respondent.

[40] It seems to me that in the case before me the counterparties have, in the correspondence, made it sufficiently clear what the dispute is about to give fair notice to the petitioners as to the nature of their case. What they have failed to do in the said correspondence is to set forth a relevant case being one which falls within the limits of the arbitration clause.

[41] For the foregoing reasons I reject the primary submission made on behalf of the counterparties and prefer the submissions made on behalf of the petitioners and hold that at the material time there was no dispute between the petitioners and the counterparties susceptible to arbitration within the meaning of the arbitration clause of the contract. It follows from that decision that the appointment by the Sheriff Principal was ultra vires and that the arbiter appointed thereunder had no exercisable jurisdiction under the arbitration clause in the contract.

[42] As a secondary line of argument senior counsel for the counterparties put forward that Answer 18 set forth a claim which fell within the terms of the arbitration clause. This was not disputed by senior counsel for the petitioners although it was his position that that was not the dispute put before the respondent and in terms of which he made the appointment of the arbiter. Further and in any event it was his position for the reasons which he had advanced that no such dispute had in fact arisen and even if such had arisen there was no merit to the contention put forward on behalf of the counterparties.

[43] Senior counsel for the counterparties went on to argue that not only was there a claim which fell within the terms of the arbitration clause set out in Answer 18 but that this claim fell within the terms of the appointment 6/1 of process. This submission was under reference to the section of the letter of appointment to which I have earlier referred. I did not understand that submission to be disputed by senior counsel for the petitioners.

[44] Senior counsel for the counterparties went on to submit that given the foregoing there was a relevant dispute, which in terms of the letter of appointment had been put before the arbiter for his determination. Accordingly, there was no basis for the reduction of the challenged decision. He submitted that the petitioners' arguments when taken at their highest amounted to little more than a rather arid and academic argument which served no practical purpose. There was no practical reason to reduce the respondents' decision.

[45] This secondary line of argument appeared to me to be misconceived. It cannot be right that if an irrelevant/incompetent dispute forms the basis of the appointment of an arbiter and at a later date a relevant or competent dispute is properly identified that the arbitration should proceed and that this in some way legitimises the decision to appoint the arbiter.

[46] The test as to whether the respondent has made a proper decision to appoint an arbiter in the sense that there was a dispute between the petitioners and the counterparties susceptible to arbitration within the meaning of the arbitration clause, must be applied at the material time. The material time is the point at which he made his decision. For the reasons I have already stated at that time there was no such dispute, put before the respondent..

[47] As regards whether this was an arid and academic dispute it seems to me that on a proper understanding of the contractual provisions relative to the resolution of disputes in the contract which are contained in clause A20 that is not correct. Clause A20.1 and A20.2 put in place a procedure where there is a dispute between the parties which requires to be gone through before an arbiter can be appointed in terms of clause A20.3. Thus accepting that the Answer 18 claim is a relevant dispute, before it could go to arbitration the said procedure would require to be gone through. That procedure, may of course, result in the settlement of the dispute or may in some other way deal with the dispute resulting in there being no necessity for recourse to arbitration. Thus, in my view, the argument before me was not academic in the sense that whatever happened there would be an arbitration in terms of the contract. That, for the reasons I have advanced, is not necessarily the case. I accordingly reject the second line of argument put forward on behalf of the respondents and prefer the submissions made on behalf of the petitioners in relation thereto.

Decision
[48] Having for the reasons stated preferred the submissions made on behalf of the petitioners to those advanced on behalf of the counterparties, I uphold the petitioners' first and second pleas in law and reduce the decision of the respondent of 6 February 2009 to appoint an arbiter under a contract between the petitioners and the firm of Oxton House Residential Home; and repel the counterparties' pleas in law. I was not addressed by parties on the issue of expenses.