Scottish Court of Session Decisions

Andrew Kirkwood M'Cosh, ironmaster, residing at Cairnhill, Airdrie, was the proprietor of the lands of Garrockhill and Bankhead, in the county of Ayr, including the minerals, conform to a disposition in his favour, dated 14th, and recorded 30th June 1900. By the disposition there were assigned to him all arrears of rents and royalties due by the tenants prior to his term of entry, and all claims against them under their leases and relative agreements for restoration of land, &c. By lease, dated in 1884, his predecessors had let, with a small exception, the whole coal seams in and under the lands, and to this lease Alexander George Moore, coalmaster, St Vincent Street, Glasgow, had acquired right by assignation, dated 15th September 1893, rind under it Moore had taken possession of the subjects and had worked the mineral field. On 12th November 1897 the tenant gave notice that he would terminate the lease at Whitsunday 1898, which notice was accepted by the landlords, but owing to there being negotiations for a renewal of the lease the tenant did not remove till some time subsequent to that term. Thereafter the landlords called upon Moore to fulfil certain prestations under the lease, and M'Cosh, after acquiring the property, insisted in these demands, and on Moore denying liability, he invoked the aid of the arbiter named in the lease, James M'Creath, civil engineer, Glasgow. The nature of the demands is disclosed in the decree-arbitral, infra.

On 14th February 1903 M'Cosh raised the present action against Moore to have it found and declared that he was bound to implement the decree-arbitral, dated 2nd November 1904, pronounced by the said arbiter. The summons also contained conclusions that the defender should be ordained (1) to make payment of a sum in name of damages caused by a sit, and to drains and watercourses, (2), (3), and (4) to execute certain work required of him by the decree-arbitral, and (5) to make payment of certain sums of expenses.

The lease provided, inter alia, as follows—“And further, the second parties (the lessees) shall be bound, and they hereby bind themselves and their foresaids, all jointly and severally as aforesaid, before the expiry or sooner termination hereof, to fill up, if desired, all pits and excavations already made or to be made, and to remove all engine buildings or other erections, in so far as the same may be their own property, and to clear away or trench in all tramways, railways, and heaps of rubbish, so as to restore the land occupied by them and their said predecessors, or in any way

Page: 168↓

used or taken up in connection with the colliery, and to render the same arable and as suitable and fit for the purposes of agriculture or any other purpose in every respect as before being originally interfered with; and the lessees shall also be bound to restore all fences, drains, and watercourses which may be or may have been broken down, altered, or removed in the course of their said predecessors' operations; declaring, however, that the lessees shall not be entitled to fill up any pits which may be abandoned by them during this lease without the express permission in writing of the first parties (the proprietors) or their fore-saids, but shall be bound to leave the same open and securely and properly fenced by a stone and lime wall of at least 6 feet in height.… Further, it is hereby agreed that in the event of misunderstandings or disputes arising between the parties as to the true intent and meaning of these presents, or any of the terms or provisions hereof, or in regard to the conduct by the second party of their coal workings or of their surface operations under the lease, or in regard to the condition of the engines, machinery, plant, and others, or the value thereof when handed over by the second party to the first party, or the rights or obligations of either party, or in any way in relation to the premises, all such shall be and are hereby referred to the amicable decision and final sentence of Alexander Simpson, civil and mining engineer in Glasgow, whom failing, of James M'Creath, civil and mining engineer in Glasgow, as sole arbiter in the premises, whose decision both parties bind themselves to implement and abide by.”

On 2nd November 1904 the arbiter pronounced his decree-arbitral, finding and determining—“[(1), (2), and (3) dealt with a sit and damage to drains and watercourses in certain places marked on a map in process, finding Moore liable to pay damages therefor]. (Fourth) That the engine-seat at Garrockhill Pit, and the areas marked on the said plan A, B, C, D, to the respective extents following, namely,… have not been respectively removed and restored by the said Alexander George Moore. ( Fifth) That the said Alexander George Moore is, upon a sound construction of the said lease … bound to remove the engine-seats and to restore the said areas marked A, B, C, and D on the said plan, so as to render the same arable and as suitable and fit for the purpose of agriculture or any other purpose in every respect as before being originally interfered with. ( Sixth) That the pit shafts at the Garrockhill Pit and the old pit respectively have not been properly fenced. ( Seventh) That the said Alexander George Moore is, upon a sound construction of the said lease … bound to fence the said pit shafts in a proper manner by stone and lime walls of at least six feet in height. ( Eighth) That the area of ground extending to about ‘310 (three hundred and ten one-thousandth parts) of an acre, formerly occupied by the hutch road between Garrockhill and Duehray, has not been restored by the said Alexander George Moore in terms of the obligations there-anent contained in the said lease … ( Ninth) That the drains and watercourses in the said last-mentioned area have been injured by the construction and use of the said railway or hutch road. And ( Tenth) That the said Alexander George Moore is, upon a sound construction of the said lease, and notwithstanding the termination of his occupancy of the minerals under the said area, bound to restore the said last-mentioned area, and to render the same arable and as suitable and fit for the purposes of agriculture or any other purpose in every respect as before the formation of the railway or tramway, and also to restore the field-drains and watercourses intersecting the said area.” The arbiter also found Moore liable in expenses.

The defender pleaded—“(3) The pursuer not having timeously called upon the defender to restore the ground in question, and the relative obligations in the lease not being prestable against the defender after his removal from the subjects, the defender is entitled to be assoilzied from the conclusions of the summons thereanent. (7) In any event, the sum sued for in name of damages under the first conclusion of the summons is excessive.”

On 17th June 1905 the Lord Ordinary ( Dundas), having heard counsel in the Procedure Roll, pronounced the following interlocutor—“Finds that the arbiter has not acted ultra vires nor outwith the scope of the reference: Repels the defender's whole pleas-in-law except the seventh: Allows the pursuer a proof of his averments in support of the First operative conclusion of the summons, and to the defender a conjunct probation, said proof to proceed on a day to be afterwards fixed: Finds, declares, and decerns in terms of the declaratory conclusion of the summons: Further decerns and ordains the defender, in terms of conclusion Second of the summons, to remove the engine-seats and to restore the areas marked A, B, C, and D on the plan lodged in the reference referred to in the summons, so as to render the same arable and suitable for the purposes of agriculture or any purpose in every respect as before being originally interfered with, and that at the sight and to the satisfaction of James M'Creath mentioned in the summons, and within such time as he shall consider reasonable, with power to him to report to the Court at any time if so advised; and further, decerns and ordains the defender, in terms of conclusion Third of the summons, to fence the pit-shafts on the said subjects of the lease referred to in the summons in a proper manner by stone and lime walls of at least 6 feet in height, and that at the sight and to the satisfaction of the said James M'Creath, and within such time and with power as aforesaid: And further, decerns and ordains the defender, in terms of conclusion Fourth of the summons, to restore the field-drains and watercourses upon the area of ground mentioned in said conclusion, and also to restore the said area itself and to render the same arable and as suitable and fit for the purposes of agriculture as before the formation of the railway or

Page: 169↓

tramway, at the sight and to the satisfaction of the said James M'Creath, and within such time and with power as aforesaid: Decerns against the defender for payment to the pursuer in terms of the Fifth conclusion of the summons.”

Opinion.—“The pursuer seeks to have the defender ordained to implement a decree arbitral pronounced by an arbiter named in a mineral lease dated in 1884, in which the pursuer and defender subsequently acquired the rights of landlord and tenant respectively. The defender gave notice to terminate the lease as at Whitsunday 1898, which was accepted by the then landlords, but in point of fact the tenant, by arrangement, continued to work the minerals, and did not remove his plant until a later period in that year. The then landlords subsequently called upon the defender to perform certain operations which they alleged to be incumbent upon him under the lease, and the pursuer, after he acquired the subjects, insisted in these demands, but the defender denied all liability in the matter. The pursuer accordingly invoked the aid of Mr James M'Creath, the arbiter named in the lease, and proceedings were instituted before him. The defender applied in the Bill Chamber to have Mr M'Creath interdicted from proceeding with the reference, upon the ground that the order prayed for would be ultra vires of the arbiter. The Second Division ultimately refused to grant interdict. The case is reported ( Moore v. M'Cosh, June 9, 1903, 5 Fr. 946), but I do not think that either of the parties can now effectually pray it in aid, because the Court, so far as I can gather, decided no more than this, that they were not prepared to say that Mr M'Cosh might not under the clause of submission be able to make good some claim against Mr Moore, though the claim as then stated in the arbitration proceedings might not be successful. I understand that, in point of fact, the pleadings were afterwards largely recast, and the matter came before the arbiter for proof, the defender keeping his position open by renewing to Mr M'Creath the protest that what he was asked to do was ultra vires. Notwithstanding the protest, the arbiter thereafter issued a decree arbitral, the material portions of which are printed in Coud. 16, which contains findings of liability on the defender ‘upon a sound construction of the said lease,’ to perform the operations specified. The object of this action is, as I have explained, to obtain decree of specific performance of these operations. The principal defence is a renewal of the plea of ultra vires.

The first point then seems to be to consider the terms of the clause of reference contained in the lease, in order to ascertain what truly were the limits of Mr M'Creath's jurisdiction. The clause is printed at length in Cond. 7, and is expressed in remarkably comprehensive terms. It was, inter alia, ‘agreed that in the event of any misunderstandings or disputes arising between the parties as to the true intent and meaning of these presents, or any of the terms or provisions hereof … or the rights or obligations of either party, or in any way in relation to the premises, all such shall be’ referred to the final decision of the arbiter. It was observed by Lord President Robertson (in the case of Mackay & Son, 20 R. 1093, at p. 1105), in regard to a clause of reference, that ‘if on its fair reading, the parties have agreed to refer to the arbiter every dispute or difference about the meaning and effect of the contract, whensoever and wheresoever such dispute or difference may arise, then there is no rule or principle of law to defeat such agreement.’ It is true that the Lord President dissented in that case, but the Judges who formed the majority did not deny, but on the contrary agreed with, the proposition thus generally expressed by his Lordship, though they thought it was not applicable to the clause there under consideration. Therefore, although it is not usual for parties to leave to the arbiter the absolute construction of the meaning of the contract in all its parts and under all circumstances, such a course would, in my judgment, be quite competent, and would not be either unintelligible or necessarily unwise. The parties might not unreasonably, I think, prefer, upon the construction of a mineral lease, to peril their case upon the decision of an experienced civil and mining engineer rather than upon that of a court of law. I have come to the conclusion that that is what the parties here intended to do, and have done, because I think that is the result of a ‘fair reading’ of the language used. I was referred to some of the numerous decisions as to the scope of clauses of reference—each of which, of course, turned upon the particular language of the clause—but I am not aware of any case where the words used were so comprehensive, or, as I think, so clearly intended to leave the arbiter a free hand in construing the contract, as that now under consideration. Nor, in my judgment, is the effect of the words which I have quoted lessened or restricted by the express enumeration of certain specific matters which intervenes between the sentences of my quotation. Holding these views, it is not necessary for me to express an opinion whether or not Mr M'Creath has, in regard to any of the points raised in discussion, wrongly construed the intent and meaning of the contract, for it is well-settled law that an arbiter, acting honestly and within the limits of the submission, is final upon matters of law, or of construction, as well as of fact. Among the most recent authorities to this effect are Holmes Oil Company, Limited, 18 R. (H. L.) 52, and Caledonian Railway Company v. Turcan, 25 R. (H. L.) 7. But it is fair to say that I am not satisfied that Mr M'Creath's construction of the lease is, upon any point, otherwise than correct. The principal matter of complaint by the defender's counsel was in regard to the clause (quoted in Cond. 6) by which the lessees are bound ‘before the expiry or sooner termination hereof, to fill up, if desired, all pits and excavations already made or to be made,’

Page: 170↓

and to remove engine-buildings, &c., and to clear away or trench in all tramways and heaps of rubbish, so as to restore the land and render it arable, and to restore fences, drains, water—courses, &c. Mr Murray strenuously argued that the whole of these obligations were intended to emerge only in the event of the defender being ‘desired’ by the landlord to perform them ‘before the expiry or termination’ of the lease, and that as no such ‘desire’ was expressed by the landlord before that period the obligations had not become, and could not thereafter become, prestable. Mr Murray argued that the true intent of the clause was that if, after a six months' notice to terminate had been given by the tenant, the landlord should, before the six months had elapsed, ‘desire’ him to perform these operations, he would be bound to do so, the landlord having, ex hypothesi, decided to cease letting or working the minerals, and to resume agricultural possession of the surface; but that if the landlord, having secured a new mineral tenant, should refrain accordingly from expressing such desire, the obligations necessarily flew off at the termination of the lease, being obviously unadapted, and indeed destructive, to the continued working of the colliery. I confess, however, that I think that the words ‘if desired’ are intended to qualify only the first of the series of obligations referred to, viz., the filling up of pits, &c., and that there is nothing to indicate that the other obligations with which this case is concerned might not be enforced after the termination of the lease, and apart from any previous expression of ‘desirer’ by the landlord. The case seems to me to be different from that of Sinclair, 25 R. 703, which Mr Murray relied upon, where a landlord was held not entitled, after the conclusion of a lease, to demand performance of operations in the quarry which the tenant was bound to execute from time to time during its currency. But it is unnecessary that I should elaborate the matter further, because, in my opinion, Mr M'Creath was entitled to construe the lease, as he has evidently and admittedly done, in a sense adverse to the defender's argument, and his decision is, in my judgment, final.

“But Mr Murray argued, as an alternative, that the Court ought, in no view, to grant decree of specific performance of the obligations, or at all events of certain of these. This argument was especially pressed in regard to the conclusion for restoration of the ground to an arable condition. The principal averments on the point are contained in answer 13. It appears that there are upon part of the ground huge bings which the defender says it would be impossible to clear away or trench in. He argued that these were not ‘heaps of rubbish’ within the meaning of the lease, but that, I think, was clearly a matter for the arbiter alone to consider and decide. This alleged impossibility is apparently based upon ( a) the enormous cost which, it is said, would be involved in the removal of the bings, especially since the defender has removed his tramways and plant, and ( b) his want of any legal title to enter upon the pursuer's lands. The latter difficulty could, I apprehend, be obviated by the pursuer granting his permission to the defender to enter upon the lands for the purpose of removal. With the former I have much sympathy; but the defender undertook by the lease to remove ‘heaps of rubbish,’ which the arbiter has decided to include these bings, and I do not know of any decision in our books which would warrant me in refusing to the pursuer a decree for specific performance of the obligation under such circumstances as are here disclosed. The only Scots cases to which I was referred upon this point were Stewart v. Kennedy, 17 R. (H. L.) 1; Middhton, 19 R. 801; and Moore, &c. v. Paterson, 9 R. 337.

“Various other points of minor importance were urged by Mr Murray. He objected to the conclusion for removal of the engine-seat, upon the grounds, as I understood, that it did not fall within the words of obligation (Cond. 6) to remove ‘all engine buildings or other erections, in so far as the same may be their own property.’ But it appears to me that it was for the arbiter alone to decide whether or not the engine-seat falls under the category named, and whether or not it was the defender's property and was included in the inventory of machinery, &c., appended to the lease. As to the ‘impossibility’ of removing it (Answer 13), I refer to what I have said in regard to the bings.

“Lastly, a matter about fencing pitshafts, referred to in Cond. and Answer 13, seems to me to have been also finally decided by the arbiter.

“It was admitted that inquiry would be necessary in order to assess, failing agreement of parties, the damages claimed in the first conclusion of the summons. For the rest I shall pronounce an interlocutor in terms of the declaratory conclusion of the summons, and substantially, though not identically, in terms of the operative conclusions other than the first.”

The defender reclaimed, and argued—The submission, though expressed in general terms, was ancillary to the contract. It applied to the parties' obligations as landlord and tenant, but had no relevance to their position after the expiry of the lease. Therefore the arbiter's findings were ultra vires. These findings being ultra vires it followed that they could not now be enforced. The landlord's only remedy was an action of damages— Greenock Parochial Board v. Coghill & Son, March 6, 1878, 5 R. 732; Kirkwood v. Morrison, November 6, 1877, 5 R. 79, 15 S.L.R. 51; Mackay v. Parochial Board of Barry, June 22, 1883, 10 R. 1046, 20 S.L.R. 697; Beattie v. Macgregor, July 5,1883, 10 R. 1094, 20 S.L.R. 729; Mackay & Son v. Leven Police Commissioners, July 20,1893, 20 R. 1093, 30 S.L.R. 919; Sinclair v. Caithness Flagstone Company, Limited, March 4, 1898, 25 R. 703, 35 S.L.R. 541; Savile Street Foundry Company, Limited v. Rothesay Tramways Company, Limited,

Page: 171↓

March 20, 1883, 10 R. 821, 20 S.L.R. 562.

Argued for the pursuer—Reference clauses are of two kinds, (1) executorial or limited, and (2) of a wider nature involving a consideration of the intention of parties as to the scope and extent of the matters which might be referred to arbitration in the event of disputes arising on a particular contract. The reference clause here fell under the second category, and the arbiter had correctly interpreted the scope of the reference— Levy & Company v. Thomsons, July 10, 1883, 10 R. 1134, 20 S.L.R. 753; Moore v. M'Cosh, June 9, 1903, 5 F. 946, 40 S.L.R. 691.

At advising—