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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> M'Connell & Reid v. Smith [1911] ScotLR 564 (07 March 1911) URL: http://www.bailii.org/scot/cases/ScotCS/1911/48SLR0564.html Cite as: [1911] ScotLR 564, [1911] SLR 564 |
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Page: 564↓
[Sheriff Court at Edinburgh.
Arbitration — Award — Incomplete Aivard — Action to Enforce Award — Competency.
Flour was sold under contracts which were embodied in sale-notes. On each of the sale-notes there was printed a side-note (on the margin)—“Any dispute under this contract to be settled according to the rules of the Glasgow Flour Trade Association.” The rules of the association provided, inter alia, as follows—“All disputes of whatever kind, including claims of damages, disputes as to whether or not there is a concluded contract, and claims to reject goods arising out of transactions connected with the trade, shall be referred to two arbiters, one chosen by each party.” The purchaser was not a member of the association, nor were the rules thereof brought to his notice otherwise than by the side-note.
Held that the terms of the contract were not such as to give the purchaser reasonable notice that, in event of disputes arising thereunder, the ordinary jurisdiction of the Courts was ousted and procedure by way of arbitration substituted.
M sold flour to S by sale-notes, which by side-note provided for disputes being settled according to the rules of the Glasgow Flour Trade Association. S having refused to take delivery of certain portions of the flour in respect of disconformity to contract, M called upon him to refer the dispute between them to arbitration, and nominated an arbiter to act for himself. S having refused to appoint an arbiter to act on his behalf, M, as provided in the rules of the association, applied to it to appoint an arbiter to act for S, and the association having done so, the arbiters found that M was acting in accordance
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with the contract in calling for arbitration, and that S having refused to arbitrate, M was entitled to claim against him for any loss he might sustain by the sale of the flour at public auction. In respect of said award M, on the averment that he had sold by auction the flour which S had refused to take delivery of, brought an action against S for the difference between the contraot price of the said flour and the price realised on the sale by auction. S averred that no flour had been set aside for him by M, and that the flour alleged to have been sold by auction did not belong to him. Opinion ( per Lord Ardwall) that, as the question at issue between the parties had not been decided, the action was incompetent in so far as it sought to enforce an incomplete decreet-arbitral.
M'Connell & Reid, flour importers, 19 Waterloo Street, Glasgow, brought an action against Robert Smith, 30 Canon mills, Edinburgh, in which they claimed (first) payment of (1) the sum of £124, 10s. 5d., being the amount of damages due to pursuers by defender for breach of contracts as ascertained in terms of an award by William Gilchrist and John Dunlop as arbiters; and (2) the sum of £3, 3s., being the expenses incurred by the pursuers in connection with the arbitration and award. The initial writ contained further craves which it is not necessary to specify.
The pursuers averred that they had sold the defender three consignments of flour at different dates, conform to sale-notes delivered by them to the defender. Each of the sale-notes contained on its margin a side-note, which is quoted in the rubric, providing for disputes being settled under the rules of the Glasgow Flour Trade Association. The rules of the Glasgow Flour Trade Association provided, inter alia, as follows—“All disputes of whatever kind, including claims of damages, disputes as to whether or not there is a concluded contract, and claims to reject goods arising out of transactions connected with the trade, shall be referred to two arbiters — one chosen by each party. If either of the parties refuses to name an arbiter, or neglect to appoint an arbiter timeously, the executive committee of the association shall, on the application of the other party, and payment by him of £1, 1s., appoint an arbiter to act for the party refusing or neglecting to appoint.… The arbiters shall appoint an oversman before proceeding to the determination of the reference, and if they fail within three business days after their appointment so to do, then, on the application of either party, the executive committee shall name an oversman.’”
The pursuers further averred that they had delivered to the defender quantities of flour in terms of the contracts, and that the defender, objecting that the flour was disconform to contract, had refused to take delivery of the balance thereof. “(Cond. 7)… The pursuers called upon the defender to refer the question between them to arbitration in accordance with the terms of the said contracts, and thereafter nominated J. A. Dunlop, 25 Wellington Street, Glasgow, as their arbiter. The defender after considerable delay refused to appoint an arbiter. “(Cond. 8) On or about 2nd May 1910 the pursuers, in accordance with the said contracts, applied to the Glasgow Flour Trade Association to appoint an arbiter to act for the defender in the matter above set forth. The said application was duly intimated by the said association to the defender. On 9th May 1910 the said association appointed William Gilchrist, 93 Hope Street, Glasgow, as the defender's arbiter. (Cond. 9) On or about 18th May 1910 the said arbiters having duly appointed an oversman, and considered the question in dispute, issued an award in the following terms, which is herewith produced — ‘Complying with a request made by Messrs M'Connell & Reid, flour importers, 19 Waterloo Street, Glasgow, to the executive of the Glasgow Flour Trade Association to appoint an arbiter to act in settlement of a dispute between themselves and Mr Robert Smith, baker, Canonmills, Edinburgh, owing to the latter refusing to accept delivery of 232 140-lbs. bags of flour branded “Helpmate,” and his refusing to arbitrate or make any other settlement, the executive appointed Mr William Gilchrist, President of the Association, to act in the interest of Mr Smith, Mr J. A. Dunlop, Wellington Street, Glasgow, being appointed to act in the interests of Messrs M'Connell & Reid. In the absence of any evidence having been submitted by Mr Smith—although asked for by Mr Gilchrist—the arbiters were obliged to base their decision upon copy of contract notes, and correspondence submitted them by Messrs M'Connell & Reid. On perusal of those contract notes, the arbiters find that the flour was sold by Messrs M'Connell & Reid to Mr Smith on the basis of the rules of the Glasgow Flour Trade Association, and as rule 18 of the association reads, … ( quotes)… they find that Messrs M'Connell & Reid are acting in accordance with contract in calling for arbitration, and that Mr Smith — having refused to arbitrate — Messrs M'Connell & Reid are entitled to claim against him for any loss they may sustain on the sale of the flour by public auction, plus interest and store charges, after allowing for a reasonable time for taking delivery.’ The said award was duly communicated to the defender by the said association. (Cond. 10) On 21st September 1910 the pursuers, after again calling upon the defender to take delivery of the balance of the flour sold to him as aforesaid, had the same sold by auction, when it realised the net sum of £74, 1s. 10d. (Cond. 12) The sum of £124, 10s. 5d. being the first sum sued for in the first place is the difference between £198, 12s. 3d., the contract price of the flour of which the defender refused delivery, and £74, 1s. 10d., the price realised for said flour as aforesaid. The sum of £3, 3s. being
Page: 566↓
the second sum sued for in the first place is the expense incurred by the pursuers in the said arbitration.” The defender, inter alia, averred—“(Ans. 2 and 3) Explained that the defender did not agree to the conditions purporting to refer to these rules, and contained in a side-note in small print in the left-hand side of said sale-notes. Such conditions were never, and are not incorporated into contracts made between the parties. The said sale notes were not authenticated in any way by either of the parties. (Ans. 10) … Believed and averred that no flour was set aside by the pursuers for the defender, and that the flour alleged to have been sold did not belong to the defender, and was not of the quality purchased by him per sample, but was an inferior lot.”
The defender pleaded, inter alia—“(1) The averments in support of the initial writ being irrelevant, the action falls to be dismissed.”
On 8th February 1911 the Sheriff-Substitute ( Guy) pronounced this interlocutor—“… Sustains the first plea-in-law for the defender so far as directed against the averments of the pursuers in support of the first two heads of the first crave of the initial writ.”
The pursuers appealed, and argued—The side-notes validly incorporated in the contract the rules of the Glasgow Flour Trade Association. It was apparent on the face of the contract that it contained a condition as to arbitration. This condition was therefore binding on the defender, who accepted the sale-notes without objection — Lyons & Company v. Caledonian Railway Company, 1909 S.C. 1185 (Lord Kinnear at 1192), 46 S.L.R. 848; Watkins v. Rymill, 1883, 10 QBD 178; Harris v. The Great Western Railway Company, 1876, L.R., 1 QBD 515; Stewart, Brown, & Company v. Grime, January 27, 1897, 24 R. 414, 34 S.L.R. 302. There were two well-known cases which were exceptions to the rule laid down above— Henderson v. Stevenson, November 25, 1873, 1 R. 215, 11 S.L.R. 98, and June 1, 1875, 2 R. (H.L.) 71, and Parker v. The South Eastern Railway Company, 1877, L.R., 2 C.P. D. 416. This was an informal arbitration in re mercatoria— Hope v. Crookston Brothers, June 6, 1890, 17 R. 868, 27 S.L.R. 709. Furthermore, the action was not incompetent because the arbiters had left one ministerial act to be done. It was no doubt true that the pursuers must still show by proof that they sold by auction the flour that had been sold to the defender, and that it realised a certain price. No judicial act, however, remained to be done by the arbiters; the whole question of liability had been settled; and it was quite competent to leave a purely ministerial act to be done after the publication of the award— Thorp v. Cole and Others, 1835, 2 C.M. and R. 367 (Parke (B.) at 380); Irons' Law of Arbitration, 200; Russell on Arbitration (8th edit.) 152. The arbiters had acted properly and in order, and their award was valid even although the defender (after receiving notice) was not present— Mitchell v. Cable, June 17, 1848, 10 D. 1297 (Lord Fullerton at 1309, and Lord Jeffrey at 1310); Low v. Bankes, June 2, 1836, 14 S. 869; Parker on Arbitration, 104; Bell on the Law of Arbitration (2nd edit.) 155.
The defender was not called on.
The first observation I make is that I think it requires clear and distinct language to oust the ordinary jurisdiction of the courts and substitute procedure by way of arbitration. If such a bargain is to be made between parties (as of course it may be made), I consider it would require to be much more clearly expressed than anything we have here. A mere reference to the rules is to my mind quite insufficient to import such a condition into the contract. It is an important matter, and one that must be distinctly expressed, that a man should abandon his normal remedies at law. Mr Hamilton referred to various authorities, railway cases and the like; but I do not think these cases help his argument. In all of them there is this element, that the conditions said to be incorporated appeared on the back of the ticket or other document, or in a body of rules exposed on the walls of the premises in question, or at least easily accessible to inspection. The question may, I think, be put thus — Did those who found upon the condition take reasonable means to give the other party notice that it was a condition of the contract? I cannot hold that the pursuers took reasonable means to give the defender such notice. It is not said that the rules were ever sent to the defender or brought to his knowledge otherwise than by the side-note. Another case referred to was Stewart, Brown, & Company v. Grime, 1897, 24 R. 414. There it appeared on the face of the contract that all disputes were to be made the subject of reference. But
Page: 567↓
If that is so, no other point arises as necessary for the disposal of this appeal; and I do not desire to express any opinion on the other matters so fully discussed by the learned Sheriff-Substitute and by counsel at our Bar.
I should, however, like to add that this action seems to me incompetent in so far as it seeks to enforce an incomplete decreet-arbitral. At the end of the day Mr Hamilton admitted that he was not in a position to ask for payment of the sum first concluded for in the initial writ. He admitted that before he could get decree for that sum he must show that the defender was called upon to take the flour, that the pursuers sold the flour, and that it realised a certain sum. He also admitted that if he were allowed a proof of these facts the defender must also be allowed an opportunity of proving his averment that no flour was ever set aside for him by the pursuers, and the other averments in answer 10. It is clear from these admissions that the arbitration was never completed, and that the real question at issue between the parties was never decided. Accordingly it comes to this, that the Court is asked to pronounce a decree upon an award which is truly no award at all. We are in the extraordinary position that a decree conform to what is alleged to be an arbiter's award is sued for, while at the same time it is admitted that a proof is required before the alleged award can become a real award, or indeed a judgment of any kind upon the dispute between the parties. I never heard of such a proceeding. It seems an amazing proposition that we should be asked to pronounce findings giving effect so far to a so-called arbiter's award, and quoad ultra to allow proof upon the most vital facts in the case.
So, apart from the first ground, in which I concur, I should have had no hesitation in deciding the case upon this second ground also.
I reserve my opinion upon the other question, namely, whether the reference is invalidated by the provision in the rules of the association for a review of the arbiter's or oversman's award by a court of appeal. I think it is unnecessary to say anything upon that point.
The Court dismissed the appeal, affirmed the interlocutor appealed against, and remitted the cause to the Sheriff to proceed.
Page: 568↓
Counsel for the Pursuers (Reclaimers) — Sol.-Gen. Hunter, K.C.— Hamilton. Agents— Sharpe & Young, W. S.
Connsel for the Defender (Respondent) — Wilton— Chapel. Agents— Mackay & Young, W.S.