CASES DECIDED IN THE HOUSE OF LORDS, 1890-91. W. & T. ADAMS AND OTHERS, Appellants (Pursuers).-Sol.-Gen. Sir C. Pearson, Q.C.-Law. THE GREAT NORTH OF SCOTLAND RAILWAY COMPANY, Respondents (Defenders).-D.-F. Balfour, Q.C.-Ferguson. No. 1. Nov. 27, 1890. Great North: Arbitration Act of Regulation, 1695, sec. 25 (issued under Act, 1693, c. 34)-Railway Co. Reduction of decreet-arbitral—Corruption-Constructive corruption.-Sec. 25 of the Act of Regulation, which excludes reduction of decreets-arbitral "upon any cause or reason whatsoever, unless that of corruption, bribery, or falsehood, to be alleged against the judges-arbitrators who pronounced the same," does not apply where it is alleged that the arbiter has exceeded the fines compromissi, or in the course of the arbitration has disregarded any one of the express conditions contained in the contract of submission, or of those conditions which the law implies in every submission. Opinions (per Lord Watson and Lord Bramwell) that the word "corruption " is used in its natural sense, and that to bring a case within the exception it is necessary to allege that there was actual corruption on the part of the judgearbitrator. Contractors for making a railway were bound by their contract to complete the works by a day specified, but it was provided that if any delay should arise from any cause not imputable to the contractors, this might be stated to the arbiter " as a reason for not completing the works within the time specified," and the arbiter was authorised "to extend the time for completing the same for such time as he shall consider reasonable." The contractors were bound to pay £20 of liquidate damages for each day's delay beyond the time specified, "or such extended period as the arbiter may determine as aforesaid." All disputes under the contract or as to its construction were referred to the arbiter. No application for extension of time was made to the arbiter during the progress of the works, but in a decree-arbitral, after the completion of the works, the arbiter, in fixing the amount of liquidate damages for delay, extended the period for completion of the works for six months. In a reduction of the decree-arbitral brought by the contractors, on the ground that the arbiter had exceeded his jurisdiction in extending the time after the completion of the works, held (in aff. judgment of First Division) that even if the arbiter was not entitled after the completion of the works to extend the time, he was entitled, in determining the amount of liquidate damages, to take into account delays caused by the railway company; and that, in any view, as the construction of the contract had been left to the arbiter, his judgment could not be reduced. A contract for making part of a railway provided that all disputes between the parties "under or in reference to the contract, or in regard to the true intent, meaning, and construction of the same, or of the specifications," &c., should be referred to A B as arbiter. The contractor was bound to complete the line of railway on 30th September a No. 1. Nov. 27, 1890. Ld.Chancellor Lord Watson. 1884, under a liquidate penalty of £20 for every day's delay, but it was stipulated by the railway company that 400 yards of embankment forming part of the line should not be formed until another contractor had completed the east abutment, of a bridge and the diversion of a river, or until he had received the written instructions of the engineer to proceed with the embankment. The line was not.completed till 1st May 1886. The arbiter found that the contractor was liable in penalties for each day's delay (exclusive of Sundays) from 30th March 1885 to 1st May 1886. In an action of reduction of the decree-arbitral brought by the contractor, it was proved that the contractor had not got access to the ground on which the 400 yards of embankment was to be formed until February 1886. The arbiter stated that he was satisfied that the contractor had not been ready to use the ground until he got it, and that his delay was not due to his not having had access to it until February 1886. Held (aff. judgment of First Division) that, as the whole matter, including the construction of the contract, had been referred to the arbiter, the Act of Regulation prevented reduction of the arbiter's award. (IN the Court of Session, June 21, 1889, 16 R. 843.) In January 1883 the Great North of Scotland Railway Company entered into two contracts with Messrs W. & T. Adams, contractors, Ld. Herschell. Callander, for the construction of a railway from Portsoy to Elgin. The Lord Morris. first, the Portsoy contract, embraced two sections of the railway (1) from Portsoy to Tochieneal Station, (2) from Tochieneal Station to Portnockie. The second, the Buckie contract, embraced the line from Portnockie to the river Spey. By the Portsoy contract the contractors were bound to complete the first section by 30th September 1883, and the second section by 30th September 1884, " or on or before such respective days thereafter as may be respectively fixed by the arbiter after named, under the declaration herein before written." A previous clause contained this provision,-" And the said second party [i.e. the Messrs Adam] bind and oblige themselves and their foresaids to intimate to the said first party in writing when they are ready to commence said works, and any delay which may thereafter occur, if any, in giving the said second party possession of such lands as the engineer shall consider necessary for carrying on said works, shall not confer on the said second party a right to claim damages against the said first party, or to break this contract, but may be stated to the arbiter hereinafter named as a reason for not completing the said works within the time after specified, and if it shall appear to said arbiter that the said second party was prevented from completing the said works by that delay or by any stoppage from any cause not imputable to the said second party, the said arbiter shall be entitled to extend the time for completing the same for such period as he shall consider reasonable, but of the propriety of giving the said extension of time, and the length thereof, the said arbiter shall be sole judge." The contract further bore,-" And it is hereby further declared that the said second party shall be liable in all damages and extra expenses which may be incurred by, or occasioned to, the said first party by the said second party or their foresaids failing to complete the said works, or to have the same ready for opening by the times respectively hereinbefore stipulated; and as compensation for loss of profits to the company should the foresaid respective portions of the line not be in a state to be opened for public traffic by the times stipulated, it is hereby declared and agreed on that the said second party shall be bound to pay to the said first party the sum of £20 sterling as the liquidate and agreed-on compensation for every day during which each of the foresaid respective portions of the No. 1. line, or any part thereof, shall remain unfinished, or in a state not to admit. of its being opened for public traffic, after the said 30th day of September 1883 and 30th day of September 1884 respectively, or such extended Nov. 27, 1890. periods as the said arbiter may determine as aforesaid." Adams v. Railway Co. By the contract the parties submitted to Mr B. Hall Blyth, as sole of Scotland arbiter, "all disputes and differences which have arisen or shall or may arise between them under or in reference to the contract, or in regard to the true intent, meaning, and construction of the same, or of the said specifications, conditions," &c. Great delay took place in the execution of the works, but no application was made to the arbiter for an extension of the time allowed for the completion of the works during their progress. Disputes having arisen between the parties as to the sums payable by the contractors as penalties or liquidate damages, the matter was brought before the arbiter, who issued the following finding on the Portsoy contract:-"Find that the first portion of said works was not completed by said contractors on said 30th September 1883, but was completed by them on 1st April 1884, and the said remainder or second portion of said works was not completed by the said contractors on 30th September 1884, but was completed by them on 1st May 1886: Find that I am entitled to extend, and I hereby do extend, the time for completing the said second portion from said 30th September 1884 to the 30th March 1885: Find that the balance of price," &c. A similar finding was given by the arbiter on the Buckie contract, which contained the same clauses-the extension of time allowed by the arbiter in his decree being from 30th September 1884 to 30th March 1885. Messrs Adams thereafter brought a reduction of the two decrees-arbitral on various grounds (enumerated by Lord Fraser, 16 R. 850). The First Division, on 21st June 1889, reduced the arbiter's decrees to a certain amount, on the ground that the arbiter had awarded a larger sum of penalties than the railway company claimed, and quoad ultra assoilzied the defenders. The pursuers appealed. The only grounds of reduction insisted on in the appeal were the third and sixth of those mentioned by Lord Fraser. "Third, that the arbiter was not entitled after the time specified for the completion of the works to extend the time for such completion." The sixth was founded on the following clause in the specifications and conditions for the construction of the Buckie section:-"The portion of the embankment of the line, between pegs Nos. 892 and 899, shall not be formed until the contractor for the bridge or viaduct over the river Spey bas completed the works in connection with the erection of the east abutment of the bridge, the diversion of the river, and the erection of the protection walls embraced in the contract for the Spey Bridge, or until he has received the written instructions of the engineer or assistantengineer to proceed with the formation of the said portion of the embankment. The pursuers averred,-(Cond. 11) "The aforesaid bridge across the river Spey at Garmouth, forming part of the Buckie Railway, was built by the firm of Blaikie Brothers, under a contract with the defenders similar to those of the pursuers, and dated in the same month of January 1883. Part of the pursuers' contract with the defenders was to connect the bridge with the Buckie section of the railway by an embankment, but it was impossible to do this, and so complete the Buckie section of the defenders' contracts, till the bridge was finished. Messrs Blaikie Brothers had contracted to finish the bridge by the 31st July 1884, but they did No. 1. Adams v. of Scotland Railway Co. not do so till the month of May 1886. It was not till the month of February 1886 that the pursuers were put in possession by the defenders of Nov. 27, 1890. the land necessary for the formation of the aforesaid embankment. On Great North 20th January 1886 the defenders' resident engineer addressed a letter to the pursuers, stating that he expected that the river Spey would be diverted in a week, provided the weather kept favourable, and that he trusted they were making all the preparations necessary for filling in the banking required. The material for the embankment had to be brought from Portgordon, a distance of three miles. It was thus impossible for the pursuers to have completed the works under their Buckie contract until two months or thereabouts after the said month of February 1886. The said Benjamin Hall Blyth has, by the decree applicable to the Buckie contract, found the pursuers liable in the sum of £6800 in name of liquidated damages, being at the rate of £20 per day for the period from 30th March 1885 to 1st May 1886, and as if the bridge at Garmouth had been completed by the month of January 1885." In answer the defenders, inter alia, denied that the completion of the works under the Buckie contract was in fact retarded or materially affected by the state of the works of the Spey Bridge, and explained that any question of delay so arising was by the contract submitted to the decision of the arbiter. It was proved that the contractors did not get possession of the ground till February 1886. The pursuers pleaded that the decrees were ultra fines compromissi, and that in the circumstances they were corrupt, unconscionable, and unjust. At delivering judgment, LORD CHANCELLOR.-I confess it appears to me that this is a very plain case. I do not at present assent to the view in the direct form in which it has been alleged that the law of Scotland applicable to this case is different from the law of England. There is no doubt that at one time the Courts in both countries treated themselves rather as being in the position of Courts of Appeal, and examined whether or not the conclusion at which an arbitrator had arrived was sound, both in point of law and in point of fact. I think the only learned Judge who ever gave distinct expression to that view was Lord Thurlow, and I am the more desirous of alluding to him and doing him justice, because I think that what Lord Thurlow says in Knox v. Symmonds 2 rather throws some doubt upon the question whether he ever was responsible for the statement put into his mouth in the case which has been quoted at the bar-Colquhoun v. Corbet. Lord Thurlow says that it is no ground for setting aside an award that the conclusion was wrong, otherwise it would be a ground for setting aside all awards, but his Lordship then goes on to say that, where certain facts are submitted to an arbitrator by the Court, the arbitrator must be considered to be somewhat in the position of a Master, and that the Court when the matter comes back to them have to consider not only whether the Master has acted according to law, but whether he has arrived at a sound conclusion. His Lordship goes on to distinguish arbitrations in the more popular sense of the word, and shews that where there are real arbitrations, and where the parties have selected their judge, in such cases you have to shew a great deal more than mere error on the part of the arbitrator in the conclusion at which he has arrived before the Court 1 Lord Campbell in Mackenzie v. Girvan, 1843, 2 Bell's App. 55. 2 1791, 1 Ves. Jun. 369. 3 1784, 2 Paton's App. 626. No. 1. Nov. 27, 1890. Great North can interfere with his award. And in the Court of Common Pleas forty years ago, in a case in which the arbitrator had a question of law submitted to him according to the ordinary forms of pleading, the Court having come to the Adams v. conclusion that the decision of the arbitrator was, in the sense in which they of Scotland understood the words, erroneous in deciding upon a question of law, on demurrer Railway Co. nevertheless held that the parties having submitted that question to the arbitrator, it was for the arbitrator to determine it,—in their own language, the parties had agreed to accept the arbitrator's decision upon the question of law, as well as his decision upon the facts-Stimpson v. Emmerson. In the Court of Queen's Bench, thirty years ago, that decision was adopted as being the law which would guide the Court in the decision of such questions. Upon the facts now before your Lordships everything appears to have been practically abandoned except the third objection, referred to by the Lord Ordinary, and the sixth. Now, with regard to the third objection, the difficulty ? seems to me to arise upon the perhaps not very well conceived or selected words of the contract. That the parties by that contract intended that the arbitrator should have the power of determining between the parties whether or not liquidated damages (I assume now that what are called the penalties are liquidated damages) should be ascertained by the arbitrator with reference to the conduct of both parties is manifest, and the language which is used undoubtedly prima facie (for my own part, I am prepared to admit as much as that) rather looks like an intention by the parties that that determination by the arbitrator should go on during the currency of the contract, that he should be the consulting engineer, that he should be the person to whom application should be made in the event of alleged default on the one side or the other. But I am by no means prepared to assent to the conclusion that that excludes the consideration of such questions afterwards. Having regard to the documents before us it is almost impossible to suppose that the parties did understand that, when the arbitrator was investigating the question what damages were to be reported, he was not to have regard to the conduct of both parties, and that if one party had withheld the possession of the land, that party was not to insist upon the delay consequential upon his action as being one of the elements of the case in respect of which he could claim damages. It is impossible, I think, to read the words of the contract without seeing that that which was in itself a very sensible provision was the intention of both parties. And in truth, I cannot entertain a doubt that, whether that provision were held to be there or not, when it was left to the arbitrator to decide in respect of the delay which had taken place, apart from any such provision in the contract at all, it would have been perfectly competent for the arbitrator to say: "I shall not allow this or that period of delay to be made the subject of damages against the contractor when it is proved before me, as a matter of fact, that the delay which then existed was caused by the act of the railway company themselves, who were bound to provide either facilities, or material, or land, or what not, and that the delay which had taken place was not the fault of the contractor." That is manifestly the law in this country, and I believe it to be the law also in Scotland. Therefore that part of the award, both upon the construction of the language itself and upon the substance of the matter, apart from the language, seems to me to be free from objection. 1 June 5, 1847, 9 L. T. 199. |