LORD DAVEY, SIR ANDREW SCOBLE, SIR ARTHUR WILSON, SIR FORD NORTH
body1902
DigiLaw.ai
Judgement Appeal from two decrees of the Punjab Chief Court (July 20, 1898) varying a decree of the District Judge of Lahore (March 2, 1896). The suit arose out of a contract given by the respondents to the appellant for building the town hall at Lahore known as the Victoria Jubilee Hall. It was brought on November 1, 1893, by the appellant for adjustment of accounts, and to recover from the respondents Rs.43,201, or any other sum which might be found due. The District Judge gave a decree for Rs.13,779 with proportionate costs. The Chief Court, on the appeal of the defendants, varied the decree of the District Judge, and, in lieu thereof, directed that the defendants should pay to the plaintiff the sum of Rs.1767, with proportionate costs in the First Court. It dismissed the plaintiffs cross-appeal. The defendants pleaded an award of arbitrators dated June 30, 1891, the terms of which it had fully complied with. The plaintiff replied that the award did not bar the suit because the arbitrators had exceeded their jurisdiction and were guilty of misconduct, and that therefore there was no legally binding award. The facts are stated in the judgment of their Lordships. The District Court found that the award was invalid— (a) Because the awarding of a certain sum of money, to be paid by defendants to the plaintiff, was beyond the scope of the arbitrators authority. (b) Because the arbitrators failed to allow for certain portions of the work in their award. (c) Because, in two instances, they lowered rates below the rates already agreed upon between the parties. The defendants appealed on the ground that the award was binding; the plaintiff cross-appealed to reverse that part of the judgment which dismissed part of his claim. The material portion of the Chief Courts judgment was— "On the whole, then, I would hold that the District Judge was wrong in setting aside the award of the arbitrators. The objections taken to the award are purely technical, or are founded on alleged omissions or excesses of duty, which have not been established, and no attempt has been made to impugn the good faith of the arbitrators.
The objections taken to the award are purely technical, or are founded on alleged omissions or excesses of duty, which have not been established, and no attempt has been made to impugn the good faith of the arbitrators. Under such circumstances as those in which the reference to arbitration was here made, it would, in my opinion, require the very strongest reasons to justify a Court in disregarding an award, in a private reference to arbitration, as a bar to a suit, and itself adjudicating in the matters in dispute between the parties. There can, I think, be no doubt whatever as to the essential portion of the arbitrators decision, however awkwardly they may have expressed it in the award. I think further that there was nothing in the manner in which the arbitrators discharged their duties under the reference to justify plaintiff in declining to abide by the award. No doubt the arbitrators have not taken his view with regard to the rates and quantities; but it is not open to him to question their decision as to particulars, merely because he is dissatisfied with it." C. W. Arathoon, for the appellant, contended that the award was not binding. The arbitrators were guilty of legal misconduct. In the first place, being in doubt as to the extent of the reference and the exact subject-matter submitted for their decision, instead of ascertaining the views of both parties thereupon, they referred to and obtained an interpretation of the terms of reference from the defendants only, and that without the knowledge of the plaintiff. It was established that, instead of exercising their own judgment upon matters submitted, they were guided by the municipal engineer and the Government advocate, Mr. Sinclair, and by the defendants secretary. It was shewn, moreover, that one of the arbitrators had deputed his son to act for him. The award was bad also in that the arbitrators exceeded their powers in that they decided "the total value of the work done," and awarded a certain sum of money to be paid by defendants to plaintiff—a direction which was outside the scope of the reference. The matters referred were the adjustment of measurements and rates of payment incident to the taking of the accounts, and did not authorize a direction to pay or the ascertainment of a sum total.
The matters referred were the adjustment of measurements and rates of payment incident to the taking of the accounts, and did not authorize a direction to pay or the ascertainment of a sum total. Sir W. Rattigan, K.C., and Boss, for the respondents, contended that the appellants argument was based upon a wrong view of what constituted the award. That award consisted of two parts, the former of which alone was open to the objection of being ultra vires, and was separable from the second portion, which dealt with the actual matters referred and decided them. The evidence shewed that the second portion was explained and intended by the arbitrators to be part of the award. It dealt with the matters at issue, and, as the first portion was merely inferential from the actual decision of details, it may be Laid out of consideration. Then as to the arbitrators having consulted a lawyer bona fide though irregularly, it did not lead to error and was not misconduct see Holland v. Cassidy. (13 App. Cas. 770, 776.) C. W. Arathoon replied. The judgment of their Lordships was delivered by SIR ANDREW SCOBLE. Buta, the plaintiff and appellant, is a contractor of Lahore who, in 1887, obtained a contract from the defendants, the municipal committee of that city, for the building of a town hall, to be called the Victoria Jubilee Hall, in commemoration of Her late Majestys Jubilee. The building was completed in February, 1890; but when the final accounts came to be settled disputes arose between the parties which were referred to arbitration by an agreement dated February 18, 1891. The material portion of this agreement is as follows " And whereas certain differences and disputes have arisen and are still pending between the said parties so far as relate to measurements of work done and to the rates, to be paid for the same where such rates have not been agreed upon between the said parties And whereas the said parties hereto for the purpose of finally adjusting the said matters in difference and dispute between them have mutually agreed to refer the same to the judgment, determination, and award of Mr. John C. Hayward and Mr. P. Ross of the North-Western Railway. . . .
John C. Hayward and Mr. P. Ross of the North-Western Railway. . . . "Now these presents witness that in pursuance of the said agreement they the said parties hereto do hereby severally and respectively covenant and agree that they and their respective heirs, legal representatives, and successors shall and will duly and fully abide by, observe, and perform the award, order, arbitrament, and final determination pf the said John C. Hayward and P. Ross .... of and concerning all the matters and things, claims, and demands in difference and dispute between the parties hereto—that is to say, so far as such matters and things, claims and demands relate to measurements of work done arid to the rates to be paid for the same where such rates have not been agreed upon between the said parties hereto; "And also all other matters in difference, controversies, claims, and demands whatever now subsisting or depending by or between the said parties, or in anywise incident or relating thereto." It was also agreed that the award should be made a rule of Court under the provisions of Chapter XXXVII. of the Civil Procedure Code. The arbitrators made and published their award on June 30, 181, and on the same day the plaintiff wrote to the defendants secretary a letter requesting that he might be "granted (1.) a copy of the award given by the arbitrators, (2.) a copy of the details furnished by the arbitrators in respect of all the items, and (3.) a copy of the order given by Mr. Sinclair, Junior Government Advocate, in reply to the letter addressed to him by the secretary of the municipal committee, under which a decision was passed as to the powers of the arbitrators," This letter is of importance in connection with his subsequent proceedings. On July 23, 1891, the defendants accepted the award, and on July 30 their secretary wrote to the plaintiff that he was prepared to hand him "a cheque for the balance of the amount due, after deducting from the amount of the award the sums that have been paid to you already." Three days before the date of this letter the plaintiff had written to the arbitrators making a number of objections to the award, and stating that unless he got a " sound and satisfactory answer" to his objections he was not prepared to accept the award.
In this letter there is no suggestion of misconduct on the part of the arbitrators. On August 31, 1891, the defendants applied to have the award filed in the Court of the District Judge of Lahore, and while this application was pending, on April 25, 1892, they paid into court the sum of Rs.10,395 12a. 3p., which they alleged to be the balance due to the plaintiff under the award of the arbitrators. This sum was paid by the Court to the plaintiff. The application to file the award was afterwards withdrawn, apparently at the suggestion of the Court, with liberty to the defendants to file a fresh application if necessary. On November 1, 1893, the plaintiff filed his plaint in the suit now under appeal "for adjustment of accounts and recovery of the money that may be found due to him" for work done and materials supplied under the contract of 1887, for additional work done outside the contract, and for damages. In his plaint no reference was made to the arbitration and award; but in their written statement the defendants relied upon it as an answer to the greater part of the demand, and they disputed the claim for damages. The plaintiff by his replication challenged the award on the ground that "the arbitrators exceeded their jurisdiction and were guilty of misconduct," and that "if valid, it was so only to the extent of the matters with which the arbitrators dealt." The material issue was as to the validity of the award, and it now becomes necessary to state, as briefly as may be, the proceedings of the arbitrators, and the form which their award ultimately took.
The first question which the arbitrators had to determine was the scope of the reference, which was primarily to determine the matters in difference between the parties "so far as such matters relate to measurements of work done, and to the rates to be paid for the same where such rates have not been agreed upon between the parties." This was clear enough; but the agreement of reference further referred to them " all other matters in difference, controversies, claims, and demands whatever now subsisting or depending by or between the said parties, or in anywise incident or relating thereto " ; and, being not unnaturally uncertain as to the meaning of these words, the arbitrator wrote to the defendants secretary on May 25, 1891, asking for an opinion " whether this clause is to be taken as a distinct clause of agreement, or is it subordinate to matters preceding it?" The secretary, on the following day, wrote to Mr. Sinclair, the barrister who had prepared the agreement, asking him to " be so good as to state what the clause in question is intended to convey "; and on June 18 Mr. Sinclair wrote that the clause " merely covers any incidental or minor matters arising out of the main subject of the reference to arbitration, viz. (1.) measurements; (2.) rates where not fixed, and must be taken and construed accordingly." This correspondence does not appear to have been communicated to the plaintiff until after the award was made, and the omission to Jo this is one of the acts of misconduct charged against the arbitrators. Upon this point their Lordships consider it sufficient to repeat what was said by Lord Selborne, in delivering the judgment of this Committee in Holland v. Cassidy (13 App. Cas. 777.) " It would be prudent and discreet for arbitrators, when they desire to put themselves on the best footing of information as to matters of law, to ask all the parties to be present when they communicate with any gentleman whom they may see upon that subject. But if they cannot be shewn to have acted with improper partiality or for any other purpose than that of being correctly informed about the law, and avoiding mistakes of law, and if they cannot be shewn to have been misled as to the law, it seems an extraordinary thing ....
But if they cannot be shewn to have acted with improper partiality or for any other purpose than that of being correctly informed about the law, and avoiding mistakes of law, and if they cannot be shewn to have been misled as to the law, it seems an extraordinary thing .... if they, having been rightly advised as to the law, and having taken all the steps which they did take for the sole purpose of getting correct information as to the law, that should be a ground for setting aside the award." In this case their Lordships are satisfied that, though there may have been an error of judgment on the part of the arbitrators, there is no ground for impeaching the good faith of any of the parties concerned, or the correctness of the opinion given by the counsel consulted. Another ground of misconduct alleged against the arbitrators was that Mr. Hayward, one of them, delegated his duty to his son and employed him to take the measurements instead of taking them himself. On this point the evidence of Mr. Boss, the surviving arbitrator (Mr. Hayward having died before the institution of the suit), is that " Mr. Hayward was present when the measurements were taken except once, and he was present throughout the inquiry except once, which was towards the end of the inquiry .... Mr. Hayward was responsible for the measurements .... I worked out quantities myself. If Mr. Haywards and my calculations differed, we went through the details, and saw where the error lay .... If the quantities did not agree, we went into the calculation of each item." It is plain from this evidence that the parties had the benefit of Mr. Haywards experience and judgment on the matters referred to him, and there is no doubt that an arbitrator may delegate to a third person the performance of acts of a ministerial character, which is at most all that Mr. Hayward did in this case. The charge of misconduct against the arbitrators, therefore, fails, and the form of the award must next be considered. It is printed in the record as Exhibit D 1, and appears to consist of two parts—the first of which is headed " Abstract of cost of Victoria Jubilee Hall, Lahore.
Hayward did in this case. The charge of misconduct against the arbitrators, therefore, fails, and the form of the award must next be considered. It is printed in the record as Exhibit D 1, and appears to consist of two parts—the first of which is headed " Abstract of cost of Victoria Jubilee Hall, Lahore. and gives the detailed measurements and rates allowed by the arbitrators with a column of remarks shewing in some cases the basis of their decision ; and the second of which is headed " Arbitrators Award," and concludes in these terms " We award and adjudge that the municipal committee do pay to Buta, contractor, the sum of Rs.58,876 8a. 6p. only as the total value of the work done." It may here be noted that the amount thus awarded is 3hewn in the first part of the exhibit as the total resulting from the calculation of the quantities ascertained at the rates allowed by the arbitrators. It was contended before their Lordships that the second part of Exhibit D 1 must alone be looked at as constituting the award, and that if so, it was manifestly in excess of the authority given to the arbitrators, who were empowered only to settle measurements and rates, and not to calculate the sum due or to direct payment of the value of the work done. But their Lordships are unable to accede to this argument. The surviving arbitrator, Mr. Ross, says, in cross-examination by plaintiffs counsel "Exhibit D 1 is the award in question .... The statement shewing details of the amount awarded to the plaintiff is annexed to the award. It is part of the award, and was so intended by us. It shews in separate columns the quantities and rates fixed by us after inquiry." And another witness, Mr. Bull, municipal engineer at Lahore, who was present when the award was published, says " The arbitrators had a figured statement, which was read out to plaintiff. It was read out in English, and I think Mr. Hay-wards interpreter interpreted to plaintiff. This was after the award had been signed. They took ten or fifteen minutes in interpreting to plaintiff. I am quite positive that the detailed statement was translated.
It was read out in English, and I think Mr. Hay-wards interpreter interpreted to plaintiff. This was after the award had been signed. They took ten or fifteen minutes in interpreting to plaintiff. I am quite positive that the detailed statement was translated. That the plaintiff knew of this detailed statement is shewn by his letter asking for a copy of it, to which reference has already been made, and which was written on the same day that the award was published. Their Lordships have come to the conclusion that they must regard the whole of Exhibit D 1 as constituting the award, and this disposes of a great deal of the technical argument that was addressed to them with regard to the validity of the award, as that portion of the award which relates to the " measurements of work done and the rates to be paid for the same where such rates have not been agreed upon between the parties " is clearly separable from that portion of the award which goes beyond the strict terms of the agreement of reference. They see no reason to doubt that the arbitrators came to an honest determination upon the specific matters referred to them, and any faulty direction they may have given in excess of their authority may be treated as null. The next objection raised on the part of the plaintiff to the validity of the award is that the arbitrators failed to allow for certain portions of the work done, and that in two instances they lowered the rates agreed on by the parties. In the judgment of the learned judge of the Chief Court of the Punjab, before whom this case came on appeal, the evidence on these points is very carefully examined, with the result that it was found that the items alleged to have been omitted were included in other items of which they formed only a subsidiary portion, and for which rates were allowed; and that in the cases in which the rates were said to have been lowered, no rates had been agreed upon, and the matter was in the discretion of the arbitrators. Their Lordships see no reason to dissent from these conclusions. With regard to the damages claimed in the plaint, these fall under three heads.
Their Lordships see no reason to dissent from these conclusions. With regard to the damages claimed in the plaint, these fall under three heads. In the first place, the plaintiff claims that he was entitled to exemption from octroi duty on the materials used by him in the building; but it is clear that the defendants refused to grant him this privilege when the contract came before them for ratification, and that he acquiesced in their decision. In the second place, he claims damages on account of loss suffered by him on account of the delay of the defendants in putting up certain girders, and for expenses incurred by him in clearing up the building after completion. It is unnecessary to examine the evidence on these points, as both the District Judge and the Chief Court have found that this claim is barred by limitation. In the third place, he claims interest on the balance due to him. As to this, both Courts have found that he " could under no circumstances be held entitled to interest on the amount due under the award after the end of July, 1891, when he was informed by the municipal secretary that the money would be paid to him if he came to the office"; and the Chief Court passed a decree in his favour for Rs.1767 under this head. The case came before the Chief Court upon two appeals—one by the plaintiff and one by the defendants—against the judgment of the District Judge of Lahore, by whom the suit was originally tried. The Chief Court varied the decree of the District Judge in the defendants appeal, and dismissed the appeal of the plaintiff. Their Lordships agree with the decision thus formulated, and they will humbly advise His Majesty that the decrees of the Chief Court of the Punjab of July 20, 1898, ought to be confirmed and this appeal dismissed. The appellant must pay the respondents costs of this appeal.