Malcolm Cole V. Silvermills Estates And Land Limited+ian Henderson

JurisdictionScotland
JudgeLord Justice Clerk,Lord Emslie,Lady Dorrian
Judgment Date14 June 2011
Neutral Citation[2011] CSIH 37
CourtCourt of Session
Published date14 June 2011
Docket NumberA39/10
Date14 June 2011

SECOND DIVISION, INNER HOUSE, COURT OF SESSION

Lord Justice Clerk Lord Emslie Lady Dorrian [2011] CSIH 37

A39/10

OPINION OF THE LORD JUSTICE CLERK

in the Reclaiming Motion by

MALCOLM COLE

Pursuer and Reclaimer;

against

(FIRST) SILVERMILLS ESTATES AND LAND LIMITED

First Defender and Respondent:

and

(SECOND) IAN HENDERSON

Second Defender:

_______

For the Pursuer and Reclaimer: Walker; Morton Fraser LLP For the First Defender and Respondent: MacColl; Fyfe Ireland

Second Defender: Non participating party

14 June 2011

Introduction

[1] This is a reclaiming motion against an interlocutor of the Lord Ordinary dated 10 November 2010 by which he sustained the defender's plea to the relevancy and dismissed the action.

The history of the dispute
[2] The defender and the pursuer were respectively landlord and tenant of a restaurant at 7 Fleshmarket Close, Edinburgh.
When the lease ended they had a dispute as to liability for repairs. That led to an action in the Court of Session. The action was sisted for arbitration.

[3] By Deed of Submission the pursuer and the defender referred the dispute to arbitration by Mr Ian Henderson MRICS (the arbiter). Mr Henderson was convened as a defender, but has not compeared.

[4] Clause 12 of the Deed provided as follows:

"12. The Arbiter shall also have the power, subject to any agreement between the Parties, to order in any award that all or part of the legal or other expenses incurred by a party in the course of the Arbitration shall be paid by the other party, such expenses to be taxed by the Auditor of the Court of Session. The Arbiter shall also have power to make an award of expenses from time to time in the course of proceedings."

The Deed also gave the arbiter power to make an interim or part award (cl 9).

[5] In its finalised pleadings in the arbitration the defender craved inter alia -

"An order for the expenses of the claimants (sc the defender) (as taxed by the Auditor of the Court of Session) to be paid by the respondent (sc the pursuer).

The pursuer counterclaimed. His crave for expenses in the counterclaim was in the same terms.

[6] On 22 August 2008 the arbiter issued his decision. He found for the defender in the claim and refused the counterclaim. He awarded expenses in the claim to the defender in the following terms:

"The respondent, Malcolm Cole, is held liable to the claimants, Silvermills Estates and Land Limited for the expenses incurred by the claimants in this Arbitration; all such expenses to be agreed or taxed by the Auditor of the Court of Session" (at para 5.1.2.3).

He awarded expenses in the counterclaim to the defender in the same terms (para 5.2.3).

[7] The arbiter issued his decision with a covering email in which he said inter alia:

"Please see attached my Final Decision in respect of this Arbitration. I now regard this Arbitration as concluded."

[8] Since the award was made by an arbiter, the remit to the Auditor of the Court of Session was a private remit subject to the Auditor's willingness to accept it. The Auditor in the event accepted the remit. On 5 November 2009 he held a diet of taxation. The pursuer objected to the competency of the taxation on the ground that the award did not specify the scale of taxation that the Auditor was to apply. The Auditor upheld the objection and declined the remit. He relied on a statement of the Extra Division in Apollo Engineering Ltd v James Scott Ltd (2009 SC 525) that when an arbiter remits an award of expenses to the Auditor of the Court of Session, he must specify on which scale expenses are to taxed, otherwise the Auditor cannot begin his task (ibid, at para [32]); and a statement to similar effect in Hastings, Expenses in the Supreme and Sheriff Courts of Scotland (at p 71).

[9] The defender thereupon submitted a motion to the arbiter seeking inter alia to have the expenses taxed on the Court of Session scale and to have an account remitted to the Auditor to tax and report. The pursuer opposed that motion on the grounds that the arbiter was functus officio. The arbiter disagreed. He indicated that in his opinion his remit was not exhausted until he decerned for expenses following receipt of a taxed account from the Auditor. He invited the parties to make further comments before he dealt with the defender's motion.

[10] The pursuer then raised this action. He seeks inter alia interdict against the arbiter from carrying out any further functions qua arbiter between the parties, and interdict against the defender from inviting or moving the arbiter to do so.

The decision of the Lord Ordinary
[11] The Lord Ordinary held that the arbiter had not exhausted his remit.
In his view, the remit included the determination of the question of expenses in a manner that would enable the Auditor to tax the account. The arbiter's decision failed to do this. It was therefore still open to him to make a further order. The decision of 22 August was an interim or part award only. The Lord Ordinary therefore pronounced the interlocutor reclaimed against.

Submissions

[12] Counsel for the pursuer submitted that the arbiter's award was clearly final. Therefore he could not make any further judicial orders (Sim Group Ltd v Jack, 2002 SLT 847 at 852; Hunter, The Law of Arbitration in Scotland, p 253; Melville and Irons, Treatise on the Law of Arbitration in Scotland, pp 199-200). If an arbiter had failed to deal with part of his remit, he could not rectify his failure by issuing further orders. The whole decision in this case was a nullity. Any further order would be incompetent (Grampian RC v John G McGregor (Contractors) Ltd, 1994 SLT 133).

[13] Counsel for the defender submitted that an arbiter was functus only when he had issued a final award that dealt with all matters remitted to him. The remit expressly included the question of expenses. Therefore the arbiter's jurisdiction was not exhausted until there had been a taxation and he had decerned for payment of the taxed expenses in a specific sum. The arbiter was right to entertain the defender's motion. The Lord Ordinary was right in holding that the arbiter's decision was an interim or part award. The defender could now seek further orders from the arbiter (a) sanctioning the employment of counsel; (b) authorising the Auditor to grant a percentage uplift on the scale fees and (c) certifying certain witnesses as experts.

Conclusions
[14] Counsel for both sides presented their submissions on the basis that the only question in this case was whether the arbiter could now make good his failure to specify the scale on which the Auditor of the Court of Session was to tax the expenses: in short, whether the arbiter was functus.
In my opinion, that approach is misconceived.

[15] The case turns, in my view, on the logically prior question whether the arbiter did fail to specify the scale on which expenses should be taxed.

[16] In presenting their submissions as they did, counsel were influenced by the following statement of the...

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