Ives & Barker v Willans
|England & Wales
|Court of Appeal
Arbitration - Practice - Staying Proceedings in Action - Requiring Statement of Claim - “Step in Proceedings” - Rules of Supreme Court, 1883, Order XX., r. 1 (b) -
A notice by Defendant requiring a statement of claim is not a “step in the proceedings” which debars the Defendant from applying for a stay under the 4th section of the Arbitration Act, 1889.
The fact that a small portion of the relief claimed is not within the scope of the arbitration clause is not in itself a sufficient reason for refusing to stay proceedings where the main subject of the action is within the arbitration clause.
An arbitration clause referring disputes to the engineer of one parts cannot be disregarded on the ground that the engineer is in substance a judge in his own case unless there is sufficient reason to suspect that he will act unfairly.
Judgment of Kekewich, J., affirmed.
THIS was an appeal from a decision of Mr. Justice KekewichF1
On the 22nd of July, 1889, the Defendant, John W. Willans, entered into a contract with the Liverpool Overhead Railway Company for the construction of a high level railway. The contract provided that any question or dispute arising between the parties out of the subject-matter of the contract should be referred to and decided by the company's engineers.
On the 24th of August, 1889, the Defendant entered into a sub-contract with the Plaintiffs, Messrs. Ives & Barker, for the erection and fitting up by them of the ironwork required for the railway. The sub-contract referred to the contract of the 22nd of July, 1889, as the principal agreement, and it was stipulated that the sub-contractor should do the work in such manner as should be determined and approved by the engineers and the contractor, and in accordance in all respects with the requirements of the principal agreement and of the specification of works therein referred to, so far as they were applicable. And it was agreed that all questions arising from the sub-contract should be settled by the engineers in the manner mentioned in the principal agreement, and that the arbitration clause in the principal agreement should be treated as being therein repeated with the substitution of the names of the contractor and the sub-contractors for those of the company and the contractor.
The material clauses in these two contracts are more fully stated in Lord Justice Lindley's judgment.
On the 1st of July, 1893, the Plaintiffs issued the writ in this action against the Defendant, claiming a declaration concerning certain disputed questions arising out of the sub-contract, for specific performance of the agreement, for damages for breach thereof, and damages for delay in delivering materials.
The Defendant appeared in the action, and at the time of his entering appearance gave to Plaintiffs notice in writing requiring a statement of claim to be delivered.
On the 20th of July, 1893, at which date no statement of claim had been delivered, the Defendant took out a summons asking that pursuant to sect. 4 of the Arbitration Act, 1889, all further proceedings in the action might be stayed, on the ground that the matters in difference had been agreed to be referred to arbitration.
Mr. Justice Kekewich made an order staying all proceedings in the action, except as to certain claims in respect of matters which were outside the sub-contract. The Plaintiffs appealed.
The Plaintiffs filed affidavits in opposition to the Defendant's application, calling in question the fitness of the engineers named as arbitrators in their contract to decide upon the question in dispute in the action. The main points alleged were as follows: (1.) That the principal items in dispute were such that they would reflect discredit on the engineers, and shew negligence on their part; (2.) That circumstances had come to the Plaintiffs' knowledge which led them to the conclusion that the engineers were in collusion with the Defendant to throw expense on the Plaintiffs; but no specific facts were alleged; (3.) That the Plaintiffs had complained several times to the engineers of defective material supplied to them under the contract, but the engineers had treated their complaints as frivolous, and had approved and passed the materials; (4.) That the engineers had appointed an inspector of materials who was inefficient; (5.) That the engineers and the Defendant were jointly interested in promoting an underground railway in London.
The Defendant filed affidavits denying collusion with the engineers, and stating that the materials passed by the engineers were not defective, and that the inspector appointed by them was an efficient and impartial man. It appeared that the only matters in dispute alleged in the statement of claim which were not covered by the arbitration clause in the contract, related to some material called “decking,” which the Plaintiffs had taken to and removed from the works of the Phoenix Foundry Company at their own expense, and in respect of which they claimed £86 from the Defendant.
Renshaw, Q.C., and A. F. Peterson, for the Plaintiffs:—
The notice requiring the delivery of a statement of claim was an election by the Defendant that the action should proceed and the question at issue be decided by the Court. It was given under one of the Rules of the Supreme Court, 1883, Order XX., rule 1 (b), and was a formal step in the proceedings under sect. 4 of the Arbitration Act, 1889, and the Defendant cannot now retract his election: Adams v. CattleyF2; Clough v. London and North Western Railway CompanyF3; Scarf v. JardineF4; Chappell v. NorthF5. It is, therefore, now too late for the Defendant to apply to the Court to refer the matter in question to arbitration.
But supposing the application is not too late, it is not one which the Court, in its discretion, ought to accede to. The arbitrators named in the contract are the engineers of the company, and are, from this very position, disqualified from acting as arbitrators, and in judging of the quality of the material and the sufficiency of the work, they cannot help being biassed in favour of the company and of the Defendant, who, in the subcontract with the Plaintiffs, stands in the place of the company. But, beyond this, we shew by the affidavits which have been filed, that there are special circumstances in this case which incapacitates the engineers from acting as arbitrators. The complaints made by the Plaintiffs reflect upon the credit of the engineers, and they cannot be judges in their own cause. They have, moreover, already passed and approved most of the material which the Plaintiffs allege to be defective, and refused to listen to the Plaintiffs' complaints; they have, therefore, prejudged the question at issue in the action. There is also cause for suspicion that they were colluding with the Defendant, and were jointly concerned with him in another enterprise: Jackson v. Barry Railway CompanyF6; Nuttall v. Mayor of ManchesterF7; Lawson v. Wallasey Local BoardF8.
There is a further reason why this application should not be granted, namely, that the submission to arbitration in the contract does not cover the whole of the matter in question in the action. We may specially mention the dispute as to the decking. It is true that is comparatively a small matter, but it is sufficient to support the action, and the Court cannot stay the proceedings without deciding that point: Turnock v. SartorisF9.
[LINDLEY, L.J.:- We do not wish to hear counsel for the Defendant on the point of practice relating to the step in the proceedings.]
Warmington, Q.C., and Bramwell Davis, for the Defendant:—
The Plaintiffs cannot now complain of the engineers acting as arbitrators. When they entered into their contract they well knew who the arbitrators were to be, and they knew that they were also arbitrators in the previous contract between the Defendant and the company. They were acquainted with the high character borne by the engineers, and their great experience in their business, and were satisfied to trust them, as the Defendant had been in his contract. The engineers of large companies are usually men of eminence, and it is very often found convenient for both parties to agree to have them as arbitrators. The Plaintiffs cannot now object to their acting unless they can prove some mala fides or misconduct. They have proved nothing of the kind. The allegations of collusion are most vague and unreasonable, and are supported by no evidence. With respect to the charge of their having already passed materials which the Plaintiffs allege to be defective, it was within the scope of their duty as engineers to do so, and if they were acting bonâ fide it is no ground for objection against them. If the Plaintiff can now shew any defect in the materials, the arbitrators would be bound to reconsider their decision, and there is no ground for saying they would not be willing to do so: Jackson v. Barry Railway CompanyF10; Eckersley v. Mersey Docks and Harbour BoardF11. With respect to the claim for the decking, the amount of damage claimed is very small. If the matters not covered by the submission to arbitration formed the principal part of the cause of action the Court might hesitate to refer them to arbitration under the 4th section of the Arbitration Act; but here all the principal matters complained of are capable of being referred, and the action may well be stayed as to them, and proceed as to the small matters which remain, which would probably be easily settled between the parties.
Renshaw, in reply.
LINDLEY, L.J.: —
This is an appeal from the decision of Mr. Justice Kekewich, staying proceedings in this action, and in substance referring the matters in dispute to...
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