Sellar v Highland Railway Company (no 2)

JurisdictionScotland
Judgment Date19 July 1918
Date19 July 1918
Docket NumberNo. 82.
CourtCourt of Session
Court of Session
1st Division

Lord Sands, Lord President, Lord Mackenzie, Lord Skerrington, Lord Johnston.

No. 82.
Sellar
and
Highland Railway Co.

ArbitrationArbiterDisqualification on ground of interestShareholder in incorporated companyReduction of oversman's awardPersonal barWaiver.

ArbitrationExpensesDisqualification of arbiterReduction of awardExpenses of the arbitration proceedings.

In an arbitration between the proprietor of certain fishings and a railway company, the arbiters disagreed, and the reference devolved upon the oversman. After the oversman had issued proposed findings, the proprietor of the fishings discovered that the arbiter appointed by the railway company was a holder of ordinary stock in the company. The proprietor thereupon gave notice to the company that, owing to the disqualification of the arbiter, he would not hold himself bound by the award; but, without prejudice, he lodged representations (which had already been prepared) against the proposed findings, and the oversman proceeded to issue his final award.

In an action at the instance of the proprietor of the fishings for reduction of the award the Court granted decree of reduction, holding (1) that the arbiter was disqualified, although his pecuniary interest in the result of the arbitration was negligible in amount, and although his holding was in stock of a company incorporated for the service of the public; (2) that the disqualification of the arbiter vitiated the award of the oversman; and (3) that the pursuer was not barred from insisting in the action by having lodged representations against the proposed findings.

Held, further, that the party appointing the disqualified arbiter was liable to the other party in the expenses incurred by him in the reference.

By submission dated 23rd December 1916 and 12th and 13th January 1917 Colin Reid Sellar, proprietor of certain salmon fishings in the River Findhorn, which are crossed by the line of the Highland Railway Company, and the Highland Railway Company referred to arbitration, subject to the provisions anent arbitrations of the Lands Clauses Consolidation (Scotland) Act, 1845,* the compensation, if any, to be paid by the Railway Company for loss and damage caused to the proprietor of the fishings by certain operations of the Railway Company. Mr Sellar appointed George Davidson,

Aberdeen, as arbiter, and the Railway Company appointed Charles Pullar Hogg, civil engineer, Glasgow. The arbiters having accepted office appointed John Wilson, Esquire, K.C., Sheriff of Perthshire, to be oversman in the reference, which office Mr Wilson accepted. After a proof and certain other procedure, on 3rd August 1917 the arbiters, having differed in opinion, devolved the submission on the oversman. On 22nd August 1917 the oversman issued his proposed findings and allowed parties to lodge representations against them.

On 28th September 1917 Mr Sellar's agents wrote the following letter to the solicitor of the Highland Railway Company:

28th September 1917.

Findhorn Arbitration.

Dear Sir,It has just now come to our knowledge that one of the Tribunal vizt. Mr C. P. Hogg, is and was disqualified from acting as Arbiter on account of his being a partner of your Company, holding a large block of its Ordinary Stock, which fact although known to the Respondents was not disclosed to the Claimant and the other members of the Tribunal. Our Counsel advise us that such a disqualification affecting one member of the Arbitration Tribunal is sufficient in law to vitiate the decision of the Oversman. We have sent an intimation to each member of the Tribunal accordingly and that the Claimant will not hold himself bound to recognise the validity of any Award which may be pronounced and

reserves to himself the right of taking such steps as he may be advised in the matter.

Before the above came to our knowledge we had prepared a Representation against the Proposed Findings and we shall let it go in. It will at least shew that our client is dissatisfied with these. We have to-day sent this Representation to the Clerk and we now enclose a copy for your use, which please acknowledge.Yours faithfully,Paull & Williamsons.

On the same date Mr Sellar's agents lodged with the clerk to the reference a representation against the proposed findings, with a covering letter, which, after setting forth their views as to the disqualification of Mr Hogg, proceeded thus,Before becoming aware of the above we had prepared a Representation against the Proposed Findings which we now enclose. We have sent a copy to the Railway Company along with our letter to them on the above. The only modification of its terms which we have made in consequence of the above discovery is that we have deleted a formal request to have the case re-heard on the Notes of Evidence, that appearing to be the only way of satisfying the Oversman that in some material respects his impression of the evidence is wrong. While we do not now ask to have that course taken we shall without prejudice do our part should he order such re-hearing.

On 6th October 1917 the oversman issued his decreet-arbitral, and on 5th December 1917 Mr Sellar brought an action against the Highland Railway Company, Charles Pullar Hogg, George Davidson, and John Wilson, concluding for reduction of the decreet-arbitral and for payment of 628, 14s. 11d. by the defenders the Highland Railway Company to the pursuer. The Highland Railway Company alone appeared to defend the action.

Besides other grounds, the pursuer sought reduction on the ground of the disqualification of the arbiter appointed by the Railway Company. With regard to this ground his averment was as follows,(Cond. 8) After the oversman had issued his proposed findings, but before the pursuer's representations against them had been lodged, the pursuer for the first time discovered that the said Charles Pullar Hogg, during the arbitration proceedings, was the holder of 3700 ordinary stock of the said Company, and was thus disqualified from acting as arbiter in the said reference, in respect that he had a direct pecuniary interest in the result. This circumstance was not previously known to the pursuer, and it was not disclosed to the other members of the arbitration tribunal. Had the pursuer been aware of this circumstance he would not have proceeded with an arbitration in which the said Charles Pullar Hogg occupied the position of arbiter. On Mr Hogg's disqualification coming to the pursuer's knowledge, the pursuer's agents at once, on 28th September 1917, communicated with the Railway Company, the arbiters and oversman, and the clerk to the reference, and intimated that they would not be bound by the oversman's award. The pursuer's said representations were lodged on said 28th September 1917 and they were lodged without prejudice to the pursuer's right to object to the award on the ground of Mr Hogg's disqualification. The pursuer's claim was greatly prejudiced by the influence which Mr Hogg exercised over the mind of the oversman. The arbiters and oversman visited the locus together, and sat together during the whole proceedings, both evidence and speeches, which extended altogether over five days. The matters of fact in dispute between the parties to the said reference were entirely matters of practical engineering and practical salmon-fishing, and the pursuer believes and avers that the oversman in coming to his decision was largely influenced by the views of Mr Hogg, who is a member of the engineering profession. The oversman would not otherwise have entirely disregarded the strong and independent engineering evidence adduced for the pursuer. The said decreet-arbitral is invalid and is not binding on the pursuer, in respect that one of the members of the tribunal was disqualified from acting as an arbiter in the said reference. With reference to the averments in answer the pursuer has no knowledge and makes no admission as to the circumstances attending the appointment and acceptance of office by Mr Hogg or as to the price or value of his shares of the defending Company.Quoad ultra the averments in answer are denied.

The defenders averred in answer, inter alia;(Ans. 8) Admitted that during the said arbitration the said Charles Pullar Hogg was a holder of ordinary stock of the Highland Railway Company. Not known when the pursuer became aware of this fact. Quoad ultra denied. Explained that the amount so held by him was 3700, that the price paid by him for the said stock was 1529, 5s., that the value thereof at the time of the arbitration was about 1100, and that his whole personal interest in the results of the arbitration was of the most trifling description. Explained further that the said Charles Pullar Hogg was appointed by these defenders entirely on account of his professional standing and reputation and without having in view the fact that he was a shareholder and that at the time of his acceptance of office as arbiter and during the said proceedings it had escaped the recollection of the said Charles Pullar Hogg that he was a shareholder and that he applied himself honestly and without prejudice or bias to the duties of the said office. Quoad ultradenied.

The pursuer pleaded, inter alia;(1) The defender Charles Pullar Hogg being disqualified by personal interest from acting as arbiter in the said reference, the said decreet-arbitral is invalid and falls to be reduced.

The compearing defenders pleaded, inter alia;(2) The said decreet-arbitral not having been pronounced by the said Charles Pullar Hogg, the pursuer's first plea in law should be repelled. (3) These defenders being incorporated by Act of Parliament, the said Charles Pullar Hogg was not disqualified from acting as their arbiter on account of his being a holder of their stock, and the pursuer's first plea in law should accordingly be repelled. (4) Separatim. In any event the pursuer having lodged representations against the proposed findings of the oversman in...

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3 cases
  • Paul Clancy V. Robin Dempsey Caird
    • United Kingdom
    • Court of Session
    • 4 April 2000
    ...interest is only discovered after decree had become final, the decree may be reduced: Sellar v The Highland Railway Company & Others 1918 S.C. 838, 1919 S.C. (H.L.) 19. There is a remedy, therefore, either in the course of the proceedings in which the irregularity occurs, or retrospectively......
  • Clancy v Caird
    • United Kingdom
    • Court of Session (Inner House - Extra Division)
    • 4 April 2000
    ...(4th) 132 Ringeisen v Austria (No 1)HRC Series A No 13 (1971); 1 EHRR 455 Russell v DicksonSC 1997 SC 269 Sellar v Highland Railway CoENR 1918 SC 838; 1919 SC (HL) 19 Sramek v AustriaHRC Series A No 84 (1984); 7 EHRR 351 Starrs v Ruxton; Ruxton v StarrsSC2000 JC 208 Stieringer v Germany App......
  • Sellar v Highland Railway Company
    • United Kingdom
    • House of Lords
    • 24 January 1919
    ...Dimes v. Proprietors of the Grand Junction Canal, (1852) 3 H. L. 759, followed. (In the Court of Session, 16th May and 19th July 1918—1918 S. C. 838) The defenders appealed to the House of Lords. The case was heard on 23rd and 24th January 1919. In addition to an argument that the possessio......

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