Taylor (David) & Son Ltd v Barnett Trading Company

JurisdictionEngland & Wales
JudgeLORD JUSTICE SINGLETON,LORD JUSTICE DENNING,LORD JUSTICE HODSON
Judgment Date04 March 1953
Judgment citation (vLex)[1953] EWCA Civ J0304-1
Date04 March 1953
CourtCourt of Appeal
David Taylor & Son, Ltd.
and

re The Arbitration Acts, 1889 to 1950

J.T. Barnett and E. Proper (trading as Barnett Trading Company, a firm)

[1953] EWCA Civ J0304-1

Before:

Lord Justice Singleton

Lord Justice Denning and

Lord Justice Hodson

In The Supreme Court of Judicature

Court of Appeal

Counsel for the Appellants: MR GILBERT BEYFUS, Q.C., MR SEBAG SHAW and MR S. BOLTON, instructed by Messrs Carters.

Counsel for the Respondents: MR R.F. LEVY, Q.C., and MR L. PEARL, instructed by Messrs Gale & Phelps.

LORD JUSTICE SINGLETON
1

On the 27th February, 1952, a contract was entered into between the Barnett Tranding Company, the sellers, and Messrs David Taylor & Sons, Ltd., as buyers. The contractual document is headed with the address and telephone numbers of the Barnett Trading Company, who describe themselves as general, produce merchants, importers and exporters. The contract number is at the head of the document 5130 S/B; it is addressed to the buyers, and it is in these terms: "Dear Sirs, We confirm having this day sold to you the following — Quantity and description — 10,000 (ten thousand) cases Irish stewed steak. Quality: — Price: 2/4d. (two shillings and fourpence) per 1b. (If the size of the can is smaller than price will be pro-rate) London or West Coast port, Ex. Wharf or Public Warehouse. L.D.P. Packing: Cases ea. Containing 48 × 16 oz tins. Packers label. Weights. Delivery Shipment April/May/June/July, 1952. Part shipments allowed. Payment: Nett cash against Delivery Order. Allowances. Remarks. Not for sale by retail."

2

There are certain conditions stated overleaf to which the contract is subject, but the only one which is material to this case is No. 9: "Any dispute arising out of this contract which cannot be settled by mutual agreement between the parties concerned, such dispute to be referred to arbitration in London in the usual and customary manner."

3

It is quite clear from the document itself and from what we have been told that this was a contract between wholesalers.

4

The Barnett Trading Company has a sole partner, Mr Jack Toby Barnett of 22, Harrow Lodge, St. John's Wood, who, in his Affidavit, describes himself as a merchant. He, or his firm, did not deliver the goods which ought to have been delivered under the contract.I suppose the reason for that was that the price had gone up; and as he did not deliver the goods a claim was made upon him by Messrs David Taylor & Son, Ltd., and in the ordinary way that claim, or the dispute which arose, was referred to Arbitration; two Arbitrators were appointed, one by each side; they met, and as they failed to agree they appointed an Umpire, and, as sometimes happens in cases of this nature, thereafter the Arbitrators became in a sense representatives of the respective parties, and the decision upon the dispute was left to the Umpire.

5

The umpire made an Award on the 21st August, 1952; it is quite a short document, and I shall it: "Whereas a dispute has arisen between Messrs David Taylor & Son Ltd. Of 3 St. Dunstan's Lane, London, E.C.3, hereinafter called the Buyers and Messrs Barnett Trading Company, St. Magnus House, Monument Street, London, E.C.3. hereinafter called the Sellers and the said Buyers and Sellers have agreed to submit such dispute to Arbitration And Whereas the Arbitrators, Messrs K. Mischeff and R.F. Newman having failed to agree, have appointed me, Arthur Cranfield Coltman, to act as Umpire. I hereby award as follows: — (1) that the said Sellers do pay to the said Buyer the sum of £11,000 (Eleven thousand pounds). (2) I direct that the costs of the Arbitration namely £34/13/-d. shall be paid by the Sellers. (Signed) A.C. Coltman. Dated the 21st August, 1952." That is the Award.

6

The gentleman who was called upon the act as Umpire is well known, and I have no doubt he was satisfied that the sellers had failed to make delivery; the price had gone up considerably, and he awarded that the sellers should pay to the buyers the sum of £11,000.

7

On the 26th August, that is, five days after theAward the buyer went before the Master seeking leave to enforce the Award; or, rather, notice was given upon that day. On the 1st September the Master heard that application, and he adjourned is so that the sellers could have an opportunity of moving to set aside the Award. Notice of Motion was served on the 1st October, 1952, and the Motion to set aside the Award was heard by the Lord Chief Justice on the 29th October. The Lord Chief Justice refused the Motion. Most unfortunately no Shorthandwriter was present in court at the time his judgment was delivered, so that we have not a complete of the judgment, and though Mr Beyfus and Mr Levy were agreed in part as to what the Lord Chief Justice said, they were not wholly agreed as to how he dealt with the second part of the case, to which I shall refer by-and-by. Yesterday afternoon it was ascertained that the solicitors for one of the parties had some note, not a complete note, oftaht which the Lord Chief Justice said, and we have copies of that before us now.

8

The Motion to set aside the Award was, so far as is material now, put on two grounds: First: "That the Award is bad on the face of it in that it incorporates by reference and purports to enforce the contract between the parties No. 5130 S/B dated 27th February, 1952, which contract is illegal under the provisions of a Statutory Instrument No. 1317 of 1951."

9

The Lord Chief Justice was of opinion that that submission failed; in other words, he said he had reached the conclusion that there was no substance in the contention that the Award, which I have read, was bad on the fact of it, and with that view of his I find myself in complete agreement.

10

The position was stated by Mr Justice Williams in the case of Hodgkinson v. Fernie many years ago inthis way: "The law has for many years been settled and remains so at this day, that, where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and fact… The only exceptions to that rule, are, cases where the award is the result of corruption or fraud, and one other, which thought it is to be regretted, is now, I think, firmly established, namely, where the question of law necessarily arises on the fact of the award, or upon some paper accompanying and forming part of the award. Though the propriety of this latter may very well be doubted, I think it may be considered as established." And in the case of Champsey Bhara & Company V. Jivraj Balloo Spinning and Weaving Company, Ltd., reported in 1923 Appeal cases at page 480, Lord Danedin at page 487 said: "An error in law on the face of the award means, in their Lordships' view, that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous."

11

Applying those tests, I find it quit impossible to say that this short Award is bad upon the face of it.

12

The second point which was raised is of a different character; it is that the Umpire misconducted himself in law in that he failed to take into account the illegality of the said contract.

13

Thus, the Applicants, the Appellants in this Court, set up that there was misconduct on the part of the Umpire in that he failed to take into account the illegality of the contract into which the parties had entered. It sounds rather unpleasant to say of an Arbitrator that he has misconducted himself, but asLord Justice Denning pointed out in the course of the argument, if an Arbitrator assumes an excess of authority he may be guilty of misconduct in the Arbitration, and I think I am right in saying that Mr Levy agreed that if an Arbitrator knows, or recognizes, that a contract is illegal, and thereafter proceeds to make an Award upon a dispute arising under that contract, he is guilty of that which is in law misconduct.

14

The circumstances under which this question arises are set out in the Affidavit sworn by Mr Jack Barnett, and it two documents to which I think it necessary to refer. It is necessary to look at the contract, and it is necessary, too, to look at least one Order or Statutory Instrument.

15

In the case of Smith, Coney, and Barrett V. Becker, Gray & Company, reported in Volume 112 of the Law Times Reports at page 914, an effort was made to obtain an injunction to prevent the other party to a contract going to Arbitration on a dispute which had arisen, and one of the grounds on which the action was brought for an injunction was that the contract between the parties was an illegal contract. The attempt to obtain an injunction failed by reason of the fact that the Court of Appeal upholding the judgment of Mr Justice Warrington (as he then was) so decided. Mr Justice Warrington, in the course of his judgment at page 916 of the report, said this: "I think that the plaintiffs in order to succeed must show that the contract for arbitration with the submission was invalid. For that purpose I think that I am bound to look at the date at which the contract was made, and to see whether at that date there is any reasonable ground for saying that the contract was invalid. Was that so? For thatpurpose it is necessary to turn to the contract and see what it really is."

16

The Master of the Rolls, Lord Cozens-Hardy, in his judgment said: "The plaintiffs in this action sought a declaration that the contract which I have just read was illegal by reason of the war. Of course, if it was illegal, then any question of arbitration under the contract would fall with it."

17

In an old case which was cited to us yesterday, the case of Wohlenberg V. Langeman, which is reported in 6 Taunton's Reports at page 251, Sir Vicary...

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