Whitworth Street Estates (Manchester) Ltd v James Miller and Partners Ltd

JurisdictionUK Non-devolved
JudgeLord Reid,Lord Hodson,Lord Guest,Viscount Dilhorne,Lord Wilberforce
Judgment Date03 March 1970
Judgment citation (vLex)[1970] UKHL J0303-1
CourtHouse of Lords
Date03 March 1970
James Miller & Partners Ltd.
Whitworth Street Estates (Manchester) Ltd.

[1970] UKHL J0303-1

Lord Reid

Lord Hodson

Lord Guest

Viscount Dilhorne

Lord Wilberforce

House of Lords

Upon Report from the Appellate Committee, to whom was referred the Cause James Miller & Partners Limited against Whitworth Street Estates (Manchester) Limited, that the Committee had heard Counsel, as well on Tuesday the 27th, Wednesday the 28th and Thursday the 29th, days of January last, as on Monday the 2d day of February last, upon the Petition and Appeal of James Miller & Partners Limited, of 18 George Street, Edinburgh 2, Scotland, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 29th of January 1969, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Whitworth Street Estates (Manchester) Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 29th day of January 1969, complained of in the said Appeal, be, and the same is hereby. Reversed, and that the Judgment of the Honourable Mr. Justice Eveleigh, of the 31st day of October 1968, thereby Set Aside, be, and the same is hereby, Restored: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Court of Appeal, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Queen's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

Lord Reid

My Lords,


The Appellants are building contractors whose registered office is in Scotland. The Respondents are an English company who owned premises in Dumbarton which they wished to convert into a bonded warehouse. They accepted the Appellants' tender for the work and the contract made by the parties was in the form published by the Royal Institute of British Architects. This contract contained an arbitration clause and when disputes arose the parties, having been unable to agree, applied in terms of this clause to the President of the Institute to nominate an arbitrator. He nominated Mr. Underwood, a Fellow of the Institute, who practised in Glasgow. Mr. Underwood then, by an Interlocutor in Scots form dated 19th January, 1967, appointed a Glasgow solicitor to be Clerk in the submissions. Thereafter all the proceedings in the arbitration were in Scots form, Scots counsel and solicitors being employed by both parties. After all the evidence had been heard counsel for the Respondents asked the arbiter to state a case for the decision of the English High Court. The arbiter refused to do so on the ground that this was a Scottish arbitration. The Respondents then on 28th June, 1968, applied to the High Court for a direction to the arbitrator to state his award in the form of a special case. Mr. Underwood did not do so: he issued his final award on 10th December, 1968.


The question in this appeal is whether this was a Scottish or an English arbitration. If it was governed by the law of Scotland the arbiter acted correctly. Under Scots law an arbiter is the final judge both of fact and law, and Mr. Underwood was entitled and indeed bound to issue his final award. But if the arbitration was governed by the law of England he was bound to state a case in order that questions of law which had arisen might be decided by the English Court.


Two questions were argued: first, whether the proper law of the parties' original contract was Scots or English law, and secondly, if the proper law was English law, was the arbitration nevertheless governed by the law of Scotland? I shall first consider what was the proper law of the contract.


The general principle is not in doubt. Parties are entitled to agree what is to be the proper law of their contract, and if they do not make any such agreement then the law will determine what is the proper law. There have been from time to time suggestions that parties ought not to be so entitled, but in my view there is no doubt that they are entitled to make such an agreement, and I see no good reason why, subject it may be to some limitations, they should not be so entitled. But it must be a contractual agreement. It need not be in express words. Like any other agreement it may be inferred from reading their contract as a whole in light of relevant circumstances known to both parties when they made their contract. The question is not what the parties thought or intended but what they agreed.


It has been assumed in the course of this case that it is proper, in determining what was the proper law, to have regard to actings of the parties after their contract had been made. Of course the actings of the parties (including any words which they used) may be sufficient to shew that they made a new contract. If they made no agreement originally as to the proper law, such actings may shew that they made an agreement about that at a later stage. Or if they did make such an agreement originally such actings may shew that they later agreed to alter it. But with regard to actings of the parties between the date of the original contract and the date of Mr. Underwood's appointment, I did not understand it to be argued that they were sufficient to establish any new contract, and I think they clearly were not. As I understood him, counsel sought to use those actings to shew that there was an agreement when the original contract was made that the proper law of that contract was to be the law of England. I must say that I had thought that it is now well settled that it is not legitimate to use as an aid in the construction of the contract anything which the parties said or did after it was made. Otherwise one might have the result that a contract meant one thing the day it was signed, but by reason of subsequent events meant something different a month or a year later.


The facts mainly relied on to shew that there was an agreement that English law should be the proper law of this contract are that the R.I.B.A. form of contract is in English form and that there was in common use at the time a Scottish form of contract drawn up by a different professional body. What reason, then, could there be for adopting the English form other than an intention that the law of England should be the proper law of this contract? But there could be a very good reason. If an English architect is appointed to act in any building contract he may well prefer that the contract should be in a form with which he is familiar, because any form of building contract is exceedingly complicated. And the parties may accede to his wish without giving a thought to the question of proper law. Indeed this is what seems to have happened in the present case. So I cannot find any agreement as to what should be the proper law of the contract, and I must consider how the law will determine that question.


At one time it was thought that the problem could be solved by means of an implied term in the contract. But this creates difficulties similar to those discussed in the more recent authorities dealing with frustration, and I think that the better view now is to apply a more objective test. Two slightly different tests have been formulated—"the system of law by reference to which the contract was made or that with which the transaction has its closest and most real connexion" (per Lord Simonds in Bonython v. Commonwealth of Australia [1951] A.C.201 at page 219) and "with what country has the transaction the closest and most real connection" (per Lord Denning in United Railways of Havana [1961] A.C. 1007 at page 1068). It has become common merely to refer to the system of law but I think that the two tests must be combined for all are agreed that the place of performance is a relevant and may be the decisive factor, and it is only in a loose sense that the place of performance can be equated to the system of law prevailing there. In Bonython's case the question was the meaning of "pound sterling", the choice being between its meaning according to the law of England and its meaning according to the law of Queensland. So it was quite accurate to refer only to the two systems of law. But in the United Railways of Havana the decisive factor was the place of performance and in the choice between Philadelphia and New York nothing turned on any difference between the systems of law in the Commonwealth of Pennsylvania and the State of New York.


In the present case the form of the contract may be said to have its closest connection with the system of law in England but the place of performance was in Scotland and one must weigh the relative importance of these two. No other factor has any real weight in this case.


So I must first see how closely the contract is connected with the law of England. In appearance it is in English form but some of its provisions can only refer to the law of Scotland. Clause 4 requires the contractor to comply with Acts of Parliament and bye-laws. As all the work was to be done in Scotland that can only mean Scottish legislation. Clause 18 requires the contractor to indemnify the employer against claims or proceedings arising under any statute or at...

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