Scottish Court of Session Decisions

Miss Jane Elizabeth Gibson and others, all residing at Kair House, Fordoun, Kincardine, lessors of the farm and lands of Shepherdshaugh, pursuers, brought an action against Alexander Fotheringham, farmer, residing at Pitnamoon, Fordoun, Kincardine, formerly tenant of the farm and lands of Shepherdshaugh; Charles Cargill, farmer, Mains of Pitarrow, by Laurencekirk; John Milne, auctioneer, Brechin; and James Ebenezer Esslemont, farmer and valuator, residing at Little Barras by Stonehaven, defenders, for reduction of (first) an award, dated 1st August 1913, issued by the defender James Ebenezer Esslemont as oversman, acting under minute of submission between the defender Alexander Fotheringham and the pursuers, dated 21st and 23rd May 1913, and (second) an award, dated 8th January 1914, issued by the defender the said James Ebenezer Esslemont as oversman foresaid. Alexander Fotheringham was the only compearing defender.

The pursuers pleaded, inter alia—“(1) The reference not having been devolved upon the oversman by a formal minute of devolution, or other writing under the hand of the arbiters, et separactim the arbiters not having differed upon any question falling within the scope of the reference, no part of the reference devolved upon the oversman, and he had no power or authority to intervene in the reference, and to execute and issue the pretended awards complained of, and the same accordingly fall to be reduced as concluded for.”

The defender pleaded, inter alia—“(3) The awards libelled being within the powers conferred upon the arbiters and oversman, and the procedure in the arbitration having been in all respects regular and proper, the defender is entitled to absolvitor, with expenses.”

The action was conjoined with an action by Alexander Fotheringham for payment of a sum found due under the first award against the pursuers in the action of reduction.

The facts are given in the opinion of the Lord Ordinary ( Hunter), who on 22nd April 1914, after a proof led, assoilzied the defenders in the action of reduction and granted the decree sought in the action for payment.

Opinion.—“In the action of reduction the pursuers seek to set aside two awards issued by Mr James Ebenezer Esslemont as oversman acting under a minute of submission between the defender Alexander Fotheringham and them. Prior to Whitsunday 1913 the said defender was tenant under the pursuers of the farm and lands of Shepherdshaugh, in the county of Kincardine,

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his tenancy coming to an end as regards the houses, farm offices, pasture and fallow land in preparation for the green crop, at that date, and as to the remainder of the farm at the separation of the hay and grain crops of that year.

“In terms of the defender's lease it was provided that the tenant should leave, and the landlord or incoming tenant should take, at the valuation of arbiters mutually chosen, or their oversman—( First) The work performed prior to the term of removal from the houses and others on the fallow ground in preparation for the green crop; ( Second) The whole of the manure at the said term so far as made subsequent to the sowing and proper manuring of the preceding green crop, provided it shall not exceed the quantity usually on the farm about the term of Whitsunday; ( Third) The machinery of the threshing-mill, but not exceeding £50, and if below that sum then only its actual worth; ( Fourth) All the fencing so far as belonging to the said Alexander Fotheringham; ( Fifth) The one-half of the grain and straw as the crop stands in the fields about the middle of August, but under deduction of a reasonable allowance for cutting, harvesting, and stacking; and ( Sixth) The value to the ingoing tenant of the grass of two years old or upwards, in so far as such grass shall exceed 40 acres in extent but not exceed 80 acres.

“By minute of submission, dated 21st and 23rd May 1913, the pursuers and the defender Fotheringham nominated and appointed the defenders Charles Cargill and John Milne as arbiters, mutually chosen, to value the said subjects. By minute dated 9th June 1913, endorsed on the minute of submission, the arbiters appointed the defender Mr Esslemont to be their oversman.

“The awards issued by Mr Esslemont are challenged upon the ground that there was no valid devolution of the reference upon him. The pursuers allege that there was neither a formal nor real difference of opinion between the arbiters. They also maintain that so far as the first award is concerned, it was, as regards certain matters dealt with, ultra fines compromissi.

“The facts as proved are briefly these. On 26th May 1913 the arbiters had a meeting on the ground with a view to fixing the value of the subjects. As is usual in such references, they were accompanied by the oversman. It had been agreed between parties that in addition to the subjects mentioned in the minute of submission, the arbiters should value the grates in the farm-house and two small sheds at the cottar-house. These were the matters that were first considered. Thereafter the arbiters and oversman went over the farm and noted the various fields and fences. The value of the grass, the machinery at the mill, and the dung was in turn considered. There is a material discrepancy in the evidence given on the two sides as to the part played by the oversman on this occasion. Mr Milne says that while he and Mr Cargill started by each giving a different figure as the value of the subjects dealt with, they always agreed upon figures on the suggestion of the oversman. On the other hand, Mr Cargill says that he and his co-arbiter agreed upon nothing, and that in each case of difference of opinion as to price it was left to the oversman to fix a price, and he did so. I think that the account given by Mr Cargill is more in accordance with what actually occurred than is the account given by Mr Milne. The oversman, Mr Esslemont, who appeared to me to give his evidence fairly and candidly, explained that in agricultural references as to the value of the subjects on a farm, the oversman, without disclosing any figure as his own, may make a suggestion to the arbiters which they accept as an agreed-on figure; but that in this case the prices fixed by him were his own independent figures and were not accepted by the arbiters. I understood from his evidence that in such references, even if the oversman is left to fix the price of one subject, the arbiters proceed to consider the other subjects with a view to seeing if they can agree upon their values. From awards exhibited to me by the parties in the course of the proceedings it appears to be not unusual for both arbiters and oversman to sign the award, though, in view of the decision in the case of Davidson, 1908 S.C. 350, 45 S.L.R. 142, this practice is not unattended with risk.

“After the meeting of the 26th May 1913, the arbiters and oversman had several meetings upon the ground. These were devoted to considering the extent of the fencing belonging to the outgoing tenant, the ownership of the mill-wheel, and the amount of dung usually on the farm. Information was got upon these points principally from the parties themselves in an informal way. A considerable amount of time was being wasted without any progress being made, and for this I think Mr Milne was largely responsible. Accordingly on 1st July 1913 Mr Cargill intimated to his co-arbiter that as they had differed in opinion and failed to pronounce a finding, he was applying to the oversman to act in the submission. In terms of this intimation he sent a request to the oversman to act. Mr Milne took up the position that he would not agree to devolve the reference upon the oversman and that he would resist any interference on his part. On 7th July Mr Esslemont wrote to Mr Milne saying he was prepared to act on Mr Cargill's request, and stating that he would be on the ground on Saturday, 12th July, to hear parties on disputed points. About this time agents were consulted and acertain amount of correspondence passed. On 10th July Mr Reed, who was acting for the defender Mr Fotheringham, wrote Mr Cargill saying that he had seen Mr Ferguson, who acts for the pursuers, that 12th July would not be a suitable date for them, and suggesting an alteration of the date. On 14th July Mr Esslemont wrote to Mr Ferguson as agent for the pursuers asking him to state definitely within four days if he wished a proof on the subjects of valuation, and if so, on what points, and intimating that if he got no notice that

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proof was desired he would proceed in terms of the submission. A similar notice was sent to the agent of the compearing defender. On 15th July Mr Ferguson wrote to Mr Cargill asking him to fix a meeting so that he might learn on what points the arbiters had differed, and what is said to be devolved upon Mr Esslemont. On the same date he replied to the latter gentleman that he did not recognise him as oversman and that any award issued by him would be taken exception to. Mr Esslemont maintained that he was entitled to act, and on 1st August issued his award dealing with the valuation of the subjects of the reference other than the grain crop. The prices fixed in the award are those which he had intimated to the parties as his valuation at the time when the arbiters stated that they disagreed and desired him as oversman to state his price. The subjects included are those which, on the information submitted at the various meetings on the ground, the oversman considered fell within the reference.

“The valuation of the grain crop had, by the provisions of the lease and of the minute of submission, to be made about the middle of August. Correspondence passed between the agents of parties as to fixing a date for a joint meeting at the farm. After a certain amount of procrastination, Mr Milne on 20th August wrote to Mr Cargill, saying—‘I am quite ready to fix a day for the valuation, but before doing so it will be necessary for us to appoint a clerk to the reference seeing there has been so much irregularity up to the present, and that we have still to issue an award not only for the half of the grain crop but for the whole of the other articles submitted to us which were valued by us at the term of Whitsunday.’ The appointing of an agent to act as clerk is unusual and unnecessary in such a reference as that on which Mr Cargill and Mr Milne were engaged. On 21st August 1913 Mr Cargill, although expressing the view that a clerk was unnecessary, said—‘If, however, you desire to have a clerk appointed, I am willing that any solicitor in Kincardineshire be nominated, but I think it right to state now, to save any misunderstanding, that I decline to open up again the question of the Whitsunday valuations.’ On 23rd August he also intimated that as Mr Milne had failed to make an appointment for a joint inspection of the grain crop, he had personally examined the crop and arrived at certain valuations, which he stated. On the same date Mr Milne wrote that he agreed to appoint Mr Mitchell as clerk to the reference, and saying that he would meet his co-arbiter. A meeting took place on the 28th August, On the request of Mr Milne, Mr Mitchell attended this meeting. There was no necessity for his being present. Mr Milne, though agreeing with Mr Cargill as to the fields that were to be taken over by the landlord, would not proceed with the valuation unless Mr Cargill put the submission in the hands of Mr Mitchell as clerk to the reference. To this Mr Cargill objected, as the oversman's award upon the Whitsunday valuations was appended to the document. By this time the award had been delivered to the defender Fotheringham, and I think that the request of Mr Milne was in the circumstances unreasonable. After further communication with Mr Milne, Mr Cargill wrote to Mr Esslemont, the oversman, on 1st September, requesting him, in view of the arbiters having failed to agree as to the value of the half of the grain crop to be taken over by the proprietors, to issue an award fixing the value. Mr Esslemont seems to have made ah independent examination of the fields on the 4th September and fixed the valuation. The fields selected by the proprietors had previously been pointed out to him by both arbiters. His award was not actually issued until 8th January 1914. Nothing in the proof suggests to my mind that Mr Esslemont acted other than fairly and impartially in a position which Mr Milne's attitude rendered unnecessarily difficult and trying. I do not, in the circumstances of this case, attach importance to Mr Esslemont before issuing his awards asking for and getting an undertaking from Mr Reed, as agent for Mr Fotheringham, to keep him free of costs in connection with any proceedings in consequence of his issuing his awards as requested.

“Mr Milne is now tenant of Shepherdshaugh. He has consumed or is in possession of practically all the subjects that fell to be valued, and for the price of which the outgoing tenant has until now received no payment. If the awards made by Mr Esslemont are set aside it will be extremely difficult, if not impossible, for other arbiters or oversman to arrive at a fair valuation of the subjects. I should not, however, allow this circumstance to weigh with me if the pursuers have made out a case for reduction.

“The pursuers did not in argument insist on the first part of their first plea-in-law that a formal minute of devolution or other writing was necessary in order to entitle the oversman to act. It has been settled by the cases of Colquhoun, July 27, 1784, 2 Pat. 626, and Dick v. Inglis, November 27, 1907, 15 S.L.T. 615, that where there is a written appointment of an oversman it is not necessary that the devolution upon him should be in writing. There must, however, be evidence that the arbiters have applied their minds to the subject of reference, and have differed in opinion. The inference I draw from the proof is that there was such difference of opinion in this case. I had most difficulty with the question of the grain crop, but I think the opinion expressed by Lord Salvesen in the case of Dick is consistent with and supports the view I take that Mr Milne's silence after Mr Cargill's communication to him of the figures he had arrived at justified the latter gentleman in holding that a difference of opinion had arisen and in referring the matter to the oversman.

“It was contended for the pursuers that there was no room for a partial devolution, the arbiters being bound to make a partial award so far as they agreed, and quoad ultra to devolve everything upon the oversman. I think that there were informalities

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about the procedure in this case which would or might have invalidated a formal reference. In the case of Nivison, November 22, 1883, 11 R. 182, 21 S.L.R. 104, however, Lord Young, dealing with valuation by arbiters on the termination of a lease, said—‘No formalities require to be observed by two farmers in valuing a crop, or by a third who is competently called in to decide where they differ. All the parties here desired or bargained for was the intelligent opinion of two skilled persons, and if they differed then the decision of another skilled man.’ The pursuers founded upon the decision in the recent case of Davidson, 1908 S.C. 350, 45 S.L.R. 142, and particularly upon Lord Ardwall's opinion therein. The ground of judgment in that case, where an award was set aside, was that the arbiters had not determined the question submitted to them. The technical grounds upon which Lord Ardwall thought the award fell to be reduced, with one exception ( i.e., the signing of the award by the two arbiters and the oversman), were not approved by the Inner House. Lord Low, at 1908 S.C. 367, 45 S.L.R. 153, said—‘The submission was substantially one for valuation, and in such a case if it appeared that the parties had obtained the honest opinion of the gentlemen selected upon the questions submitted to them, I should not regard mere irregularities of procedure as being sufficient to nullify the award.’ In the present case I think that the parties have obtained the honest opinion of the oversman on the value of the subjects after the arbiters had failed to agree. I also think that what I may describe as the in-and-out method of referring to the oversman from time to time as differences arose between the arbiters, may be irregular procedure in a formal reference, but is not of such materiality as to invalidate a valuation under a lease.” [ His Lordship then dealt with the pursuers' contention that the first award was ultra fines compromissi.]

The pursuers in the action of reduction reclaimed, and argued—(1) The parties having adopted the form of a formal reference were bound to follow the rules which applied to formal references— Davidson v. Logan, 1908 S.C. 350, per Lord Justice-Clerk (Kingsburgh) at 369, 45 S.L.R. 142, at 154. Dick v. Inglis, November 27, 1907, 15 S.L.T. 615, merely decided that a written minute of devolution was not necessary for the validity of an award. M'Gregor v. Stevenson, May 20, 1847, 9 D. 1056; Paterson & Son, Limited v. Corporation of Glasgow, July 29, 1901, 3 F. (H.L.) 34, 38 S.L.R. 855; and Nivison v. Howat, November 16, 1883, 11 R. 182, 21 S.L.R. 104, were different, because in these cases the arbitrations were informal. (2) The rules which applied to formal references had been broken, inasmuch as, assuming what was contended for by the appellants, viz., that there was no difference of opinion between the arbiters on any of the three important dates, 26th May, 1st July, and 1st September, the devolution to the oversman was incompetent, because a devolution was only competent where there was a sufficient difference between the arbiters— Colquhoun v. Corbet, July, 27, 1784, 2 Pat. 626; Frederick v. Maitland & Cunningham, July 7, 1865, 3 Macph. 1069; Davidson v. Logan, cit.; Bell's Arbitration (2nd ed.) sec. 353; Russell's Arbitration (9th ed.) p. 180. (3) Alternatively, assuming that there was a difference of opinion on 1st July and also on 1st September, although not on 26th May, the oversman's award was invalid, because it dealt with matters which had been agreed upon on 26th May, and it was incompetent to devolve matters which had been agreed upon. That was a necessary corollary of the principle that there could only be a devolution where there was a difference. (4) Alternatively, assuming that there was a difference of opinion on 26th May, the devolution having once been made, it was incompetent for the arbiters to resume without special powers to do so— Lang v. Brown, May 8, 1855, 2 Macq 93, per Lord Cranworth, L.C., at 95. (5) The appellants had no other remedy than to bring the present case— Marshall v. Edinburgh and Glasgow Railway Company, March 26, 1853, 15 D. 603; Forbes, &c. v. Underwood, January 22, 1886, 13 R. 465, 23 S.L.R. 324, disapproving Sinclair v. Fraser, July 19, 1884, 11 R. 1139, 21 S.L.R. 768.

Argued for the respondent—(1) The procedure in an agricultural reference was not so strict as in a formal reference. Before the Court would set aside an oversman's award there must be substantial injustice— M'Gregor v. Stevenson, cit., per Lord President (Boyle) at 1059; Paterson & Son, Limited v. Corporation of Glasgow, cit., per Lord Robertson at 3 F. (H.L.) 40, 38 S.L.R. 859; Davidson v. Logan, cit., per Lord Low at 1908 S.C. 366, 45 S.L.R. 152, and Lord Stormonth Darling at 1908 S.C 368, 45 S.L.R. 153. (2) The oversman did not intervene until he was aware that the arbiters had differed, and by 30th June there was a difference of opinion between the arbiters regarding the value, ownership, and quantity of the dung sufficient to entitle the oversman to act. The disagreement was as great as it was in Nivison v. Howat, cit. Whenever there was a sufficient disagreement between the arbiters the jurisdiction of the oversman emerged, and it was not necessary that the arbiters should take the initiative by submitting the matter to him— Middleton v. Chalmers, June 9, 1721, Rob. 391; Dick v. Inglis, cit., per Lord Ordinary (Salvesen) at 616; Sinclair v. Fraser, cit.; in re Tunno & Bird, 1833, 5 B. & A. 488; Winteringham v. Robertson, 1858, 27 L. J. (Ex.) 301, per Watson, B., at 304; Cudliff v. Walters, 1839, 2 Moo. & R. 232. (3) Even if the arbiters were in agreement on certain matters on 26th May, that fact did not disentitle the oversman from issuing an award on 1st July which decided the matters still in dispute and at the same time embodied the previous decisions of the arbiters— Nivison v. Howat, cit. (4) A devolution on specific points from time to time was competent, because such a devolution merely consisted of a number of partial devolutions, and partial devolutions were competent— Davidson v. Logan, cit., per Lord Ordinary (Ardwall)

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at 1908 S.C. 358, 45 S.L.R. 146; Nivison v. Howat, cit., per Lord Craighill at 11 R. 191.

At advising—