Scottish Court of Session Decisions

In this action David Riddell of Auchenback, Paisley, sued the Lanarkshire and Ayrshire Railway Company for, inter alia, £595, 10s. 7d., being his expenses in a statutory arbitration by which the defenders had acquired about six acres of his land for the purposes of their railway.

The defenders pleaded that they were not liable in the expenses of the reference, in respect that the sum tendered by them to the pursuer exceeded the sum awarded by the oversman.

The facts leading up to the action were as follows:—On 8th July 1898 the defenders served on the pursuer a notice to treat for the purchase of his land. On 9th August they entered upon the land, and by written agreement dated 31st August they undertook to “pay interest at 5 per cent. per annum on the amount of his compensation when ascertained or agreed on from the date when possession was taken.”

While parties were arranging for the arbitration the defenders, by tender dated 23rd July 1901, offered to the pursuer's agents £1300 sterling “in full of all your client's claims of every description in respect of his right and interest as proprietor in the land … taken from him by this Railway Company.” On 26th July the pursuers' agents acknowledged receipt of the tender, and made a counter proposal stating the pursuer's willingness to accept £1500 “in full of his claims against your company for ground acquired by them, interest at 5 per cent. to be paid on said sum from the date of the service of the notice to treat, my client to be relieved of the whole expenses incurred by him from the inception of this matter until its final settlement,” and on a certain understanding as to accommodation works.”

As nothing resulted from these negotiations arbiters were nominated and an oversman appointed. In the arbitration the pursuer claimed “the sum of £2500, with interest thereon at the rate of £5 per centum per annum from the 8th day of July 1898 till paid.” Proof was led in December 1901, and, the arbiters having differed, the

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oversman signed his award on 21st March 1902 fixing the compensation at £1265, with interest at 5 per cent. “from the 9th day of August 1898, the date agreed upon by the parties.” The award was silent on the matter of expenses.

On the pursuers asking the defenders for the expenses of the arbitration, the defenders refused to pay them on the ground that their tender of 23rd July 1901 did not include the interest specified in their undertaking of 31st August 1898, and that the amount of the tender was therefore greater than the amount awarded.

The pursuer thereupon raised the present action.

On 17th August 1903 the Lord Ordinary ( Pearson) pronounced the following interlocutor—“Finds that the sum awarded by the oversman in the arbitration referred to on record exceeds the sum tendered by the defenders, and the pursuer so requiring, remits to the Auditor of Court to tax the account No. 7 of process under section 37 of the Act 30 and 31 Vict. cap. 126, and section 32 of the Land Clauses Consolidation (Scotland) Act 1845,” &c.

Opinion—… “In regard to the question whether the award here exceeds the tender, that depends on whether the tender of £1300 made on 23rd July 1901 is to be taken as carrying interest at 5 per cent. from 9th August 1898, when the company took possession. I think that is a narrow and difficult question. One element which might have affected the decision is not present, namely, the amount and ingredients of the sum claimed at and prior to that date (23rd July 1901) by the pursuer, though possibly if ascertained it would not tell either way. The materials for decision are mainly these—(1) The company's undertaking of 31st August 1898 was that the company ‘will pay interest at 5 per cent. per annum on the amount of his compensation when ascertained or agreed on from the date when possession was taken if the works are allowed to proceed.’ Of course a tender, if accepted, results (in a sense) in agreed compensation, and the company here contend that if the £1300 tender as made had been accepted it would have related back to this undertaking and would have carried interest. But (2) this depends mainly upon the terms in which the tender is expressed. Here it is ‘£1300 sterling in full of all your client's claims of every description in respect of his right and interest as proprietor in the land … taken from him by the railway company, and extending to 6.242 acres or thereby imperial measure.’ Now, this is ambiguous, and while it is quite possible that the company meant it to carry interest, I think that prima facie it does not. If the tender had been accepted I think the company would have had a strong case for contending that an additional claim for interest was excluded, the tender bearing expressly to be ‘in full of all your client's claims of every description in respect of his right and interest as proprietor in the land.’ The arbitration was not yet on foot, so that we cannot resort to that for the measure of the ‘claims’ referred to, though even if it be referred to it will be found that interest was expressly claimed. But the words of the tender are words chosen by the Railway Company; it was for them to make clear what they meant in an important step such as they were taking, and (as I have said) I think the prima facie sense of the words used is against them. If they had meant the tender to be ‘with 5 per cent. interest,’ they should have said so. Further (3) this consideration derives force from the next letter that passed between the parties. Three days later, on 26th July, the tender was acknowledged, and a counter proposal was made stating the pursuer's willingness to accept £1500 ‘in full of his claims against your company for ground acquired by them, interest at 5 per cent. to be paid on said sum from the date of the service of the notice to treat, my client to be relieved of the whole expenses incurred by him from the inception of this matter until its final settlement,’ and on a certain understanding as to accommodation works. Here the question of interest is brought conspicuously forward, and, in my opinion, a perusal of this letter should have led the company, if they had desired the thing to be made clear on the lines of their present contention, to have replied that when they said the £1300 was to be paid ‘in full of all his claims of every description in respect of his right and interest as proprietor’ they did not mean it to be in full of his claim for interest. As I have said, my opinion is, on the whole, in favour of the pursuer on this matter. I hold on the documents before me (and neither party suggested any further inquiry or production) that the tender must be read as in full of all claims, including interest, and that the award is above the tender. I shall find accordingly, and as the pursuer so requires under the Act of 1867 I propose to remit the account to the Auditor for taxation in terms of the statute. The parties will then consider whether anything further remains for the oversman to do in the way of ‘settling’ it.”

The defenders reclaimed, and argued—All that was referred to the arbiter was the question of compensation. That was the only thing in dispute. The matter of interest had been already settled by the parties and did not fall within the scope of the reference. It was questionable whet her an arbiter had power to deal with interest on the sum awarded—Deas and Ferguson on Railways, 365. The matter of interest was quite distinct from that of compensation. Under the Lands Clauses Act a railway company could not enter into possession of lands without granting a bond which bore interest. The parties in the present case had by agreement dispensed with a bond, but the interest nevertheless ran, and by agreement this interest had been fixed at 5 per cent. on the compensation agreed on or awarded from the date of entry. The sum tendered by the defenders on 23rd July 1901 only referred to the matter which came before the arbiter, viz., the amount of compensation. It did not include interest, a matter which had already been

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fixed by agreement. The amount in the tender therefore exceeded the amount awarded, and the pursuers were not entitled to the expenses of the arbitration.

Argued for the pursuer and respondent—The compensation awarded, viz., £1265, with interest at 5 per cent. from 9th August 1898, amounted to about £1490, or if the interest was only calculated to the date of the tender, to about £1448. That sum was much in excess of £1300, the amount in the tender. An arbiter could either calculate the interest for himself and give one sum, made up of the amount of compensation and the interest, or he could give an award of a separate sum in compensation with interest from a certain period. The sum awarded being with interest greater than the amount of the tender, the pursuer was entitled to the expenses of the arbitration— Carmichael v. Caledonian Railway Company, March 26, 1868, 6 Macph. 671, 5 S.L.R. 413. The tender must be held to include interest on the amount awarded from the date of entry to the lands. The words of the tender were unreserved, and must be read according to their fair meaning. The tender included all that the pursuer was entitled to get from the Railway Company, and one of the things he was entitled to get was 5 per cent. interest on the compensation awarded from the date of the promoters entering his land— West Highland Railway Company v. Place, February 21, 1894, 21 R. 576, 31 S.L.R. 455. There was no exclusion of previous arrangements in the tender; any claims in virtue of such fell under the “all claims” mentioned in the tender.

At advising—