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Decisions of the Superior Courts of New South Wales, 1788-1899

Sheppard v. Scarr [1842] NSWSupC 57

arbitration

Supreme Court of New South Wales

Dowling CJ., Burton and Stephen JJ 13 May 1842

Source: Australian, 14 May 1842

            Mr. Foster applied, on the part of the plaintiff, that the rule nisi granted that cause might be shewn why the award between the parties should not be set aside, be made absolute.

            The Attorney-General, on the part of the defendant, said, that he had to acknowledge the courtesy by which had been allowed to postpone this case until the present day. He would give a very brief review of the facts of the case. The plaintiff, Sheppard, was a large landed proprietor in this Colony, possessing many thousand acres of land in the counties of King and Georgiana, many thousand sheep and cattle and hundreds of horses, brood mares, &c.; and also a cottage, with garden attached to it. This Mr. Sheppard, it appeared, had entered into an agreement with Mr. Scarr, of whom he should only say that he had, previously, for eighteen years, filled a subordinate office under government in the most creditable manner. Mr. Scarr was to have the care and management of Mr. Sheppard's sheep, cattle, brood mares, and horses; also, to superintend the cultivation of his land. He was also to have the cottage upon the estate, with the garden attached to it, for the accommodation of himself and family. In consideration of these things, Scarr was to pay a certain fixed annuity to Sheppard; the sales arising out of the increase of stock and produce were to be divided equally between Sheppard and Scarr; and at the expiration of the agreement, which was for seven years. Mr. Scarr was to render back the same amount of stock, &c., in possession of which he was first put. Differences, however, very shortly arose between the parties, and it was ultimately decided that they should be left to the arbitration of parties fixed upon by Sheppard and Scarr, and an umpire assented to by both. Accordingly, Mr. Scarr fixed upon a Mr. Moir, a respectable merchant in Sydney, as his arbitrator, and Mr. Sheppard selected Mr. James Atkinson, a gentleman of extended experience in the management of stock, &c. An umpire was also agreed upon: the high honour of whom it was unnecessary to comment upon, as to name him was quite sufficient; he alluded to Mr. Charles Cowper, the gentleman fixed on. There were, in consequence, several meetings between the arbitrators. Considerable difference existed in the statements and counter-statements then made; and eventually an order was made by the arbitrators and umpire , that the exact state of the stock at the commencement of the arbitration should be taken, and that Mr. Sheppard and Mr. Scarr should proceed forthwith to the estate of Wyal to muster the stock. The order also determined that the stock, when mustered, should be given over to the charge of Sheppard, but that the cottage should remain in the hands of Scarr, for the accommodation of his family, until the final award of the arbitrators. It was put forth in the statement of the plaintiff, that there was no mutuality in the award; that its requirements were all on one side, and that was on the side of Sheppard; that all was to be done by him, and nothing by Scarr. Why, this order which had been before made, was all that could be done; it left nothing which Sheppard could require. He had possession of all; and all that remained for the arbitrators to do was, to award Mr. Scarr his amount of compensation. This order was complied with by Mr. Scarr, and Mr. Sheppard took possession of the whole stock, &c. The arbitrators met subsequently, when Mr. Atkinson, the arbitrator on the part of Mr. Sheppard, withdrew, assigning that the statements were of so conflicting a nature, that he could not arrive at the truth of the matter. It was to be regretted that Mr. Atkinson, when he retired From the arbitration, did not leave things in the same state as he found them. He first denuded Mr. Scarr of every thing in his possession, by the order; and, having done so, retired from the arbitration altogether. The learned counsel then proceeded to read and comment on a voluminous affidavit put in by Sheppard, to shew that the award was not final; that the proceedings of the arbitrators were considered at the end of the retirement of Mr. Atkinson from the arbitration; and also that the award, while it adjudged a compensation of £2050 to defendant, and cancelled the agreement, did not shew any breach of the agreement, or make any award on the plaintiff's part, and that the compensation awarded to Mr. Scarr was not warranted by the evidence in the matter. The Attorney General said in continuation, that it was affirmed in the affidavit of the plaintiff they had just heard, that the arbitration was considered at an end on the retirement of Mr. Atkinson from it; but such was not the case. Mr Sheppard had, indeed, met Mr. Cowper at the Bishop's office, and had some conversation with him on the subject; and when Mr. Cowper had declared his doubt on his competency to leave things in the state they were, he produced, not the stock and lands, and so forth, which would have been the most satisfactory arrangement of the case, but he did produce "Chitty on Awards," wherewith to scare Mr. Cowper from the fulfilment of his duty. It was proposed at that time, that a Mr. James Hassell should take the place of Mr. Atkinson as Sheppard's arbitrator; but Sheppard wanted evidently, having obtained the end he had in view by getting the whole of the property into his own hands, to do away with the arbitration; and having denuded and stripped Mr. Scarr of every thing he had in the world , even down to the house he lived in, to resume the management of his own stock.

            His Honor Mr Justice Burton remarked that there was no mention in the award which had been made of the delivery of the stock to Sheppard. Mention was made of a compensation to Scarr, but nothing was said of any thing on the other side to counterbalance such compensation.

            The Attorney-General said, that their Honors would see if they would permit him to read the affidavit of Scarr, that they had the receipts of Sheppard for the different portions of the stock which Scarr had rendered back to him. Sheppard having once got his stock back under the order, cared nothing for anything else they might do. There was nothing legally binding on Mr. Scarr in that order, and it would have been well for him if he had resisted it until he had security for the payment of his compensation, or even until the final award was made, but Mr. Scarr was willing to abide by the issue of the arbitration, and expected it would be allowed to come to such issue. If the award should be set aside, it would be impossible to place the defendant in status quo. Before the arbitration began, he was in possession of certain property; but this had since, by the proceedings of the arbitration, passed out of his hands, and Sheppard now possessed everything , and Scarr nothing. It was stated in the case, that the award was not final. Now, he felt perfectly satisfied, that their Honors would not coincide with this opinion. That a sum of £500, which had been paid for by the defendant to plaintiff was not mentioned in it; but this, he contended, was immaterial, as they had the plaintiff's receipt for such money, and it had passed under the notice of of [sic] the arbitrators. That there was no provision made in the award for the recovery of the house, stock, &c., of the plaintiff. This certainly was the most preposterous pretext under which any man ever came into that Court. The only part of the arbitration under which he had acted, was, in the taking into his possession, all, for the recovery of which he was now praying. They had, in their affidavits, his actual receipts for the property he was fearful of not recovering, and yet he had the amusing naivete to come with a pretence like this. It was also said, that statements had been made at the later meetings of the arbitrators , which were not true, and which were prejudicial to the interests of the plaintiff. Why did not Mr. Sheppard attend such meetings to contradict these statements ? They were open to him as well as to Mr. Scarr; besides, it was sworn positively in the affidavits of both Mr. Scarr and Mr. Moir , that there was nothing of a disputed nature stated at those meetings which could be material to the issue of the award. It was further said, that the alleged award was uncertain and incomplete, and it did not give a mutual release. But it was not material, he contended, that a mutual release should be given. Complete restitution had been made to Sheppard by the order of the arbitrators, and the question then under their consideration would be, as to the amount of compensation that Scarr ought to receive. The learned Counsel concluded, by contending, that the award ought not to be set aside, as it was quite clear that by it full justice had been done to the plaintiff, and that his object in bringing the matter into Court was to prevent the defendant obtaining the advantages by the arbitration, which he had himself already experienced.

            Mr. Michie followed at considerable length on the same side.

            Mr. Foster, for the plaintiff, said, that from all the affidavits that had been read, the irregularity of the award was so apparent on all sides, and there were so many fatal legal objections to it , that he should pass over many other topics which he should otherwise have argued as important. It was quite evident that all the parties though the arbitration was at an end when Atkinson retired from the proceedings, and when Mr. Cowper took legal advice, and continued to act, it was entirely an after-business. The award was not at all in compliance with the terms of the arbitration, as it did not specify that there had been any breaches of the agreement on either side. The award had cancelled the agreement, but it had no authority to terminate the agreement, except upon some breach of the terms of the agreement, which it did not point out; neither could any compensation be awarded, without a breach of agreement being proved. The order, which had been made out for the rendering back of the property to Mr. Sheppard , also, was irregular as it was signed by the umpire, who had no authority to act until the expiration of the time allowed for arbitration. The effects of this order had been made a great point of, by saying that it gave Mr. Sheppard everything, and left Mr. Scarr nothing; but he submitted this order did not put an end to the agreement; it was not a final order; it was merely an order putting the property in the charge of Mr. Sheppard, for the purposes of arbitration, until such time as the final award was made, which should then have been made, by uts decree, the possession of the property complete and perfect. It was a conditional order, to have effect only until the arbitrators should decide as to whether there had been any breach of the agreement which would justify its cancellation; and if they did not specify such breach of agreement, it was quite impossible the award should be binding.                  

            The learned counsel continued to argue at some length on the irregularity of the award, and cited cases in support of this position, and was followed by Mr. Windeyer on the same side. The matter was ultimately referred to the judgment of the Solicitor-General.

Published by the Division of Law, Macquarie University