CHAP. V.

Effect of the section.

Agreement to refer not

necessarily in

instrument giving cause of action.

Must be subsisting.

the same effect as a cross action, and where there is an agreement to refer the subject-matter of a counterclaim it may be stayed on the application of the plaintiff. (Spartali v. Van Hoorn, 76 L. T. Journ. 259; 28 Sol. J. 270; Mathew, J., in chambers.) In such a case the delivery of the counterclaim is the commencement of legal proceedings within the meaning of the section. (Chappell v. North [1891] 2 Q. B. 252; 60 L. J., Q. B. 554.)

The Act does not give to an agreement to refer the effect of depriving a plaintiff of his right of action, but it enables the defendant to take advantage of the agreement by application to stay proceedings in the action. and compel the plaintiff to resort to his remedy by arbitration. (Roper v. Lendon, 1 E. & E. 825; 28 L. J., Q. B. 260.)

In Blythe v. Lafone (1 E. & E. 435; 28 L. J., Q. B. 164), it was held that power to stay proceedings does not arise in an action upon a deed or instrument unless the instrument itself contains an agreement to refer differences, though the parties have made such an agreement in writing subsequently to the differences arising. But this decision has been overruled. (Mason v. Haddon, 6 C. B., N. S. 526; Randell v. Thompson, 45 L. J., Q. B. 713; 1 Q. B. D. 748; Deutsche Springstoff, &c. v. Briscoe, 20 Q. B. D. 177; 57 L. J., Q. B. 4.) Where there were two contemporaneous instruments relating to the same subject-matter, the one supplemental to the other, and one of them contained an arbitration clause but the other did not, the two documents were treated as one, and the arbitration clause held to apply to questions arising under the instrument which did not contain the clause. (Wade-Gery v. Morrison, 37 L. T. 270; and distinguish Turnock v. Sartoris, 43 Ch. D. 150.)

There must, however, be a valid subsisting agreement to refer, capable of being enforced. (Moffat v.

Cornelius, 39 L. T. 102; Piercy v. Young, 14 Ch. D. 200; Deutsche Springstoff, de. v. Briscoe, supra.)

CHAP. V.

Verbal

upon terms of expired agreement.

There must be an agreement in writing to refer. Must be But in Hattersley v. Hatton (3 F. & F. 116), where the in writing. parties had gone on dealing upon the terms of a former dealings and satisfied agreement, which contained a clause for reference, it was held to be within the statute. So, where partnership articles for a term contained an arbitration clause, and after the expiration of the term the parties, by verbal arrangement, continued in partnership upon the terms of the old articles, it was held that there was an agreement in writing within the section. (Gillett v. Thornton, 44 L. J. Ch. 398; L. R., 19 Eq. 599; Cope v. Cope, 52 L. T. 607.)

when made.

The application to the court must be made not only Application before the delivery of a statement of defence (West London to stay, Dairy Society v. Abbott, 44 L. T. 376; 29 W. R. 584), but before the defendant takes a "step in the proceedings." "Step in the A defendant who attends upon a summons for direc- proceedings." tions and does not object to an order being made thereon with respect to the general course of the action is to be considered as taking a step in the proceedings within the meaning of section 4. (County Theatres and Hotels v. Knowles [1902] 1 K. B. 480; Richardson v. Le Maitre [1903] 2 Ch. 222; Steven v. Buncle, W. N. (1902) 44.) To prevent the loss of the right to have the dispute referred, the defendant should either object to the making of the order on the ground of the agreement to refer or ask for an adjournment in order to make a substantive application to stay the action. (Ib.) Before the first-mentioned decision, it was considered that the words implied something done by the defendant on his own initiative, and accordingly it was held that an application to the court for leave to administer interrogatories (Chappell v. North [1891] 2 Q. B. 253; 60 L. J., Q. B. 554), for an extension of time to deliver defence (Ford's Hotel Co. v.

CHAP. V.

By whom made.

"Person claiming through or under" a party.

Mode of application.

Evidence in support of application.

Bartlett [1896] A. C. 1; 65 L. J., Q. B. 166), for security for costs (Adams v. Catley, 66 L. T. 687), or other like application to the court for an order in the proceedings, was a "step" within the meaning of the section. But that a notice to the plaintiff requiring a statement of claim (Ires v. Willans [1894] 2 Ch. 478; 63 L. J., Ch. 521), or an application to the other side for extension of time, or any other application which was acceded to without going to the court (Brighton Marine Palace and Pier v. Woodhouse [1893] 2 Ch. 486; 62 L. J., Ch. 697), or filing affidavits in answer to a motion for a receiver (Zalinoff v. Hammond [1898] 2 Ch. 92), was not. When there are more defendants than one, they need not all join in the application. (Willesford v. Watson, 42 L. J., Ch. 447; L. R., 8 Ch. 473.)

The better opinion seems to be that the trustee of a bankrupt is not a person claiming "through or under" one of the parties to a reference within the meaning of the Act, and it is doubtful whether such a trustee, who is a defendant, is a party entitled to make an application within the section (Piercy v. Young, 14 Ch. D. 200), and it is equally doubtful if the court has power to stay proceedings commenced by the trustee in respect of matters agreed to be referred by the bankrupt. (Pennell v. Walker, 26 L. J., C. P. 9; 18 C. B. 651; and see Sturgis v. Curzon, 21 L. J., Ex. 38.)

The application is made in chambers, by summons, which may be dealt with by a master or district registrar. In the Chancery Division it is sometimes made by motion. There must be an affidavit by the applicant of his readiness and willingness to refer the whole dispute at the time when the action was brought (Piercy v. Young, 14 Ch. D. 200; 28 W. R. 845), and not merely a part. (Daris v. Starr, 41 Ch. D. 242.) And it must be shown that the matters in dispute are within the agreement to refer. (Piercy v. Young, supra; Wood v. Robson,

15 W. R. 756; Dennehy v. Jolly, 22 W. R. 449; Gillett v. Thornton, L. R. 19 Eq. 599; Nobel Brothers, &c. Co. v. Stewart, 6 Times L. R. 378.)

CHAP. V.

What is— when question

for court and

when for

arbitrator.

On an application to stay, the court will generally "Matter decide whether the matters in dispute are within the agreed to be agreement for arbitration, and not leave the point to be decided by the arbitrator (Piercy v. Young, 14 Ch. D. 200; De Ricci v. De Ricci [1891] Prob. 378; Workman v. Belfast Harbour Commissioners [1899] 2 I. R. 234), though persons can agree to refer to arbitration not merely disputes between them, but even the question whether the disputes between them are within the arbitration clause. (Piercy v. Young, 14 Ch. D. 208; Willesford v. Watson, L. R., 8 Ch. 473; 42 L. J., Ch. 447.) And where the dispute is one to which the arbitration clause applies the construction of the instrument and the extent to which its clauses apply in the particular case is for the arbitrator. (Cope v. Cope, 52 L. T. 607.) But the arbitrator cannot read into a contract a non-existing custom, so as to give himself a jurisdiction he would not otherwise possess. (Hutcheson v. Eaton, 13 Q. B. D. 861; 51 L. T. 846.)

proceedings discretion

matter of

with court.

The section in question does not take away the juris- Staying diction of the court to decide the disputes between the parties, but gives power to the court to stop an action in violation of an agreement to refer to arbitration, and to enforce the agreement between the parties, a power which did not exist before the passing of the 11th section of the C. L. Procedure Act, 1854, which this section replaces. (Daris v. Starr, 41 Ch. D. 242; 58 L. J., Ch. 808; London, Chatham and Dover Rail. Co. v. SouthEastern Rail. Co., 40 Ch. D. 100; 58 L. J., Ch. 75.)

The exercise of the jurisdiction is a matter of discretion When prowith the court (Wickham v. Harding, 28 L. J., Ex. 215) ceedings will a discretion to be exercised judicially and according to well-known and ordinary principles. (Vawdrey v.

CHAP. V.

"No sufficient reason"

against a reference.

Inconvenient tribunal.

Suggested bias of arbitrator.

Simpson [1896] 1 Ch. 166; 65 L. J., Ch. 369; Barnes v. Youngs [1898] 1 Ch. 414.) The primâ facie duty of the court is to act upon the agreement of the parties. (Willesford v. Watson, 42 L. J., Ch. 447; L. R., 8 Ch. 473; Law v. Garrett, 8 Ch. D. 26; 38 L. T. 3.) And the cases are rare in which the court ought to refuse the order to stay proceedings (Russell v. Russell, 49 L. J., Ch. 268; 14 Ch. D. 471), the burden being upon the plaintiff to show some reason why the dispute should not be referred. (Vawdrey v. Simpson, supra; Hodgson v. Railway Passengers' Assurance Co., 9 Q. B. D. 188; but see Fox v. Railway Passengers' Assurance Co., 54 L. J., Q. B. 505; 52 L. T. 672.)

The court has to be satisfied according to the varying circumstances of each particular case "that there is no sufficient reason why the matter should not be referred in accordance with the submission." (Fox v. Railway Passengers' Assurance Co., supra; Vawdrey v. Simpson, supra.) In Lyon v. Johnson (40 Ch. D. 579; 58 L. J., Ch. 626), Kay, J., notwithstanding the subject-matter of the action was within the arbitration clause, refused a stay, but assigned no reason for doing so.

It is not sufficient reason against an order to stay that, the particular matter cannot be conveniently decided by arbitration. (Denton v. Legge, 72 L. T. 627.)

The court will not refuse to stay an action, where the matters in difference have been agreed to be referred to the engineer of one party, on the ground that the engineer is in substance a judge in his own cause, unless there is sufficient reason to suspect that he will act unfairly. (Ires v. Willans [1894] 2 Ch. 478; 63 L. J., Ch. 521; and see Eckersley v. Mersey Docks and Harbour Board [1894] 2 Q. B. 667, and other cases cited infra, Chapter IX., REVOCATION, under "bias of arbitrator.") In The City of Calcutta (79 L. T. 517), Rigby, L.J., held that the fact that the Committee of Lloyd's had the