Hegarty v. The Cosmopolitan Insurance Corporation, Ltd [1912] ScotLR 256 (12 December 1912)

Hegarty v. The Cosmopolitan Insurance Corporation, Ltd [1912] ScotLR 256 (12 December 1912)

The contract between the parties was not rescinded; both parties continued to treat it as subsisting. The arbitration clause remained operative and was a condition precedent to liability. Therefore, the dispute as to the construction of clause VI(a) must be determined by arbitration before any action for damages can proceed. The defenders are entitled to rely on the arbitration clause, and the action is sisted to await the arbiter's decision.

Citation
[1912] ScotLR 256
Parties
Pursuer: Hegarty & Kelly; Defender: The Cosmopolitan Insurance Corporation, Limited
Jurisdiction
Scotland
Judgment Date
12 December 1912
Procedural Posture
Civil / Appeal (reclaiming Motion) From Lord Ordinary's Interlocutor
Outcome
Interlocutor of Lord Ordinary recalled in part; cause sisted for arbitration; defenders awarded expenses since the date of the interlocutor.
Legal Topics
Arbitration Clause, Breach of Contract, Repudiation, Condition Precedent, Damages, Interpretation of Contract
Contract Law Arbitration Arbitration Clause Breach of Contract Repudiation Condition Precedent Damages Interpretation of Contract

Case Brief

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Parties

Hegarty & Kelly

Pursuer

The Cosmopolitan Insurance Corporation, Limited

Defender

Procedural Posture

Civil / Appeal (reclaiming Motion) From Lord Ordinary's Interlocutor

Legal Issues

  1. 1 Whether the arbitration clause in the contract is a condition precedent to liability for damages.
  2. 2 Whether the defenders, having allegedly repudiated the contract, are barred from relying on the arbitration clause.
  3. 3 Whether the contract was rescinded or remained in force.

Ratio Decidendi

The contract between the parties was not rescinded; both parties continued to treat it as subsisting. The arbitration clause remained operative and was a condition precedent to liability. Therefore, the dispute as to the construction of clause VI(a) must be determined by arbitration before any action for damages can proceed. The defenders are entitled to rely on the arbitration clause, and the action is sisted to await the arbiter's decision.

Court Disposition

Interlocutor of Lord Ordinary recalled in part; cause sisted for arbitration; defenders awarded expenses since the date of the interlocutor.

Orders

  • Recall the interlocutor in so far as it repels the first plea-in-law for the defenders and allows proof.
  • Adhere to the interlocutor quoad ultra.