Mudie's settlement. How that can affect the Crown's claim for duty I am unable to see. Indeed, it was not contended, if I have stated the correct view of the transaction of 1877, that duty was not payable. However this annuity was secured, there was upon the annuitant's death a cesser of her interest, property was within the meaning of the statute deemed to pass to the defender, and estate-duty became payable on her death in terms of the first and second sections of the Finance Act. If I am correct in my reading of this transaction entered into between the defender, his mother, and the testamentary trustees in 1877, then it is quite obvious that section 3 (1) of the statute of 1894 and section 15 (1) of the Act of 1896 have no application of any kind to this case. I am, therefore, for adhering to the Lord Ordinary's judgment, although probably not on precisely the same grounds as his Lordship has taken.

Lord Johnston.-As was said by Phillimore, J., in Attorney-General v. Smith Marriott ([1899] 2 Q.B. at p. 602), "The whole matter turns upon one short question-Is this a new annuity or an old one with a varied security?" I am unable to answer the question in any other way than the Court of Queen's Bench did in that case and for the same reasons.

I would at the same time add this other consideration—the annuity to fall under the exemption of section 3 (1) of the Act of 1894 must be granted "for full consideration in money or money's worth, paid to the . . . . grantee for his own use or benefit." The term "paid" implies that payment be made in money or money's worth in the ordinary sense of the word payment, either by the annuitant or by someone on his or her behalf. I do not think that there was any such payment made here. The portion of the residue of Mr Mudie's estate retained to secure Mrs Lyell's annuity had already vested in the grantee indefeasibly. It was his money, subject to its retention to secure the annuity. The consideration (and this apart from the question whether it was full consideration) was not a payment in money or money's worth, but was merely the release of one security subject already belonging to the grantee from a burden, on another subject also belonging to him being substituted as the security for the same burden. Such a transaction cannot be deemed payment in the sense of the statute.

Lord Mackenzie.-The question here is whether the claim of the Crown to an account is well founded or not. I agree with the Lord Ordinary that it is.

The first point argued for the reclaimer was that he is exempt from the provisions of section 2 (1) (b) of the Finance Act 1894, because of section 3 (1). It is the substance of the transaction, not the form, which has to be

v. Lord

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regarded, and it appears to me that once the 1st Div. true nature of the transaction is understood the The Lord defender's argument is seen to be untenable. Advocate The transaction was as regards the rights of Lyell. succession enjoyed by the defender and his December 12, mother to the estate of the deceased John Mudie. It was he who created the annuity in favour of Mrs Lyell which was secured on the trust money which belonged to the defender. Mrs Lyell was willing that her son should get the benefit of being released from the trust administration. She accordingly relieved the moveable estate of the burden of her anuuity, and the defender provided for the annuity by giving her security over the heritable property he succeeded to from John Mudie. It may be that the same argument would have been equally good if the defender had given security over the heritage belonging to him, but it is not necessary to go into that. It was the same annuity throughout. It may have changed its form, but not its substance. The exemption in section 3 (1) is in these circumstances inapplicable. The annuity was not granted in virtue of the transaction, for there was no "grantor." The annuity depended upon the antecedent right. Nor can it be said that the defender got "full consideration." No doubt he got some benefit in the increased rate of interest which the trust funds would yield in his hands as compared with the rate earned by the trustees. The release, however, from trust administration is not "money or money's worth," which is the provision in the subsection.

The second point maintained for the defender is founded on section 15 (1) of the Finance Act of 1896. If what has already been said is correct, no separate question arises upon this provision, for if by the transaction no annuity was granted or conferred (which is the view I take), then the section does not apply. But, further, if the transaction be regarded as a whole, which is the true view, then it is not only the bond of annuity and disposition in security by the defender which must be taken into account. The arrangement by which Mrs Lyell disburdened the moveables was part of the transaction, and this, though not full consideration, did give a benefit to the defender. This is sufficient to prevent him from making a successful appeal to section 15 (1).

Lord Skerrington.-The transaction upon which the defender founds as saving him from liability for estate-duty amounted to an exchange of one annuity for another. It seems to me hardly accurate to say that it was a mere change in the security for an annuity. An annuity which was constituted by the will of a testator imposing a duty of payment upon his testamentary trustees and which was secured by moveable trust estate, of which the defender was beneficial owner, was extinguished in consideration for the granting of a new annuity constituted by the defender's

for, and the prices charged therefor being fair and reasonable, the pursuers are entitled to decree as concluded for.

"3. The contract founded upon by the defenders is inapplicable as the basis of charge for the work executed by the pursuers, and is no longer binding upon the pursuers, in respect (a) that said contract was induced by the fraud of the defenders; (b) that said contract was entered into by the pursuers under essential error induced by the misrepresentations of the defenders; (c) that the work as executed by the pursuers proved to be entirely different from that contemplated by the contract; (d) that said contract was by agreement of parties departed from as a basis of charge; and (e) that the defenders are by their actings barred from founding on said contract as the basis of charge."

Incidentally, and as alternative to their quantum meruit case, Messrs Boyd & Forrest averred "alternatively, in the event of the contract hereinafter mentioned being held to be binding in whole or in part on the pursuers in respect of the work executed, the pursuers have suffered loss and damage to the extent of the sum sued in respect of the fraud, the negligence, and breach of contract of the defenders, all as aftermentioned." Nothing more was averred or "aftermentioned" by the pursuers as to damages, but they added a further new plea, viz. :

"4. Alternatively, the pursuers having suffered loss and damage to the extent of the sum sued for, owing to the fraud, negligence, or breach of contract of the defenders as condescended on, the pursuers are entitled to decree as concluded for."

After hearing parties in the Procedure Roll, the Lord Ordinary (Salvesen) pronounced the following interlocutor on 14th July 1908:

"The Lord Ordinary, having considered the cause, before answer allows to the pursuers a proof of their averments so far as bearing on their third plea in law, and to the defenders a conjunct probation, to proceed on a day to be afterwards fixed, and reserves all questions of expenses," and on 13th November 1908 the Second Division adhered to said interlocutor. The proof so allowed was taken by Lord Johnston, who, on 20th January 1910, sustained branches (a), (b), and (e) of said third plea, and found that the pursuers (Messrs Boyd & Forrest) were "entitled to reasonable recompense for the work they had done, "allowing for payments to account either in name of quantum meruit or, which in the present case is substantially the same thing, of damages as may be ascertained." On 10th November 1910 the Second Division sustained branches (a) and (e), omitting branch (b) of said third plea. After sundry further procedure, the railway company obtained leave to appeal to the House of Lords, and that House, on 3rd April 1913, reversed, inter alia, the said interlocutors of 20th January 1910 and 10th November 1910, found that Messrs Boyd & Forrest had failed to prove that they had been induced to enter into the said contract by fraud, and remitted the cause to the Court of Session, "with directions (1) to repel branch (a)" of said third plea; (2) to repel branches (b) and (e) of the said plea, in so far as founded on allegations of fraud, and to hear and dispose of the whole pleas and contentions, except in so far as repelled, in terms of the said directions. This order of the House of Lords was duly applied by the Court of Session on 5th June 1913. After further procedure the Second Division, on 7th February 1914, sustained branches (b) and (e) of said third plea, and repelled branches (c) and (d), and found that the contractors were entitled to be paid for the work done by

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them on a basis of quantum meruit. On 1st March 1915 HOUSE the House of Lords reversed said last-mentioned inter- OF LORDS. locutor so far as it sustained branches (b) and (e) of Glasgow said third plea and so far as it found Messrs Boyd & and SouthForrest entitled to be paid on a basis of quantum Western Railway meruit, and remitted the cause to the Second Division Co. v. Boyd to assoilzie the defenders (the railway company) in the & Forrest. action from the conclusions of the summons; but pro- December 14, viding "that this order and such decree of absolvitor be without prejudice to the right of the respondents in the original appeal, and it is hereby declared that the respondents in the original appeal are to have the right, if so advised, to refer to the arbiter named in the contract all claims, whether for damages or otherwise, under the contract, or in respect of breach thereof, provided such claims are condescended upon in the pursuers' condescendence in this action, and provided that they relate to (a) the construction of bridge 12A and the diversion of the Paisley waterpipe, or (b) any delay on the part of the appellants in the original appeal in furnishing plans for dealing with water-courses encountered in the cuttings.' This judgment was duly applied on 13th May 1915 by interlocutor of that date.

Thereafter the arbiter under the contract (Mr John Strain, C.E.), having been appealed to, accepted that office on 1st March 1916, and ordered Messrs Boyd & Forrest to lodge their claim, and the railway company to answer the same, and this having been done, a record in the arbitration was made up and closed. In their claim in said arbitration the claimants, Messrs Boyd & Forrest, averred that they had done certain work for the railway company, all in terms of the said contract and schedule thereto, "and in addition did numerous other work not set forth in the schedule, and for which no prices have been provided.” The work so averred to have been done was practically altogether, or at least in great part, the same work as that averred to have been done in the original action. But, whereas in the action it was averred that this work had not been done under the contract, but on the footing that it should be paid for on the basis of quantum meruit, in the arbitration the work was averred to have been done under the contract on the footing that it should be paid for at schedule rates where there were schedule rates, and where there were no such schedule rates at such rates as the arbiter might fix. The claimants in this respect claimed that they were entitled to be paid by the railway company the sum of £88,830, 13s. 11d., and they further claimed that they were entitled to £9750 as damages in respect of the two items (a) and (b) referred to in the House of Lords' said order of 1st March 1915. The railway company, in their answers to said claim for £88,830, 133. 11d. maintained that it was excluded by the order for absolvitor of 1st March 1915, and they joined issue as to the said claim for damages amounting to £9750.

The arbiter, having heard parties on the said claim and answers, on 24th July 1916 issued an order in which he found that the entire claim was within his jurisdiction, and that he proposed to proceed accordingly, reserving in hoc statu all questions of relevancy, and in order to enable this order to be brought under review of a Court of Law, he sisted further procedure in the arbitration.

The railway company thereupon, on 21st August 1916, raised the action in which the present reclaiming note has been taken. In that action the railway company sought declarator to the effect that the arbiter had no jurisdiction to entertain or determine the said claim for £88,830, 13s. 11d., and that the claimants should be interdicted from proceeding with

The Lord Justice-Clerk [after the narrative above quoted].-In my opinion the plea of res judicata does not apply in the circumstances of this case. I agree that, if not altogether, at least to a large extent, the work claimed for by Messrs Boyd & Forrest in the arbitration and referred to in this action is the same as was claimed for in the action finally disposed of by the House of Lords, and that even the separate items in the accounts in the two processes were the same. But the grounds of action, the media concludendi in the two processes, except it may be as to the damages under said heads (a) and (b) in the said order of 1st March 1915, and the interlocutor of 13th May 1915, were entirely different.

The medium concludendi in the first action was that the contract and relative schedule had been displaced and no longer applied, for the reasons set forth seriatim in the pursuers' (Messrs Boyd & Forrest's) third plea, and that these pursuers were entitled to be paid on the basis of quantum meruit.

The only proof allowed in said action was a proof "of the pursuers' averments so far as bearing on their third plea in law."

On the other hand, the claim in the arbitration is founded on the contract, and the claimants' rights, it is pleaded, are to be determined according to said contract and the relative schedule where the latter is applicable, and where it is not, according to the arbitrament of the arbiter in terms of the contract, said contract being thus the medium concludendi.

Not only was no such view presented in the original action, but the bases of the two proceedings (said action and the arbitration) are contradictory and mutually exclusive. The ground of claim put forward by Messrs Boyd & Forrest in the arbitration was never submitted for decision to the Court of Session or the House of Lords, and, in my opinion, could not be and was not decided or disposed of in any way in said action.

It seems to me that a simple and unqualified decree of absolvitor in the action could not have affected Messrs Boyd & Forrest's right to go to arbitration, as they now seek to do. But then it was argued to us by the railway company that even if this might have been true they had been put in a better position than they would have been in had they had only such a decree, in virtue of the clause in the order as to the claim for damages under heads (a) and (b). It seems odd that a pursuer should be put in a worse position by having a qualified decree of absolvitor pronounced against him than he would have been by an unqualified decree of absolvitor. In my opinion such a contention is unsound.

It is said that the action was a petitory one for a sum of money made up of certain items, and that the claim in the arbitration is to a large extent for the same sum of money, made up to a large extent of the

same items. But that is not the question; the question is, Are the grounds of claim, the grounds on which the demands are made, the same in the two proceedings? In my opinion they are not the same but are radically different.

The addition to the order or decree of absolvitor is introduced by the words "But it is provided that." I would not readily hold that a clause so beginning could extend the scope or effect of the order or decree of absolvitor to the prejudice of the pursuers as regards rights which they would have had under a plain order or decree of absolvitor. But the clause I am now considering only provides that the order and decree of absolvitor is to be without prejudice to a specified right which it proceeds to say the respondents are to have, viz. the right "to refer to the arbiter named in the contract all claims, whether for damages or otherwise, under the contract, or in respect of breach thereof, provided such claims" have been condescended on in the pursuers' condescendence in said action, and provided they relate to the items (a) and (b) therein set forth. This, it was argued, shews that the parties and the House of Lords had in contemplation the reference clause in the contract, and that there might still be a reference under and in virtue of that clause.

In the record in the present action it occurs to me that on this point parties have confined themselves to treating the dispute on this point as one of legal construction--what is the true construction of the order of the House of Lords, or rather of the decree which followed thereon, and (it is not disputed) faithfully followed the order. There is no averment on record dehors the terms of the order and the interlocutor applying the same-neither party asked a proof, and, as at present advised, I think there is no ground for allowing proof. Each party asked at once for decree in their favour on the record. We were referred at the debate before us by both sides to notes of discussions in the House of Lords on two occasions-one at the close of the argument on the appeal and the other after the opinions of the noble Lords had been delivered and before the questions were put. But there is no averment of agreement or bargain or of any fact which could either in law or in fact affect the construction of the clause in question, or give an independent ground of judgment. The counsel who took part in said discussion differed in argument before us toto cœlo as to the import of said discussions.

I confess I have felt it a question of delicacy and difficulty how far we are entitled to consider these reports or as to what is the correct import of them. The clause in its present form does not appear in either of these reports, and in the end counsel were asked to draw up the form of the order for submission to the House.

Our duty, it appears to me, is to construe the decree or interlocutor of 13th May 1915, and I do not see that we in any event, and particularly having regard to the pleading and proceedings in this action, are entitled to proceed in any way on these reports.

་་

The clause was represented to us as a concession" to Messrs Boyd & Forrest by which they would be entitled to get the arbiter to assess damages (contrary to the law of Scotland) in respect of the two items (a) and (b). But the railway company say that the decree of absolvitor in itself would have excluded any further arbitration, and that the clause in question must be read as if it had contained the words "and the pursuers shall not have the right to refer any other claims to the arbiter," or words of similar import. As to the first point, in my opinion the decree of absolvitor would not have any such effect—such a right not being

in dispute in the action. As to the second point, the words are not there, and we ought not, in my opinion, to construe the decree or order as if they were. The Lord Ordinary says that the decisions in the original action proceeded on the assumption that "the schedule rates did not apply," and he goes on to say that he does "not see how the arbiter can now be asked to consider the same specified charges based on the same assumption." In my opinion it is a mistake to say that the charges in the arbitration are based on the schedule rates. It was distinctly explained to us that where there are schedule rates, these rates must be applied by the arbiter, and that it is only as to items for which there are no schedule rates that the -arbiter's arbitrament can be appealed to.

I do not think there was any relevant statement sufficient to support a claim of damages in the original action. There was only the sentence, to which I have already referred, in Condescendence 3 and the corresponding plea-plea 4. But in the arbitration no claims of damages have been referred except those which arise out of the two items (a) and (b) specified in the order, and I understand no objection is taken to the arbiter proceeding to deal with these.

I am of opinion that we should recall the Lord Ordinary's interlocutor, repel the first plea for the defenders, sustain the second and fifth pleas in law for the defenders, and assoilzie them.

On the plea of res judicata we were referred by Messrs Boyd & Forrest, inter alia, to the following

authorities:

1. Stair's Institutions, IV. 40, 16: "But the exception rei judicatæ must not only be that the decreet had the same conclusion, but also that it proceeded upon the same media concludendi, if the decreet was an absolvitor; for though absolvitor was pronounced against a pursuer it could not hinder him to insist for the same conclusion upon a different medium in which case competent and omitted takes no place, but only in decreets condemnatory in foro contradictorio. So he who pursues a reduction of any decreet or other right may raise as many actions as there are relevant

reasons."

2. Macdonald and Others v. Macdonald (1842, 1 Bell's App. 819 at p. 822), where Lord Campbell says: "With regard to pursuers, on the other hand, in proceedings of this nature there may be as many A pursuer cannot a second time set up a ground of reduction on which there has been judgment against him. But this is no bar to his bringing a fresh action on a totally different ground of reduction, although both might have been included in the first

actions of reduction as there are media concludendi.

action."

3. Phosphates Sewage Co. v. Molleson (1879, 6 R. (H.L.) 113 at p. 121), where Lord Blackburn says: Secondly, there is a ground where there is a fresh medium concludendi; the plaintiff in the action is not obliged to join all his media concludendi in one suit; if he has one medium concludendi, and fails in proving that, he may start another, and that whether or not he knew of it at the former time, provided it be a separate medium concludendi.”

4. Edinburgh and District Water Trs. v. Clippens Oil Co. Ltd. (1899, 1 F. 899 at p. 909), where Lord Kinnear states: " The validity of a plea of res judicata must necessarily depend upon the pleading and decision in the previous action, and not upon any rights or equities which may have arisen antecedent to the pleadings or from any extra-judicial communications between the parties. The question always is, what was litigated and what was decided. I think the defenders have in this case stated per

fectly distinctly and quite accurately the reason why HOUSE the judgment in the previous case cannot be pleaded OF LORDS. as res judicata in this. For they say in their sixth Glasgowstatement of facts: The pursuers did not either aver and Southor plead in said action that they had any right of Western Railway support for either of their lines of pipes, such as is Co. v. Boyd now put forward, relative to the Crawley pipe.' That & Forrest means that they neither averred facts nor pleaded law December 14, which would have enabled the Court to decide the question raised in this action."

5. Mackay's Manual of Practice, 312: "A decree of absolvitor is a decree by which the merits of the action are finally determined in favour of the defender. It consequently forms res judicata and excludes a new action on the same grounds. A new action on different grounds may always be raised notwithstanding decree of absolvitor.

Lord Dundas, Lord Salvesen, and Lord Guthrie delivered opinions concurring in the result arrived at by the Lord Justice-Clerk.

The pursuers appealed to the House of Lords. On 14th December 1917 their Lordships reversed the interlocutor appealed from with costs.

The Lord Chancellor.-An action was brought on 15th November 1907 by Messrs Boyd & South-Western Railway Co., in which they Forrest, contractors, against the Glasgow and claimed payment of money alleged to be due in respect of the construction of a line of railway by the contractors. That case was, by an Order of your Lordships' House dated 1st March 1915, remitted to the Court of Session with the direction to assoilzie the defenders from the conclusion of the summons with certain reservations. The present action has been instituted by the appellants, the Glasgow and South-Western Railway Co., by summons dated 26th August 1916, against the respondents, Messrs. Boyd & Forrest, asking for a declarator as to the effect of your Lordships' Order of the 1st March 1915 in the former action, and for an interdict accordingly.

The

The claim in the former action was for £378,254, 2s. 2d., which sum it was alleged was due and resting-owing to the pursuers. their statement of facts that the work was done defenders (the railway company) pleaded in under a lump sum contract by which the work was to be executed for £243,000 plus the price of extras, and that with extras and certain allowances the total amount due was £272,030, which had been paid. The pursuers (the contractors) lodged pleas in law, the third of which was as follows:

"The contract founded upon by the defenders is inapplicable as the basis of charge for the work executed by the pursuers, and is no longer binding upon the pursuers, in respect (a) that said contract was induced by the fraud of the defenders; (b) that said contract was entered into by the pursuers under essential error induced by the misrepresentations of the defenders;

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