J.T.

Cassells
vs.
Robert Reid and Juan Figueras, as administrators of the Estate of John Henry Grindrod

No. 3731 | 15 January 1908

Tracey, J.

Nature of Action: Appeal from a judgment of the CFI of Iloilo

Facts: • Upon the dissolution of the House of Cassells, Buchanan & Co. of
Iloilo in 1987, a new firm was formed.
• This new firm was comprised of principal capitalist, J.T. Cassells who
was residing in England, and resident managing partner, John Henry
Grindod of Iloilo, who contributed a small amount of capital.
• A disagreement arose between Cassells and Grindod regarding the
terms of settlement as to the classification of accounts and the
ownership of certain lighters.
• The issue was referred to two arbitrators in England, one of whom
was McPherson, who sent two letters to Grindod stating the following:
- The issue involves the value of the lighters, to whom it belongs,
and whether a certain Alvarez’ account belonged to the firm or to
the Cassells individually;
- The arbitrators decided that half of the lighters’ value should not
have been debited to Grindod’s account, that it should be valued at
$7,000, and that Alvarez’ account belongs to the firm;
- A proposed settlement agreement whereby the arbitrators suggest
that Grindod pay the Cassells the total amount of $22,629.45 within
21 months with 8% interest starting not later than 31 December
1904.
- Arbitrators closed the letter with the statement: “I trust you will
agree with the view we have taken and agree to settle on these
terms, in which case you can use the cipher words given in your
letter to me of 3rd April, 1905”
• Grindod acknowledged receipt of the two letters, however did not
express his agreement to the proposed settlement by the arbitrators.
• Rather, Grindod’s reply sought clarification as to the exact amount of
debt he has to pay to the Cassells because according to him, there
are still unaccounted for expenses he shouldered on behalf of the
partnership, i.e. a debt to a certain Serra and a Supreme Court case
seeking collection of P6,000 from the firm, which he is handling.
• Grindod did not receive any response from the said letter until his
death on 7 November 1905.
• Thus, Grindod’s will contained a clause pointing the following matters:
- That the decision of the arbitrators in all his pending differences
with JT Cassells be adjusted in the most amicable manner
possible;
- To turn over to a certain Isabela, Rosario, and Paquita, the three
lighters he claimed as his property and in order to settle any claim
made by the Cassells; and
- That he charges his executors to put an end to the issue with the
Cassells by accepting the decision of the arbitrators as final.
Issues: W/N there was a valid and binding award by the arbitrators in the case
at bar.

Arimao
Alternative Dispute Resolution | LPU
Held: NO. An award does not bind the parties when it is informal and not
accepted by them (parties). In the case, the Court is of opinion that by
the terms provided in McPherson’s letter, the terms i.e. the proposed
settlement was expressly made conditional on acceptance by Grindod.
To which, according to the Court, Grindod never assented to and on the
contrary he withheld by sending a response containing comments and
documents which intended to change the arbitrators’ initial conclusion.

Furthermore, the clause in Grindod’s will stating that “he charges his
executors to put an end to the issue with the Cassells by accepting the
decision of the arbitrators as final” should not be construed as an
acceptance of the proposed settlement by Grindod, because he
expressly refused such proposal in his response to McPherson’s letters
by stating a counter proposal.

The Court also took into consideration that the clause in Grindod’s will
mentions the arbitration as then “actually pending” and it even suggests
a disposition of the lighters which is not in accordance with the
proposed settlement. Therefore, such clause in Grindod’s will cannot be
construed as an acceptance of the arbitrator’s decision.

Hence, Mcpherson’s informal arbitration award which was refused by

Grindod, cannot be held as binding between Grindod and Cassell.

Arimao
Alternative Dispute Resolution | LPU