Compton Beauchamp Estates Ltd v James William Mills Spence
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 01 May 2013 |
| Neutral Citation | [2013] EWHC 1101 (Ch) |
| Date | 01 May 2013 |
| Court | Chancery Division |
| Docket Number | Case No: HC11C04434 |
[2013] EWHC 1101 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN THE MATTER OF AN ARBITRATION CLAIM CONCERNING A RENT REVIEW OF KINGSTONE FARM, KINGSTONE WINSLOW, BERKSHIRE
AND IN THE MATTER OF AN ARBITRATION UNDER THE ARBITRATION ACT 1996
AND IN THE MATTER OF AN ARBITRATION AWARD DATED 18 NOVEMBER 2011
AND IN THE MATTER OF AN APPLICATION UNDER SECTIONS 68 AND 69 OF THE ARBITRATION ACT 1996
Royal Courts of Justice
Rolls Building, Fetter Lane
London, EC4A 1NL
Mr Justice Morgan
Case No: HC11C04434
Mr Edward Peters (instructed by Michelmores Solicitors LLP) for the Claimant
Mr William Batstone (instructed by Thrings LLP) made Written Submissions for the Defendant
Hearing date: 19 March 2013
The claim
This is an arbitration claim arising out of an arbitration award which determined the rent payable in relation to an agricultural holding pursuant to the provisions of the Agricultural Holdings Act 1986 ("the 1986 Act"). In the arbitration, the Claimant was the landlord and the Defendant was the tenant of the relevant holding. In the present claim, the Claimant seeks an order under section 68 of the Arbitration Act 1996 ("the 1996 Act") setting aside the arbitration award in its entirety, or alternatively remitting the matter to the same arbitrator for reconsideration by him whether in whole or in part. At the hearing before me, Mr Peters appeared on behalf of the Claimant. He had not appeared at any hearing which had taken place before the arbitrator. The Defendant did not appear at the hearing before me. However, I was provided with detailed written submissions prepared by counsel, Mr Batstone, who had appeared at the substantive hearing before the arbitrator.
The background facts
The Claimant is the freehold owner of an agricultural holding known as Kingstone Farm, Ashbury, Kingstone Winslow, Berkshire. The holding extends to some 605 acres and includes a farmhouse and farm buildings. The Defendant is the tenant from year to year of the holding and his tenancy is within the 1986 Act. The Defendant became tenant of the holding pursuant to the succession provisions of that Act. On 15 th January 2009, an Agricultural Land Tribunal made a direction, by consent, in favour of the Defendant pursuant to section 53(7) of the 1986 Act. The effect of that direction was that the Defendant became tenant of the holding with effect from 25 th March 2009.
The arbitration
The rent payable under the tenancy which preceded the Defendant's tenancy of the holding was £28,500 per annum, with effect from a date in 1999. The Claimant gave the Defendant a notice under section 48(3) of the 1986 Act (read together with section 56(3) thereof) requiring an arbitration as to the amount of the rent payable under the Defendant's tenancy of the holding, with effect from 25 th March 2009. In due course, the President of the Royal Institution of Chartered Surveyors appointed an arbitrator, Mr Roderick Mackay, FRICS, FCIArb, to determine the amount of the rent payable for the holding with effect from 25 th March 2009.
The 1986 Act prescribes the basis for the determination of the rent in this case. Section 48(7) read together with section 56(3) provides that the arbitrator is to determine what rent should be properly payable from the relevant date, in this case 25 th March 2009. The "rent properly payable" is elaborated by section 48(9) which provides:
"(9) For the purposes of this section the rent properly payable in respect of the holding shall be the rent at which the holding might reasonably be expected to be let by a prudent and willing landlord to a prudent and willing tenant, taking into account all relevant factors, including (in every case) the terms of the tenancy or prospective tenancy (including those relating to rent) and any such other matters as are specifically mentioned in sub-paragraph (1) of paragraph 1 of Schedule 2 to this Act (read with sub-paragraphs (2) and (3) of that paragraph)."
Paragraph 1 of schedule 2 to the 1986 Act provides:
"1(1) For the purposes of section 12 of this Act, the rent properly payable in respect of a holding shall be the rent at which the holding might reasonably be expected to be let by a prudent and willing landlord to a prudent and willing tenant, taking into account (subject to sub-paragraph (3) and paragraphs 2 and 3 below) all relevant factors, including (in every case) the terms of the tenancy (including those relating to rent), the character and situation of the holding (including the locality in which it is situated), the productive capacity of the holding and its related earning capacity, and the current level of rents for comparable lettings, as determined in accordance with sub-paragraph (3) below.
(2) In sub-paragraph (1) above, in relation to the holding—
(a) "productive capacity" means the productive capacity of the holding (taking into account fixed equipment and any other available facilities on the holding) on the assumption that it is in the occupation of a competent tenant practising a system of farming suitable to the holding, and
(b) "related earning capacity" means the extent to which, in the light of that productive capacity, a competent tenant practising such a system of farming could reasonably be expected to profit from farming the holding.
(3) In determining for the purposes of that sub-paragraph the current level of rents for comparable lettings, the arbitrator shall take into account any available evidence with respect to the rents (whether fixed by agreement between the parties or by arbitration under this Act) which are, or (in view of rents currently being tendered) are likely to become, payable in respect of tenancies of comparable agricultural holdings on terms (other than terms fixing the rent payable) similar to those of the tenancy under consideration, but shall disregard—
(a) any element of the rents in question which is due to an appreciable scarcity of comparable holdings available for letting on such terms compared with the number of persons seeking to become tenants of such holdings on such terms,
(b) any element of those rents which is due to the fact that the tenant of, or a person tendering for, any comparable holding is in occupation of other land in the vicinity of that holding that may conveniently be occupied together with that holding, and
(c) any effect on those rents which is due to any allowances or reductions made in consideration of the charging of premiums."
On 12 th April 2010, following a preliminary hearing (by telephone), the arbitrator gave directions for the conduct of the arbitration. He directed sequential Statements of Case so that the Claimant was to serve its Statement of Case first, to be followed by the Defendant's Statement of Case. He also directed that there be sequential exchange of expert evidence with the Claimant to serve its expert evidence first, to be followed by the expert evidence on behalf of the Defendant. The arbitrator also stated in his directions that he would in due course make a reasoned award. The parties then served sequential Statements of Case; the Claimant contended that the rent properly payable was £46,000 per annum and the Defendant contended for a rent of £28,500.
Thereafter, the Claimant served two expert's reports. The first was from a Mr Hollis, who principally dealt with the productive capacity and the related earning capacity of the holding. The second report was from a Mrs Martin, MRICS FAAV, who expressed her opinion as to rental value in accordance with the statutory formula in the 1986 Act. In her opinion, the rent properly payable was £47,000. In relation to the productive capacity and the related earning capacity of the holding, Mrs Martin relied upon the report of Mr Hollis.
Following his receipt of the expert evidence on behalf of the Claimant, the Defendant served two expert's reports. The first was from a Mr Green who principally dealt with the productive capacity and the related earning capacity of the holding. The second report was from a Mr Horton, MRICS FAAV, who expressed his opinion as to rental value in accordance with the statutory formula in the 1986 Act. In his opinion, the rent properly payable was £28,500 (ignoring a separate dispute about a possible disregard of certain works, to which I refer in the next paragraph). In relation to the productive capacity and the related earning capacity of the holding, Mr Horton relied upon the report of Mr Green.
There was an issue between the parties as to the correct treatment of certain building works and other works which were said to have been carried out under the tenancy which preceded the Defendant's tenancy. The Defendant contended that the effect on rent of these works was to be disregarded when determining rental value under the statutory formula. The Claimant disagreed. That issue generated a considerable number of written submissions. Eventually, the arbitrator referred the issue to counsel, acting as a legal assessor, and counsel advised that the effect on rent of these works was not to be disregarded. In due course, in his award, the arbitrator followed the advice of counsel in this respect.
Prior to the substantive hearing of the dispute there was a further hearing (by telephone) for directions at which a question as to the applicable rules of evidence was debated. The arbitrator then gave directions as to the rules of evidence which would apply although that matter was revisited at the later substantive hearing.
The substantive hearing took place on 10 th and 11 th May 2011. The Claimant's advocate at that hearing was a surveyor (who did not give any expert evidence) and the Defendant was represented by Mr Batstone. The four experts to whom I have referred gave evidence and were...
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