Jd Wetherspoon Plc v Jay Mar Estates
| Jurisdiction | England & Wales |
| Judgment Date | 04 April 2007 |
| Neutral Citation | [2007] EWHC 856 (TCC) |
| Date | 2007 |
| Docket Number | Case No: HT-07-44 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2007] EWHC 856 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
His Honour Judge Peter Coulson QC
Case No: HT-07-44
MISS CATHERINE TASKIS appeared on behalf of THE CLAIMANT (instructed by Sprecher Grier Halberstam LLP).
MR MARK SEFTON appeared on behalf of THE DEFENDANT (instructed by Kuit Steinart Levy).
HIS HONOUR JUDGE PETER COULSON Q.C.:
A: Introduction.
This is an application by JD Wetherspoon PLC (“JDW”) for an order remitting the arbitrator's award for reconsideration on the grounds that, pursuant to section 68.2 of the Arbitration Act 1996, there has been a serious irregularity which has caused JDW a substantial injustice. The application is opposed by Jay Mar Estates (“JME”). The matter has been cogently argued by both counsel and I am very grateful for their submissions. Having considered the dispute carefully, I have concluded that there is no reason for me not to give judgment straightaway.
JDW are the tenants of licensed premises in Redditch owned by JME (“the property”). There is a five year rent review cycle. Clause 6.1.3.9 of the lease provided that, when conducting the review, it must be assumed that the property was being let in a shell condition.
On 12th January 2007 the arbitrator, Mr Michael Newman, published his rent review arbitration award which had the effect of increasing the annual rent from £90,000 to £97,750. In his award the arbitrator referred to a number of suggested comparables, including two licensed premises in particular. The first was 'Barracuda', at Unit 4B, The Quadrant, Redditch, which was adjacent to the property. The other was 'Huggies', at 11/12 Marketplace, Redditch. Although Barracuda was a shell, and therefore directly comparable, Huggies was fitted out, so an adjustment had to be made in order to arrive at a comparable rental figure for the purposes of the review.
In arriving at the adjusted figure for Huggies, the arbitrator made a number of findings which I set out in greater detail in paragraph 22 below. His conclusion on this point was set out at paragraph 18.10.10 of his award. He said this:
“In conclusion on this point, I consider that the method employed by Mr DJ McElhannan of a percentage deduction is too simplistic and is not supported by evidence.
I prefer the approach of Mr N Cassidy, but I do NOT ACCEPT his assessment.
During my inspection I assessed the approximate capital value the tenant probably placed on the fittings, fixtures and furnishings.
This is within my professional expertise as a valuer and expert on the valuation of the contents of in situ fittings, fixtures, furnishings and utensils of trade in licensed premises. I place this value as at 25th March 20006 at £150,000.”
He then undertook a calculation which utilised the £150,000 figure, from which various deductions were made, to arrive at a devalued rental figure of £70,500.
It is this exercise which lies at the heart of JDW's complaint. They say that this assessment was based on an inspection done after the parties had made their submissions, and the arbitrator erred because he did not give them an opportunity to address the £150,000 figure, or the calculations based upon it. They go on to say that, had he done so, they would have presented further evidence which would have resulted in the arbitrator reaching a different conclusion. JME, on the other hand, maintain that the arbitrator did not commit any sort of irregularity. Even if they are wrong about that, they reject absolutely the suggestion that there has been any sort of substantial injustice as a result of the arbitrator's use of the £150,000 figure.
Accordingly, I set out below the relevant principles of law which seem to me to be applicable to this application, and I then go on to analyse each of the two issues that have arisen, namely: (a) Does paragraph 18.10.10 of the award demonstrate a serious irregularity; and (b) If so, has it caused a substantial injustice?
B: Principles
a) The Relevant Sections of the 1996 Act
The relevant parts of s.68 of the Arbitration Act 1996 read as follows:
“(1) A party to arbitral proceedings may (upon notice to the other parties and the tribunal) apply to the court challenging an award in the proceedings on the grounds of serious irregularity affecting the tribunal, the proceedings or the award …
(2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—
(a) failure by the tribunal to comply with section 33 (general duty of tribunal) …
(3) If there is shown to be serious irregularity affecting the tribunal the proceedings or the award, the court may—
(a) remit the award to the tribunal, in whole or in part, for reconsideration …”
The relevant parts of s.33(1) of the same Act read as follows:
“(1) The tribunal shall—
(a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting its case and dealing with that of his opponent …”
b) Serious Irregularity/General.
Section 68 of the 1996 Act cannot be used as a means of raising an appeal on a question of fact which would otherwise be prohibited (see Warborough Investments Limited v S Robinson and Sons Holdings Limited [2003] EWCA Civ 751). It is not to be used as a means of launching a detailed enquiry into the manner in which the arbitrator considered the various issues (see Weldon Plant v The Commission for New Towns [2000] BLR 496 cited with approval in World Trade Corporation Limited v C.Czarnikow Sugar Limited [2004] 2 All ER Comm). It is axiomatic that the issue in any s.68 application is not whether the arbitrator reached the right conclusion (see St George's Investment Company v Gemini Consulting Limited [2005] 1 EGLR 5.
c) The Arbitrator's Own Experience
The arbitrator is fully entitled to make use of his own experience in reaching his conclusions, provided that it is of a kind and in the range of knowledge that one would reasonably expect the arbitrator to have, and providing that he uses it to evaluate the evidence called and not to introduce new and different evidence (see Checkpoint Limited v Strathclyde Pension Fund [2003] EWCA Civ 84). It is important to note that the arbitrator cannot:
a. Use his expertise to introduce new evidence which he then fails to allow the parties to address (see Eastcheap Dried Fruit & Co v NV Gerbroedus Catz Handelsvereeniging) [1962] 1 Lloyds Rep 283; and
b. Make an award based upon arguments or evidence that were not presented to him, or upon a basis that is contrary to the common assumption of the parties as represented to him: see the judgment of Bingham J (as he then was) in Zermalt Holdings SA v Nu-Life Upholstery Repairs Limited [1985] 2 EGLR, 14 at page 15 K-N, where he said:
“If an arbitrator is impressed by a point that has never been raised by the either side then it is his duty to put it to them so that they have an opportunity to comment. If he feels that the proper approach is one that has not been explored or advanced in evidence or submission then again it is his duty to give the parties a chance to comment. If he is to any extent relying on his own personal experience in a specific way then that again is something that he should mention so that it can be explored. It is not right that his decision should be based on specific matters which the parties have never had a chance to deal with, nor is it right that a party should first learn of adverse points in the decision against him. That is contrary both to the substance of justice and to its appearance…”
The authority most often referred to on this topic is the decision of the Court of Appeal in Fox v Welfair [1981] 2 Lloyd's Law Reports 514. That was a building arbitration in which the claimant owners brought claims against the building contractors in respect of defects that had appeared in a block of flats. At the arbitration the respondent contractors, who by then were in liquidation, were not represented and neither were the NHBC, who stood behind them. Despite the fact that the respondents were not represented, the arbitrator rejected the bulk of the claims made against them, although he had made no relevant comment during the oral evidence called on behalf of the claimants; indeed, the claimants first learnt of the scale and nature of their defeat when they were provided with copies of the published award. In the words of Ackner J (as he then was) at first instance:
“The arbitrator failed to provide the applicants with a fair hearing, in that he failed to give them any opportunity to deal with the very serious deficiencies which he must ultimately have found in the presentation and/or proof of their claim.”
He therefore set aside the award.
That decision was upheld by the Court of Appeal. Lord Denning MR concluded that the arbitrator had fallen into error. He said that he did not think it was the duty of the arbitrator to protect the interests of the unrepresented party, and he went on to say at page 522:
“In particular he [the arbitrator] must not throw his own evidence into the scale on behalf of the unrepresented party—or use his own special knowledge for the benefit of the unrepresented party—at any rate he must not do so without giving the plaintiff's expert a chance of dealing with it—for they may be able to persuade him that his own view is erroneous.”
Dunn LJ said at page 528 that:
“… an expert arbitrator should not in effect give evidence to himself without disclosing the evidence on which he relies to the...
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