Secretary of State for the Environment v Euston Centre Investments Ltd

JurisdictionEngland & Wales
Judgment Date24 June 1994
Judgment citation (vLex)[1994] EWCA Civ J0624-2
Docket NumberNo. CHANI 93/1798/B
CourtCourt of Appeal (Civil Division)
Date24 June 1994
Secretary of State for the Environment
Euston Centre Investments Ltd.

[1994] EWCA Civ J0624-2

(Mr. Cherryman QC Sitting as a Deputy High Court Judge)

Before Lord Justice Dillon Lord Justice Steyn and Lord Justice Waite

No. CHANI 93/1798/B




MR. J. GAUNT QC and MISS E. FOGGIN (instructed by Treasury Solicitors Department) appeared on behalf of the Appellant.

MR. M. BARNES QC and MR. J. MALE (instructed by Messrs. S. J. Berwin, London) appeared on behalf of the Respondent.


I will ask Lord Justice Steyn to give the first judgment in this matter.


The principal question in this appeal is whether the principles laid down in Birkett v. James [1978] AC 297 are applicable to a motion to strike out for want of prosecution an application for leave to appeal under section 1 of the Arbitration Act 1979. It is common ground that the High court has jurisdiction to strike out such an application for want of prosecution. The question posed is whether it is a pre-condition to striking out such an application that the delay involved has caused, or is likely to cause or to have caused, serious prejudice to the other party.


Under a lease dated 9th June 1970 Euston Centre Investments Limited is the landlord of Euston Tower, Euston Road, London, NW1, and the Secretary of State for the Environment is the tenant. The term of the lease is for 49 years from 25th March 1970. The lease contains a rent review clause. It provides for rent reviews every 7 years. In the event of a difference the matter is to be settled by the decision of a sole arbitrator agreed by the parties or appointed by the President of the Royal Institution of Chartered Surveyors.


In March 1991 a rent review became due. The matter was not resolved by agreement. An arbitrator was appointed. In February and April 1992 arbitration hearings were held. There was an issue about asbestos discovered in the building. The landlord argued that the asbestos should have been removed by the tenant pursuant to a covenant before the review date. The landlord contended the premises should be valued as if the asbestos had been removed. The tenant argued that there was no breach of covenant and that what was to be valued was a building with asbestos. On 28th May 1992 the arbitrator published his award. He accepted the landlord's argument that the asbestos should have been removed and made no deduction in respect of asbestos.


The tenant wishes to appeal on what is said to be a point of law within the meaning of section 1 of the 1979 Act. Within 21 days after the publication of the award, which is the time limit stipulated by Order 73, rule 5, the tenant caused an Originating Notice of Motion and summons seeking leave to appeal to be served and entered. The tenant accepts the arbitrator's decision as regards asbestos surrounding certain vertical riser ducts but wishes to contend that, in the absence of any finding that there was any damage to the rest of the asbestos, the arbitrator should not have found that the other asbestos should have been removed.


Four procedural matters must now be explained. First of all, arbitration matters are assigned to the Commercial Court. Secondly, the practice is that an application for leave to appeal in a rent review arbitration is normally transferred to the Chancery Division. Third, the details of the practice is more fully explained by Anthony Colman, the Practice and Procedure of the Commercial Court, [1990] 3rd edn., 162–163.

"If the substance of the arbitration is clearly commercial a date for the hearing of the application can if requested be obtained from the Commercial Court Listing Officer when the summons is issued, although it may be found more convenient to postpone obtaining a date until after the summons has been served so that the date can be agreed by liaison between the solicitors, the Listing Officer and counsel's clerks. If on the other hand the substance of the arbitration is not manifestly commercial or concerned with the law of arbitration procedure, the applicant will normally be required to leave the summons in the Commercial Court Office so that one of the commercial judges may have the opportunity of deciding whether to direct the application to be heard otherwise than by a commercial judge in the exercise of his discretion under RSC Order 73, rule 6(1). If the judge does make such a direction the Registry will inform the applicants' solicitors who must apply for a date to the appropriate court, as directed by the commercial judge. If the commercial judge does not make such a direction the Registry will inform the applicant's solicitor who should then liaise with the Listing Officer as to the date for the hearing of the application for leave to appeal by the commercial judge".


Fourthly, the current edition of the Guide to Commercial Court practice, which is to be found at page 1239 of the Supreme Court Practice 1993 (Volume 1), provides in paragraph 7.2 as follows:

"In arbitration matters it is the particular duty of the court to see that court proceedings are not a cause of delay. A hearing date must be applied for promptly after the issue of the relevant process or after obtaining leave to appeal under the Arbitration Act 1979. Delay will prejudice any application for relief. Where it comes to the notice of the court that improper delay is occurring, it may itself direct that the matter be listed".


Paragraph 7.2 first appeared in the Guide in March 1990. This is the procedural framework against which subsequent events must be examined.


There was a lapse in Commercial Court case management. The question of the possible transfer of the application to the Chancery Division was left in abeyance for some nine months. On 19th March 1993 and by order of Saville J (now Saville LJ) the matter was transferred to the Chancery Division. Only on 29th April 1993 was the Treasury Solicitor (the tenant's solicitor) informed of the transfer. That involved a period of delay of about ten months. The lawyer in charge of the case in the Treasury Solicitor's office states on affidavit that he, "… telephoned the Commercial Court from time to time but heard nothing from them until 29th April 1993". He had no attendance notes and never wrote to the Clerk of the Commercial Court.


On 9th June 1993 the Treasury Solicitor, writing on behalf of the tenant, suggested to the landlord's solicitors that the clerks of leading counsel, who had appeared at the arbitration, should be in contact to fix a date. On 15th June the landlord's solicitors agreed. On 21st June the Treasury Solicitor instructed his counsel's clerk to contact other clerks, "…. with a view to obtaining a hearing date in the Chancery Division as soon as possible". In July and August 1993 counsel for the tenant and landlord respectively gave estimates for the duration of the hearing. On 19th August 1993 the hearing date was fixed for 2nd December 1993.


On 24th November 1993 the landlord served a Notice of Motion to dismiss the application for leave to appeal for want of prosecution. On the same day the affidavit in support was served. On 29th November 1993 the affidavit in opposition was served.


On 2nd December 1993 Mr. John Cherryman QC, sitting as a Deputy High Court Judge, heard argument on the question of dismissal for want of prosecution first. He reserved judgment. On 9th December he gave judgment striking out the application for leave to appeal for want of prosecution. That judgment is now reported: Secretary of State for the Environment v. Euston Centre Investments Ltd [1994] 1 WLR 563.


The judge said that a question of general importance arose, namely whether the principles to be applied were those stated in Birkett v. James, supra, or, because an application for leave to appeal from an arbitration award is involved, some other principles. The judge came to the following conclusion (at [1994] 1 WLR 563, 568H —569A):

"My conclusion therefore is that the inherent power to strike out applications for leave is not limited by Birkett v. James principles but is exercisable whenever there has been a failure to conduct and prosecute an appeal with proper dispatch. Whether such power should be exercised in any particular case is, of course, a matter for the discretion of the court".


The judge then considered the question of discretion. Taking into account the initial 10 months delay and the 5 weeks it took the Treasury Solicitor to act upon notification of transfer, the judge concluded that he ought to strike out the application.


On this appeal Mr. Gaunt QC, for the tenant, makes two broad submissions. First, he submits that the judge was wrong when he ruled that the Birkett v. James requirements are inapplicable. He argues that proof of prejudice is an indispensable pre-condition to striking out an application for leave to appeal on a point of law arising from an arbitration award. If this submission is right, Mr. Barnes QC., for the landlord, concedes that the appeal must succeed. Alternatively, if Birkett v. James is inapplicable, Mr. Gaunt submits that the judge exercised his discretion wrongly.


The Birkett v. James point It is manifest that the High Court has inherent power to strike out for want of prosecution an application for leave to appeal under section 1 of the 1979 Act or an appeal under that section. The terrain of the debate is whether the Birkett v. James requirements, and in particular the requirement of prejudice, are applicable.


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