Warborough Investments Ltd and S.Robinson & Sons (Holdings) Ltd [CA (Civil), 10/06/2003]
| Jurisdiction | England & Wales |
| Judge | Lord Justice Clarke,Lord Justice Jonathan Parker |
| Judgment Date | 10 June 2003 |
| Neutral Citation | [2003] EWCA Civ 751 |
| Docket Number | Case No: A3 2002 2643 CHANI |
| Court | Court of Appeal (Civil Division) |
| Date | 10 June 2003 |
[2003] EWCA Civ 751
Lord Justice Clarke and
Lord Justice Jonathan Parker
Case No: A3 2002 2643 CHANI
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION (Mr Justice Lawrence Collins)
Mr Nicholas Dowding QC (instructed by Messrs Beachcroft Wansbroughs) for the Appellant
Miss Rosemary Jackson (instructed by Messrs Flint Bishop and Barnett) for the Respondent
INTRODUCTION
This is an appeal by Warborough Investments Ltd against an order made on 27 November 2002 by Lawrence Collins J dismissing an application by the appellant under section 68 of the Arbitration Act 1996 ("the 1996 Act") relating to a rent review arbitration between the appellant (as landlord) and S. Robinson & Sons (Holdings) Ltd (as tenant) pursuant to a lease of premises at Robinson Industrial Estate, Shaftesbury Street, Derby DE28 8YB ("the subject premises"). S. Robinson & Sons (Holdings) Ltd is the respondent to the appeal.
In the proceedings, the appellant seeks an order that the award of the arbitrator, Mr Raymond Valenti, be remitted for reconsideration, on the ground of serious irregularity. It contends that the arbitrator reached his determination by adopting an approach to valuation which was not advocated by either party; that no prior information was given by the arbitrator of his intention to adopt that approach; and that in consequence neither party was given an opportunity to make submissions as to the correctness of that approach. It further contends that the arbitrator based his award on unsupported factual statements. In consequence, so it is contended, the appellant has suffered serious injustice in that had it been alerted to the arbitrator's intentions it would have made further representations and presented further evidence which would have raised a real possibility of an outcome more favourable to the appellant. In the event, so the applicant contends, the award which the arbitrator made is significantly lower than the market value of the subject premises at the review date, with a knock-on effect not only on the rental income from the subject premises but also on the capital value of the reversion in the subject premises and of other comparable reversions owned by the appellant.
In his judgment dismissing the application, the judge concluded that the matters complained of by the appellant did not amount to an irregularity, within the meaning of section 68. He went on to express himself as not satisfied that the appellant had suffered substantial injustice as a result of them.
The judge granted permission to appeal.
THE RELEVANT STATUTORY PROVISIONS
Section 1 of the 1996 Act, which is headed 'General principles', provides as follows (so far as material):
"The provisions of this Part are founded on the following principles, and shall be construed accordingly –
(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense; …."
Section 33 of the 1996 Act, which is headed 'General duty of the tribunal', provides as follows (so far as material):
"(1) The tribunal shall –
(a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and
(b) adopt procedures suitable to the circumstances of the particular case …. so as to provide a fair means for the resolution of the matters falling to be determined.
(2) ….."
Section 68 of the 1996 Act, which is headed 'Challenging the award: serious irregularity', provides as follows (so far as material):
"(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground 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 BACKGROUND
The background to the matter is helpfully and clearly set out in part II of the judge's judgment, comprising paragraphs 5 to 13, and I can do no better than set those paragraphs out in full, as follows:
"5. By a lease dated October 5, 1981, and made between Derby City Council as lessor and S Robinson & Sons (Engineering) Limited as lessee, premises at Shaftesbury Street in the City of Derby were demised for a term of 125 years commencing on February 17, 1981 at a yearly rent of £11,250 subject to review as provided. In 1991 the reversionary interest under the lease became vested in the landlord and the lease was transferred to the tenant. The premises are a light industrial estate ("Robinsons Industrial Estate") of 29 terraced nursery units, located on the north side of Shaftesbury Street, Derby, a short distance from the junction of Shaftesbury Street and Osmaston Road, approximately 1 mile from the city centre.
6. There are some similar, but much smaller, properties on Osmaston Road, Nos. 244, 246, 248 and 250. All of them, like the Robinsons Industrial Estate, were to be the subject of rent reviews as at February 17, 1989 and as at February 17, 1997. The 1989 rents on Nos. 244, 246, 248 and 250 had been settled by agreement, and there had been settlements of the 1997 rents for Nos. 244, 246 and [248].
7. Clause 2(k) of the Robinsons Industrial Estate lease restricted the use of the premises to light industrial or warehousing purposes only. The use of Nos. 248 and 250 Osmaston Road was similarly restricted. The use of No. 244 was limited to light industrial or warehousing purposes and as a wholesale/retail warehouse for the sale of carpets and other floor coverings, and that of No. 246 for light industrial or warehousing purposes and for the retail sale of ceramic tiling products and tiling and decorating materials only (but was later extending to use for double glazing retail business).
8. In 1989 the agreed new rents per square yard were as follows: (1) Robinsons Industrial Estate: £1.94; (2) 244 Osmaston Road: £3.10; (3) 246 Osmaston Road: £3; (4) 248 Osmaston Road: £2.17; (5) 250 Osmaston Road: £2.46.
9. In 1997 settlements were reached for Nos. 244, 246 and 248 as follows: (1) 244 Osmaston Road: £4.62; (2) 246 Osmaston Road: £4.70; (3) 248 Osmaston Road: £4.65.
10. Subsequently the rent on No. 246 Osmaston Road was increased to £5.63 when the retail use was extended to double glazing.
11. There is an estate called Osmaston Park Industrial Estate about a mile away, which is one of Derby's principal industrial estates.
12. Under clause 5 of the lease provision was made for the rent to be reviewed in accordance with clause 5 of the lease every 8 years. By clause 5(1):
'(1)(a) The yearly ground rent shall be such sum as shall be assessed as a reasonable ground rent for the demised premises as at the review date based on the then current market value of land available for development …
(b) For the purpose of each rent review the demised premises shall be considered as a vacant site available for development for the then current purpose with equal statutory service connections and otherwise on similar terms and conditions as are herein contained except as to the amount of rent payable.'
13. The rent fell to be reviewed as of February 17, 1997 and in accordance with the rent review clause, the parties, in default of agreement, applied to the President of the Royal Institution of Chartered Surveyors for the appointment of a single arbitrator to determine the question. Mr Valenti, BSc FRICS ACI Arb was appointed by the President of the Royal Institution of Chartered Surveyors as arbitrator to determine the rent payable in respect of the review date. Prior to that date the rent was as settled in 1989, £1.94 per square yard or £18,500 per annum."
It is also convenient at this stage to note the provisions of the lease of the subject premises relating to user. Clause 2 contains the tenant's covenants. Subclauses (k) and (l) of that clause are in the following terms (so far as material):
"(k) To use the demised premises for light industrial or warehousing purposes only but not for any other purpose whatsoever PROVIDED that with the previous written consent of the Council the demised premises may be used for some other trade or business which does not (in the opinion of the Council) conflict with the principles of good estate management and is a use within Classes III or X of the Town and Country Planning (Use Classes) Order 1972.
(l) Not to use the demised premises for retail sales of any description …."
THE MATERIAL BEFORE THE ARBITRATOR
The arbitration was conducted on the basis of written reports (variously described as submissions or statements of case) by Mr Stephen Gillott, of Messrs Fisher Hargreaves Proctor, Chartered Surveyors (for the appellant) and Mr Neil McNab, of Messrs Raybould & Sons, Chartered Surveyors (for the respondent). Following exchange of their first reports, supplementary reports were exchanged in which each commented on the other's first report. This was in accordance with a procedure which had previously been directed by the arbitrator. No...
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