The independent arbitration panel empowered to reduce or uphold commercial rent arrears generated during the Covid-19 pandemic has criticised private hospital and gym operator Nuffield Health for ignoring the arbitration process.
The freehold owner of Nuffield’s Newbury Racecourse health club applied to the Falcon Chambers Arbitration panel earlier this year to seek recovery of a £585,000 rent debt due to them. The case was assigned to arbitrator Martin Dray.
According to his arbitration decision, Nuffield Health ignored all correspondence sent to it by the landlord’s lawyer, Ashurst, informing the firm of the arbitration. The correspondence was sent to the company’s head of estates.
In his decision, the arbitrator said he was “satisfied” that Ashurst had contacted the correct person, the documents had been served and the arbitration could go ahead.
He found that Nuffield should pay the sum in full.
In a second decision on costs, published a few days after the first, the arbitrator said Nuffield Health should pay all the costs of the arbitration as “true to its form thought,” the company “has not made any representations”.
“In this case I regard the respondent as unreasonably having failed to engage at any stage and thus having effectively bound the applicant to pursue what was, in the event, a one-sided arbitration,” he said.
“Although a respondent is not compelled to engage, nonetheless it is tolerably clear that [the Commercial Rent (Coronavirus) Act] envisages and distinctly encourages such participation.
“The respondent simply buried its head in the sand and adopted a policy of radio silence. Despite several opportunities and invitations to engage, it did nothing at all.”
This forced an arbitration to take place, he said. Nuffield Health “could have avoided this waste of time and expense altogether if only it had engaged in a timely fashion and confirmed that it did not contest the matter”.
Dray added: “In my judgment, the respondent’s conduct was manifestly unreasonable and contrary to the spirit and intent of [the Commercial Rent (Coronavirus) Act], which (as noted above) is aimed at affording the parties the chance to resolve their differences, with determination by arbitration only being required if dialogue cannot produce a consensus.”
He said that “to reflect the respondent’s thoroughly unhelpful behaviour”, Nuffield Health should pay the full costs of the arbitration.
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