Petrol filling station and area at rear for bunkering — Lease providing for rent review every five years — Open market rental value as between willing landlord and tenant for residue of term — Final award of arbitrator — Tenants challenging award on ground that arbitrator not taking account of all relevant evidence and failing to make allowance for relevant factors in valuation — Award remitted on latter ground
The premises, Flamstead Filling Station, Old Watling Street, Flamstead, Hemel Hempstead, were divided into two: the petrol filling station and the rear bunkering site (the “truckstop”). The tenants had entered into a lease for a term of 95 years (less three days) from June 30 1975 at an initial rent of £12,500 pa reviewable every five years. The rent review in clause 1(1) of the lease was for an upwards-only review of the open market rent, ie “the annual rental value … in the open market which might be demanded by a willing landlord for term of years … equivalent in length to the residue unexpired at the review date … on the basis of the use of the premises … as a garage for the sale of petrol and repair of motor vehicles … or in the event of [permitted] development”. The rent at the review in 1990 was £20,000 pa. The arbitrator awarded a figure of £102,750, the landlords having contended for £179,808 and the tenants having cited £42,750 as their upper limit. The tenants applied for the award to be set aside on grounds, inter alia, that the arbitrator had failed to take account of evidence in respect of both parts of the premises and had failed to make allowance for relevant factors stated in the award against the valuations.
Held The award would be remitted on the ground of failing to make allowance for relevant factors.
1. With regard to the question of failure to take account of the evidence, the court concluded that the arbitrator had rejected certain evidence for the tenant. That was a question of fact with which the court could not interfere.
2. If the arbitrator had indeed disregarded evidence, which was relevant, that would be as much misconduct as to refuse to allow a party to call a relevant witness: see Unit Four Genevras Ltd v Tosaca Investments Ltd [1993] 2 EGLR 11 and Handley v Nationwide Anglia Building Society [1992] 2 EGLR 114.
3. However, to reject evidence was not to ignore it. The court had not the slightest doubt that, when the award was read as a whole, the arbitrator had duly considered and rejected the relevant evidence.
4. An award was not akin to a summing up before a jury and the court rejected the implicit supposition in the present attack on the award that everything which was said in evidence had to be dealt with and summarised in the award.
5. The findings or determination of the arbitrator upon contested issues of fact and law had to be stated sufficiently clearly and in a non-technical and non-legalistic manner, to establish the way in which the arbitrator had reached his decision. Thus, if either party asked: “Why had the arbitrator come to this conclusion?”, the award itself should provide the answer. The present award did so.
6. With regard to the question of allowances (the second ground), the court accepted the tenants’ contention that there was an internal inconsistency in the manner in which they were calculated in relation to the filling station and truckstop. However, the court would not accede to the application that the award be set aside: see Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14 on “mere procedural mishap”. It would remit it for the question of allowances to be reconsidered.
Jonathan Brock (instructed Rexworthy & Co, of St Albans) appeared for the tenants; Joanne Moss (instructed by Wedlake Bell) appeared for the landlords.
