Lease — Rent review — Failure to agree new rent — Arbitrator appointed to determine revised rent — Request for payment of costs in advance of arbitration — One party agreeing to pay, the other refusing — Arbitrator accepting payment offered by willing party — Whether arbitrator guilty of misconduct — Whether arbitrator should be removed — High court holding arbitrator had not acted improperly — No reasonable fear of bias.
The business premises at 7, Austen Paths, Stevenage, were the subject of a lease made between the council as landlord and C as tenant. The lease was dated October 26 1982 and was for a term of 21 years from June 16 1982. Clause 5 of the lease was an “upwards only” three-yearly rent review provision which incorporated an agreement by the parties to have the current market rent of the demised premises determined by an arbitrator appointed, on the reference of either the landlord or the tenant, by the President of the Royal Institute of Chartered Surveyors. T was the assignee of the tenant’s interest under that lease and carried on a hairdressing business at the premises. T and the council were unable to agree the new rent effective as from June 16 1991 and on February 15 1993, in accordance with the terms of the lease, an arbitrator was appointed to determine the revised rent for the premises.
An issue arose whether, in all the circumstances, the arbitrator misconducted himself because he had, without any power or provision to do so, requested that each of the parties to the arbitration should pay him 50% of his “interim account” of £6,462.50 before he would proceed to hear the arbitration. He had received the sum of £3,231.25 from the council thereby, allegedly, rendering himself vulnerable to the imputation of bias. An application was made to the court by T for the removal of the arbitrator on the ground of misconduct under the Arbitration Act 1950, section 23(1).
Held The application was dismissed.
1. For an arbitrator to request a payment from both parties which was not in terms covered by their contractual arrangement was not in any way improper: see K/S Norjarl A/S v Hyundai Heavy Industries Co Ltd [1992] 1 QB 863.
2. The mere making of the request for payment was wholly unobjectionable. On the true construction of the correspondence which passed between the parties, this was a proposal made to both parties and not merely to one of them or whichever one of them agreed to the proposal.
3. The mere fact that the arbitrator had learned that one of the parties might be willing to pay his interim account but that the other one was not so willing, could not amount to misconduct on the part of the arbitrator. Nor did it provide any foundation for reasonable or justifiable concern that the arbitrator either would be, or might be, biased in favour of the more generous party and against the less generous one.
4. No reasonable person in the position of T would have lacked the confidence or fear of bias in the circumstances of this case. The case would be remitted to the arbitrator.
Mark Warwick (instructed by David Barney & Co, of Stevenage) appeared for the applicant; Joanne Moss (instructed by the solicitor to Stevenage Borough Council) appeared for the respondent.
