Lease of commercial premises — Parties unable to agree market value — Determination by arbitrator — Tenant wishing to appeal against figure determined — Delay in proceedings — Landlord seeking to strike out tenant’s action for want of prosecution — Finding of inexcusable delay — Court granting application to strike out under inherent jurisdiction of the court
By a lease dated May 9 1970 premises at Euston Tower, London NW1, were demised for a term of 49 years from March 25 1970 at an initial rent of £1,729,200 pa with rent reviews every seven years. The rent was increased to £3,710,000 pa at the second review on March 25 1984. Euston Centre Investments Ltd (“ECI”) was the landlord and the Secretary of State was the tenant. The parties were unable to agree the market rent as at March 25 1991 for the purposes of the third rent review. Determination of the rent was referred to an arbitrator, who published his interim award on May 28 1992 determining the market rent as at March 25 1991 at £7,760,000 pa. The applicant wished to appeal against that award, which was due to be heard in December 1993. However ECI sought an order to strike out those proceedings for want of prosecution under the inherent jurisdiction of the court. The Secretary of State submitted that the court’s jurisdiction must be exercised in accordance with the principles stated by Lord Diplock in Birkett v James [1978] AC 297 at p318; and that the application to strike out was bound to fail because ECI would be unable to establish the likelihood of serious prejudice as required under those principles.
Held The application was granted.
1. The principles in Birkett v James were intended to define the inherent power to strike out actions that had yet to be tried. Nothing said by the House of Lords was intended to place strict limits on the manner in which the court should exercise the inherent jurisdiction in proceedings of a different type.
2. The manner in which the leave to appeal procedure introduced by section 1(3)(b) of the Arbitration Act 1979 was utilised by parties aggrieved by arbitration awards was something that the court must control strictly in order to prevent abuse of the procedure. Judges should be vigilant to prevent frustration of the intention of Parliament to promote speedy finality in arbitral awards.
3. It was incumbent on an applicant to use all reasonable endeavours to get the application on as soon as practicable. In property matters the transfer of a case to the Chancery Division (as was sought in this case) often occurred within a matter of weeks without any representation to the Commercial Court being necessary. When delay in the transfer did occur — and the delay in this case was enormous — it was the duty of the applicant to make representations; and if the response was unsatisfactory, to make an application to the Commercial Court.
4. When leave to appeal from an award of arbitration was sought the applicant invoked a special statutory jurisdiction which public policy required to be exercised with the utmost expedition. The parties could not dispense with that requirement and it was unsafe to assume that slow progress of a leave application would not lead to trouble simply because the other side raised no objection.
5. This was a case that having weighed up all the matters and taken into account the prejudice to the applicant of being shut out from appealing, and the previous warnings to litigants about delay, the court should, in its discretion, strike out the Secretary of State’s entire proceedings in the High Court under the inherent jurisdiction.
Jonathan Gaunt QC (instructed by the Treasury Solicitor) appeared for the Secretary of State for the Environment; Michael Barnes QC and John Male (instructed by S J Berwin) appeared for ECI.
