Arbitration — Misconduct — Rent review — Request by applicant tenant that arbitrator stand down — Respondent landlord wishing to rely on a comparable — The comparable was determination of the arbitrator acting as an independent expert — Applicant wishing to call arbitrator as witness — Applications under section 23 and 25 of the Arbitration Act 1950 dismissed
holds a lease of premises at St Paul’s House, Warwick Lane, in the City of
London — The first respondent is the landlord — The second respondent was
appointed an arbitrator in May 1991 to determine the rent at review — In
relation to the rent review of premises at 7-10 Old Bailey, also in the City,
the arbitrator had been appointed an independent expert — As independent expert
he had determined the rent of 7-10 Old Bailey at £1.4m — Landlord in present
case wished to rely upon that determination as a comparable — Tenant objected
to comparable on grounds that determination too high — Tenant requested
arbitrator to stand down — On landlord’s valuer including 7-10 Old Bailey
transaction as comparable in submissions, tenant applied for order that
arbitrator misconducted himself and that he stand down
submitted that arbitrator cannot do justice in considering comparable transaction
because of interest in comparable — Arbitrator’s integrity and impartiality
raises doubt as to whether justice can be seen to be done — Tenant submitted it
wished to call arbitrator as a witness in the arbitration to ask him factually
how he arrived at his rental determination of 7-10 Old Bailey — If it cannot do
this it will be prejudiced
No reason why tenant should have any fears — No reason why arbitrator should be
biased — On third point, the whole basis of calling arbitrator as witness would
be to undermine his opinion evidence — In those circumstances arbitrator would
be called as an expert witness — Matters of expert opinion should be addressed
to tenant’s valuer in arbitration — Questions of fact can be asked of the
arbitrator or from other sources — No reason why tenant would be prejudiced by
inability to call the arbitrator — Test in ‘The Ellisar‘ applied
The following
case is referred to in this report.
Haigh
and London North Western and Great Western Railway Co, In re [1896] 1 QB 649
This was an
application by an originating notice of motion, pursuant to sections 23 and 25
of the Arbitration Act 1950, for the removal of Mr A H P Gillett [FRICS], an
arbitrator appointed to determine the rent of premises at St Paul’s House,
Warwick Lane, City of London, and for the appointment of a fresh arbitrator.
The applicant tenant was Moore Stephens & Co and the respondent landlord
was the Local Authorities’ Mutual Investment Trust.
Miss Hazel
Williamson QC (instructed by Alsop Wilkinson) appeared for the applicant; Guy
Fetherstonhaugh (instructed by Lovell White Durrant) represented the first
respondent; and Barry Denyer-Green (instructed by Taylor Joynson Garrett)
represented the second respondent arbitrator.
Giving
judgment, BLOFELD J said: In this case the applicant tenant asked the
court to decide that Mr Alan Gillett [FRICS], who has been appointed
arbitrator, stand down for a number of reasons. The background is that there is
a property known as St Paul’s House, Warwick Lane, in the City of London, and
there is now an arbitration for a new rent to be fixed and Mr Gillett was
appointed by the president of the Royal Institution of Chartered Surveyors to
be the arbitrator. He was appointed in May 1991. At that time it would appear
that it was known generally, in the way that these things get about, that he
had, in fact, been used as an expert in the valuation of 7-10 Old Bailey, also
in the City. The parties were not aware that the Old Bailey determination in
which he, Mr Gillett, was the expert involved would be used as one of the
comparables. That happened in June or maybe later. When it was discovered that
Mr Gillett was prepared to allow this to be used as a comparable, the applicant
made this application early in August. At that time, as Mr Gillett had not
actually looked at the comparables, because he had deliberately allowed a
period of three days to elapse in case objections were taken, he was not aware
of the precise reason for this application, but he has since put in an
affidavit and the matter is now clear as it comes before this court today.
The applicant
put its case forward on three grounds. It started by making it perfectly clear
that it did not impugn Mr Gillett’s integrity, but it said that when he was
acting as an expert in relation to 7-10 Old Bailey the figure that he put in
was a figure of £1,400,000. That, it said, was too high and therefore as, it
said, the premises with which these proceedings are concerned, that is St
Paul’s House, are very comparable to 7-10 Old Bailey, that that figure will
inevitably be lurking in the back of his mind and will influence him in any
decision to which he comes.
Without
further ado I reject that submission. I am quite certain that somebody of Mr
Gillett’s standing and expertise would have absolutely no difficulty in being
entirely unbiased about the whole matter.
It is further
said, as a result of that, that the applicant can reasonably fear that justice
will not seem to be done. I find that argument as unattractive as I find the
first argument put forward by the applicant. I do not think it does credit to
Mr Gillett and all other people who act in this capacity as arbitrators. I see
absolutely no reason why they should have any fears. I have listened with care
to what Miss Williamson has said; she has taken me through the principles which
are admirably set out in Mustill and Boyd on Commercial Arbitration, and
she particularly referred me to pp 529, 530, 289 and 290. I do not propose to
read them out because this is in chambers, but I have them all fully in mind.
So, on those two grounds I am against the applicant without further ado.
Before going
further I should say that the arbitrator is, in fact, represented here today.
He has set out his views in an affidavit and his counsel has addressed me and
has indicated that his instructions are that he is perfectly willing to
continue as arbitrator.
I have called
the first two points really 1(a) and 1(b); that is the integrity point and the
impartiality point. I now come to the third point although it is probably, if
one looks at Wright J’s judgment in the case of In re Haigh and London North
Western and Great Western Railway [1896] 1 QB 649, a bias point, too,
because that is how it starts.
The applicant
says that it wishes to call Mr Gillett as a witness in this arbitration. It is
perfectly clear that it is not possible for it to call the arbitrator itself.
It says that it wishes to call him as a witness of fact, to ask him factually
how he arrived at the £1,400,000 that he did. It said that it cannot do that if
he is the arbitrator and therefore it will be prejudiced. It is said on behalf
of the first respondent first of all, and indeed on behalf of the arbitrator,
that this is an extremely unusual proceeding to which the applicant says in
reply that as the figures get bigger so the investigations get wider and so the
number of witnesses that may be called get enlarged, and although it may be
that nobody has experience of a witness being called to deal precisely with a
comparable, there is always a first time and this is a proper occasion for it
to be a first time. Against that, again, the first respondent says that, of
course, it will require a subpoena, anticipating that Mr Gillett would
be extremely reluctant to give evidence without a subpoena, and a subpoena
may well not be granted in the circumstances. Furthermore, the first
respondent, echoed by the counsel on behalf of Mr Gillett, said that in fact it
really would be seeking to call him as an expert not as a witness to fact. To
that Miss Williamson, on behalf of the applicant, strongly disagrees; she says
he would be called as a witness of fact. But as the whole basis of calling him
would be to undermine his opinion evidence that the proper value of 7-10 Old
Bailey was £1,400,000 however it is dressed up in the end, I have come firmly
to the view he would be called as an expert witness. I therefore accept the
first respondent’s argument that the questions that the applicant should wish
to ask should be addressed to Mr Arthur Spooner [FRICS], who is to be called as
an expert for the applicant tenant. If they want precise questions of fact I
have absolutely no doubt, as has been indicated by the arbitrator’s counsel,
that Mr Gillett would be only too happy to supply them, and furthermore they
can get matters of fact from other sources rather than Mr Gillett. So, I cannot
for the moment see that they would be in any way prejudiced by their inability
to call Mr Gillett.
I further bear
in mind, having paid close attention to the decision in In re Haigh and The
London North Western and Great Western Railway, that arbitrators in these
sort of circumstances inevitably are men or women who not only have great
experience of commercial rents, they inevitably must have come down firmly in
comparable situations. If they had no experience of comparable situations, they
would hardly be in a position to do justice as arbitrators. I take the view
that the court has to apply the test which is set out concisely in ‘The
Ellisar‘ [1984] 2 LLR 84 and I cite at p 89 from Ackner LJ, as he then was:
Do there
exist grounds from which a reasonable person would think that there was a real
likelihood that Mr Clark [Mr Gillett] could not, or would not, fairly determine
the safe port issue . . .
or the issue
here —
on the basis
of evidence and arguments to be adduced before him? It seems to me that that is a satisfactory
way of expressing the objective test which, to my mind, is the appropriate
approach. To suggest that the mere lack of confidence which no reasonable person
would, in the relevant circumstances, experience, should be a basis for setting
aside an award, seems to me quite unacceptable.
I have
absolutely no doubt that Mr Gillett can fairly determine this issue on the
basis of the evidence and arguments to be adduced before him. I am equally satisfied
that the evidence and arguments to be put before him can be perfectly properly
and fully put before him if I had seen it in any way necessary to call him as a
witness.
So for those
short reasons I refuse this motion.
Motion
dismissed with costs to the first and second respondents.
