Arbitration — Whether award of arbitrator should be remitted under section 22 of the Arbitration Act 1950 where later court decisions disclose that there had been an error of law — Whether time for application for remission should be extended
In National
Westminster Bank plc v Arthur Young McClelland Moores & Co
(1985) 273 EG 402 Walton J held that under a lease of 7 Rolls Buildings, Fetter
Lane, London EC4, the notional lease postulated by the rent review clauses did
not itself contain a rent review provision; he declined to certify that a
question of law was one which should be considered by the Court of Appeal. That
decision was subsequently considered to have been wrong by the Court of Appeal
and the House of Lords: see Arnold v National Westminster Bank plc [1990]
1 EGLR 137 and [1991] 2 EGLR 109. In the present proceedings the plaintiff
tenants sought an order remitting the award of March 19 1984 by the arbitrator,
as varied by Walton J on November 26 1984, pursuant to section 22 of the
Arbitration Act 1950 on the grounds that it contained an error of law, and an
order extending time for making such an application.
the applications was excessive. The path for the plaintiffs’ remedy under
section 22 of the 1950 Act was clear at the latest with the report of the
decision in Basingstoke and Deane Borough Council v Host Group
Ltd or in Equity & Law Life Assurance Society plc v Bodfield
Ltd. There was a delay of three and three-quarter years before the issue of
the originating motion, which could not be abridged. There is no suggestion in
the authorities of any special provision for, or possibility of, remission on
the discovery of an error of law. The error of law was not appealable and it
would not be right to find a way around a limitation on appeals imposed by
Parliament. Estoppel per rem judicatam applied. The changes made to
appealing an arbitrators’ award by the Arbitration Act 1979 did not impliedly
enlarge the power of the court to remit under section 22 of the 1950 Act.
The following
cases are referred to in this report.
Basingstoke
and Deane Borough Council v Host Group Ltd
[1988] 1 WLR 348; [1988] 1 All ER 824; (1987) 56 P&CR 31; [1987] 2 EGLR
147; 284 EG 1587, CA
British
Gas Corporation v Universities Superannuation
Scheme Ltd [1986] 1 WLR 398; [1986] 1 All ER 978; (1986) 52 P&CR 111;
[1986] 1 EGLR 120; 277 EG 980
Burnard v Wainwright (1850) 19 LJQB 423
Carl
Zeiss Stiftung v Rayner and Keeler Ltd (No
2) [1967] 1 AC 853; [1966] 3 WLR 125; [1966] 2 All ER 536, HL
Elizabeth v Motor Insurers’ Bureau [1981] RTR 405, CA
Equity
& Law Life Assurance Society plc v Bodfield
Ltd (1987) 54 P&CR 290; [1987] 1 EGLR 124; (1987) 281 EG 1448, CA; affirming
[1985] 2 EGLR 144; (1985) 276 EG 1157
GKN
Centrax Gears Ltd v Matbro Ltd [1976] 2
Lloyd’s Rep 555
Keighley,
Maxsted & Co v Bryan Durant & Co
[1893] 1 QB 405
Ladd v Marshall [1954] 1 WLR 1489; [1954] 3 All ER 745, CA
King v Thomas McKenna Ltd [1991] 2 QB 480; [1991] 2 WLR 1234;
[1991] 1 All ER 653, CA
Montgomery
Jones & Co Ltd v Liebenthal & Co Ltd (1898)
78 LT 406
Mutual
Shipping Corporation v Bayshore Shipping Co Ltd [1985]
1 WLR 625; [1985] 1 All ER 520; [1985] 1 Lloyd’s Rep 189, CA
National
Westminster Bank plc v Arthur Young McCelland
Moores & Co [1985] 1 WLR 1123; [1985] 2 All ER 817; [1985] 2 EGLR 13;
(1985) 272 EG 171; CA; affirming [1985] 1 EGLR 61; (1985) 273 EG 402
This was an
application by originating motion to remit an arbitrator’s award under section
22 of the Arbitration Act 1950 determining a rent review under a lease held by
the plaintiff trustees, Michael John Arnold, Peter Edwards and Simon Francis
Phillips, from the defendant, National Westminster Bank plc, as trustees for
British Rail Pension Trustee Co Ltd.
James Munby QC
and Jonathan Gaunt QC (instructed by Freshfields) appeared for the plaintiffs;
Hazel Williamson QC (instructed by Stephenson Harwood) represented the
defendants.
Giving
judgment, KNOX J said: This is the latest, and perhaps not the last, chapter in
the history of attempts by the applicants, a firm of chartered accountants,
whom I will call ‘the tenants’, under what was originally a subunderlease, but
which I will call ‘the lease’, of premises at 7 Rolls Buildings, Fetter Lane,
London EC4, to undo the effects of a decision of Walton J on November 26 1984,
whereby he varied the award of an arbitrator, acting under a rent review clause
in the lease, and held, first, that the notional lease postulated by the rent
review clause should not itself be assumed to contain a rent review provision
and, second, refused to certify that a question of general public importance
was involved or that the question of law raised was one which, for some other
special reason, should be considered by the Court of Appeal.
That decision
has now been shown to have been wrong on both counts by decisions of the
highest authority in the Court of Appeal and in the House of Lords.
The tenants
since then have been understandably trying, with varying degrees of success, to
undo its effects.
I take the facts
from some of the fairly numerous judgments which have been given in the past by
courts of first instance, the Court of Appeal and the House of Lords. The term
granted by the lease ran from October 28 1976 to June 24 2008, and the rent was
initially one of £800,000 pa. There were provisions for review, to take effect
from the midsummer quarter day, in the years 1983, 1988, 1993, 1998 and 2004.
The review procedure adopted involved what was called the ‘fair market rent’,
and defined as follows:
. . . such
amount as shall represent a yearly rent at which the demised premises might
reasonably be expected to be let at the Relevant Review Date in the open market
by a landlord to a tenant without a premium with vacant possession and subject
to the provisions of this subunderlease other than ‘the rent hereby reserved
there being disregarded any effect on rent of any of the matters set out in
paragraphs (a) (b) or (c) of section 34 of the Landlord and Tenant Act 1954 (as
amended).
There was
provision for arbitration if the parties failed to agree, as they did in
relation to the rent payable from the midsummer quarter day in 1983.
There were a
number of disputes involved in the arbitration, but what has proved to be the
main subject of dispute was whether, under that definition of ‘fair market
rent’, which I read, the rent under the
provisions for rent reviews as were contained in the lease itself or, on the
other hand, contained no provision for review.
The arbitrator
to whom the matter was referred, by an award published on March 19 1984,
decided that the hypothetical lease should be treated as containing review
provisions and, on that basis, he fixed the rent at £1,003,000 pa. But he also found
what the rent would be based on the other view, namely that there was no rent
review clause in the hypothetical lease and that rent he found at a figure some
20% higher, that is to say £1,209,000 pa. So there was a difference, obviously,
of £206,000 pa during the remainder of that review period of five years from
midsummer 1983.
At that stage
the landlords were the National Westminster Bank plc, as trustees for British
Rail Pension Trustee Co Ltd and PosTel Properties Ltd, which, as their names
indicate, were pensions organisations for British Rail and the Post Office,
respectively. They were beneficially interested in equal shares.
The matter
proceeded on appeal before Walton J, who, on November 26 1984, gave a judgment
varying the arbitrator’s award. The order reads:
It is ordered
that the said interim award dated 19th March 1984 be varied by substituting
therefor an award in the sum of £21,209,000 per annum, as set out in his
alternative award at paragraph 10(8) of the said award, and the court does not
think fit
— I pass over
(1) —
(2) to grant a certificate, pursuant to section
1(7)(b) of the aforementioned Act, that this decision is one of general public
importance
The
aforementioned Act, of course, is the Arbitration Act of 1979.
In the course
of his judgment, Walton J said (it is reported at (1984) 273 EG 402, at p402):
The first and
I think probably the main question which arises here is whether when the
arbitrator is deciding what is to be the fair market rent for the next rent
period, he is to do that upon the basis that the lease contains (as, of course,
we know it does in fact contain) a rent review clause or whether, on the other
hand, he is to fix the fair market rent on the basis that there is no such
clause in the lease. I do not think that there is a presumption one way or the
other. I think that in every case that must depend upon the precise terms of
the lease, because it must be very much borne in mind that there is no such
thing as a fair market rent of any premises in the abstract. There is only a
fair market rent upon a set of abstractions which may be actual, may be
hypothetical and in most cases under rent reviews are a mixture of the one and
the other. For example, here we have that the premises are expected to be let
with vacant possession, which is, of course, something which we know as a fact
just is not the case because the tenants are actually in possession and are
certainly not just going to move out for the purpose of a rent review.
So the
attempt by Mr Morritt
— the tenant’s
counsel —
to poison my
mind in advance to achieve the lower of the two values by defining the fair
market rent as something which favours the tenant, as in fact he was attempting
to do, I do not think impresses me very much.
Walton J,
having dealt with the question of whether there was a presumption one way or
the other, went on to find that the hypothetical lease should not be treated as
containing a rent review provision and, as already mentioned, he refused a
certificate under section 1(7) of the Arbitration Act 1979.
Before the
order of Walton J that I have read was passed and entered, a second attempt to
obtain a certificate under section 1(7)(b) was made to, and rejected by, Walton
J.
On June 13
1985 the Court of Appeal dismissed an appeal from his decision on the ground
that it had no jurisdiction to hear it.
There then
ensued some correspondence, in the course of which Mr Arnold, on behalf of the
tenants, wrote two letters, the first dated January 6 1986 and addressed to a
gentleman at Folkard & Hayward, the estate agents and chartered surveyors
who were acting for the landlord, in the course of which Mr Arnold said:
in the
circumstances we (the tenants) have been looking for an alternative way of
dealing with ‘the problem and, in particular, are contemplating an action for
rectification. Our review shows good evidence to support this and I anticipate
the writ will be issued during the course of January.
And 11 days
later he wrote to a gentleman at Maxwell Batley, the landlords’ solicitors, a
letter in the course of which he said:
I really
would emphasise that, because of the long-term consequences to us, we do not
feel able to allow any stone to be left unturned in reversing the effect of Mr
Justice Walton’s judgment. As previously indicated, a route of rectification is
our most likely next course. However, you were kind enough to indicate that
further expensive litigation might not be necessary and that you would discuss
the matter further with your clients to see whether a sensible compromise might
be worked out. I remain willing to discuss matters directly with your clients,
but obviously would like to do so sooner rather than later so that I may turn
off some expensive legal meters.
On February 6
1986 the vice-chancellor, Sir Nicolas BrowneWilkinson, gave his decision in British
Gas Corporation v Universities Superannuation Scheme Ltd [1986] 1
WLR 398*, and set out his views regarding the correct approach to questions of
construction of rent review clauses. He said at p403A:
In these
circumstances, there are in my judgment conflicting decisions as to the correct
approach to the construction of these clauses. I am accordingly free to adopt
the approach I prefer. In my judgment the correct approach is as follows: (a)
words in a rent exclusion provision which require all provisions as to
rent to be disregarded produce a result so manifestly contrary to commercial
common sense that they cannot be given literal effect; (b) other clear words
which require the rent review provision (as opposed to all provisions as to
rent) to be disregarded (such as those in the Pugh case, 264 EG 823,
[1982] 2 EGLR 120) must be given effect to, however wayward the result; (c)
subject to (b), in the absence of special circumstances it is proper to give
effect to the underlying commercial purpose of a rent review clause and to
construe the words so as to give effect to that purpose by requiring future
rent reviews to be taken into account in fixing the open market rental under
the hypothetical letting.
I am
conscious that such approach is perilously close to seeking to lay down
mechanistic rules of construction as opposed to principles of construction. But
there is an urgent need to produce certainty in this field.
*Editor’s
note: Also reported at [1986] 1 EGLR 120.
Very nearly
one year later two events occurred. First, the British Rail Pension Trustee Co
Ltd, on March 5 1987, contracted to buy out the half-share in the reversion
vested in the other tenant in common. That contract contains a covenant, which
operates to put the burden of any refund that eventually might be ordered in
respect of the rents paid after the first rent review, should Walton J’s
decision be upset, upon the purchaser, British Rail Pension Trustee Co Ltd, by
way of indemnity to PosTel Properties Ltd.
At almost the
same time the Court of Appeal approved what Sir Nicolas Browne-Wilkinson V-C
had said, which I have quoted just above, in the British Gas case, in a
decision called Equity & Law Life Assurance Society plc v Bodfield
Ltd (1985) 276 EG 1157, [1985] 2 EGLR 144† . Dillon LJ described them as
‘rough guidelines’, but subject to that description he adopted them.
† Editor’s
note: Also reported at [1985] 2 EGLR 144.
In those
circumstances, the second lot of proceedings, entitled ‘1987-A-No 3648’, were
instituted by the tenants. The specially endorsed writ contained a statement of
claim which in the first 19 paragraphs set out the rectification claim, and it
is not necessary for me to read that. Para 20 went on as follows:
Further or in
the alternative to their claim for rectification, the Plaintiffs seek a
determination as to the basis on which those reviews are to be conducted and
contend that on the true construction of the definition of ‘the fair market
rent’ set out in paragraph 5 above, the rent is to be reviewed on the basis of
a letting for a term equal to the residue of the term unexpired at the relevant
review date with provision for a rent review on 24th June 1993, 1998 and 2004.
There was
inserted a ‘1988’ in manuscript: nothing turns on this aspect of the matter.
The
plaintiffs’, that is to say the tenants’, claim for relief, besides
rectification sought under para 3:
In so far as
may be necessary as a consequence of any such order for rectification, an order
remitting the question of the rent payable with effect from 24th June 1983,
alternatively the award of the Arbitrator as varied by the Judgment referred to
in paragraph 7 above, to the Arbitrator, pursuant to section 22 of the
Arbitration Act 1950.
The reference
to ‘the judgment referred to in paragraph 7 above’ is, of course, Walton J’s
judgment. The defence raised, among other things, laches as a basis of defence
to the rectification claim. The landlords then applied to strike out para 20,
by a summons dated October 1 1987, on the ground that it disclosed no
reasonable cause of action.
The matter
came before Sir Nicolas Browne-Wilkinson V-C and he observed that:
During the
hearing, the parties agreed that I should treat as being before me a
preliminary issue whether in the circumstances I have recited, the Plaintiffs
are estopped by the judgment of Walton J from putting forward the case pleaded
in para 20 of the statement of claim.
His decision
on the subject, after a discussion of the authorities regarding issue estoppel,
was as follows ([1989] 1 Ch 63, at p70):
In my judgment
a change in the law subsequent to the first decision is capable of bringing the
case within the exception to issue estoppel. If, as I think, the
the parties, injustice can flow as much from a subsequent change in the law as
from the subsequent discovery of new facts. In both cases the injustice lies in
a successful party to the first action being held to have rights which in fact
he does not possess. I can therefore see no reason for holding that a
subsequent change in the law can never be sufficient to bring the case
within the exception. Whether or not such change does or does not bring the
case within the exception must depend on the exact circumstances of each case.
Turning again
to the circumstances of the present case, I have no doubt that justice does
require the matter to be relitigated. The following factors are in my judgment
relevant.
1. There is a
continuing contractual relationship of landlord and tenant under which, if
there is an issue estoppel, the decision of Walton J will regulate four further
rent reviews and thereby affect the rent payable until the end of the term.
2. Because of
the peculiarities of the procedure applicable to appeals from arbitrators,
unlike the ordinary case of a prior decision by a judge, the decision of Walton
J was not subject to appeal. Therefore a matter of a very great financial
importance involving millions of pounds will, if an issue estoppel applies, be
decided on a point of law which the lessees have never had the opportunity to
test in the higher courts.
3. The
decision whether or not to permit an appeal was the decision of Walton J
himself and there was no right of appeal against his refusal to certify the
matter fit for appeal. The lessees took every possible step to test the
decision in the earlier case in the higher courts but without success.
4. Subsequent
decisions, in particular that of the Court of Appeal in the Equity & Law
Life case, 276 EG 1157, [1985] 2 EGLR 144, make it, at the lowest, strongly
arguable that the decision of Walton J was wrong.
And for those
reasons he dismissed the application to strike out para 20 of the statement of
claim.
The next
significant event was that on November 3 1987 the Court of Appeal gave its
judgment in Basingstoke and Deane Borough Council v Host Group Ltd [1988]
1 WLR 348*, in terms which supported the views as to the principles of
construction in rent reviews that had been expressed by the vice-chancellor in
the British Gas case and endorsed by the Court of Appeal itself in the Equity
& Law Life v Bodfield case.
*Editor’s
note: Also reported at [1987] 2 EGLR 147.
On October 31
1988 Gibson J refused to allow the construction issue to be taken as a second
preliminary issue. During the course of that decision he said:
The
plaintiffs accept
— that, of
course, is the tenants —
that the
rectification point will in any event have to be tried if they are to recover
the additional rent paid between 1983 and 1988. The total sum in dispute in
respect of that past rent is a little over £1 million. So that while it is
rightly said by Mr Gaunt that four-fifths of what is at stake in the litigation
(in the sense of four out of the five rent reviews) would be conclusively
determined if the plaintiffs won on both the issue estoppel point and the
construction point, on any footing there is a substantial amount remaining in
dispute.
The landlords
appealed the decision of the vice-chancellor to the Court of Appeal, which in
November 1989 dismissed the appeal. Lord Justice Dillon, in the course of the
judgment, said at [1990] Ch 573 at p587 at letter F:
The simplest
and oldest form of estoppel per rem judiscatam is what is now called
’cause of action estoppel’. That is referred to by Lord Reid in Carl Zeiss
Stiftung v Rayner & Keeler Ltd (No 2) . . . where he
said:
‘There is a
vast amount of authority on estoppel per rem judicatam. ‘The object of the rule
of res judicata is always put upon two grounds — the one public policy, that it
is the interest of the state that there should be an end of litigation, and the
other, the hardship on the individual, that he should be vexed twice for the
same cause, (per Lord Blackburn in Lockyer v Ferryman) . . . And
the general principle is clear that the earlier judgement relied on must have
been a final judgment, and that there must be identity of parties and of
subject matter in the former and in the present litigation.’
One instance
of cause of action estoppel . . . is in my view, pace the Vice-Chancellor, the
decision of Jenkins J in In Re Waring (No 2) [1948] Ch 221. In that case
a testator had by his will made in February 1939 bequeathed two annuities
payable free of income tax. He had given directions to his trustees to set up
an annuity fund and he died in 1940. The trustees took out a summons asking
whether, in setting aside the fund, they ought to provide for the annuities at
their face value, or whether they fell to be reduced under the wartime
provisions of section 25 of the Finance Act 1941. Farwell J held in In Re
Waring [1942] Ch 309 that section 25 did not apply, but his decision was
reversed by the Court of Appeal, who held [1942] Ch 426 that section 25 did
apply, notwithstanding that the testator had not died until 1940. The trustees
accordingly appropriated a fund sufficient to pay 2029ths of the gross amount
of the tax free annuities in accordance with the section. Only one of the
anuitants had been a party to that decision and no representation order had
been made. Subsequently the House of Lords, in a case between other litigants, Berkeley
v Berkeley [1946] AC 555, had held that In Re Waring
— in the Court
of Appeal —
had been
wrongly decided and therefore it followed that the section which replaced
section 25 did not apply where the testator had died after the commencement of
the war, which was the crucial date. Jenkins J held that in the case of the
annuitant who was a party to the previous proceedings, the principle of res
judicata applied and he was bound by the decision of the Court of Appeal that
section 25 of the Act of 1941 applied to reduce his tax free annuity to the
appropriate fraction of the full amount. The second annuitant, however, who had
not been a party to the previous decision, and was not bound by any
representation order, was entitled to claim retrospectively the full amount of
her annuity. That is a case where the earlier decision had decided the precise point.
There was no further point to litigate, although it was suggested that the
change in the statutory provision produced a further point.
Lord Justice
Dillon’s conclusion is found at p595E of the report, where he said:
If therefore
the binding nature of an issue estoppel, where a point has been litigated in
earlier proceedings, may be qualified on new facts of sufficient cogency being
brought forward in a second action, why as a matter of common sense should it
not equally be qualified as a result of new developments in law? If one has in mind Lord Upjohn’s overriding
consideration of working justice and not injustice, there can be no reason why
not.
The
Vice-Chancellor said in his judgment under appeal . . . :
‘If, as I
think, the yardstick of whether issue estoppel should be held to apply is the
justice to the parties, injustice can flow as much from a subsequent change in
the law as from the subsequent discovery of new facts.’
Respectfully,
I entirely agree with him. I pray in aid also the observation of Cumining-Bruce
LJ in Property & Reversionary Investment Corporation Ltd v Templar.
It is not
enough for a litigant who has argued a point of law and lost, to say, in order
to avoid issue estoppel, merely that it is arguable in the light of other
decisions at first instance that the previous decision at first instance might
have been wrong. He must go further. But the tenants here do go further. The
Vice-Chancellor said, at p67:
‘To put it no
higher, there is a very substantial chance that if the rent review clause in
this sub-underlease were now to be construed in the light of the Court of
Appeal decision, the opposite result would be achieved.’
And Lord
Justice Dillon goes on:
That seems to
be an understatement, but it is not necessary for us to reach a final
conclusion. I merely draw attention to three points. (1) It is admitted that
Walton J’s approach was not in accordance with the guidelines since laid down
and approved by this court. (2) There was nothing in this lease, properly
construed, to constrain him to the extreme (and to my mind ridiculous) position
that he seems to have taken of assuming a hypothetical lease with no covenant
for payment of rent and no power of re-entry for non-payment. (3) His decision
is contrary to commercial sense and the underlying commercial purpose of a rent
review clause in that he has saddled the tenants with the rent for a term they
do not have, that is to say a term at a fixed rent without reviews.
Staughton LJ
said this on the issue of flexibility, having observed in passing that he
regarded the words ‘the rent hereby reserved’ in the rent review clause as
referring to the basic rent of £800,000 pa and to nothing else and that he had
considered Walton J’s reasons for reaching a different conclusion, but could
not agree with him (see p596G):
Nevertheless
that decision remains binding between the parties so far as concerns the rent
payable between June 1983 and June 1988. The question is whether it is still
binding from June 1988 onwards.
On flexibility
in relation to issue estoppel and cause of action estoppel he said (at p597E):
So far as I
recollect it was not argued that there is any decision which compels us to one
conclusion or the other on this dispute. But a good many cases have touched
upon it. As Miss Williamson, also for the defendants, pointed out, there are
two lines of authority, and two views expressed by judges of great distinction.
Thus Lord Devlin in Connally v Director of Public Prosecutions .
. . said: ‘Res judicata imposes a rigid bar and Wigram V-C’s principle a
flexible one.’
And Lord
Justice Staughton says:
I take this
to mean that there is no exception in a case of cause of action estoppel or
issue estoppel in the strict sense, but that there is flexibility in the case
of non-issue estoppel.
And he went on
to deal with the other line of authority which indicated that there might be
flexibility in the second and third categories of what he called non-issue
estoppel and issue estoppel in the strict sense. But there is no suggestion
that there was any flexibility in cause of action estoppel.
His conclusion
is to be found at p598D of the report in these terms:
There then
arises the question, which is equally difficult, whether such circumstances
exist in the present case.
That is to
say, circumstances where a matter can be reopened notwithstanding issue
estoppel.
As was
conceded before us, it cannot by itself be enough that the previous decision
was arguably wrong in law; nor, in my judgment, is it by itself enough that the
previous decision was plainly wrong in law. The remedy for such errors is that
provided by the appellate process. Where the legislature has chosen to limit
the right of appeal, as in section 1(7) of the Arbitration Act 1979, it is not
for the courts to circumvent that policy: see Bynoe v Governor and
Company of the Bank of England [1902] 1 KB 467, 471, where Sir Henn Collins
MR said:
‘If we yielded
to his argument, we should be constituting ourselves a Court of Appeal in a
matter in which the legislature has thought fit to declare that there shall be
no appeal.’
However, the
remedy which the the defendants seek in this action is not wholly equivalent to
what might have been granted in an appeal from Walton J if one had been
permitted. The rent for 1983 to 1988 remains as Walton J determined it.
And he
concluded that with the continuing contractual relationship the further
elucidation of the law since Walton J’s decision was sufficient to justify the
decision to allow the plaintiffs to argue the construction of the lease anew.
He said at p599A:
But I do not
say that the result would have been different if there had been no further
elucidation of the law. I have difficulty in seeing why the plaintiffs would
have failed if the original decision had merely been plainly wrong (as I think
it was), but should succeed now that subsequent courts have shown that to be
the case. That difficulty may have to be resolved on another occasion.
Finally, Mann
LJ expressed his conclusion at p600E in the report:
I would not
disagree with the Vice-Chancellor’s finding of special circumstances in this
case. I regret to say that Walton J’s decision was in my view plainly wrong. If
it were arguably wrong, I might have taken a different view as to whether there
was a special circumstance.
I wish to add
only this. I was at one time during the course of argument troubled by In Re
Waring (No 2) [1948] Ch 221. However, that case is distinguishable
in my view, because it was a decision of the court which it was sought to
reopen. Here there is no attempt to re-open the rent review for 1983 to 1988.
The present question is as to a totally independent rent review and the
respondents to this appeal have expressly disclaimed any intent to upset the
previous determination. Therefore In Re Waring (No 2) no longer
troubles me.
It was pointed
out, no doubt principally as a result of that observation which I have read
from Mann LJ’s judgment, by Mr Munby QC, who appeared for the tenants, that the
rent review for 1983 to 1988 was indeed being challenged by the rectification
claim in those very proceedings, and that elucidation was recorded as having
been made clear to the Court of Appeal. In the result, it seems to me that the
three judges of the Court of Appeal in that decision were unanimous in holding,
first, that Walton J was wrong on construction — and they said that with
varying degrees of emphasis, but they were all agreed on that point. Second,
they were all agreed that there was a need for exceptional circumstances for it
to be possible to relieve a litigant from the consequences of issue estoppel.
They all recognised the distinction between cause of action estoppel, which was
inflexible, and recorded the fact that it was not sought to disturb the rent between
1983 and 1988 as a result of the issue estoppel argument as being a significant
factor in their decision.
The next event
chronologically was that a further application was made, by coincidence to me,
for a certificate under section 1(7) of the Arbritration Act 1979, and I
rejected that application in July of 1990.
Next there was
an appeal to the House of Lords against the decision of the Court of Appeal,
which on April 25 1991 was dismissed. Lord Keith gave the leading judgment and
he said at p103 of the report, which starts at [1991] 2 AC 93*, having reviewed
what had happened in the past:
It therefore
appears that there are powerful grounds for the view that Walton J wrongly
construed the rent review clause in the parties’ lease and that he did so by
virtue of an approach to the question of construction which was wholly
incorrect in law.
*Editor’s
note: Arnold v National Westminster Bank plc also reported at [1991] 2 EGLR
109.
In fact, he
went somewhat further later in his speech, when at p11 he said:
I am
satisfied, in agreement with both courts below, that the instant case presents
special circumstances such as to require the plaintiffs to be permitted to
reopen the question of construction decided against them by Walton J, that
being a decision which I regard as plainly wrong.
He then, at
p104D of the report, dealt with the difference between cause of action estoppel
and issue estoppel. He said:
It is
appropriate to commence by noticing the distinction between cause of action
estoppel and issue estoppel. Cause of action estoppel arises where the cause of
action in the later proceedings is identical to that in the earlier
proceedings, the latter having been between the same parties or their privies
and having involved the same subject matter. In such a case the bar is absolute
in relation to all points decided unless fraud or collusion is alleged, such as
to justify setting aside the earlier judgment. The discovery of new factual
matter which could not have been found out by reasonable diligence for use in
the earlier proceedings does not, according to the law of England, permit the
latter to be re-opened. The rule in Scotland, which recognises the doctrine of
res noviter veniens ad notitiam, is different: see Phosphate Sewage Co
Ltd v Molleson. There is no authority there, however, for the view
that a change in the law can constitute res noviter. The principles upon which
cause of action estoppel is based are expressed in the maxims nemo debet bis
vexari pro una et eadem causa and interest rei publicae ut finis sit litium.
Cause of action estoppel extends also to points which might have been but were
not raised and decided in the earlier proceedings for the purpose of
establishing or negativing the existence of a cause of action.
He then went
on to consider the substance of the matter, and I can pass over that and come
to his conclusion, after reading, first of all, the quotation from what Lord
Reid had said in Carl Zeiss Stiftung v Rayner & Keeler Ltd (No2)
[1967] 1 AC 853, at p917C. This is what Lord Reid said:
The
difficulty which I see about issue estoppel is a practical one. Suppose the
first case is one of trifling importance but it involves for one party proof of
facts which would be expensive and troublesome and that party can see the
possibility that the same point may arise if his opponent later raises a much
more important claim. What is he to do?
The second case may never be brought. Must he go to great trouble and
expense to forestall a possible plea of issue estoppel if the second case is
brought? This does not arise in cause of
action estoppel: if the cause of action is important, he will incur the
expense: if it is not, he will take a chance of winning on some other point. It
seems to me that there is room for a good deal more thought before we settle
the limits of issue estoppel. But I have no doubt that issue estoppel does
exist in the law of England. And, if it does, it would apply in the present
case, if the earlier judgment had been a final judgment of an English court.
Lord Keith
stated the issue for their lordships in the following terms at p109E of the
report:
Your
Lordships should appropriately, in my opinion, regard the matter as entire and
approach it from the point of view of principle. If a judge has made a mistake,
perhaps a very egregious mistake, as is said of Walton J’s judgment here, and a
later judgment of a higher court overrules his decision in another case, do
considerations of justice require that the party who suffered from the mistake
should be shut out, when the same issue arises in later proceedings with a
different subject-matter, from reopening that issue?
And his
preferred solution was in the following terms, at p110D of the report:
In the instant
case there was no right of appeal against the judgment of Walton J because he
refused to grant a certificate that the case included a question of law of
general public importance. There can be little doubt that he was wrong in this
refusal, as is shown by the large volume of litigation on the construction of
rent review clauses and the decisions in that field which I have mentioned
earlier. I consider that anyone not possessed of a strictly legalistic turn of
mind would think it most unjust that a tenant should be faced with a succession
of rent reviews over a period of over 20 years all proceeding upon a
construction of his lease which is wholly unfavourable to him and is generally
regarded as erroneous. It is true that the chosen method of settling disputes
about rent reviews, namely arbitration, involves that the right of appeal from
the judge of first instance is subject to limitations. But these limitations
were not present when the lease was entered into in 1976, having been
introduced by the Arbitration Act 1979. There is much force also in the view
that the landlord, if the issue cannot be reopened, would most unfairly be
receiving a very much higher rent than he would be entitled to on a proper
construction of the lease. The public interest in seeing an end to litigation
is of little weight in circumstances under which, failing agreement, there must
in any event be arbitration at each successive review date. Estoppel per rem
judicatam, whether cause of action estoppel or issue estoppel, is essentially
concerned with preventing abuse of process. In the present case I consider that
abuse of process would be favoured rather than prevented by refusing the
plaintiffs permission to reopen the disputed issue.
And he agreed
with what the vice-chancellor had said at first instance and the appeal was
dismissed.
That was an
end to the second litigation so far.
The third
litigation is what is before me by an originating motion. The tenants ask for
an order remitting the award of March 19 1984 by the arbitrator, as varied by
the order of Walton J on November 26 1984, to the arbitrator, pursuant to
section 22 of the Arbitration Act 1950, and, second, for an order extending the
applicants’ time for making this application.
Finally, the
last event that I should recite is that on March 24 1992 the construction issue
was finally decided by Master Monroe in favour of the tenants, who now have the
benefit of cause of action estoppel in relation to all rent reviews later than
1983 in favour of the contention for which they have so long struggled.
In my
judgment, there are two categories of reasons why the tenants’ application
should fail in this case. One is short and the other significantly longer. The
short one is that the delay seems to me excessive and such as I should not
extend time for. I do this for the following reasons. In my judgment, the path
for the tenants’ remedy, if they have one by way of section 22, was clear, at
latest, when the Court of Appeal gave its decision in Basingstoke and Deane
v Host Group Ltd or, at latest, when it was reported. The decision was
on November 3 1987. Weekly Law Reports carried a report of it on March 4
1988 and All England Reports carried a report on April 1 1988. If that
is not right, the decision of the Court of Appeal in Equity & Law Life
v Bodfield in February 1987, reported in 1987 in Estates Gazette,
provided the path to that remedy, if it exists.
The remedy
sought, of course, was by the originating motion to which I have just referred,
which was issued on December 5 1991. The time-limit that the rules lay down
under Ord 73, r5, is 21 days. Subrule (1) reads:
An application
to the court —
(a) to remit an award under section 22 of the
Arbitration Act 1950
— I pass over
(b) and (c) —
. . . must be
made, and the summons or notice must be served, within 21 days after the award
has been made and published to the parties.
Even making all
due allowances for the time it took to publicise the Court of Appeal’s
successive decisions, there has been very nearly three and three-quarter years’
gap between — I take Lady Day 1988 as being the day by which the remedy was
crystal clear, until the originating motion was actually issued. In my view, it
is not an answer that the tenants were concentrating on the issue estoppel
litigation. In a sense, it was incumbent on the tenants to inform the courts
dealing with the issue estoppel of other possible remedies as potentially
relevant circumstances. Indeed, Mr Munby very properly did just that when what
fell from Mann LJ in the Court of Appeal suggested that he did not perhaps have
in mind that the rectification claims in the second set of litigation would, if
successful, have the result of reversing the decision regarding the rent
payable between 1983 and 1988. I should make it clear that I am not suggesting
that at any stage the tenants, in saying what they have said in correspondence
and in various courts regarding the situation concerning the rents payable in
respect of the first review period from 1983 to 1988, were doing more than
state accurately what they saw the ambit of the proceedings as then
constituted. What they said has in every respect, so far as I am aware, been
strictly accurate. But what I am saying is that the existence of the remedy by
way of remission under section 22 of the Arbitration Act was a relevant factor
which, if it had been perceived, would, I feel sure, have been referred to by
the tenants in making their applications to the successive courts, and in those
circumstances it does seem to me that the three and three-quarter years’ delay
is greater than it would be right for me to bridge over by extending time,
although undoubtedly I have jurisdiction, as I see it, to do so.
The longer
reasons are as follows. Remission under section 22 of the 1950 Act derives from
section 8 of the Common Law Procedure Act 1854. That read:
In any Case
where Reference shall be made to Arbitration as aforesaid the Court or a Judge
shall have Power at any Time, and from Time to Time, to remit the Matters
referred, or any or either of them, to the Re-consideration and
Re-determination of the said Arbitrator, upon such Terms, as to Costs and
otherwise, as to the said Court or Judge may seem proper.
The remedies
that the court had available for correcting errors before that 1854 Act was
passed were as follows. As regards error of law, there was in general no power
to correct, but if an arbitrator admitted a mistake, there was a power to set
aside an award in toto, and, if an error on the face of the award
occurred, there was also power to set aside the award in toto, but it
was an all-or-nothing remedy and in practice proved to be somewhat too
wholesale. So the practice grew up which is described in Mustill and Boyd’s
Commercial Arbitration, 2nd ed, at p438, in the following terms:
During the
first half of the nineteenth century it became the practice to remedy this gap
in the jurisdiction of the Court by including in those submissions to
arbitration which were made a rule of court an express provision that in the
event of either of the parties disputing the validity of the award, or moving
to set it aside, the Court should have power to remit the matters referred, or
any of them, to the reconsideration of the arbitrator. The wording of this
clause made it plain that the purpose was to mitigate the rigour of the
existing law by giving the Court an alternative remedy in cases where it would
otherwise have set the award aside; and the courts did not as a rule interpret
the clause as conferring a general discretion to remit on grounds other than
those which would have sustained an application to set aside.
The 1854 Act,
by section 8, which I have read, gave statutory force to that existing
practice.
Section 5 of
the same Act empowered arbitrators to state a special case for the opinion of the
court.
The
Arbitration Act 1889, by section 10, re-enacted part of section 8 of the Common
Law Procedure Act 1854. Subsection (1) reads:
In all cases
of reference to arbitration the Court or a judge may from time to time remit
the matters referred, or any of them, to the reconsideration of the arbitrators
or umpire.
That is a
slightly condensed version of the first part of section 8 of the 1854 Act, and
section 20 reproduced the latter part of that last section. Section 20 reads:
Any order
made under this Act may be made on such terms as to costs, or otherwise, as the
authority making the order thinks just.
The power to
state a case was preserved and there was introduced a power to state a
consultative case by section 19, which read:
Any referee,
arbitrator or umpire may at any stage of the proceedings under a reference, and
shall, if so directed by the Court or a judge, state in the form of a special
case for the opinion of the Court any question of law arising in the course of
the reference.
The 1950 Act
repealed the 1889 Act. Section 22 re-enacts section 10 of the Arbitration Act
1889, the power to remit, and section 28 re-enacts section 20 of the 1889 Act,
both of which I have just read. The procedure by case stated was retained. As
it stands now, section 22(1) reads:
In all cases
of reference to arbitration the High Court or a judge thereof may from time to
time remit the matters referred, or any of them, to the reconsideration of the
arbitrator or umpire.
Subsection (2)
is not material.
The statutory power
to remit is thus quite general in its terms and always has been since its
creation in 1854 under the Common Law Procedure Act.
In 1979 the
Arbitration Act, by section 1, abolished the earlier systems for correcting
errors of law. What it provided was this, in subsection (1):
In the
Arbitration Act 1950 . . . section 21 (statement of case for a decision of the
High Court) shall cease to have effect and, without prejudice to the right of
appeal conferred by subsection (2) below, the High Court shall not have
jurisdiction to set aside or remit an award on an arbitration agreement on the
ground of errors of fact or law on the face of the award.
Then
subsection (2):
Subject to
subsection (3) below, an appeal shall lie to the High Court on any question of
law arising out of an award made on an arbitration agreement; and on the
determination of such an appeal the High Court may by order —
(a) confirm, vary or set aside the award; or
(b) remit the award to the reconsideration of the
arbitrator or umpire together with the court’s opinion on the quest of law
which was the subject of the appeal;
and where the
appeal is remitted under paragraph (b) above the arbitrator or umpire
shall, unless the order otherwise directs, make his award within three months
after the date of the order.
There was no
amendment to section 22 of the Arbitration Act 1950, which remains as it was
when first passed. Judicial interpretation over the years and practice has
provided limitations on the very general power to remit, which appears to have
become fairly restricted towards the end of the last century but has
subsequently become somewhat enlarged.
One
established basis for remission since even before the Common Law Procedure Act
1854 has been the discovery of fresh evidence. At any rate, if it satisfies the
quite stringent tests on the lines of (but not identical to) those laid down in
Ladd v Marshall [1954] 1 WLR 1489, for the introduction of fresh
evidence in appellate courts, it is very long established that there may be a
remission on the basis of the discovery of fresh evidence. This was decided in Burnard
v Wainwright (1850) 19 LJQB 423, which is, of course, before the 1854
Act, and that decision was followed and given effect to by the Court of Appeal
in the Keighley Maxsted & Co v Bryan Durant & Co arbitration
[1893] 1 QB 405, where Lord Esher MR said at p409:
There have
been many decisions upon the provisions relating to arbitration in the Common
Law Procedure Act, 1854, and especially as to the right
to the reconsideration of the arbitrator. It has been held that one effect of
the Act was that it continued the ordinary law as to decisions by arbitrators,
that is to say, that they are final and conclusive both of the law and of the
facts, and that whether there has been a mistake either of law or fact the
parties cannot by themselves set it up. Where, however, the submission contains
a power to refer back to the arbitrator, if the party alleges that there has
been a mistake on the arbitrator’s part either of law or fact, the Court gives
this effect to the power: that upon such a state of facts alone the decision
cannot be questioned either on the law or the facts, the parties having chosen
their arbitrator for better or worse; but that if the arbitrator himself
informs the Court that he thinks he has made a mistake either of law or fact,
and both he and the party approach the court, the court would send the matter
back to him for reconsideration, although such a course will not be taken on
the mere allegation of one of the parties. That was the law under the Act of
1854, and that is the view adopted in Dinn v Blake . . . , in
which case it is said in terms that an award cannot be sent back to the
arbitrator on the mere ground of mistake, the exceptions being where there has
been corruption or fraud, where there is a mistake of law or fact apparent on
the face of the award, and where the arbitrator himself admits that he has made
a mistake. That law or rule of the Court, therefore, applies only where there
is an allegation by the arbitrator that he has made a mistake of law or fact;
and the case of Dinn v Blake . . . is no authority for anything
beyond.
In the
present case there is no allegation of any mistake by the arbitrators during
the progress of the arbitration; but it is said that all the case was not
[then] before them, further material evidence having since been discovered. Our
decision to-day will apply only to cases where evidence has been discovered
since the award, and we do not determine whether in other cases and under other
circumstances the Court would be justified in sending back the award, as, for
example, where the evidence was known to one of the parties, but kept back by
him in order to deceive the arbitrator. The only questions here are, Has new
evidence been discovered since the award was made, and is that a good ground
for sending the award back, though the arbitrator has not asked us to
interfere? Now, before the Act of 1854,
this point was decided in Burnard v Wainwright . . . , and it was
held that in such a case the Court had power to refer the award back to the
arbitrator for reconsideration. In that case the submission contained a clause
empowering the Court to remit the matters to the arbitrator, and it was
therefore the same as all submissions are at the present day, for the effect of
the Act of 1889 is that every submission must be taken to contain such a
clause. Wightman J decided that if evidence were discovered after the decision
of the arbitrator the Court might (though, of course, it would not necessarily
in every case) remit the matter for reconsideration, although in that case
there had been no request of the arbitrator to that effect. That being the law
at that time, we ought to adopt it now.
And they did.
Other
established categories where remission was allowed were cases of corruption or
fraud or misconduct on the part of the arbitrator, error on the face of the
award, an arbitrator requesting the correction of an admitted mistake of fact
and law and procedural mishaps. There is no suggestion in the authorities of
any special provision for, or possibility of, remission on the discovery by a
subsequent decision of an error of law.
The decision
in Montgomery, Jones & Co Ltd v Liebenthal & Co (UK) Ltd (1898)
78 LT 406 was described by Lord Donaldson MR in King v Thomas McKenna
Ltd [1991] 2 QB 480, at p488, in the following terms:
In In re
Montgomery, Jones & Co and Liebenthal & Co . . . , Mr Sanderson of
counsel, appearing for the respondents, put forward the argument that the
jurisdiction was limited to remission on four defined grounds. The applicants’
case was based upon a complaint that the arbitrators had gone wrong on a point
of law. Smith LJ accepted the argument of the respondents. But Chitty LJ,
having referred to the Keighley Maxsted case, said, . . .
‘It is not,
however, now necessary to limit the operation of section 10 to those four
grounds, for we are asked to remit the matter to the arbitrators solely upon
the ground that they have gone wrong on a point of law. That, if it came within
any part of the Abritration Act, would come within section 19 [the special case
section] and [not] section 10.’
Collins LJ
agreed with both judgments. This again . . . [said Lord Donaldson] . . .
provides powerful persuasive authority, but, in the light of the fact that
Collins LJ whilst agreeing with the view of Smith LJ also agreed with Chitty LJ
that it was not necessary to decide the point, I do not regard the decision as
in any way tying our hands.
And that
enabled the Court of Appeal in King v Thomas McKenna to decide
the case in the way in which they did.
The case was
concerned with a misunderstanding by counsel as to the effect of her
submissions in thinking, erroneously, that she had effectively asked for costs
to be held over by the arbitrator, where in fact she had not effectively done
so and, in those circumstances, there was an application under section 22 of
the 1950 Act for the award to be remitted on the ground of a procedural mishap.
At first instance the application was granted and the appeal before the Court
of Appeal was dismissed. The case contains a valuable analysis by Lord
Donaldson of the jurisdiction to remit. At p491C he said this:
In my
judgment the remission jurisdiction extends beyond the four traditional grounds
to any cases where, nothwithstanding that the arbitrators have acted with
complete propriety, due to mishap or misunderstanding, some aspect of the
dispute which has been the subject of the reference has not been considered and
adjudicated upon as fully or in a manner which the parties were entitled to expect
and it would be inequitable to allow any award to take effect without
some further consideration by the arbitrator. In so expressing myself I am not
seeking to define or limit the jurisdiction or the way in which it should be
exercised in particular cases, subject to the vital qualification that it is
designed to remedy deviations from the route which the reference should have
taken towards its destination (the award) and not to remedy a situation
in which, despite having followed an unimpeachable route, the arbitrators have
made errors of fact or law and as a result have reached a destination which was
not that which the court would have reached. This essential qualification is
usually underlined by saying that the jurisdiction to remit is to be invoked,
if at all, in relation to procedural mishaps or misunderstandings. This is,
however, too narrow a view since the traditional grounds do not necessarily
involve procedural errors. The qualification is however of fundamental
importance. Parties to arbitration, like parties to litigation, are
entitled to expect that the arbitration will be conducted without mishap or
misunderstanding and that, subject to the wide discretion enjoyed by the
arbitrator, the procedure adopted will be fair and appropriate. What they are not
entitled to expect of an arbitrator any more than of a judge is that he will
necessarily and in all circumstances arrive at the ‘right’ answer as a matter
of fact or law. That is why there are rights of appeal in litigation and no
doubt would be in arbitration were it not for the fact that in English law it
is left to the parties, if they so wish, to build a system of appeal into their
arbitration agreements and few wish to do so, preferring ‘finality’ to
‘legality’, to adopt Lord Diplock’s terminology.
The tenants’
case for remission is that remission is (as that passage I have just read) not
limited to procedural mishaps or misconduct but, the tenants submit, is
available wherever justice cannot otherwise be done, and I was referred to what
Lord Justice Stephenson said in GKN Centrax Gears Ltd v Matbro Ltd
[1976] 2 Lloyd’s Rep 555, at p576, in the second column, where the learned lord
justice said:
I accept that
this Court has statutory jurisdiction to remit an award (in the form of a
special case) not only for error on the face of the award, mistake admitted by
the arbitrator, misconduct by the arbitrator or additional evidence, but, in
the words of Lord Justice Parker in Universal Cargo Carriers Corporation v
Citati . . . ‘if justice cannot otherwise be done’. But I would not go so
far as Mr Justice Donaldson did and regard it as a discretion to remit any
award ‘if it considers that there is a possibility of injustice being done by
inadvertence’: Centrals Morska Importowa Eksportowa v Companhia Nacional
de Navegacao.
To send an
award back to enable justice which has certainly not been done to be done (as
Mr Justice Donaldson did in The Aristides Xilas) . . . is one thing; to
send it back to make sure that justice which may possibly not have been done is
done is quite another, and, as it seems to me, would, in the words of Lord
Justice Willmer in Tersons Ltd v Stevenage Development Corporation:
‘. . . cut at
the root of the whole purpose of arbitration, the basic idea of which is that
the arbitrator’s decision shall be final’.
Similarly, in Mutual
Shipping Corporation v Bayshore Shipping Co Ltd [1985] 1 WLR 625,
the headnote reads:
A dispute
between the owners and charterers of the Montan was referred to a sole
arbitrator. The arbitrator made an award under which the charterers were to pay
the owners US $62,402.13. The arbitrator was not asked to give reasons for his
award but, in accordance with the practice of London maritime arbitrators, he
provided the parties with written reasons on the basis that they were not to
form part of or to be used in any way in connection with his award. The
document revealed to the charterers that the arbitrator had mistakenly
attributed the evidence of the owners’ expert witness to that of the charterers
and vice versa, that it was the evidence of the charterers’ expert witness
which he had preferred and that he should have ordered the owners to pay the
charterers US $27,527.87. The matter was brought to the attention of the
arbitrator who wrote to the parties admitting the error. The charterers applied
to the High Court for an order pursuant to section 22 of the Arbitration Act
1950 that the award be remitted to the arbitrator for reconsideration.
And Mr Justice
Hobhouse granted the application and the Court of Appeal dismissed an appeal
against that decision.
Sir John
Donaldson MR (as he then was), at p632A, said:
The principal
supervisory review powers of the English courts are contained in sections 22
and 23 of the Arbitration Act 1950. Section 23 empowers the court to set an
award aside if the arbitrator has misconducted himself or the reference.
Section 22 empowers the court to remit an award to an arbitrator for
reconsideration. It provides the ultimate safety net whereby injustice can be
prevented, but it is subject to the consideration that it cannot be used merely
to enable the arbitrator to correct errors of judgment, whether on fact or law,
or to have second thoughts, even if they would be better thoughts.
And, finally,
there is the decision in Thomas v McKenna, on which the tenants
rely, of which I have already read an extract from the Master of the Rolls’
judgment. The principal submission for the tenants was that an analogy between
issue estoppel cases can be drawn with remission cases in a variety of aspects
and that the latest development in the law of issue estoppel in the House of
Lords in Arnold v Westminster Bank plc (this case) should be
applied by analogy for the purpose of remission here, in that it can be said,
under both issue estoppel and remission, that the principle of finality should,
if its application involves a sufficient degree of injustice, bow to the
demands of justice. Fresh evidence is capable of producing such a state of
affairs if the stringent conditions regarding the admissibility of fresh
evidence are met. So, it is argued, should the discovery of new law. ‘New law’
is an expression that is used in the special sense of a change in the generally
received perception of what the law is as the result of a new decision, rather
than a positive change in statutory law. It is just such new law that sufficed
in Arnold v Westminster Bank plc to persuade the House of Lords
to uphold the decision that issue estoppel should not, in the circumstances of
this case, be treated as binding in regard to the rent reviews after the first.
The tenants accept that mere error of law is not enough to grant an application
for remission. There was here, they say, much more than mere error of law and
indeed a double error of law, in that there has been a subsequent discovery of
new law, in the sense in which I have described a moment ago, which establishes
the critical error of law, that is to say the error of construction.
There are, in
my judgment, three reasons why the tenants’ application should not succeed.
First,
applying what was said by Lord Donaldson in King v Thomas McKenna
in the passage which I have quoted, it seems to me that their application is
indeed based not on an argument that the route which the reference took was
incorrect, but that the destination that it reached was the wrong one as a
matter of law. Furthermore, the error of law was that of Walton J and is one
which is not appealable and, in my judgment, it would not be right, as was said
in the Bynoe v Bank of England* case, for the court to be astute
to find a way round the limitation which has expressly been imposed by
Parliament on the extent to which appeals can be made against errors of law.
Even on the wide interpretation by Lord Donaldson in King v Thomas
McKenna of the jurisdiction to remit as not limited to the four classic
categories, it seems to me that the tenants’ case falls outside the ambit as
formulated by Lord Donaldson.
*Editor’s
note: Reported at [1902] 1 KB 467.
Second, if the
analogy between estoppel and remission is to be taken to its logical
conclusion, it involves also importing the very clear distinction which, in my
view, exists between estoppel per rem judicatam and issue
estoppel. The latter is flexible in special circumstances, as the House of
Lords’ decision in Arnold v National Westminster Bank shows. The
former is not, as has been emphasised in several passages (which I have quoted
and need not repeat) in the decisions in the Court of Appeal and in the House
of Lords in Arnold v National Westminster Bank.
Third, before
the 1979 Act was passed and removed the jurisdiction to remit on the grounds of
error on the face of the award, I do not consider that the court would have
gone outside the very well-established boundaries for the court’s intervention
where an error of law was relied upon, that is to say error on the face of the
award or under the procedure by way of case stated and I do not consider that
the removal of both those remedies by the 1979 Act and the substitution of a
system of appeals impliedly enlarged the power of the court to remit under
section 22 of the 1950 Act.
For those
three reasons, it seems to me that, as a matter of substance, this application
should fail.
Before parting
with this case I should mention the decision in Elizabeth v Motor
Insurers’ Bureau [1981] RTR 405. The headnote reads:
At about 5.15
pm on the 2 December 1976 the appellant was riding his motor cycle along the A2
road in the direction of Strood when a van in front of him braked suddenly. The
appellant also braked but his motor cycle ran into the back of the van injuring
the appellant. The van driver drove away and remained untraced. On December 7
1976 the police took a statement from the driver of a car which was travelling
behind the van and the motor cycle in which it was stated that the witness saw
that ‘the van in front of the motor cycle appeared to brake suddenly’. The
appellant applied for compensation to MIB who rejected the claim stating that
the evidence including that of the independent following car driver (who in
October 1977 stated that he could not after nine months remember details of the
accident and did not wish to be bothered any further) indicated that if the
appellant had ‘kept a correct distance and a proper lookout the accident would
never have occurred’. He appealed to an arbitrator under clause 11 of the
Agreement. The arbitrator said that he found it ‘impossible to say that the
[appellant] had proved on the balance of probabilities that the van driver did
anything negligent which caused his accident’ and that he could not allow the
appeal or make an award. Stocker J refused to remit the case to the arbitrator
under section 22 of the Arbitration Act 1950.
The Court of
Appeal, allowing the appeal, held:
. . . that
the arbitrator had erred in putting the burden of proof on the appellant to
show that the untraced van driver had braked without good reason whereas the
burden of proof was on the untraced van driver to prove that he had good reason
for braking suddenly . . . ; that in the absence of evidence from the van driver
the appellant’s version of the accident should have been accepted . . .; and
that, accordingly, the case should be remitted to another arbitrator for
reconsideration under section 22 of the Arbitration Act 1950.
No cases on
section 22 of the 1950 Act or its predecessors in the 1854 and 1889 Act were
cited to the Court of Appeal.
That decision
is, in my view, explicable on the basis that the Court of Appeal took the view
that what happened was a procedural mishap or its equivalent. But, even if that
is wrong, I do not regard that decision as sufficient to deter me from
following the decisions of the Court of Appeal after full argument on the
authorities on section 22, such as King v Thomas McKenna, which
do lead to the conclusions that I have sought to express earlier in this
judgment.
For those
reasons, I propose to dismiss this application.
