Civil procedure – Appeal – Extension of time – Parties disagreeing as to increase in rent under rent review — Arbitrator determining appropriate rent – Claimant seeking to extend time for challenging arbitrator’s award – Whether claimant satisfying conditions for extension – Application dismissed
The claimant was the tenant of a former warehouse that was used for offices, workshops, film studios and warehousing under a lease that provided for three-yearly rent reviews. In 2004 and 2007, the claimant and the defendant landlord were unable to agree the level of rent mainly because the claimant had partially removed a derelict timber floor on an upper storey. The defendant argued that the works constituted a tenant’s improvement that fell to be disregarded when valuing the property for the purposes of a rent review. The claimant disagreed. The dispute was referred to an arbitrator who agreed with the defendant and made an award accordingly.
The claimant wanted to challenge that award, under section 68 of the Arbitration Act 1996, on the grounds that the arbitrator had reached his decision on the basis of issue estoppel, which approach he should have communicated to the parties in advance. Further, he had failed to consider the ramifications of his decision, in particular the fact that, had the timber floor not been removed, pillars supporting it would have limited the claimant’s use of the ground floor. He had also failed to address the argument that different parts of the building should have different values.
However, the challenge to the arbitrator’s award was out of time and the claimant applied to the court for an extension.
Held: The application was dismissed.
Section 80(5) of the 1996 Act introduced a broad discretionary approach to applications to extend the 28-day time limit under sections 67, 68 and 69. Although each case turned on its own facts, the likely material considerations would be: (i) the length of the delay; (ii) whether, in allowing the time limit to expire and the subsequent delay to occur, the party was acting reasonably; (iii) whether the defendant or the arbitrator had caused or contributed to the delay; (iv) whether the defendant would, because of the delay, suffer irremediable prejudice in addition to loss of time should the application proceed; (v) whether the arbitration had continued during the period of delay and, if so, what effect that might have on the progress of the arbitration or the costs incurred in respect of the determination of the application by the court; (vi) the strength of the application; and (vii) whether it would be unfair to the applicant if the application were not to be determined: Kalmneft JSC v Glencore International AG [2002] 1 All ER 76 applied.
Other relevant factors for the court included public policy in the due expedition of arbitration, bearing in mind, in the instant case, that the arbitrator’s award was made five years after the initial rent review in 2004. Further, the strength of the underlying challenge was vital to the court’s considerations since, pursuant to section 68, the court could intervene only where it was satisfied of a serious irregularity. In that regard, the Departmental Advisory Committee, in its report on the Arbitration Bill, had referred to section 68 as a longstop, available only in extreme cases where a tribunal’s conduct of the arbitration had been so flawed that justice demanded its correction: Egmatra AG v Marco Trading Corporation [1999] 1 Lloyd’s Rep 862 and Checkpoint Ltd v Strathclyde Pension Fund [2003] EWCA Civ 84; [2003] 1 EGLR 1; [2003] 14 EG 124 applied.
The weakness of the claimant’s challenge was decisive in not granting an extension of time. His submissions on issue estoppel had not merit since the parties had raised the question of estoppel during the arbitration. The claimant had not asked the arbitrator to consider other matters if he rejected its primary case and it was not for the arbitrator to make up the evidence on which the claimant later relied. The arbitrator might have been right or wrong in his conclusion, but that did not satisfy the test of serious irregularity. Finally, it could not be said that he had failed to deal with an issue as contemplated by section 68 since he had applied a uniform rate to the entire building for valuation purposes, having rejected evidence of comparable rates.
Stephen Boyd (instructed by Wilson Barca LLP) appeared for the claimant; Camilla Lamont (instructed by Maxwell Winward LLP) appeared for the defendant.
Eileen O’Grady, barrister
