Arbitration — Rent fixed — Arbitrator refusing to make discount — Application for remission — Reason for refusal of discount allegedly not before arbitrator — Application out of time — Strict time-limits insisted upon — Whether injustice being caused — High Court refusing to extend time for application
This was an application by Lehman for an extension of time to apply for the remission of awards made in two rent review arbitrations and for remission of the awards to the arbitrator if time was extended. By two leases dated December 31 1987 Broadgate granted Lehman leases of 1 and 2 Broadgate. Each lease was for a term of 30 years and six months from July 23 1986 and contained provisions for an upwards-only rent review on December 25 1991 and every fifth year thereafter. The reviewed rent was to be the open market rent. The parties were unable to agree the reviewed rent and a reference was made to an arbitrator.
Lehman claimed that the two arbitrations should be remitted to the arbitrator on the ground that he refused to make a discount in the rent which he fixed for a reason which was not taken before the arbitrator; and which he did not give the parties an opportunity to address him on, ie “for it might introduce an element of double counting”. The application was delayed for seven months since Lehman’s legal advisers had believed that the words “for it might introduce an element of double counting” expressed a legal, rather than factual reason for rejection of the discount. However, Broadgate successfully contended that the words expressed a finding of fact on a question of valuation, and that no appeal lay. The present application was commenced about two weeks later and stood over by consent.
Held The application was refused.
1. This was a field in which the court strictly insisted on time-limits to avoid the lengthy and protracted hearings which used to afflict arbitration matters. Only where good cause was shown and no possibility of prejudice would any extension of time be granted and then only if the delay were minor: see Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14.
2. Zermalt was an application for the entire award to be set aside. The same strictness was not required on an application such as the present. If the court had been satisfied that there was a serious procedural mishap, with potentially substantial consequences, it should have been inclined to extend time.
3. However, on the evidence available to the arbitrator it seemed that it would be double counting to give Lehman a discount for the onerous rent review provision in assessing a comparable containing the same provision. The arbitrator was entitled to decide that double counting would be involved. It was for the arbitrator to decide what evidence was of importance; the failure of counsel to refer to it did not disable him from relying on it.
4. The passage in question was obscure, but in the absence of good reason to do otherwise, the court would assume that the arbitrator acted correctly and decided rationally. It was not enough to suspect that there might have been an injustice. The court was not satisfied that there was actual injustice.
5. The arbitrator clearly rejected Lehman’s case on questions of fact and valuation. The parties to an arbitration had to accept any errors of fact made by the arbitrator acting properly.
David Neuberger QC (instructed by Freshfields) appeared for Lehman; Kim Lewison QC (instructed by Herbert Smith) appeared for Broadgate.
