Appellant claiming tenancy and commencing proceedings in county court – Freeholder serving notices to protect his position should tenancy be established – Notices purportedly served without prejudice to denial of tenancy – Arbitrators appointed under notices – Whether freeholder could participate in arbitration – Whether arbitrators having jurisdiction or guilty of misconduct
The appellant was the sole surviving member of a partnership that, in June 1970, had taken a tenancy of 330 acres of farmland known as Ivy House Farm, Derbyshire, at a rent of £1,148 pa. In December 1996 W acquired the freehold. He claimed that any tenancy in favour of the partnership or the appellant had ceased prior to his acquisition of the freehold. In July 1997 the appellant commenced proceedings in the county court claiming, initially, a declaration that he was tenant of two small areas of the farmland totalling 20 acres and subsequently, by amendment, a declaration that he was tenant of the rest of the farmland as well. A defence and counterclaim were duly served and the proceedings remained undecided.
Meanwhile, W took steps to protect his interests in case the appellant established a tenancy. He served two notices, both withour prejudice to the contention that there was no tenancy. The first, under section 12 of the Agricultural Holdings Act 1986, demanded “that the rent to be payable in respect of the holding as from termination date be referred to arbitration under this Act”. The second, under Case D Part 1 of Schedule 3 to the Act, was served “to remedy breach of tenancy by doing work of repair, maintenance or replacement” within 6 months.
In March 1998 W applied, pursuant to the first notice, for an arbitrator to be appointed and arbitrator S was duly appointed. In view of the proceedings in the county court, S decided to state a case. The assistant recorder answered the questions raised in the case stated, concluding that, despite the county court proceedings, the section 12 notice was valid and the arbitration proceedings should be suspended to allow the issue of whether a tenancy existed to be decided by the county court. The appellant appealed.
Meanwhile, the appellant had applied for an arbitrator to be appointed to determine whether he was liable to comply with the notice to carry out the works of repair. Arbitrator L was appointed. Subsequently, the appellant applied for L to be removed for misconduct. The application was rejected on the basis that L had not misconducted himself and had been entitled to suspend the arbitration on the basis that he believed he was being invited to decide issues that were concurrently under consideration in the county court.
The appellant appealed and the two appeals were heard together. The appellant contended that it was an abuse for W to attempt to invoke or maintain the arbitrator’s jurisdiction under the 1986 Act “without prejudice” to a contention that there was no tenancy.
Held: The appeal was dismissed.
1. There was no reason in principle why a freeholder could not serve a notice, or take relevant arbitral steps to protect his position, pending the resolution of an outstanding dispute as to whether a tenancy existed. That did not flout the scheme of the 1986 Act. The validity of the notice or arbitral step did not depend upon the will of either party, or require any unconditional acknowledgement of a tenancy by either party. On the contrary, it depended upon a matter of objective fact and law, namely, whether there was any, and if so what, tenancy. That was independent of either party’s expression of view, unless that expression of view itself gave rise to some new contract or estoppel. Accordingly, W’s conduct did not involve any kind of abuse.
2. At all material times the dispute relating to the survival of the tenancy had been awaiting resolution in the country court. On the face of it, it had been open to each arbitrator to stay further proceedings while that issue, which determined whether the arbitrators had jurisdiction, was resolved. That conclusion was reinforced by the provision for stating a case in para 26 of Schedule 11 to the 1986 Act, since, if an arbitrator could state a case on jurisdiction, he had to be able to await the outcome of that case. Accordingly, where it was unnecessary to state a case, because the issue of jurisdiction was already before the county court in pending proceedings, an arbitrator had to be able to await the outcome of those county court proceedings.
3. The fact that no award had been issued within 56 days of L being appointed could not amount to misconduct and could not justify a court in setting aside the arbitrator’s appointment. There were no grounds for concluding that the arbitrators had acted unreasonably. Accordingly, the appellant’s application to set aside the appointment of L had been correctly dismissed. It followed also that S had been entitled to state a case and the answers given to the questions all stood.
John McLinden and Mohammed Asif (instructed by M&S Solicitors, of Leicester) appeared for the appellant; Richard Hedley (instructed by Hibbert Durrad Davies, of Nantwich) appeared for “L”, the first respondent in the first appeal; William Batstone (instructed by Burges Salmon, of Bristol) appeared for “W”, the second respondent in both appeals. “S”, the first respondent in the second appeal, did not appear and was not represented.
Thomas Elliott, barrister
