Arbitration — Whether arbitrator erred in making compensation award under a management agreement — Whether leave should be given to appeal arbitrator’s award — Whether time for seeking leave to appeal should be extended
1980s, part of Graveney Hill Farm, including West Graveney Beach, at
Whitstable, Kent, was designated an area of special scientific interest under
the Countryside Act 1968 and the Wildlife and Countryside Act 1981 — On May 6
1986 a management agreement relating to that area was entered into under
section 15 of the 1968 Act for a period of 21 years from January 24 1984 — The
parties to the management agreement were the Nature Conservancy Council (‘the
NCC’) and predecessors in title to the defendant owner of the area — The
agreement imposed restrictions on the use of the land by its owners for the
time being — In 1988 the defendant purchased West Graveney Beach and became
entitled under the agreement to an ‘. . . annual payment reflecting the net
profits from the use of the land for leisure activities forgone by the owners
in a full year as a result of those provisions of this Agreement which restrict
use of the land for leisure activities . . .’ — On December 7 1988 the
defendant gave notice under the agreement to have the annual payment adjusted
in respect of the year commencing January 24 1989, and on May 8 1991 she
applied for the appointment of an arbitrator — On August 13 1991 the defendant
gave similar notice in respect of the years commencing on January 24 1990 and
January 24 1991 — On November 11 1991 the appointed arbitrator gave notice that
his award was available for publication on payment of his fee — On February 5
1992 the NCC issued a summons for leave to appeal and on February 12 1992 they
issued a summons for leave to appeal out of time — The NCC contended that the
arbitrator had erred in law on five grounds; however, they abandoned the fifth
ground during the hearing — (1) the arbitrator had construed the expression
‘net profits forgone’ in the agreement as denoting all net profits that could
have been earned from leisure activities on the land in the absence of the
restrictions imposed by the agreement, rather than those which would have been
earned from leisure activities by the defendant herself in the absence of the
restrictions — (2) the arbitrator held that time was not of the essence of the
provision in the agreement that notice would be given not more than three
months before or more than two months after the commencement of the year in
question — (3) there was no finding by the arbitrator as to the level of
parking use which had become established and for which the local planning
authority would have granted an established use certificate — (4) the
arbitrator was wrong in holding that ‘in planning terms’ boat-launching was ancillary
to car parking — The NCC also sought leave to appeal as they had wrongly
assumed that the 21-day period for appeal ran from date of receipt of the
arbitrator’s award rather than from its date of publication
relied on, the NCC having made out a strong prima facie case that the
arbitrator erred in law in saying that boat-launching was, in planning terms,
ancillary to car parking — As to the other grounds: (1) there was no strong prima
facie case that the arbitrator erred in holding that the profits which
might have been made from the land in question rather than the actual profits
that the actual claimant might have made were the basis of compensation — (2)
it was also arguable as to whether time was of the essence for serving notices
to have the annual payments readjusted and no strong prima facie case
had been made out that the arbitrator erred in upholding the notices — (3) the
arbitrator had figures before him from which he could have made a finding as to
the established level of parking use — There was not a strong prima facie case
that the arbitrator erred in law simply because he failed to set out the whole
of his reasoning in his award — Leave to appeal was granted out of time, notwithstanding
the fact that the defendant was in financial difficulties — It was a condition
of granting leave that the NCC should pay at once to the defendant everything
which was due to her under the award except in respect of the item of claim for
which leave to appeal had been granted
The following
cases are referred to in this report.
Amherst v James Walker (Goldsmith & Silversmith) Ltd (1980) 254
EG 123, [1980] 1 EGLR 86
Brooks
& Burton Ltd v Secretary of State for the
Environment [1977] 1 WLR 1294; [1978] 1 All ER 733: (1977) 76 LGR 53, CA
Burdle v Secretary of State for the Environment [1972] 1 WLR 1207;
[1972] 3 All ER 240; (1972) 70 LGR 511; 24 P&CR 174; [1972] EGD 678; 223 EG
1597, DC
Cameron v Nature Conservancy Council [1992] 1 EGLR 227; [1992] 07 EG
128
Hare v Nicoll [1966] 2 QB 130; [1966] 2 WLR 441; [1966] 1 All ER
285, CA
Ipswich
Borough Council v Fisons plc [1990] Ch 709;
[1990] 2 WLR 108; [1990] 1 All ER 730; [1990] 1 EGLR 17; [1990] 04 EG 127, CA
United
Scientific Holdings Ltd v Burnley Borough
Council [1978] AC 904; [1977] 2 WLR 806; [1977] 2 All ER 62; (1977) 33
P&CR 220; [1977] EGD 195; 243 EG 43 & 127, HL, [1977] 2 EGLR 61
Zermalt
Holdings SA v Nu-Life Upholstery Repairs Ltd [1985]
2 EGLR 14; (1985) 275 EG 1134
This was an
application for leave to appeal under section 1(3)(b) of the Arbitration
Act 1979 against an award of an arbitrator, Donald Troup FRICS, made under a
management agreement under the Countryside Act 1968 and the Wildlife and
Countryside Act 1981 and an application under Ord 3, r 5 of the Rules of the
Supreme Court for leave to appeal against the award out of time. The applicants
were the Nature Conservancy Council for England; the respondent was Mrs Cynthia
Deller.
David Elvin
(instructed by the Treasury Solicitor) appeared on behalf of the plaintiffs,
the Nature Conservancy Council for England; Kirk Reynolds (instructed by
Girlings, of Canterbury) represented the defendant.
Giving
judgment, WARNER J said: There are before me two applications by the
Nature Conservancy Council for England (‘the NCC’), or English Nature, against
Mrs Cynthia Deller. The first is an application for leave to appeal under
section 1(3)(b) of the Arbitration Act 1979 against an arbitrator’s
award in her favour and the second is an application under Ord 3, r 5 of the
Rules of the Supreme Court for leave to appeal against the award out of time.
The case is
about a site known as West Graveney Beach, on the north coast of Kent, near
Whitstable. West Graveney Beach was formerly part of Graveney Hill Farm. At
some time in the early 1980s part of Graveney Hill Farm, including West
Graveney Beach, was designated an area of special scientific interest under the
Countryside Act 1968 and the Wildlife and Countryside Act 1981, by reason of
its flora and fauna.
On May 6 1986
a management agreement relating to that area was entered into under section 15
of the 1968 Act. The agreement was for a period of 21 years from January 24
1984. The parties to it were Mr and Mrs Crebbin, the then owners of Graveney
Hill Farm, two mortgagees whose role is for present purposes unimportant, and
the NCC. It is common ground that the terms of the agreement bind, and inure
for the benefit of, successors in title to Mr and Mrs Crebbin. The agreement
imposed restrictions on the use of the land by its owners for the time being.
By way of
compensation for those restrictions the agreement made provision for annual
payments to the owners of the land. Those provisions, which are complex, are
contained in clauses 2, 3 and 4 of the agreement. Suffice it for the moment to
say that until a particular index was provided, clause 2 was to apply. It is
common ground that the index in question has not yet been provided so that
clauses 3 and 4 have not come into operation. Clause 2(b) provides:
(i) The annual payment reflecting the net profits
from the use of the land for agriculture forgone by the Owners in a full year
as a result of those provisions of this Agreement which restrict the use of the
land for agriculture shall be the sum of £14.73 or such other sum as shall be
agreed or determined in accordance with sub-clause (c) hereof.
(ii) The annual payment reflecting the net profits
from the use of the land for leisure activities forgone by the Owners in a full
year as a result of those provisions of this Agreement which restrict the use
of the land for leisure activities shall be the sum of seven thousand pounds or
such other sum as shall be agreed or determined in accordance with sub-Clause
(c) hereof.
There is then
a proviso, which reads as follows:
Provided
always that the Owners or the Council shall on serving upon the other not more
than three months before nor more than two months after the commencement of
each year in question written notice to that effect have the right to require
that either or both of the annual payments referred to in this sub-clause for
the year in question shall be adjusted in accordance with the provisions of
Sub-clauses (c) and (d) of this clause.
Subclause (c)
provides:
Upon service
of a notice as mentioned in sub-clause (b) of this clause either or both of the
annual payments mentioned in sub-clause (b) hereof for the year in question
shall be adjusted upwards or downwards (in accordance with the guidance for the
time being given under Section 50(2) of the Wildlife and Countryside Act 1981)
to such sum as shall reflect the net profits forgone by the Owners as a result
of those provisions of this Agreement which restrict the use of part or parts
of the land for agricultural and/or for leisure activities as the case may be
for that year and in the event of the parties hereto being unable to agree such
sum or sums then the same shall be determined by a single arbitrator in
accordance with the provisions of Clause 8 hereof.
Subclause (d)
provides for interim payments by the NCC pending the agreement of determination
of any adjustment under subclause (c).
Clause 8 is a
common form reference to arbitration by a single arbitrator to be agreed
between the parties or, in default of agreement, to be appointed by the
president for the time being of the Royal Institution of Chartered Surveyors.
In 1988 Mrs
Deller purchased West Graveney Beach. West Graveney Beach was the part of the
area comprised in the management agreement in respect of which the net profits
forgone, as a result of the provision of that agreement, arose from leisure
activities, so that Mrs Deller became entitled to the payments under para (ii)
of clause 2(b) but not to those under para (i).
On December 7
1988 Mrs Deller gave notice under the proviso to clause 2(b) in respect of the
year commencing on January 24 1989. On May 8 1991 she applied to the president
of the Royal Institution of Chartered Surveyors for the appointment of an
arbitrator under clause 8, and on June 5 1991 the arbitrator, Mr Donald
Alexander Gordon Troup OBE FRICS FAAV, was appointed. He is, I am told, a
distinguished chartered surveyor and a past president of the institution.
Then on August
13 1991 Mrs Deller gave notice under the proviso to clause 2(b) in respect of
the years commencing on January 24 1990 and January 24 1991. On the strict
terms of the proviso those notices were, of course, out of time.
The hearing
before the arbitrator took place on September 23 and 24 1991, following which
he inspected the site and some other sites which had been mentioned as
comparables. On November 11 1991 the arbitrator wrote to the parties saying
that his award was available for publication or collection on receipt by him of
his fee, which was £9,683.18. That letter was received by the representatives
of the parties — the Treasury Solicitor in the case of the NCC — on November 12
1991.
The principal
legal officer who was dealing with the matter in the Treasury Solicitor’s
department, Mr Nwanodi, did not spot the fact that the time for appealing
against the award ran from the date when that letter had been received. There
followed some correspondence between the parties and between them and the
arbitrator about the payment of his fees. There seems to have been a
misunderstanding as to what, if any, agreement there was between the parties as
to that, and it was not until January 17 1992 that the arbitrator’s fee was
paid, in fact by the NCC, and the award was received by the Treasury Solicitor.
On February 5 1992 the summons for leave to appeal and the notice of appeal
were issued. Subsequently, on February 12 1992, the summons for leave to appeal
out of time was issued.
It is common
ground that the principles upon which the court should exercise the discretion
it has under section 1(3)(b) of the Arbitration Act 1979 are those laid
down by the Master of the Rolls in Ipswich Borough Council v Fisons
plc [1990] Ch 709*. At p 722 Lord Donaldson said:
The
distinguishing feature between arbitration and litigation is that, in the
former case, the parties have chosen to submit their dispute to a tribunal of
their own choice in preference to the courts. In making this choice they may
have been influenced by a number of considerations such as the expertise of the
chosen tribunal, privacy, speed, wider rights of representation, flexibility of
procedure, improved enforceability in other jurisdictions, cost and many other
matters. But the fundamental point is that it was their choice. If, in the
light of the award, both parties in effect resile from that choice and
wish to seek a decision from the courts on the legal aspects of their dispute,
they are free to do so without leave: see section 1(3)(a). But if it is
only the party aggrieved by the award who seeks to do so, there is a
presumption in favour of finality and thus against granting leave. However, the
presumption is neither irrebuttable, nor is it of constant weight. On the other
hand it always has some weight. This is inherent in the parliamentary intention
to give greater weight to finality than had been the case prior to the passing
of the Act of 1979.
*Editor’s
note: Also reported at [1990] 1 EGLR 17.
Then on p 724
he said:
What, as I
see it, underlies the philosophy expounded in The Nema and The
Antaios is that there is always a presumption in favour of finality and
that, where there is nothing to rebut it, the application should be
unceremoniously refused. Rebuttal must always be based upon at least a
suspicion that the arbitrator has gone wrong. Being left in the frame of mind
that the arbitrator may or may not have been right — being left in real doubt
in that sense — is not sufficient. But the degree of suspicion which is
requisite may vary according to the seriousness of the consequences of error to
the parties and to a wider public.
The House of
Lords’ guidelines with regard to one-off contracts, that an obvious case of
error should be shown, I think assumed that the effect would also be one-off.
This might well be true of the last rent review, particularly if the remainder
of the lease were relatively short. It would not, however, be true of earlier
rent reviews. There the long-term effect on subsequent reviews would be
analogous to the effect of decisions on standard terms, the only difference
being that the same, rather than different, parties might be affected.
Accordingly
it may well be that in most rent review disputes the ‘standard terms’ approach
will be justified: a strong prima facie case of error should be shown. But
‘strong’ is an imprecise term and I did not think that the House of Lords
intended that the same degree of strength should be called for in every case.
This is, after all, a matter which Parliament has left to the exercise of
judicial discretion. Consistency of approach is important, but it must not
negative a discretion based upon the facts of individual cases.
So how strong
is strong? No meter can be applied or
indeed devised. It is a matter of relative values. If the chosen arbitrator is
a lawyer and the problem is purely one of construction, the parties must be
assumed to have had good reason for relying upon his expertise and the
presumption in favour of finality or, to put it the other way round, the
strength needed to rebut it will be greater. So too if the dispute really
centres upon an issue calling for non-legal expertise, albeit with some
underlying question of law, and the chosen arbitrator has that expertise. But
if the chosen arbitrator is not a lawyer and the whole dispute centres upon a
difficult question of law, less strength may be required.
Similarly,
the degree of strength will be affected by whether the clause in question is
one of a class commonly encountered, so that others would benefit from an
authoritative decision on its meaning or application, and I see no reason why
some account should not be taken of the seriousness of the consequences to the
parties of the arbitrator’s error, if error there be. But the bottom line must
always, I think, be that the judge concludes that there is a more or less
strong, but still ‘strong’, prima facie case that the arbitrator has erred in
law. To adopt any other approach would be to fly in the face of the legislative
preference for finality.
Then on p 726,
after having considered the facts of the case before the court, Lord Donaldson
said:
For the
reasons which I have already given, I think that the Vice-Chancellor applied
the wrong test. It is not sufficient that he should have been left in real
doubt whether the arbitrator was right. Nor, I would add, does it matter
whether the arbitrator’s reasons may have been faulty, unless this cast doubt
upon his conclusions, it is always possible to arrive at the right answer for
the wrong reasons and in such a case leave should never be given. If he was to
give leave, he had, at least, to be satisfied that there was a more or less
strong prima facie case for thinking that the arbitrator had erred on a
question of law.
I propose to
deal with the questions that have been argued before me, first by considering
them independently of the fact that the NCC needs and seeks leave to appeal out
of time. Mr Elvin, on behalf of the NCC, put forward five grounds on which he
submitted that the arbitrator had erred in law, but during the course of his
submissions he abandoned the fifth ground in the light of the fact that it had
not been raised before the arbitrator himself.
The first
ground concerned the interpretation of the phrase ‘net profits forgone’ in the
agreement and, in particular, in clause 2(b)(ii) of it. The arbitrator’s error,
Mr Elvin submitted, was to construe that phrase as connoting all net profits
that could have been earned from leisure activities on the land in question, in
the absence of the restrictions imposed by the agreement, rather than those
which
restrictions; the distinction being between what could have been done on the
land in the absence of the restrictions and what would have been done on it by
the actual landowner concerned, in this case Mrs Deller. Mr Elvin submitted
that there should have been, but was not, before the arbitrator evidence from
Mrs Deller as to what she would have done in the absence of the restrictions,
albeit that such evidence might have been difficult for the NCC to challenge.
It appears that the point was not raised very clearly before the arbitrator, at
all events in the earlier stages of the arbitration, but it was raised and
dealt with by him.
In support of
his submission, Mr Elvin drew my attention to the relevant statutory provisions
and, in particular, to the ministerial guidance given under section 50(2) of
the Wildlife and Countryside Act 1981. That guidance takes the form of a
ministerial Circular dated January 31 1983, circular 4/83 — Wildlife and
Countryside Act 1981, Financial Guidelines for Management Agreements,
which was issued jointly by the Department of the Environment and the Welsh
Office.
Mr Elvin
referred first, as tending to support his argument, to para 11 in the appendix
to the circular, which is headed First Steps Towards Agreement — Minimising
Loss and which says:
From the date
of initial notification of his proposed operation an owner or occupier should
not take any action which may increase the sum eventually payable to him under
these guidelines, eg entering into any contract or commitment with third
parties relating to the proposed work. If he enters into such a contract or
commitment during that period he will have no claim on the offeror if it is
inconsistent with the restrictions which are contained in a management
agreement subsequently completed and involves him in financial loss.
As Mr Elvin
pointed out, these guidelines envisage that a management agreement should be
triggered by a proposal from the landowner or the occupier of the land to
undertake an operation on the land.
Mr Elvin also
drew my attention to para 16 in the appendix and to annex C. Para 16, which is
headed Annual payments: (owners or owner-occupiers), says:
Payment of
annual sums for an agreement over a 20-year period, or such other period as may
be agreed between the parties. The payments should reflect net profits forgone
(sic) because of the agreements (or, in the case of payments to
landlords, be nominal — see paragraph 8), the last payment to fall due 12
months before expiry.
Annex C, which
deals with the situation where annual payments for net profits forgone are
opted for by an owner or occupier rather than standard payments, requires
information to be given by the owner or occupier about, in particular, the
current situation of crops and so on on the land and the proposed improvement.
Mr Elvin submitted that such information would not be required if all that the
landowner needed to prove was what he could have done or could do on the land.
Of course, one difficulty about that argument is that these provisions are
about the information to be supplied to the authority concerned before the
agreement is made.
Mr Elvin also
submitted that in its natural meaning the phrase ‘profits forgone’ connoted
profits which were actually forgone and did not include profits which would
not, in fact, have been earned.
Mr Reynolds on
behalf of Mrs Deller accepted that a management agreement normally resulted
from a proposal by a landowner to do something on the land, but he submitted
that the statutory guidelines and the statutory framework under which they are
published gave no clear guide on the question at issue. He put forward two main
arguments on this part of the case.
First, he
pointed to para 14 in the appendix to the circular, which is concerned with an
alternative way of compensating owners for restrictions imposed by a management
agreement, namely lump-sum payments. Para 14 reads as follows:
Payment, at
the commencement of the agreement of a single lump sum for the management
agreement over a 20-year period (or such other period, possibly operating in
perpetuity, as may be agreed between the parties). The amount should be equal
to the difference between the restricted and unrestricted value of the owner or
owner-occupier’s interest, calculated having regard to the rules for assessment
in respect of the compulsory acquisition of an interest in land, as set out in
Section 5 of the Land Compensation Act 1961 so far as applicable and subject to
any necessary modifications; and in so far as there is no statutory eligibility
for compensation in this respect under Section 30(2) of the 1981 Act.
Para 15 goes
on to say that offerees choosing this method should be requested to provide the
information listed at annex B. Annex B does not refer to anything proposed to
be done on the land.
Section 5 of
the Land Compensation Act 1961 provides, among other things, that:
. . .
Compensation in respect of any compulsory acquisition shall be assessed in
accordance with the following rules:
. . .
(2) The value of land shall, subject as
hereinafter provided, be taken to be the amount at which the land if sold in
the open market by a willing seller might be expected to realise.
Mr Reynolds
drew my attention to a decision of the Lands Tribunal for Scotland in Cameron
v Nature Conservancy Council [1992] 07 EG 128*, from which it is
quite clear that the question, where para 14 applies, is what a hypothetical
purchaser would have been likely to offer for the land on the open market
without, and alternatively with, the relevant restrictions. Mr Reynolds
submitted that it was therefore clear that on the lump-sum basis the question
that matters is what could in fact be done with the land rather than what would
be done with it by a particular identified owner. One would expect, he said,
equivalence between that and the notion underlying the phrase ‘profits forgone’
in para 16.
*Editor’s
note: Also reported at [1992] 1 EGLR 227.
To that Mr
Elvin replied that the methodology for reaching the figures was different under
paras 14 and 16 and that that was so because under para 14 regard could not be
had to future occurrences such as changes in planning policy in the area; hence
the test of what a hypothetical purchaser could do. But in the case of annual
payments, Mr Elvin said, the actual owner could give evidence and could be
cross-examined. It was clear that, when the initial payments were being assessed,
what he proposed was relevant and there was no reason for assessing revised
payments on a different basis.
Mr Reynolds’
second argument was that the idea that the amounts of the annual payments could
fluctuate according to the subjective intentions of the owner of the land from
time to time was inconsistent with the alternative methods of adjustment
provided for by clauses 3 and 4 of the management agreement which operate by
reference to impersonal indices, a method which is indeed envisaged by the ministerial
circular. It did not appear to me that Mr Elvin answered that point.
I am left with
the impression that this question is arguable both ways and that, at best from
the point of view of the NCC, the arguments are evenly balanced. So there is to
my mind no prima facie case that the arbitrator erred, let alone a
strong prima facie case to that effect. That being so, this is not a
point on which I think leave to appeal should be granted, even though it is a
point, so Mr Elvin told me, of great importance to the NCC. Mr Elvin explained
that that was so, not only because the arbitrator’s approach may be, and
probably will be, adopted in any future arbitrations between the same parties
but also because there is a fear that the result of this arbitration will be
relied upon by other owners in arbitrations between themselves and the NCC. The
fear is, as Mr Elvin expressed it, that this arbitration award and the opinion
of counsel on which the arbitrator relied will be ‘hawked around’ at other
arbitrations.
The second
matter on which Mr Elvin submitted that the arbitrator erred in law was that he
held that time was not of the essence of the provision in the proviso to clause
2(b) of the agreement, that notice should be given not more than three months
before nor more than two months after the commencement of the year in question.
That point applies in the present case to the notices served by Mrs Deller in
respect of the second and third of the three years in question.
On that point
the arbitrator referred to a number of authorities, in particular United
Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904† , Amherst
v James Walker (Goldsmith & Silversmith) Ltd (1980) 254 EG 123,
[1980] 1 EGLR 86 and Hare v Nicoll [1966] 2 QB 130, and he
founded his decision that time was not of the essence partly on the effect of
those authorities and partly on the contrast between the proviso to clause 2(b)
and the corresponding provisions for reviews in clauses 3 and 4 of the
agreement, in the case of each of which it is expressly provided that time
should be of the essence in respect of the notices there in question.
† Editor’s
note: Also reported at (1977) 243 EG 43 & 127, [1977] 2 EGLR 61.
Mr Elvin
submitted that the arbitrator had distinguished Hare v Nicholl on
the wrong ground. That may be so, but it seems to me manifest that it is
distinguishable. It was a case of an option to purchase shares. Second, Mr
Elvin sought to turn round, so to speak, the argument, based on the express
provisions in clauses 3 and 4, that time should be of the essence. He pointed
out that the reviews provided for by clauses 3 and 4 were five-year reviews,
whereas the reviews provided for by clause 2 were annual reviews, and he
submitted that one might take the view that in the case of a five-year review
adherence to strict time-limits was not so important, so that there it was
necessary expressly to say that time was of the essence, whereas in clause 2
the matter was a fortiori. There again it seems to me that the matter is
arguable in the way in which Mr Elvin argued it, but I certainly cannot say
that there is a prima facie case that the arbitrator was wrong, let
alone a strong prima facie case to that effect. So there again I do not
think that it would be right to grant leave to appeal.
The third
matter on which Mr Elvin submitted that the arbitrator was wrong in law was
this. The arbitrator said that on the evidence he was satisfied that Canterbury
City Council would, if applied to, have granted an established-use certificate
for car parking on West Graveney Beach. Having set out his findings leading to
that conclusion at some length, he then held that there could have been a
permissible intensification of that established use leading to the conclusion,
which he expressed in para 122 of his award, that parking could have been
provided on West Graveney Beach for up to 60 cars a day. Mr Elvin’s criticism
was that there was no finding by the arbitrator as to the level of parking use
which had become established and for which Canterbury City Council would have
granted an established-use certificate. There was therefore no basis, Mr Elvin
said, for the finding as to intensification.
Mr Elvin drew
my attention in that connection to the judgment of the Court of Appeal in Brooks
& Burton Ltd v Secretary of State for the Environment [1977] 1
WLR 1294 and in particular to the passage at pp 1306 to 1307 where the question
of intensification is discussed. That passage ends with the words:
We have no
doubt that intensification of use can be a material change of use. Whether it
is or not depends upon the degree of intensification. Matters of degree are for
the Secretary of State to decide. He did so in this case. There was ample
evidence to support his decision on this point. It cannot be upset in this
court.
But, said Mr
Elvin, the question could not be dismissed as simply one of fact because no
reasonable arbitrator could conclude that there was a permissible level of
intensification without applying his mind first to the established level of car
parking and then, in relation to that, to the level of increase envisaged.
Having omitted to state what the established level of car parking was, the
arbitrator had, Mr Elvin submitted, omitted part of the necessary exercise in
reaching his conclusion and had therefore erred in law. There was no starting
point for his assessment of the permitted intensification. I suggested to Mr
Elvin that, if that were so, this might be a case for requiring the arbitrator
under section 1(5) of the 1979 Act to state his reasons in further detail, but
Mr Elvin replied that it was not because the arbitrator had in para 69 of his
award set out his findings in detail and had not there determined the level of
established use. Now it is perfectly true that para 69 of the award contains
detailed findings, but they relate more to the history of the matter and to the
extent to which the parking that did occur was in effect trespass or not.
I find this
point more difficult than the first two that I have dealt with. However, there
is no dispute that the arbitrator had figures before him from which he could
have made a finding as to the established level of parking use. Nor is there
any suggestion that he was mistaken as to what could in law constitute
permissible intensification. In the end I have come to the conclusion that I
cannot hold that there is anything that can be described as a strong prima
facie case that he erred in law simply because he failed to set out the
whole of his reasoning in his award. He was after all, as Mr Elvin acknowledged,
and as is shown by Brooks & Burton Ltd, the judge of fact and, in
view of Mr Elvin’s answer on the question whether the arbitrator should be
required to state further findings, I do not think that it would be right to
grant leave to appeal on this point either.
I come to the
fourth point on which Mr Elvin submitted that the arbitrator erred in law and
that was this. One of the leisure activities which the arbitrator found could
be carried out on the land in the absence of the restrictions imposed by the
management agreement was boat-launching. He dealt with that in paras 130 to 139
of his award. In para 137 he said:
I must now
consider for the purposes of the established car parking use and my finding
that boat launching is ancillary in planning terms to that use, the extent to
which the numbers for a full season will be greater. I take the view that
midweek launchings are likely to be at a much lower level to that at the
weekends, except during the high holiday season of July and August.
Now that paragraph
is to some extent obscure, though I think that when he refers to the numbers
for a full season being greater he means greater than for a period of 28 days,
that being the period for which it is common ground that under the General
Development Order 1987 boat-launching would, on any view, be permissible under
planning law. However, as Mr Elvin pointed out, there does not seem to be any
doubt that the arbitrator held that ‘in planning terms’ boat-launching was
‘ancillary’ to car parking, and Mr Elvin submitted that that plainly was wrong.
Car parking might be ancillary to boat-launching in the sense that the owner of
a boat could bring his car with a trailer to the beach in order to launch the
boat from the trailer, but common sense and proper use of the English language
made it impossible to say that boat-launching could be ancillary to car parking
in the sense of ‘incidental to or ancillary to the achievement of the purpose
of’ car parking: see Burdle v Secretary of State for the Environment [1972]
3 All ER 240*, at p 244.
*Editor’s
note: Also reported at (1972) 233 EG 1597.
Mr Reynolds’
answer to this argument was twofold. First, he submitted that, read in its
context, the finding in para 137, which was undoubtedly obscure, was a finding
that historically there had been boat-launching connected with car parking,
that the arbitrator’s error, if any, had been to express himself in legally
incorrect language by using the word ‘ancillary’, and that it would not be safe
to conclude that he had erred in law. I do not find that answer convincing.
Mr Reynolds’
alternative submission was that if this were the only point on which I was
minded to grant leave to appeal, subsection (4) of section 1 of the Arbitration
Act 1979 was relevant. That subsection provides that the court should not grant
leave under subsection (3)(b) unless it considers that, having regard to
all the circumstances, the determination of the question of law concerned could
substantially affect the rights of one or more of the parties to the
arbitration agreement. That, in this case, is really a question of figures.
In paras 196
to 199 the arbitrator made alternative awards on the footing, first, that the
annual payments to be made by the NCC to Mrs Deller should be in respect of a
potential use of the land for leisure purposes for a 210-day season and on the
footing, second, that they should be in respect of the potential use of the
land for only 28 days. On the first basis his awards were £16,876 for 1989,
£19,363 for 1990, and £21,639 for 1991. In para 139 of his award he in effect
particularised the figures for boat-launching, and those were, on the first
basis, £4,500 for 1989, £4,875 for 1990 and £5,250 for 1991. On the alternative
basis, ie the 28-day basis, they were £1,680 for 1989, £1,820 for 1990 and
£1,960 for 1991. The difference between those sets of figures over the
three-year period is, I am told, £9,165. So Mr Reynolds’ argument based on
section 1(4) of the Act is in effect that £9,165 is not significant when
compared to the total of the three figures of £16,876, £19,363 and £21,639. I
do not, for my part, think that it can be said that that sum is insignificant
when compared to that total. It is, of course, small but it is not
insignificant.
I think,
therefore, that Mr Elvin has shown that on this point there is a strong prima
facie case that the arbitrator erred in law, that he erred in saying that
boat-launching was, in planning terms, ancillary to car parking.
Mr Elvin said
that if the appeal succeeded on that point there would be no need for a
remission to the arbitrator. The court would simply substitute the smaller
figures in para 139 of the award for the larger ones. I am not altogether sure
about that. It depends on what view the judge who hears the appeal takes of the
matter, and it is possible that he might feel, after having heard full argument
on it, that the point, particularly having regard to the undeniable obscurity
of para 137, should be remitted to the arbitrator.
The relevance
of this is that, as Mr Elvin emphasised, it is open to me to grant leave to
appeal on terms. Mrs Deller is in financial difficulties and she has legal aid
for the proceedings in this court, but she would not have legal aid for any
further proceedings before the arbitrator. I would therefore impose as a
condition of granting leave to appeal on this point not only a condition that
the NCC should pay at once to Mrs Deller everything that is due to her under
the arbitrator’s award except the £9,165 but also a condition that the NCC
should undertake to pay any costs incurred by Mrs Deller on any remission to
the arbitrator.
I deal, last,
with the question whether I should grant that leave to appeal on those
conditions despite the fact that the application is made out of time or, to put
it another way, whether I should grant Mr Elvin’s application for an extension
of time for the NCC to appeal on that point. This is an aspect of the case on
which I have hesitated a great deal. Mr Reynolds drew my attention to a
judgment of Bingham J in Zermalt Holdings SA v Nu-Life Upholstery
Repairs
corresponding aspect of that case. He said at pp 15M-16A:
The landlords
have issued this notice of motion one week out of time. They appear to have
done that, first, because they gauged the 21 days permitted by the rules from
the date on which they received the award rather than the date on which it was
published and that they say is why they did not issue the notice of motion in
time.
*Editor’s
note: Also reported at (1985) 275 EG 1134.
So the same
mistake was made in that case as was made by Mr Nwanodi in the present case.
Bingham J went
on:
This is a
field in which the court is extremely strict in insisting on the time-limits to
avoid the lengthy and protracted hearings which used to afflict arbitration
matters. Only where good cause is shown and where there is no possibility of
prejudice will any extension of time be granted, and then only if the delay is
minor. This, however, is, in my judgment, such a case and albeit with
reluctance I feel it right to extend the time and make the order that I have
indicated.
Of the three factors
that Bingham J mentions there, the first is that good cause should be shown. As
I have said, the mistake made by Mr Nwanodi was the same as was made by the
landlords in the Zermalt case and it is, I am bound to say, an
understandable mistake. The second is that there should be no possibility of
prejudice. The prejudice relied on by Mrs Deller, and by Mr Reynolds on her
behalf, arises from her financial difficulties. She owes money that she cannot
pay to her bank and to the Inland Revenue. Her debt to her bank, according to
an affidavit that she has sworn, is £179,000 and in no way will she be able to
pay that as a result of this case, whatever its outcome. She says that her debt
to the Inland Revenue is £14,688.64. I have not done the arithmetic, but it
does not seem to me that the withholding from her of the £9,165 would prevent
her from paying the Inland Revenue out of what is owed to her by the NCC. Be
that as it may, I do not think that it would be right to deny to a party which
had prima facie a good case for appealing against an arbitration award
the opportunity to do so on the ground that its opponent was in financial
difficulties. That would mean that a person who was not in financial
difficulties was more vulnerable to an appeal than one who was, which I do not
think would be just. Moreover, it seems to me that the financial consequences
to the NCC of being denied this opportunity to appeal must also be weighed.
There is something over £3,000 a year for potentially quite a long period
involved. Last, there is the question of the length of the delay. It was only
one week in Bingham J’s case; it is two months here. But it does not seem to me
that that is a sufficient reason for denying the NCC the extension of time that
it seeks. Two months is not in all the circumstances an outrageous period of
delay — particularly when one bears in mind the reason for it. The proceedings
were issued well within 21 days of the date when the Treasury Solicitor in fact
received the award.
For those
reasons, albeit as I have said with hesitation, I will grant the NCC the
extension of time it seeks.
Leave to
appeal allowed on one of five grounds.
