Lease of commercial premises — Parties unable to agree market value — Determination by arbitrator — Tenant wishing to appeal against figure determined — Delay in proceedings — Landlord seeking to strike out tenant’s action for want of prosecution — Finding of inexcusable delay — High Court granting application to strike out under inherent jurisdiction of the court — Appeal allowed — Judgment for tenant
By a lease dated May 9 1970 premises at Euston Tower, London NW1, were demised for a term of 49 years from March 25 1970 at an initial rent of £1,729,200 pa with rent reviews every seven years. The rent was increased to £3,710,000 pa at the second review on March 25 1984. Euston Centre Investments Ltd (“ECI”) was the landlord and the Secretary of State for the Environment the tenant. The parties were unable to agree the market rent as at March 25 1991 for the purposes of the third rent review. Determination of the rent was referred to an arbitrator, who published his interim award on May 28 1992 determining the market rent as at March 25 1991 at £7,760,000 pa.
The applicant sought to appeal against that award under section 1 of the Arbitration Act 1979, which was due to be heard in December 1993. However, ECI sought an order to strike out those proceedings for want of prosecution under the inherent jurisdiction of the court. The Secretary of State argued that the court’s jurisdiction had to be exercised in accordance with the principles stated in Birkett v James [1978] AC 297 at p318 and that the application to strike out was bound to fail because ECI would be unable to establish the likelihood of serious prejudice as required under those principles. The High Court struck out the application for leave to appeal for want of prosecution: see [1993] EGCS 210.
Held The tenant’s appeal was allowed.
1. The judge was right to hold that the principles in Birkett were not applicable to applications under section 1 of the Arbitration Act 1979. To hold otherwise would seriously undermine the ability of the court to carry out the policy of the 1979 Act to ensure prompt action by applicants.
2. It was manifest that the High Court had inherent powers to strike out for want of prosecution an application for leave to appeal under section 1 of the 1979 Act.
3. There were substantial and culpable delays in this case. However, there were factors which cumulatively persuaded the court that the judge had exercised his discretion wrongly.
4. There was a duty to apply promptly for a hearing date and parties could not dispense with that requirement. It was unsafe to assume that the slow progress of a leave application would not lead to trouble simply because the other side raised no objection.
5. However, there might have been scope for misunderstanding in the present case. It was also relevant that until now there was no clear authority that Birkett was inapplicable. The judge took into account that there had been previous judicial warnings to litigants about delay in arbitration matters. But those warnings were in general terms and did not eliminate specific uncertainties.
6. It would be unjust in a case where the delay occurred while uncertainties existed and where a delay of 10 months was partly caused by administrative errors of court staff, to strike out the application. However, such an indulgent attitude in future would be inappropriate.
Jonathan Gaunt QC and Erica Foggin (instructed by the Treasury Solicitor) appeared for the Secretary of State for the Environment; Michael Barnes QC and John Male (instructed by S J Berwin & Co) appeared for ECI.
