Agricultural holdings — Arbitrator’s award — Appeal against decision of county court judge that award should be set aside — Complaint that arbitrator was guilty of misconduct in refusing to grant an adjournment of the hearing requested by the tenant on the ground that he needed further time to obtain legal representation — The arbitration followed a notice to quit given by the landlord in reliance on Case E in section 2(3) of the Agricultural Holdings (Notices to Quit) Act 1977 — Tenant before the arbitration hearing had in fact instructed a firm of solicitors and later dispensed with their services and had then instructed a second firm — Second firm of solicitors, being concerned about mounting expenses, required the payment before the hearing of a sum on account of costs as a condition of continuing to act — The sum was not paid and these solicitors were no longer retained by the tenant, but before ceasing to act they made an informal request to the arbitrator to postpone the hearing, stating the reason that the tenant needed further time to find the funds to secure representation at the hearing — Arbitrator said that he saw no proper cause for postponing the hearing and commented that the question of fees between a client and his solicitor was a personal matter — At the arbitration the tenant said that he did not feel capable of acting on his own and asked for an adjournment, which was not granted — County court judge found that the arbitrator’s reason for refusing an adjournment at the hearing was the same as his reason earlier for refusing a postponement, namely, that he considered the ground, concerned with a question of fees, irrelevant — Held, upholding the decision of the judge, that the arbitrator’s action amounted to technical misconduct and his award was properly set aside — The arbitrator had failed to give due consideration to the application for adjournment on its merits — Given the substantial nature of the factual issues raised, the possibility also of questions of law arising, the grounds put forward by the tenant and objections raised by the landlord, legal representation at the hearing was desirable — The refusal of adjournment risked injustice to the tenant — Landlord’s appeal dismissed
This was an
appeal from a decision of Judge Chope at Truro County Court ordering that an
arbitrator’s award should be set aside and that a fresh arbitration should take
place. The appellant was the landlord, the Official Solicitor, acting as a
trustee, and the first respondent was the tenant, John Derek Thomas, who had
been the applicant before the county court judge to have the award set aside.
The agricultural holding which was the subject of the arbitration was known as
Colan Barton and Penhill Farms, situated at Colan, near Newquay, Cornwall. The
second respondent was the arbitrator, Anthony Archer-Lock BSc FRICS, who took
no part in the proceedings.
Derek Wood QC
and Edward Cole (instructed by Robbins Olivey & Lake, agents for Burges
Salmon & Co, of Bristol) appeared on behalf of the appellant landlord; P G
Langdon-Davies (instructed by Foot & Bowden, of Plymouth) represented the
respondent tenant; the arbitrator was not represented.
Giving
judgment, CUMMING-BRUCE LJ said: This is an appeal against an order of His
Honour Judge Chope made in June this year when he ordered that an arbitrator’s
award, dated July 15 1981, made in the matter of an arbitration between the
applicant, as tenant, and the first respondent, as landlord, relating to an
agricultural holding, should be set aside and whereby the learned judge further
ordered that a fresh arbitration take place pursuant to statute.
The grounds of
appeal are pleaded in five paragraphs, but it is accepted before us that the
grounds in the fourth and fifth paragraphs do not now arise in the sense that
the only questions raised by the appeal are the questions raised in the first
three paragraphs of the pleaded grounds of appeal.
In that
situation, the point for decision by this court is in a narrow compass and it
becomes unnecessary to explain, other than in the most cursory way, the general
background of the dispute, much less the merits thereof. That is for this
reason, that the issue before this court is only whether the arbitrator was
guilty of such an irregularity as may properly be classified as misconduct for the
purpose of determining whether to set aside the award. The irregularity relied
upon is the refusal of the arbitrator to grant an adjournment on February 18
when a request (to use a neutral word) had been made to the arbitrator by the
respondent to the arbitration for an adjournment of four weeks in order to
enable him to obtain legal representation.
The
arbitration was an arbitration under the Agricultural Holdings (Notices to
Quit) Act 1977. The landlord had served notice to quit upon the tenant and relied
upon Case E of section 2(1) of the Act, which I quote:
At the date
of the giving of the notice to quit the interest of the landlord in the
agricultural holding to which the notice relates had been materially prejudiced
by the commission by the tenant of a breach, which was not capable of being
remedied, of any term or condition of the tenancy that was not inconsistent
with the fulfilment by the tenant of his responsibilities to farm in accordance
with the rules of good husbandry, and it is stated in the notice that it is
given by reason of the matter aforesaid.
The notice
served by the landlord on the tenant alleged a breach of covenant by the tenant
in that he, without the consent of the landlord and in breach of covenant, had
sublet a part of the holding, whereby the interest of the landlord to which the
notice related had been materially prejudiced.
For the
purpose of establishing that the notice to quit should have effect, it was
necessary for the landlord to establish in the arbitration the matters specified
in the statute as Case E. Those questions were (a) has the tenant committed a
breach which, in the circumstances, meant had he sublet part of the holding;
(2) was that breach not capable of being remedied; and (3) had the landlord
been materially prejudiced by the irremediable breach of covenant by the
tenant? In respect of such an issue, the
Agricultural Holdings Act 1948 imposes upon parties the duty to submit to
arbitration being a statutory arbitration in accordance with the conduct and
procedures set out in the Sixth Schedule to the 1948 Act.
The notice to
quit having been served and the statutory arbitration
landlord had a right to oust him from the holding, the parties agreed upon the
nomination of an arbitrator and, as is usual in such a context, the arbitrator
upon whom they agreed was an arbitrator with experience in agriculture, being
in fact a member of a firm of land agents, who, contrary to the belief and submission
of the tenant in an ill-judged letter, was the kind of person who, as
experience shows, is usually best qualified to undertake these inquiries. So
the stage was set and statements of case pursuant to the Sixth Schedule were
duly served and thus the arbitrator became seized of the proceedings. A formal
appointment was made and, from the moment of his appointment, the arbitrator
was in command of the proceedings in the arbitration.
About the
issues raised in the statements of case, I need say only this. The landlord was
alleging a number of breaches which the landlord alleged had been serious
breaches by the tenant over a long period of time, whereby the tenant had
sublet or parted with possession of a number of different parts of his holding,
including one part which, as it turned out, was alleged to have been sublet by
the tenant to a certain farmer whom I will describe as ‘X’. If the landlord
succeeded in establishing any of the breaches of covenant alleged in his
statement of case and proving that such breach was incapable of being remedied,
and proving that the landlord had been materially prejudiced by the commission
by the tenant of the breach, the consequences to the tenant were manifestly of
the utmost importance for, by reason thereof, he was under threat of ejection
from his holding with consequential prejudice to his livelihood. Everybody
knows that, in the circumstances of the 1970s and 1980s, the capital required
to buy one’s way into an agricultural holding has, for many people, become prohibitive.
Nothing is known in this court, or before the arbitrator, of the finances of
the tenant and it may be that he could go into the market after losing this
holding of some 300 acres and find another livelihood in farming land that he
owned or tenanted, but, having regard to all the circumstances, it is
reasonable to approach the issues raised by the arbitration as constituting as
serious a threat to the livelihood of the tenant as can reasonably be
anticipated. From the landlord’s point of view, assuming that the landlord had
proved material prejudice, again his interest, particularly acting as a trustee
(which I understand is the landlord’s position), is of the utmost importance.
So for both parties, an award in the arbitration was of the greatest importance.
When the
proceedings were under foot, the tenant instructed his first solicitors. They
decided to seek the advice of counsel. Those solicitors — and, after the tenant
had dispensed with their services, the next firm of solicitors who represented
him — were at all times alive to the fact that the interests of their client
would be best advanced (a) by legal representation by themselves and (b) by the
advice of counsel and representation by counsel at the hearing of the
arbitration. The first solicitors retained counsel and the second solicitors
retained counsel. On the other side the landlord was represented legally by
solicitors who, if my recollection is right, decided that it was not necessary
for them to be represented by counsel; which may perhaps reflect the experience
of that firm of solicitors in relation to arbitrations under the Agricultural
Holdings Act.
The arbitrator
tried to arrange a date for the hearing of the arbitration and he was under a
statutory duty to issue his award within 56 days from the date of formal
appointment, subject to an extension of time given to him by the minister and
so naturally he tried to arrange a date as early as possible. The first date
that he suggested was December 11-12 1980, but that was not a convenient date
to the tenant’s solicitors and, as an alternative, they proposed December 18-19
or, if that was not acceptable, a date in January. The arbitrator fixed January
9, but then there were difficulties from the tenant’s point of view about a
hearing on that date, because his land agent, whom the solicitors wished to be
present, would not be available. So they asked for a date in February and the
arbitrator fixed a date to begin on the 5th and if necessary to continue on the
6th. In fact, by the end of the attempts to find a convenient date, the
arbitration was ultimately arranged to begin on February 18.
There had been
some vicissitudes on the tenant’s side on December 18 1980. The tenant
discharged his first solicitors and instructed his second solicitors, and it
was at the request of those second solicitors that the arbitration was
ultimately fixed for February 18-19. Then there was a suggestion in a letter
from the landlord’s solicitors to the arbitrator that before February 18 there
had been an adjournment of the arbitration. That was not an accurate expression
of the situation. What had happened was that the arbitrator, seeking to find a
date convenient to both solicitors, having regard to their requirements, was
confronted over a period of weeks by difficulties represented to him by the
tenant’s solicitors which had the effect of leading the arbitrator, perfectly
reasonably, to abandon his attempts at earlier dates in December, January or
early February until the date of February 18 was eventually arranged.
So I come to
the facts that gave rise to the county court proceedings. On January 9, in
letters to both sides, the arbitrator told them that he understood that
Wednesday, February 18 was a mutually convenient date for the hearing, with a
possible extension to Thursday, February 19 and that was accepted. But on
January 27, the arbitrator told the tenant’s solicitors that he was concerned
as to the number of people who would be attending the arbitration on Wednesday,
February 18 and possibly February 19 and 20. He said this:
If the
tenant’s case is to be supported by a total of 14 people; and the landlord’s
case is to be supported by a substantial number, then it would seem that the
hearing room . . . would not be large enough, and I shall have to take steps to
book a larger room . . .
I only refer to
that letter as indicating the extent of the number of witnesses whom the
parties’ legal advisers were at that stage forecasting as being required in
order to present their factual cases. The arbitrator, from what he had learnt
from the parties’ solicitors, was envisaging an arbitration in which the facts
were going to require investigating the evidence of perhaps 20 witnesses over a
period of two days which might extend to two-to-three days. Of course, in that
forecast of time, the arbitrator would have been thinking not only about the
number of witnesses but also the time required for submissions of law on the
issues raised in the statements of case. So on January 9 the parties knew that
the arbitration was to begin on February 18.
On February 2
the tenant’s solicitors wrote to the tenant, in which they gave him certain
advice and emphasised the immense importance of the evidence in the arbitration
to be given by ‘X’. They advised the tenant in these terms:
We are
playing for exceptionally high stakes and there is a substantial risk that the
arbitrator will prefer [‘X’s’] evidence to yours. If he does, he will have no
alternative but to decide in favour of [the landlord], which means that you
will have to quit the entire holding.
Then in the
last paragraph they said this:
My firm’s
costs in this matter are mounting fast and I would be grateful if you would let
me have a cheque in the sum of £5,000 on account of costs and expenses incurred
and to be incurred. I hope that that sum would cover the matter but it depends
on numerous uncertain factors. My firm’s costs
and this is
the second solicitor
and
disbursements to date are in the region of £1,500 exclusive of VAT.
On February 6
the tenant’s solicitors wrote to him again:
I wrote to you
on Monday of this week asking for funds £5,000 on account of costs incurred and
to be incurred. There is still considerable further work to be done in the
preparation of this matter in order that counsel may be briefed properly. I am
not prepared to do any further work until my firm has the sum of £5,000 as
requested. If you are to give me an opportunity of preparing your case
properly, I must have that sum in cash or by banker’s draft by noon on Monday,
February 9. If I do not have that sum, my firm will regard its retainer as
being at an end and you will have to collect your papers and instruct another
firm of solicitors. In this connection, my firm will exercise its lien on the
papers and will not release them until such time as you have paid our costs to
date which we are prepared to place at £1,500, as previously indicated, plus £225
VAT. . . .
Since
dictating the above we have spoken at length on the telephone and I look
forward to hearing from you first thing on Monday morning.
February 6 was
a Friday, so that telephone conversation between the solicitors and their
client took place on the Friday and he received their letter, as it was sent by
recorded delivery, on the following day, Saturday. He was faced with the demand
for £5,000 in cash, or by banker’s draft by noon on Monday 9. He could not, or
would not, pay. I put it in that way because there is no material which
sufficiently establishes whether the fact that he did not pay was due to
immediate difficulty in raising the cash, or whether it was because he was
challenging the figures which his solicitors were claiming as reasonable
charges for work done or to be done.
The next thing
that happened, as he had not paid, was that the solicitors were discharged —
either on February 9 or 10 — and on February 10 there was a telephone
conversation between a partner in
arbitrator was a partner. This record was made:
Attendg Mr
Faulks of Bond Pearce on the telephone when he sd Mr Thomas wanted an adjnmt of
4 weeks because he cd not afford to pay him for anr 4 weeks. Mr Faulks hd told
him he was not prepared to incur legal fees unless he pd him. He hd spoken
through the arb’s secy to the arb. He hd hd a message back saying please tell B
S & Co
that is the
landlord’s solicitors
that he hd
not spoken to him direct. The message Mr Faulks hd gvn was ‘Would you be
prepared to agree to adjnmt if B S & Co were to agree an adjnmt’. He hd hd
an involved message come back saying he wd be prepared to consider it.
That was
followed by a letter dated the same date, written by the landlord’s solicitors
to the arbitrator with a copy to the tenant’s solicitors, by then more
accurately described as the tenant’s previous solicitors. They say this:
We understand
from a telephone conversation we have had today with Messrs Bond Pearce &
Co that they have telephoned you and spoken to your secretary requesting an
adjournment to the hearing.
They inform
me that the reasons for their request are that their client has failed to put
them in funds for the costs to be incurred by them and the tenant has explained
to his solicitors that he is not able to put them in funds for four weeks. In
consequence, if the case is to proceed next week he will be unrepresented.
We are
writing to oppose this application for the following reasons:
1. As you
know, the hearing has already been adjourned for the benefit of the tenant and
his new solicitors, Bond Pearce, from last week to next week to enable them to
familiarise themselves with the case following the change of solicitors. This
was a matter of inconvenience to our client and more particularly the witnesses
but we readily agreed to that adjournment to avoid that difficulty. We think
you will agree that a further adjournment would be quite unreasonable.
2. As to the
financial position, the tenant is also the tenant of a smaller holding from our
clients who have had to give notice to quit by reason of his failure to pay the
rent in accordance with a notice to pay. Furthermore, our client has, on our
advice, refused to accept rent in respect of the main holding, the subject of
this notice to quit, pending the outcome of the arbitration and has even
withdrawn the demand for arbitration made in respect of the rent increase which
should have taken effect from the last term date. Far, therefore, from the
tenant being short of finance he should have more than enough money to enable
him to put his solicitors in funds and we are extremely concerned on our
client’s behalf to hear of his present financial position. Any delay will,
therefore, have the effect of further delaying our client being able to recover
the moneys due by way of unpaid rent.
3. Perhaps
most important of all, the tenant has on a variety of occasions and in a
variety of ways, sought to interfere with one of the witnesses to be called on
behalf of the landlord, to wit [‘X’]; details of him you have from the
statement of case. In particular, a photocopy of [‘X’s’] letter of August last,
which accompanied the landlord’s statement of case, was affixed to the notice
board of the Methodist Church which [‘X’] attends and since then the tenant and
others on his behalf have made numerous approaches to [‘X’], his wife and other
members of the family and even to the minister of the Methodist Church to try
and dissuade him from giving evidence in accordance with the letter that he has
written and the truth of the matter. If there is to be any delay over the
hearing there is a danger, indeed a probability, that this attack on [‘X’] will
continue and indeed will be intensified as it has been since the hearing
originally fixed would have taken place and there is a very real danger that in
our respectful opinion the course of justice will be perverted by this. We will
have to supply you with full details at the hearing of the attempts which have
been made to interfere with this witness but at this stage it is perhaps
sufficient for us to give you the general indication we have of the reasons for
our concern about any further delay.
Having regard
to all the above, we should be most grateful if you would not allow this
application but insist upon the hearing proceeding as has been arranged.
It will be
observed from that letter that they state the grounds of opposition to a
request for an adjournment and the first ground was that the hearing had
already been adjourned for the benefit of the tenant and his solicitors. As I
have said, the word ‘adjourned’ is not strictly accurate, but it had been
postponed for their benefit.
Secondly they
give their reasons for thinking that, far from the tenant being short of
finance, he should have more than enough money to enable him to put his
solicitors in funds.
Thirdly, and
perhaps most importantly, they raise a very serious suggestion, in which they
refer to the pressures on the witness ‘X’ giving rise to a perfectly obvious
practical argument for getting on with the arbitration as quickly as possible
in order to relieve pressure on the witnesses.
On February 12
the arbitrator wrote an important letter addressed to the landlord’s
solicitors, with a copy to the tenant’s solicitors whose retainer had just been
ended, and to the tenant personally. He said this:
I have
received your letter of February 10 1981.
No formal
request to adjourn the hearing has been received by me; and the telephone
conversations do not lead me to see any proper cause for postponing the
hearing. The question of fees between a client and his solicitor is a personal
one.
May I
therefore remind you that the hearing will begin on Wednesday, February 18 1981
at 10.30 am . . .
There has been
some discussion in this court about the meaning and implications of the second
paragraph of that letter.
The arbitrator
told the parties that the telephone conversations that he had had with the
tenant’s solicitors had not led him to see any proper course for postponing the
hearing and he elaborates that by saying: ‘The question of fees between a
client and his solicitor is a personal one.’
In my view,
what the arbitrator was then telling the parties was this. He had received an
informal request to adjourn the hearing, made to him by the tenant’s
solicitors, and they had stated a reason, namely that the tenant needed another
four weeks to put his solicitors in funds in order that he might be represented
at the hearing and that he was unable, before then, to arrange legal
representation because his then solicitors were not prepared to act any longer
until they got the £5,000 requested on account of fees. The arbitrator told the
parties that that ground for an adjournment was not, in his view, a proper
course for postponing the hearing, so whatever he may have thought about the
content of the landlord’s solicitors’ letter of February 10, he was not in any
sense attempting, for the purpose of exercising his discretion, to do a
balancing act between the arguments put forward on behalf of the tenant for an
adjournment and the arguments put forward on behalf of the landlord against an
adjournment. He communicated to the parties a quite different basis for his
reaction and decision upon the informal request for an adjournment. He said
that the grounds for an adjournment put forward on behalf of the tenant was not
a ‘proper’ course at all, because he was not concerned with any question of
fees between a solicitor and his client. I read that paragraph as saying: ‘I,
the arbitrator, regard the ground for an adjournment put before me by the
tenant’s solicitors as an irrelevant ground, which does not found any case for
consideration.’
In my view, at
that stage the arbitrator was communicating to the parties a reaction to the
application for an adjournment and a decision on the informal request which was
quite irregular. Given the background, the substantial nature of the factual
issues raised by the statements of case and the real possibility that the case
would also involve decision on at least two, and perhaps more, questions of
law, it was obviously right, as both parties to the arbitration realised, that
they should have the advantage of legal representation at the hearing. When the
arbitrator learnt from the tenant’s solicitors that he could not be legally
represented on February 18 because he had been unable to raise £5,000 in 48
hours over a weekend as required by his solicitors, but that he thought that he
would be able to be legally represented if there was an adjournment for four
weeks, ordinary fairness imposed upon the arbitrator the duty to consider the
application with appropriate care because at first sight it was a perfectly
reasonable application; and the consequences to the tenant in refusing the
application were likely to be very grave indeed. If the arbitrator had taken
that view, it would then have been perfectly reasonable for him to consider the
objections put forward on behalf of the landlord, at least one of which was a
perfectly reasonable objection, and to weigh the matter up and arrive at a
decision. On February 12 the arbitrator indicated to the parties that he had
done nothing of the sort but that he regarded the ground for an adjournment put
before him by the tenant’s solicitors as not being a proper ground, ie
irrelevant.
When the
tenant’s solicitors, whose retainer had ended, received the arbitrator’s letter
on February 13 they wrote to the tenant:
I confirm
that the arbitrator has refused to allow an adjournment and that I have written
to him saying that you are now acting in person.
I confirm
that we are no longer acting.
I further
confirm that although you have been unable to pay the sum required on account
of costs, I volunteered to continue to act on your behalf if you
wish to settle.
On the same day
they wrote to the arbitrator saying that they were no longer acting for the
tenant.
On February 13
the tenant personally wrote to the arbitrator. He said:
About the
arbitration on February 18 1981 . . . as I have been unable to let my solicitor
. . . have £5,000 on account, they have withdrawn their legal representation.
Would you please tell me where I must attend legally unrepresented on Feb 18. I
shall have to come without witnesses, as I do not know how to get them, and
without any papers to prove my case as Bond Pearce are hanging on to them until
I have paid their bill. I enclose their letter for you to read. The final thing
that Bond Pearce were prepared to do was to ask for an adjournment for 4 weeks
to enable me to find some money for me to be legally represented. I understand
that this request was turned down by you.
Then there are
a lot of rude and extremely silly observations.
It is
important that in that letter to the arbitrator the tenant said that he
understood that the request for an adjournment had been turned down. On no
occasion before February 18 did the arbitrator disabuse him of that belief, and
indeed could not because, although, as the arbitrator had said, there had been
no formal request for an adjournment, there had been an informal request and he
had turned it down.
I come to
February 18 when the parties met at the appropriate place for the arbitration.
We have the advantage of a manuscript note from a Mr Streeter of what happened
then and there, the note being a note of what Mr Langdon-Davies told the
learned judge at the hearing in the county court:
MR
LANGDON-DAVIES . . . At the arbitration the tenant asked the arbitrator to give
him an adjournment. Before anyone started taking a note whilst the parties were
going in (and this is common ground) there was a certain amount of conversation
between the arbitrator and others — eg Mr Densham asked if the arbitrator
objected to his secretary taking notes to which the arbitrator replied no.
During the same period the tenant said that he did not feel capable of acting
on his own and wished for an adjournment. The arbitrator said ‘well we are all
here, so let’s carry on and see how we get on’. Mr Densham does not deny that this
request was made because it may have been made when he was not listening.
MR DENSHAM: A
number of people were coming in and it may well have been that the tenant did
ask but it was not in my hearing and I have no reference to it.
MR
LANGDON-DAVIES: Be that as it may an application was made . . .
The fact is
that, although the landlord’s solicitors did not hear it, but before the formal
proceedings, the tenant told the arbitrator that he did not feel capable of
acting on his own and wished for an adjournment, to which the arbitrator gave
the reply which I have just quoted.
In my view, a
fair inference from the interchange between the tenant and the arbitrator which
I have just recited is that the arbitrator, having decided on February 13 that
the ground on which the tenant was seeking an adjournment was an irrelevant
ground, remained of that mind and never at any stage addressed his mind to any
weighing exercise in relation to the pros and cons — the pros of the tenant’s
grounds for an application and the cons being the landlord’s objections.
The learned
county court judge made a finding in his judgment about the arbitrator’s
decision on February 18. He put it in this way:
. . . the real
substance of the matter is that [the arbitrator] should have granted the
adjournment on February 18 and it is said that that refusal amounted to
misconduct. The hearing took place on February 18 and went on into February 19.
. . .
The first
question that falls to be answered is ‘Whether in reaching the decision to
refuse to adjourn the hearing the arbitrator was guilty of misconduct?’ An arbitrator has unfettered discretion to
allow the application for an adjournment or not. Nobody suggested that he acted
solely on the contents of the landlord’s letter of February 10. The reasons
were limited to what appeared in the arbitrator’s letter which referred to
matters between a solicitor and client being personal ones. In so far as one
would wish to know why the arbitrator refused the application, one has nothing.
Mr Wood, in a
characteristically well-judged submission, has submitted that, on the finding
of fact by the judge that one would like to know why the arbitrator refused the
adjournment, it is pure speculation as to what was the basis of the
arbitrator’s decision which he communicated to the tenant, who had said that he
wished for an adjournment, when the arbitrator said ‘well we are all here, so
let’s carry on and see how we get on’.
I take the
view that there is a finding by the judge, which is the right finding and the
only possible finding, that the reasons for the arbitrator’s action on February
18 were limited to what appeared in the arbitrator’s letter dated February 12
and that on the 18th he was still in exactly the same mind as he had been in on
the 12th because he had quite wrongly regarded a perfectly reasonable ground
for adjourning as an improper ground which means, in the context, an irrelevant
ground. The arbitrator, on February 18, was under a duty to regard the ground
for an adjournment put forward by the tenant’s solicitors as a relevant ground
which required proper consideration. The arbitrator made a mistake of law
because he thought it was an irrelevant ground and therefore did not give it
any consideration but simply rejected it out of hand. That was his state of
mind on February 12 and it was the explanation of his communication to the
tenant on February 18 when he said ‘well we are all here, let’s carry on and see
how we get on’.
Was that an
irregularity of such a kind as to fall within the meaning of misconduct in the
context in which that noun is used for the purpose of deciding whether a ground
was shown for setting aside an arbitrator’s award? The judge thought that it was misconduct. I
agree. I find myself assisted by the way in which it was put by McNair J in Rotheray
& Sons Ltd v Carlo Bedarida & Co [1961] 1 Lloyd’s Rep 220
and I refer to the passage in his judgment at p 224:
The more
difficult question, however, is whether the extent of that irregularity is such
as to justify interference by this court either by way of setting aside the
award or remitting the award. The determination of that issue, as it seems to
me, depends upon whether the court is satisfied that there may have been — not
must have been — or that this irregularity may have caused — not must have
caused — a substantial miscarriage of justice that would be sufficient to
justify the setting aside or remitting of the award, unless those resisting the
setting aside or remission could show that no other award could properly have
been made than that which was in fact made, notwithstanding the irregularity.
As for the
qualification in the last five lines of that passage, it is not necessary for
this court to consider that, because it was sufficiently established that, if
an adjournment had been granted and the tenant had availed himself of the
opportunity of again obtaining legal representation, it cannot be said that the
result would necessarily have been the same.
In my view the
test as thus propounded by McNair J is a correct statement of the approach
which the court should take to the irregularity that occurred in this case
which led the arbitrator to refuse to consider the application for an adjournment
on its merits. I have no doubt, given the subject-matter of the arbitration,
the multiplicity and character of issues of fact, and the delicacy of questions
of credit and the fact that, though the issues of law raised by Case E are not
very complicated, their analysis on the facts of this particular case might
well have called for legal submission of some refinement. Therefore, applying
the test of McNair J — which I regard as appropriate to this case — I would
answer that this irregularity was such that it may have caused a substantial
miscarriage of justice and in that sense, without any reflection, of course,
upon the moral features of the arbitrator’s decision, his action in refusing to
entertain the application for an adjournment was misconduct. The learned judge
was right in setting aside the award and making the order which he did. I would
move that the appeal be dismissed and the learned judge’s order be upheld.
Agreeing,
ACKNER LJ said: I agree. Mr Wood, as one would expect from him, readily and
properly conceded that the decision of the arbitrator on February 12 to the
effect that there was no basis for the tenant asking for an adjournment was
wrong. In my judgment it clearly was an irregularity. Mr Wood contended that we
should infer that that irregularity did not persist when, on February 18 again
the arbitrator refused an adjournment. It seems to me, from the circumstances
in which he refused that adjournment (as dealt with in detail by my Lord) the
only proper inference is that he was adhering to the decision he had made on
February 12, namely that there was no basis for an application for an
adjournment. The question then arises as to whether that irregularity was
misconduct in the technical sense in which it is used in arbitration matters.
I agree with
my Lord that the approach is as stated by McNair J in the Rotheray case.
In the
proceedings before the learned county court judge the solicitors for the
landlord conceded that the result of the arbitration would not necessarily have
been the same if the adjournment had
that the case might have resulted in an injustice to the tenant. I, therefore,
following the test of McNair J, also agree that the irregularity which existed
amounted to misconduct and accordingly the learned county court judge was right
in the decision which he reached.
I would also
dismiss this appeal.
The appeal
was dismissed with costs in the Court of Appeal and below.
