England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY

		Bristol Magistrates Court Marlborough Street Bristol BS1 3NU
		14 July 2017

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1. JUDGE PAUL MATTHEWS: This is an application made on behalf of the landlords (as I will term them) in relation to a claim that they bring under the Arbitration Act 1996 to challenge the final award made by Mr Michael Townsend, dated 8 May 2017 in an arbitration against their tenant concerning notices, two to remedy, and two to quit, two holdings amounting to about 102 acres of land at Bosawsack, near Constantine in Cornwall. This was a statutory arbitration pursuant to the Agricultural Holdings Act 1986.
2. The application was made by an application notice which was issued on 6 June 2017. That date is within the period of 28 days which is laid down by section 70(3) of the Arbitration Act, which provides:

"Any application or appeal must be brought within 28 days of the date of the award or, if there has been any arbitral process of appeal or review, of the date when the applicant or appellant was notified of the result of that process."

3. However, the landlords here had not issued their claim in that 28 day period; what they did was to issue the application notice within that period. As it happens, they have now issued a claim form, and it was, I think, issued on 4 or 5 July 2017, some 30 days out of time.
4. The position is that both parties have asked the arbitrator to deal with points raised on the arbitration award under section 57, but that has not yet happened. I have been shown authorities that bear on the question as to whether and how far any application to the arbitrator under section 57 counts as an arbitral process of appeal or review within section 70(3). As it appears, that it not a matter entirely free from doubt.
5. However, the points which are raised by the landlords in the section 57 process contained in a letter written to the arbitrator on 26 May 2017 are very much narrower than the points which are taken in the claim as set out in the claim form, although of course they are included. So if there is some kind of extension automatically gained because of the section 57 procedure, it is still continuing. It is only respect of the three or four points raised in that letter and not the larger number of points raised in the claim.
6. The criteria which the court must apply in considering whether to grant an extension, here of about 30 days for the issue of the claim, might have been thought to be the general discretion under the Civil Procedure Rules. There is after all an argument to say that, since this is a compulsory arbitration, and not by the will of the parties, the court should be generous in exercising its discretion to extend time, in the same way and on the same principles as it does in ordinary litigation. However that may be, there are authorities which I have been shown, including a dictum of Longmore LJ in Peel v Coln Park LLP [2010] EWCA Civ 1602 and the decision of Morgan J in Compton Beauchamp Estates Ltd v Spence [2013] EWHC 1101 (Ch), which indicate that, notwithstanding that the Agricultural Holdings Act arbitration is in effect compulsory, it is the usual Arbitration Act principles which apply in deciding whether to extend time. I am not strictly speaking bound by obiter dicta from the Court of Appeal, though of course they are entitled very great respect, but the High Court does not refuse to follow a decision of the High Court unless it is satisfied that it is wrong. On the material before me this morning I cannot say that I am so satisfied. Accordingly, I will proceed on the basis that I should apply the criteria set out in the Arbitration Act.
7. These criteria are helpfully summarised in authorities which have been cited to me and in particular the decision of Teare J in the case of K v S [2015] EWHC 1945 (Comm). At paragraph 32 the judge cited extensively from the decision of Popplewell J in Terna Bahrain Holding Company Wll v Al Shamsi [2013] 1 Lloyd's Report 87:

"27. The principles regarding extensions of time to challenge an arbitration award have been addressed in a number of recent authorities, most notably in Kalmneft v Glencore [2002] 1 Lloyd's Rep 128, Nagusina Naviera v Allied Maritime Inc. [2003] 2 CLC 1, L Brown & Sons Limited v Crosby Homes (Northwest) Limited [2008] BLR 366, Broda Agro Trading v Alfred C Toepfer International [2011] 1 Lloyd's Rep 243, and Nestor Maritime v Sea Anchor Shipping [2012] 2 Lloyd's Rep 144, from which I derive the following principles:

(1) Section 70(3) of the Act requires challenges to an award under sections 67 and 68 to be brought within 28 days. This relatively short period of time reflects the principle of speedy finality which underpins the Act, and which is enshrined in section 1(a). The party seeking an extension must therefore show that the interests of justice require an exceptional departure from the timetable laid down by the Act. Any significant delay beyond 28 days is to be regarded as inimical to the policy of the Act.

(2) The relevant factors are:

(i) the length of the delay;

(ii) whether the party who permitted the time limit to expire and subsequently delayed was acting reasonably in the circumstances in doing so;

(iii) whether the respondent to the application or the arbitrator caused or contributed to the delay;

(iv) whether the respondent to the application would by reason of the delay suffer irremediable prejudice in addition to the mere loss of time if the application were permitted to proceed;

(v) whether the arbitration has continued during the period of delay and, if so, what impact on the progress of the arbitration, or the costs incurred in respect of the arbitration, the determination of the application by the Court might now have

(vi) the strength of the application;

(vii) whether in the broadest sense it would be unfair to the applicant for him to be denied the opportunity of having the application determined.

(3) Factors (i), (ii), and (iii) are the primary factors.

28. I add four observations of my own which are of relevance in the present case. First, the length of delay must be judged against the yardstick of the 28 days provided for in the Act. Therefore a delay measured even in days is significant; a delay measured in many weeks or in months is substantial.

29. Secondly, factor (ii) involves an investigation into the reasons for the delay. In seeking relief from the Court, it is normally incumbent upon the applicant to adduce evidence which explains his conduct, unless circumstances make it impossible. In the absence of such explanation, the Court will give little weight to counsel's arguments that the evidence discloses potential reasons for delay and that the applicant "would have assumed" this or "would have thought" that. It will not normally be legitimate, for example, for counsel to argue that an applicant was unaware of the time limit if he has not said so, expressly or by necessary implication, in his evidence. Moreover where the evidence is consistent with laxity, incompetence or honest mistake on the one hand, and a deliberate informed choice on the other, an applicant's failure to adduce evidence that the true explanation is the former can legitimately give rise to the inference that it is the latter.

30. Thirdly, factor (ii) is couched in terms of whether the party who has allowed the time to expire has acted reasonably. This encompasses the question whether the party has acted intentionally in making an informed choice to delay making the application. In Rule 3.9(1) of the Civil Procedure Rules, which sets out factors generally applicable to extensions of time resulting in a sanction, the question whether the failure to comply is intentional is identified as a separate factor from the question of whether there is a good explanation for the failure. This is because in cases of intentional non compliance with time limits, a public interest is engaged which is distinct from the private rights of the parties. There is a public interest in litigants before the English Court treating the Court's procedures as rules to be complied with, rather than deliberately ignored for perceived personal advantage.

31. Fourthly, the Court's approach to the strength of the challenge application will depend upon the procedural circumstances in which the issue arises. On an application for an extension of time, the Court will not normally conduct a substantial investigation into the merits of the challenge application, since to do so would defeat the purposes of the Act. However if the Court can see on the material before it that the challenge involves an intrinsically weak case, it will count against the application for an extension, whilst an apparently strong case will assist the application. Unless the challenge can be seen to be either strong or intrinsically weak on a brief perusal of the grounds, this will not be a factor which is treated as of weight in either direction on the application for an extension of time. If it can readily be seen to be either strong or weak, that is a relevant factor; but it is not a primary factor, because the Court is only able to form a provisional view of the merits, a view which might not be confirmed by a full investigation of the challenge, with the benefit of the argument which would take place at the hearing of the application itself if an extension of time were granted."

8. I will set out the actual factors which are referred to. In the first place, the length of the delay. Second, whether the party who committed the time limit to expire in such a delay was acting reasonably in the circumstances in doing so. Thirdly, whether the respondent to the application or the arbitrator caused or contributed to the delay. Fourthly, whether the respondent to the application was by reason of the delay suffered irremediable prejudice in addition to the mere loss of time if the application were permitted to proceed. Fifthly, whether the arbitration is continued during the period of delay and, if so, what impact on the progress of the arbitration or the costs incurred the determination of the arbitration might now have. Sixth is the strength of the application. Seven, whether in the broadest sense of the word, it would be unfair to the claimant for them to be denied the opportunity of having the application determined. The judge says factors one, two and three are the primary factors.
9. The length of the delay is 30 days; that is not great considering the period of time, some four years, that has elapsed since these proceedings were commenced, but nevertheless it is more than a trivial amount; it is approximately a month. I should say it is in the context of proceedings where both sides have been legally represented and proceedings themselves have been hard fought. The tenant has also made a claim to challenge that the award under the Arbitration Act and has issued a claim form within the 28 day period.
10. Second, whether the party that permitted the time limit to expire was acting reasonably in the circumstances in doing so. The problem, as it seems to me, is that there is no real explanation of the cause of the delay and, as it happens, the landlord has indeed subsequently issued the claim form. It is not as if there was any kind of information that was lacking. It is not as if any of the parties was away. There is simply no explanation of how this came about, except that presumably a decision was taken that an application notice be issued, but not the issue of a claim form. Yet if it turned out that it was unnecessary that would be just so much waste paper. On the other hand, if it had been issued, as the tenant issued his, then this whole argument would have been completely unnecessary.
11. I think it was sensible of the landlord to issue the application notice, if nothing else, but I cannot see why, in circumstances where the application notice was thought right to be issued, the claim form itself should not have been issued. So I respectfully disagree with Mr Adams, and hold that the landlord was not acting reasonably in the circumstances.
12. Whether the respondent to the application or the arbitrator caused or contributed to the delay. I do not think I can say that the respondent to the application has contributed to the delay in any meaningful sense. The arbitrator no doubt could have been more helpful in his responses to letters, but at the end of the day he is not a party to these proceedings and his part in the matter is something which simply, in my view, would have made it more important to get on with issuing the claim, rather than less. Again, it is not as if he was promising information which did not arrive in time before the claim could have been issued.
13. The question then is whether the respondent would be suffering irremediable prejudice in addition to the loss of time. I do not think that there is any irremediable prejudice suffered by the respondent in the application. The arbitration has not continued during the period of delay, except in the sense that technically the arbitrator still has jurisdiction to deal with section 57 points. As I understand it, nothing much is happening upon that front.
14. Sixthly, the strength of the application. On the material before me, I have not been able to form a view about the strength of the application. It may be that there is some merit in it, but I am not at this stage able to say what that strength is.
15. Seventhly, whether in the broadest sense it would be unfair to the applicant for him to be denied the opportunity of having the application determined. Here I take into account the fact that the landlord is legally represented, has been legally represented, and is obviously versed in these procedures because of the length of time that they have been going on. That really brings me to my second point, which is that there must be an end to arbitration, being restricted (as arbitrations under the Arbitration Act are) to only limited grounds of challenge. This is an indication of the importance that Parliament attaches to this form of procedure as being one which is relatively speedy, and ultimately final. I think that, in circumstances where Parliament has thought fit to attach the arbitration procedure to agricultural holdings, and where the authorities suggest strongly that the whole of the arbitration structure, including the question of challenges and including the question of resolution of application for extension of time, should be incorporated into the agricultural holdings system, I do not think in the broadest sense it is unfair for the applicant to be denied the opportunity of having the application determined.
16. Overall, although not all the factors point in the same direction, I think it is now too late, and I will therefore refuse the application for an extension of time in which to dispute the claim form. I should say that the draft order attached to the application notice also sought an extension of time in relation to the section 57 application, but Mr Adams confirmed that it had fallen away across the issue of the claim form.

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