England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		15 September 2005

MR JUSTICE SIMON:

1. This hearing concerns applications under Section 67 and 68 of the Arbitration Act 1996 in relation to an arbitration award made by Mr Nicholas Merriman QC and dated 9 May 2005.

Background

2. Prior to March 1996 Dr Persaud and Dr Beynon, who are both medically qualified doctors, were involved in providing various medical services through a business trading under the name of Insurance Medical Services ("IMS").
3. A dispute arose as to Dr Beynon's interest in IMS. He contended he was a partner of Dr Persaud. Dr Persaud contended that he was his employee. Dr Beynon began proceedings in the Chancery Division to resolve this issue. The proceedings were settled by an agreement dated 6 March 1996 ("the 1996 Agreement"). In summary, and so far as material, the 1996 Agreement provided for remuneration to which Dr Beynon would be entitled on the sale of IMS. Clause 2 provided that if there were a sale of IMS a final commission of 10 per cent of the value of the net proceedings of the sale would be paid. Clause 4 provided that in the absence of the sale Dr Beynon could, during the period 1 July 2004 to 30 November 2005, elect to receive a final commission of 8 per cent of the "market value" of IMS.
4. Market value was defined as:

"… the open market value, at the specified date, of the business and assets of IMS as between a willing buyer and a willing seller contracting at arm's length, determined on the presumption that the business is a going concern. Such presumption shall only be rebuttable in the event that there is persuasive evidence that a sale of the business as a going concern at the specified date was not commercially viable. The open market value used shall be computed without the application of any discount pertaining to, or arising from, the fact that the business might be encumbered with any liability to [Dr Beynon]."

5. Clause 14 provided that Dr Persaud should not be obliged to operate IMS in any particular way:

"…except that he must (a) generally act in good faith to [Dr Beynon]."

Clause 14 concluded:

"Otherwise [Dr Persaud] shall have complete freedom to manage and direct IMS in such ways as he shall in his absolute discretion see fit, and he shall not be obliged by anything in this agreement to seek to maximise Turnover, Market value, Net Proceeds or the profit of IMS."

Clause 18 provided for the resolution of any dispute arising under the agreement by a sole arbitrator.

6. In July 2000 a letter was sent on Dr Persaud's behalf saying that he had decided to sell IMS for £20,000 and tendering a cheque for £2,000 as the amount due under clause 2 of the 1996 Agreement. This was later followed by information that the business had been sold to a Ms Saltwell, who, with a Ms Middleton, was an employee of IMS.
7. Dr Beynon responded by making a claim against Dr Persaud alleging that the sale was not a genuine sale, that IMS's business was being diverted to other companies controlled by Dr Persaud, and that in these circumstances Dr Persaud had acted in breach of his obligations to act in good faith, and had repudiated the 1996 Agreement. The matter went to arbitration in accordance with clause 18 of the 1996 Agreement.
8. By a letter dated 14 August 2003, written by his solicitors, Dr Persaud admitted liability and made five specific admissions. Two are material for present purposes: (1) There had, in fact, been no sale of IMS's business to Ms Saltwell; (2) Dr Beynon would have exercised his option under clause 4 of the 1996 Agreement at the time between 1 July 2004 and 30 November 2005 when IMS reached its highest market value. These admissions were recorded at paragraph 1(a) and (d) of the directions given by the arbitrator on 15 September 2003.
9. Paragraph 2 recorded Dr Persaud's admission of his liability to pay damages. Under the heading "Quantum of damages", the arbitrator made the following further directions:

"(5) The highest open market value of IMS is the highest value of the business and assets on the following basis ('the valuation basis').

(b) The value as between a willing buyer and a willing seller at arm's length, determined on the presumption that the business was a going concern, such presumption to be rebuttal in the event that there is persuasive evidence that a sale of the business as a going concern was not commercially viable; the highest open market value shall be computed without the application of any discount arising from any liability to … [Dr Beynon]."

10. Paragraph 6 contained an obligation on Dr Persaud to give disclosure of all documents relevant to the valuation issue. Paragraphs 8 and 12 provided for each side to adduce an expert's report on the highest open market value of IMS between 1 July 2004 and 30 November 2005 on the valuation basis.
11. Paragraph 13 provided that the experts were to meet and produce a joint report dealing with areas of agreement and disagreement. Paragraph 14 provided that if the parties could not agree the quantum of damages, written statements were to be exchanged by 30 January 2004 setting out the parties' respective cases with a view to a hearing in April 2004.
12. At this stage it was envisaged that the assessment of damages would be a relatively straightforward matter. Indeed, the arbitrator did not feel it necessary to order an exchange of pleading or statements of case, since, as he later expressed it, "there were no issues of fact or law to be determined before the valuation exercise". In the event there was to be no hearing until April 2005.
13. Following a hearing before the arbitrator on 26 November 2004 he published an interim award on 30 November 2004 in which he dealt with various preliminary issues. He dealt with an application for an interim provisional payment and costs and gave various directions. The formal part of this award was preceded by 38 paragraphs in which the arbitrator dealt fully with the issues as they appeared to him. In paragraph 1 he noted that the directions given on 15 September 2003 did not provide for the exchange of pleadings or statements of case in relation to quantum "as neither party wanted any such exchanges as there were no issues of fact or law to be determined before the valuation exercise".
14. Again, it is clear that the arbitrator assumed that the valuation exercise would be a relatively straightforward exercise. That it was not was, in large measure, due to the conduct of Dr Persaud, as the arbitrator later found.
15. The arbitrator ordered that the quantum of damages be determined in accordance with his previous order, namely:

"In accordance with paragraph 1(d) of the directions of 15 September on the basis that Dr Beynon would have exercised his option under clause 4 of the agreement at the time between 1 July 2004 and 30 November 2005 when IMS reached its highest open market value, and so Dr Beynon would have been entitled to final commission of 8 per cent of that open market value, and the sale of IMS did not determine that issue."

16. The arbitrator also gave further directions (paragraph 42) that there should be a meeting of the expert valuers in order to seek to agree on the methodology to be used for the valuation, and all relevant figures to be used in the valuation, and (paragraph 44(a)) that there should be a joint report setting out areas of agreement and disagreement.
17. A revised joint statement of the experts was produced on 1 April 2005:

"2.1 Mr Eales [Dr Persaud's expert] and Mr Kerr [Dr Beynon's expert] agree that the multiplier/multiplicand method of valuation is the appropriate method for valuing the IMS Companies. They also agree that this method involves making adjustments to reported profits in respect of exceptional and/or non-recurring costs and revenues.

2.2 It is acknowledged that this method also requires the net asset position of the business to be addressed in finalising the valuation."

18. Two points may be noted. First, it is clear that adjustments had to be made to reported profits to take into account exceptional and/or non-recurring costs and revenues. Many of these were agreed. Those that were not were identified. In the light of the issues that arise on the present application I need say nothing further about these.
19. Secondly, it is clear from paragraph 2.2 that the experts recognised that the balance sheet position needed to be addressed as part of the valuation. The reason for this was summarised succinctly in Mr Kerr's report at paragraph 2.3(i):

"It is also necessary in finalising the valuation to look at the balance sheet position of the business, for example, where there is cash at bank well in excess of its working capital requirement, this would need to be reflected in the valuation. Conversely, if the balance sheet position showed net liabilities this would need to be investigated and the results reflected in the valuation."

20. The experts' approach to the issue of net asset adjustment was set out in paragraph 2.11 of the joint statement:

"Mr Eales is of the opinion that in the event of any deficit on net assets, such deficit should be subtracted from the value derived on a capitalised earnings basis (ie the multiplier applied to the multiplicand). Mr Kerr understands the principle which Mr Eales is seeking to apply. However, as will be seen in Mr Kerr's separate report he does not accept that all of these adjustments should be seen as having balance sheet effect."

I shall return later in this judgment to the particular adjustments to which Mr Kerr refers.

21. In paragraph 4.2(vi) of his report Mr Kerr said this:

"…if, as suggested by Mr Eales, there is a deficit on net assets, such a deficit arises, in my opinion, entirely as a result of [Dr Persaud's] policy of extracting surplus cash from the IMS Companies for personal expenditure, the funding of this litigation, costs associated with the abortive sale of [IMS] and payments relating to the purchase of shares issued to Ms Middleton and Ms Saltwell. And, as a result, I consider that in this case it would be inappropriate to make an adjustment of the nature suggested by Mr Eales."

22. A hearing took place between 26 and 28 April 2005, and the arbitrator published his award on 9 May 2005. He found that the highest open market value of IMS between 1 July 2004 and 30 November 2005 was £9 million on 1 July 2004. On the agreed basis of 8 per cent of that value he awarded damages of £720,000 from which an interim payment of £150,000 was to be deducted.
23. The issue raised in the present claim relates to the way in which the arbitrator dealt with the net deficiency of assets. Paragraph 37 and 38 of the award read as follows:

"37. Mr Kerr and Mr Eales also disagreed on which accounts and figures to use in the valuation process, on the multiplier and on the effect on the valuation of a net deficiency in assets.

38. Their final calculations of the value of the IMS business was a follows:

(a) Mr Kerr: Using his 2003 final adjusted PBT of £1.37 million and a multiplier of between 6 and 8, his valuation was between £8.2 million and £11 million with no deduction for any deficiency of assets.

(b) Mr Eales: Using his 2004 final adjusted PBT of £779,000 and a multiplier of 5 or 6, his capitalised earnings total was between £3.895 million and £4.674 million from which he deducted a net deficiency of assets to produce a final value of £1.035 million to £2.424 million."

24. The arbitrator dealt with the issue of the effect of a net deficiency of assets at paragraph 70 onwards. In summary, the arbitrator found as follows:

(1) 5 out of the 7 items which Mr Eales took into account did not result in any liability or add to any asset deficiency (paragraphs 74 to 76). These were the adjustments which, in Mr Kerr's view expressed at paragraph 2.11 of the joint statement, had not had "balance sheet effect".

(2) He noted that Dr Persaud's accounting policies ignored liabilities and that both Mr Kerr and Mr Eales agreed that these liabilities must be recognised in the adjusted PBT so as to reduce the profits.

(3) He recorded Mr Kerr's view that it was wrong to make a deduction from value since the asset deficiency was caused by Dr Persaud's policy of extracting value from IMS by making substantial withdrawals from the business (paragraph 72 and 77). The arbitrator therefore accepted Mr Kerr's views about the treatment of the two remaining items.

(4) The arbitrator recorded the arguments of counsel on these points (paragraph 79 to 80). Mr Emerson, then, as now, appearing for Dr Beynon, had submitted that Mr Kerr's approach was correct, since on the facts Dr Persaud had acted in breach of his obligation of good faith to Dr Beynon by withdrawing excessive sums. Mr Padfield QC, then, as now, counsel for Dr Persaud, had submitted that the valuation exercise required IMS to be valued as it was, not as it might have been in other circumstances. If Dr Persaud had extracted value by paying bonuses and dividends before the valuation date, then the valuation had to reflect that. Dr Persaud had been entitled to withdraw as much value from IMS as he liked, even if it reduced the value of IMS to nil.

(5) The arbitrator noted Dr Persaud's significant withdrawal from the business at paragraph 86 and recorded further payments made at paragraph 87:

"In August 2003, Dr Persaud made his admission of liability and after I gave directions on 15 September 2003, the valuation process started. Starting in October 2003, Dr Persaud started to approve the massive payments apparently for Ms Saltwell and Ms Middleton and these continued until early 2004. The total paid apparently to Ms Saltwell and Ms Middleton in the 6 months from January to July 2004 was about £1.6 million."

(6) At paragraphs 84 to 94 the arbitrator considered in detail Dr Persaud's conduct, and concluded at paragraph 95:

"I conclude that Dr Beynon has established that the substantial sums which were paid out of IMS and which have resulted in the net asset deficiency calculated by Mr Eales is the result of Dr Persaud acting in breach of his duty of good faith to Dr Beynon."

25. Paragraph 96 reads as follows:

"I have considered whether it would be fair to find that Dr Persaud has acted towards Dr Beynon without good faith as Dr Persaud has not given evidence and has not had the opportunity to defend himself or answer cross examination. In the circumstances I am sure that it is fair."

26. He set out his reasons for this conclusion at paragraphs 97 to 101 of the award.

"97. Dr Persaud has been fully aware throughout this arbitration that Dr Beynon has made and continued to make serious allegations against Dr Persaud. From Fox Williams letter on behalf of Dr Beynon in September 2001 onwards, Dr Beynon has accused Dr Persaud of acting in breach of his duty to act in good faith. This was expressly pleaded in the Particulars of Claim served in this arbitration. Dr Beynon's case on liability was, in effect, that Dr Persaud had attempted to cheat Dr Beynon by diverting IMS business to secret companies and by inventing a sham sale of the IMS business to Ms Saltwell, and that he pursued this attempt to cheat Dr Beynon by maintaining the falsehood that these IMS companies were not controlled by him and did not do IMS business.

98. Dr Persaud has also been fully aware that throughout the arbitration Dr Beynon's advisers have persisted in repeated complaints that Dr Persaud has failed to give proper disclosure of documents and the correspondence between the solicitors has been extremely heated at times on this issue.

99. Dr Persaud knew that a number of Mr Kerr's requests for information and documentation had not been answered because Dr Persaud was asked for the information and documentation and he had not given the information nor supplied the documents.

100. In his Report Mr Kerr made it clear that he did not accept that the substantial payments to Ms Saltwell and Ms Middleton were "bonus" payments as Dr Persaud claimed; Mr Kerr's conclusion, noted above, was that these payments appeared to relate to the transfer from these ladies to Dr Persaud. Further, in his case summary served after receipt of Dr Persaud's witness statement, Mr Emerson made it clear that Dr Persaud's credibility was in issue. Against this background Dr Persaud decided not to give evidence.

101. No explanation has been given for Dr Persaud's failure to disclose relevant documents relating to the alleged bonus payments nor for the inconsistency between those documents and the information given by Dr Persaud to Mr Kerr in the January 2004 interviews."

27. There were two further hearings. By an additional award, dated 31 May 2005, the arbitrator dealt with Dr Persaud's application to "correct" the award under section. 57(3) of the 1996 Arbitration Act in relation to the finding of bad faith. He declined to do this. He was also asked to stay his award so as to enable Dr Persaud and his advisors to consider "its consequences". He found that he had no jurisdiction to grant a stay and that, if he had had such a power, he would not have exercised it.
28. By a further additional award, dated 4 July, the arbitrator dealt with the issue of costs.

The 1996 Act

29. Section 67 sets out the parties' right to challenge any award of an arbitral tribunal as to its substantive jurisdiction, or for an order declaring such an award of no effect, in whole or in part, due to lack of substantive jurisdiction. A party may lose the right to challenge under section.73; and the right to apply is subject to the restrictions in section 70(2) and (3).
30. Section 68 provides, so far as material:

"(1) A party to arbitral proceedings may, upon notice to the other parties and to the tribunal, apply to the Court challenging an award in the proceedings on the ground of the serious irregularity affecting the tribunal, the proceedings or the award."

31. Again, a party may lose the right to object by section 73; and the right to apply is subject to the restrictions in section 70(2) and (3).

"(2) Serious irregularity means an irregularity of one or more of the following kinds which the Court considers has caused, or will cause, substantial injustice to the applicant.

(a) Failure by the tribunal to comply with section.33 (the general duty of the tribunal to act fairly and impartially);

(b) The tribunal exceeding its powers (otherwise and exceeding a substantive jurisdiction. See section.67);

(c) Failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties;

(d) Failure by the tribunal to deal with all the issues that were put to it."

There are other provisions, (2)(e) to (i), which are not material to this application; and the powers of the Court to grant relief are set out in (3).

32. On an application under both section.67 and 68 the Court may either confirm the award, vary the award, or set it aside, either in whole or in part. Section 33 sets out the general duty of a tribunal to "act fairly and impartially" and to "adopt procedures suitable to the circumstances of the particular case".
33. Section 70(2) requires that an applicant exhausts any available remedies before the tribunal prior to applying to the Court. Section 70(3) provides the 28-day time limit for bringing proceedings. Section 73 provides, in summary, that, if a party to arbitral proceedings takes part, or continues to take part, in the proceedings without objection to a lack of substantive jurisdiction or irregularity, he may not subsequently object, unless he shows that at the time he did not know of, and could not have discovered, the grounds for objection.

The submissions

34. For Dr Persaud, Mr Padfield QC submitted in summary:

(1) The directions of 15 September 2003 and the interim award of 30 November 2004 established an agreed basis of valuation for the determination of quantum: namely, an arm's length transaction between willing buyer and willing seller. They also established an agreed procedure as to how the experts should approach the determination. The arbitrator's role was confined to arbitrating the differences between the experts.

(2) The arbitrator departed from this agreed approach in two ways: first, since a willing buyer would undoubtedly have taken into account a deficiency of net assets, he departed from the agreed basis of valuation; second, he made a finding of bad faith against Dr Persaud.

(3) In so acting the arbitrator had acted in excess of his jurisdiction. First, his substantive jurisdiction was confined to making findings on the agreed basis and in accordance with the agreed procedure. Second, it did not extend to make findings about lack of good faith. These submissions give rise to the claim under section 67.

(4) In the alternative, and for similar reasons, there had been a serious irregularity within the meaning of section 68 of the 1996 Act. First, the arbitrator was not entitled to depart from the agreed basis and procedure for calculating damages, and to have done so was unfair. Secondly, Dr Persaud was denied a proper opportunity to meet the case of lack of good faith; to defend himself against it or to object to the course adopted. Mr Padfield relied on subsections (a) to (d) of section 68(2) of the Act, and the cases Co-operative Group (CWS) v International Computers [2003] EWCA civ. 1955 and Vogon International Limited v The Serious Fraud Office [2004] EWCA civ. 104.

(5) The serious irregularity has caused, or will cause, substantial injustice to Dr Persaud as described in his two witness statements, dated 7 June and 24 August 2005.

35. For Dr Beynon, Mr Emerson submitted in summary:

(1) So far as the section 67 claim was concerned the arbitrator acted within his powers, which were derived from clause 16 of the 1996 Agreement. Nothing subsequent to the commencement of the arbitration confined the arbitrator's substantive jurisdiction either as to how he should proceed or as to how the damages should be calculated. The orders made by the arbitrator on 15 September 2003 and 30 November 2004, and the reference to the open market value of the business and assets as between willing buyer and willing seller, simply reflected the formula by which commission was earned on the exercise of an option to receive a final commission under clause 4 of the 1996 Agreement. Neither the orders of the arbitrator nor the conduct, either expressly or impliedly, limited the arbitrator's jurisdiction.

(2) So far as the section 68 claim was concerned, first, Dr Beynon's case that Dr Persaud had "extracted surplus cash" from IMS was set out in Mr Kerr's report. Mr Kerr also made it clear in his report at paragraph 4.26 that this policy of Dr Persaud made it inappropriate to subtract any deficit in net assets from the value on a capitalised earnings basis. Secondly, for whatever reason, Dr Persaud decided on the day before the hearing that neither he nor his accountant would give evidence in the arbitration and, therefore, deprived himself of the opportunity to explain the payments that had been made from IMS. Thirdly, as noted by the arbitrator in paragraph 89(a) of the award, Dr Persaud's disclosure in relation to these unconventional payments and cash withdrawals were both late and unsatisfactory. Fourthly, the issue of Dr Persaud's good faith was raised in closing submissions and recorded by the arbitrator at paragraph 79 to 80 of his award. Fifthly, significantly in the context of the test of "substantial injustice" in section 68(2), Dr Persaud had failed to adduce any evidence as to how he would have addressed the issue of lack of good faith if he had had more notice of it.

Conclusions

The claim under section 67 of the Act

36. I accept the submissions of Mr Emerson on this issue. In my judgment the arbitrator's substantive jurisdiction was founded on the arbitration clause in the 1996 Agreement. Neither the directions of 15 September 2003, the award of 3 November 2004, nor the experts' disagreement conferred substantive jurisdiction on the arbitrator.

(1) Paragraph 5(b) of the directions of 15 September 2003 simply reiterated the method of calculating loss under the contract. The paragraphs in the 30 November 2004 award, which were relied on by Mr Padfield, including paragraphs 13 and 19, dealt with specific admissions in Dr Persaud's letter of 14 August 2003, as recorded in paragraph 1 of the 15 September 2003 directions. To the extent there was a formula for calculating damages it was a formula which had its provenance in the 1996 Agreement. The 30 November award did no more than give further directions which were intended to provide for the assessment of damages in a way which reflected the loss of Dr Beynon's contractual entitlement.

(2) While an arbitrator's jurisdiction may be confined to adjudicating on disagreements between experts, this was plainly not such a case. The arbitrator was concerned with the assessment of damages for breach of contract. The parties might confine their case by a form of pleading or in their experts' report, but it does not follow from this that the arbitrator's jurisdiction is so confined so as, for example, to prevent him allowing a pleading to be amended so as to expand a case. Whether it is fair to do this may give rise to a different question.

(3) I should add that I am not satisfied, in any event, that the point of lack of substantive jurisdiction was taken at the time of the arbitration (see section 73). This is not a criticism of Dr Persaud or his legal advisors, more an indication that it did not strike those taking part in the arbitration that the matter of complaint was a matter that went to substantive jurisdiction.

Claim under section 68 of the Act

37. I was referred in this context to a decision of Mr John Jarvis QC, sitting as a deputy judge of the High Court, in St George's Investment Company v Gemini Consulting Limited [2004] EWHC, judgment delivered on 8 October 2004. In that case the deputy judge considered two decisions of the Court of Appeal concerning section 68 of the 1996 Act, Checkpoint Limited v Strathclyde Pension Fund [2003] EWCA civ. 84 and Warborough Investments Limited v S Robinson and Sons Holdings Limited [2003] EWCA civ. 751. He elicited a number of principles from these cases, of which three are relevant to the present case, and I gratefully adopt his analysis.

"26 Third, the issue is not whether the Arbitrator came to the right conclusion. The sole issue is whether he committed a serious irregularity in coming to the conclusion that he did: see paragraph 64 of the extract of the Judgment of Lawrence Collins J in Warborough.

27. Fourth, in deciding whether a serious irregularity has caused substantial injustice, the Court should…try to assess how the aggrieved party would have conducted his case but for the irregularity. Only if the aggrieved party has suffered a substantial injustice because he was unable to present his case and so obtain a fair hearing of his case will the irregularity be treated as falling within section.68: see Checkpoint per Ward LJ at paras 57-58, Warborough per Jonathan Parker LJ at paras 55-59.

28. Fifth, the test of "substantial injustice" is intended to be applied by way of a support of the arbitral process and not by way of interference with that process. It is only in those cases where it can be said that what is happened was so far removed from what could reasonably be expected of the arbitral process that the Court will interfere. Section 68 is a long stop which is only available in extreme cases where the arbitrator has gone so wrong in his conduct of the arbitration that justice calls out for it to be corrected. It is not a soft alternative to an application for leave to appeal: see Checkpoint per Ward LJ at para 59.

38. I have concluded that the claim under section 68 also fails.

(1) This case is very far removed from the Co-operative Groups (CWS) case and the Vogon case, on which Mr Padfield relied. In the present case there was no "obvious unfairness" in the arbitrator's decision to make the findings that he did. The arbitrator was bound to calculate the damages suffered as a result of Dr Persaud's breach. Dr Beynon was entitled to damages which compensated him for the loss of his bargain: his rights under the 1996 Agreement. Those rights included contractual compensation on the basis of the exercise of good faith by Dr Persaud. As the arbitrator noted in paragraphs 19 to 21 of the additional award of 4 July 2005, Dr Persaud was given notice that the point was being taken and argued that he was entitled to run IMS in any way he liked, even if this involved reducing its value to nil. The arbitrator took a different view, but that does not give rise to objectionable irregularity. This is not a case of a new point being taken in a way which prevented Dr Persaud dealing with it, nor is it a case of the arbitrator deciding a dispute on the basis of an entirely new point which had not been canvassed.

(2) In paragraph 96 of the award the arbitrator addressed the question whether it would be fair to find that Dr Persaud had acted without good faith to Dr Beynon in the light of the fact that he had not given evidence. In paragraphs 97 to 101 he set out his reasons for concluding that it was fair. Although those reasons are not determinative of the issue of injustice, they demonstrate that the arbitrator was conscious of the issue of fairness and directed himself in relation to it.

(3) I am also, for the reasons which I have set out in relation to the claim under section 67, unpersuaded that the arbitrator exceeded his procedural powers. It seems to me that section 68(2)(b) is concerned with a significant abuse of power if the qualifying word "serious" in the expression "serious irregularity" is to given its proper weight. The present case is not one in which "justice calls out" for a correction to be made.

(4) The challenge under section 68(2)(c) fails for similar reasons to those I have set out in my conclusion in relation to section 67. There was no procedure agreed by the parties which prevented the arbitrator from conducting the arbitration as he did and reaching the conclusion which he did. To use the language of section 33, the arbitrator adopted procedures suitable to the circumstances of the particular case.

(5) I also reject the contention that the arbitrator failed to deal with the issues which were before him within the meaning of section 68(2)(d). It seems to me that Dr Persaud's real complaint is that the arbitrator erred in his conclusion as a matter of analysis. He should have valued the claim having regard to a deficiency in net assets. But, if anything, that gives rise to an application for permission to appeal.

(6) Dr Persaud has to show that the irregularity upon which he relies has caused substantial injustice. Although he has made three witness statements in support of the claims, there is no evidence as to what he would have said about the allegations of lack of good faith if he had been given the opportunity which he says that he was denied. In the terms of the St George's Investment case "the Court should…try to assess how the aggrieved party would have conducted his case but for the irregularity." Dr Persaud has not provided the Court with any materials on which he could make this assessment. In paragraph 89 of the award the arbitrator set out a number of issues about the payments which he considered should have been addressed. Dr Persaud has declined to address them, and there is nothing to refute the inferences which the arbitrator drew. There has been no frank or adequate explanation for the payments and the matter has been made no clearer by (a) the claims by Dr Persaud's solicitors to recover the payments and (b) by the concession in Dr Persaud's closing submissions to the arbitrator that if a willing buyer and a willing seller considered that the payments to the employees were recoverable, it would reduce the net asset deficit.

(7) It is clear from paragraph 21 of the 4 July award that if the arbitrator had not made the finding about net asset deficiency, of which Dr Persaud complains, then the valuation would have been £7,327,000 rather than £9 million, and Dr Beynon's entitlement would be £586,160 rather than £720,000. In such circumstances, if I had been persuaded to exercise my powers under section 68, I would only have done so in relation to £133,840 of the sum awarded.

39. For these reasons I hold that the claim fails.
40. I am handing down my decision in the applications under section 69 of the Arbitration Act.
41. If permission were refused I did not understand there was any question that Dr Beynon was entitled to an order under section 66(1) of the Arbitration Act 1996 that the awards of 9 May and 4 July 2005 be enforced as a judgment or order of the Court, and that Dr Persaud be ordered to pay the costs of any judgment that may hereinafter be entered.