Brian Andrews v. John Bradshaw and another
(England and Wales) Supreme Court of Judicature (Court of Appeal),
Nourse, Mantell, Mance LJJ, July 29, 1999.
Arbitration - arbitrator sought to require parties to agree his terms - whether letters written by arbitrator to party refusing to agree terms provided grounds for removal - s. 24 Arbitration Act 1996 considered - justifiable doubts about impartiality -test for bias in
R. v. Gough applied.
Facts:
The applicant/respondent on appeal ("Mr Andrews") was engaged by the second respondent ("Randells") as a demolition and groundwork sub-contractor under a sub-contract that provided for the arbitration of disputes. Disputes arose and were referred to arbitration by Randells after its court proceedings were stayed on Mr Andrews' application. The first respondent ("the arbitrator") was appointed as arbitrator by the RICS on application of Randells. Randells' claim in the arbitration was for damages and costs incurred as a result of alleged defective work by Mr Andrews. Mr Andrews had a counterclaim for payment.
Following his appointment, the arbitrator wrote the parties advising that a preliminary meeting would be necessary and stating that it would also be necessary for both parties to execute his fee agreement. One of the terms of this agreement provided for a minimum fee of £250.00 to be paid by each party to the arbitrator.
During the course of the preliminary meeting Mr Andrews, by his advisors, stated that he was not prepared to sign the arbitrator's fee agreement. Randell signed the fee agreement. The question of the need for preliminary issues was also discussed at this meeting and a procedure devised to enable these to be formulated. After a period of what the court characterised as a somewhat unfocussed and untidy correspondence between the arbitrator and the parties concerning the formulation of the preliminary issues, such issues were identified and argued. In October 1998 the arbitrator advised the parties that his Interim Award was available on payment of his fees.
During this period, Mr Andrews maintained his refusal to execute the arbitrator's fee agreement and the arbitrator, in his correspondence with the parties, became increasingly resentful of the didactic tone adopted by Mr Andrews' advisor and Mr Andrews' refusal to fall into line with the arbitrator's request for payment. By letter of the 12th May 1998, the arbitrator advised the parties that he would seek security for costs if they did not pay his minimum fee. This prompted payment from Randells, but not from Mr Andrews.
After further correspondence, in which disagreements between the arbitrator and Mr Andrews' advisors over the proper formulation of preliminary issues became somewhat acrimonious, the arbitrator wrote to Mr Andrews's advisors stating, inter alia, that in formulating the preliminary issues he would not be "influenced by prescription from yourself. This was particularly so in view of the refusal of your Client so far to provide any costs in the Matter." This letter prompted an immediate response from Mr Andrews' advisors in which they expressed concern about whether Mr Andrews would be given a fair and impartial hearing and asked the arbitrator to retract his comments and confirm that he was still able to act impartially. The arbitrator did not do so immediately but, on the 7th October 1998, wrote directly to Mr Andrews asserting that his impartially was beyond question but repeating his concern that Mr Andrews had not thought fit either to sign the fee agreement or pay the minimum fee. The arbitrator again expressed extreme concern about the position as regards costs when, later that month, he wrote to the parties advising that his Interim Award was available.
Mr Andrews applied under s. 24 of the Arbitration Act 1996 ("the 1996 Act") to have the arbitrator removed. Prompted by this application, the arbitrator released his Interim Award to the parties, even though his fees remained unpaid. The Award was generally in Mr Andrews' favour on all significant issues, but ordered that he bear his own costs and half the arbitrator's costs to date.
The first instance judge removed the arbitrator and disallowed his fees as to 50% of the contribution for which Mr Andrews would otherwise have been liable. The arbitrator appealed.
Held:
The manner in which the arbitrator dealt with the preliminary issues could not be criticised, given that the Interim Award dealt with the matters that Mr Andrews wished to be put forward and did so in a manner favourable to Mr Andrews. As to the order for costs, there was force in the criticism that, since Mr Andrews had been successful, he should not have had to bear his own costs and half the arbitrator's costs, but it was not so unusual as to lead to the suspicion, let alone the conclusion that the arbitrator was not acting impartially.
Mantell LJ: The arbitrator's letter of the 7th September and those that followed did cause greater concern. Clearly the arbitrator ran out of patience with Mr Andrews' advisors and was irritated with their refusal to advise Mr Andrews to sign the fee agreement and pay the minimum fee. But although this correspondence disclosed feelings of irritation it did not, nor did his refusal to retract, indicate a real danger of bias against Mr Andrews so as to justify his removal.
Mance LJ: The test to apply was that in R v. Gough [1993] AC 646, 670F, whether in all the circumstances of the case there was a real danger of bias on the part of the arbitrator in the sense that he might unfairly regard or have regarded with favour or disfavour the case of one party to the issue under consideration by him. When speaking of real danger, the court was thinking in terms of the possibility rather than the probability of bias. When referring to all the circumstances, the court included all relevant circumstances appearing on the evidence before it, whether or not they would have been available to any observer of the relevant proceedings at the time.
In this case the JCT Arbitration Rules current at the date provided for the arbitrator's remuneration, yet the arbitrator asked the parties to accept an agreement that provided for different terms including a minimum fee, booking rates and cancellation fees, all in fixed amounts. On the face of it, it was unwise and inappropriate for the arbitrator, after accepting the appointment by the RICS, to enter into a once sided agreement with one of the parties. He was, of course entitled to ask both parties whether they would accept such an agreement, but he should not have entered into such an agreement with only one of them, once the other refused to do so.
Although Mr Andrews had acquiesced in this and it was not in issue before the court, it formed the background against which subsequent events had to be considered. Of particular concern was the arbitrator's letter of the 7th September 1998. This was pejorative and gave cause to be concerned about the risk that the arbitrator's view of Mr Andrews' attitude to costs was clouding his judgement. There was cause for further concern in the arbitrator's reaction to the letter from Mr Andrews' advisors, in which they give him a very reasonable opportunity to reconsider and correct his attitude. Instead he wrote questioning their position. This was an unnecessary letter to write and an unnecessary attitude. As for the arbitrator's letter of the 7th October, while this was a partial concession and affirmed his impartiality, he should not have reverted back to the question of his costs or to Mr Andrews' failure to enter into the fee agreement.
As to the Interim Award, this appeared generally favourable to Mr Andrews on matters of substance and although the costs order was curious, this was a matter for a different type of application to the present.
On the core issues (the test in R v. Gough) the following matters were of most concern. First, the arbitrator's repeated references to Mr Andrews' failure to sign the fee agreement; although it was not unfair of the arbitrator to state, in general terms, that he expected Mr Andrews to contribute to his fees. Secondly, the clear possibility that this irritation influenced the arbitrator in formulating the preliminary issues; although, by the 7th October 1998, he had recognised the irrelevance of Mr Andrews' attitude to his costs to any decision he had to make and, in his Interim Award, he corrected his previous errors as regards the preliminary issues. Albeit with some doubt, these concerns did not, however, justify removal. Particularly as the arbitrator's letter of the 7th October expressly recognised the irrelevance of his observations relating to costs and because there was no reason to view the Interim Award as other than an conscientious effort to address the issues, however right or wrong the award on costs might be.
Norse LJ: The arbitrator's letter of the 7th September 1998 could not be condoned. Nevertheless, the question was whether, in all the circumstances as they were now known, a case had been made out which passed the test formulated in
R v. Gough. It had not.
For the appellant (Mr Bradshaw): Mr D Sears: (instructed by Messrs Berrymans Lace Mawer).
For the respondent/applicant: Mr S Snowden (instructed by Messrs Hazell & Co).
The second respondent (Randells) was not represented.
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