Walsall Metropolitan Borough Council v Beechdale Community Housing Association Ltd.

Permission to appeal an arbitral award under Arbitration Act 1996, section 69, requires a question of law which substantially affects the parties’ rights, was determined by the tribunal, and is obviously wrong on the face of the award, unless the question is one of general public importance and is seriously doubtful. Extraneous arbitration material is ordinarily inadmissible.

Section 68 is a long-stop remedy for serious irregularity causing substantial injustice. It does not permit the court to re-try evidential or valuation disputes, or correct an arbitrator merely because another conclusion was possible. No substantial injustice arises where a different valuation methodology would probably have produced the same or a similar result.

The claimant sought permission to appeal under section 69 of the Arbitration Act 1996 and, alternatively, to set aside the award for serious irregularity under section 68.

The dispute arose from an arbitration concerning warranties given on the sale of housing units. The arbitrator awarded damages for repair costs and future costs arising from non-disclosure of information about sulphate attack. The claimant challenged the measure of loss, the treatment of a contractual cap, VAT and interest, and the absence of a deduction for early receipt of future losses.

The central questions were whether the proposed challenges raised questions of law meeting section 69’s statutory threshold, and whether any procedural irregularity had caused substantial injustice under section 68.

1. The applications under sections 69 and 68 of the Arbitration Act 1996 were dismissed. The claimant was ordered to pay the defendant’s costs, to be assessed on the standard basis if not agreed.

2. Under section 69, an error of law must ordinarily be demonstrable from the face of the award. Pleadings, submissions, transcripts and expert evidence cannot be used to establish an obvious error. The claimant’s application depended on such extraneous material and therefore faced a complete threshold bar.

3. The award of actual repair costs was not obviously wrong. The warranty referred to loss arising from information being untrue or misleading, rather than to costs which would not otherwise have been incurred. The arbitrator was entitled to regard the repair costs as a recoverable measure of loss. Her conclusion was within the permissible range of solutions.

4. The challenge concerning the contractual cap, VAT and interest did not identify a question of law and, in any event, did not show an obvious error. The challenge to future costs similarly sought to re-argue technical and evidential matters. It did not identify a legal question and the arbitrator’s valuation conclusion was open to her.

5. Section 68 addresses serious irregularity, not whether the arbitrator reached the correct answer. Any irregularity must also cause substantial injustice. Even assuming that the parties had agreed a different valuation method for actual losses, the evidence did not show that the outcome would have been radically different. The alleged irregularity was therefore neither serious nor unjust.

6. As to future costs, the arbitrator had considered the valuation evidence and given the parties a full opportunity to present their cases. Disagreement with her conclusions did not establish procedural unfairness, serious irregularity or substantial injustice.

First-instance arbitration claim. The judgment records no prior court decision in the same proceedings.