Reliant Building Contractors Ltd v BRB (Residuary) Ltd

Leave to appeal from an arbitration award under section 69 of the Arbitration Act 1996 requires the statutory conditions to be satisfied. A contractual exemption for a disposition of land to be used as a residential or commercial unit does not necessarily extend to land merely intended to be used for that purpose. The words must be given their ordinary contractual meaning in the context of the agreement. Where the contract refers to a residential or commercial unit, the exemption may require a physically recognisable unit to have been constructed. A detailed interpretation is not impermissible merely because it adds explanatory words to the contract. Leave was refused where the arbitrator’s construction was not obviously wrong and no question of general public importance arose.

Reliant sought leave to appeal under section 69 of the Arbitration Act 1996 against a final arbitration award concerning the construction of an overage or clawback provision in a transfer of freehold land. The dispute concerned whether a disposition of part of the property for residential or commercial purposes was exempt before any unit had been physically constructed, or whether construction was required. The arbitrator held that the exemption applied only when a physically recognisable residential or commercial unit had been constructed and was to be used as such.

The central issues were whether the arbitrator’s interpretation was obviously wrong, whether the question was one of general public importance, and whether leave to appeal should be granted.

1. Leave criteria. The court had to apply the requirements in section 69(3) of the Arbitration Act 1996, even though the hearing concerned both permission and, if permission were granted, the substance of the contractual issue.
2. General public importance. No question of general public importance arose. Although overage provisions were relatively common, the wording of this agreement was essentially one-off. The arbitrator had considered the contractual language in context and had not improperly used business common sense to override clear wording.
3. Construction of the exemption. The words “to be used” in the definition of “Exempt Disposition” did not mean merely “intended to be used”. They contemplated that the relevant part of the property was going to be used for one of the specified purposes, a matter capable of proof by evidence. The reference to a “residential unit or units or commercial unit or units” required a sensible meaning to be given to “unit”. In context, this supported the requirement for something physically recognisable as a residential or commercial unit.
4. The construction was consistent with the agreement’s two alternative chargeable events, its credit mechanism for previous payments, and the 80-year relevant period. It was neither unrealistic nor contrary to what sensible commercial parties might have agreed.
5. The arbitrator was not obviously wrong and was, in substance, right. Leave to appeal was refused. The defendant was awarded assessed costs of £11,000, payable by 24 June 2011.

Mr Justice Ramsey gave directions leading to the hearing before Mr Justice Akenhead. The application for leave to appeal was refused by the High Court (Technology and Construction Court).