Morris Homes (West Midlands) Ltd v Keay & Anor

Leave to appeal an arbitral award under Arbitration Act 1996, section 69, requires a clear-cut satisfaction of the statutory threshold. A construction issue arising from unusual, one-off facts will not ordinarily be a question of general public importance. An obligation to carry out works diligently may be independent of an obligation to use reasonable endeavours to complete them. Diligence may concern the timing, sequencing and progress of works, not merely workmanship. On an appeal concerning damages, an applicant must identify an obvious legal error; disagreement with factual findings or their application is insufficient. The court should respect the parties’ choice of arbitration and the finality of the arbitral tribunal’s factual findings.

The claimant sought leave under section 69 of the Arbitration Act 1996 to appeal two aspects of an arbitrator’s partial award concerning the construction of a medical centre. The first proposed question concerned the relationship between contractual obligations to carry out works diligently and to use all reasonable endeavours to complete them. The second concerned whether alleged financial benefits from deferred expenditure should be credited against damages where the benefit was said to have been enjoyed by the claimant’s father rather than the claimants.

The arbitrator found that the diligence obligation was independent and that prolonged suspension of the works breached it. He also found that the claimants had received no monetary benefit from the delay. The application therefore required consideration of whether the questions were of general public importance, whether the arbitrator’s decisions were seriously or obviously wrong, and whether it was just and proper for the court to intervene.

1. Application refused. Leave to appeal was declined on both proposed questions.
2. Section 69 applications are essentially summary. The applicant must establish, on a clear-cut basis, the relevant statutory criterion in section 69(3)(c) and that it is just and proper for the court to determine the question. The guidance in CMA SA v Beteiligungs KG (MS ‘Northern Pioneer’) & Ors [2003] 1 WLR 1015 superseded the earlier statutory guidance in Pioneer Shipping Ltd v BTP Tioxide Ltd (‘The Nema’) [1982] AC 724.
3. The first question was not one of general public importance. Although clauses combining diligence and reasonable endeavours may be common, the contractual provisions fell to be applied to unusual, one-off events. The arbitrator’s construction was not open to serious doubt.
4. The obligations in clauses 3.1 and 4 were distinct and independent. A duty to carry out works diligently could require continuous and properly programmed progress, including appropriate timing and sequencing, even where the party complied with a separate obligation to use reasonable endeavours to secure completion. That conclusion was consistent with Ampurius New Homes Holdings Ltd v Telford Homes (Creekside) Ltd [2012] EWHC 1820 (Ch) and West Faulkner Associates v LB of Newham [1994] 71 BLR 1.
5. The damages question concerned the arbitrator’s findings of fact and their application of established principles. The arbitrator correctly compared the claimants’ actual position with the position absent breach and considered actual gains and losses. The decision was neither obviously wrong nor open to serious doubt. The guidance in HMV UK v Propinvest Fire Limited Partnership [2012] 1 Ll Rep 416 was applied.
6. There was no sufficient reason to displace the arbitral process. The expertise of the arbitrator and the presumption of finality were relevant considerations, as noted in Keydon Estates Ltd v Western Power Distribution (South Wales) Ltd [2004] EWHC 996 (Ch). The claimants were bound by the arbitrator’s findings of fact.

First-instance application for leave to appeal an arbitrator’s partial award. Leave was refused.