J.E. Taylor Co. Ltd. v. Paul L. Brown and Another

HCMP001259/1990

MP No. 1259 of 1990

HEADNOTE

Arbitration-application to revoke appointment of arbitrator for bias, inherent and/or actual-section 3 Arbitration Ordinance-application for removal of arbitrator on grounds of misconduct-section 25 Arbitration Ordinance-application to appoint replacement

HCMP No. 1259 OF 1990

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Deputy Judge Sharwood in Court

Date of Hearing: 12, 15, 16 October 1990

Date of Delivery of Judgment: 31 October 1990

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J U D G M E N T

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1. The plaintiff applies by originating summons for leave to revoke the appointment of the 1st defendant (Mr. Brown) as arbitrator, he having been so appointed by the Chairman of the Royal Institution of Chartered Surveyors (Hong Kong Branch) (RICS) on 28 February 1990, pursuant to an arbitration clause in a Tenancy Agreement between the plaintiff and the predecessor-in-title of the 2nd defendant. This application is made under section 3 of the Arbitration Ordinance, Chapter 341.

2. The plaintiff also seeks an order that the Chairman for the time being of RICS be directed to appoint another arbitrator to act in place of Mr. Brown.

3. Further or alternatively the plaintiff applies under S.25 of the said ordinance for the removal of Mr. Brown as arbitrator on the grounds of misconduct in the manner in which he has so far handled the proceedings.

4. It is necessary to briefly set out the history of the dispute.

5. The plaintiff as tenant and the predecessor-in-title of the 2nd defendant as landlord entered into a Tenancy Agreement dated 30 July 1987 for a term of 2 years from 1 August 1987.

6. Under Part 3 of the Schedule to the agreement, the plaintiff was granted an option to renew the tenancy for a further 2 years, provided that not less than 6 months before the expiration of the term, it gave notice in writing to the landlord of its intention so to do. On 14 December 1988, the plaintiff exercised its option to renew.

7. The rental for the new term of 2 years was to be the "open market rent applicable at the expiration" of the original term, "having regard to prevailing market rentals of similar premises in the same locality, such rent to be mutually agreed between the parties hereto or failing agreement thereon three months before the expiration date of the term hereby created, the amount of such open market calendar monthly rent shall be determined by a single arbitrator nominated by the Chairman for the time being of the Royal Institution of Chartered Surveyors (Hong Kong Branch) on the application of either party and such arbitrator's decision shall be final and binding on the parties hereto".

8. On 24 April 1989, the agent of the landlord wrote to the plaintiff, confirming that the landlord was prepared to grant a further 2 year term at a specified rental. It was pointed out that in the absence of agreement, an arbitrator would have to be appointed pursuant to the tenancy agreement.

9. On 28 April 1989, Mr. Crawley on behalf of the plaintiff rejected the proposed new rental, and proceeded to provide his own assessment of the then open market rent.

10. On 29 April 1989, the landlord applied to the Chairman of RICS for the nomination of an arbitrator. The plaintiff was not informed. On 31 July the term expired, and on 7 August 1989 the Chairman of RICS nominated Mr. F.Y. Kan as arbitrator. The plaintiff was not informed until November 1989, and then only indirectly.

11. On 18 December 1989, the landlord's agent, Vigers, requested the arbitrator to commence arbitration as soon as possible and the plaintiff was informed, but it was not until 5 February 1990 that the arbitrator wrote to both parties about a preliminary meeting.

12. Thereafter the plaintiff challenged the arbitrator's capacity to act impartially, and the latter resigned on 20 February 1990. He subsequently made it clear that his resignation had nothing to do with the plaintiff's challenge to his capacity, but was occasioned solely by the manner in which he had been treated by the agent of the landlord.

13. On 28 February 1990, the Chairman of RICS. nominated Mr. Brown as arbitrator, requesting him "to proceed as a matter of urgency". The plaintiff was informed. In paragraph 5 of his affidavit, filed on 23 May 1990, Mr. Brown says that he was asked by the Chairman if he "could treat the matter with expedience as there had apparently already been a certain amount of delay in the matter". Mr. Brown says that he informed the Chairman that he would do so.

14. On 5 March 1990, Mr. Crawley, on behalf of the plaintiff wrote to Mr. Brown stating that since Mr. Brown was a ."senior partner in a firm of property consultants who are remunerated largely by commission income received from landlords," he wondered whether Mr. Brown could "impartially judge a matter of this nature between landlord and tenant since it seems you must have a bias in favour of those who provide you with your income. Please would you comment on this matter which is very important to us. By bringing this question to your attention we do not intend any disrespect. The question is not directed at you personally but is directed more to your position which seems to us to be by its nature incapable of the objectivity an arbitrator requires".

15. Mr. Brown did not reply to this letter, and on 7 March 1989 he wrote to the plaintiff and to the landlord, informing them of his appointment as arbitrator in their rental dispute, and requesting a meeting for Monday 19 March "for the purpose of considering the procedure to be followed". He made it clear that it was "purely a preliminary meeting at which no matters germane to the dispute itself shall be discussed".

16. A meeting was duly held on 19 March, and Mr. Brown summarised the proceedings in a letter to both parties, dated 19 March. At the meeting, he gave directions requiring the parties to submit their representations before 5 p.m. on 13 April, their cross-representations before 5 p.m. 23 April, and to attend a hearing on 27 April at a venue to be announced. Mr. Brown noted that Mr. Crawley, a director of the plaintiff, objected to "this date and the subsequent timetable on the grounds that inappropriate time is given to prepare a submission", but "after taking all facts known to me into account I find the suggested timetable to be a reasonable one within which to consider the matter".

17. On 21 March 1989, Mr. Crawley, sent a fax to Mr. Brown and the agent of the landlord, setting out his summary of the 19 March meeting, inviting comments and corrections. None were forthcoming.

18. On 28 March, Mr. Crawley wrote to the arbitrator, once again expressing his "reservations on the impartiality of a property consultant as an arbitrator in a case where the landlord may be the client past present or future of the property consultant". He went on to seek from Mr. Brown a "written declaration that our landlord is not your client now, and has not been your client in the past; furthermore please would you declare that you do not intend to work for our landlord in the future".

19. To this communication Mr. Brown did not reply.

20. On 12 April 1990, the landlord submitted its representations to the arbitrator.

21. On 13 April 1990, the deadline for the submission of representations came and went.

22. On 18 April the plaintiff's solicitors wrote to the arbitrator, alleging "real or apparent bias", on the ground of an existing professional business relationship between his firm and the agents of the landlord. It was pointed out that the declaration sought by the plaintiff had not been forthcoming and that it was therefore reasonably believed by Mr. Crawley that the arbitrator could not be impartial. But that was not the end of the matter, for the letter went on to complain about the directions which had been made on 19 March. There was a complaint that insufficient time had been allowed, and about the failure to provide for discovery of documents, which was described as "a normal and essential requirement". There was also a complaint that the direction for "an oral hearing at which interlocutory proceedings shall be heard" was impossible to understand.

23. On 23 April, Mr. Brown wrote to the landlord and the plaintiff's solicitors, stating that he had no special relationship with the parties to the dispute. After explaining his position, he indicated that he was prepared to revise the timetable by allowing until 30 April for representations, 9 May for cross-representations and 16 May for the hearing. Finally, he stated that "barring unforeseen circumstances, if the revised timetable is not followed I will be prepared to proceed on an ex parte basis".

24. On 26 April, the solicitors wrote to the arbitrator noting that he had not addressed the points raised in their letter of 18 April, and informing him that since he did not intend to step down as arbitrator, proceedings would be issued to seek his removal by the Court.

25. On 27 April, Mr. Brown acknowledged receipt of the letter of 26 April, and stated that "all relevant matters have been covered in my letter of 23 April".

26. On 30 April, the extended deadline for representations came and went, and on 2 May, the plaintiff applied for an ex parte injunction, which was granted. The landlord was joined as the 2nd defendant.

27. In support of its applications, the plaintiff essentially relies upon three grounds. The first can conveniently be described as "inherent bias". It was submitted that Mr. Brown, the 1st defendant, by reason of his occupation as a practising surveyor and valuer, is per se not a fit and proper person to be appointed as an arbitrator.

28. As I have mentioned, Mr. Crawley wrote to Mr. Brown on 5 March stating that "we understand you yourself are a senior partner in a firm of property consultants who are remunerated largely by commission income received from landlords. We wonder therefore whether you can impartially judge a matter of this nature between landlord and tenant since it seems you must have a bias in favour of those who provide you with your income".

29. Mr. Brown says in paragraph 8 of his first affidavit that he "informed Mr. Crawley that my company was not remunerated largely by commission from landlords as he contended in that letter and that, in any case, I was acting as arbitrator in the dispute in a personal capacity and not as a representative of my company" Mr. Brown also says in paragraph 2 of the same affidavit, that he had "acted as an expert valuer for both landlords and tenants in many rental disputes and have appeared on a number of occasions in the Lands Tribunal as an expert witness. I have also, on several occasions been appointed either as an arbitrator or independent expert to settle rental disputes - particularly by the past four Chairmen of The Royal Institution of Chartered Surveyors (Hong Kong Branch) and on two occasions by the President of the Hong Kong Institute of Surveyors".

30. There is no evidence from the plaintiff that Mr. Brown's company relied more upon landlords than upon tenants for its remuneration. Mr. Brown refuted the "understanding" of Mr. Crawley. I find myself unable to take judicial notice of the extent to which property management company's in general rely upon landlords for their income. But I am satisfied that there is no business relationship as such between Mr. Brown's company and the landlord. There is no reason to doubt Mr. Brown's assertion in paragraph 20 of his said affidavit that "JLW are, if anything, a direct competitor of my company".

31. On the evidence available to me, I am satisfied that no inherent bias has been shown to exist by virtue of any relationship between Mr. Brown, or the company of which he is the managing director, namely Sallmanns (HK) Ltd, on the one hand, and the landlord or its agents, on the other.

32. I am further satisfied that no inherent bias in favour of landlords generally has been shown to exist by virtue of Mr. Brown's position as managing director of a prominent property management company, part of whose income may be derived from landlords.

33. At p. 251 of Mustill and Boyd, Commercial Arbitration, 2nd Edition, the following passage is found:

"It is impossible to lay down any principle more precise than the test of what a reasonable man would think for ascertaining whether the relationship is close enough to be objectionable. With the exercise of common sense, a situation should never arise in which the arbitrator's personal impartiality is put in question. A person who is approached with a request to act, and knows that he has some kind of relationship with one of the parties, should remember that there is no keener sense of injustice than is felt by someone who has doubts about whether the arbitrator is doing his honest best. He should also bear in mind that the question is not just whether he really is impartial, but whether a reasonable outsider might consider that there is a risk that he is not."

34. I am satisfied that a "reasonable outsider" would, in the present case, readily accept that there was no evidence of any relationship between Mr. Brown or his company, and the landlord or its agents, which might create the risk that Mr. Brown would not act impartially.

35. On behalf of the plaintiff, Mr. Allman Brown submitted in reply that the very fact that Mr. Brown's company was remunerated to some extent at least by landlords, was sufficient to create the appearance of bias in their favour generally. But Mr. Brown has also derived remuneration from tenants. As he said, in paragraph 2 of his first affidavit, he has "acted as an expert valuer for both landlords and tenants in many rental disputes". There is no evidence as to whether Mr. Brown or Sallmans (HK) Ltd. depend more upon landlords than upon tenants.

36. In Bremer Handelsgesellschaft M.B.H. v. Ets Soules et Cie and Anthony G. Scott (1985] 2 L1 L.R. 199, Mr. Scott was one of the members of the Board of Appeal in relation to an arbitration award, and was also a member and director of a London company which was the wholly owned subsidiary of a Lausanne Company. Bremer alleged that the Lausanne Company, Andre, were buyers of the soya beans the subject of the dispute betwen Bremer and Soules, giving rise to the possibility that any decision in favour of Soules could favour the Lansanne Company in future arbitrations. It was submitted that Mr. Scott might consciously or unconsciously lean towards a finding of fact in the Soules arbitration favourable to the Lausanne Company.

37. In the event, the Court of Appeal upheld the Judge's conclusion that no case of imputed bias had been made out. Ackner, L.J. approved the following observation of Mustill, J. (p. 204).

"At least one could see in that instance the shadow of an advantage to Andre from a decision in favour of Soules, although for the reasons already stated, too insubstantial to found a remedy. But here there is only the possibility of a shadow, since the existence of any motive for a partial decision is no more than speculation."

38. In the present case, there is neither a shadow, nor the possibility of a shadow. One could not even begin to speculate about Mr. Brown's motives or allegiances. The test to be applied is an objective one, and was formulated by Ackner, J. in Hagop Ardahalian v. Unifert International S.A. ("The Elissar"), [1984] 2 Ll Rep 84 at p.89, as follows:

"Do there exist grounds from which a reasonable person would think that there was a real likelihood that Mr. Clark could not, or would not, fairly determine the safe port issue on the basis of the evidence and arguments to be adduced before him? It seems to me that that is a satisfactory way of expressing the objective test which, to my mind, is the appropriate approach."

39. In my view, there exist no grounds in the present case from which a reasonable person would think that there was a real likelihood that Mr. Brown could not or would not fairly determine the fair rental on the basis of the evidence and the arguments to be adduced before him .

40. The fact that the plaintiff is aggrieved by the appointment of Mr. Brown, on the basis that Mr. Crawley believes or suspects that he is a creature of landlords in general, and has a business relationship with JLW in particular, is not to the point. Those are subjective considerations. If the test was subjective, any party could frustrate a reference on the basis of any fanciful doubts which he might choose to harbour about an arbitrator. As Lord Ackner, L.J. said, in "The Elissar", p. 89:

"To suggest that the mere lack of confidence which no reasonable person would, in the relevant circumstances, experience, should be a basis for setting aside an award, seems to me to be quite unacceptable."

41. In the case under consideration, I repeat that, no reasonable person could on the evidence, and in all the relevant circumstances, believe that there was a risk that Mr. Brown might favour a landlord over a tenant in any rental review.

42. I turn to the plaintiff's second ground, namely, actual bias. It was submitted that the arbitrator is or must have become biased because he had read a letter from Vigers to F.Y. Kan, the original arbitrator, complaining of delays by the plaintiff. I have already mentioned that Mr. F.Y. Kan was originally appointed arbitrator in August 1989, but did not write to the parties until 5 February 1990. This delay, the reasons for which I do not need to determine, led to, inter alia, a letter from Vigers, as agent for the landlord, to Mr. F.Y. Kan, in which the plaintiff was accused of "inertia" and of "delaying this case" unnecessarily. This letter was copied to the plaintiff, and it appears to have been sent to the arbitrator by the Chairman of the RIGS, as part of the correspondence.

43. I find this submission less than persuasive. In any adversarial system, a tribunal will inevitably hear complaints of one sort or another by other. Often, the tribunal does not have to resolve the problem, but hears about it anyway. It seems to me quite unrealistic to suggest that the mere making of such a complaint could lead to bias. In any event, the plaintiff was aware of the complaints that had been made against it, and Mr. Crawley could have protested to Mr. Brown that such complaints were quite unjustified, and that the delay was entirely attributable to the landlord, or the first arbitrator.

44. There is no evidence that Mr. Brown sought to blame anyone, and there is nothing to suggest that he had formed a view that the plaintiff was in any way responsible.

45. Neither would it be right to infer the existence of bias merely because Mr. Brown wished to proceed with the matter expeditiously. He had been requested to proceed as a matter of urgency, and was willing to do so. Mr. Allman-Brown submitted that the reference by Mr. Brown in paragraph 5 of his affidavit to the effect that he was asked to treat the matter with "expedience" is significant, insofar as "expedient" is defined in the Oxford Concise Dictionary to mean, inter alia, "politic rather than just." I have no doubt that Mr. Brown was here inadvertently using the wrong word. What he should have said, and what he undoubtedly meant to say, was "expedition". That is quite clear from the context. "Professor Walker asked if I could treat the matter with expedience as there had apparently already been a certain amount of delay in the matter". In other words, Mr. Brown was saying that he had been requested to get on with the reference, to act expeditiously. I reject the suggestion that Mr. Brown was saying that he had been asked to act in a manner which was "politic rather than just".

46. I will deal further with the plaintiff's complaints arising from Mr. Brown's determination to act expeditiously when I come to the alleged misconduct. Suffice it to say at this time that I can discern no evidence of actual bias in Mr. Brown's attitude and approach, despite the evidence that the landlord was clearly also anxious that the reference be speedily dealt with.

47. I come therefore to the third ground upon which the plaintiff relies, namely, the alleged misconduct of the arbitrator.

48. It was submitted that the arbitrator misconducted the proceedings by:

a)Failing to allow the plaintiff sufficient time to prepare his representations and cross-representations, and by ordering a hearing only 3 days after the last day for filing cross-representations.

b) Failing to make it clear that he had ordered an oral hearing.

c) Failing to order discovery.

d) Being prepared to proceed ex parte in the event of non compliance by the parties.

e) Adopting a procedure which had not been agreed upon by the parties.

f) Engaging in correspondence with the 2nd defendant on October 12.

49. I will deal with each allegation separately.

(a) Failing to allow sufficient time

50. Mr. Brown had been asked in to deal with the arbitration as a matter of urgency, and he set out to do so. In my view, his general approach was commendable. The arbitration was some 8 or 9 months overdue. The arbitration clause in the tenancy agreement provided for either party to apply to the Chairman of the RICS to nominate an arbitrator three months before the expiration of the lease. It can be inferred from this that it was contemplated that arbitration could commence as soon as the term had expired. It is impossible that it could have commenced before that time, having regard to the terms of the arbitration clause, which referred to the open market rental applicable at the expiration of the original term.

51. The landlord, no doubt with this in mind, applied to the Chairman of the RICS on 29 April 1989, slightly more than 3 months before the expiration of the term. It would seem that the landlord was anxious to have an arbitrator nominated, ready to assess the open market rental on 31 July, 1989.

52. I have already said that it is not my intention to determine the cause of the delay, and I have commented that there is no evidence to suggest that this was a matter which concerned the arbitrator. But the fact is that the reference had been delayed, and it is against that background that Mr Brown's willingness to act expeditiously must be viewed.

53. In acting as he did, he was not only responding to the request of the Chairman of the RICS, but he was also acting in accordance with the requirements of section 15(3) of the Arbitration Ordinance, which empowers the Court to remove an arbitrator who "fails to use all reasonable despatch in entering on and proceeding with the reference".

54. It was submitted on behalf of the landlord that any assessment of the adequacy of the time allowed must be made in light of the fact that this was a "simple rent review". That being the case, the time allowed for the filing of representations and cross-representations was not unduly short. The fact that the hearing was scheduled three days after the last day for filing cross-representations was not significant, because the parties would have done all the relevant work beforehand, when preparing their respective representations and cross-representations. In any event, no advantage accrued to either party.

55. There is no evidence to suggest that the time allowed was insufficient, but if it had proved to be the case, there is every reason to believe that Mr. Brown would have granted any necessary adjournment. When the complaint was made on 18 April by the plaintiff's solicitors that the time allowed was too short, Mr. Brown immediately set a new timetable, and allowed additional time. He had in any event extended the original deadline by four days, on his own initiative. Another example of Mr. Brown's willingness to be reasonable and flexible is seen in his extension of the preliminary meeting from 5 March to 19 March, at the request of Mr. Crawley.

56. Mr. Allman-Brown, on behalf of the plaintiff, strenuously opposed the description of the arbitration as a "simple rent review". He submitted that the matter had been rendered highly complex by the upheaval in China on 4 June 1989, whereby the entire property market had been thrown into disarray. In addition, Mr. Allman-Brown submitted that whereas the original rent had been assessed on a "net" basis, the landlord had sought to assess the new rent on a "gross" basis, whereby, as he put it, "the whole game had changed", and it was anything but a simple rent review.

57. But the fact remains that it was still a rent review, based on "prevailing market rentals of similar premises in the same locality". The representations and cross-representations would no doubt have taken into account the upheaval in China and its effect upon rental, and would also have cast light on whether assessments were being based on "gross" area or "net" area. I fail to see how these matters could have altered the essential nature of the arbitration. In my view, the matters referred to by Mr. Allman Brown would not necessarily have made Mr. Brown's task more difficult. He would still have had to act upon the representations and the evidence. If such evidence could not have been obtained within the time allowed, because, for example, the upheaval in China had made information harder to come by, or more difficult to analyse, then there is nothing to suggest that Mr. Brown would not have adjourned until the information was available. There is no substance in the submission.

(b) Failing to make it clear that the arbitrator had ordered an oral hearing.

58. Mr. Crawley requested an oral hearing. This was granted and a date was fixed for 27 April 1989, and subsequently extended to May 9. It was described by the arbitrator as an oral hearing "at which interlocutory proceedings shall be heard ... It was submitted that this was an unintelligible direction, and could not be accepted as a direction for an oral hearing. I consider this quite unreasonable. It is quite clear from the correspondence and the affidavits that it was always understood, by everyone, that there would be an oral hearing. There is a good sense in the submission on behalf of Mr. Brown that lawyers have put a special meaning on the word "interlocutory", whereas its ordinary meaning is "to speak between". It seems likely that Mr. Brown used the word in this sense, but in any event I am quite satisfied that he specifically acceded to a request for an oral hearing, and that to the extent that he might have been misunderstood, the matter could have been easily clarified. There is no substance in this submission.

(c) Failing to order discovery.

59. Discovery was mentioned for the first time in the solicitors' letter of 18 April, almost a month after Mr. Brown's directions on 19 March. It was alleged in the said letter to be a "normal and essential requirement" in any similar proceeding. But according to Mustill and Boyd, at p.541:

"In an arbitration, by contrast, the claimant is not obliged to deliver a statement of claim unless he is ordered to do so; and in the majority of arbitrations, no such order will be made. The same is the case as regards orders for 'defence', 'discovery', 'inspection' and so on, which have no counterpart in the ordinary run of arbitrations" (my underlining).

60. If there is no counterpart to discovery in an ordinary arbitration, then failure to order discovery could hardly be described as misconduct, especially since discovery had not been requested by Mr. Crawley.

61. It appears that the plaintiff's solicitors were assuming that the Rules of the Supreme Court were automatically applicable in arbitration proceedings. The assumption was incorrect.. The arbitrator was not asked to order discovery, he was not obliged to order discovery, and it is very doubtful whether any good purpose would have been achieved by discovery, the submissions of Mr. Allman Brown in his reply to the contrary notwithstanding. It is relevant in this context to remember that "drawing an analogy with the powers of the Court ... does not work at all well, because proceedings in litigation and arbitration are fundamentally different in character" (Mustill and Boyd, p.540). Moreover, "the arbitrator should use discrimination in the employment of his power to order discovery. He should not feel that he is obliged to make any order for discovery at all, still less a full order" (Mustill and Boyd, p.325).

62. No doubt, each case is different, and the procedure must be "tailored to suit the circumstances", (Mustill and Boyd, p.326). But it has not been shown in this case that discovery was necessary, or even desirable.

(d) Being prepared to proceed ex parte in the event of non-compliance by the parties.

63. Mr. Brown made it clear in his letter of 23 April 1989 that "barring unforeseen circumstances, if the revised timetable is not followed I will be prepared to proceed on an ex parte basis".

64. What he perhaps should have said is that he would be prepared to apply to proceed on an ex parte basis. Section 23C.(1) of Cap.341 provides for application to the Court by an arbitrator if a party to the reference fails within the time specified to comply with an order made by the arbitrator. Section 23C.(2) gives power to the arbitrator, in the event of an order under 23C.(l), to continue with the reference in default of appearance or of any other act by one of the parties.

65. Mr. Brown could not legally have proceeded on an ex parte basis without the leave of the Court. The likelihood is that in saying that "I will be prepared to proceed on an ex parte basis" he was in fact saying no more than that he was prepared to apply to be granted the necessary power so to do. If he expressed himself inadequately , that is hardly misconduct. In my view, it is more probable than not that he was aware of S23(C)(1) and (2), since he said in para.2 of his first affidavit that he had "on several occasions, been appointed either as an arbitrator or independent expert to settle rental disputes ...", in which case the most likely explanation for his choice of words is that it was a shorthand way of indicating that he was prepared to do what was necessary to proceed ex parte.

(e) Adopting a procedure which had not been agreed upon by the parties.

66. The arbitration clause in the tenancy agreement provided that "the amount of such open market calendar monthly rent shall be determined by a single arbitrator nominated by the Chairman for the time being of the Royal Institution of Chartered Surveyors (Hong Kong Branch) on the application of either party and such arbitrator's decision shall be final and binding on the parties hereto".

67. There is no mention in this clause of the procedure to be adopted. If the parties have not indicated what procedure is to be followed, it may be possible to imply terms. But if this can't be done, then according to Mustill and Boyd, "it is not possible to extract from the reported cases any clear guidance on the shape which the reference should take in such a case. Two propositions can, however, be stated with reasonable confidence.

68. First, the procedure must be of an adverserial nature... Second, the arbitrator is not required to follow minutely the procedures of a High Court action, but can exercise a broad discretion, so long as he adopts a procedure which complies with the essential features of the English adversarial procedure."

69. However, it is submitted on behalf of the defendants that in this case, it is possible to imply from the fact that a surveyor/valuer has been chosen as the arbitrator, that the parties intended him to exercise his own expertise, and to impose his own procedure.

70. In my view, it is not difficult to imply that since such a person had been specified as arbitrator, the parties intended him to conduct the reference in accordance with a procedure which he would have considered most appropriate to the dispute to be resolved. The parties agreed that he would be nominated by the Chairman of the RICS, who would be expected to nominate an experienced professional member of the RICS.

71. Mr. Allman Brown devoted considerable time in stressing the consensual nature of arbitration proceedings. He suggested that in the absence of specific agreement, a procedure could not be imposed on the parties without their consent, or contrary to their wishes.

72. In support of this proposition, he cited Pratt v. Swanmore Builders Ltd and Baker [1980] VOL.2 QB p.504. In that case, the parties entered into a building contract, which included an arbitration clause whereby in the event of a dispute an arbitrator would be appointed by the President of the Institute of Arbitrators, as it was known prior to its charter. There was no indication of what the procedure would be. An arbitrator was duly appointed, who took no steps to ascertain the scope of the agreement.

73. One of the parties favoured the regulations governing the conduct of arbitrators, and wrote to the arbitrator requesting that both parties deposit money to secure the amount in dispute plus fees and expenses, pursuant to those regulations. At the first meeting between the arbitrator and the parties, an order was made in those terms, despite the fact that one party did not agree. Thereafter, everything which could have gone wrong, did go wrong.

74. Mr. Justice Pain said at p.509:

"In my view this arbitration went wrong because of Mr. Baker's fundamental mistake in failing to establish just what the arbitration agreement was. The clause in the building agreement did not say by what procedure the arbitration was to be conducted. Miss Pratt by her application, which was made on the Institute's standard form for unilateral applications, made it a .condition of her application that the arbitration should be conducted under the Institute's regulations... Since this was a unilateral application, as Mr. Baker well knew, it was appropriate to obtain Swanmore Builders' acceptance of the same conditions... Of course, Mr. Baker had no power to compel Swanmore Builders to accept the regulations. It was for the parties to make their own bargain as to how the reference should proceed, but it was the arbitrator's first duty to ascertain just what bargain the parties had made. Unless he did this Mr. Baker could not know by what procedure the arbitration was to be governed."

75. To put it simply, the arbitrator in this case adopted certain regulations, to which one party did not agree. The applicability of those regulations could not be implied from the arbitration agreement.

76. On the authority of this case, it was submitted that since arbitration is consensual in nature, when there is no specific agreement as to procedure, it cannot in any way be imposed by an arbitrator, contrary to the wishes of a party.

77. With that general proposition, I firmly disagree. It would mean that in the absence of agreement, every procedural direction would have to be consented to by both parties. That would surely lead to a speedy breakdown in the system. It is one thing to make an order in relation to security for an award and expenses, pursuant to the improper acceptance by an arbitrator of a specific set of regulations, and another to simply order times for the filing of representations, and cross-representations and an oral hearing.

78. Whereas it can readily be implied in the present case that the arbitrator had at least been granted the power to make directions as to time, it could not be implied in Pratt v. Swanmore that the parties had agreed to be bound by a specific set of regulations.

79. Finally, it has to be said that the plaintiff has never complained about the procedure itself, about representations, cross-representations and a hearing. There seems to me to be a distinction between procedure as such, and the timetable set for its implementation.

(f) Engaging in correspondence with the 2nd defendant in October 1990.

80. The plaintiff's application commenced before me on 12 October, 1990. On 11 October, the 2nd defendant's agent, JLW Management Services Ltd., wrote to the arbitrator requesting a "tentative time schedule" for the arbitration proceedings in the event that his appointment was upheld by the Court. Mr. Brown replied on 12 October, saying that "it would be imprudent of me to suggest a timetable in this matter until the result of the Court hearing is known". He went on to comment that "arbitrators are under a general duty to proceed expeditiously and as this is a relatively straightforward case I would not expect the procedure to be an unduly lengthy one once the subject matter is able to be addressed".

81. The plaintiff was sent a copy of both these letters.

82. On the basis of these letters, it was submitted that Mr. Brown was completely unaware of his judicial role and function, and that he acted non-judicially by replying at all.

83. This seems to be really clutching at straws. Mr. Brown was appropriately discreet, and his reply was copied to the plaintiff.

84. It was further submitted that Mr. Brown had already formed the view that the case was straightforward. I can see no harm in that. Many Judges form such a view of a case before it has commenced. Sometimes they are quickly disabused, and sometimes they continue to maintain that view. It surely cannot be misconduct to form the view that an issue is straightforward.

85. It was submitted. that Mr. Brown was once again promising the landlord that he would proceed with speed if his appointment was confirmed. It was submitted that this amounted to "signaling the landlord his readiness to conduct the proceedings according to the Landlord's wishes", and reveals actual bias in favour of the landlord.

86. With respect, I disagree. Mr. Brown was doing no such thing. He always intended to get on with the job, and he was merely confirming that his position had not changed.

87. The plaintiff's application is made under sections 3 and 25 of the Arbitration Ordinance, Cap.341. Leave of the Court is required under S.3 to revoke the authority of an arbitrator. Mustill and Boyd state, in relation to S.1 of the English Act, which is virtually identical to our S.3, as follows: (p. 526)

"First, the primary purpose of the section is to impose a constraint, not to give a new remedy. The purpose is to improve the enforceability of the arbitration agreement by taking away the unrestricted power of a party at common law to frustrate the reference by revoking the mandate of the arbitration."

88. Despite the lack of guidance provided by the authorities as to the circumstances in which the discretion will be exercised, Mustill and Boyd,(pp. 528-529) suggest that the remedy will be appropriate where the arbitrator has "seriously and irreparably" misconducted himself, where he has displayed actual or potential bias, where deficiencies in his capability or performance have revealed themselves for which the legislation provides no other remedy, and where justice demands that the proceedings be ended, and no method of doing so is available to the Court".

89. After a careful analysis and review of the detailed submissions on behalf of the plaintiff, I can find no evidence that anything resembling the foregoing has been shown to exist in the present case. It is said that the remedy is "used sparingly, and only in unusual cases, because it deprives the other party of his contractual rights" (Mustill and Boyd, p.528). There is nothing in this case which is unusual. Indeed, it is as ordinary a case as one could find. When one looks closely at what has happened, the words "seriously and irreparably" are conspicuously out of place. The proceedings have not yet begun. The arbitrator has commenced his duties briskly and with a view to expedition. He has set a timetable. These are hardly matters which are aptly described as "serious" and "irreparable".

90. In Succula Ltd. v. Harland and Wolff [1980] 2 L1. L.R 381 at 388, Mustill, J. said:

"This leaves S.1. In the past, the Court has been very cautious in the exercise of its powers under this section. It is a serious matter to remove an arbitrator - not only for the arbitrator himself, but also for the parties, who must begin the whole proceedings again.... In my respectful submission, however, it remains a remedy of last resort, and the Court should not intervene with an established reference unless convinced that this is the only right course to take."

91. In my view, the only right course to take in the present case is not to interfere in any way whatsoever.

92. Aside from s.3, an arbitrator may be removed by the Court under s. 25 if he has misconducted himself or the proceedings.

93. So far as procedural misconduct is concerned, the Court adopts a much more permissive attitude "in relation to proceedings in arbitration, and in practice the prospects of persuading it to interfere in an arbitration on the grounds of procedural misconduct are much less than in respect of other tribunals" (Mustill and Boyd, p.37).

94. But, "the fact that the Court is given a wide power to remove the arbitrator in cases of misconduct does not mean that the power will be freely exercised. An arbitrator may commit errors - even serious error - in the course of the reference, and yet remain perfectly able to carry the arbitration to a successful conclusion once his mistakes have been pointed out. Justice requires that in such a case the arbitrator should be left in office, rather than that the parties should suffer the delay and expense of beginning the arbitration afresh. The remedy is therefore likely to be confined to those cases where the arbitration simply cannot be allowed to continue with the particular arbitrator in office - either because he has shown actual_ or potential bias or because_ his conduct has given serious grounds for destroying the confidence of one or both parties in his ability to conduct the dispute judicially or competently" (My underlining).

95. I have already referred to the fact that the test is an objective one, and that a party's subjective feeling of lack of confidence in the arbitrator would not suffice. "To suggest that the mere lack of confidence which no reasonable person would, in the relevant circumstances, experience, should be a basis for setting aside an award, [is] quite unacceptable" (The "Elissar", p.89, Supra).

96. Mr. Crawley clearly has no confidence in Mr. Brown, although the reasonable person would, in my estimation, have no reason to feel this way. As far as I can discern, his only mistake was to use the word "expedience", when he obviously meant "expedition", and possibly, to fail to make it perfectly clear on 23 April, that he was prepared to apply to proceed ex parte, by saying that he was prepared to proceed on an ex parte basis.

97. But these are matters which are so insignificant as to be heardly worthy of mention.

98. As a last gasp, so to speak, Mr. Allman-Brown submitted that since Mr. Scott, on behalf of Mr. Brown, stated in Court that the allegations of inherent bias were insulting, it was unsafe to permit Mr. Brown to continue to act as arbitrator, because if he felt insulted, he might well be biased.

99. It is necessary to approach this matter realistically. When Mr. Crawley first wrote to Mr. Brown on March 5, 1990, he tempered his suggestion of Mr. Brown's unsuitability by saying: "By bringing this question to your attention we do not intend any disrespect. The question is not directed at you personally but is directed more to your position which seems to us to be by its nature incapable of the objectivity an arbitrator requires".

100. Nevertheless, Mr. Brown would be less than human if he did not feel insulted by the allegations of inherent bias, especially as they have no foundation.

101. But the statement by his counsel did not add anything to that which might have been inferred in all the circumstances of the case. This would not prevent a professional arbitrator from discharging his duty properly. I venture to suggest that Judges not infrequently feel insulted by parties or counsel. That does not affect their impartiality, or the proper discharge of their duties.

102. So will it be with Mr. Brown, especially as Mr. Crawley made it clear that his criticism was not directed at Mr. Brown personally.

103. The plaintiff bears the onus of proving on the balance of probabilities. that the authority of the arbitrator should be revoked, or that he should be removed for misconduct. In the present case, the plaintiff has not discharged that onus. I am unable to find any evidence of bias, actual, inherent, imputed or potential, and I am unable to find any evidence of misconduct.

104. Finally, I should like to say that although I have sought to deal with the matters raised in moderate language, most if not all of them are conspicuously without any merit or substance whatsoever. So far as bias is concerned, there are many examples of persons who act as arbitrators, despite general professional involvement with one side or the other to a dispute which they are called upon to resolve. For example, barristers often act for underwriting interests at Lloyds. Can it be said that they could be removed for bias when arbitrating an insurance dispute?. The answer is clearly no.

105. The application fails, and the summons is dismissed.

106. There will be judgment for the defendants.

107. I will hear counsel on costs.

Representation:

Mr. Andrew Allman-Brown (Fok & Johnson) for the Plaintiff

Mr. John Scott (Lovell [white & Durrant) for the 1st Defendant

Miss Maria Yuen (Baker & McKenzie) for the 2nd Defendant