House of Fraser Ltd v Scottish Widows Plc

This is an oral application for permission to appeal under section 69 of the Arbitration Act 1996 for permission to appeal the Award (“the Award”) dated 15^th October 2010.

By the Award the Arbitrator Mr Douglas Stevens (“the Arbitrator”) determined the annual rent of the premises (“the Premises”) known as “House of Fraser” department store at 140-142 Briggate, Leeds.

The Award was to determine the rent as at 30^th July 2009. The Arbitrator by the Award determined the rent as of that date (“the second Review Date”) as £1,550,000.

The review was under the terms of a Lease (“the Lease”) dated 30^th July 1999 made between BL Fraser Ltd as Landlord and the Claimant as Tenant.

The term of the lease was for 40 years commencing on and including 30^th July 1999. The initial passing rent was £1,040,000 subject to 5 yearly reviews. This review as I have said is the second review.

Separately the Claimant (“HOF”) has made an application seeking to set aside the Award under section 68 alleging serious irregularity.

Vos J on 27^th May 2011 made a directions order for an oral hearing of the present application for permission to appeal which has come on before me.

The application to set aside the Award for serious irregularity was not before me and will take place after my determination. That is somewhat surprising given the decision of Ramsey J in London Underground Ltd v Citylink Telecommunications Ltd [2007] EWHC 1749 (TCC). In paragraph 16 of that judgment he indicated that the best procedure was when there were applications under both section 68 and section 69 AA 1996 was for the former to be heard before the latter. The logic is that there is no point in dealing with permission to appeal if the Award is going to be set aside. However given the fact that the hearing was already listed before me there was no point in adjourning the matter as that would simply cause further delay.

The relevant rent review provisions are to be found in clause 6 of the Lease as follows:-

“6.1

Rent Review

With effect from each review date the principal yearly rent payable by the Tenant will be (a) the principal yearly rent payable immediately before the relevant review date or (b) in the case of the first review date £1,205,762 or (c) in the case of the second review date £1,397,656 or (d) the open market rental value (as hereinafter defined) of the demised premises at the relevant review date whichever is the greater.

6.2

Open Market rental value

The open market rental value means the annual rent at which the demised premises might reasonably be expected to be let on the open market at the relevant review date

(A)

on the following assumptions at that date:-

(i)

that the demised premises:-

(a)

are available to let on the open market without a fine or premium by a willing landlord to a willing tenant for a term of 15 years or the residue then unexpired of the term of this Lease (whichever be the longer);

(b)

are to be let subject to the terms of this Lease (other than (aa) clause 7 of this Lease (bb) the amount of the rent hereby reserved but including the provisions for review of that rent;

(c)

are fitted out in accordance with the attached specification immediately for occupation and use for the installation of the tenant’s trade fittings;

(d)

may be used only for the Permitted Use if at the relevant review date the demised premises are being used as a department store or otherwise may be used for any of the purposes permitted by this Lease as varied or extended by any licence granted at the request of the Tenant pursuant thereto (other than a personal licence);

(e)

are to be let as a whole with vacant possession or in the event any sub-tenancy or sub-tenancies are in existence at the relevant review date are to be let:

(i)

as a whole with vacant possession or

(ii)

as a whole subject to and with the benefit of the relevant sub-tenancy or sub-tenancies but otherwise with vacant possession

whichever shall produce the highest open market rental value

(ii)

that the covenants herein contained on the part of the Tenant have been fully performed and observed;

(iii)

that no work has been carried out to the demised premises by the Tenant or any sub-tenant which has diminished the rental value and that in case the demised premises have been destroyed or damaged by any of the insured risks they have been fully restored; and

(iv)

that no reduction is to be made to take account of any rental concession which on a new letting with vacant possession might be granted to the incoming tenant for a period within which its fitting out works would take place;

(B)

but disregarding:-

(i)

any effect on rent of the fact that the Tenant its sub-tenants or their respective predecessors in title or lawful occupiers have been in occupation of the demised premises

(ii)

any goodwill attached to the demised premises by reason of the carrying on thereat of the business of the Tenant its sub-tenants or lawful occupiers their respective predecessors in title in their respective businesses; and

(iii)

any increase in rental value of the demised premises attributable to the existence at the relevant review date of any improvement to the demised premises or any part thereof carried out with consent where required otherwise than in pursuance of an obligation to the Landlord or is predecessors in title by the Tenant its sub-tenants or their respective predecessors in title or by lawful occupiers during the term provided that if at the relevant review date any part or parts of the demised premises have been sub-let the works to create such sublet parts or parts shall not be disregarded pursuant to this clause 6.2 (B) (iii) (except where the demised premises are being valued on the assumption that they are to be let as a whole).

(iv)

any effect on rent attributable to the presence of any asbestos in the demised premises at the relevant review date.

6.3

Referral of disputes

The Landlord and the Tenant shall endeavour to agree the open market rental value as at the relevant review date but if it has not been agreed by the day three months before the relevant review date the question of the open market rental value at the relevant review date may be referred by the Landlord or the Tenant to the determination of a referee acting as an arbitrator pursuant to the Arbitration Act 1996.

6.4

Referee

(A)

The arbitrator (who shall be a surveyor having a minimum of ten years national experience in the letting and valuing of property of a similar character and size to the demised property) may be agreed by the Landlord and the Tenant or if not agreed by them within one month from the nomination in writing of an arbitrator by one party to the other is to be appointed on the application of either party by the President for the time being of the Royal Institution of Chartered Surveyors.

(B)

If the arbitrator relinquishes his appointment or dies or if it becomes apparent that he will be unable to complete his duties the Landlord and Tenant may agree upon or either of them may apply to the President for a substitute in his place which procedure may be repeated as many times as necessary.

(C)

If the President is unable or unwilling to make an appointment at the time of application the appointment may be made by the Vice-President or next senior officer of the Institution then able and willing to make it or if no such officer is available by such officer of such professional body as the Landlord designates.

(D)

If either the Landlord or the Tenant fails to pay any part of the fees and expenses of the arbitrator payable by it within seven days of demand and the other party may pay it and the amount so paid shall be repaid by the party chargeable on demand.”

It will be seen that the Arbitrator’s task was to determine the open market rental value of the premises in accordance with clause 6. The rent then payable is the higher of £1,397,656 or the open market rental value. The Award sought to be challenged determined a higher rental than the baseline figure.

The ability to challenge an Award under the various Arbitration Acts has been curtailed successfully. Section 69 AA 1996 provides as follows:-

“69 Appeal on point of law.

(1)

Unless otherwise agreed by the parties, a party to arbitral proceedings may (upon notice to the other parties and to the tribunal) appeal to the court on a question of law arising out of an award made in the proceedings.

An agreement to dispense with reasons for the tribunal's award shall be considered an agreement to exclude the court's jurisdiction under this section.

(2)

An appeal shall not be brought under this section except—

(a)

with the agreement of all the other parties to the proceedings, or

(b)

with the leave of the court.

The right to appeal is also subject to the restrictions in section 70(2) and (3).

(3)

Leave to appeal shall be given only if the court is satisfied—

(a)

that the determination of the question will substantially affect the rights of one or more of the parties,

(b)

that the question is one which the tribunal was asked to determine,

(c)

that, on the basis of the findings of fact in the award—

(i)

the decision of the tribunal on the question is obviously wrong, or

(ii)

the question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and

(d)

that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question.

(4)

An application for leave to appeal under this section shall identify the question of law to be determined and state the grounds on which it is alleged that leave to appeal should be granted.

(5)

The court shall determine an application for leave to appeal under this section without a hearing unless it appears to the court that a hearing is required.

(6)

The leave of the court is required for any appeal from a decision of the court under this section to grant or refuse leave to appeal.

(7)

On an appeal under this section the court may by order—

(a)

confirm the award,

(b)

vary the award,

(c)

remit the award to the tribunal, in whole or in part, for reconsideration in the light of the court's determination, or

(d)

set aside the award in whole or in part.

The court shall not exercise its power to set aside an award, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration.

(8)

The decision of the court on an appeal under this section shall be treated as a judgment of the court for the purposes of a further appeal.

But no such appeal lies without the leave of the court which shall not be given unless the court considers that the question is one of general importance or is one which for some other special reason should be considered by the Court of Appeal.”

By sub-section (3) the Court is required to be satisfied as regards 4 conditions.

All 4 bases were challenged by the Respondent (“Scottish Widows”).

There was a debate between the parties as to the threshold level required to obtain permission to appeal. Miss Katharine Holland QC who appeared for HOF submitted that the threshold was high and that HOF must show strong prima facie grounds for thinking that the Arbitrator had erred in law (see for example Capital and Counties PLC v Hawa [1991] 2 EGLR 133, 134).

Mr Fancourt QC who appears for Scottish Widows submitted that the threshold was higher than that. He submitted that the test propounded by Miss Holland QC was that under the Arbitration Act 1979 and the standard had been raised even higher under the Arbitration Act 1996. That higher threshold is because he submits any point of law which it is sought to raise before the Appellate Court is one which the tribunal was asked to determine. Under the 1979 Act that was a factor and a matter of discretion see for example Petraco (Bermuda) Ltd v Petromed International SA [1988] 3 All ER 454.

The point of law now must be “fairly and squarely before the Arbitrator whether or not it was actually articulated as a question of law” per Lewison J as he then wasin Safeway Stores v Legal and General Assurance Society [2005] 1 P & CR 9 at paragraph 8. Mr Fancourt QC submits that this change was a policy decision further to restrict the ability of the parties to a reference to challenge the Award and thereby to ensure finality. It was intended to prevent the parties from raising new arguments of law and in particular arguments of law of the type familiar in appeals against factual decisions or in judicial review cases such as “no evidence to support conclusion reached” or “no reasonable arbitrator could have reached the decision that…..” or “irrational”. He further submitted that it is no longer open to a party to contest the findings of fact of an Arbitrator by contending that there was no evidence or insufficient evidence to support the findings.

Thus he submits that the combination of statutory requirements (a) the Arbitrator’s findings of facts are taken as the basis for assessing whether the Arbitrator obviously erred on a point of law and (b) the point of law in question is one the Arbitrator was asked to determine means that leave to appeal cannot be granted on the ground that the Arbitrator reached the wrong conclusion on the evidence that was before him unless he was asked to rule on a question of admissibility or otherwise.

There are further obstacles because he submits permission to appeal cannot be given unless the Arbitrator was obviously wrong and unless the contrary determination on the issue by the Court will substantially affect the rights of one or other of the parties and it is both just and proper to decide it in all the circumstances. Those are the other criteria set out in section 69 (3) set out above.

He referred me to 2 decisions. The first is a decision of Mr Justice Cooke sitting in the Commercial Court Demco Investments & Commercial SA v SE Banken Forsakring Holding Aktiebolag [2005] 2 Lloyds Rep page 650. The second decision was a decision in the TCC Court of Ramsey J in London Underground Ltd v Citylink Telecommunications Ltd [2007] EWHC 1749 (TCC). On this point Miss Holland QC referred me to a decision of Etherton J as he then was in Guardcliffe Properties Ltd v City and St James [2003] EWHC 315.

In that decision the question was raised as to whether or not a decision made by the Arbitrator without any evidence was an error of law within the principle of Edwards v Bairstow [1956] AC 14 and could be raised in an application for permission to appeal under section 69. On the facts Etherton J held that the point of law had not been raised (paragraph 55).

Prior to that he referred to the Capital and Counties decision of Millett J. He was also referred to a contrary decision of Steyn LJ in GeogasSA v Tramond Gas Ltd [1993] 1 Lloyds Reports 215 at pages 231-232. That too was an obiter decision and not considered by the other members of the Court of Appeal. It was applied by Evans-Lombe J in the decision of Secretary of State for the Environment v Reed International PLC [1994] 1 EGLR 22.

Etherton J’s conclusion was that the latter decision was strictly per incuriam since the Capital and Counties decision was not cited. Accordingly he expressed the view that had it been necessary to do so he would have felt bound to follow Millett J’s decision because he was not clear that the decision of Millett J’s was plainly wrong.

Cooke J in the Demco case was referred to Guardcliffe and the observations of Steyn LJ. At paragraph 43 he said this :-

“43 I have been referred to Guardcliffe Properties Limited v  City & St. James [2003] 2 EGLR 16 in which Etherton J expressed the view, obiter, that an error of law within the Edwards v  Bairstow principle could be an error of law under section 69 of the 1996 Act. He relied upon the earlier decision of Millett J and considered a decision of Evans Lombe J in Secretary of State for the Environment v  Reed International [1994] 1 EGLR 22 as decided per incuriam, in ignorance of Millett J's decision. I regret that I am unable to agree with him and respectfully note that the point does not appear to have been argued before him by reference to the opening words of s 69(3) (c), nor to the wording of the DAC report. The learned judge did not have, in the event, to consider the scope of section 69 because the challenge under section 68 succeeded, but he drew no distinction between the 1979 Act and the 1996 Act, whereas the terms of section 1(2) of the earlier Act do not include the words to which I have drawn attention with which section 69 (3)(c) commences. For the same reasons I disagree with the decision of HH Judge Thornton QC in Fence Gate Ltd v NEL Construction Ltd [2001] 82 Con LR 41.

44 Under the terms of the 1996 Act therefore Steyn LJ's dictum in relation to Arbitrations under the 1979 Arbitration Act, with which Neill LJ was impressed, without agreeing, takes full force and effect.

45 In the same decision, Steyn LJ, at page 228 said: -

"The Arbitrators are the masters of the facts. On an appeal the Court must decide any question of law arising from an Award on the basis of a full and unqualified acceptance of the findings of facts of the Arbitrators. It is irrelevant whether the Court considers those findings of fact to be right or wrong. It also does not matter how obvious a mistake by the Arbitrators on the issues of fact might be, or what the scale of the financial consequences of the mistake of fact might be. That is of course an unsurprising position. After all, the very reason why parties conclude an arbitration agreement is because they do not wish to litigate in the Courts. Parties who submit their disputes to arbitration bind themselves by agreement to honour the Arbitrator's Award on the facts. The principle of party autonomy decrees that a Court ought never to question the Arbitrator's findings of fact."

Ramsey J in London Underground Ltd was also referred to the same difference. He referred to the decision of Cooke J and his conclusion (paragraph 62) and he adopted the reasoning of Cooke J in Demco (paragraph 65).

There is thus a conflict between the 3 decisions. However in my view I prefer the reasoning of Cooke J and Ramsey J supported by the obiter observations of Steyn LJ. I accept Mr Fancourt QC’s submission that the intent behind the 1996 Act was to curtail factual challenges being disguised as legal submissions.

Equally section 69 (as clarified by Lewison J in the Safeway case) requires the questions of law to be fairly and squarely put to an arbitrator.

In that context it is somewhat surprising to note that in his directions that led to the Award (paragraph 8) the Arbitrator indicated that the parties had not to date raised any points of law which might be material to the decision. When he delivered his Award (paragraph 3.4) he stated “I am not required to decide any issues of law”.

Despite that HOF now find 4 points of law which he failed to deal with. He was never corrected in respect of his Award. Further as will appear from this judgment the legal issues which HOF complain about do not find any significant analysis either in the submissions to the Arbitrator or in his Award.

The 4 issues are as follows:-

“Issue 1: Whether the Arbitrator, in determining the rent review for the ‘House of Fraser’ department store at 140-142 Briggate, Leeds ("the Department Store”) under the terms of a Lease dated 30 July 1999 (“the Lease”) made between BL Fraser Limited as landlord and House of Fraser as tenant, was entitled to have regard to the benefit of post–review date hindsight evidence, rather than the actual approach of the hypothetical retailer/lessee prior to the review date of 30 July 2009.

Issue 2: Whether the Arbitrator, in considering what approach a hypothetical lessee would take in agreeing a rent for the Department Store as at 30 July 2009 was entitled to take into account speculative subjective assumptions as to the actions and approach of the actual tenant, House of Fraser, some 10 years earlier when the actual 40 year lease term was granted.

Issue 3: Whether the Arbitrator was entitled, when determining the approach of the hypothetical lessee, to take into account unfounded speculative findings as to the position of the actual lessee, House of Fraser, in 2009.

Issue 4: Whether the Arbitrator was entitled, when applying the rent review provisions in the Lease, to treat certain assertions as to the position of Next plc as constituting relevant evidence in applying the rent review provisions in the Lease.”

I will deal with those issues in turn.

The complaint by HOF under this issue is that the Arbitrator when assessing the rent as at 30^th July 2009 wrongly took into account post review date evidence contrary to well established principles (see for example Handbook of Rent Review paragraph 7.9.5 and Industrial Properties (Barton Hill ) Ltd v AEI Ltd (unreported on this 7^th April 1976)).

The complaint is in respect of page 21 of the Award where the Arbitrator said this:-

“The state of the market and the difficulties in sourcing capital at and leading up to the subject valuation date have been well documented. Well respected researchers such as Verdict endeavoured in very difficult circumstances to predict the implications for the retail sector. In relation to their findings for the department store sector it is clear that a number of their forecasts and conclusions were overly pessimistic and that the major store operators, John Lewis, Debenhams and the incumbent tenants House of Fraser, to their credit achieved much better performance than was forecasted by Verdict.

The Respondent's support for, and reliance on, the Verdict report is, I find, misplaced. The general state of the market and the general findings of the Verdict report would not have had a universal impact to depress store activity throughout the UK. One of my tasks is to assess potential tenant demand for the subject store In order to assess its rental value. It is, therefore, more relevant for me to focus ort the actual market dynamics for large space in Leeds in July 2009 than to consider the national economic picture or the general forecast for the department store sector.”

It is submitted that it was impermissible for him to rely on what had actually happened in respect of forecasts post the review date.

With respect I do not believe that is what he is doing. The Verdict report was put in by HOF as showing that the markets as at the Review Date were lowered. It must be remembered that this was a review on paper only. The Verdict report was put in by GBA Grimley the experts acting for HOF (as set out in paragraph 9.6 of their report). It was responded to on behalf of Scottish Widows by GG Finn (paragraphs 9.6-9.9). In 9.6.8 Mr Finn said this:-

“The predictions of Verdict in May 2009 have now been proven to be wholly incorrect for the department store sector. As a consequence there is no necessity to spend any time on the detail of this research. Mr Oates [of Grimleys] would have you believe the whole sector was in crisis – far from!!”

I do not accept that the Arbitrator by accepting that comment on the Verdict report is accepting inadmissible post valuation date evidence. It goes to the credit of the Verdict report which was put before him by HOF. Given the parties’ decision not to have an oral hearing the Arbitrator must weigh the evidence. All factual matters including the weighing of evidence are in the sole purview of the Arbitrator.

In view of the authorities that I have referred to above it is no longer permissible to argue that there is an error of law because the Arbitrator failed properly to consider the evidence or admitted inadmissible evidence. That too is within the remit of the Arbitrator.

It is significant further as I have shown in the Award the Arbitrator did not understand he was asked to answer any questions of law. Nor as the two reports summarised above show did either party suggest he was asking a question of law.

Even if I am wrong on the analysis of the competing cases under sections 69 above in my view it cannot be said that the question of law was in the words of Lewison J as he then was one that was fairly and squarely before the Arbitrator. It was not even articulated. For HOF’s submissions to be correct it must be necessary for the Arbitrator to realise there was a question of law even though the parties did not mention it and then deal with it. In my view that does not fall within the parameters set out by Lewison J in the Safeway case.

Accordingly this issue fails because I am not satisfied that the question is one which the Tribunal was asked to determine (section 69 (3) (b)). In addition I do not on the basis of findings of fact have the view that the decision of the Tribunal on this question was obviously wrong (section 69 (3) (c) (i)).

Finally I do not accept that the decision will substantially affect the rights of one or more parties (section 69 (3) (a)). I will elaborate on that issue when I come to examine comparable evidence put before the Arbitrator. I do not believe that any of the grounds satisfies that hurdle. Nor in the circumstance of the case is there anything in my view which shows that it is just and proper for the Court (as opposed to the Arbitrator) to determine the issue.

The complaint here is that HOF contends that the Arbitrator erred in law in determining the approach which a hypothetical lessee would take in agreeing a rent as at 30^th July 1999 by reference to speculative subjective assumptions as to the actions and approach of the actual tenant HOF 10 years earlier when the lease was entered into.

This criticism refers to page 24 of his Award where he said this:-

“In common with the Claimants and Respondents I am satisfied that the incumbent tenants House of Fraser must by precedent be treated as a "willing tenant” for the subject store and would in actuality have been a willing tenant for the subject store. It is of relevance that they committed to a 40 year lease on the subject store in 1999 with an option to renew. They would have done so in the expectation that during this period other potentially larger store opportunities would arise and so must have been satisfied that the subject store was large enough and prime enough to hold its market position. In point of fact up to, and as at, July 2009 no such larger store opportunities had arisen and the subject store presented the only opportunity for the foreseeable future of securing store representation in Leeds.”

Once again to my mind this involved a valuation of the competing reports before him. Grimley’s at paragraph 9.13.5 set forward the view that in the instant case they were unable to identify an alternative user for the subject other than HOF. Mr Finn in his report in response maintained the view that HOF would be a front runner. He also expressed the view that minimal capital expenditure would be required as the store was already fitted out and ready for merchandise. Further in paragraph 10.3 he once again identified that there were no other alternative premises.

Grimleys replied to that (paragraph 6.2 of their points of reply) where they said they did not disagree with Mr Finn’s observation but the case of FR Evans Ltd v The English Electric Co Ltd [1978] 1 EGLR 93 governed the situation in that it is possible for the Arbitrator to find there is only one bidder for the premises. There was no question of law that he was asked to decide in my view. Both sides’ experts understood what the law was but put different factual scenarios to the Arbitrator in accordance with that question of law. The Arbitrator was thus therefore merely determining whether or not HOF would be a bidder, or whether HOF would be a sole bidder or whether HOF (and appears later) Next would be potential bidders. He decided that factual issue and it is impossible in my view to find any question of law that he was implicitly asked and failed to answer.

Accordingly issue 2 fails completely.

It also fails for the other factors in section 69 (3) that I have referred to in issue 1.

The complaint here is that the Arbitrator erred in law in determining the approach of the hypothetical lessee and reference to unfounded speculative findings as to the solution of HOF. The reference is to page 24 of the Award where he said this:-

“In these circumstances I am persuaded that regardless of their financial position and the state of the market House of Fraser would have wanted the subject store and a budget would have been allocated for any additional capital expenditure (over and above the fitted specification) for fitting out. They would also be aware that at least one other party (Next) would want the store and so would not as suggested by the Respondents bid at the lower range of values.”

Once again it is impossible to discern a question of law that was put before him in that paragraph in accordance with the Safeway decision. No question of law was expressly put and I cannot with respect to HOF find any question of law in that paragraph. The competing evidence was put before him to consider the position of HOF in relation to its willingness to take the premises at the rent review date. That is a question of fact. That is solely for the remit of the Arbitrator and this to my mind is a classic attempt to find a question of law when it is really a question of fact. The issue therefore fails first because questions of fact like that are now solely for the Arbitrator as I have determined. In case I am wrong, it fails the test having been asked to be considered by the Arbitrator with in the Safeway parameters.

The issue also fails for the above alternative reasons in respect of section 69 (3).

The complaint about issue 4 is that he reached his decision on the basis of speculative conclusions about the actions of a particular company namely Next Plc. He said this (page 24 of his Award):-

“I am persuaded that Next must also be considered as a potential tenant for the subject store. Whilst 114,516 sq ft exceeds their optimum requirement for Leeds (75,000 sq ft) Next have shown a willingness to acquire stores in this; size range in High Street type locations (CF Cardiff, Liverpool). Details have been provided to me as to the terms on which Next have now agreed to take a 52,000 sqftstore in Trinity Quarter and the terms on which they would have been Interested in the subject store. As there are potential Issues of confidentiality in respect of the Trinity Quarter figures I have not recorded them in this Award……..”

He was provided with competing evidence as to the attitude of Next. It seems to me once again that all he is doing is assessing that evidence and coming to a particular conclusion. There is to my mind no question of law which he has been impliedly asked to determine. Obviously no express question of law was sought to be determined by him.

This issue fails for those substantial reasons. It also fails for the above reasons that I have set out in respect of issue 1.

HOF submitted in their skeleton argument that the issue was a substantial one because on account of the errors of law the rent was determined at a figure of £152,344 per annum in excess of the stepped rent of £1,397,656. For the rent review period of 5 years it was submitted that amounted to £761,720.

There is no evidence to support such a submission. That appears clear when one looks at the Award. In reality there were 2 competing bases. HOF sought to value the premises in accordance with rentals that passed in respect of department stores in shopping centres. That gave a rental figure according to HOF of £1,150,000. Scottish Widows comparables were on the basis of a comparison with large stores drawn from major cities in prime High Street type locations. On that basis they contended that the rental was £1,850,000.

The primary decision of the Arbitrator was to reject HOF’s contention that the rent should be assessed on the basis of a department store in a precinct. That meant that HOF has no comparable evidence to challenge the comparables which the Arbitrator has accepted as being the relevant ones namely the ones put forward by Scottish Widows. However it is important to appreciate that the Arbitrator did not simply accept those comparables. His rental was over £300,000 less than the rent contended by Scottish Widows. The reasons for that are set out in his summary paragraph in particular at page 40 where he said:-

“the above three principal comparables require adjustment when applied to the subject store to reflect rental compression (they are each smaller than the subject store) and the difference in Valuation date.”

That led him to conclude a rental of £13 per ft² as opposed to the rental sought by Scottish Widows of £15 per ft². In so determining he plainly gives effect to his clear understanding that the rentals as at the review date had depreciated from the comparables but not catastrophically as the Verdict report did.

It seems to me therefore that this demonstrates that the Arbitrator clearly had in mind the duty before him and determined the issues on the evidence put before him. It is not open to HOF to challenge those factual decisions by dressing them up (as I determine) as illegitimate supposed legal arguments.

For all of the above reasons I will refuse permission to appeal.

I will hear submissions on the parties as to the order that should be made as a result of this determination.