Eur Ing Professor Geoffrey M. Beresford Hartwell CEng

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Consulting Engineer, Adjudicator, and Chartered Arbitrator
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Fox and others v P G Wellfair Ltd; Fisher and another v P G Wellfair Ltd

Arbitration — Duty of arbitrator — Dispute arising out of defective construction of flats — Appointment of arbitrator who was a member of the Bar and also a chartered architect and chartered surveyor — Builders of flats went into liquidation but purchasers had guarantee of National House-Building Council — Flat-dwellers represented by counsel and solicitors before arbitrator, but no representation of builders or council — Arbitrator rejected a large volume of expert evidence and awarded only a fraction of the amount claimed — Duty of arbitrator when only one party is represented — Different kinds of arbitrations — Extent to which an arbitrator is entitled to use his own knowledge and experience, whether as an aid to the interpretation of expert evidence or as an independent source of evidence — Arbitrator in the present case an expert, not a purely legal arbitrator, but the arbitration was not a commodity arbitration or an informal arbitration — Arbitrator was entitled in this case to use his special knowledge to understand the evidence, but not to provide evidence which one party, the builders, had not chosen to provide for themselves — The arbitrator erred in failing to put his views, which clearly challenged the basis of the expert evidence, to the witnesses for comment — An expert arbitrator can use his general expert knowledge without disclosing it, but if he forms a view contrary to the evidence which, if not disclosed, would take the parties by surprise, he should bring it to their attention — This is particularly so where only one party is present and the arbitrator is in effect putting the case for the other party — In the present case the arbitrator gave no indication that he might reject in large measure the evidence given by qualified expert witnesses — Held that there had been a failure of natural justice and the arbitrator was guilty of technical misconduct — Appeal from decision of Ackner J (as he then was) dismissed — Arbitrator removed, award set aside and another arbitrator ordered to be appointed

The proceedings reported related to both a main arbitration affecting a number of long leaseholders and an individual arbitration in which the claimants were Mr and Mrs Fisher. The flats whose defects gave rise to the arbitrations were at Dolphin Court, Woodlands, London NW11. The present appeals were from decisions by Ackner J. The appellants were nominally the builders of the flats, P G Wellfair Ltd, but they were in liquidation and the effective contest was between the National House-Building Council (formerly the National House-Builders Registration Council), which had guaranteed the builders’ work, and the present respondents, the leaseholders. The arbitrator whose award was challenged by the leaseholders was Mr Spencer Carlton Rodgers ARICS LRIBA LMTPI, barrister.

Gerald Butler QC and Alastair MacGregor (instructed by Stafford Clark & Co) appeared on behalf of the appellants; Derek Wood QC and Miss Joanne Moss (instructed by S Rutter & Co) represented the respondents.

Giving judgment, LORD DENNING MR said: Dunn LJ, in the course of his valuable judgment, has set out the facts in detail. I will only state sufficient to illustrate the point of law that arises.

In 1969 a block of flats was built in London. Seven storeys high: 30 flats all told. There were many defects in construction. The flat-dwellers claimed damages against the builders. The dispute was submitted to arbitration. An arbitrator was appointed. He was of acknowledged competence and skill. He conducted the proceedings before him with the utmost diligence and the utmost good faith. The hearings spread over 10 days. Experts of high repute gave evidence. The arbitrator knocked down the amount from £93,000 to only £13,000. The flat-dwellers were so aggrieved that they made complaint against the arbitrator. The judge upheld their complaint. He has removed the arbitrator for misconduct. The judge has set aside his award and has ordered some other person to be appointed in his place. It is a serious matter for the parties because of all the time and money that have been wasted. It is a serious matter for the arbitrator. That goes without saying.

The most extraordinary feature of the whole case is, however, that only the flat-dwellers were represented at the hearings before the arbitrator. The builders were unrepresented. Yet the flat-dwellers lost and the builders won. The arbitrator knocked down the claim by 86%.

The building agreement

The block of flats was called Dolphin Court, Woodlands, London NW11. The developers sold the flats to purchasers on long leases for 125 years at prices ranging from £7,000 to £10,000 a flat. The building agreement was made by each purchaser with the builders, P G Wellfair Ltd. They were registered with the National House-Builders Registration Council (now known as the National House-Building Council). That is the equivalent of an insurance company which guarantees the due performance by the builders of their obligations under the agreement. P G Wellfair Ltd is now in compulsory liquidation. So the only remedy is against the National House-Building Council. They agreed ‘to honour any award made by an arbitrator . . . as a consequence of the failure of the builder to make good defects in the dwelling notified in writing within two years from the date of the certificate and consequent upon non-compliance with the council’s requirements if for any reason the builder shall fail to honour such award or judgment’.

The arbitrator

The flat-dwellers complained of many defects within the two years. They formed a residents’ association to protect their interests. In 1973 they applied for the appointment of an arbitrator. The presidents of the Royal Institutes appointed Mr Spencer Carlton Rodgers. He is a chartered architect and a chartered surveyor and a member of the Bar.

Points of claim were delivered on March 15 1974. Points of defence on July 12 1974. The principal hearings took place before the arbitrator in October and November 1977. The flat-dwellers were represented by leading counsel. The builders were not represented at all. Nor was the National House-Building Council. They decided of their own free will to let the proceedings go undefended.

The arbitrator’s point of view

The arbitrator has set down in an affidavit his view of his duty:

In a case where one party is unrepresented, I had always understood that it was the duty of the tribunal to see to it that the interests of the unrepresented party were protected and that no award was made against that party unless the claim was properly proved. I was therefore careful to handle the case, and did to the best of my ability handle the case, with this in mind.

The applicants during the main hearing called two witnesses to fact and four experts, to all of whose evidence I listened carefully. Where clarification was required, I intervened, so that the effect of their evidence was clear to me. However, I did not feel that it was part of my duty to indicate at the hearing that I did or did not accept any particular evidence. That is in my submission a matter for subsequent consideration and decision and for the award.

On his understanding of his duty the arbitrator rejected a large part of the evidence of Mr Thomas Akroyd who was a structural engineer of the highest qualifications. He had been a vice-president of the Institution of Structural Engineers. The arbitrator rejected a large part of the evidence of Mr Ramsay Wilson, a Fellow of the Royal Institution of Chartered Surveyors, who made a schedule of defects and estimated the cost of remedy. He rejected a large part of the evidence of Mr Jonathan Steer who was a chartered quantity surveyor and an examiner for the Quantity Surveying Division of the Royal Institution. He rejected a large part of the evidence of Mr Eric Shapiro who gave evidence of consequential damage.

In rejecting their evidence, the arbitrator did so without giving any indication to the witnesses or to counsel for the flat-dwellers that he was rejecting it. If he had given them any indication of his views, they might well have been able to correct them. That is the principal point in the case.

The law

There are some arbitrations in which the arbitrator is expected to form his own opinion and act on his own knowledge without recourse to evidence given by witnesses on either side: such as an arbitrator who is to decide as to whether goods are up to sample; see Mediterranean & Eastern Export Co Ltd v Fortress Fabrics (Manchester) Ltd (1948) 64 TLR 337. But there are other arbitrations in which the arbitrator is expected to receive the evidence of witnesses and the submissions of advocates and to be guided by them in reaching his conclusion: such as arbitrations on shipping contracts or on building contracts. In such cases the arbitrator is often selected because of his knowledge of the trade — so that he can follow the evidence and the submissions. But he must act judicially. He must not receive evidence in the absence of the other party, and so forth. In the present case if the defendants had been represented I have no doubt that the plaintiffs’ experts would have been cross-examined so as to throw doubt on their findings and on their opinions: and the defendants would have called experts to support the line of cross-examination. The arbitrator would then have been able to form a judgment — based on evidence other than his own.

I cannot think it right that the defendants should be in a better position by failing to turn up. Nor is it right that the arbitrator should do for the defendants what they could and should have done for themselves. His function is not to supply evidence for the defendants but to adjudicate upon the evidence given before him. He can and should use his special knowledge so as to understand the evidence that is given — the letters that have passed — the usage of the trade — the dealings in the market — and to appreciate the worth of all that he sees upon a view. But he cannot use his special knowledge — or at any rate he should not use it — so as to provide evidence on behalf of the defendants which they have not chosen to provide for themselves. For then he would be discarding the role of an impartial arbitrator and assuming the role of advocate for the defaulting side. At any rate he should not use his own knowledge to derogate from the evidence of the plaintiffs’ experts — without putting his own knowledge to them and giving them a chance of answering it and showing that his own view is wrong. Such is the way in which we dealt in the pensions cases when a medical expert was himself a member of the tribunal: see Moxon v Minister of Pensions [1945] KB 490 and Starr v Minister of Pensions [1946] KB 345 at pp 353-4.

I am afraid that the arbitrator fell into error here. He felt that it was his duty to protect the interests of the unrepresented party — in much the same way as a judge protects a litigant in person. But in a case like this I do not think it is the duty of the arbitrator to protect the interests of the unrepresented party. If the defendants do not choose to turn up to protect themselves, it is no part of the arbitrator’s duty to do it for them. In particular he must not throw his own evidence into the scale on behalf of the unrepresented party — or use his own special knowledge for the benefit of the unrepresented party — at any rate he must not do so without giving the plaintiffs’ experts a chance of dealing with it — for they may be able to persuade him that his own view is erroneous.

The arbitrator in an affidavit uses an illuminating sentence. He says:

I formed the view that the claim was grossly exaggerated and, if I may say so, I thought a large part of it was a ‘try on’.

If that were a correct view of the claim, it was for the defendants to come before the arbitrator and show it to be so. By not coming to the arbitration they virtually admitted that it was a genuine claim which was not exaggerated but only needed assessment. They ought not to leave it to the arbitrator to pull the irons out of the fire for them: or to take up cudgels on their behalf. For thereby they expose him to the charge of being partial to their side and not impartial as he ought to be.

To my mind therefore the National House-Building Council are, in a sense, the authors of all the trouble. By not turning up, they placed the arbitrator in an awkward position. They left him without any assistance. This led to his making a mistake. If they had been represented, I am sure he would have made no mistake at all. In the circumstances I do not think it fair to say that the arbitrator himself has been guilty of misconduct. What has happened is that the proceedings have been misconducted: and the arbitrator has to take responsibility for it. He has ‘misconducted the proceedings’ within section 23 of the Arbitration Act 1950. The award must be set aside. The arbitrator must be removed and a new arbitrator appointed. I agree with the judge and would dismiss the appeal.
 
Agreeing DUNN LJ said: The claimants in the main arbitration, as it has been called, are 28 purchasers of long leases of flats built by the respondents at Dolphin Court, NW, in the 1960s. Each purchaser entered into an identical form of house-purchaser’s agreement with the builders, supplemental to the contracts for the purchase of their leases, between the purchaser and the selling company Lizco Ltd, an associated company of the respondents. The house-purchaser’s agreement in effect gave the purchasers a contractual remedy against the builders guaranteed by the National House-Builders Registration Council (now the National House-Building Council, which I will call NHBC), so that remedy was effective in the event that the builders became insolvent. We were told that in general building societies will not lend money for the purchase of newly built houses unless the purchaser enters into such an agreement, so that almost all purchases of new houses up and down the country are covered by agreements in this form, and their terms are of general importance.

By the agreement the builder on behalf of NHBC undertakes that the council will perform certain undertakings set out in a schedule. These are to honour any award made by an arbitrator or any judgment of a court as a consequence of the failure of the builder to make good defects in the dwelling (which includes by definition the common parts) notified in writing within two years of a certificate issued by NHBC, and consequent upon non-compliance with the requirements of NHBC if for any reason the builder fails to honour such award or judgment. The requirements of NHBC are set out in a technical handbook rather like local authority building regulations and issued from time to time. The undertakings are expressed to be subject to certain exclusion clauses not relevant to this case, and to an overall limit of liability.
 
By the agreement itself the builder warrants that the dwelling has been built in an efficient and workmanlike manner, and so as to comply with NHBC requirements. The purchaser is obliged to report in writing any defects in the building consequent upon any breach by the builder of NHBC requirements as soon as possible after they appear. The agreement further provides that no claim shall be13 entertained in respect of the common parts unless it is made by the purchaser jointly with all other purchasers, although a claim by a defined corporation shall be deemed to be made by the purchaser jointly with all other purchasers. In this case there was such a corporation, effectively a tenants’ association called Dolphin Court (Woodlands) Ltd of which all purchasers were shareholders.

The house-purchaser’s agreement contained an arbitration clause, clause 12, in the following terms:

If any dispute shall arise between the purchaser and the builder concerning any matter or thing arising hereunder or in connection herewith such dispute shall be and is hereby referred to the arbitration and final decision of an arbitrator to be appointed at the request of either party by the Presidents of the Royal Institute of British Architects and of the Royal Institution of Chartered Surveyors from a panel of arbitrators nominated by them and such reference shall be deemed to be a reference to arbitration within the meaning of the Arbitration Act 1950 . . .

By a second schedule to the agreement certain terms and conditions were to be observed by the purchaser. By clause 2(a) it was provided:

The purchaser shall notify the council in writing as soon as practicable after its appearance of any damage which the council is liable to make good or defray the cost of making good under paragraph (2) of clause (B) of the First Schedule hereto. (b) Before his claim is investigated the purchaser shall pay to the council an investigation fee which will be based on current professional charges. The council will then arrange for an investigation under the supervision of a chartered member of the Royal Institute of British Architects or the Royal Institution of Chartered Surveyors or a member of any other appropriate professional institution who will if the claim is found valid in principle prepare a schedule of the work necessary to make good the damage . . . (d) In any other case where the purchaser does not agree with the findings of the council but nevertheless wishes to pursue his claim the matter shall be referred to an arbitrator appointed by the Presidents for the time being of the Royal Institute of British Architects and of the Royal Institution of Chartered Surveyors from a panel nominated by them. Any claim shall be deemed to be made on the basis of the above conditions.

In this case cracks appeared in the building both before and after completion. The machinery under the second schedule to the agreement, which I have just read, was put into operation and on March 14 1973 Mr Fisher on behalf of Dolphin Court (Woodlands) Ltd applied for the appointment of an arbitrator. The application was made on the standard form which recites certain defects in the building which have appeared and been reported

by me to the builder . . . Now therefore I hereby apply to the NHBRC to request the President of the Royal Institute of British Architects and/or of the Royal Institution of Chartered Surveyors to appoint an arbitrator from a panel nominated by them who shall be completely independent of the NHBRC. He will conduct proceedings as provided by the Arbitration Act 1950 . . . Terms of reference. To consider and determine whether the defects set forth in the Schedule hereto are consequent upon non-compliance by the builder with the standards currently approved by the NHBRC and to make an appropriate award. As a condition of the appointment I hereby agree as follows: (1) That the arbitrator’s award will be in complete satisfaction of my claim. (2) That I have read ‘Disputes about Defects’ published by the NHBRC and understand that the arbitrator may in his discretion initially require a deposit . . .

The booklet ‘Disputes about Defects’ contains the following relevant provisions under ‘Arbitration’, paragraph 20:


We were told that a panel of arbitrators is appointed by the presidents of the RIBA and RICS for NHBC arbitrations. The panel covers the whole country and an arbitrator for the area concerned is nominated by the presidents for a particular reference. In this case Mr Rodgers, a member of the panel, was nominated. After confirming that he was on the panel, the purchasers accepted the nomination. On September 3 1973 the arbitrator held his first appointment and gave directions. The arbitration was concerned with the common parts of the dwelling. On April 29 1974 points of claim in the main arbitration were delivered. The claim was framed in summary in this way:

In consequence of the respondents’ said breaches of contract the claimants have suffered loss and damage and will incur expense in having remedial work carried out to the said dwellings and the block, and have suffered damage in that the value and/or their beneficial enjoyment of their flats is substantially diminished thereby.

An unpriced schedule of defects prepared by a surveyor was delivered with the points of claim. It contained 148 items, many of them small, which were subsequently remedied by the builders and seen by the arbitrator on May 14 1975. Some 80 defects remained unremedied. On July 12 1974, points of defence were delivered consisting of in effect a denial. There was also a request for further and better particulars of the points of claim. On May 24 1976 a compulsory winding-up order was made in respect of the building company. In July 1976 the liquidator indicated that the builders did not wish to appear or be represented in the arbitration. On October 27 1976 the Companies Court gave the purchasers leave to continue the arbitration, and also another action against the architect. Between 1974 and 1976 the arbitrator visited the premises on four occasions, including Mr Fisher’s flat at his request. Meanwhile, five other arbitrations had been instituted by individual purchasers, including the Fishers, relating to defects in their own flats.

These arbitrations had been referred to the same arbitrator, Mr Rodgers. On April 14 1977, further and better particulars of the points of claim in the main arbitration were delivered. These particularised the claim in this way: the claim for remedial work was quantified in the figure of £57,242.69 plus VAT. Then it was said:

In addition, after completion of the said works there will be a continuing (but markedly reduced) tendency to movement within the brickwork. The defect will continue to impose upon Dolphin Court (Woodlands) Ltd the necessity of carrying out recurring maintenance work of an exceptional character throughout the term of the claimants’ leases, to the cost of which the claimants will continue to have to contribute. The claimants estimate that such works of maintenance will be required every five years and that they will cost (at current prices) approximately £6,000 at each occasion.

3. The claimants further say that, as a result of the irrevocable nature of the defect described . . . the capital value of their flats has been permanently diminished by about 7 1/2 per centum.

4. The claimants also claim (a) general damages for the inconvenience and loss of amenity which they will suffer during the period of the necessary remedial works . . . and (b) the amount of the extra insurance premiums they will have to pay in respect of the protection and security of their property during the said period.

In May and June 1977 there were interlocutory meetings, at one of which the chief conciliation officer of the NHBC was present. NHBC were given leave to attend the hearing and leave to apply to take part in it. On October 24 1977 the hearing began. No representative of NHBC was present. The purchasers were represented by counsel and solicitors. Therefore the claim was undefended. But the arbitrator rightly made it clear that the purchasers must prove their claim strictly. This involved not only proof of the defects, the cost of remedying them and the consequential damage, but also of proving that the defects fell within the technical requirements of NHBC, and that the purchasers had complied with the various provisions as to notice and time contained in the house-purchaser’s agreement. Moreover, as no documents were admitted in the defence, it was necessary for the purchasers to prove all contractual and other documents strictly. Accordingly the purchasers called six witnesses, two witnesses of fact including Mr Fisher and four experts, Mr Akroyd, a consulting engineer, Mr Wilson, a chartered surveyor who prepared the original schedule of defects, Mr Steer, a quantity surveyor who costed the schedule, and Mr Shapiro, a chartered surveyor and valuer who dealt with the14 consequential damage. Each witness produced reports, schedules and costings covering his particular discipline. Not surprisingly the hearing took seven working days, and Mr Fisher made a contemporary note of the proceedings which appears in our bundle.

After the hearing the arbitrator had another view of the premises. One of the issues was whether under NHBC requirements the builders were obliged to construct the roof so that it was of sufficient strength to take roof gardens. It was admitted that the roofs were not of sufficient strength, and there was a good deal of evidence on the assumption that if they were required to be of sufficient strength to take the roof gardens then what would be the cost of strengthening the roofs?

In April 1978 there was a further hearing in the arbitrator’s chambers. On May 24 the purchasers delivered written submissions on the roof strengthening issue. On May 24 and 25 the hearing of the individual arbitrations took place, and on May 25 there was a further hearing in the main arbitration. On August 3 the purchasers’ counsel submitted proposed alternative forms of award on the basis either that the arbitrator accepted or rejected the roof strengthening as a necessary requirement. In the autumn of 1978 the purchasers’ solicitors were pressing for an award. On December 7 1978 the arbitrator published his first interim award. It ran to 12 pages, and I will read some of the material parts of it:

27. That in constructing the block of flats the respondents failed to comply with a number of the technical requirements of the NHBC whereby the structure of the block of flats (and of certain of the flats therein) was and is defective.

28. That the defects include defects in the ‘common parts’ of the building within the meaning of the NHBC house-purchasers’ agreements.

29. That although before the compulsory winding-up order the respondents remedied some of the defects in the ‘common parts’ there were and still are substantial defects that have not been remedied and as to which it will be appropriate for me to make further awards or interim awards.

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31. That the extent of the necessary remedial work will depend on whether the claimants or any of them are entitled to the reconstruction or strengthening of the roof of the eastern end of the building.

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33. That in any event some of the claimants will suffer a greater loss of enjoyment of their individual flats or of the common parts than others, and that the extent of such loss may depend upon whether or not the remedial work includes the reconstruction or strengthening of the herebefore referred to roof.

34(1)  That the fact that the respondents did not provide a roof or roofs capable of use as one or more roof gardens by the lessees or occupants of flats nos 28 and 30 was not a breach by the respondents of the technical requirements of the NHBC and (2) that in assessing the damages, if any, to be paid by the respondents to the claimants, or any of them, in respect of defects in the common parts of Dolphin Court, the claimants are not entitled to the inclusion of an amount to cover the cost of reconstructing or strengthening of roofs to enable such roofs or part of them to support roof gardens.

On January 2 1979 the purchasers’ solicitors wrote saying that they did not intend to apply to the High Court, so there was no request for a special case to be stated in respect of the award relating to the roof strengthening, and no complaint has been made about that in these proceedings.

On April 12 1979 the arbitrator published what he called his third interim award, the material parts of which are as follows:

3. For the purposes of this third interim award I repeat all the findings of fact contained in the above-mentioned interim award

- that is the interim award which I have just read.
4. By paragraph 29 of the interim award I found that notwithstanding that the respondent remedied some of the defects in the ‘common parts’ there remained substantial defects that had not been remedied and as to which it will be appropriate for me to make further awards or interim awards.

Then he made his award, paragraph (3) of which fixed it in the total sum of £13,167. Then paragraph (4):

As I have no jurisdiction to make an award against the respondent in favour of parties other than the claimants it is appropriate that I deduct and I do deduct 4/76 (four seventy-sixth’s) from the above assessment and I apportion the balance of such total damages, as money to be paid to the claimants in the same proportions as the claimants as lessees of their respective flats have covenanted to pay maintenance charges to the Association, Dolphin Court (Woodlands) Ltd.

Accordingly he awarded a total of £12,471 including an amount in respect of interest to the claimants to be made within 30 days of the award.

On the same day the arbitrator published his award in the individual arbitrations. He awarded Mr and Mrs Fisher £1,213 as against a claim of £3,800. He also made awards in the other four individual arbitrations, but there is no complaint about any of those. On May 24 1979 the purchasers, including Mr Fisher, served notices of motion in the main arbitration and in Mr Fisher’s arbitration applying that the arbitrator be removed on the ground of misconduct; alternatively that the awards be set aside on the same ground. The grounds of the application so far as material were, firstly, that the arbitrator ‘failed to determine the questions in dispute in accordance with the unchallenged evidence tendered at the hearing of the reference'; secondly, that he ‘took into account facts and matters which tended to contradict or might have contradicted the said unchallenged evidence without giving the claimants notice or opportunity of dealing with the same'; and, thirdly, that he ‘failed to conduct the said proceedings in accordance with the principles of natural justice’. It is the second and third grounds which were relied upon before the learned judge and in this court.

On December 4 1979 Ackner J (as he then was) allowed the applications and ordered that the arbitrator be removed on the ground of misconduct and the awards be set aside. The ratio of his decision appears at p 28 of his judgment starting at letter C, and was in these terms:

In my judgment the officious bystander, who had had the resilience to listen attentively at all stages of these arbitrations, who had heard the very careful and detailed manner in which every aspect of the claims had been supported both by argument and by evidence, would have been justifiably provoked, on reading the awards, into saying to the applicants, ‘Well, you’ve been badly treated by the arbitrator.’  Translated into forensic language, the arbitrator failed to provide the applicants with a fair hearing, in that he failed to give them any opportunity to deal with the very serious deficiencies which he must ultimately have found in the present action and/or proof of their claim. There must have been major matters of criticism to have resulted in the dismissal of so large a part of the claim. An arbitrator is not, in my judgment, entitled in such circumstances to hide behind his hitherto immunity from giving a reasoned decision and thus enable it to be claimed that since it cannot be established that the deficiency he found was one of fact or law or both the aggrieved party has no remedy. There was, in my judgment, such a mishandling of these arbitrations as was likely to amount to a substantial miscarriage of justice. The proceedings were not conducted in accordance with the principles of natural justice, the applicants being in effect condemned unheard to lose the greater part of their claims.

Before Ackner J and before this court the respondents were represented by leading counsel, who were effectively instructed by NHBC.

In the course of his judgment the learned judge dealt with the expertise of the arbitrator at p 25, where he said this:

The arbitrator, while stating that he himself was an architect and chartered surveyor, explained that these were essentially paper qualifications and that since 1946 he had been a practising member of the Bar. He was thus sitting as a legal arbitrator and not as a lay expert.

This comment was based on one sentence in a note of the proceedings taken by Mr Fisher, which is in the following terms:

(Arbitrator) Acquired his knowledge since 1946. He is an architect and chartered surveyor on paper, but since 1946 as counsel.

In the context in which that remark was made, it seems to me to have been no more than a pleasantry by the arbitrator. Although the arbitrator had sworn an affidavit before the application was heard by Ackner J, the parties agreed that it should not be put before the judge. In this court both parties agreed that we should see it and also a second affidavit sworn after the judgment.

It appears from the affidavits and also an affidavit from Mr Johnstone, who is employed by the RIBA, that Mr Rodgers holds the qualifications LRIBA and ARICS. He was senior assistant valuer to the Gloucestershire County Council from 1942 to 1944. He was called to the Bar in 1946, since when he has been in practice specialising in building disputes. In 1969 he was placed on the NHBC Panel on the recommendation of the presidents of the RIBA and the15 RICS. Since 1970 he has been appointed arbitrator in more than 200 building disputes. He is one of the NHBC arbitrators for London. It is quite clear from that evidence, which was not before the judge, that the arbitrator was an expert as that word is understood, and not simply a legal arbitrator. The reference to the arbitration incorporating the pamphlet ‘Disputes about Defects’ made it clear to the parties that the arbitrator would be an expert. In my view the judge fell into error in not regarding him as an expert. In any event it would be unusual to remove an arbitrator for misconduct without giving him an opportunity to be heard.

But the fact that the arbitrator was an expert does not conclude this appeal. The question remains, especially in the unusual circumstances of this case where there was no opposition to the claim, how far an arbitrator’s expertise extends and how far an arbitrator is entitled to use the expertise he has to arrive at different conclusions from those of the expert witnesses, without putting his views to them so that they may have the opportunity of dealing with them.

Mr Butler for NHBC relied on the following four propositions of law:

(1)  It is not misconduct for an arbitrator to come to an erroneous decision whether of fact or law, even if that decision is unsupported by evidence.

(2)  It is not misconduct for an arbitrator to award a sum which is either excessive or inadequate.

(3)  It is not misconduct for an arbitrator to refuse to accept unchallenged evidence.

(4)  Where an arbitrator is appointed partly for his own expertise he can in coming to his award use that expertise.

Mr Wood for the purchasers accepts those propositions as far as they go, but says that they do not go far enough to cover the facts of this case. He submitted that by the manner in which the arbitration was conducted the arbitrator kept the purchasers in the dark as to his doubts, and misled them. He submitted that the general principles of natural justice were applicable to arbitrations, whether defended or undefended, and whether the arbitrator was an expert or not. He submitted that all parties were entitled to know the case that they had to meet and to comment upon it. He submitted that it was the duty of an expert arbitrator to hear both sides, and if he was proposing to take any facts into account which did not appear from the evidence it was his duty to put them to the witnesses. He submitted that in this case the arbitrator in awarding a much lower figure than that suggested by the experts for the purchasers should have put the basis upon which that figure was arrived at to the expert witnesses so that they might have an opportunity of dealing with it. He submitted that in failing to do that the arbitrator was in breach of the principles of natural justice, and that amounted to misconduct.

The bona fides of the arbitrator are not in question. He disputed that as an arbitrator he was under the duty suggested by Mr Wood and found by the judge. He set out his position as he saw it in his affidavit of June 9 1980 sworn after the judgment. He said:

11. . . . I did not feel that it was part of my duty to indicate at the hearing that I did or did not accept any particular evidence. That is in my submission a matter for subsequent consideration and decision and for the award. As appears below, I did in fact reject some of the evidence of opinion tendered to me.

12. Nor did I feel that there was a duty on me, or indeed that it was the practice of the court or of an arbitration tribunal, to tell the applicants, or to reconvene the hearing to tell the applicants, that they had not proved the whole or part of their case and give them a further opportunity to do so. I took the view on the basis of the adversary or accusatorial system which prevails in England that it was for the party to prove his claim, and not for me to proceed on the continental or inquisitorial system to make enquiries and to call or recall evidence (apart, as I have said, on matters of clarification). Had the applicants been unrepresented I might have taken the latter course, but these applicants had prepared their case fully and were represented by counsel and solicitors, and, as I have said, they called two witnesses to fact and four experts. The main hearing lasted more than five days and every aspect was fully canvassed. Certainly the applicants were not ‘condemned unheard’.

The question in this appeal is whether the arbitrator was right in the view that he formed as to the law, or whether the judge was right.

This question seems to me at the end of the day to turn on the application of the principles of natural justice. It was a very unusual situation. In the first place this was not a commodity arbitration where the arbitrator is usually concerned to decide whether the quality of goods is in accordance with the contract, or whether the bulk corresponds to the sample. In such a case the arbitrator is chosen by the parties for his expertise in relation to those particular goods. Nor was this an informal arbitration. On the contrary, the proceedings were extremely formal; they were conducted as if in a court of law, and evidence was given on oath. The arbitrator insisted on everything being strictly proved, and therefore he himself was bound to observe the formalities of legal proceedings. Finally, the claim was undefended at the hearing. That did not mean that the arbitrator was obliged to accept the claim without question. Nor did it mean that he was under an obligation to protect the party who was not present. His function was to hold the scales as evenly as he could and to act fairly and judicially in the conduct of the hearing. I accept that in the circumstances it was a difficult role for the arbitrator. What should he have done and how should he have approached the problem?

In the first place it is a matter for the arbitrator whether he accepts or rejects the evidence, and his award cannot be set aside on the ground of misconduct because there is no evidence to support it. The proper remedy in such a case is to require a case to be stated on the point of law as to whether there was evidence or not (see Oleificio Zucchi SPA v Northern Sales Ltd [1965] 2 Lloyd’s Rep 496). And where the onus lies on the claimant to prove his case or part of it, eg to prove a contract or trade custom, the arbitrator is not bound to accept even uncontroverted evidence, and may find that the evidence given still falls short of establishing the case to be proved. In Lewis Emanuel & Son Ltd v Sammut [1959] 2 Lloyd’s Rep 629 Pearson J (as he then was) at p 634 said this:

. . . in my view, it is a quite untenable suggestion to say that there is any evidence of misconduct on the part of the umpire in coming to the conclusion to which he did come. That is the first ground, and, putting it very shortly, my main basis of decision that a court, or tribunal of fact, is not bound to accept evidence, and may find that evidence given, even if the evidence is accepted in the sense that it is true evidence, may still obviously fall short of establishing the allegation in support of which it is intended to be called.

But this does not help solve the problem where the arbitrator has to choose between rival views of experts, especially when one of the experts is himself.

It is well established that where an arbitrator hears evidence in the absence of either or both parties, his award will be set aside on the ground of misconduct, unless perhaps it can be shown that the evidence would not have affected the award (see Walker v Frobisher (1801) 6 Ves 70; Re Brook, Delcomyn and Badart (1864) 16 CBNS 403 where it was held that the principle applied to mercantile as well as legal arbitration; Re O’Conor and Whitlaw’s Arbitration (1919) 18 LJKB 1242; Royal Commission on Sugar Supply v Trading Society Kwik-Hoo-Tong (1922) 38 TLR 684; and Eastcheap Dried Fruit Co v Gebroeders Catz [1962] 1 Lloyd’s Rep 283). On the analogy of those cases, it seems to me that an expert arbitrator should not in effect give evidence to himself without disclosing the evidence on which he relies to the parties, or if only one, to that party. He should not act on his private opinion without disclosing it. It is undoubtedly true that an expert arbitrator can use his own expert knowledge. But a distinction is made in the cases between general expert knowledge and knowledge of special facts relevant to the particular case. In Mediterranean and Eastern Export Co Ltd v Fortress Fabrics (Manchester) Ltd [1948] 2 All ER 186, Lord Goddard CJ at p 187 said:

The more serious question that was argued was that neither side had tendered evidence with regard to damage and, therefore, the arbitrator had no material before him on which he could fix the amount which the sellers were entitled to receive. This would be a formidable, and, indeed, fatal objection in some arbitrations. If, for instance, a lawyer was called on to act as arbitrator on a commercial contract he would not be entitled, unless the terms of the submission clearly gave him power so to do, to come to a conclusion as to the amount of damages that should be paid without having evidence before him as to the rise or fall of the market, as the case may be, or as to other facts enabling him to apply the correct measure of damage, but, in my opinion, the case is different where the parties select an arbitrator, or agree to arbitrate16 under the rules of a chamber of commerce under which the arbitrator is appointed for them, and the arbitrator is chosen or appointed because of his knowledge and experience of the trade. There can be no doubt that with regard to questions of quality and matters of that description an arbitrator of this character can always act on his own knowledge.

Then the Lord Chief Justice cited various authorities including Jordesan & Co v Stora, etc Aktiebolag (1931) 414 L Rep 201, the judgment of Branson J, who said:

Now, I think that the fact that this umpire was an expert in the timber trade and was appointed because he was such an expert must not be lost sight of. I think the parties must be taken to have assented to his using the knowledge which they chose him for possessing; I do not mean to say knowledge of special facts relating to a special or particular case, but that general knowledge of the timber trade which a man in his position would be bound to acquire.

So if the arbitrator is relying on general expert knowledge, there is no need to disclose it. O’Connor LJ gave a good example in argument. An arbitrator is required to value a bull killed by the negligence of one of the parties. If the expert arbitrator relies on his general knowledge of the value of bulls, including fluctuations in the market known to anyone who studies the market, there is no need to disclose it. But if he has recently sold an identical bull for a certain sum, it is necessary to disclose that to the parties. Or if the dead bull is found by the arbitrator, unknown to the parties, to be suffering from some disease or injury which reduces its value, it is necessary to disclose that fact to the parties. So in assessing rents, an expert arbitrator can rely on his general knowledge of comparable rents in the district. But if he knows of a particular comparable case, then he should disclose details of it before relying on it for his award. ]

This view, which is based on the general principles of natural justice, is supported by authority. Societe Franco Tunisienne D’Armement-Tunis v Government of Ceylon [1959] 1 WLR 787 was a case in which there were two advocate arbitrators and an umpire. It was held that the umpire had misconducted himself in a technical sense ‘since his view of the law as applied to the facts before him involved a radical departure from the cases as presented by the parties, and raised complicated issues of law on which further evidence might be required; and as on the evidence before the court it did not appear either that that change was made sufficiently clear to the owners, or that they were given a sufficient opportunity to reframe their case in the light of an unexpected development, the proceedings were unsatisfactory and contrary to natural justice’. Pilcher J sitting in the Court of Appeal, who had wide experience of commercial and admiralty arbitration, at p 805 said:

I think that this — the view of the umpire — was such a radical change in the position that it is one that (the umpire) should have made perfectly clear to both arbitrators.

Then at the bottom of p 805 the learned judge said:

I think the probabilities are overwhelming in favour of the view that (the umpire), while he no doubt had these things in mind, never brought them clearly, if he brought them at all, to the attention of the two arbitrators. That being so, I cannot help feeling that the trial of this matter was unsatisfactory, because Mr Ellis — one of the arbitrators — might have presented an interesting and important argument to the umpire and might have invited the umpire to state his award in the form of a special case. But he never had that opportunity, on the view which I take of the facts. Consequently, I think that the hearing before the umpire was of so unsatisfactory a nature that this court is justified in saying that the case must be remitted to the umpire to consider further the whole question as to the amount of demurrage, if any, which was due to the owners at Colombo.

That principle seems to me to apply to questions of fact as much as to a question of law. If the expert arbitrator, as he may be entitled to do, forms a view of the facts different from that given in the evidence which might produce a contrary result to that which emerges from the evidence, then he should bring that view to the attention of the parties. This is especially so where there is only one party and the arbitrator is in effect putting the alternative case for the party not present at the arbitration.
 
Similarly, if an arbitrator as a result of a view of the premises reaches a conclusion contrary to or inconsistent with the evidence given at the hearing, then before incorporating that conclusion in his award he should bring it to the attention of the parties so that they may have an opportunity of dealing with it. In R v Paddington and St Marylebone Rent Tribunal, ex p Bell London & Provincial Properties Ltd [1949] 1 KB 666, Lord Goddard CJ at p 682 said this:

It is no part of the duty of this court to review a finding of fact by the tribunal, though it is certainly remarkable that it should be found that flats of this description, erected, as we were informed, very shortly before the late war, and the plans of which must have been passed and approved by the London County Council, do not conform to present-day standards, when it is notorious that the building of this class of flats has not been allowed since the war. But not a word was said by anybody during the hearing, or at any time before the decision was given, as to this being a ground for reduction of rent. It has, in fact, taken the advisers of the applicants entirely by surprise, and surely in common fairness, if this was to be considered by the tribunal they ought to have given the applicants some opportunity of dealing with it. That this could ever have been in the minds of the borough council in referring these matters is, of course, impossible to suppose, and as we have already said, not a single word was said by the representative of the borough council as to any of the grounds on which the tribunal was invited to act.
 
In our opinion, to take into account a matter of this kind, of which no sort of intimation had been given to the applicants, brings this case exactly within the decision of the House of Lords in Board of Education v Rice [1911] AC 179, the judgments in which are so well known that we need not set them out. On that ground alone, we think that the eight determinations in this case, even if the reference were unobjectionable, would have to be quashed.

That was in the context that before the tribunal entered on the hearing there was an inspection of the flats by the members. In giving their decision, the tribunal said:

In fixing the rents of the various flats, it is not out of place to point out that these flats are not up to modern standards. In no single flat is the ceiling more than eight feet from the floor. This is less than is required by present-day standards.

Lord Goddard continued:

It appears from the affidavit of the chairman of the tribunal that during the course of the inspection they had some conversation with a Mr Marshall, described as the manager of Park West — the block of flats concerned — and another member of the staff and one or other of them, it is not clear which, agreed that the height of the ceiling which was measured, was less than that required by present-day standards.

So much for the principles. How do they apply to the facts of this case?  Apart from the question of the roof strengthening, the central issue in the main arbitration was the cause of the cracks in the building. Mr Akroyd, a structural engineer, gave two reports and also gave evidence. He found that the cracks were caused by differential thermal movement between the concrete frame of the building and the brick infills, concrete having a different coefficient of expansion from brick under temperature and that movement joints should have been incorporated in the structure. Mr Akroyd said that this was irremediable although the movement could be reduced by certain works which he described as very expensive. At the conclusion of his report under the heading ‘Remedial Measure’, he said:

It is virtually impossible at this juncture to introduce any movement joints into the structure; these should have been built into the structure initially. The cracking of the building due to thermal movement cannot be eliminated. The only scope for improvement lies in reducing the range of temperature experienced by the structural members.

Most benefit would be obtained by providing additional insulation to the roof structure, but this is a costly exercise. It would be necessary to remove the existing asphalt, lay insulation material and then lay a new asphalt finish. On the basis of similar work carried out elsewhere recently, in the Home Counties, we would anticipate that the cost could be of the order of £10,000.

Because of the load-carrying characteristics of the roof the existing asphalt must be removed before the new asphalt and insulation can be laid. This will add to the expense of remedial measures since precautions will be necessary to protect the building during the work otherwise the top-floor flats would be open to penetration of water when the asphalt is removed. This extra expense could increase the cost of the work by a further £2,000.

That report was made on November 3 1975. Mr Akroyd was a very well qualified structural engineer. He was vice-president of the Institution of Structural Engineers and he had a wide experience in structural engineering. His view of the effect of the thermal movement was the basis of the costings of the quantity surveyor for the remedial works, a total figure of £63,659 including £25,066, the cost of the insulation of the roofs at the date of the arbitration. It was also the basis of Mr Shapiro’s assessment of damages as to the necessity for a maintenance fund to deal with further movement which he put at £29,444 and also the loss of enjoyment likely to be suffered by the purchasers while the extensive work was being carried out, and the depreciation in the capital value of their flats, which was described as a ‘stigma’.

In his affidavit the arbitrator broke down his total award. He awarded £1,250 for work on the underside of the ring beams, £5,500 for the insulation to the roofs, and £3,250 for the sealing of the ring beams. Those were the principal items, together with an item of £1,007 for contingencies, VAT and interest. Under ‘Roof Insulation’ he had the note ‘Allowed above £5,500.’  Under ‘Quinquennial Maintenance’ he had the note: ‘Both items disallowed. With the defects which had already been remedied by respondents and with the allowances made for defects above, the maintenance would be no more than would be required in any ordinary building.’  Then:

‘Stigma — Having regard to my findings above, having regard to the fact that the flats had been occupied happily by the applicants for eight or nine years and having regard to the minor nature of the claims which had been substantiated, I found that there was no question of any ‘stigma’ or reduction in value of the building by reason of the alleged defects.’  Then: ‘Loss of Enjoyment — Having regard to the minor nature of the claim allowed, I formed the view that there was no justification for this item.’  Then in paragraph 15:
As I have said before, I considered a claim of nearly £200,000 to be grossly excessive in respect of a building whose cost had been about £280,000 in 1969-71 and which had been occupied by the purchasers ever since . . . . It was a building in which a substantial amount of remedial work had been carried out and the remainder of which was allowed for in my awards. Such work should last for between 10 and 20 years and much of it may not ever need to be carried out again. Moreover, the insulation should limit very much any thermal movement.

The only explanation the arbitrator gave for awarding a total of something over £13,000 as against the claim put forward by the experts appears in the affidavit in one sentence in paragraph 14 where he says: ‘. . . I formed the view that the claim was grossly exaggerated and, if I may say so, I thought a large part of it was a ‘try on’.’

An analysis of the arbitrator’s affidavit shows that in accepting that work was required to insulate the roofs he must have accepted Mr Akroyd’s evidence that there was differential thermal movement and that that was the cause of the cracks. So this was not a case where the arbitrator was rejecting the expert’s evidence in toto. On the other hand, he must have rejected Mr Akroyd’s evidence as to the irremedial nature of the defects and have formed the view that they could be remedied very much more easily and cheaply than Mr Akroyd or any other of the expert witnesses had said. It is not sufficient in my view for the arbitrator to say simply that the claim was grossly exaggerated. He may be right. The original claim for the roof insulation in March 1976 was £10,162. But that is nearly double the figure which he awarded. In order to reach that view, he must have made a comparison between the figures put forward by the experts and his own figures based on some scheme which he had in mind for the necessary remedial works. In those circumstances, natural justice required that he should have put his alternative scheme and alternative costings to the experts to give them an opportunity of dealing with them. The issues in the arbitration were not simply questions of general expert knowledge. They involved the separate disciplines of a structural engineer, a quantity surveyor, a chartered surveyor, and a valuer. The arbitrator’s expertise did not on the face of it cover all of those disciplines. I am, however, content to assume that he had sufficient expertise to enable him in effect to challenge the evidence of the experts, but his views should have been clearly put to them. In failing to take that course, in my view the arbitrator was guilty of technical or legal misconduct in failing to observe the principles of natural justice.
 
But in this case the arbitrator went further than simply keeping silent as to his own opinion of the claim. During the hearing he made no criticism of the expert evidence except in relation to the roof strengthening, and the validity of the claim for damages for loss of amenity and inconvenience. During the course of the hearing he said that he would decide the case on the evidence, and at its conclusion he said that he would consider the evidence in depth and might recall some of the witnesses, but he did not do so although he asked for and was given written submissions on the question of roof strengthening. He stated that it would be contrary to the purchasers’ interests for him to break down his award. He suggested that he might treat the maintenance fund as part of the depreciation in value of the building due to the thermal movement, thereby implying that he was minded to award a sum for the latter but not the former as well.

All this supports Mr Wood’s submission that the arbitrator lulled the purchasers into falsely believing that he had broadly accepted the main contentions of their experts and, although he might reduce some of the heads of claim, he did not have it in mind to award a figure which must have been based on his own private opinion of the feasibility of some entirely different scheme of remedial works. In other words, not only did he keep his private opinion to himself, but he also positively suggested that he had no alternative view to put to the experts.

The same considerations apply to a lesser extent to Mr Fisher’s arbitration. In any event, in view of the misconduct in relation to the main arbitration, I do not think that the award in Mr Fisher’s arbitration can stand either. Mr Fisher must have lost confidence in the arbitrator by reason of his conduct of the main arbitration.

In those circumstances, I agree with the judge that the award must be set aside, that the arbitrator must be removed, and that another arbitrator be appointed to hear the reference in accordance with the terms of the arbitration clause in the house-purchaser’s agreement.

For those reasons I would dismiss this appeal.

Agreeing that the appeal should be dismissed, O’CONNOR LJ, whose judgment was read in his absence by the Master of the Rolls, said: In 1969 a property development company Lizco Ltd engaged Wellfair Ltd to build a block of 30 flats called Dolphin Court in North London. When the flats were built long leases were sold off to purchasers and the common parts of the building vested in a company in which the leaseholders were the shareholders to manage the block. The purchasers of the leases each entered into what is known as a house-purchaser’s agreement. This is an agreement which gives each purchaser contractual rights against the builder and the National House-Building Council guarantees the liability of the builder under the agreement. The agreement has an arbitration clause submitting disputes arising thereunder to the arbitration of an arbitrator to be appointed by the presidents of the RIBA and RICS from a panel of arbitrators nominated by them.

In the present case disputes did arise and the leaseholders contended that the building was defective. The major dispute was between the leaseholders jointly and Wellfair Ltd in respect of the common parts of the building. Some leaseholders including Mr Fisher were in dispute with Wellfair Ltd in respect of their own flats. The leaseholders invoked the arbitration clause and in May 1973 Mr Spencer Rodgers was duly appointed arbitrator. During the next two or three years it seems that the parties tried to reach some agreement. Wellfair Ltd carried out a lot of remedial work putting right a large number of minor defects. In February 1976 a compulsory winding-up order was made to wind-up Wellfair Ltd. In due course the leaseholders obtained the leave of the court to proceed with the arbitration. The official receiver decided to take no part in the arbitrations. That left the NHBC as guarantors. They decided to take no part in the arbitrations, merely to pay whatever award was made.

The arbitrator told the leaseholders that they would have to prove their claims strictly. They prepared their evidence with that end in view. The hearing began on October 24 1977 and lasted seven days. Counsel were called in April 1978 and again in May. No award came forth until December 1978 when an interim award on one issue was published. The main issues in the joint arbitration were decided in an award published in April 1979. The arbitrator awarded the leaseholders £12,471 including some interest against a claim for some £93,000. Mr Fisher got an award for £1,213 against a claim for £3,817.

It looked to the leaseholders and Mr Fisher that something had gone very wrong. They formulated two main complaints, that the arbitrator:

(i)  Took into account facts and matters which contradicted the unchallenged evidence without giving the leaseholders notice or opportunity of dealing with the same.

(ii)  Failed to conduct the proceedings in accordance with the principles of natural justice.

On these grounds the leaseholders moved the court to set aside the awards and remove the arbitrator for misconduct. At this stage the proceedings became defended — it is obvious that the NHBC supported the defence of the awards. The judge would have none of it; he held that there had been a grave breach of the rules of natural justice, set aside the award and removed the arbitrator.

Now an appeal is made against that decision. In my judgment the learned judge came to a correct decision. It is well settled law that it is misconduct in an arbitrator if he hears evidence in the absence of a party or the parties. In effect that is what has happened in this case. A major complaint of the leaseholders depended on the evidence of Mr Akroyd, a structural engineer with very high qualifications. He said that the cracks which appeared all over the building were caused by the fact that the co-efficient of expansion for concrete was different from that for brick and that due to defective design or construction the concrete frame had not been jointed to the brickwork to allow for this difference. He said that the trouble could not be cured but could be ameliorated by doing expensive work of insulation especially to the roof. This trouble gave rise to three heads of claim: (i) The cost of insulation and repairs of the existing cracks. (ii) A sinking fund to meet the cost of repairing future cracking. (iii) Compensation for the diminution in the value of the building. These matters were spoken to in detail by Mr Akroyd supported by a quantity surveyor and two chartered surveyors, all distinguished professional men. The insulation alone was £10,000, and all three claims came out at well over £30,000.

In an affidavit which was not before the judge but has been put before us the arbitrator has broken down his award. He says he allowed £5,500 for the insulation and rejected both heads (ii) and (iii). The effects of this must be that the arbitrator has decided that some unidentified work can be done for £5,500 which will permanently cure the defect. He can only have come to this conclusion by in effect giving evidence to himself in flat contradiction to the evidence of the leaseholders’ professional witnesses, in particular Mr Akroyd. Those witnesses were given no chance to consider and comment upon the arbitrator’s theory, whatever it was. He may be right, but the issue has not been tested fairly.

This is not a case of a trade arbitrator deciding whether the bulk complies with the sample. In the present case, because of something said in the notes of evidence, the judge thought that this arbitrator only had paper qualifications and was therefore a legal arbitrator. I think that not having had the arbitrator’s thesis, whatever it was, put to the unchallenged highly qualified witnesses is a grave miscarriage of the rules of natural justice. It is also quite contrary to the settled law that arbitrators must not take evidence in secret.

Nothing that I say in this case must impugn the right of arbitrators to use their own knowledge in appropriate cases; that is essential to arbitration in very many cases. It will be right in most cases where the NHBC arbitration clause is involved that the arbitrator from the skilled panel will use without fear his own ability. That is the ordinary building contract dispute. That freedom of decision which arbitration submissions have always given to arbitrators does not go to support the award in this case.

I would dismiss the appeal.

The appeal was dismissed with costs. Leave to appeal to the House of Lords was refused.