The Elements of Justness and Fairness in the Procedure - Essay Example

Introduction The phrase “time is of the essence” basically means that performance should be made by the parties to the contract, at or within the period stipulated in the contract. In the case of a rent review clause time has been made an effective consideration that is to be taken note off in case of any due business interaction between the tenant and the landlord. They can either maintain a reasonable time period amongst themselves in their agreement or will have to follow the rule maintained in the statute. Discussion of the Annex Focusing on clause 6.1, we can say that this fundamentally bestows upon the landlord his right to enjoy the share of profit accruing from the increase of the value of his property in the market or any other which rises by virtue of him being the landlord. It empowers the landlord to review the rent payable to him after an interval of five year and each period of five years thereafter. This term is referred as the “date of review” and is computed from the date of the commencement of the term and the date of expiration of each period. This five year time has been designed to protect the tenant. In the absence of this time period it might be possible for the landlord to charge the tenant a higher amount every now and then. It may also prompt the landlord to even evict the already residing tenant for a tenant who is ready to pay more. It further contends that the landlord must notify the tenant of his this intention to charge him with a new, increased and revised rent. Such a notice must be written and must be sent prior to less than 6 months and not more than 12 months to or after each date of review, underlying the intention to do the decided. Such a notice served as mentioned aforesaid is called as the “Review Notice” and would cause the basic rent to increase to an amount as was specified in the Review Notice, from and after such date of review. Thereafter the tenant has been given a time frame of twenty-eight days after the receipt of the Review Notice, within which he may serve a counter notice on the Landlord calling him for any negotiation and thereafter shall make best efforts to reach a mutual agreement as to the amount of the revised rent which shall represent the open market value of the demised premises at each date of review. This provision too has a stipulated time to protect the landlord from any undue delay due to the lethargic conduct of the tenant or any other excuse made by him with a mala-fide intention. This provision would enable the landlord to get a quick recourse to get his desired revised amount, because if the tenant fails to serve such notice within this time it he would be deemed to have assented to the same. Clause 6.2 defines this “open market value” at each date of review to be that amount which may be agreed between the Landlord and the Tenant or determined in accordance with clause 6.3. The amount decided mutually with the consent of the landlord and tenant must represent the best rent at which the demised premises might be reasonably expected to be let out for a term of years equal to that for which the demise was originally granted (except in cases of rents) on the same terms contained here, by a willing lessor to a willing lessee with vacant possession and without taking any fine or premium and taking no account of any goodwill attributable by reason of any trade or business carried on by the Tenant or any sub-tenant, any effect of any improvements carried out by or on behalf of the Tenant or any under tenant with the written consent of the Landlord and any effect on the rent due to the fact that the Tenant or any under tenant may have been in occupation of the demised premises in all other respects on the term and conditions of these presents. Clause 6.3 deals with the provisions applicable in case the Landlord and the Tenant are unable to agree on the amount of the revised rent within two months from the date of the service of the Review Notice. The revised rent must be then decided by an independent surveyor mutually agreed upon by both the parties hereto. This condition is designed to prevent any kind of mischief by the parties against each other. In the absence of this time frame, it could have been possible that one of the parties could get this matter in going for years by not assenting to it. Therefore this provision of appointment of an independent party agreed upon by both the sides is an apt solution in this case. It would check any kind of arbitrariness and would dispose off the matter to both the parties’ satisfaction. In the event of failure by the parties to agree upon the same within the period of three months from the date of service of the Review Notice by a surveyor, who is nominated by the President of the Royal Institution of Chartered Surveyors, at the instance of the Landlord; the decision of such Surveyor shall be binding on both parties. This again speeds up the matter and thus helps in its quick disposition. The fees payable to the Surveyor shall be borne and paid by the parties in such shares and manner as determined by him. Clause 6.4 provides that if prior to the date of review, the amount of revised rent is not being agreed upon by the parties and thereafter determined in accordance with clause 6.3, then the amount of rent payable immediately prior to the date of review shall continue to be payable till the date when the amount of the revised rent has been determined. Thereupon the tenant shall pay to the Landlord a sum equal to any increase in the said rent calculated from the relevant date of review.  This clause makes good to the landlord any loss which he sustained by virtue of not increasing the rent from the date of review and the time period for which such a retrospective operation is applicable is also just for the tenant. Clause 6.5 purports that if the amount of the revised rent payable on or from any date of review shall have been agreed to be determined as aforesaid but the Landlord is restricted from obtaining the full amount by virtue of any statutory enactment like any Act of Parliament applicable retrospectively or prospectively, any instrument regulation or order made thereunder or deriving validity therefrom and any governmental or public or local policy, then on and from every such occasion upon which such enactment is modified removed or relaxed so as to enable the Landlord to obtain and receive the balance or any part thereof of the full amount of the revised rent, the basic rent shall be increased by the maximum amount permitted under such enactment until the full amount of the revised rent is obtained and received by the Landlord. Whenever a revised rent has been ascertained in accordance with clause 6.6, memoranda to that effect must be signed by or on behalf of the landlord and the Tenant and annexed to the annexure and its counterpart, and the Landlord and Tenant must bear their own costs in this respect.  Case Laws In United Scientific Holdings v Burnley BC1, it was held that “deadlines in leases will usually not be treated as being of the essence unless that is made clear expressly or impliedly in the lease. So the deadlines for responding to trigger notices will not usually be of the essence unless this is clear from the lease”2. In McDonald's Property Co Ltd v HSBC Bank plc3, the court held that there is a rebuttable presumption as to the time not being an essence which is applicable as a general principle in all rent review clauses. In Idealview Ltd v Bello4 the court accepted a flexible approach and considered a situation where a delayed rent review can be pursued by the landlord. Similarly in H Turner and Son Ltd v Confederation Life Insurance Co (UK) Ltd5, it was held that “A provision in a rent review clause allowing for service of a late rent review notice after the end of the period for service of a 'main' rent review notice, made time of the essence in relation to a main notice. The effect of the provision was not that the landlord lost the right to renew but that the reviewed rent became payable from a later date than would have been the case if a main notice had been served in time”6. In Starmark Enterprises Ltd v. CPL Distribution Limited (2001)7 , the Court of Appeal overruled Mecca Leisure Ltd v Renown Investments (Holdings) Ltd8and held that indeed time is an essence; “an express deeming provision in a rent review clause which sets out what should happen if a counter-notice is not served within the time limits prescribed by the lease, is sufficient to rebut the presumption that time is not of the essence”9. Barclays Bank plc v Savile Estates Ltd10, it was decided that a tenant can demand to make the time an essence, even if no such time has been stipulated. Both high court and court of appeal, in the case of First Property Growth Partnership LP v Royal & Sun Alliance Property Services Ltd11 while deeming over the meaning of an ambiguous rent review clause term, upheld the meaning making the “time an essence” and discarded the literal meaning. In the case of Iceland Foods plc v Dangoor12, “where a rent review clause required a landlord, or a tenant, to take a step within a specified time, in respect of which time was not of the essence, the other party could make time of the essence by serving an appropriate warning notice. Accordingly, the lessor had not lost the right to a rent review under the lease and the surveyor appointed to determine that reviewed rent was validly appointed”13. Conclusion Therefore we see that time has been made an essence in the statute. The extensive time periods stipulated with respect to the service of the notice, counter notice, agreements, disagreements etc show that effort has been made to make the statute much more effective and quicker. The time constraint, designated in matters of mutual agreement not only give law an upper hand to dispose the suit fairly but also prevents harassment of one party in the hands of the other. In the cases of tenancy it’s quite possible that in the absence of any such statutory obligations the dominating party might take advantage of the dominated. The time so stipulated is remarkably reasonable and makes sure a speedy disposal of cases and swift delivery of justice. Table of Cases 1. Barclays Bank Plc v. Savile Estates Ltd, [2002] All ER (D) 144 (Apr) 4 2. First Property Growth Partnership LP v Royal & Sun Alliance Property Services Ltd [2002]EWHC 305 4 3. H Turner and Son Ltd v Confederation Life Insurance Co (UK) Ltd 4 4. Idealview Ltd v Bello [2009] EWHC 2808 (QB) 3 5. Iceland Foods plc v Dangoor & ors [2002] EWHC 107 4 6. McDonald’s Property Co. Ltd v HSBC Bank plc (2001) LTL 25/4/2001 3 7. Mecca Leisure Ltd v Renown Investments (Holdings) Ltd, [1984] 49 P&CR 12 4 8. Starmark Enterprises Ltd v. CPL Distribution Limited [2001] EWCA Civ 1252  4 9. United Scientific Holdings Ltd v Burnley BC [1978] A.C. 904 (HL) 3 Bibliography and Referencing A Property Career, (2010) Becoming a Chartered Surveyor, [Internet] Available at: http://www.apropertycareer.co.uk/becoming-chartered-surveyor.html (Accessed 8th January 2010) Business Link, (2010) Succession Planning For Your Business, [Internet] Available at: http://www.businesslink.gov.uk/bdotg/action/layer?topicId=5000671197&site=181 (Accessed 8th January 2010) Winckworth Sherwood, (2010) Landlord and Tenant: Rent Review Update, [Internet] Available at: http://www.wslaw.co.uk/publications/download/168/rent-review-update-2010 (Accessed 5th June 2010) PracticalConveyancing.co.uk, (2010) Arbitration: time limits with deeming provisions [Internet] Available at: http://www.practicalconveyancing.co.uk/content/view/7713/1134/, (Accessed 2nd June 2010) Practical Law Company, (2010) Landlord and tenant [Internet] Available at: http://property.practicallaw.com/topic7-103-1318?params=true&num=20&&_charset_=UTF- 8&sv=7-103-1771&isasc=0&sort=date&rt=2-103-2004, (Accessed 2nd June 2010) Lexisweb.co.uk, (2010) Iceland Foods plc v Dangoor and others - [2002] All ER (D) 116 (Feb) [Internet] Available at: http://lexisweb.co.uk/Cases/2002/February/Iceland-Foods-plc-v-Dangoor-and-others, (Accessed 2nd June 2010) Question 2 Introduction Justice thrives on impartiality and the very essence of it is lost if an iota of biasness or partiality gets involved in it in any form. The quintessence behind this “fair award” is the sense of being able to deliver justice in its true sense and this is what has been the aim of all the legal systems from time immemorial. Fairness, impartiality and independence are the cannons of all the justice delivery bodies, be in quasi judicial or judicial in nature. Ronald Dworkin said that ‘if the judgment is unfair, then the community has inflicted a moral injury on one of its members. In the recent years of civilization the trend has shifted more towards “out of court settlements” via such means like arbitration, conciliation etc. the regular courts already have a large number of pending cases and thus the new arrivals too get delayed due to this huge backlogging of cases. Resorting to these off court settlement of disputes methods, not only saves the courts from being over burdened with litigations but also ensures a quick and fair disposal of cases to the parties. Therefore the impartiality of an arbitrator is the most potent feature for the smooth and efficient running of the quasi-judicial processes. However time and again, eyebrows have been raised with respect to it playing its role unbiased. Recently concerns have been expressed with regards to arbitrator’s quality decision making capacity. Arbitrators being the distinct individuals would have different perceptions and prejudices which is bound to be reflected in their respective orders. Their ability to evaluate and interpret and then finally put forth the correct decision is also subject to their individual understanding and prejudices. The major problem that lies with the arbitral orders is their finality and thus mostly it goes unobserved. Therefore even if the arbitrator is appointed mostly by the mutual choice of both the parties, yet it’s possible that the more influential party may induce the arbitrator to bias his decision towards him. This decision bias is greater when the dispute is private rather than when it is public. This leaves the arbitrator with lots of scope to practice his prejudices and nurture his biasness over the parties in question. Even though the parties to the dispute have rights to choose their own arbitrator, yet there is no mention of any law allowing them to dictate the procedure of the same so as to instill the elements of fairness and avoid any kind of arbitrariness. Let us understand this point with an example. Let us say that an arbitrator belongs from the tenant class. Then it is quite obvious that his ideas would be very much influenced by the ideas of that class and he might be prejudiced towards the landlord classes. Here if he adjudicates upon a case where a landlord and a tenant is at disputes, it would be quite natural if his sympathy bends towards the tenant irrespective of him being at fault and this bias mindset would definitely compromise with the justness of his decision. The terms like biasness and partiality are very difficult to comprehend especially where they are not prima facie evident. Therefore the social and economical rearing of the arbitrator is an important factor influencing his award. Even the International Law on arbitration has not been able to define biasness as a state of mind. Therefore we see that partiality arises where an arbitrator favors one of the parties or where he is prejudiced in relation to the subject-matter of the dispute and does compromises with the award. The entire idea behind this “quick disposal of justice” would be defeated if the arbitral orders like ordinary judicial orders would be made subject to appeals. Therefore awards are only legible to appeal when the miscarriage of justice is on the face of it. To check the arbitrator’s biasness his position has to be made independent by all means. He should not be related to either party in professionally, socially or financially or he should not hold any kind of pecuniary interest with respect to the subject. The state has made certain guidelines and would not enforce the awards unless it is satisfied that such an award has been made in good faith and keeping in view the justice, equality and good conscience. The arbitrator too like any other body is subject to rules of natural laws and the underlying norms of justice. The arbitrators award can be challenged if it’s against “ordre public” because rules of natural justice propounds that arbitrators not only have to be impartial by themselves but also they should not have any interest attached with respect to the parties or with the subject matter of disputes. An award tainted with bias or partiality would usually be snubbed enforcement and be set aside on ground of public policy.  Bias could either be actual or imputed bias. While actual bias is difficult to prove, proof of imputed bias relies on the concept of the existence of justifiable doubt. Most of the domestic laws and international laws both provide that an arbitrator should be impartial and if there are ‘justifiable doubts’ as to their impartiality, they may be removed and their award would be dismissed. Article 10 (1) of UNCITRAL Arbitration Rules and Article 12 of UNCITRAL Model Law propounds that the existence of ‘justifiable doubt’ would suffice to render an award unfit for enforcement14. Under English law, in a case “R v. Gough15, it was held that justifiable doubt would be proved if ‘a real danger of bias’, is shown. Under US law, ‘evident partiality’ needs to be proved16. In each of these cases the test is based with respect to what a reasonable man of prudence would consider as the doubt being justifiable. Case Laws In the case of Ebner v Official Trustee in Bankruptcy17 the court laid down a test for relevance of the apprehension of bias principle, which consisted identification of the element of biasness, the test of reasonableness of the asserted apprehension of bias, and finally if a man of ordinary diligence might reasonably apprehend that the case might not be decided impartially18. In the case of Scott v City and County of Swansea19, the court set aside an arbitral order on the grounds of fraud. It was found that the landlord’s lawyers did not fully disclose the actual contents of the note containing the clear evidence envisaging the common intention of the parties with respect to such rent review. In Metropolitan Property Realizations Limited v Atmore Investments Limited20, the arbitrator’s award regarding a rent review provision was challenged on the grounds of it suffering from serious irregularity. The same ground of challenge was taken in the case of Checkpoint Ltd v Strathclyde Pension Fund21, and Guardcliffe Properties Ltd v City and St James Property Holdings22. In the first case, the Court of Appeal held; if an arbitrator used its personal knowledge while making an award, it per se did not amount to serious irregularity. Serious irregularity would be construed if only such knowledge was outside the preview of the range of knowledge which he would be reasonably expected to have by virtue of his experience. In the second case it was upheld that “making a substantial allowance for a rent free period without giving the landlord and the tenant the opportunity to make submissions on that issue, did amount to serious irregularity”23 and thus the award was quashed. In Magill v Porter24, the house of lord laid down that “whether the fair-minded observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased”25. In the case of R v Gough26, Lord Goff said that "bias is such an insidious thing that, even though a person may in good faith believe that he was acting impartially, his mind may unconsciously be affected by bias27”. In the case of Gillies v Secretary of State for Work & Pensions28, it was held that the question of reasonableness of the apprehension is implicit in the test of biasness. This test of logical connection must imply that the lay observer could reasonably be expected to conclude that the Tribunal is unable to impartially determine the proceedings.  The judge denied that any man of ordinary prudence would conclude biasness in this case. Similarly in the case of Smits v Roach29  it was “alleged that the former Chief Judge of the New South Wales and Environment Court might not have been impartial because his brother was a partner of Freehills, a firm of solicitors which was potentially affected by the proceedings”30.  Conclusion Lord Hewart C.J had very aptly said that “it is of fundamental importance that justice should not only be done but should manifestly and undoubtedly been seen to be done”. Therefore we can safely conclude that indeed the role of an arbitrator is compromised by his or her biasness towards the issue. An arbitrator is under a duty to deliver to the parties what is just and fair. He cannot afford to get carried away by his own emotions nor can he allow his ideas and principles to affect his pronouncements. He has to decide on what is presented to him and where the evidences are heavier. It is also suggested that states should incorporate an elaborate and lucid procedure to make the screens of arbitral awards more transparent and thus prevent implementation of any kind of prejudiced award. These issue first needs to be addressed in the domestic paradigm before being moved to the international dice. There is an urgent calling to frame such rules with regard to arbitration proceeding and code of conduct of arbitrators which would essentially introduce the elements of justness and fairness in this procedure and would make an arbitrator essentially is impartial and unbiased. TABLE OF CASES Checkpoint Ltd v Strathclyde Pension Fund [2002] EWHC 439 (Ch) 4 Ebner v Official Trustee in Bankruptcy, [2000] HCA 63 3 Gillies v Secretary of State for Work & Pensions, [2006] UKHL 2 4 Guardcliffe Properties Ltd v City and St James Property Holdings, [2003] EWHC 215 (Ch) 4 Metropolitan Property Realizations Limited v Atmore Investments Limited, [2008] EWHC 2925 (Ch) 4 Porter v Magill [2002] 2 AC 357 4 R v Gough [1993] AC 357 3,4 Scott v City and County of Swansea, [2001] EGCS 10 (ChD) 3 Smits v Roach, [2006] HCA 36 4 Bibliography and Referencing Transnational Dispute Management, (2010) Independence and Impartiality in International Arbitration – An assessment, [Internet] Available at: http://www.transnational-dispute-management.com/samples/freearticles/tv1-2-article205b.htm, (Accessed 12th May 2010) Quick Brief, (2010) Arbitrators and Impartiality - Update and Commentary [Internet] Available at: http://docs.google.com/viewer?a=v&q=cache:BuwQFumFL3AJ:www.quentin-bargate.com/Quick_Brief_1.pdf+biases+of+arbitrator+under+UK+laws&hl=en&gl=in&pid=bl&srcid=ADGEESjTRkv6RJ-_1Nrjk-ygMqY4-jCHc86AeMEFt_EhDw2wpD0KHYh72K8N9hiUuQLpLEM0bJDhNgKu6lHlx9rU0ruXhN_UiQ8_XjGqRJXQ7BzL0CnL8uZlCxynMpo2rEG3ScIlqrZR&sig=AHIEtbSBQBh6qE9CEz0GMu-1MaNDPuqdxw (Accessed 12th May 2010) Journal of International Arbitration, (2010) With Arbitrators, Less Can be More: Why the Conventional Wisdom on the Benefits of having Three Arbitrators may be Overrated [Internet] Available at: http://docs.google.com/viewer?a=v&q=cache:E5Em8auYxZAJ:www.herbertsmith.com/Publications/LessCanBeMore_JIL_Nov09.htm+THE+ROLE+OF+ARBITRATOR+CAN+BE+COMPROMISED+BY+HIS+OR+HER+BIAS.&hl=en&gl=in&pid=bl&srcid=ADGEESjhKrszM5YTCNc65J-I_QgFQ3EcUP5dlI9d1oeEdALluwP7Op6R-VIQP6ntaE-sI2wMYwm_H0XOvIrX2iI_EudC5SAzolL2_8Jbaa9HJ3BzVn3bjUlT74Fg1DRrK_71zDT_6UMU&sig=AHIEtbSYnJZYRSh_3DyuyloaZHauMRhAsg (Accessed 12th May 2010) Arbitration in Consumer Disputes: A Focus on the Providers, (2010) [Internet] Available at: http://www.assembly.ca.gov/acs/committee/c15/publications/HearingReports/ArbitrationProvidersbackground.doc. (Accessed 2nd June 2010) The modern approach to bias, James Maurici, Landmark Chambers, (2010)  [Internet] available at: http://webcache.googleusercontent.com/search?q=cache:qmm7u85bw50j:www.adminlaw.org.uk/docs/james%2520maurici%2520-%2520july%25202007.doc+porter+v+magill+[2002]+2+ac+357&cd=3&hl=en&ct=clnk&gl=in (Accessed 1st June 2010) R v Stone (Michael John), (2010) [Internet] available at: http://www.homepage-link.to/justice/judgements/Stone/1st-appeal.html (Accessed 1st June 2010) [Internet] available at: http://webcache.googleusercontent.com/search?q=cache:DEAlwAeaKjwJ:www.supremecourt.tas.gov.au/__data/assets/file/0007/88765/J049-2007.rtf+Gillies+v+Secretary+of+State+for+Work+%26+Pensions&cd=3&hl=en&ct=clnk&gl=in (Accessed 2nd June 2010) Read More