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Osler v Osler [2024] EWCA Civ 516

Dov Ohrenstein, assisted by Matthew Tonnard and instructed by Tim Russ of Roythornes,  appeared in the Court of Appeal for the successful respondents in the recent case of Osler v Osler [2024] EWCA Civ 516.

The Appeal concerned a High Court judge’s order which contained a clear error and an order of a Court of Appeal judge which was found to have been made without jurisdiction. Although the procedural history was unusual, the Court of Appeal’s decision is of general significance because it decided that:

(1) A High Court Judge’s dismissal of an application to set aside another judge’s order refusing leave to appeal an arbitration award may itself be treated as a refusal of permission to appeal the award so that (unless the High Court grants leave to appeal its own order) the dismissal cannot be the subject of an appeal to the Court of Appeal; and

(2) where an order refusing leave to appeal an arbitration award erroneously includes a provision that a party can apply to set it aside, the set aside application can be dismissed without regard to the underlying merits of the arbitration award.

The underlying dispute was as to the proper construction of a farming partnership deed and in particular whether the price payable by a surviving partner (the appellant) to acquire a deceased partner’s share of the partnership should be based on accounts prepared on a market value or historical cost basis. That question had been determined by an arbitrator in favour of the respondents who were the personal representatives of the deceased partner. The arbitrator concluded that the correct approach was to apply the market value.

The appellant decided to challenge the arbitrator’s decision. He therefore issued a claim form seeking permission to appeal the arbitrator’s award pursuant to s.69 of the Arbitration Act 1996. That section provides that a party requires leave to appeal against an arbitrator’s award on a point of law and that leave should only be given if (amongst other things) the arbitrator’s decision was “obviously wrong” or “the question is one of general public importance and the decision of the tribunal is at least open to serious doubt” (see s.69(3)).

Section 69(5) of the Act provides that applications for leave to appeal shall be determined without a hearing unless it appears to the court that a hearing is required. In accordance with the usual procedure, Joanna Smith J considered and determined the question of leave to appeal against the arbitration award on the papers.

Joanna Smith J refused permission to appeal and her order set out her reasons for her decision, namely that “1. There is no issue of public importance”; “2. There is no basis whatever on which to determine that the arbitrator’s decision is ‘obviously wrong’” and “3. In all the circumstances it is not just and proper for the court to determine the questions raised”.

Ordinarily, a High Court Judge’s refusal of permission to appeal against an arbitration award, even if made on the papers and without oral submissions, is the end of the road for an appellant. See the decision of Calver J in WSB v FOL [2022] EWHC 586 (Comm) which makes clear that once an application for permission to appeal an arbitral award has been refused on paper, there should be no oral rehearing of that application.

However, unusually for an order concerning an arbitration appeal, the order of Joanna Smith J included the following wording:

“This Order has been made by the court without a hearing pursuant to CPR PD 52B paragraph 7.1. Any party affected by the order may apply to have it set aside or varied within 7 days of the date of service upon that person. The application may be made by CE-filing a letter of request …!

The appellant then applied by letter to set aside Joanna Smith J’s order. That application was heard by HHJ Monty KC (sitting as a High Court Judge). HHJ Monty KC dismissed the application [2023] EWHC 1270 (Ch)without considering the merits of the arbitration award for the following reasons:

(1) Arbitral appeals are governed by CPR 62 and there is no provision in CPR Part 62 or CPR PD 62 granting an unsuccessful applicant who is seeking to appeal an arbitral award the right to a renewed oral hearing. That is different to the situation that applies to appeals from the County Court and High Court decisions under CPR 52. The provision in Joanna Smith J’s Order permitting an application to set aside or vary could be set aside under the slip rule (CPR 40.12) and CPR 3.1(7).

(2) Even if the slip rule or CPR 3.1(7) could not be deployed, he still had no power to reconsider the merits of Mrs Joanna Smith J’s decision to refuse permission to appeal because the Court cannot permit a jurisdiction to have an oral rehearing to be conferred by an order where it is clear on the authorities and under the Act that such jurisdiction does not exist.

The Appellants then appealed to the Court of Appeal against HHJ Monty KC’s refusal to set aside Joanna Smith J’s order. Asplin LJ gave them permission to do so.

The Court of Appeal (Popplewell LJ, Nugee LJ and Cobb LJ) unanimously dismissed that appeal for the following reasons.

Firstly, the Court of Appeal held that although the appellant, via his solicitor, had written to the Court only asking for Joanna Smith J’s order to be set aside he was also asking HHJ Monty KC for a determination that the arbitrator’s decision concerned “a matter of public importance” and “obviously wrong”, ie he was “in terms” asking not merely for the order of Joanna Smith J to be set aside but also for it to be replaced by an order granting permission to appeal against the arbitrator’s award. Accordingly, an appeal against HHJ Monty KC’s decision was an attempt to appeal against a refusal or permission to appeal (not merely a refusal to set aside a previous court order) and therefore had to comply with  s.69(6) of the 1996 Act. Section 69(6) provides that leave of the court (meaning the High Court, see s.105(1)) is required for any appeal against the decision of the court to grant or refuse leave to appeal. Since HHJ Monty KC had not given permission to appeal against his own order the Court of Appeal concluded that it had no jurisdiction to hear the appeal against his order notwithstanding Asplin LJ’s grant of permission to appeal.

Secondly, the Court of Appeal held that, in circumstances where Joanna Smith J’s Order contained an obvious error because if referred to CPR PD 52 paragraph 7.1 which has no relevance to appeals from the decision of an Arbitrator, the only rational explanation for the wording in her order which provided for permission to apply to set aside was that it too was included by mistake (no doubt because of some standard wording template). In that situation HHJ Monty KC decision to dismiss the application was correct.

Thirdly, the Court of Appeal found “nothing wrong in Joanna Smith J’s refusal of permission” because they were not satisfied that the arbitrator’s decision raised any issue of general public importance or was obviously wrong.  The hurdle that has to be passed to establish that an award is “obviously wrong” is a high one, merely having “reasonable arguments” is insufficient and as has famously been suggested in a lecture by Colman J (quoted in AMEC v Secretary of Defence [2013] EWHC 110 (TCC) that obviously wrong  is a conclusion that could be  arrived at “on a first reading over a good bottle of Chablis and some pleasant smoked salmon” rather than on a twelfth reading of clauses and with great difficulty.  The Court of Appeal acknowledged that the question of market or historic valuation for an outgoing partner’s share had been considered in various cases with decisions going both ways with the outcome depending upon a close analysis of the facts and contractual provisions in each case. Although not referred to in the judgment, the relevant principles were recently considered by the Court of Appeal in Procter v Procter [2024] EWCA Civ 324 which confirmed that where partners have agreed an express provision as to the payment to be made to an outgoing partner (or his estate) and such provision is open to more than one construction, the Court should not in construing it start from any particular presumption.

Read the full judgment here.