The modern tendency in litigation is for most evidence, whether hearsay or otherwise, to be admitted, and then accorded such weight as the tribunal considers appropriate. This approach lends itself particularly well to arbitration, since the arbitrator, with his or her specialist expertise in the subject matter of the dispute, will be especially adept at evaluating the evidence. This section deals with the arbitrator’s approach to that task.
18.2 The arbitrator’s powers concerning procedural and evidential
matters
The arbitrator is given wide powers by Rule 28 of the Act to decide procedural and evidential matters unless the parties otherwise agree. Among others these powers include:
Rule 28(1)(b) – weighing the evidence (see section 18.3)
The arbitrator should not refuse to hear evidence tendered by one party unless the other party objects to it, in which case they must rule as to its admissibility. If the reason put forward is technically sound, but of no real merit, the arbitrator may order the party making the objection to pay the increased costs caused by the need to observe the technicalities.
It is frequently the case that a party obtains evidence late in the proceedings and either serves it on the other side (who then objects), or seeks to adduce it. In such cases, the arbitrator will have to rule whether the evidence should be admitted, and how it should then be dealt with. The arbitrator should in such circumstances, make every effort to balance two conflicting principles:
the principle that the rent that is determined should be based on the best possible evidence that the parties can adduce and
the principle that the arbitration should be conducted fairly, and without unnecessary delay or expense.
18.3 Weighing the evidence
One of the main reasons for the parties choosing to have their dispute determined by a chartered surveyor as an arbitrator is that they can be expected to have the appropriate expertise and experience to weigh the evidence properly. In some cases, both parties may put in inadequate submissions; for example, they may concentrate on the evidence of comparables which are out of date in relation to the review date, and put forward little or no discussion of evidence of how the market has moved over the relevant period. In other cases, the evidence will conflict substantially.
In such cases, the arbitrator is entitled – and indeed bound – to use his or her skills to weigh up the evidence and decide what credibility to give it. The exercise of this power is however subject to a number of limitations:
a) the arbitrator should not arrive at a figure as a result of this process that falls outside the bracket of the parties’ contentions – see section 18.7
b) the arbitrator should not rely on a piece of evidence that neither party has introduced without giving the parties an opportunity to be heard – see sections 18.5 and 18.6 c) the arbitrator should not select a method of valuation for which neither party has
contended without giving the parties an opportunity to be heard – see section 18.7. The arbitrator may find it helpful in such circumstances to bring the representatives together in a meeting to consider the conflicts and tensions in the evidence.
18.4 Where there is little or no evidence
Depending on the market at the review date, there may be very little transactional evidence to put before the arbitrator. However, the parties’ experts may well have their own opinions as to the right rent in the absence of that evidence, and the arbitrator should have due regard to such evidence, despite the fact that it is unsupported by evidence of comparable lettings.
In assessing the weight to be attached to such an opinion, the arbitrator should take into account the ability, experience and objectivity of the expert who expresses it. The
arbitrator may, indeed, prefer the opinion evidence of one valuer, even if unsupported by comparable evidence, where the valuer is shown to be a credible expert, with detailed
knowledge and experience of the relevant market, to opposing opinion evidence apparently or allegedly supported by comparable transactions.
In certain circumstances, even reliable opinion evidence may be lacking. The arbitrator should try not to be put in the position where there is insufficient evidence to be able to reach a decision. If the submissions and evidence are inadequate in any way, the arbitrator should encourage the parties to supplement them. The arbitrator should indicate the nature of his or her concern about the evidence already submitted, and may convene a hearing for this purpose under the powers reserved in the directions (see section 18.3).
Alternatively, the arbitrator could employ the powers under Rule 28(2)(e), and carry out the requisite investigation him or herself (see section 18.5 below).
18.5 The arbitrator’s own enquiries
The arbitrator’s powers include deciding whether and to what extent they should take the initiative in ascertaining the facts and the law (Rule 28(2)(e)). The arbitrator has to exercise this power with discretion, balancing the need to be aware of relevant evidence with the need to avoid unnecessary delays or expense. The arbitrator is not obliged to ascertain the facts and the law relating to any case, but may choose to do so if they wish and the parties have not agreed otherwise.
However, in the latter case it would be advisable for the arbitrator to tell the parties first (in accordance with the duty under Rule 24(1)(c) to avoid unnecessary expense), in case they wish to provide that information themselves and possibly thereby save costs.
This initiative should be exercised very carefully, to avoid an aggrieved party alleging partiality by the arbitrator in advancing the case for the other party. Quite clearly it is not the function of the arbitrator, within the context of Rule 28, to become a third expert in the arbitration. Introduction of new evidence by the arbitrator should therefore be restricted to direct evidence rather than hearsay, to avoid the prospect of the arbitrator being subjected to cross-examination.
Bear in mind that the arbitrator is also under a duty in Rule 24 to act fairly and
impartially between the parties and to provide each party with a reasonable opportunity of putting their case and dealing with that of their opponent. The arbitrator would therefore be required to ensure that any information obtained is placed before the parties and they are given a reasonable period in which to make representations. Observance of Rule 24 and the rules of natural justice should enable the arbitrator to exercise his or her powers under Rule 28(2)(e) of the Act without being guilty of ‘serious irregularity’.
18.6 Use by the arbitrator of his/her own knowledge
Because the arbitrator has been selected on the grounds of special expertise and
experience, it is likely that he or she will possess knowledge that may have been gleaned from involvement in the market, or, indeed, from other arbitrations or expert
determinations. The distinction between the arbitrator’s knowledge as opposed to professional expertise as an arbitrator and surveyor should be carefully observed. It is one thing for the arbitrator to perform an evaluative role by using general skills; it is quite another for them to deploy a piece of evidence or valuation method drawn from his or her experience, which neither party has had an opportunity to deal with.
If there are specific facts within the arbitrator’s own knowledge that cannot be shut out of their mind in making the award, these should be revealed to the parties and treated
to the same scrutiny and procedures as agreed for the other evidence. An arbitrator’s finding, based on their own specific knowledge, would not comply with the general duty of the tribunal of giving each party a reasonable opportunity of putting their case and dealing with that of the other party, and, as such, could constitute a serious irregularity. Provided that the details of such specific knowledge are revealed to the parties, and they are given reasonable opportunity for comment, there is no reason for such details to be excluded if the arbitrator believes them to be of relevance.
Similar duties arise in the case of a difference of opinion as to valuation method. Accepting that the choice of the ‘correct’ valuation method is a ‘fact’ within Rule
28(2)(e), it is clear that the identification and use of an alternative valuation method is derived from the arbitrator’s own knowledge.
18.7 The bracket of the parties’ contentions
It is difficult to conceive of circumstances in which the arbitrator might be able to award more than the ultimate figure sought by the landlord or less than that submitted by the tenant. The arbitrator therefore should not award a figure outside the bracket of the parties’ contentions.