Stonegate Farmers Limited v Joey Heavey
| Court | High Court of Justice, London Circuit Commercial Court |
| Judge | Thomas Raphael KC, sitting as a Deputy Judge of the High Court |
| Judgment | 9 October 2026 |
| Hearing | 14 and 24 July 2026 |
| Jurisdiction | England and Wales |
| Claimant | Stonegate Farmers Limited |
| Defendant | Joey Heavey |
| Case reference | LM-2025-000314 |
| Outcome | Serious irregularity under section 68(2)(a) found; substantial injustice not decided; challenge adjourned pending a further challenge in a parallel arbitration, with liberty to restore |
Summary
An arbitrator awarded an egg farmer damages because his packer kept the farm's Lion Code, the registration that lets a packer sell a farm's eggs under the Lion Mark, after their exclusive supply contract ended. Liability rested on an implied term that neither side had argued. The packer challenged the award for serious irregularity under section 68 of the Arbitration Act 1996.
Thomas Raphael KC held that deciding on the unargued term was a serious irregularity, but did not decide substantial injustice. The same arbitrator has since upheld the same term after full argument in a parallel reference, and the packer is challenging that award. The judge adjourned the claim until that challenge is decided. Neither side has won yet.
Background and facts
Stonegate Farmers Limited packs and distributes eggs. Under a contract of 6 November 2000 on Stonegate's standard terms, Mr Heavey, a farmer in Northern Ireland, supplied his eggs exclusively to Stonegate, which held his Lion Code with the British Egg Industry Council. While one packer holds a farm's code, no other packer can sell its eggs as Lion Eggs, which fetch more. The contract said nothing about the code on termination.
Mr Heavey wanted to supply another packer. Stonegate said the contract had been extended to 2026 and kept the code. By Award 1 of 6 May 2025 the arbitrator held that the contract ended in early October 2024. Stonegate released the code on 14 May 2025. By Award 2 of 14 July 2025 the arbitrator held Stonegate in breach of an implied term to release the code once the contract ended, and awarded £116,114.78, a quantum the parties had agreed.
Twelve days before Award 2, the same arbitrator had found the same implied term against Stonegate in a parallel reference with another farm, Chucks Farm. HHJ Pelling KC refused Stonegate permission to appeal under section 69. In the Chucks Farm dispute, HHJ Russen KC upheld Stonegate's section 68 challenge and remitted the award. On 7 August 2026 the arbitrator upheld the implied term again, and on 4 September 2026 Stonegate began a further challenge to that remission award.
The issue
The first question was whether Stonegate had a reasonable opportunity to put its case on the implied term, as section 33(1)(a) requires. Mr Heavey said the term was in play, and Stonegate had admitted it in its pleaded Response and through its chief executive's answer in cross-examination. The second question was whether the irregularity caused substantial injustice. Mr Heavey relied on HHJ Pelling KC's view that the term was likely to be obviously correct, on issue estoppel and abuse of process, and later on the remission award. Stonegate said HHJ Russen KC's finding that its case was reasonably arguable was enough, and asked for a stay if the remission award counted.
The decision
On irregularity Stonegate succeeded. Neither side raised the implied term, and the debate about breach of the express terms did not put it in play. Mr Heavey's case rested on the express terms, and implication is a different exercise from construction, with its own tests of necessity and obviousness. The arbitrator's unannounced reliance on his Chucks Farm reasoning widened the gap. The supposed admissions conceded no contractual obligation, and the arbitrator's later account that he relied on them alone appeared to be retrospective rationalisation, though the judge did not doubt his good faith.
Nevertheless, my overall assessment is that in this case it was clearly unfair to decide on the basis of an implied term that had not been raised by or with the parties.Thomas Raphael KC, paragraph 126
The court was not bound by the arbitrator's findings of admissions. Those are legal conclusions about the effect of procedural steps, and the court judges the fairness of the proceedings as a whole.
Otherwise tribunals could immunise themselves from challenge under s. 68 by making findings as to admissions.Thomas Raphael KC, paragraph 127
The issue estoppel and abuse arguments failed. A refusal of permission to appeal under section 69, made on the papers, is not a final decision on the merits. The thresholds are compatible: an award may not be obviously wrong while the contrary view remains one the arbitrator could realistically have reached.
Substantial injustice asks whether the arbitrator, acting reasonably and fairly, might realistically have reached a different outcome. Reasonable arguability alone is not enough. Had the remission award stood unchallenged, the judge would have found no substantial injustice: the same arbitrator, hearing much the same arguments, would with virtual certainty have reached the same result.
The contrary approach would have meant closing the court's eyes to obvious realities.Thomas Raphael KC, paragraph 163
Because the further challenge might undermine that inference, the judge adjourned the claim with liberty to restore. If the further challenge fails or is withdrawn, the section 68 claim should fail, subject to any unforeseen complication.
Practical implications
An arbitrator who sees a route to the result that neither party has argued must put it to them, even in a small trade arbitration. An implied term sits in a different legal category from the construction of express terms, so argument about the express terms will not by itself put an implied term in play.
The judge confined his use of a parallel award on substantial injustice to unusual facts: the same point, the same losing party, the same arbitrator and much the same arguments in two references. Repeat disputes on one set of standard terms before one arbitrator can produce exactly those facts.
Practice points
- If breach depends on an implied term, plead it and address necessity and obviousness. A general plea that conduct breached some term invites this dispute.
- When an award turns on a point nobody argued, assemble the record at once: pleadings, skeletons, transcript references and post-hearing submissions.
- A witness's answer in cross-examination is not a party's admission. Witnesses have no authority to admit the other side's case.
- Refusal of permission under section 69 does not end a parallel section 68 challenge. It creates no issue estoppel, and running both is not an abuse.
- Arbitrators sitting in parallel references should flag reliance on their reasoning in the other case, anonymised if confidentiality requires, and invite submissions.