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Enforcement of an expert determination clause


Expert Determination Rules



    • Whether clause a submission to arbitration – Held not.
    • clause uncertain and thus unenforceable – Held uncertain.
    • Application for stay of proceeding based on clause – Multiplicity of proceedings – Wide disputes involving questions of expert knowledge and mixed fact and law – No procedural instructions to expert – Stay refused


    • CONTRACT – Share sale agreement – Dispute resolution clause – Expert accountant appointed by the parties to calculate an adjustment amount – Whether expert complied with the terms of the agreement – Scope of expert’s broad discretion under agreement – Whether the expert made a ‘manifest error’ in determining the accounting treatment of two items – General principles regarding ‘manifest error’ – Consequences of a finding of ‘manifest error’ – Whether whole determination vitiated – One issue referred to expert for re-determination
    • CONTRACT - Expert determination - Valuation of land - Assumptions - Planning Scheme - Ministerial approval - Application of Valuation and Property Standards - Whether determination was a ‘valuation’ - Determination made pursuant to contract


    • CONTRACT – Specific performance of dispute resolution clause – Where parties agreed to refer dispute to independent expert determination – Where one party refused to execute Expert Determination Agreement – Proper construction of primary agreement and Expert Determination Agreement
    • CONTRACT - Contract for expert determination - Provision for calculation of share price - Dispute resolution provision - Alleged errors - Whether expert determination complied with contract - Whether contract varied by letter of instruction to expert.


    • EQUITY - Remedies - declarations - whether proceedings should be stayed pending determination by expert - whether the plaintiff is bound to accept the terms of the retainer provided by the expert - whether terms of release and indemnity provided by expert are reasonable - whether dispute resolution process under the terms of the lease should be followed by both parties - whether term of the lease provides an independent contractual entitlement to initiate court proceedings - whether viticulture expert can express an opinion on the issues in dispute




      • The FA Rules (see Rule B.12) provide that membership of the Premier League constitutes an agreement between the FAPL and the member clubs to be bound by and comply with the FA Rules, the Articles and the FAPL Rules. The FAPL Rules are those made by the FAPL from time to time under the power contained in Article 16.1 for the purpose of regulating the organisation and management of the Premier League. The combined effect of Article 79 and Article 16 is that member clubs are bound by both the FA and the FAPL Rules and any regulations made under the FA Rules.
    • The General Conditions provided
      • The Principal may in its absolute discretion for the benefit of the Principal extend the time for Completion at any time and for any reason, whether or not the Contractor has Claimed an extension of time.
      • The Contractor is not entitled to an extension of time for Completion under this clause 54.6 unless the Principal exercises its discretion to extend the time for Completion.
      • A party to the Contract could give notice to the other party of an issue about any matter arising under the Contract15)
      • Senior executives were required to attempt to resolve issues so notified.
      • An issue not able to be resolved by senior executives of the parties could be referred to an Expert for “Expert Determination”.
      • The Contract also provided that, in answer to any issue referred to the Expert by a party, the other party could raise any defence, set-off or cross-claim
    • The Contract further provided:
      • the parties to treat the Expert Determination as final and binding if the aggregate liability of one party to the other did not exceed $500,000.
      • If the aggregate amount determined exceeded $500,000, then either party was free to commence proceedings in respect of the determined amount within 56 days after receiving the Determination
    • The Expert's use of the principal's discretion to extend time as a device for allocating responsibility for delay caused by the principal was adequately explained and was not inconsistent with his refusal to allow the contractor's claimed extensions of time.
    • the plain and unambiguous words of (the dispute resolution clause) require the expert determination to be given effect to unless and until it is reversed, overturned, or otherwise changed under the procedure in (the dispute resolution clause).
    • If this entails an abrogation of the parties' common law rights, it has come about by express provision.
    • In my view, these commercial parties clearly intended by the alternative dispute resolution process agreed to, to abrogate their common law remedies
    • the plaintiff's construction is to conclude that the parties intended that the same disputes should be resolved before different tribunals.
    • I consider this both unlikely and that if it were correct, it would result in consequences which are unreasonable, inconvenient and costly
    • The parties chose an expert tribunal to deal with disputes.
    • The plaintiff's construction would permit a party by non-agreement (albeit subject to an obligation of good faith) unilaterally to render a determination by the expert tribunal which they chose, ineffective.
    • I consider it unlikely that the parties had this intention.
    • The consequence is that the expert determination is final and binding and the proceedings in this Court are not maintainable, and must be dismissed as disclosing no cause of action.
    • …the clause requires the parties to treat the expert determination as final and binding once made and to give effect to it.
    • It does not oust the jurisdiction of the court.
    • It simply provides that, once the expert has made a determination, that determination (assuming it was made in accordance with the contract) is the source of the parties' contractual rights and obligations.
    • For that reason, the determination is not unenforceable.
    • On 8 February 2010, Mr Burnell asked a firm of accountants, PKF, to calculate and report on the amounts due to or from parties under the LLP agreement, and in particular the amounts due to and from Barclays.
    • PKF, in its report, assessed at approximately £10.585m, that part of the expenses of the LLP attributable to Barclays' investment in the funds.
    • Mr Burnell on behalf of the LLP contended that Barclays should pay this amount. This was disputed by Barclays.
    • It is ultimately for the court to determine the jurisdiction of the expert.
    • NCLLP contends that the BB Investment Profits mean the profit due to BB from its investment in the Flagship Funds not, as in the case of Third Party Profits, the profit derived by NCLLP from the management and performance fees payable in respect of BB's investment in the Flagship Fund.
    • I reject the submissions of counsel for NCLLP for substantially the reasons given by counsel for BB.
    • Clause 26.1 only applies to “any dispute regarding…the amount of any profit or loss allocations due to a Member pursuant to Clause 9”.
    • I accept the broad approach to the interpretation the (dispute clause) for which counsel for NCLLP contended but the relevant dispute must have some connection with an allocation of profit pursuant to clause 9.
    • The provisions of Clause 26.1(B) to (D) must all be read in that context.
    • I do not consider that the issue … relates comes within the purview of clause 26.1 …


  • Warren J 22) was, I think, right to regard the arbitration clause she had to consider as unenforceable insofar as it included within the scope of the reference the question whether the company should be wound-up. Such an order lies within the exclusive jurisdiction of the court and the discretion as to whether or not to make that order is for the court, not the arbitrator to exercise. But I part company with her if and insofar as she suggests in paragraph 18 of her judgment that there can be no resort to arbitration in respect of the dispute between shareholders or the company which forms the grounds upon which such relief may be sought.
  • The arbitrator could, I think legitimately, decide whether the complaint of unfair prejudice was made out and whether it would be appropriate for winding-up proceedings to take place or whether the complainant should be limited to some lesser remedy.
  • It would only be in circumstances where the arbitrator concluded that winding-up proceedings would be justified that a shareholder would then be entitled to present a petition under s.122(1)(g).


    • CONTRACT – Construction of dispute resolution clause – Instigation of proceedings – Whether proceedings should be stayed due to dispute resolution clause – Whether the Court should exercise its discretion in staying the proceedings.
    • ..[an adr] clause is to be read liberally as required by the common law of Australia 27)
    • So reading the clause, it can be seen to require the totality of likely disputes between the parties to be dealt with by the clause.
    • No evidence is needed to appreciate that an engineering contract for the designing and building of new rolling stock for Railcorp could lead to complex disputes, which, if litigated, could be productive of very large legal and associated forensic costs.
    • As said in Comandate
      • An ordered efficient dispute resolution mechanism leading to an enforceable award or judgment by the adjudicator, is an essential underpinning of commerce.
      • Disputes arising from commercial bargains are unavoidable.
      • They are part of the activity of commerce itself.
      • Parties therefore often deal with the possibility of their occurrence in advance by the terms of their bargain


  • Badgin Nominees Pty Ltd v Oneida Limited 28) - Reference to Valuer as expert - Not an Arbitration - Court proceeding - Application to stay - Principles to apply - Discretionary considerations - Stay granted - Valuation proceeds


    • These commercial parties freely entered a bargain to resolve their disputes in London according to English law
    • No one forced Pan to do so
    • Through its broker, it entered the international market for the time chartering of vessels
    • It negotiated hire and terms on the foundation of a dispute resolution clause in clause 45(b)
    • If it had wanted to maintain any rights by reference to Australian law governing its relationship, it could have bargained for them
    • It did not
    • There is no provision of the Trade Practices Act that says the parties cannot enter a clause such as clause 45(b).
    • There are powerful discretionary reasons why an arbitration agreement should be enforced,
    • even if the contractually chosen venue and law give rights not entirely the same as would arise under one party’s domestic law and in one party’s domestic courts30)
    • If Australian commercial parties desire Australian dispute resolution clauses they should bargain for them
    • Proposed joinder of expert who delivered a determination allegedly negligently or in breach of terms of contract of engagement permitted.



  • Exeter City Association Football Club Ltd. v. Football Conference Ltd 35) Weeks J
    • Declined to grant a stay of an unfair prejudice petition because the statutory rights conferred on shareholders to apply for relief at any stage are inalienable and cannot be diminished or removed by contract or otherwise



  • The Heart Research Institute Limited v Psiron Limited 37)
    • It is plain that when one is examining the conduct of a judicial or quasi-judicial hearing, there is an expectation of impartiality and adherence to procedural fairness (or what was formerly referred to as natural justice).
    • However, where what is involved falls outside the realm of judicial or quasi-judicial determination, the issue is whether the principle of procedural fairness can be or should be maintained…
    • It is of assistance to address this issue by first asking whether the … task is to be seen as that of an arbitrator, ie a quasi-judicial determination which will automatically invoke the principles of impartiality, or whether the task is merely that of an expert, valuer or appraiser. (my emphasis)


    • The position of an expert valuer carrying out a determination in accordance with the requirements of a contract between two other parties is very different from that of a trustee exercising an unfettered discretion under at trust instrument such as a will or settlement. There is no warrant for importing into the law of contract a rationale developed in quite a different context in the law of trusts.
    • True it is that the valuer, as expert, is called upon to exercise skill, judgment and an element of discretion, but he or she must exercise that discretion within the confines of the character of the valuation which the parties to the contract have stipulated will bind them.
    • The valuer's discretion does not permit a refusal to take into account the matters which the contract directs be taken into account, nor does it permit a valuation upon a basis different from that which the contract requires.
    • In my opinion, unless the contract clearly provides that the expert valuer's reasons for a determination are unexaminable, then either party to the contract is entitled to call into question whether the determination conforms with the contractual requirements.
    • That question is not for the valuer to determine in effect, by exercising a discretion not to disclose reasons, thus depriving the parties of a means of ascertaining the matter for themselves.
    • The contract may entitle the valuer to give only a non-speaking valuation, but that is not the same thing as prohibiting the parties from eliciting, by legal process or otherwise, what the valuer has actually done.


    • the court clearly has jurisdiction to stay a court proceeding on the simple basis that ‘a contract is a contract’ and the parties should abide by it
    • A Best Floor Sanding Party Ltd v Skyer Australia Party Ltd42) Warren J
    • The right of a contributory to apply to the court for a winding up order could not be limited by agreement.
    • Refused to stay a winding up petition because it did not fall within the scope of the discretionary provisions of section 53 of the Commercial Arbitrations Act 1984.



  • Holt v Cox (first instance)44)


  • Channel Tunnel Group Ltd v. Balfour Beatty Construction Ltd 45) Lord Mustill
    • Having made this choice (to have a dispute resolution clause) I believe that it is in accordance, not only with the presumption exemplified in the English cases cited above that those who make agreements for the resolution of disputes must show good reasons for departing from them, but also with the interests of the orderly regulation of international commerce, that having promised to take their complaints to the experts and if necessary to the arbitrators, that is where the appellant should go.


  • Legal & General Life of Australia Ltd v A Hudson Pty Ltd46)
    • the question whether an expert determination is binding depends in the first instance on the terms of the contract, express or implied;
    • a determination obtained by fraud or collusion can usually be disregarded (for almost certainly it would be the case that in such a case there had been no valuation in accordance with the terms of the contract; it being easy to imply a term that the determination must be made honestly and impartially);
    • it will be difficult, and usually impossible, to imply a term that the determination can be set aside on the basis of mistake or because it is unreasonable, since, by referring the decision to an expert on the basis that the decision will be final and binding, the parties will be said to have agreed to accept the expert’s honest and impartial decision, relying on the expert’s skill and judgment, and have agreed to be bound thereby;
    • the critical question in cases where it is alleged that the expert has made a mistake is whether the determination was made in accordance with the terms of the contract – if the mistake is of a kind which shows that the determination is not in accordance with the contract (such as where a valuer values the wrong premises), then the determination may be rendered ineffective; if the mistake is as to the application of the expert’s judgment or as to what the expert has or has not taken into account, this is not a matter which affects the binding nature of the determination.


  • Mayne Nickless Ltd v. Solomon 47) Sheenan J
    • In the instant case the valuation of Mr Wolfs is, I consider, a `speaking valuation' in the sense that it is one which, on its face, discloses the method of valuation used, namely replacement costs less depreciation.
    • For the purpose of this appeal I am prepared to assume that it is open to be impeached and set aside for mistake.
    • In such case it is necessary to consider firstly whether any of the grounds of appeal have been made out.
    • On this point I would reject all those grounds of appeal which assign error in the valuation other than such ground or grounds as asserts that the basis or method of valuation namely replacement costs less depreciation is erroneous or mistaken.
    • I would do so for the reason that the grounds I reject are not matters which could be said to appear on the face of the valuation.
    • If a `speaking valuation' can be impeached for mistake then I would regard it as sensible to hold that the mistake must appear from a reading of the valuation and not from cross-examination of the valuer and answers elicited therein, which the appellant in part has attempt here.48)


  • Campbell v. Edwards 49) Lord Denning MR


  • Dean v. Prince 50), Harman J held 51)
    • that “if (the auditors) had chosen to keep silent I do not think that any Court would have obliged them to explain their reasons; but they have not been strong minded enough to do that. It is therefore open to the plaintiff to question them”
    • (when) trustees and directors exercis(e) a discretion: the Court will not oblige them to give reasons but, if they do, those reasons may be impeached in Court52)
1) [2017] VSC 94
2) [2016] VSC 708
3) [2016] VSC 153
4) [2015] NSWSC 780
5) [2015] VSC 38
6) [2014] NSWSC 978
7) [2013] NSWSC 1848
8) [2012] NSWSC 578
9) [2012] VSC 249
10) , 28) , 41) [1998] VSC 188
11) , 37) [2002] NSWSC 646
12) [1999] VSCA 158
13) [2010] VSC 176
14) [2011] EWCA Civ 855
15) A dispute resolution procedure was set out in cll 73-76 of the General Conditions.
16) [2011] NSWCA 163
17) [2010] NSWCA 59
18) [2011] NSWSC 530
19) [2011] NSWSC 685
20) [2011] EWCA Civ 826
21) [2010] EWHC 1139 (Ch)
22) A Best Floor Sanding Party Ltd v Skyer Australia Party Ltd [1999] VSC 170
23) [2010] VCAT 285
24) [2010] NSWSC 150
25) [2009] VSC 226
26) (2009) 74 NSWLR 618
27) Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 at 165-166 (Gleeson CJ with whom Meagher JA and Sheller JA agreed) and Comandate Marine Corporation v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; 157 FCR 45 at 87-93 [162]- [187] (Allsop J with whom Finn J and Finkelstein J agreed). See also the law of international commerce: Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40; [2008] 1 Lloyd’s Rep 254 (see [31] for the phrase “law of international commerce”) and Threlkeld & Co Inc v Metallgesellschaft Limited (London) [1991] USCA2 61; 923 F 2d 245 (2nd Cir. 1991).
29) [2006] FCAFC 192
30) see Wealands v CLC Contractors and Key Scaffolding Ltd [1999] 2 Lloyd’s Rep 739 at 747-48 and Société Commerciale de Reassurance v Eras International Ltd [1992] 1 Lloyd’s Rep 570 at 610-11.
31) [2006] VSCA 173
32) [2006] VCAT 871
33) [2005] QSC 135
34) [2004] NSWSC 289
35) [2004] 1 WLR 2910
36) [2003] NSWSC 1134
38) [2002] NSWSC 753
39) [2001] NSWSC 596
40) [2001] NSWSC 405
42) [1999] VSC 170
43) (1996) 39 NSWLR 160
44) (1994) 15 ACSR 313
45) (1993) AC 334
46) (1985) 1 NSWLR 314 Followed Palmer J in Kanivah Holdings Pty Limited v Holdsworth Properties Pty Limited [2001] NSWSC 405, [at 48]); AGL Victoria Pty Limited v SPI Networks (Gas) Pty Limited [2006] VSCA 173
47) [1980] Qd. R. 171
48) See Gold Coast City Council v. Canterbury Pipelines (Aust) Pty Ltd [1968] HCA 3; [1968] 118 CLR 58; Evans v. National Pool Equipment Pty Ltd [1972] 2 NSWLR 410
49) [1976] 1 All ER 785
50) [1953] 1 Ch 590
51) at 594
52) at 593

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