REUTERS | Jorge Silva

TCC stays expert determination proceedings

It has been quite some time since I have blogged about expert determination. In fact, the last time was six years ago when I wrote about the Court of Appeal’s judgment in Begum v Hossain, which concerned the valuation of shares in an Indian restaurant. That was before the term “Brexit” had been coined and most of us were happily oblivious to the meaning of the word “furlough”. Therefore, Jefford J’s recent judgment in Maypole Dock v Catalyst Housing Ltd, which concerned an interim injunction to restrain the pursuit of an expert determination, caught my eye. 

Maypole Dock v Catalyst – the facts

In 2014, Catalyst purchased land and buildings in Southall from Maypole, and the parties entered into an overage agreement under which Catalyst was required to seek planning permission to optimise the open market value (OMV) and pay “additional consideration” to Maypole. Planning permission for a residential development of affordable housing was granted in 2017 and Catalyst built the scheme. However, development costs exceeded the projected revenue and so, for the purposes of the overage agreement, the OMV was a negative sum, meaning no additional consideration was due to Maypole.

Maypole alleged that Catalyst had deliberately avoided paying the additional consideration under the overage agreement by developing a site that was entirely social housing, so the OMV was negative, and that it had moved residents from another site to this new social housing scheme, and then redeveloped the other site to its own advantage.

In December 2020, Maypole started proceedings in the TCC seeking damages from Catalyst for (among other things) breach of contract.

In March 2021, Catalyst served a notice of expert determination, asking a surveyor to determine whether any sum was due to Maypole as additional consideration. It also filed its acknowledgement of service and subsequently applied for a stay of the court proceedings (which will be heard later this month), contesting the court’s jurisdiction to deal with the additional consideration point.

In May 2021, Catalyst refused Maypole’s request to a stay of the expert determination, which prompted Maypole’s injunction application to restrain the expert determination.

This situation arose because, although the overage agreement stated that the English courts had jurisdiction in relation to any dispute arising from the agreement, it also contained an expert determination clause allowing either party to refer to an independent surveyor a dispute:

“… (other than in relation to OMV) relating to or arising out of the calculation of the Additional Consideration.”

As Jefford J noted in her judgment, the effect of these two clauses was to give the court unlimited jurisdiction over all disputes between the parties whereas the scope of the expert determination clause was limited to disputes about the additional consideration. Quite what that means is still to be decided but it was sufficient for the judge to grant an injunction until the July hearing, at which point either the expert determination will be allowed to continue or it will not, depending on where the court draws the jurisdiction line.

Comparison with adjudication

In reaching this conclusion, the judge was invited to look at case law dealing with injunctions in adjudication proceedings. Although she deals with the law at paragraphs 19-30 (and even manages to squeeze in reference to Lord Briggs’ judgment in Bresco), she ultimately concludes that she is not approaching the question as if this was an adjudication case or “any form of special pleading relating to adjudication”.

She also made the point that the situation that Maypole found itself in could not be replicated in adjudication because adjudication is only interim binding. Even if a party to an adjudication declines to take part and then finds itself on the wrong end of an adverse adjudicator’s decision, it still has the right to refer the dispute to litigation or arbitration. Unlike an adjudicator’s decision, an expert’s determination cannot be revisited.

My take-aways from Maypole v Catalyst

I think Jefford J’s comparison with cases where the courts have been asked to injunct adjudications from proceeding is interesting. It is clear that the TCC is reluctant to interfere with the conduct of an adjudication. In part, this is due to the fact that adjudication is a product of statute where the purpose is to provide a quick form of dispute resolution. Other factors include the fact that it can be commenced “at any time” and is temporarily binding in nature.

This is to be compared with expert determination, which normally concerns very particular classes of disputes and results in decisions that are final and binding. These are evidently key differences that will influence the courts’ approach when considering applications to injunct expert determination proceedings.

I also think that this case is an excellent example of the issues that can arise when the jurisdiction of a dispute resolver is restricted to particular types of dispute. Similar issues arise in adjudications conducted outside the UK (such as in Australia, Canada or Ireland) where the scope of the adjudicator’s jurisdiction is often restricted to “payment claims” and the like, whereas in the UK an adjudicator has jurisdiction to decide any dispute arising under the relevant contract.

However, one of the advantages of expert determination is that particular disputes, often those of a specialist or technical nature, can be carved-out from proceedings that would otherwise be dealt with in court or arbitration, for example those concerning rent reviews or share valuations. This enables technical disputes to be dealt with speedily and at relatively low cost to the parties, which provides obvious advantages. Such jurisdictional challenges are therefore arguably a necessary evil of expert determination proceedings.

My recommendations for expert determination generally

Expert determination is not as commonly used as other forms of dispute resolution and, in my view, this is in part due to the specialist or technical nature of the disputes that are to be resolved.

However, I think that there is also some confusion about what constitutes expert determination. Although I accept that I may be looking at things too simplistically, I think this confusion sometimes arises due to different industry sectors using different terms to refer to expert determination. For example, in my experience, the rent review sector generally refers to disputes being resolved by an “independent expert”, and that can cause confusion with expert witnesses. There’s no such confusion when it comes to adjudication.  Would it not be more sensible for all sectors to refer to the same thing as expert determination?

Expert determination clauses

In terms of drafting expert determination provisions in contracts, I would recommend two things:

  • Agreeing a procedure for the expert determination in the contract.
  • Not imposing an unduly short timetable on the expert determination process.

Firstly, in terms of a procedure, I say this because (unlike arbitration where the Arbitration Act 1996 will allow the arbitrator to proceed upon appointment even where there are no institutional rules specified), in my experience I often cannot proceed as expert determiner until the parties have agreed to a separate procedure for the determination, which itself takes time. Perhaps it is time for an institution to draft its own expert determination rules which can simply be adopted by parties.

Secondly, in terms of timing, one of the reasons that the injunction proceedings were required in Maypole was because the parties’ submissions were required to be submitted within ten days of the appointment, and such timetables are not uncommon. For example, I am currently acting as expert determiner where, had the parties not agreed otherwise, I would have been required to reach my decision within ten days of my appointment.

In my view, such short time scales are unrealistic and put undue pressure on both the parties and the appointed expert (assuming that the parties or the relevant appointing body can find a competent expert with availability to act at such short notice), particularly when the expert’s determination is likely to be final and binding in most circumstances. I consider that a more realistic timetable would be 28 days, as with adjudication.

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