Contract — Dispute to be referred to decision of expert — Decision to be final and conclusive — Legal proceedings — Application to strike out — Whether expert’s report can be set aside — Appeal dismissed
By a sale agreement of February 13 1987 the defendant company agreed with the plaintiffs to acquire the entire share capital of Corporate Technology Group Ltd. Clause 4 of the appendix to that agreement provided that if the parties’ accountants could not agree as to the amount of sales which were part of the subject of the sale agreement “the matter shall be referred to an independent chartered accountant or firm of chartered accountants (the “Expert”)”. Clause 7 provided that “the Expert (if any) shall act as expert …and … his determination shall be conclusive and final and binding for all purposes…”.
In the event a firm was appointed as an Expert and they produced a report in which they certified the amount of sales in dispute was the sum considered correct by the defendant’s accountants. The plaintiffs commenced proceedings contending that the Expert was wrong. The defendant’s application to strike out the plaintiffs’ pleadings to the extent that it concerned matters upon which the parties, by their contract, had agreed were to be determined by the Expert whose decision was final and binding was dismissed by His Honour Judge Hague QC, sitting as a judge of the High Court.
Held Appeal dismissed.
The first question is to see what the parties to a contract have remitted to an expert; the next step is to see what is the nature of the mistake the expert is alleged to have made. If the mistake is that the expert has departed from his instructions in a material respect, either party would be able to say that the expert’s certificate was not binding because the expert had not done what he was appointed to do.
In the present case the Expert did precisely what they were instructed to do. The parties had agreed to be bound by the Expert’s decision and it could not be impugned.
Dean v Prince
[1953] Ch 590 and
Campbell v Edwards
[1976] 1 WLR 403 considered.
Mark Howard (instructed by Norton Rose) appeared for the appellants; and Nicholas Underhill (instructed by Phillips & Buck) appeared for the respondent.