Construction works – Dispute – Claimant agreeing to build extension to defendant’s property – Claimant complaining of defects in defendant’s work – Parties agreeing to settlement of dispute by independent expert – Whether claimant entitled to summary judgment to enforce decision of expert – Application granted
In August 2003, the claimant agreed to build an extension at the defendant’s property. The claimant left the site in October 2004 before the work was completed. A dispute arose as to the claimant’s entitlement to payment under its final account; the defendant complained of defects in the claimant’s work. The parties agreed to have their dispute determined by an independent expert appointed by the RICS, whose decision would be binding on the parties.
The appointed expert visited the premises and subsequently gave a detailed written decision concluding that the claimant was entitled to an award in the the sum of £55,000. The defendant refused to pay and the claimant applied to the court for summary judgment to enforce the expert’s determination.
The defendant argued that the agreement to refer the dispute to expert determination contained an implied term that the decision would not be enforceable unless the expert conducted himself according to the rules of natural justice. Furthermore, the decision would have no effect if the expert gave the appearance of bias or made an obvious error. The defendant also argued that the expert was guilty of actual and perceived bias and partiality and that his conclusions included gross and obvious errors and were perverse.
Held: The application was granted.
The defendant had no real prospect of defending the claimant’s claim to enforce the expert’s opinion and there was no compelling reason why judgment should not be given.
It was not necessary for the rules of natural justice or due process to be followed in an expert determination in order for that determination to be valid and binding between the parties. Provided that the expert answered the right question, his decision would be binding even if it were wrong: Bernhard Schulte GmbH & Co KG v Nile Holdings Ltd [2004] EWHC 977 (Comm); [2004] 2 Lloyd’s Rep 352 applied.
The court’s task was to ask whether the expert’s decision came within his jurisdiction. If it did, his decision would be binding even if he had made errors; if it did not, his decision would be a nullity. No expert evidence was needed to deal with that point: Campbell v Edwards [1976] 1 EGLR 103; (1975) 237 EG 647 and Jones v Sherwood Computer Services plc [1992] 1 WLR 277 referred to.
The question as to whether the expert was biased was a question of fact and did not require the opinion of an expert. There was no evidence to suggest that the expert in had actually been biased, or had taken against the defendant or had been prejudiced against the defendant in reaching his decision: Re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700 considered.
Furthermore, applying the test in Porter v Magill [2001] UKHL 67; [2002] 2 AC 357, no fair-minded and informed observer would have concluded that there was a real possibility of bias. On a true construction of the agreement, the expert was required to consider matters relevant to the claimant’s entitlement to payment based upon its final account and to identify the basis of any entitlement on the part of the defendant to apply contra charges. The obvious reading of the agreement was that the expert was to consider contra charges in relation to the work that the claimant had carried out. His conclusion that the parties had effectively agreed a walk away situation whereby the claimant was entitled to payment less any defective works was clearly within the scope of the agreement.
It was not open to the court to set aside or refuse to enforce the decision by reason of errors in the determination, whether gross, obvious or perverse. The expert’s determination was binding and thus enforceable, even if it was wrong.
Charlotte Ellis (instructed by Wragge & Co, of Birmingham) appeared for the claimant; Thomas Rochford (instructed by Humfrys & Symonds, of Hereford) appeared for the defendant.
Eileen O’Grady, barrister
