Court clarifies jurisdictional and limitation points on expert determination

After a 4 day trial in the Business and Property Court sitting in Newcastle upon Tyne, the High Court dismissed the Claimants’ claim and made a number of rulings on the legal and jurisdictional principles of expert determination proceedings, including:

• The right to apply for expert determination had to be exercised jointly by all of the individuals comprising the ‘Seller’; the attempt to do so by only some of those parties was invalid and ineffective to confer jurisdiction on any expert referred under the RICS scheme.
• The Court retained jurisdiction to deal with disputed matters concerning legal construction and the jurisdiction of the expert, notwithstanding the Deed appearing to reserve all disputes to the expert determination process.
• The statutory limitation periods from the Limitation Act did not apply to applications for expert determinations, but the exercise of the right was subject to contractual principles of reasonable time where the contract itself was silent on timescales.
• An insolvency office holder needed to be a party to any application for expert determination in circumstances where the right / remedy vested in the office holder; they could not hedge their bets by taking a watching brief but refusing to participate directly, as doing so rendered the appointment invalid.

Analysis of findings and practical implications

Some of these findings were influenced by the drafting of the Deed. However, they nevertheless clarify some important principles rarely featuring in previously reported cases. Matters concerning jurisdictional questions around expert determination applications and appointments are a rarity and the guidance is welcome for practitioners dealing with such proceedings.

Many of the appointment processes, such as the RICS scheme in this case, operate a ‘no questions asked’ appointment scheme. There is no substantive form of scrutiny as to whether an application may be valid and an expert appointment is made with very little consideration as to the legality of that appointment. It is therefore incumbent on the parties to any expert determination process to raise any jurisdictional challenges as soon as possible in any proceedings once an expert is nominated (or before if that is possible). This judgment creates and clarifies some helpful principles should a party wish to challenge jurisdiction, including that the expert’s remit does not extend to matters of jurisdiction.

This judgment also serves as a warning as to the importance of clear and unambiguous drafting of documents and consideration of the operation of the rights and remedies contained within documents. Here, the Deed contained many errors and examples of clumsy drafting. Among those was the reference to multiple individuals as a singular party without any attempt to set out how that singular party could pursue rights and remedies. That ultimately resulted in the parties comprising the ‘Seller’ making an invalid application to RICS for an expert appointment and losing their right to pursue payment under the Deed after the Trustee in Bankruptcy for one of them declined to put his name to the proceedings.

The clarification that contractual time limits apply at the expense of statutory time limits is also worthy of note. Where parties want to exercise rights under expert determination provisions, the terms of the contract will govern whether or not such exercise of rights confers jurisdiction on experts to proceed with any appointment. Where silent, the implied term of reasonable time will apply, which will be fact-specific in each case and therefore provide no certainty for parties to expert determination proceedings or the experts themselves as to whether an expert has jurisdiction to proceed. Again, careful drafting of express time limits can prevent this potential problem.

Expert determination proceedings can be unpredictable and somewhat lacking in guidance and authority. Therefore the legal and jurisdictional principles to emerge from this High Court judgment are extremely useful to practitioners and parties involved in both the drafting and implementation of expert determination provisions.

The full judgment can be read here: Bastholm & Ors v Peveril Securities (Dalton Park Retail) Ltd & Ors [2023] EWHC 438 (Ch) (03 March 2023)

Please note that this information is for general guidance only and should not substitute professional legal advice. If you have specific concerns, we recommend consulting one of our legal experts.