Intestacy: how we achieved an inheritance settlement for a stepchild where there was no will
We recently represented a child whose non-biological father had died without having made a will.Read more
The case involved a claim for payment under overage provisions of a Payment Deed (Deed) relating to the development of a major designer outlet and shopping complex at Dalton Park, County Durham. The ‘Seller’ under that Deed comprised five individuals and the Deed contained a mechanism to value any development by way of expert determination, through an application to RICS.
The five individuals made an application to RICS in 2014 for the appointment of an expert to determine the value of development alleged to have taken place in 2002. In the interim, one of the five individuals had been made bankrupt and subsequently discharged. His Trustee in Bankruptcy was not a party to the application to RICS.
The First Defendant was the owner of the land in question and argued that the application was invalid as it had not been made by the ‘Seller’, since the bankrupt’s assets (including rights of action) vested in his Trustee in Bankruptcy. Accordingly, it was alleged that any expert appointed through that RICS application did not have jurisdiction to act. The RICS appointed expert refused to act unless or until his jurisdiction was agreed or determined by a court.
After many years of ad-hoc attempts to progress the claim, the Claimants eventually issued declaration proceedings in 2021 arguing the validity of the expert appointment back in 2014. The Claimants comprised of four of the five original ‘Seller’ plus the Trustee in Bankruptcy of the fifth. The First Defendant defended the claim, seeking various rulings on jurisdiction of the expert and liability under the underlying Deed.
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:
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.
Author Nick Wells is partner and head of commercial dispute resolution at Flint Bishop LLP and acted for the successful First Defendant within these proceedings. The full judgment can be read here: Bastholm & Ors v Peveril Securities (Dalton Park Retail) Ltd & Ors  EWHC 438 (Ch) (03 March 2023)
For further information or any queries relating to this case, please contact us on 01332 226 104 or complete the form below.
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