Expert determination is commonly used in the construction and real estate sector, its origins having developed in relation to valuation disputes.

One of the perceived advantages of expert determination is that it produces a final and binding decision, although an expert may be sued for negligence if the requisite level of skill and care is not exercised in reaching that decision. It remains relatively rare for an expert's determination to be challenged or appealed compared to arbitration awards or court rulings. In Shafi v Rutherford [2014] EWCA Civ 1186, decided in the Court of Appeal this summer, the court considered one of the circumstances in which it is possible for a party to apply for an order setting aside the decision in an expert determination.

In this particular case, the expert had been appointed in relation to a dispute concerning the amount to be paid for a share in a dental practice. The expert, in considering the accounts of the dental practice, identified that certain leases were not properly treated in those accounts. The expert considered that correcting those accounting errors was outside the scope of his instruction, and therefore proceeded to value the share of the dental practice based on those incorrect accounts.

The Court of Appeal found that the expert was wrong not to correct the accounts and that the effect of the treatment of the leases on the accounts was within the scope of the expert determination and the wording of the letter of instruction to the expert. The court therefore found that the expert had erred in interpreting his jurisdiction or materially departed from the scope of his instruction. The court therefore ordered that a different expert be appointed to carry out a new determination.

This is a rare example of the courts interfering with expert determination because, as noted above, an expert determination cannot generally be appealed or challenged. It is common for parties to agree, when entering into a contract which provides for expert determination, that such a determination will be binding. This ensures that the effect of the decision of the expert is certain and is often cited as a benefit of using expert determination to resolve disputes.

However, there are certain other grounds which can, in limited circumstances, lead a court to set aside or vary an expert determination:

  • Material departure from instructions: As described above in Shafi v Rutherford
  • Failure to state reasons: If the expert does not adequately state the reasons for his decision, a court can direct an expert to do so (Halifax Life Ltd v The Equitable Life Assurance Society [2007] EWHC 503 (Comm))
  •  Fraud or collusion: If the expert has reached his determination due to fraud or collusion with one of the parties, then the determination can be set aside by the court (Campbell v Edwards [1976] 1 WLR 403)
  • The certificate not being certain: If an expert is determining a situation which requires the expert to produce a certificate (as is sometimes the case in accounting scenarios) then the certificate cannot be uncertain or qualified (Shorrock Ltd v Meggitt plc [1991] BCC 471)
  • Partiality: If an expert has shown actual bias or there is a real danger of injustice resulting from the alleged bias, then the court has the power to set aside the expert determination (Hickman v Roberts [1913] AC 229).