Don’t use an independent expert to resolve a dispute if you’re not prepared for the decision to go against you
It is a long established ideal in Britain that any decision in a legal dispute must be reached in accordance with the rules of natural justice. However, the recent decision in Owen Pell Ltd v Bindi (London) Ltd suggests that, where the parties to a construction dispute agree to be bound by the decision of an independent expert, the expert’s decision cannot be challenged on the basis of his apparent failure to apply those rules. As long as the expert has jurisdiction to decide the outcome of the dispute, his decision will be binding, irrespective of alleged bias or serious errors on his part.
Owen Pell agreed to build an extension and to undertake M&E work at Bindi’s property but left the site before work was complete. A dispute arose over payment of the final account and Bindi also complained that Owen Pell’s work was defective. The parties agreed to ask an independent expert to determine the dispute and approached the RICS, which nominated a Mr Cartwright. He decided that Bindi should pay 80% of the final account. Bindi, however, refused to make any further payment to Owen Pell, which commenced proceedings to enforce Cartwright’s decision and then issued an application for summary judgment.
Owen Pell argued that Cartwright had answered the question put to him and that his decision was binding, even if it was wrong. In the circumstances, it should be entitled to judgment. Bindi argued that when the parties agreed to refer any dispute to an independent expert, it was an implied term of that agreement that the expert would conduct himself in accordance with the rules of natural justice, so that, if it appeared that he was biased or if he made a gross or obvious error in his decision, that decision would be of no effect. Bindi went on to argue that Cartwright was guilty of bias and that his decision was therefore void and unenforceable.
The independent expert’s determination was binding and enforceable, even if it was wrong
Her Honour Judge Kirkham disagreed. In her view, to imply such a term into the agreement would undermine the purpose of the agreement, namely to allow a mechanism by which disputes could be resolved quickly, cheaply and, above all, finally. Applying the findings in two previous cases, the judge concluded that there was no requirement 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. The only basis upon which Bindi might overturn Cartwright’s decision was by establishing that he had no jurisdiction to decide the outcome of the dispute, either because he had not been validly appointed or because he had purported to have decided issues that had not been referred to him, so that he had gone beyond the remit of his authority. Since neither argument applied in this case, there was no basis to impugn his decision.
The judge concluded that it was not open to the court to set aside or refuse to enforce Cartwright’s decision by reason of alleged errors in his determination, whether gross, obvious or perverse. While the judge concluded that there was no evidence to suggest Cartwright had acted with a lack of impartiality, in any event his determination was binding and enforceable, even if it was wrong, so that Bindi had no real prospect of defending Owen Pell’s claim for enforcement. The judge therefore granted summary judgment on the claim.
This case is a reminder about the practical effect of entering an agreement that allows for binding determinations, whether by experts or quasi-judges. While the savings to be made by having a simple and speedy mechanism to resolve disputes can be quite considerable, if the decision goes against you, there is rarely anything you can do about it.
Building Sustainable Design
Alexandra Anderson is a partner in the construction and engineering group at City law firm Reynolds Porter Chamberlain (email@example.com)