Expert Determination: Swift, Binding and Cost Effective

Thursday, June 23rd, 2016
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Contractually ordained expert determination can be a viable alternative to other more mainstream forms of dispute resolution such as courts, tribunals and arbitration.

Expert determination, some would say, is a well-kept secret in terms of cost containment and the way by which a disputant can enjoy a parsimonious legal spend. Little wonder those in the know – top end of town builders and developers – use it.

I first chanced upon expert determination in the late 1980s when a developer client and a household name builder entered into a $65 million serviced apartment development in the CBD and the dispute resolution clause required was expert determination. The parties wanted to ensure that if there were to be a dispute then it could be resolved, cheaply, quickly and confidentially.

It must be emphasised that these seasoned professionals were prepared to abide by the umpire’s ruling. Implicit within the election to subject oneself to expert determination is that if one is on the wrong side of the umpire’s ruling, you don’t drop the lip, you just cop the ruling.

Expert determination is a creature of agreement and contract. The parties contractually resolve to be bound by expert determination in the event of a dispute. The parties often agree upon and nominate the expert before the contract is signed.

The contract may have detailed procedures governing the way by which the expert assessment and determination regime operates or the contract may adopt well known and revered expert determination protocols such as the IAMA rules that govern expert appointment. It is probably best to adopt the tried and true, so the IAMA rules are worthy of serious consideration.

Experts are not governed by Court rules or arbitration or adjudication Acts of Parliament, save for where an expert breaks free of the leash and deviates from the contractual procedures that govern the way by which the expert is supposed to conduct his or her affairs in respect of the resolution of the dispute.

Not surprisingly, it is very difficult to overturn an expert determination and this is demonstrated by the ruling of His Honour Justice Vickery in the case Glenvill Projects Pty Ltd & Ors v North North Melbourne Pty Ltd & Ors [2013] VSC 717. In this case, Justice Vickery provided a very comprehensive and informative explanation of the way in which an expert determination procedure operates. It is worthwhile quoting some of the very instructive passages from the case.

He noted that “there is no procedural code for expert determination, in contradistinction to arbitration. The activities of an expert are subject to little control by the court, save as to jurisdiction or departure from the mandate given. Unless the parties specify the procedure, the expert determines how he will proceed…An expert is not obliged to afford to the parties procedural fairness in the manner required of a court or arbitration in a curial context…How the task is undertaken is in the hands of the expert, subject to anything to the contrary in the contract pursuant to which the appointment was made.

“When the parties appoint an expert, they usually do so because they agree to place reliance on the expert’s skill and judgment. They implicitly agree to accept and be bound by the determination. In the usual case, provided the decision is arrived at honestly and in good faith, the parties will not be able to re-open it and will be bound by the result.

“Finally, considerations of commercial utility are likely to be relevant factors. Efficiency, the production of a speedy and authoritative outcome and the elimination of the expense of a more elaborate procedure, undoubtedly play a part in parties selecting the contractual process of expert determination.”

Justice Vickery went on to note that “This problem-solving role is usually intended to be applied in a manner which is untrammelled by overly restrictive procedural considerations, so that the specialist skills and insights of the expert can be fully applied to the issues for resolution, in an expeditious and cost effective manner which is attended with an appropriate measure of ‘finality.’”

There is little I can add that would shed more light on the way in which expert determination dispute resolution regime operate, such is the judge’s aplomb with respect to his jurisprudential insights; suffice it to say that expert determination has some compelling merits which are as follows:

Expert determination is swift

It is cost effective which in part is due to the speed by which a determination can be generated. Time is money, and the longer a dispute takes to be resolved, the greater the sums of money that will be thrown at it.

Expert determinations are binding

Probably the greatest virtue of expert determination is its finality. As Justice Vickery alluded, its not easy to overturn an expert determination. When parties invest an expert with the power to make a final and binding finding, they abide by that expert’s findings. The downside with this is that if a party is unhappy with an outcome, they will just have to “suck it up.” The positive is that regardless of whether one is happy with the determination the dispute is over, finished and end cycled. Compare this with the courts, tribunals and arbitration where appeal rights exist to courts of higher jurisdiction which when invoked can take years to resolve.

So expert determination has much to commend it but there is a caveat: be very careful with your choice of expert and make sure that some legal dexterity and artistry is evident with regards to the drafting of the expert determination clause.

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