UK: High Court refuses to set aside expert determination for ‘manifest error’

Where parties have contractually agreed to submit a dispute for expert determination, one of the the limited bases on which they may challenge the determination and have it set aside by the court is that it contains a manifest error.  However, the scope of that exception is very narrow, as illustrated by a recent High Court decision: Walton Homes Ltd v Staffordshire County Council [2013] EWCH 2554 (Ch).

In particular, the decision highlights that it will be difficult to establish a manifest error where the alleged error relates to a question of law.

In an agreement for the sale of land, the parties had agreed to submit to an expert surveyor all questions of fact and law in any disputes concerning the agreement.  The dispute that arose turned entirely on questions of law – specifically, the scope and operation of a clause in the agreement.  The expert had therefore retained legal Counsel to provide specialist advice on that issue and had adopted Counsel’s written opinion as the basis for the determination.

The claimants contended that the reasoning set out in Counsel’s opinion (and therefore the expert’s determination) was manifestly erroneous.  In particular, it was said that Counsel’s reasoning erred on the question of whether it was legitimate, when construing the clause, to take into account the factual matrix surrounding the agreement in order to justify departing from the literal meaning of the clause’s wording.

In his judgment,  Mr Justice Peter Smith undertook a useful review of the case law and academic commentary regarding the ‘manifest error’ exception.  In particular, he noted prior descriptions of the the concept being confined to ‘oversights and blunders so obvious as to admit no difference of opinion’ and ‘not to errors of judgment’.  The examples given in the various authorities indicated to him that that the exception operates within a very limited window and refers to ‘something like an arithmetical error, or a reference to a non existent building and the like’.

In this case, he considered that no manifest error could be identified in the reasoning supporting the determination.    This was notwithstanding his observation that he could see some force in the claimants’ criticisms of the reasoning and that ‘it might be wrong if one was pressed to argue it’.    However, it was not suficient that the reasoning be arguably wrong, or even be accepted as wrong – it must be manifestly wrong.   In this case, the alleged error in approach was not obvious.   In the judge’s view, that was well evidenced by the fact that the parties before him had each been able to put forward properly arguable competing submissions as to the correct approach to  interpretation of the clause.

 

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