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Expert Determinations: Lainson v Duffy Kennedy

By June 25, 2019 No Comments

The idea of an expert determination is that, instead of becoming embroiled in litigation, parties can have their disputes swiftly, relatively cheaply, and finally resolved. Finality is generally regarded as a good thing until a party receives a determination with which it is unhappy. The law in the area is settled. Determinations can be overturned if the expert has not carried out the determination in accordance with the terms of the contract, but not otherwise.

In this case one party thought that the expert had got the law wrong. It seized upon the words requiring the expert to determine the dispute ‘according to law’. which are referred to in the The Institute of Arbitrators & Mediators Australia Expert Determination Rules, which were in turn incorporated by reference into the expert determination agreement. It said that this meant that if there was an error of law then the expert had not carried out the determination in accordance with the terms of the contract.

Hammerschlag J, was having none of it. In rejecting the argument he said this:

“In the context in which they appear here, however, the words ‘according to law’ mean in the manner which the law requires a person in the position of the Expert to go about the mandated task, so as to give it contractual efficacy; for example, honestly, without bias or collusion, and while not intoxicated. There is no suggestion that the Expert acted in any way not ‘according to law’ in this sense. Significantly, the words appear in that part of the Rules headed ‘The Procedure’.”

He added:

“I consider it unlikely that reasonable persons in the position of the parties would have understood the words of the Contract to bear the meaning contended for by Lainson. It is inimical to two of the principal commercial objects that expert determination is intended to secure, namely, celerity and finality.”

This is the link: https://www.caselaw.nsw.gov.au/decision/5cdcde04e4b02a5a800c0d8e.